Musk: Without trade barriers, Chinese electric cars would have 'crushed' competitors

Tesla CEO praises Chinese car companies and believes they can be a huge success in the international market.

On January 24, after announcing the fourth quarter 2023 financial report, Tesla CEO Elon Musk praised Chinese car companies, saying they are the "most competitive" companies and "will be very successful outside of China", depending on the level of import tariffs and trade barriers.

“Without trade barriers, they would crush almost every other automaker in the world . They’re incredibly good,” Musk said.

The comments show how much pressure the American electric carmaker is facing from Chinese rivals like BYD, which is aggressively expanding its global presence.

Tesla CEO Elon Musk at a conference in Poland on January 22. Photo: AP

Musk launched a price war last year to attract buyers hurt by rising interest rates. But the move is squeezing Tesla’s profits and worrying investors. On January 24, Musk warned that Tesla had reached its limit on discounting its current models.

Tesla plans to produce a cheaper, mass-market model from the middle of next year to compete with low-cost rivals, Reuters reported. Musk also confirmed yesterday that Tesla plans to produce a new generation of electric vehicles at its Texas factory in the second half of next year.

But Chinese EV makers, which have better control over costs thanks to a stable supply chain, are accelerating. As competition increases and China has excess capacity, many are expanding rapidly overseas. Their market in China is also well established after years of government support.

“The infrastructure for battery materials production in China has been mature and stable for several decades,” said Ross Gregory at consultancy New Electric Partners.

China's SAIC Motor is ordering more car carriers to save on overseas shipping costs. China's BYD is also expected to sell more electric cars than Tesla globally in the fourth quarter of 2023.

Still, Spencer Imel of consulting firm Lansgton says that Chinese automakers have very low brand recognition in the U.S., and their reliability and safety are mediocre. So these companies have a long way to go if they want to gain market share in the U.S.

“These companies are benefiting from strong demand in China, with breakthroughs such as in-car technology and battery swapping. We believe this will be an important and differentiating factor for their future growth overseas,” Imel said.

Musk also said on January 24 that Tesla has no “clear opportunity” to cooperate with Chinese competitors. However, Tesla is willing to share charging systems and some other technologies with them, such as self-driving technology.

Musk's comments yesterday came as US presidential candidates raced to win support from voters. President Joe Biden said China was determined to dominate the electric vehicle market and he "won't let that happen."

Former US President Donald Trump also signaled that he would raise import tariffs if re-elected. He called for a 10% tax on all imports into the US.

Europe is also increasingly wary of Chinese electric carmakers. Last year, the European Commission launched an investigation into whether tariffs should be imposed on electric cars imported from China, which was seen as a way to protect European carmakers if Chinese cars were heavily subsidized by the government.

Ha Thu (according to Reuters)

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