In Q2 of 2020, Tesla sold 90,891 vehicles, with an estimated 29,684 built in China (for Chinese buyers), and an estimated 36,800 built in America (for US buyers).
That leaves 24,407 vehicles produced in the US and exported around the world.
In the same quarter, America’s entire auto industry exported 68,900 vehicles.
That means 35.4% of all US auto exports were built by Tesla.
Also in the same quarter, America imported 117,600 vehicles from Mexico, and imported 62,400 vehicles from Canada.
Two things stand out to me here:
- America is running a massive auto trade deficit (and has been for many years)
- Tesla is starting to change that
Below is a chart of the auto imports and exports of all the top auto-producing nations in the world.
It’s not surprising to see countries like Japan and Germany exporting far more vehicles than they import. But it is surprising to see that America’s auto trade deficit is the largest of all the above nations on an absolute and percentage basis.
WHO CARES ABOUT AUTO TRADE BALANCES?
That’s what Elon Musk said on Joe Rogan’s podcast earlier this year, as a warning against complacency and excessive lockdowns.
Just a few weeks earlier, Marc Andreessen wrote a blog post titled ‘It’s Time to Build’ expressing his frustration at America’s lack of desire to build important infrastructure and manufacturing projects. In his blog post, Marc included many examples of the supply issues we had to deal with earlier this year:
Both the comments from Elon and Marc hit on the same issue. Too often, American companies have chosen to offshore manufacturing in exchange for lower labor expenses, instead of tapping into the talented and educated workforce that already exists to build better products that can raise everyone’s standard of living.
WHY DOES AMERICA NEED TO BUILD EVERYTHING?
I’m not suggesting that America has to make all their products domestically. Trading partners create opportunities to divide labour and specialize, which in turn creates enormous benefits for the entire world. Free trade is a great thing for everyone, and everyone should focus on creating the goods and services they can produce better than anyone else.
And if there’s anything America is great at, it’s building things. More specifically, building cars.
Coming out of World War 2, US companies lifted the entire nation to new heights by producing automobiles. American cars were the best in the world, and the record production levels at GM, Ford, and Chrysler helped America become the economic superpower it is today.
And though countries like Japan and Germany export more cars today, Americans still have decades of relevant experience, and all the necessary infrastructure to compete as global leaders in auto production.
AMERICAN MANUFACTURING IS NOT RESOURCE CONSTRAINED
America is also home to many of the world’s brightest engineers, along with the world’s most successful companies, with access to the world’s largest pools of capital.
America’s auto manufacturing decay isn’t due to a lack of money, or a lack of smart people. As Marc Andreessen says, it’s a lack of desire.
Good thing Elon and the Tesla team have no ‘desire shortage’. In less than two decades, against all odds, Tesla has proven that it’s possible to reverse America’s auto manufacturing decay, and build the world’s best cars. At scale.
With a 35.4% share of US auto exports in Q2, they surely topped the auto exports of either GM or Ford (and possibly both of them). No small feat.
Although America’s auto exports still represent a fraction of those in Germany and Japan, Tesla’s US auto production is ramping up fast.
With a factory being built in Texas right now, and at least one other US factory that still remains under wraps, Tesla will soon be shipping millions of American cars around the world.
Not because of government policies, not because of some special advantage, but because they’re simply innovating faster than their competition. So let this be a message of encouragement for Rivian, Lucid, and all the other teams building the electric cars of tomorrow.
If Tesla can do it, you can too.