Tesla’s CEO Elon Musk extols the pace and efficiency of China’s auto industry, with the potential to demolish competitors.
Tesla has seen its stock dip after its quarterly earnings report that indicated a slowdown. This is in addition to the underwhelming performance of the Cybertruck. Elon Musk, Tesla’s CEO has further highlighted the tensions by alleging that China’s auto industry would destroy other automakers if not for global trade barriers.
The Chinese EV industry has seen a period of rapid growth that has continued to feed its large population. The industry has positioned itself well ahead of other markets and continues to expand beyond the Mainland. Chinese automakers leverage several key fundamentals to deliver affordable and durable EVs, giving them a higher bargaining edge.
The Tesla Quarterly Earnings call provided the avenue for Musk to acknowledge the pace and efficiency of the Chinese EV industry. He however raised an alarm that the Chinese EV industry could demolish other automakers in the absence of relevant trade barriers. Musk stated that he was of the view that Chinese EV companies will have significant successes outside of China depending on the applicable trade tariffs. The influx of Chinese EVs in markets across the globe has led to claims of possibly extinguishing domestic markets. This has led some governments to put in place protectionist tariffs and regulations to avoid being flooded by cheap Chinese EVs. There is also the possibility of a probe by the European Commission.
Tesla became the first foreign automaker to set up shop in China without being required to have a joint partnership with domestic brands. Stellantis has also highlighted the issue pointed out by Musk on the Chinese auto industry. Tesla has already lost its top position as the leading EV maker, with BYD, a Chinese company mounting the top position. Tesla’s released earnings report indicated that the company failed to meet market expectations for Q4 2023.
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