Tesla's chief, Elon Musk, remains steadfast on rapid EV adoption but concedes that the greatest threat to future demand is likely to come from China. He said this as U.S. Treasury Secretary Janet Yellen visited China and issued a warning to Beijing on its exports of green technology that posed potential threats to global supply chains.
Musk said in an interview that the rate of EV adoption is still incredibly high and Tesla remains way ahead when it comes to data collection and real-world driving data. He added the threat from China was broad-based in the auto industry and not just confined to electric vehicles. That reflects broader U.S. concerns, underlined by Treasury Secretary Janet Yellen on her visit to China. Yellen also pointed to over-capacity in Chinese green energy exports-a concern that increasingly appears to be shared by policymakers and market competitors around the globe.
Tensions are running high as China's surging output of affordable EVs, solar panels, and batteries, subsidized by the state, tests world markets from the U.S. to Europe. This has raised concern of a wave of Chinese exports undercutting overseas manufacturers. China now accounts for 60% of global EV sales, while its production capacity has risen more than fivefold, with the risk that the country could soon saturate its market and export excess production.
While Musk has spoken of potentially expanding Tesla's manufacturing footprint to India, Yellen's visit to China had been all about trade dynamics, especially in green technologies. She recalled the case of Suniva, a U.S. solar cell manufacturer that had been hurt by Chinese exports, underlining the need to ensure this does not happen again. The Biden administration's protection for domestic industries like solar cells, as reflected in the Inflation Reduction Act, reflects these very anxieties.
While competition is heating up, Tesla doesn't stop innovating: Musk teases Space X about its ambitious plans to journey to Mars. For now, however, it's all about the global EV market and the unfolding geopolitical chess game between the U.S. and China. The competition drama extends to trade disputes: a U.S. tariff on steel and aluminum imports, with China challenging U.S. subsidies under rules of the WTO.
With Musk making Tesla so vulnerable in such a delicate situation, and with Yellen serving US interests in foreign trade, the global balance of the EV market was one precarious balance. To the extent that discussions and policy remain in flux, a trajectory for this sector aligns closely with future developments in the US-China relationship over trade and strategies by key players like Elon Musk.
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