Elon Musk Warns of Chinese Car Dominance in the Global Market
Elon Musk of Tesla has drawn attention to his comments at last week’s earnings conference, where he stated, “Chinese car companies are the most competitive in the world. Therefore, I believe they will achieve significant success outside of China.” He also suggested that most other companies worldwide will collapse if trade barriers are not built.
His comments resonate with the fact that in the fourth quarter of 2023, BYD sold more electric vehicles than Tesla. BYD sold 3.02 million plug-in hybrid electric vehicles in annual sales compared to Tesla’s 1.81 million electric vehicles. BYD sold 1.57 million electric vehicles.
Tesla’s global production capacity is about 2.3 million annually, with China’s Gigafactory Shanghai accounting for 950,000. Nearly half of the sales in 2023 were Chinese models.
China overtook Germany and Japan to become the world’s largest exporter of cars in 2023. This trend is expected to accelerate. Analysts are therefore voicing concerns that Musk’s comments could lead politicians to consider measures to suppress the business of Chinese car manufacturers in foreign markets, especially in countries with their automotive industries.
U.S. President Joe Biden stated that he would not let China dominate the electric vehicle market. Donald Trump, a likely Republican candidate for this year’s presidential election, has also pledged to impose universal 10% tariffs on all imported goods entering the U.S. and to revoke China’s most-favored-nation trade status. Europe is also adopting a protectionist stance towards Chinese electric car manufacturers. In 2023, the European Commission launched an investigation into whether to impose punitive tariffs to protect EU producers from cheaper Chinese electric car imports, which they claim benefit from state subsidies.