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Tesla faces EV competition amidst calls for a European alliance against Chinese dominance

Elon Musk has also suggested trade barriers to counter the threat from Chinese EV manufacturers.

The competition in the electric vehicle (EV) market is on the rise. As Tesla is set to announce its first-quarter delivery data, there are growing concerns about competition from Chinese EV manufacturers, such as BYD. Elon Musk has also suggested trade barriers to counter the threat from Chinese EV manufacturers.

Additionally, according to Vivienne Walt’s DealBook report, Renault Group CEO Luca de Meo advocates for Walt’s drastic strategy. His response to the China challenge was an EV alliance based on the heavily state-subsidized aircraft manufacturer Airbus. He recently sent a 19-page open letter to parliamentarians titled “The Prosperity of Europe is at Stake,” aiming to grab their attention before June’s EU parliamentary elections.

The major European automakers partnered on research and development, battery and chip production, and manufacturing to lower the cost of EV manufacture and more effectively compete with its non-European competitors. However, according to DealBook, Felipe Munoz, senior analyst at JATO Dynamics, an auto consulting group, stated, “If they’re competing as they are, they are weaker in front of China. Their EVs are still expensive, and battery manufacturing is problematic.”

It’s important to note that Shenzhen, China, offers cheaper labor than both Berlin and Detroit. It receives substantial government funding and has developed operating efficiencies. Moreover, China is the leading supplier of lithium, one of the primary global raw materials for EV batteries, which the West is desperately trying to get its hands on. Patrick Hummel, an auto analyst at UBS, reported to DealBook that Chinese EV makers hold a 25% structural cost advantage.

Ultimately, trade barriers are unlikely to slow down China’s economy. Munoz stated, “Any increase in tariffs will have an effect, but it won’t stop them from coming.” He added, “There will be a war between subsidies and tariffs here.” A venture akin to Airbus might encounter challenges.

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Jaelyn Campbell
Jaelyn Campbell
Jaelyn Campbell is a staff writer/reporter for CBT News. She is a recent honors cum laude graduate with a BFA in Mass Media from Valdosta State University. Jaelyn is an enthusiastic creator with more than four years of experience in corporate communications, editing, broadcasting, and writing. Her articles in The Spectator, her hometown newspaper, changed how people perceive virtual reality. She connects her readers to the facts while providing them a voice to understand the challenges of being an entrepreneur in the digital world.

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