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Elon Musk fears China's car manufacturers: "They are extremely good"

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Gonzalo Fuentes / REUTERS

Tesla wants to make its cars attractive with price cuts and purchase incentives.

But the company's rapid growth is slowing.

In the last quarter, Tesla missed expectations on the stock market, there is no sales target for this year - but there is an admission that deliveries will grow noticeably more slowly.

In a conversation with analysts, company boss Elon Musk still made big promises: Tesla is only between two waves of growth, is developing a "revolutionary" production system and could become the most valuable company in the world.

Investors initially remained skeptical: While Musk was still speaking in a conference call, the stock slipped deeper into the red and lost almost six percent at the end of after-hours trading.

Cheaper compact model announced

The new production process is intended, among other things, to build a cheaper compact model.

According to current plans, production should begin in Austin, Texas, in the second half of 2025, Musk said.

At the same time, he qualified: “I am often optimistic about the times.”

The cheaper model is of strategic importance for Tesla because competition from Chinese manufacturers is increasing.

In the last quarter, the manufacturer BYD sold more electric cars from China.

For the whole of 2023, Tesla was still ahead with 1.81 million vehicles - but it is foreseeable that BYD will become number one.

Musk pays respect to competition from China

Chinese automakers are so strong that most of the industry would have no chance against them without trade barriers, Musk warned.

“They are extremely good,” he said in the conference call.

"If there are no trade barriers, they will pretty much destroy most other car companies in the world." In the USA, an import tariff of 25 percent keeps Chinese car manufacturers out of the market.

According to previous information, Musk also wants to build a robotaxi without a steering wheel or pedals on the same technical basis as the cheaper model.

To do this, Tesla would first have to develop the autonomous driving technology that Musk has been promising for years.

Tesla does have an advanced version of its “Autopilot” assistance system called “Full Self-Driving” (FSD, “completely self-driving”).

Contrary to what the name suggests, the technology does not make a Tesla a truly autonomous car: the driver still bears responsibility and must be ready to take control at any time.

But FSD is at least trained to observe traffic lights and right-of-way rules.

However, the software is still in a testing phase and makes mistakes - while Musk keeps promising that it will be ready soon.

Six months ago, Musk caused a stir when he announced that Tesla was in talks with a large manufacturer that was interested in using the FSD software.

Now, when asked, he said that they had only approached it: "I think they think it's not real yet." But this year the proof will be provided, he assured.

Market expectations missed

With the latest figures, Tesla has missed market expectations.

Sales rose three percent year-on-year to $25.17 billion.

Analysts on average had expected revenue of almost $25.9 billion.

Tesla's quarterly profit jumped from $3.7 to $7.9 billion year-on-year.

Tesla did not provide any forecast for deliveries in the current year.

Analysts were based on an estimate of around 2.1 million vehicles.

Tesla reduced prices last year.

The most popular Model Y in the USA costs around 26 percent less than before.

The company achieved its delivery target of 1.8 million electric cars in 2023 – an increase of 38 percent.

mmq/dpa-AFX/Reuters