Elon Musk’s recent Twitter announcement of a global workforce cut at Tesla has sent shockwaves through the tech industry. Despite being renowned for its innovative technologies, such as autonomous driving features and wireless software updates, Tesla has faced challenges maintaining its competitive edge against companies like China’s BYD. This decision reflects a significant shift in strategy for the electric car giant, sparking concerns about its future.

Elon Musk, the well-known CEO of Tesla, recently made a public statement regarding his intentions to reduce the company’s workforce by 10% globally. Musk has fired employees on social media platform X before, and this decision is consistent with his past actions.

Despite this news, Tesla has been at the forefront of the electric vehicle (EV) industry. It is renowned for its state-of-the-art technology, such as advanced autonomous driving features and wireless software updates directly from Tesla to consumers, eliminating the need for physical visits for updates.

However, in the final quarter of 2023, BYD surpassed Tesla in sales performance. During 2023, Tesla produced 1,845,985 vehicles and sold 1,808,581, while BYD achieved sales of 3,000,000 vehicles. This marks the second consecutive year of BYD outperforming Tesla, causing concern among Western policymakers and Tesla’s CEO, Musk.

The European Union has expressed scepticism regarding the Chinese EV market, suggesting that it has undermined the competitiveness of Western EV products.

The Chinese government’s industrialisation policy was strategically designed to achieve current and future objectives. One of its key aspects was to champion the development of domestic industries like electronics and the construction of massive battery electric vehicle (BEV) production plants. Promoting self-sufficiency in these sectors aimed to decrease dependence on foreign imports and bolster the country’s economic strength in the long run.

The European Union has recently launched an investigation into potential subsidies received by Chinese electric vehicle (EV) manufacturers, causing concern in Western markets. We have been informed that the 13-month investigation is to establish whether Chinese EV companies benefit from government subsidies. However, companies like Tesla, Renault, and Mercedes are exempt from this inquiry.

The announcement of the investigation by Ursula von der Leyen, President of the European Union, has sparked tensions, leading to meetings between figures such as Olaf Scholz and Xi Jinping to clarify the EU’s stance. This development comes as global interest in high-priced EVs is declining, with consumers increasingly seeking more affordable options for daily transportation. Chinese EVs have gained popularity worldwide due to their pricing strategies that align with this demand.

Christina Balan’s claims about safety issues with Tesla cars have had a detrimental effect on the company. Notwithstanding the legal challenges filed by Musk, Balan has emerged victorious in her legal battles, which has helped to bolster the credibility of her accusations.

In contrast to the billionaire’s dismissive attitude, the Chinese strategy focuses on heeding consumer input and improving product quality, which has boosted their popularity in China and Europe.

The Biden administration has employed similar rhetoric to that previously used against Huawei devices, focusing on national security concerns. Initially, they alleged that Chinese Battery Electric Vehicles (BEVs) receive government subsidies without substantiation. Subsequently, they asserted that these vehicles have the potential to compromise national security by transmitting sensitive American consumer data to Beijing. This narrative is similar to strategies observed in the European Union and nations such as Japan.

It would appear that the policy seeks to block the entry of affordable Chinese electric vehicles into the US, even if they are produced in neighbouring countries such as Mexico. This move is viewed as a way to protect the market dominance of traditional combustion vehicles, especially those made by major American automakers such as Ford, General Motors, and Stellantis. These companies are focused on improving their internal combustion vehicles rather than investing in pure Battery Electric Vehicle technology.

Stellantis, an American company, recently announced a $56 billion investment in Brazil to take advantage of its cost-efficient workforce. Some manufacturers may have opted for hybrid technology in their vehicles to meet consumer demands. These decisions seem to go against the government’s claims of leading in environmental protection globally. Furthermore, the US government has accused China of exploiting cheap labour in Latin American countries while American firms are also engaging in similar practices.

Even though the United States has a bigger economy than China, only 1.18 million Battery Electric Vehicles (BEVs) were purchased in the US last year.

Less than a decade ago, cities like Beijing were frequently covered in thick smog all day. The air quality in China has significantly improved due to significant investments by Chinese multinational corporations in renewable energy. Chinese buyers have shown a dedication to environmental consciousness, with almost 10 million Electric Vehicles (EVs) sold in China alone.

This has raised concerns in Western countries about falling behind in this sector. For instance, the BYD Seagull sells for about $11,000 in China, whereas the most affordable Tesla Model 3 starts at approximately $40,240. This cost disparity has made BYD more attractive to consumers looking for battery-electric vehicles (BEVs). The mainstream media in the US has also acknowledged the difficulty of keeping pace with China in the electric vehicle (EV) market, leading to proposed laws to ensure fair competition.

Energy Secretary Jennifer Granholm announced that the Biden administration is ready to provide $12 billion in grants and loans to encourage Asian companies to set up operations in the United States. At the same time, an investigation was launched to determine if Beijing is also using similar tactics, potentially leading to restrictions on their products. The US has faced challenges in developing an electric vehicle strategy, with concerns raised by companies like Tesla about competing in the local market.

As someone who appreciates petrol-powered cars, I hope that sound, rational decision-making will prevail and that political actions will not harm the automotive industry. Healthy competition is expected to benefit consumers by driving innovation and progress in all areas of the automotive sector.