Musk faces a crisis as Tesla’s reliance on China pushes rivals forward., Electric Vehicle News Bitesize
Musk faces a crisis as Tesla’s reliance on China pushes rivals forward., Electric Vehicle News Bitesize

Musk faces a crisis as Tesla’s reliance on China pushes rivals forward. Subscribe to Electric Vehicle News Bitesize Podcast for FREE!

Tesla Chief Executive Elon Musk could lose his position as the world’s largest electric vehicle maker as production problems give other companies an opportunity to move forward.

The auto industry, once unrivaled in electric vehicles, has recently caught up with Tesla. Data show that major traditional automakers such as Ford, Volkswagen, BMW and others have been rapidly increasing the production of electric vehicles. Tesla, on the other hand, faced significant production challenges this year as its massive gigafactory in Shanghai, China, was forced to close for 22 days in the wake of the coronavirus outbreak.

China’s strict lockdown rules have dragged down Tesla’s production significantly.

At the same time, rising costs mean a lot of money is needed to ramp up output at Musk’s other factories in Austin and Berlin.

Based on these trends, Volkswagen CEO Herbert Diess told employees at Volkswagen headquarters in Wolfsburg, Germany, that Tesla’s continued expansion will “cost it strength”.

He added: “We have to seize this opportunity and catch up quickly. By 2025 we can be in the lead.”

According to the Financial Times, Volkswagen expects to deliver 700,000 electric vehicles in 2022, while Tesla expects to sell 1.5 million vehicles in the same period.

In a research note on Friday, Deutsche Bank analyst Emmanuel Rosner slashed the institution’s estimate of Tesla deliveries by 65,000 cars, saying: “Elon Musk had provided directional guidance of sequentially flat deliveries for the quarter but the situation in China worsened subsequently, only improving in early June.”

Meanwhile, investment bank Credit Suisse estimates that the Shanghai lockdown has brought Tesla production to a standstill and delayed as many as 90,000 vehicles.

The lockdown in China proved to be a major blow for Musk, as his Shanghai Gigafactory produced about half of the Tesla vehicles shipped last year.

Tesla is expanding rapidly, most recently Mr Musk opened a new Gigafactory near Berlin in March.

Still, Tesla’s rivals among traditional automakers have entered the Electric Vehicle market as the likes of Volkswagen, GM and Ford rapidly expand their Electric Vehicle capabilities.

Volkswagen recently converted its plant in Emden, Germany, into a pure electric vehicle plant to produce Volkswagen’s ID4 electric model.

The German automaker sold 30,000 electric vehicles in the first three months of 2022, a 65 percent increase from the same period last year.

If such growth rates continue, Tesla could be in serious competition with Volkswagen within a few years.

Meanwhile, two U.S. auto giants, General Motors and Ford, have begun to gradually electrify their fleets.

This year Ford introduced the F-150 Lightning, an electric version of its famous Flareside pickup.

The Ford Mustang Mach-E is now gradually replacing the American automaker’s traditional Mustang.

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Musk faces a crisis as Tesla’s reliance on China pushes rivals forward., Electric Vehicle News Bitesize
Subscribe to Electric Vehicle News Bitesize Podcast for FREE!