Tuesday, June 25, 2024

Elon Musk Super Bullish on Chinese Electric Car Companies

Tesla’s recent conference call for investors was packed full of little nuggets, and some big nuggets. We covered the Tesla California factory being the biggest auto production facility in the USA, we covered the financials, we covered the $25,000 Tesla coming in 2025, we covered the stock tumbling, we covered Tesla services becoming very profitable, and we covered Tesla energy storage & solar profits nearly quadrupling. But there was a pretty huge statement near the end of the conference call that we didn’t cover, and that concerned Elon Musk’s very bullish views on Chinese EV companies.

Here’s what Elon had to say: “Our observation is, generally, that 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 that if there are not trade barriers established, they will pretty much demolish most other car companies in the world. So, they’re extremely good.”

Naturally, Musk didn’t name any particular brands, but the most successful and most notable brands include BYD, NIO, and XPeng. (Li Auto deserves a nod here, given its popularity, but note that it only sells plug-in hybrid models — so it’s unlikely this is a brand Elon was thinking about.) There are also some cheaper electric models from GAC, Wuling, SAIC/MG, Changan, and other — but, again, I have to presume Elon was thinking more about brands competing with Tesla than brands down market. In any case, though, whatever price point you are looking at, Chinese EV brands are probably the best — or some of the best — options on the market. Well, that is, if you are in a market that sells them. Europe is getting more and more of these options, while the US is still basically barren when it comes to Chinese EV options. Many other markets — like Chile, as an example — are somewhere in between.

It’s both surprising and unsurprising that several finalists for our 2023 European CleanTechnica Car of the Year award were Chinese EVs. It’s surprising because the European auto market is so big, so highly regarded, and so hard to break into. It’s unsurprising because Chinese companies are producing the best electric vehicles and the best electric vehicles for the money, even accounting for shipping costs and tariffs. As more of those hit foreign markets like those initial ones in Europe, our ears perk up. Of course, as indicated recently and in the image at the top, the winner of the 2023 European CleanTechnica Car of the Year award was the MG4, a Chinese model using an auto brand that was originally British.

Will Chinese electric vehicle brands demolish other car companies in the US and Europe? Will they be blocked from disruption in these markets via ongoing and growing trade barriers, either not being allowed in these markets or via high tariffs? Will they struggle to break into markets due to lack of brand awareness? Let us know your thoughts down in the comments?

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