Elon Musk is criticizing the barriers against the Chinese electric car for its own good

The United States has activated very tough 100% tariffs on Chinese cars. The objective is obvious: to stop their landing in the country. The European Union is considering implementing very similar measures. Actions that are dividing European manufacturers and that Elon Musk openly criticizes.

He has no room to think anything else.

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

Biden, who has replicated one of the promises that Donald Trump boasted about in the face of the next presidential elections, wants to stop China’s expansionary desires for the future since until the announcement its cars were barely sold in the United States.

Tariffs in Europe. This decision has multiplied rumors about Europe’s position regarding Chinese cars. In September 2023, the European Union confirmed that it was studying imposing new tariffs on these vehicles and, since then, the possible amount of these has fluctuated over time.

Europe is in a difficult position. Right now, local manufacturers are not meeting customer expectations when it comes to price and emissions targets are really ambitious. The dilemma is such that the industry itself is faced, with the French asking for harsh tariffs and the Germans trying to get rid of all trade barriers.

The dependence on China. Beyond the fact that the European Union needs China to sell more accessible (not cheap) electric vehicles to its citizens, 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 their most important markets in China. But, in addition, their electric cars largely arrive from there. It is likely that, if tariffs are lifted, they will also affect European brand vehicles manufactured in China, as has happened to Dacia in France with the Spring.

The best example of why German manufacturers are opting to forget about tariffs was summed up, in part, by Ferdinand Dudenhoeffer, director of the German Automotive Research Center, in Forbes:

If the EU takes action against China, it will be a big mistake: in Germany they would call it an own goal. The Chinese market has more than 20 million new vehicles and the EU market is closer to 15 million. So we would be losing a big market. How did protectionism work in the United States 30 years ago against the Japanese? Toyota is dominating the US market. Protectionism has never been successful. It has only weakened. And the weakening becomes very dramatic. Everything that is cutting-edge technology in batteries comes from China. This is how we move away from technical innovations. You can’t do anything worse. As a result, we would lose a lot internationally.

“Neither Tesla nor I asked for them”. Broadcast on video 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 inhibit freedom of exchange or distort the market are not good,” said the owner of Tesla in words reported by Guardian.

Musk has used arguments very similar to those used by senior managers of German manufacturers. “Tesla competes quite well in the Chinese market without tariffs or specific support. I am in favor of no tariffs,” he later stressed.

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

What Elon Musk did seem to be clearer about is that Chinese manufacturers are the true competitors against his brand. “If I had to make a prediction… probably some company that comes out of China will be second after Tesla,” he noted at the beginning of 2023 in relation to the future of the automobile market.

Picking up cable. Elon Musk’s statements are just one more step towards rapprochement with the Chinese Government, after relations between the company and the State cooled in recent months. Musk seems to be discovering how far he could tighten the rope and begins to loosen it a little.

Tesla had been flirting with the possibility of setting up a factory in India. Musk, in fact, had a visit to the country scheduled but canceled it at the last minute. Instead, it appeared in China and shortly after its Autopilot, the semi-autonomous driving system that is so important for the company’s future, was accepted in the Asian country.

The good harmony between the Chinese State and Tesla was once again evident, after a few days of tension. The company had been promising the arrival of Autopilot in the country for four years but had not achieved results until now. To achieve this, it has had to expand its alliance with Baidu, considered the Chinese Google.

As dependent as anyone. What Elon Musk’s words and his latest movements demonstrate is that the company is as dependent on China as many of the current manufacturers. For the company, the Asian country is the second country that adds the most income to its coffers and is not far from what all other markets add (excluding the United States).

To this we must add that Giga Shanghai was the company’s first factory outside the United States. In 2018 he obtained the lease of the land for 50 years and in less than a year the first cars were already leaving his plant. It is also its most profitable plant because of how little it costs to produce there and it will support it with a new battery factory.

To this we must add that the company had begun to export vehicles from China to North America. Faced with a decline in sales in China, Tesla had begun to sell it in Canada with attractive discounts for units manufactured in Asia. Tariffs will prevent this in the United States, as it is also likely to happen in Europe.

Image | Wikimedia Commons

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