I hope you’ve got a long, restful Memorial Day weekend ahead of you. It’s been a taxing year and you deserve a rest. But first, let’s use The Morning Dump to explore why Tesla CEO Elon Musk seemingly doesn’t worry about China destroying the American car market as much as he did, like, four months ago.
Oh, yeah, there’s a total coincidence that data seems to indicate that Tesla is cutting back production at its Shanghai plant. Nothing to see here folks. Fellow American EV automaker Lucid is also cutting back, but this time on staff.
And, finally, Chinese smartphone company/EV automaker Xiaomi is upping its targets as it expects to sell more cars.
Elon Musk: Wait, No, Tariffs Are Bad
Elon Musk spoke yesterday at the Viva Tech conference in France (via videoconference) and he said “I don’t quite know what the public perception [of me] is,” but noted that the representation of him is salacious because the “more crazy it sounds, the more clicks it will get.”
You know what, I’m gonna hand it to Elon Musk on this one. It’s probably a societal burden that Elon Musk lacks self-awareness, but it’s definitely better for his mental health. You gotta take care of yourself!
Musk also said he thinks people should listen less to headlines and more to what people say, so the link is above so you can hear what he says.
Here’s what he said regarding Chinese tariffs:
“Neither Tesla nor I asked for these tariffs, in fact, I was surprised when they were announced… Tesla competes quite well in the market in China with no tariffs and no deferential support. I’m in favor of no tariffs… Things that inhibit freedom of exchange or distort the market are not good.”
Musk then goes on to say he would be happy with no incentives either, assuming that incentives were also eliminated for all ICE-powered vehicles, which is a political non-starter at this point.
This is an interesting about-face if you remember what Elon Musk said in an Earnings Call way back in January:
“The Chinese car companies are the most competitive car companies in the world. So, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established,” Musk said on Tesla’s earnings call Wednesday.
“Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world.”
Ok, Musk! We’re listening to what you’re saying. These two things seem semi-contradictory so let’s try to parse it.
The Chinese car companies are the most competitive car companies in the world.
Yes, true. The companies are back-stopped by heavy incentives and, likely, sketchy labor practices (including forced labor), but even without that China has built a remarkable car industry remarkably fast.
So, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established.
This is probably true. There might be resistance in some markets, but most people just want good cheap cars.
Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world.
Musk gets credit as a long-term thinker, and you have to grant that his long-term vision for space, renewables, and cars have panned out quite well. At the same time, Musk has extreme shot-term flexibility in order to meet his long-term goals.
He specifically said “most other companies” which, presumably, doesn’t include Tesla. Why would Tesla care if Mazda, Toyota, Ford, Opel, or any other automaker went away? This is consistent with what Musk has previously said about the world just being Tesla and a bunch of other Chinese automakers eventually.
From the perspective of a self-interested Elon Musk, all of these trade barriers just create problems for other companies, unless… China retaliates against all American car companies. I don’t think it’ll happen, but some kind of levy against American brands selling in China would likely hurt Tesla.
Also, it sure feels like Musk is trying to cozy up to China at a time when the rest of the West is pulling back, at least politically. Why? Elon Musk has made it clear he thinks cars are a boring business and he’s focused on AI and self-driving, which requires a huge amount of data. Data that, it seems, China is suddenly willing to give him.
It’s callous and simplistic to imply that, over the last 14 years, Musk has squeezed all the money and support out of the American government he thinks he’s going to get and is now more than happy to get that support from China. Which… makes me callous and simplistic I guess.
Tesla Cuts Model Y Production In China
Data from China shows that Tesla has cut production of the Model Y at its Shanghai plant by double digits.
The Shanghai plant, Tesla’s biggest manufacturing hub globally, planned to cut Model Y output by at least 20% during the March to June period, said the person, who declined to be named as the matter is private.
Data from the China Association of Automobile Manufacturers (CAAM) showed the output of Model Y in China stood at 49,498 units in March and 36,610 in April, 17.7% and 33% lower, respectively, compared to a year ago.
That’s not ideal, but you don’t cut back production of a car you think you’re going to sell more of, usually. But here’s the key bit from Reuters:
Tesla has left out its goal of delivering 20 million vehicles a year by 2030 in its latest impact report published on Thursday, another sign the company was moving away from electric cars as it shifts focus to robotaxis.
Yup. Robotaxis that likely would be helped by Chinese user data.
Layoffs Hit Lucid
Lucid, the there-but-for-the-Grace-of-PIF EV automaker, has decided to cut approximately 6% of its workforce, which is approximately 400 employees according to Bloomberg Law:
Job cuts will impact employees at all levels, including leadership and mid-level management, according to an email sent to employees by CEO Peter Rawlinson. Layoffs will not impact hourly manufacturing and logistics workforce.
If you were curious, Lucid recently dropped its prices and sold a total of 477 of its Lucid Air sedans in March. That’s slightly less than VinFast, which sold 496 cars in the same month.
Xiaomi Thinks It Can Sell 120,000 Cars This Year
Chinese smartphone maker Xiaomi did what Apple couldn’t do, and built a car, the Xiamoi SU7, a sub-$30k Tesla-fighter. The car looks good and the company has enjoyed a ton of hype.
Now, according to Bloomberg, the hype has translated into so much buzz that the company thinks it can increase its already lofty goals:
As of the end of April, orders for the SU7 series neared 90,000. On Thursday, Lu told reporters on a call his company was on track to ship 10,000 SU7s in June — about as much as Xiaomi moved during the first 43 days of sales — meaning it could shoot for a loftier annual goal of 120,000 units.
That’s a big number for Xiaomi and a sign for every other automaker that the market is still very much in the fast-paced Darwinian period.
What I’m Listening To During TMD Today
Here’s a thought for maybe exactly one person this morning: Beyonce’s “Break My Soul” is just a dancier, updated version of Kim Gordon/Sonic Youth’s “Ineffable Me.” If you’re gonna listen to this song, listen to it in a room by yourself.
The Big Question
Are you driving anywhere this weekend? Flying? Boating? Or staying put?
Weird that elon musk flips his opinion to his own benefit.
Musk’s brain and reputation went down the toilet when he bought Shitter and started believing in his own PR. There is nothing he says these days that I want to listen to. SpaceX is an awesome company and would be even more awesome if he were not around. Tesla is now close to being a has been company. Muck Fusk !
There’s a pre-Pride pub crawl kickoff at a nearby brewery tomorrow afternoon that I may go to if I muster up some energy. In this case “nearby” means roughly 500 feet, so a three-minute walk per Google Maps. If it were any further away I wouldn’t consider it, but I kinda feel as if I must socialize at least once this year, and at least parking won’t be an issue. If I go, I doubt I’ll stay long. and then I’ll be home again until my next dental appointment in July.
I’m not driving, but I’m gonna watch a bunch of people drive rapidly for 500 miles in Indianapolis.
I have to say IMHO the 1st section of the Morning Dump has Tobe the best all around, inclusive and informative automotive story I have ever read. It touches on all the relevant information. I don’t like it as I can’t complain about anything. LOL. GREAT JOB MATT
I’ll be taking the s2000 for a spin this weekend, at least once.
It just clicked over 200k, so I got it a brand new air filter. It does feel a bit peppier, but it’s probably all in my head.
Driving down to Georgia this weekend with family. In the past we’ve done 13 hours of fun all at once but we’re splitting up into multiple days to visit other places along the way. Going to really see how comfortable these seats are in the Terrain.
Also unsaid is that Tesla could benefit from inexpensive vehicle components, especially batteries, that companies like BYD have down to a science.
Once sodium-ion batteries prove themselves to his liking, I think he’s going to want to use them in Tesla’s products. The current ones being offered on the Chinese market, given the safety and cost benefits, offer a lot of advantages over LiIon and LiFePO4.
An ultra-streamlined low-frontal-area Tesla Model 2 could still possibly get well over a 200 mile range on Na+ batteries with the car coming in at under 3,000 lbs, even though their gravimetric energy density is currently about half of the 21700 LiIons used in the Model 3 Performance. This would be a pack size of around 30 kWh to make this happen. The cost of a replacement battery could come in at under $3,000, not including labor, and offer 5 year/100,000 mile life spans or thereabouts.
Has any governing body or industry group outside of China crash tested the latest generation of Chinese EV vehicles?
I have to assume they’ve improved dramatically from previous years just based on apparent build quality, but I wonder how they would rate on IIHS, NHTSA or Euro NCAP?
On Youtube there is a ton of Euro NCAP crash tests on Chinese EVs that are available in Euroland.
I like watching EU car reviews to see what the latest Chinese EVs are like. With luck some of the technology may trickle down onto us through Volvo, Polestar, etc.
I’m not sure of how things are today, but 10-15 years ago the roads in and around Beijing were one massive crash test facility. There must have been some good data collected. LOL
Yes – Many are highly rated in the NCAP cycle.
I get it, you have a hate boner for Musk, but this is kind of embarrassing- you are suggesting there’s some sort of contradiction in the words you have quoted, but no reading of plain English supports that conclusion.
Musk’s earning call comments are properly taken as a warning- the Chinese car companies are coming, and in the absence of Western trade barriers they will demolish Western car companies. How does this contradict his statement that he would prefer no tariffs or incentives? He is not making a statement about what the world actually is, simply his preferences of what he would like it to be. The plain reading of these statements is: Chinese companies are subsidized and incentivized in their internal market beyond the point of most foreign companies being competitive (Tesla being the exception, because they have a unique structure for a foreign company operating in China). You agree this is true and I see no indication Musk thinks it is not true, only that he wishes it were not. In his earnings call, he also warned that Chinese car companies (with their heavy subsidies/incentives/government backing) would demolish Western car companies in the absence of trade barriers. This seems like a reasonable reading of reality. Musk saying he wishes it were otherwise is not a contradiction of reality, just an expression of preference. Reading a “contradiction” into that is like Fox News-tier clickbait.
Yes, this. These are two different audiences, and only a fool fails to tailor their message to their audience. Musk may be a fool, but not for this reason.
Musk cares about Musk. That is it really.