Tesla Chief Executive Elon Musk stunned the electric vehicle space as he acknowledged the strong presence of Chinese electric automakers in the market during the earnings call on Wednesday.
Chinese rivals’ dominance
According to the American billionaire’s recent remarks, Tesla’s Chinese rivals will “demolish” global brands without trade barriers in place.
“The Chinese car companies are the most competitive car companies in the world. So, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established.
Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world.”
Tesla CEO Elon Musk
The Tesla boss’ acknowledgment of Chinese rivals’ dominance highlights the intensifying challenges his company faces, specifically from new energy vehicle (NEV) giant BYD. It surpassed Tesla’s EV sales in the fourth quarter of last year and penetrated key markets in Europe, Southeast Asia, and the Middle East.
In addition, EV startups Nio and XPeng are also now making their names in the European market.
EU moves against Chinese brands
In response to the growing dominance of Chinese electric automakers, the European Commission took a protectionist measure against those companies last year. The EU’s executive arm initiated a probe on possible unfairly excessive state subsidies that enable Chinese brands to sell their offerings at very low prices.
Chinese brands’ cheap pricing continues to prompt European automakers to launch price cuts to stay competitive in their home market, compromising their profitability and long-term stability.
Therefore, the EU is considering introducing punitive tariffs on Chinese EV imports to aid its local brands.
Tesla warns of lower growth in 2023
Tesla’s shares closed down 12% in premarket trade Thursday following its forecast of “notably lower” growth in electric vehicle sales in 2024.
Tesla announced plans to bring a new, more affordable model in 2025, codenamed “Redwood.” It will ride on the company’s long-promised next-gen platform. However, developing the new platform will reduce the company’s sales growth prospects this year.
“Our company is currently between two major growth waves: the first one began with the global expansion of the Model 3/Y platform, and the next one we believe will be initiated by the global expansion of the next-generation vehicle platform.
In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas.”
Tesla said in its Q4 Earnings Report
It is worth noting that CEO Musk’s remarks come after BYD successfully overthrew Tesla as the best-selling electric automaker in Q4 2023, disregarding the American brand’s major price-cut efforts in its key markets last year. Nonetheless, Tesla remained the market leader in the full year 2023, achieving its self-set target of 1.8 million EV sales.
