Musk facing crisis as Tesla’s China reliance lets rivals race ahead: 'Seize this moment'

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Musk facing crisis as Tesla’s China reliance lets rivals race ahead: 'Seize this moment'

Once unrivalled in the EV space, the automotive industry has been catching up with Tesla recently. Figures show that major traditional car manufact

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Once unrivalled in the EV space, the automotive industry has been catching up with Tesla recently. Figures show that major traditional car manufacturers like Ford in the US and Germany’s Volkswagen Group and BMW have been rapidly expanding their electric vehicle productions. Tesla, on the other hand, has been facing major production challenges this year, as its major gigafactory in Shanghai, China, was forced to close down for 22 days following a Covid outbreak.

China’s harsh lockdown rules dragged Tesla’s production numbers down significantly.

Meanwhile, soaring costs mean that major capital will be required in order to boost production in Mr Musk’s other sites in Austin and Berlin.

Based on these trends, VW’s chairman, Herbert Diess, told his staff at VW headquarters in Wolfsburg, Germany, that Tesla’s ongoing 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, VW is expecting delivery of 700,000 electric vehicles in 2022, while Tesla estimates 1.5 million car sales during 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 banking firm Credit Suisse has estimated that the Shanghai lockdown had stalled Tesla’s production and delayed up to 90,000 cars.

Lockdowns in China have proved to be a major blow to Mr Musk as his Shanghai gigafactory produced approximately half of the Tesla cars delivered last year.

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Tesla has been rapidly expanding, with Mr Musk most recently opening a new gigafactory near Berlin in March.

Yet Tesla’s rivals in traditional carmakers have begun up in the electric vehicle market, as companies like VW, General Motors and Ford rapidly scale up their EV capabilities.

VW recently converted their Emden facility in Germany into an all-EV factory to build Volkswagen’s ID.4 electric model.

The German automaker has sold 30,000 units of the EV in the first three months of 2022, which is a 65 percent increase when compared to the same period last year.



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