Tesla's reliance on China presents risks because almost 40% of the companies supplying Tesla with EV battery materials are Chinese, meaning increased geopolitical tensions between the U.S. and China could eventually make it difficult for Tesla to buy batteries.

Of the 61 companies that constitute Tesla’s “storage battery” category, thirty-nine percent of them were Chinese, making China the organization's biggest supplier of lithium-ion battery materials, according to Nikkei Asia.

Tesla’s reliance on Chinese firms was calculated using Fronteo’s chokepoint score index, which measures the degree of a product maker’s dependence on a specific supplier using a 10-point scale, with 10 being the highest level of dependence. Some of the companies vital to Tesla’s operations included lithium products maker Ganfeng Lithium (chokepoint score: 6.8), inorganic compounds producer Novoray (chokepoint score: 7.1) and cobalt materials provider Zhejiang Huayou Cobalt (chokepoint score: 5.7).

Still, the company has been looking to lower its dependence on China.

"As we look ahead a few years, a fundamental chokepoint in the advancement of electric vehicles is the availability of battery-grade lithium," said Tesla CEO Elon Musk at a ground-breaking ceremony for a Texas lithium refinery in May 2023. That facility is expected to produce enough lithium to build roughly one million EVs by 2025.