Musk Calls For Trade Barrier As BYD Outperforms Tesla!

Elon Musk, Tesla's CEO, expressed concern earlier this week about the competitive threat posed by Chinese automakers in the global electric vehicle (EV) market.

He also advocates for proper trade barriers, believing that without them, Chinese car companies, which he describes as the "most competitive," could outperform and surpass other global automakers.

This comes in the wake of BYD, a Chinese EV manufacturer backed by Warren Buffett, surpassing Tesla as the world's top-selling EV company in the last quarter. This comes despite Tesla's efforts to slash prices in order to push sales and maintain its position.

Furthermore, Musk acknowledged the challenges and indicated that the company is approaching the "natural limit of cost down" with its current lineup. Therefore, to maintain its global competitiveness, Tesla plans to introduce a more affordable compact crossover, codenamed "Redwood," by mid-2025 to compete with lower-priced rivals.

Having said that, the rise of Chinese EV brands cannot be discounted. They are able to leverage on a stable supply chain and competitive pricing to win over the global audience solely based on the Chinese state subsidies. The latter has undeniably boosted domestic sales, resulting in them attaining economies of scale with ease.

Musk's comments coincide with concerns raised by President Joe Biden about China's determination to dominate the EV market despite facing hurdles in gaining market share in the United States. A lot of which stems from low brand awareness and concerns about reliability, durability, and safety.

However, Tesla is still willing to work with Chinese competitors, providing access to its network of charging stations and licencing technologies such as autonomous driving if necessary. Adding to that, Tesla is currently a customer of BYD since BYD provides the blade battery for the SR Tesla Model 3 models.

New Electric's Gregory however calls for countries to look beyond trade barriers and focus on tariffs in implementing policies that support automakers in building diversified supply chains, according to industry experts.