Tesla founder and CEO Elon Musk has warned that Chinese automotive brands will “demolish” global rivals without trade barriers.
Elon Musk’s Tesla has been one of the largest electric vehicle manufacturers in recent years thanks to its range of reasonably priced, high-tech EVs like the Tesla Model Y and the newly introduced Cybertruck.
Chinese manufacturers have made huge progress in recent years by expanding across Europe and North America with the aim of securing a significant global market share.
Major Chinese firms can benefit from cheaper production costs and greater access to materials needed to manufacture electric vehicles, putting them ahead of the competition.
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Elon Musk has described Chinese manufacturers as 'highly competitive'
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Elon Musk has now warned that manufacturers from China will have “significant success” outside of China, depending on the tariffs or trade barriers in place.
Speaking at Tesla’s earnings calls on Wednesday, Musk said: “Our observation is generally that Chinese car companies are the most competitive car companies in the world.
“If there are no trade barriers established, they will pretty much demolish most other car companies in the world. They’re extremely good.”
BYD, which is backed by Warren Buffett’s Berkshire Hathaway, overtook Tesla to sell more electric vehicles in the last three months of 2023.
The Shenzhen-based manufacturer sold a record 526,000 battery-only vehicles compared to 484,500 Tesla EVs. BYD also sold more than three million “new energy vehicles” through electric cars and hybrids across 2023.
The controversial billionaire downplayed the quality of Chinese cars in 2011, dismissing companies like BYD for the quality of the vehicles.
He has since backtracked on those comments, adding that BYD – which stands for Build Your Dreams – was “highly competitive”.
In November, Musk suggested that in the future, the 10 best-selling car makers would be Tesla and nine Chinese manufacturers.
Tesla has attempted to remain competitive with other brands by continually slashing prices. The cheapest options now include £39,990 for the Model 3 and £44,490 for the Model Y, while the Model S (£77,985) and Model X (£82,255) can be purchased from the existing inventory.
According to Reuters, Tesla now has plans to start producing a cheaper, mass-market electric vehicle, codenamed “Redwood” believed to begin production in the second half of 2025.
The next-generation EV is expected to be manufactured at the company’s Texas factory.
Previous reports suggested that Tesla was looking to launch a cheap, £21,700 electric car, with production of the vehicle being supported by the Berlin Gigafactory.
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BYD is slowly launching across European and North American markets
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Sources close to the manufacturing process said Tesla would be able to die cast nearly all of the underbody of the EV in one piece, cutting costs in the process.
Giga Berlin currently produces Europe’s best-selling EV, the Tesla Model Y, although the factory has dealt with production issues in recent months as a result of Houthi rebel attack in the Red Sea.