Musk warned that Chinese electric companies could “demolish” their rivals: Tesla will be severely punished

By Abhirup Roy

SAN FRANCISCO, Jan 24 (Reuters) – Tesla CEO Elon Musk said on Wednesday that Chinese automakers would “demolish” their global rivals without trade barriers, comments that underlined the pressure they face. Companies like BYD are leaders in the US market in electric vehicles. ,

Musk’s statement comes after Warren Buffett-backed BYD – with its cheaper models and more diverse range – overtook Tesla as the world’s best-selling electric vehicle company last quarter, despite price cuts by the US manufacturer. Gave.

Musk said in a post-earnings call with analysts on Wednesday that Chinese auto companies were “the most competitive” and “they will have significant success outside of China, depending on what kind of tariffs or trade barriers are imposed.” She goes.”

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Disappointing results and market punishment

Musk’s notice also comes after Tesla published results for the fourth quarter of 2023, a year in which it achieved a net profit of $14,997 million, 19.4% more than in 2022, after increasing the production of its vehicles by 35% last year. Is.

However, its fourth-quarter data disappointed Wall Street expectations. It achieved total revenues of $25.17 billion, compared to the expected $25.87 billion; Revenue increased by approximately 3% compared to the previous year. Tesla reported adjusted EPS of $0.71, compared to forecasts of $0.73. And adjusted net income totaled $2.48 billion, compared with the market’s expectation of $2.61 billion.

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Analysts also worried that Tesla warned in 2024 The growth rate of its output “could be significantly lower than that achieved in 2023”. For the work being done at the Texas Gigafactory to launch the next generation vehicles.

This led to a sharp decline in the company’s shares on Wall Street on Thursday:

Musk has reason to be concerned

Last year it waged a price war to lure consumers hurt by high borrowing costs, resulting in Tesla’s margins shrinking and investors worried. On Wednesday, Musk warned that Tesla was reaching “the natural limit of cost reduction” with its current range.

Tesla plans to begin production of a cheaper mass-market compact crossover, codenamed “Redwood,” in mid-2025 to compete with lower-cost rivals, Reuters reported on Tuesday. Musk confirmed on Wednesday that Tesla expects to begin production of the next generation of electric vehicles at its Texas factory in the second half of 2025.

However, Chinese electric vehicle makers, adept at keeping costs under control with stable supply chains, are moving quickly. With competition and overcapacity increasing in China, many are now pursuing rapid overseas expansion, as years of government subsidies have helped boost domestic sales.

Still, Chinese car companies have very low brand awareness in the United States and their reliability, durability and safety are mediocre, so they have a long way to go, according to Spencer Immel, partner at consumer analytics firm Lansington. Gain market share in the United States.

More than tariffs, the US and Europe need policies that give their automakers time to build a diverse supply chain, said Ross Gregory, partner at Melbourne-based consultancy New Electric Partners.

Note prepared with information from Reuters and EFE.

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