Tesla CEO Elon Musk has admitted the biggest threat to the company comes from Chinese carmakers.

    In a recent interview at The New York Times DealBook Summit, the Tesla CEO admitted Chinese car brands are a threat to Tesla due to their manufacturing prowess.

    “Electric car sales in China are gigantic,” Mr Musk told the conference.

    “I think the Chinese car companies are extremely competitive. By far our toughest competition is in China.

    “I mean there’s a lot of people out there who think that the top ten car companies are going to be Tesla followed by nine Chinese companies. I think they might not be wrong.”

    Elon Musk then delved deeper into why the Chinese EV producers represent such a challenge to Tesla.

    He explained the manufacturing capability of Chinese EV producers is a key driver behind the intense competition Tesla faces in that market and abroad.

    “China is super good at manufacturing and the work ethic is incredible,” he said.

    “If we consider different leagues of competitiveness at Tesla, we consider the Chinese league to be the most competitive,” the Tesla CEO added.

    Elon Musk was then asked if basing such a large amount of Tesla’s manufacturing capability in China gave the Chinese government influence over him, but he rejected the notion.

    “Tesla has one of four vehicle factories in China, and China [is] a quarter of our market or something like that. And so it’s a quarter of a market for one company,” he said.

    “The same is true by the way of all the other car companies. They also have something in the order of a quarter of their sales in China. If that’s a problem for Tesla, that’s a problem for every car company.”

    Such is the importance of the Chinese market to Tesla, the company opened a flagship ‘gigafactory’ in Shanghai in 2019. All Teslas sold in Australia are currently sourced from this factory.

    Additionally, Elon Musk’s comments come as EV sales in the Asian nation have risen to new heights. They were up 82 per cent in 2022.

    China accounted for 59 per cent of global EV sales in 2022 according to the World Economic Forum.

    One Chinese EV producer is causing the most headaches for Tesla however.

    BYD, the Chinese automaker backed by Warren Buffet, has recently just fallen short of snatching the global electric vehicle (EV) sales crown from Tesla.

    According to figures seen by Bloomberg, BYD sold 431,603 pure electric cars globally in the third quarter of 2023, an increase of 23 per cent from the previous quarter.

    That put the Chinese automaker just 3456 sales behind Tesla, which announced this week that it had delivered 435,059 cars during the same period.

    If this trend continues into the fourth quarter, BYD will overtake its American rival, marking the first time Tesla has not been the world’s leading EV marque since it deposed Nissan around 2019.

    Tesla’s range is narrow with just five models, with the more affordable Model 3 sedan and Model Y crossover accounting for over 96.3 per cent of all deliveries.

    It’s unclear if the just-launched, stainless steel-bodied Cybertruck will be a volume-seller or a niche vehicle.

    This contrasts sharply with BYD, which has a broad and growing range of EVs stretching from the city-friendly Dolphin hatch through a selection of crossovers up to the luxurious Han sedan.

    The company does however, still sell plug-in hybrid vehicles.

    James Gelding
    James Gelding is a Contributor at CarExpert.
    Buy and Lease
    Uncover exclusive deals and discounts with a VIP referral to Australia's best dealers
    Uncover exclusive deals and discounts with a VIP referral to Australia's best dealers
    Also on CarExpert