Protectionism Stops China’s Cheap EVs From Demolishing Rivals

Competition from Chinese EV automakers may be starting to get to Elon Musk and Tesla.

Beijing lavished manufacturing subsidies on the Chinese EV sector in a bid to develop a globally competitive industry. I Photo: Great Wall Motor Facebook

After a long battle for market share in China, Tesla's CEO issued a warning to his fellow automakers: That, on a level playing field, Chinese carmakers will outcompete almost everyone else, Lionel Lim reported for Fortune.

"Our observation is generally that Chinese car companies are the most competitive car companies in the world," Musk said Wednesday, during Tesla's earnings call.

"If there are no trade barriers established, they will pretty much demolish most other car companies in the world," he continued.

Beijing lavished manufacturing subsidies on the Chinese EV sector in a bid to develop a globally competitive industry. That government support is now attracting scrutiny from lawmakers in the West.

Last September, the European Commission launched an anti-subsidy probe into Chinese EV brands.

Later, the Biden administration barred vehicles that used Chinese-made battery parts from being eligible for consumer tax credits. (Tesla sources some of its parts from CATL, a Chinese battery manufacturer).

The US imposes a 25% levy on imported Chinese cars on top of a general 2.5% tariff on all auto imports.

The Trump administration imposed the China-focused tariff, which the Biden administration has extended. The EU currently imposes a 10% tariff on imported vehicles. China also imposes import tariffs for foreign-made autos, depending on their place of origin.

WEEKLY FEATURE : Jose Mari Chan And The Christmas Anthem