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Tesla (TSLA) is facing growing pressure in China after a weak first quarter. The company says it will revisit its 2025 guidance in the next update.
Michael Dunne, CEO of Dunne Insights and an expert on China's electric vehicle (EV) market, joins Yahoo Finance's Tesla earnings special with Julie Hyman and Myles Udland to break down Tesla's full self-driving (FSD) approval in China and rising competition from local automakers.
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
Tesla's milestone in China, because its its deliveries were not great there. They weren't great anywhere, but they weren't great in China. Its milestone was that getting that approval for supervised um FSD in China. Um Michael, how big a milestone is that and and how does it sort of compete? How's the competitive landscape there?
On two fronts, one, Tesla's being totally surrounded by very impressive Chinese automakers. Your Xiaomis, your Huaweis, your X Pungs, and Nio, BYDs. So within the domestic Chinese market, they're facing competition like never before. And secondly, Elon's big pivot is, hey, we're not just an EV company, we're going all in on FSD, and he has won licenses and permits to do testing on a limited basis. What will be crucial in the coming weeks is to see whether or not he gets approval to roll that out nationally in China, which would be a huge win. Now, this all happens within the context of the United States and China going head-to-head on this tariff war. So the timing is not ideal for Tesla to win that kind of approval from Beijing.
So, that begs the question, do you think Beijing will sort of use that as a lever in this back and forth?
Absolutely. If China knows nothing else, it knows leverage. Today, China totally dominates the business of electric vehicles, batteries, and battery supply chains, and Tesla and the United States are at risk of really being blindsided by the extent to which China controls those key inputs, including earlier this week, rare earths, and rare earths and magnets are being constrained. Their exports to the United States being constrained. That would really potentially bring, not only America's auto industry, but also our defense industry to a standstill. So, China understands its leverage, and it's going to deploy that leverage as it sees fit.