Tesla Vs BYD: Chinese automakers will demolish, says Elon Musk warning of fierce competition
Tesla CEO Elon Musk has warned that Chinese automakers could surpass global rivals without trade barriers, highlighting intense competition faced by the US electric vehicle market leader.
Tesla CEO Elon Musk stated on January 24 that the "Chinese automakers will 'demolish' global rivals without trade barriers," underscoring the intense competition faced by the US electric vehicle market leader from companies like BYD, which are aggressively expanding worldwide, according to a report Reuters.
Elon Musk's comments followed the recent achievement of Warren Buffett-backed BYD, whose more affordable models and diverse lineup allowed it to surpass Tesla as the world's top-selling EV company in the last quarter, despite Tesla's significant price reductions throughout 2023, the report added.
According to Elon Musk, Chinese car companies are the "most competitive" and could achieve considerable success outside China, depending on trade barriers. He emphasized that without such barriers, Chinese automakers could potentially outshine most global counterparts, describing them as "extremely good," the report further added.
In response to Musk's comments, the Chinese foreign ministry, during a regular briefing on January 25, expressed unawareness of the reports but emphasised the importance of maintaining a fair, just, and open business environment.
Musk has raised concerns about a price war initiated last year to attract consumers facing high borrowing costs, resulting in squeezed margins for Tesla and causing investor worries. On Wednesday, Musk cautioned that Tesla was approaching the "natural limit of cost down" with its existing lineup.
Tesla's plans to introduce a more affordable mass-market compact crossover, codenamed "Redwood," in mid-2025 to compete with cheaper rivals were confirmed by Musk. However, with Chinese EV manufacturers adept at cost management and rapidly expanding their foreign presence, Tesla faces increased competition.
While Chinese car companies are making strides with their stable supply chains and competitive pricing, their low brand awareness and perceived reliability, durability, and safety challenges in the United States may hinder their progress in winning U.S. market share, according to industry experts.
Musk's comments coincide with the U.S. presidential election gaining momentum. President Joe Biden has expressed concerns about China's determination to dominate the EV market, vowing not to let it happen. Former President Donald Trump, a potential frontrunner for the Republican nomination, has signaled a willingness to impose stronger tariffs on Chinese imports if elected.
Musk clarified on Wednesday that there is currently no obvious opportunity for partnership with Chinese rivals. Still, Tesla remains open to providing access to its charging network and licensing technologies such as self-driving to Chinese companies.
In Europe, a protectionist stance toward Chinese EV makers has been evident, with the European Commission investigating the imposition of tariffs to counter alleged benefits from state subsidies for Chinese EV imports.
According to industry analysts, rather than tariffs, the US and Europe need policies that support their automakers in building diversified supply chains over time.
(With Inputs from Reuters)
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First Published:26 Jan 2024, 01:33 PM IST
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