Elon Musk criticizes barriers to Chinese electric car for its own good

The US has imposed very strict 100% tariffs on Chinese cars. The goal is obvious: to stop their landing in the country. The European Union is considering very similar measures. Actions that divide European manufacturers and which Elon Musk openly criticizes.

He has no room to think about anything else.

Tariffs in the USA. Two weeks ago, Joe Biden confirmed very harsh tariffs on Chinese cars. From now on, to import a car from China to the United States, you will have to pay a 100% duty, which is a serious blow to the brands’ expansion plans.

Biden, who repeated one of the promises Donald Trump boasted ahead of the next presidential election, wants to stop China’s expansionist ambitions for the future because its cars were barely sold in the United States before the announcement.

Tariffs in Europe. The decision fueled speculation about Europe’s position on Chinese cars. In September 2023, the European Union confirmed that it was looking into introducing new tariffs on these vehicles, and the possible amount has changed over time since then.

Europe is in a difficult situation. Currently, local manufacturers are falling short of customer expectations when it comes to prices and emissions targets that are truly ambitious. The dilemma is one that the industry itself faces: the French are demanding tough tariffs, while the Germans are trying to get rid of all trade barriers.

Dependence on China. Apart from the fact that the European Union needs China to sell its citizens more affordable (not cheap) electric cars, some of the most important manufacturers on the continent are tied to their Chinese dependence. Especially the Germans.

Both the Volkswagen Group, BMW and Mercedes have one of the most important markets in China. But also, their electric cars largely come from there. It is likely that if the tariffs are lifted, they will also affect European cars made in China, as happened with Dacia in France in the spring.

The best example of why German manufacturers prefer to forget about tariffs was partially summed up by Ferdinand Dudenhöffer, director of the German Automotive Research Center, in his work. Forbes:

If the EU takes action against China, it will be a big mistake: in Germany it will be called an own goal. There are more than 20 million new cars on the Chinese market, and about 15 million on the EU market. Thus, we will lose a large market. How did US protectionism work against the Japanese 30 years ago? Toyota dominates the US market. Protectionism has never been successful. It only weakened. And the weakening becomes very dramatic. All advanced battery technology comes from China. This is how we move away from technical innovation. You can’t do anything worse. As a result, we will lose a lot internationally.

“Neither Tesla nor I asked for them”. During a video broadcast during the VivaTech startup fair in Paris, Elon Musk took the opportunity to criticize the tariffs that Joe Biden’s government has raised against Chinese cars. “I was surprised when they were announced. Things that hinder freedom of exchange or distort the market are not good,” the Tesla owner said in words reported by The keeper.

Musk used arguments very similar to those used by top managers of German manufacturers. “Tesla competes quite well in the Chinese market without tariffs or specific support. I am for the absence of tariffs,” he emphasized later.

Where I said, I say… Musk didn’t always feel this way about Chinese cars and their landing on American soil. “The Chinese are extremely good. If we don’t put up trade barriers, they will destroy most car manufacturers,” the Tesla owner himself said a few months ago.

What Elon Musk seems to have made clear is that his brand’s real competitors are Chinese manufacturers. “If I had to make a prediction… maybe some company from China will be second only to Tesla,” he noted in early 2023 regarding the future of the auto market.

I pick up the cable. Elon Musk’s remarks are just another step toward rapprochement with the Chinese government after relations between the company and the state have cooled in recent months. Musk seems to realize how tight he can tighten the rope and is starting to loosen it a little.

Tesla has flirted with the possibility of opening a factory in India. Musk actually planned a visit to the country, but canceled it at the last minute. Instead, it launched in China, and soon after its Autopilot, the semi-autonomous driving system so important to the company’s future, was adopted in the Asian country.

Good harmony between the Chinese state and Tesla has become evident again after days of tension. The company has been promising the appearance of Autopilot in the country for four years, but has yet to achieve results. To achieve this, it had to expand its alliance with Baidu, according to Chinese Google.

Addicted like no one else. Elon Musk’s words and recent actions demonstrate that the company is as dependent on China as many current manufacturers. For the company, the Asian country is the second country that adds the most revenue to its coffers and is not far behind what all other markets (except the US) add.

It should be added that Giga Shanghai was the company’s first factory outside the United States. In 2018, he received a 50-year lease on the land and less than a year later the first cars were already leaving his factory. It is also the most profitable plant in the country because production there is inexpensive, and it will support it with a new battery plant.

It is worth adding to this that the company has begun exporting cars from China to North America. Faced with declining sales in China, Tesla began selling it in Canada with attractive discounts on cars made in Asia. Tariffs will prevent this from happening in the United States, as it is likely to happen in Europe as well.

Image | Wikimedia Commons

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