Tesla stock took a tumble in early February as fears grew that the company would lose more of its hold on the electric vehicle market, with an American-Chinese collaboration the point of contention.
What’s happening?
In late January, the Financial Times reported that Ford held talks with Chinese EV maker Xiaomi to explore a joint manufacturing venture in the United States.
The news apparently spooked investors. Tesla stock was down 2% when markets closed Feb. 2, according to Yahoo Finance, which noted this isn’t the first time the iconic American brand has reportedly considered a partnership with a Chinese EV maker.
Also in January, The Wall Street Journal wrote that Ford was in talks with BYD to buy its batteries for some of its hybrid vehicles. BYD has quickly ascended to become the darling of the EV realm, offering sophisticated technology at lower price points than Tesla.
Why is this important?
Since its founding in 2003, Tesla has invested billions of dollars in domestic manufacturing and EV infrastructure, creating tens of thousands of jobs in California alone. The brand’s innovative offerings sparked a wave of interest in electric vehicles, accelerating their adoption and providing tangible community benefits, including a drastic reduction in harmful air pollution.
However, Tesla’s status as an EV trendsetter is waning amid a talent exodus, declining profits, a shift in patent filings, and CEO Elon Musk himself pointing toward a new era of artificial intelligence. Ford’s reported connections to Xiaomi and BYD raised alarm bells that the U.S. auto industry will cede ground to international competition in a lucrative market.
For its part, Ford denied the report. “This story is completely false. There is no truth to it,” chief communications officer Mark Truby wrote on X.
Xiaomi echoed those sentiments. “Xiaomi does not sell its products and services in the United States and is not negotiating with any companies to do so,” it said in a statement.
What does this mean for consumers?
Finding the “right” electric vehicle depends on what you’re looking for. Today, plenty of automakers sell EVs, and there are tools to help you make an informed decision.
If you’re purchasing stateside, though, you won’t be able to find major Chinese brands — at least for now.
To protect American workers and boost domestic manufacturing, the Biden administration implemented a 100% tariff on Chinese EVs in 2024. It also finalized about $300 billion in tariffs on China-made products — introduced during Donald Trump’s first term as president — and increased tariffs on certain imports, CNN reported.
However, as Yahoo Finance noted, Trump has seemed open to the idea of Chinese automakers coming to the U.S. and creating jobs.
Auto analyst Michael Dunne believes it makes a lot of sense for American manufacturers to partner with Chinese automakers. In his estimation, though, domestic manufacturers lost a competitive advantage in “a panicked short-term move to relieve financial stress.”
“Building new manufacturing capacity outside China takes 3-5 years and billions in capital investment. Automakers are simultaneously trying to fund EV transitions, develop autonomous technology, and navigate trade wars. Instead, look for the joint ventures to continue. The exports will grow. The dependency will deepen,” Dunne wrote in November.
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