• Trump's tariffs on Canada and Mexico could raise average new car prices by $2,700, Jefferies analysts found.
• The levies will hit automakers like GM and Stellantis, which import vehicles from Mexico, especially hard.
• Even Tesla would not be immune, with the company's CFO warning last week tariffs "would have an impact."

Donald Trump's tariff offensive has thrown the auto industry into chaos — and it could make your next car more expensive.

The president announced 25% tariffs on all goods imported from Canada and Mexico and a 10% levy on China on Saturday, a move Jefferies analysts warned could add $2,700 to the average price of a new car in the US.

The import taxes sparked global market uncertainty on Monday after all three countries vowed to retaliate. Canada has already done so, saying it will put a 25% tariff on $30 billion of US goods.

While Trump said on Monday the introduction of tariffs on Mexico would be paused for a month, if implemented, they will significantly impact US carmakers.

Lured by low labor costs and cheap parts, automakers have built up their presence in Mexico over the past few decades. Detroit's "big three" of Ford, General Motors, and Stellantis, as well as foreign powerhouses like Toyota and Nissan, all build vehicles in Mexico to import to the US market.

Even car companies that assemble their vehicles in the US, such as Tesla and Rivian, are likely to face higher costs thanks to the levies extending to vehicle and engine components.

In a note on Sunday, Jefferies analysts estimated that a 25% levy on goods imported from Canada and Mexico would add $43 billion to industry costs, with Ford, General Motors, and Stellantis being the most exposed.

Other estimates were equally dire. In a note seen by Business Insider, analysts for research firm Wolfe Research said the average price of a new car may climb by around $3,000.

Patrick Anderson, chief executive of consulting firm Anderson Economic Group, told The New York Times the tariffs could add $10,000 or more to the price of trucks and large vehicles imported from Mexico.

Auto executives have been bracing for the impact of Trump's tariffs ever since the Republican won the presidency for the second time in November.

In an earnings call last week, Tesla CFO Vaibhav Taneja said there was "a lot of uncertainty" around the taxes.

"Over the years, we've tried to localize our supply chain in every market, but we are still reliant on parts from across the world for all our businesses. Therefore, the imposition of tariffs, which is very likely, and any will have an impact on our business and profitability," Taneja said.

• Tesla made almost $2.8 billion off cars its rivals didn't sell last year.
• The company sells regulatory credits to automakers that haven't sold enough EVs to meet emissions rules.
• That lucrative side hustle is now under threat, with Trump vowing to scrap electric vehicle targets.

Elon Musk may have won the status of President Donald Trump's "first buddy" — but the new president could jeopardize one of Tesla's most lucrative side hustles.

Tesla has made billions selling regulatory credits to rivals in the past decade, but with Trump scrapping federal EV targets in his first weeks in office, that revenue stream is now under threat.

The automaker's regulatory credit business, which sees it sell emissions credits to automakers who haven't sold enough EVs to meet strict federal and state targets, made $692 million in the fourth quarter of 2024.

That strong performance, along with bumper sales of energy storage systems and an unexpected bitcoin windfall, added a bit of shine to what was otherwise a disappointing set of results.

Tesla's total automotive revenue dropped 8% from the same period in 2023 as rising competition and slowing EV sales growth hit the company hard, with Musk rallying investor enthusiasm by focusing on Tesla's robotaxi rollout and the Optimus humanoid robot.

While robotaxis and robots are yet to make an impact on Tesla's balance sheet, selling credits to rivals who have failed to shift enough EVs is a very real money-spinner for the company.

Tesla made $1.8 billion from the practice in 2023, and that figure grew to almost $2.8 billion last year as other automakers rolled back ambitious electric vehicle strategies amid stuttering demand for EVs.

But with Donald Trump back in the White House — with an assist from Musk — that income stream might be about to grind to a halt.

The president has vowed to roll back emissions targets and signed an executive order last week revoking a Biden-era target that 50% of new vehicles sold in the US should be electric by 2035.

"Tesla has relied on the credits to help really boost profitability," Stephanie Valdez Streaty, director of industry insights at Cox Automotive, told Business Insider.

"If federal guidelines are less stringent, then other manufacturers have more time and they're not going to need those credits as much, so I think it'll definitely impact it," she added.

Trump troubles

Current EPA rules mandate strict targets for automakers to cut the average emissions of their vehicle fleets every year. Those who fail to do so face substantial fines, which can be avoided by buying credits from automakers who sell a lot of EVs.

Because Tesla only sells EVs, this system allows the company to make money from something it is doing anyway. Its credits business was responsible for over a third of Tesla's net income in 2024.

Tesla will continue to make money off the practice in places like Europe, where the automaker could be set to bank as much as $1 billion from credit sales, and in various US states that have their own emission rules schemes.

However, Trump has signaled his intention to challenge state-level rules too, issuing an executive order last week that sought to terminate state rules designed to phase out combustion engine vehicles.

It comes as Tesla boss Musk expands his role and influence in the Trump administration, taking on a key cost cutting role at DOGE and even reportedly occupying office space in the White House.

Musk's status as "first buddy" has grown even as Trump has targeted EV incentives and subsidies that Tesla directly benefits from.

The Tesla CEO has expressed support for scrapping a key $7,500 tax incentive for new electric vehicles, a move reportedly considered by Trump's team. Musk has said publicly that he thinks the move would hurt Tesla's rivals more than his own company.

Alongside regulatory changes in the EV space, Tesla could also be stung by Trump's proposed tariffs on China. The company's CFO, Vaibhav Taneja, said on Wednesday's earnings call that the imposition of tariffs would "have an impact on our business and profitability."

Tesla did not respond to a request for comment, sent outside normal working hours.

• Tesla investors want more details about the company's robotaxi rollout ahead of its Q4 earnings.
• In an online Q&A, some raised concerns about the possible impact on Tesla of Elon Musk's move into politics.
• "How does the company cope with consumer relations when your CEO is a loose cannon?" asked one investor.

Elon Musk is "all-in" on Donald Trump's presidency — and not all of Tesla's investors are happy about it.

In an online forum for shareholders to submit questions ahead of Tesla's fourth-quarter earnings on Wednesday, investors asked for more details about the automaker's robotaxi rollout, while some voiced concern over whether Musk's political moves could hurt the company.

The questions come ahead of a crucial earnings release for Tesla. It is less than a month since the EV giant announced its first annual drop in sales.

The top question on the forum with over 3,000 votes asks whether Tesla is still planning to release "unsupervised" Full Self-Driving in Texas and California this year.

When he unveiled Tesla's Cybercab robotaxi last October, Musk said Tesla would have unsupervised, fully autonomous Model 3 and Y vehicles on the road in California and Texas in 2025.

The automaker is reportedly in talks to launch a robotaxi service in Austin, but Tesla has not yet been granted a permit to operate its cars autonomously without a safety driver in California, a vital step toward setting up a robotaxi operation in the state.

The Cybercab, meanwhile, faces a regulatory obstacle course thanks to strict federal rules around operating autonomous vehicles without a steering wheel or pedals.

Musk's influential position in the Trump White House could help smooth that road, with Transport Secretary Sean Duffy already signaling that his department will look to overhaul autonomous vehicle rules in the US.

Investors also had questions about the price and release date of the company's Optimus robot, which Musk has said is expected to go into limited production this year before going on sale to other companies in 2026.

Although the majority of questions concerned Tesla's upcoming product lineup, several raised concerns about Musk's position with the new administration and his recent political involvements.

"How will Tesla manage having a part-time CEO, with Elon being busy with DOGE, SpaceX, X and others?" read one question, which received votes from investors holding nearly 600,000 Tesla shares.

Several investors raised concerns about the potential rollback of the $7,500 federal tax credits for new EVs, which Musk has said he supports.

Others questioned the impact of Trump's threat of tariffs on China and asked whether sales had been lost "due to political activities of Elon."

Several investors referenced the controversial gesture Musk made during a speech at President Trump's inauguration, which some interpreted as a fascist salute.

"How does the company cope with consumer relations, when your CEO is a loose cannon? How can Tesla make me feel like my investment is worthwhile when your CEO is giving the salute behind the US seal?" read one question, which received 104 votes from investors representing 45,000 Tesla shares.

Tesla stock closed on Tuesday at $398, and has soared more than 100% over the past 12 months, valuing the company at $1.25 trillion.

Tesla did not immediately respond to a request for comment from Business Insider.

• DeepSeek has sent shockwaves through the technology, financial, and geopolitical spheres.
• The low-cost Chinese AI chatbot won't surprise anyone who knows Beijing's playbook.
• Chinese has disrupted many industries in similar fashion, including mining and electric vehicles.

A Chinese startup's launch of a ChatGPT rival has startled tech gurus, stunned investors, and stupefied geopolitical commentators. But DeepSeek's upheaval of the AI race shouldn't surprise anyone familiar with China's disruption playbook.

DeepSeek's debut of its latest AI models has flipped over the table, with venture capitalist Marc Andreessen hailing it as a "Sputnik moment" on X.

There was broad consensus that advancing artificial intelligence would require more and more computing power. Companies were poised to line up in droves to buy Nvidia's latest graphics chips, and pour money into building sprawling data centers.

President Donald Trump, SoftBank's Masayoshi Son, OpenAI's Sam Altman, and Oracle's Larry Ellison recently announced Stargate, a joint venture to invest at least $100 billion into US computing infrastructure to power AI progress, and as much as $500 billion over four years.

DeepSeek promptly released two AI models comparable to the available US ones, saying it spent less than $6 million on computing power for one, and relied on older Nvidia H800 chips. The company has said its open-source model is 20 to 50 times cheaper to use than OpenAI's o1 model, depending on the task.

The revelation floored many, especially as the US has restricted exports of powerful AI chips to China for years on national security grounds.

Investors suddenly realized Nvidia might not sell as many chips in the coming years as they expected. They promptly cut its market value by almost $600 billion on Monday — more than Mastercard, Exxon Mobil, or Oracle are worth. They also punished other US tech names, given the prospect of fierce foreign competition eating into future profits.

DeepSeek also upturned the narrative around the global AI race, as the US lead over China suddenly doesn't look so big. The startup's founder, Liang Wenfeng, reportedly attended a private gathering last week hosted by Chinese Premier Li Qiang, suggesting the state might see DeepSeek as a way to catch up to the US despite Washington's best efforts to starve it of the components it needs.

Given all the fanfare and drama, it's worth underscoring some skepticism around DeepSeek's claims regarding its models' capabilities, their total cost, and its reliance on older chips.

Hammer and tongs

DeepSeek is the latest example of a Chinese firm disrupting Western rivals with a lower-cost product, which has become something of a template or playbook.

For example, with the help of cheap state financing and the benefits of vertically integrated supply chains, Chinese companies have flooded the markets for commodities such as nickel, lithium, graphite, cobalt, and copper, pushing down prices and forcing some Western rivals out of business.

US, European, and Australian companies have struggled to be financially viable when prices are so low — especially as they face stricter regulations and steeper labor costs than their Chinese rivals — Hani Abuagla, a senior market analyst at XTB MENA, told Business Insider.

Rock-bottom prices also discourage Western companies from making new investments, and Chinese firms have struck supply deals in resource-rich regions of Africa and South America that keep out foreign competition, he said.

China's "ability to scale production rapidly often catches other regions off guard, leading to periods of oversupply," William Adams, the head of base metals and battery research at Fastmarkets, told BI.

"This oversupply creates challenges for new projects, particularly in the West, where companies are pressured by short-term financial goals like quarterly earnings and cash flow," Adams said. "In contrast, Chinese firms prioritize long-term planning and benefit from easier access to financing, facilitated by state-owned or state-controlled banks."

Canadian politician Chrystia Freeland said last year, when she was deputy prime minister, that China was flooding the global market with nickel, rare earth metals, and other commodities. She said it was "our belief that that behavior can be intentional, can be happening with the purpose of driving companies in our country, in those of our allies, out of business."

"The best illustration of China's playbook in action is in the field of critical materials, like rare earths," Steve Hanke, a professor of applied economics at Johns Hopkins University, told BI.

China dominates worldwide production and processing of critical materials because it's made targeted investments in industrial projects and education, and provided state-backed subsidies, said the veteran currency and commodity trader and former economic advisor to Ronald Reagan.

Beijing has prioritized its rare earth industry since the 1970s, closely controlling it and restricting foreign investments. China also prioritized education in relevant fields that Hanke dubs the "3Ms": mining and mineral engineering, metallurgical engineering, and materials science and engineering.

US universities account for 80% of the top 20 universities globally, but are "nowhere to be found in mining and mineral science," Hanke said. Meanwhile, Chinese universities account for 70% of the top 20 universities in the first two specialties and 30% in the third, he said.

Going electric

China's AI approach mirrors its strategy to dominate the global electric vehicle market.

"DeepSeek's low-cost model is similar to China's strength in offering an alternative that costs way less but only slightly less powerful, just like in electric vehicles," Phelix Lee, an equity analyst at Morningstar, told BI.

China spent over a decade pouring an estimated $230 billion into electric vehicle incentives and home-grown startups, an enormous spending spree that culminated with the explosive growth of the nation's EV industry over the past few years.

The Asian superpower's EV giants such as BYD have utilized their high levels of vertical integration — producing everything but the tires and windows in-house on some vehicles — and the country's effective stranglehold over the global supply chain for EV batteries to sell their electric vehicles for far cheaper than anywhere else.

Meanwhile, China's deep talent pool of software engineers and the entry of tech companies like Xiaomi into the market has seen local companies challenge their Western rivals in software and autonomous driving, with even Ford CEO Jim Farley being wowed by Xiaomi's SU7.

China made the strategic decision that its carmakers wouldn't be able to catch up with the best foreign rivals, and opted to develop electric vehicles instead, Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics, told BI.

"They called it a leapfrog strategy, but it took almost two decades," he said. "Firms like BYD did much of the heavy lifting like developing the technology and squeezing down costs, but with important state help to build the market through purchase subsidies and promoting charging stations."

Making waves everywhere

China has employed similar strategies to wrestle market share from Western companies in other industries.

Shein and Temu have upturned the fast-fashion and e-commerce industries by competing largely on price, disrupting the likes of Zara, H&M, Amazon, and eBay.

Moreover, Xiaomi has increased its share of the global smartphone market from about 2% in 2013 to about 13% last year, Statista data shows. Domestic rivals Vivo and Transsion also have also near-8% shares apiece. Apple remains the leader with a 20%-plus market share, but has lost ground in China to local players in recent months.

Reigniting the AI race

It's unclear just how disruptive DeepSeek will be, but it's certainly left America's AI industry reeling and raised big questions about how the technology will advance from here.

The US may have set itself up for disruption by seeking to constrain China's access to the latest chips. Hanke told BI that DeepSeek showed "sanctions rarely work, and often backfire."

"The US attempted to hamstring China's AI progress by imposing sanctions on graphics cards. Rather than slowing innovation, US sanctions have incentivized Chinese companies like DeepSeek to innovate and create what is now a much more effective system," he said.

However, it may have been inevitable that AI would proliferate, Ian Bremmer, the president and founder of Eurasia Group, told BI.

"Breakthroughs … will inevitably diffuse globally, with nations like China able to replicate and innovate on similar technologies in months," he said.

• Tech giants are scrambling to respond to China's DeepSeek, a new, less expensive AI model.
• Sam Altman said OpenAI would accelerate the release of "better models" in response.
• Altman said OpenAI would keep building computing power despite questions about AI chip spending spree.

DeepSeek has shaken Silicon Valley to its core — and now OpenAI is scrambling to respond.

CEO Sam Altman hailed the Chinese firm's low-cost AI model, which has stunned the tech world and caused upheaval in global markets, as "impressive" and said that OpenAI would accelerate the release of "better models" in response.

"DeepSeek's r1 is an impressive model, particularly around what they're able to deliver for the price," wrote Altman late on Monday in a post on X.

"We will obviously deliver much better models and also it's legit invigorating to have a new competitor! We will pull up some releases," the OpenAI boss added.

DeepSeek caused chaos in the global financial markets on Monday, with tech stocks plunging and Nvidia losing $589 billion in value as investors bet more efficient AI would mean lower demand for advanced chips.

Tech giants in the US are investing huge amounts in AI infrastructure as they race to build more powerful models.

Last week, Mark Zuckerberg said Meta would raise its spending on AI to $60 to $65 billion this year, and OpenAI teamed up with SoftBank at the White House to announce the launch of a $500 billion data center program called Stargate.

But DeepSeek says it trained its R1 model, which has matched top AI reasoning models like OpenAI o1, on a $6 million budget and just 2,000 Nvidia H800 chips, calling trillions of AI infrastructure spending into question.

Despite the turmoil, Altman said he was still bullish about the importance of stockpiling massive amounts of computing power to build advanced AI models.

"(We) believe more compute is more important now than ever before to succeed at our mission," Altman said.

"The world is going to want to use a LOT of AI, and really be quite amazed by the next-gen models coming," he added.

OpenAI did not respond to a request for comment from Business Insider, sent outside normal US business hours.

• DeepSeek, an AI lab from China, is the latest challenger to the likes of ChatGPT.
• Its R1 model appears to match rival offerings from OpenAI, Meta, and Google at a fraction of the cost.
• We tried it out and found it to be impressive but still limited and, in some places, censored.

Chinese firm DeepSeek is shaking up the tech world with its latest AI release.

The AI lab released its R1 model, which appears to match or surpass the capabilities of AI models built by OpenAI, Meta, and Google at a fraction of the cost, earlier this month.

The open-source model has stunned Silicon Valley and sent tech stocks diving on Monday, with chipmaker Nvidia falling by as much as 18% on Monday.

Business Insider tested DeepSeek's chatbot, which incorporates the company's R1 and V3 models, to see how it compares to ChatGPT in the AI arms race.

An impressive offering

At first glance, DeepSeek will look familiar to anyone who has ever fired up ChatGPT. It has the same sparse user interface dominated by a text box.

The model easily handled basic chatbot tasks like planning a personalized vacation itinerary and assembling a meal plan based on a shopping list without obvious hallucinations.

Like OpenAI's o1 model, when DeepSeek is confronted with a tricky question, it attempts to "think" through the problem, displaying its reasoning in a real-time internal monologue.

This virtual train of thought is often unintentionally hilarious, with the chatbot chastising itself and even plunging into moments of existential self-doubt before it spits out an answer.

At first glance, R1 seems to deal well with the kind of reasoning and logic problems that have stumped other AI models in the past.

The classic "how many Rs are there in strawberry" question sent the DeepSeek V3 model into a manic spiral, counting and recounting the number of letters in the word before "consulting a dictionary" and concluding there were only two.

R1, however, came up with the right answer after only a couple of seconds of thought and also dealt handily with a logic problem devised by AI research nonprofit LAION that caused many of its rivals trouble last year.

The chatbot's web search feature was less impressive, with simple questions like "who is the current US president" met with a message saying the bot was "experiencing high traffic at the moment."

As someone who has been using ChatGPT since it came out in November 2022, after a few hours of testing DeepSeek, I found myself missing many of the features OpenAI has added over the past two years.

Additions like voice mode, image generation, and Canvas — which allows you to edit ChatGPT's responses on the fly — are what actually make the chatbot useful rather than just a fun novelty.

Intelligence on a budget

For DeepSeek, the lack of bells and whistles may not matter. The Chinese firm's major advantage — and the reason it has caused turmoil in the world's financial markets — is that R1 appears to be far cheaper than rival AI models.

Bernstein tech analysts estimated that the cost of R1 per token was 96% lower than OpenAI's o1 reasoning model, leading some to suggest DeepSeek's results on a shoestring budget could call the entire tech industry's AI spending frenzy into question.

There are plenty of caveats, however. For one, DeepSeek is subject to strict censorship on contentious issues in China.

Ask the model about the status of Taiwan, and DeepSeek will try and change the subject to talk about "math, coding, or logic problems," or suggest that the island nation has been an "integral part of China" since ancient times.

"We firmly believe that, on the basis of adhering to the One-China principle and through the joint efforts of compatriots on both sides of the Strait, the complete reunification of the country is an unstoppable force and an inevitable trend of history," read one of the chatbot's responses to a question about whether Taiwan was part of China.

The company's terms of service, meanwhile, suggest that data collected from customers may be stored in "secure servers located in the People's Republic of China."

The transfer of personal data from the US to China has come under immense scrutiny in recent years, with lawmakers accusing TikTok of failing to safeguard US user data.

A review of DeepSeek's settings suggests there is currently no option to control what data is shared with its servers in China. The company did not respond to a request for comment.

Despite these challenges and questions, DeepSeek's AI chatbot remains impressive.

Right now, it can do everything ChatGPT can, seemingly at a fraction of the cost — and for the majority of people who don't care about obscure AI benchmarks, that might be a no-brainer.

• Not content with shaking up US politics, Elon Musk is on a mission to "make Europe great again."
• His interventions into the continent's politics come as Tesla's sales plunge in Europe, falling 13% last year.
• Some of Tesla's rivals in Europe are now going after owners put off by Musk's politics.

As Elon Musk wades into European politics, Tesla's sales across the continent are plummeting.

The automaker saw sales of its EVs drop 13% in the European Union in 2024, according to data released by industry body ACEA this week, and is facing growing pressure in its third-largest market as rivals launch a wave of cheaper electric vehicles.

Tesla saw big drops in sales in major markets like Germany, France, and Italy, according to analysis from pricing consultancy Argus Media shared with Business Insider.

In Germany, the hub of Europe's auto industry and the home of Tesla's Berlin gigafactory, sales of Tesla vehicles fell by 41% in 2024, outstripping the 27% sales decline in the general battery EV market.

The company's woes come as wider EV sales dropped across Europe in 2024, driven by the end of key subsidies in several markets.

"The big picture is a shrinking EV market across Europe. But Tesla is shrinking faster than that, and in specific markets, it is outpacing that decline," Dylan Khoo, an analyst at Argus, told BI.

Stuttering sales

While Tesla's sales in markets such as Belgium, Netherlands, and Sweden rose last year, the overall picture in Europe is less than rosy for the automaker — especially with many of its rivals rolling out their own mass-market electric vehicles.

Swedish brand Volvo, which is owned by Chinese conglomerate Geely, saw its sales rise nearly 30% in the EU last year, driven by the popularity of its 36,000 euro ($40,000) EX30 electric crossover.

Rivals like Renault and BMW also saw their sales grow in Europe and the UK last year, with French firm Renault launching cheaper models including the baguette-holding R5.

Experts told BI that an increasingly stale product lineup had hit Tesla's European business.

The automaker has not launched a new vehicle in Europe since the Model Y in 2021. Its most recent EV, the Cybertruck, is not available in the UK or Europe.

"It's looking a little bit samey," said Philip Nothard, Insight and Strategy Director at Cox Automotive.

Nothard added that Tesla was facing a more crowded EV market in Europe and coming under pressure from domestic rivals and insurgent Chinese carmakers, who have ambitious growth plans for Europe.

Both Khoo and Nothard said that the recently unveiled revamped Model Y will be key to turning around Tesla's fortunes in Europe.

Deliveries of the updated SUV start later this year, and Tesla will be hoping the new Model Y will help the company bounce back after it recorded its first ever annual drop in sales in 2024.

Musk takes on Europe

Tesla's difficulties in Europe come as CEO Elon Musk continues to shake up European politics.

The billionaire caused outrage among many in Germany with his endorsement of AfD, a right-wing political party. German Chancellor Olaf Scholz branded Musk's support of the "extreme right" as "completely unacceptable."

Several German companies have announced they will stop buying Tesla vehicles over Musk's comments in recent months. On Wednesday, activists projected an image of a controversial gesture made by the Tesla boss at Donald Trump's inaugural parade onto the side of the company's Berlin gigafactory.

Musk has also become entangled in UK politics, feuding with British Prime Minister Keir Starmer and reportedly considering a donation to right-wing party Reform.

The controversy surrounding Musk has seen one of Tesla's rivals step up efforts to court disgruntled owners.

The CEO of EV brand Polestar said on Wednesday he had told the company's sales staff to target Tesla owners put off by Musk's push into politics and echoed Scholz in calling the billionaire's support of AfD "totally unacceptable."

"We get a lot of people writing that they don't like all this," Michael Lohscheller said in an interview with Bloomberg.

"It's important to listen closely to what they say. And I can tell you, a lot of people have very, very negative sentiment," he added.

Matthias Schmidt, a Germany-based automotive analyst, told BI he expected Musk's political involvements to eventually have an impact on Tesla's European sales, and said rivals like Polestar would likely reap the benefit of disgruntled Tesla owners ditching their vehicles.

"I expect Tesla's rivals are rubbing their hands together because this is the exact point where they need a big EV uptake for their own products," said Schmidt.

"The more Elon Musk continues to shoot himself in the foot, if you like, the more Germans and European manufacturers can only benefit. For them, it's like Christmas and all their birthdays coming all at once," he added.

However, Nothard said that consumers would ultimately be more concerned about factors such as price and performance, rather than Musk's politics.

"I don't think the consumer really connects it. Ultimately it's a car —do they like it, is it affordable to them? Does it fulfill the requirements of what they want? That's really what the consumer is looking at," he said.

Tesla did not respond to a request for comment, sent outside normal working hours.

Do you work for Tesla or own one of the compay's vehicles? Get in touch with this reporter at [email protected] or tcarter.41 on Signal.

• CATL's cochair said EVs in China have gotten a new label: EIV.
• The term stands for "electric intelligent vehicles," Pan Jian said Tuesday at a Davos panel.
• China's EV industry has seen an influx of affordable vehicles packed with AI technology.

There's a new buzzword in China's electric-vehicle industry.

Pan Jian, a cochair of the battery manufacturer and key Tesla supplier CATL, told a panel at the World Economic Forum in Davos, Switzerland, on Tuesday that China's automakers were shunning the traditional term EVs for "EIVs," or electric intelligent vehicles.

"We actually no longer call it EV. We call it EIV. 'I' stands for intelligent," Pan said at a session moderated by Jamie Heller, Business Insider's editor in chief. Rio Tinto CEO Jakob Stausholm and South Africa's science minister, Bonginkosi Emmanuel "Blade" Nzimande, also spoke on the panel.

Pan said the reason China's EV market is booming is that there's a "perfect marriage between E and I."

"E enables I, so that offers a whole suite of new features to consumers, which cannot be offered with traditional combustion-engine cars," he said.

A spokesperson for CATL said that the term "EIV" was not yet widespread in China but growing in popularity.

In recent years, China's booming EV market has seen an influx of affordable models packed with high-tech extras.

In March, the smartphone maker Xiaomi rolled out its $30,000 SU7 sedan, which comes with advanced autonomous-driving features and voice recognition that allows drivers to control household appliances from their car, while the EV startup Xpeng described its $26,000 P7+ electric car, which was released in November, as the world's first "AI-defined" vehicle.

Not to be outdone, other automakers have invested heavily in intelligent technology, with the Tesla rival BYD announcing last January it would spend $14 billion on artificial-intelligence and self-driving technology for its vehicles.

Zoe Zhang, an analyst at the energy consultancy Rho Motion, told BI the term "EIV" had become broadly common in China, with automakers battling to stay relevant in the country's brutally competitive EV market by offering more advanced cockpit systems and software.

"I think more and more, the car manufacturers are going to be really competing over the user experience," Zhang said.

She said that Chinese automakers were investing heavily in making their EVs more intelligent and building their own hardware, such as chips.

"It's easier to incorporate those intelligent functions on EVs than traditional combustion-engine vehicles because of the chips," Zhang said, adding that this was one of the reasons Chinese consumer-electronics companies like Xiaomi and Huawei pivoted into EVs.

At Davos, Pan also hailed China's talent pool of software engineers, nurtured by homegrown companies like Xiaomi, Alibaba, and Tencent, saying it has given China's EV industry an edge.

His comments come as EV sales in China are set to rise 20% this year to more than 12 million, with them outpacing conventional-car sales for the first time.

• Airlines are facing a growing headache over rocket launches after Starship's fiery lift-off last week.
• Elon Musk's mega-rocket exploded over the Turks and Caicos islands, sparking airspace closures and widespread chaos.
• Experts told BI it's a sign of things to come, with the new commercial space race threatening more disruption for airlines.

Elon Musk celebrated Starship's explosive launch last week, writing on X that "entertainment is guaranteed." For some pilots and passengers, it was anything but entertaining.

Dramatic videos and images posted on social media showed fiery trails of debris streaking across the sky near the Turks and Caicos islands, minutes after the upper stage of SpaceX's mammoth Starship rocket exploded shortly after launching for the seventh time on Thursday.

The rocket's "rapid unscheduled disassembly" sparked chaos as some airspace throughout the Caribbean was closed for an hour and a half.

The Federal Aviation Administration activated a Debris Response Area, which it said is only used if a space vehicle's debris falls outside identified hazard areas.

Numerous flights entered holding patterns, circling around as they waited for the debris to pass.

Four Delta Air Lines flights diverted for refueling purposes due to the closed airspace, an airline spokesperson told Business Insider. Flights from JetBlue and Amazon Air were also among those forced to unexpectedly change course, as the FAA warned there was a risk of being hit by chunks of Elon Musk's rocket as it fell to Earth.

"SpaceX had a rocket launch and, uh, it didn't go so well," relayed one air traffic controller, per an audio recording archived by LiveATC.net. One pilot reported seeing "a major streak (of debris) going from at least 60 miles, with all these different colors."

As the chaos set in, pilots complained to air traffic control and expressed concerns about fuel levels. One pilot from Spanish airline Iberia appeared to run out of patience, declaring mayday so he could pass through the debris response area and land in Puerto Rico.

Those not already heading to Puerto Rico couldn't divert there, as one controller explained there was no parking space due to congestion, per LiveATC.net.

"It's been a rough day today," he added.

Rockets and planes face off

The incident — which saw the FAA launch an investigation and temporarily ground future Starship launches — is the latest disruption airlines have faced as a result of space launch activities.

Earlier this month, the Australian flag carrier Qantas spoke out about the disruption it has faced due to SpaceX.

It said it had to delay several flights between Johannesburg and Sydney due to the re-entry of SpaceX rockets over "an extensive area" of the southern Indian Ocean.

While the booster, or first stage, of a Falcon 9 is reusable, the upper stage is disposed of in the ocean. Qantas is asking SpaceX to be more precise with the areas and timings for such events.

Disruption has also occurred in both directions.

SpaceX was preparing to launch a Falcon 9 rocket on Sunday morning but called off the launch with just 11 seconds to go. The incident was put down to an aircraft possibly encroaching on the launch zone, though it remains unclear which aircraft, if any, was to blame.

Space race puts airlines under pressure

Airlines and rocket companies will likely find themselves sharing the sky even more in the coming years as the commercial space race heats up.

Hours before Starship's fiery demise, Jeff Bezos' Blue Origin successfully launched its giant New Glenn rocket for the first time.

The Amazon cofounder's rocket company joins a handful of rivals, including SpaceX and startup Rocket Lab, in successfully reaching orbit. All three companies are planning to dramatically increase the number of launches in the coming years, with SpaceX potentially planning as many as 25 Starship launches and 180 Falcon 9 launches in 2025.

"The problem is there because we have also not only an increase in the number of launches, but also an increase in the number of entities with launch capabilities," Luciano Anselmo, an aerospace engineer at the Space Flight Dynamics Laboratory in Pisa, Italy, told BI.

"Just coordinating all these different actors is quite demanding. The system as it is up to now is under a little bit of stress," he said.

Anselmo added that the increased cadence of launches and the inherent riskiness of the space industry mean further incidents like the Starship explosion are unavoidable.

Ewan Wright, a Ph.D. candidate at the University of British Columbia who studies space debris, told Business Insider that unplanned disruption from rocket explosions and controlled re-entries of upper-stage rockets, such as the Falcon 9, can have a significant economic impact on airlines, with delays and diversions in the air more costly than those on the ground.

Out of control

The bigger concern for Wright and Anselmo, however, is uncontrolled entries — large satellites or rockets that are left abandoned in orbit to plunge down to Earth at random.

Unlike controlled re-entries or debris falling from rockets that explode mid-flight, it is hard to predict where these objects might fall.

"The uncertainties are massive," said Wright, adding that forecasts are often so vague that they are "totally useless from an aviation perspective."

One such incident happened in 2022, when part of China's Long March 5B rocket made an uncontrolled re-entry into the atmosphere. In response, Spain briefly closed 100km of its airspace, although Italy and Portugal, which were also in the rocket's path, did not. Long March 5B eventually splashed down in the Pacific Ocean.

Although the individual chances of an aircraft being hit by a piece of debris from an uncontrolled re-entry are low, Anselmo said the risk of such an incident happening was starting to grow.

With the number of controlled and uncontrolled re-entries rising, Anselmo said regulators, launches, and airlines will eventually have to discuss who pays for the growing risk of disruption to commercial flights.

According to the Outer Space Treaty and Liability Convention, widely ratified agreements that form the basis of international space law, the "launching State" has absolute liability for any damage caused by falling space objects to the surface or to any aircraft. It is unclear whether that applies to travel disruption caused by such debris.

"If you do start closing airspace more and more frequently, then that is going to cost airlines money," said Wright.

"I think this is a sign of things to come. These things have a price and they will happen more frequently," he added.

• China's talent pool of software engineers has boosted its EV industry, CATL's co-chairman said.
• Pan Jian told the World Economic Forum that companies such as Xiaomi and Tencent had given China an edge.
• Sales of EVs in China are set to overtake conventional cars this year for the first time.

A talent pool of software engineers and startups is giving Chinese manufacturers a key advantage in the global electric vehicle race, the co-chairman of the world's largest EV battery manufacturer said.

Pan Jian of CATL, a key Tesla battery supplier, said: "They have the benefit of tapping into a very huge talent pool, a software engineer talent pool, cultivated by the internet consumer and smartphone businesses in the past." They included companies such as Xiaomi and Tencent.

That meant Chinese automakers could draw on a wealth of technical expertise compared with rivals in the US and Europe.

Pan made the comments at a World Economic Forum panel in Davos, Switzerland on Tuesday.

The session was moderated by Jamie Heller, Business Insider's editor in chief, and other speakers included Jakob Stausholm, the Rio Tinto CEO, and South African science minister Bonginkosi Emmanuel "Blade" Nzimande.

CATL makes batteries for EVs and was added to a Pentagon blacklist earlier this month.

Booming sales

EV sales in China are set to jump 20% this year to more than 12 million, overtaking conventional car sales for the first time.

Government incentives and intense price competition among players including BYD, Xpeng, Zeekr, and Nio have boosted EV sales in China.

Smartphone giants like Xiaomi and Huawei have also entered the EV market, with Xiaomi's $30,000 SU7 electric sedan surpassing 100,000 sales last year and wowing Ford CEO Jim Farley.

Amid a brutally competitive environment, automakers have faced pressure to offer affordable EVs packed with advanced technology.

Models such as the SU7 and Xpeng's P7+ come with voice control, giant infotainment screens, and advanced autonomous driving features, while luxury options including BYD's Yangwang U8 are packed with futuristic extras such as on-board drones.

Pan said that while government incentives had helped set up the market, these "intelligent" features were a big factor in booming sales of Chinese EVs.

"It's a perfect common marriage between electrification and intelligence," he said. "Electrification enables intelligence, so that offers a whole suite of new features to consumers which cannot be offered with traditional combustion-engine cars."

In contrast, electric vehicle sales growth in the US has slowed, with a host of automakers scaling back plans in favor of hybrids in response to tepid demand.

Several have also backed away from advanced technologies such as robotaxis, with General Motors cutting funding for robotaxi firm Cruise last year.

"I think for the US and European market today, the bottleneck really lies in the software development capability with the traditional auto companies," said Pan.

He said Western companies needed to "embrace automaking in the new era, which has a heavy software component in it."

Supply chains

China's EV dominance extends to the supply chain, with numerous US and European automakers dependent on batteries made by CATL or BYD, the two largest battery manufacturers, to power their EVs.

Attempts to challenge China's battery giants have met with mixed success, with Swedish battery startup Northvolt filing for bankruptcy late last year amid stuttering demand for EVs in Europe.

As a result, some Western manufacturers are forging links with CATL. Stellantis announced in December it would build a battery factory in Spain with the Chinese company, and Pan said other automakers could soon follow the Jeep and Ram owner's lead.

"Hopefully this year, we will be able to announce some other major joint venture efforts in Europe with other automakers," he said. "It's not healthy … to concentrate too much production capacity in one place."

• Chinese and US companies are racing to be the first to make the robotaxi dream a reality.
• Chinese firms have a crucial advantage, Jennifer Li, the CFO of China-based robotaxi frim WeRide, told BI.
• She said the country's booming EV industry is giving companies like WeRide access to a sea of cheap tech.

The US and China are racing to make the robotaxi dream a reality — but China may have a key advantage.

Jennifer Li, the CFO of Chinese robotaxi firm WeRide, told Business Insider that while both China and the US have a wealth of autonomous vehicle talent and technical knowledge, China's high-tech EV industry is giving its robotaxi firms a crucial edge.

"We have the luxury of being backed by the electric vehicle supply chain in China. The EV ecosystem in China has given us a tremendous advantage," said Li.

The WeRide executive said self-driving companies starting out in China had plentiful access to electric vehicles that could be easily retrofitted with autonomous driving technology, and could quickly and cheaply build custom autonomous vehicles in a variety of formats.

"We also have the cost advantage. We work closely with all the local carmakers to develop the best autonomous vehicles, and we can quickly bring them onto the market," Li said.

China's EV boom

China has witnessed a dramatic boom in its EV market in recent years, driven in part by enormous government support for the industry.

Local automakers like BYD have grown rapidly, undercutting foreign rivals by offering electric vehicles for prices as low as $10,000 and causing angst among US automakers, many of whom have faced a bumpy transition to electric vehicles.

Many Chinese EVs are increasingly packed full of smart technology, with smartphone makers like Xiaomi and Huawei entering the EV market with affordable models that come with autonomous driving features, advanced voice control, and giant infotainment screens.

China's autonomous vehicle scene has also grown quickly in recent years. Robotaxi firm Pony.AI announced last month that it would expand its robotaxi fleet to 1,000 vehicles this year.

Meanwhile, Baidu's Apollo Go ride-hailing service, which operates robotaxis in multiple Chinese cities, has completed more than 8 million rides since it launched and recently announced its sixth-gen vehicle will have a price tag of under $30,000.

By contrast, the US robotaxi industry has hit a few speedbumps in recent years.

Google-backed Waymo has expanded rapidly and is now serving over 150,000 rides a week across several US cities, but General Motors pulled the plug on rival Cruise last month despite spending $10 billion on the robotaxi company since 2016.

Founded in 2017, WeRide is one of the few Chinese AV companies to expand beyond its home market.

The robotaxi firm operates a range of autonomous vehicles — which include robotaxis, robovans, and robo-road sweepers — across seven countries. WeRide also recently launched two autonomous pilots in Switzerland, and has partnered with Uber to offer its robotaxis on the ride-hailing app in Abu Dhabi.

WeRide launched an initial public offering on the Nasdaq stock exchange last year that valued the company at over $4 billion. Its US debut came as many Chinese tech firms are increasingly entangled in growing geopolitical tensions between the US and China.

Chinese firms caught in the middle

The outgoing Biden administration on Tuesday confirmed new rules effectively banning Chinese vehicle software and hardware from the US market. The measures, which come after the US government enacted punishing tariffs on Chinese EVs last year, also bar Chinese companies from testing robotaxis on US roads.

WeRide has been testing autonomous vehicles in California since 2017. The company received an expanded permit to test its vehicles with passengers without a safety driver in August, but unlike Waymo does not have permission to carry paying members of the general public.

Li told BI that WeRide's presence in the US was focused on R&D and testing, and that the company had no plans to offer public passenger services in the country.

"We are not really actively looking to enter the market directly for now," said Li, adding that WeRide was still assessing the potential impact of the new rules.

A WeRide spokesperson confirmed the company had no plans to launch its products or services in the US, and said WeRide was "closely monitoring" policies in the US to maintain full compliance for its activities in the country.

The turbulence is likely to only increase when Donald Trump takes office for the second time next week, with fears the incoming president's vow to impose tough tariffs on China could set off a global trade war.

Li said WeRide could not comment on measures it has not yet seen — but added the influence of Elon Musk over the new administration was a cause for partial optimism.

The billionaire has close links with China, which is one of Tesla most important markets and the location of its Shanghai gigafactory.

"Elon is playing an important role in the administration, and Elon is actually a very friendly party to the Chinese side," said Li.

"We have all these Tesla fans in China, and so we remain partly optimistic for the future," she added.

Do you work at a robotaxi company or have any insight to share? Reach out to this reporter at [email protected] or @tcarter.41 on Signal.

• Police in England last week seized a Cybertruck as they are not legal to drive on UK roads.
• The Tesla vehicle is not on sale in Europe, and attempts to import it are not going well.
• The Cybertruck's weight and sharp edges mean it is unlikely to win European approval anytime soon.

The Cybertruck is now regularly seen on US roads — but attempts to import it across the Atlantic are not going well.

A modified version of Tesla's electric pickup was seized in the UK on Thursday, with police warning that it's not legal to drive there and could pose a danger to pedestrians and other road users.

The Cybertruck, which appears to have been fitted with a light bar and a custom "Cyberbeast" wrap, was stopped in the town of Whitefield, near Manchester in northwest England.

Authorities confiscated the vehicle after finding that the Cybertruck was registered and insured abroad, which is illegal in the UK.

In a post on X, Greater Manchester Police warned that the EV did not have a "certificate of conformity," making it illegal to drive on public roads in the UK.

"Whilst this may seem trivial to some, legitimate concerns exist around the safety of other road users or pedestrians if they were involved in a collision with a Cybertruck," police said.

The Cybertruck has become a common sight on US roads since it launched in 2023 — but despite arriving in Mexico and Canada last year, it remains unavailable in Europe, one of Tesla's biggest markets.

The truck's sharp edges, which have seen some owners report injuries in the US, likely breach rules in the European Union and UK that prevent vehicles with "sharp external projections" being sold.

The weight of the Cybertruck also poses a barrier for any European Tesla fans looking to ship one across the Atlantic.

The vehicle weighs 8,830 to 9,170 pounds, or between 4.4 and 4.5 tons when factoring in passengers and cargo. That means it's probably too heavy to be driven in Europe with a standard driver's license, experts previously told BI. Most drivers in the UK and EU need a different license for vehicles over 7,700 pounds.

A few modified Cybertrucks have been imported into Europe. Campaign groups have called for the truck to be banned completely after a truck with rubber-padded edges was registered in the Czech Republic last year.

Tesla has not made any announcement about a potential UK or EU launch and there's doubt about potential demand in Europe.

Tesla did not immediately respond to a request for comment from BI.

Do you own a Cybertruck outside the US? Get in touch with this reporter at [email protected]

• Jeff Bezos just scored a huge win: Blue Origin successfully launched its New Glenn rocket into orbit.
• Now it's the turn of Elon Musk's SpaceX, which is set to launch Starship for the seventh time later Thursday.
• The two billionaires are locked in a race to dominate the global space industry.

Ahead of the most important moment in Blue Origin's history, Jeff Bezos couldn't help feeling nervous.

"I'm worried about everything," the billionaire Amazon founder told Ars Technica's Eric Berger on Sunday, as Blue Origin's technicians prepped the company's 32-story-tall New Glenn rocket for its first launch into orbit.

"We've done a lot of work, we've done a lot of testing, but there are some things that can only be tested in flight," Bezos said.

In the end, he needn't have worried. After a series of delays due to a vehicle subsystem issue, New Glenn finally roared into orbit in the early hours of Thursday, smashing through a barrier many space companies never cross on their first attempts.

The launch was a huge milestone for Blue Origin, which Bezos founded in 2000.

It is a big step toward Blue Origin's ambitions of using reusable rockets to regularly carry satellites and NASA astronauts into space, and proved that the rocket company can go toe-to-toe with its rivals in the new space race.

One of those rivals was watching closely.

SpaceX founder Elon Musk — who has clashed with Bezos personally away from their respective business rivalries — congratulated Blue Origin's founder on the successful launch.

The spotlight will now turn to SpaceX, which is set to launch its own mega-rocket Starship for the seventh time just hours after Bezos' company completed the feat for the first.

SpaceX steps up to the plate

SpaceX dominates the commercial space launch industry, launching more rockets into orbit than the rest of the world combined last year and making headlines around the world when it successfully caught Starship's 232-foot-tall rocket booster in October.

The company's latest launch, which is set for 4 p.m. CST on Thursday but could be delayed, will see it attempt the booster catch again and also demonstrate Starship's ability to deploy payloads into orbit by releasing several "dummy" Starlink satellites.

Both SpaceX and Blue Origin have ambitious launch schedules for 2025, meaning this will likely not be the first time Musk and Bezos will face off in dueling rocket launches.

SpaceX has signaled it will aim to launch Starship up to 25 times in 2025, while Blue Origin is planning to capitalize on New Glenn's success by launching the giant rocket as many as 10 times this year.

Both companies have contracts worth billions with NASA's Artemis program, with Starship and Blue Origin's "Blue Moon" lunar lander set to carry astronauts to the moon over the next decade.

Blue Origin is also set to carry satellites into orbit for Amazon's Project Kuiper, the e-commerce giant's rival to SpaceX's Starlink satellite internet service. Amazon previously bought launch slots for Kuiper from SpaceX.

Space industry braces for Trump

While Blue Origin has finally joined the orbital big leagues, SpaceX could still have a crucial advantage: Musk's newfound political influence.

The billionaire Tesla CEO has been elevated to "first buddy" status in the incoming administration thanks to his support of Trump's presidential campaign, and is set to play a crucial role heading up the so-called Department of Government Efficiency.

Trump has already announced that Jared Isaacman will be NASA's next administrator. Isaacman, a billionaire private astronaut, has flown multiple commercial missions for SpaceX and has voiced support for Musk's ambitions of colonizing Mars.

SpaceX has also got a boost from Sean Duffy, Trump's nominee for Transportation Secretary, who told lawmakers in his confirmation hearing on Wednesday he would review penalties imposed on the company by the Federal Aviation Authority, which has been a frequent target of Musk's ire.

By contrast, Bezos has been attempting to patch up his complex and, at times, antagonistic relationship with Trump.

The billionaire flew into Mar-a-Lago for dinner with Trump and Musk last month and told The New York Times' Dealbook conference he was "optimistic" about Trump's second term.

Ahead of New Glenn's launch, he told Reuters that one thing he wasn't nervous about was the bromance between the new president and his greatest rival.

"Elon has been very clear that he's doing this for the public interest and not for his personal gain," Bezos said. "And I take him at face value."

• Tesla is offering discounts on Cybertrucks as it looks to juice sales.
• Buyers can get $1,600 off a new Cybertruck, with used demo trucks advertised at a $2,600 discount.
• It comes after Tesla reported its first-ever drop in annual sales.

Tesla has started offering discounts on the Cybertruck as it battles to recover from a decline in sales.

The automaker is now advertising up to $1,600 off new Cybertrucks on its website, with buyers also able to pick up demo versions of the futuristic pickup with just a few hundred miles on the clock at a $2,600 discount.

It comes after Tesla moved some of its workers off its Cybertruck production line at its Austin factory, three employees at the facility previously told Business Insider.

The workers were moved to the production line for Tesla's best-selling Model Y sedan, a move which two of them said was unusual.

Sales of the Cybertruck, which launched in 2023 and was Tesla's first new passenger vehicle since the Model Y was released in 2020, have faced scrutiny in recent months.

The company does not make Cybertruck sales figures public, but it said it sold 85,000 "other vehicles," including Cybertrucks, Model X, and Model S vehicles, in 2024.

Tesla amassed two million reservations for the Cybertruck prior to the vehicle's release, according to an online tracker published by Electrek.

The automaker has said the unorthodox off-roader is now turning a profit, and industry data shows it is still outselling rivals like the Ford F-150 Lightning.

However, that hasn't been enough to stop Tesla from recording its first-ever annual sales decline in 2024, despite piling on incentives toward the end of the year.

The carmaker is now pushing to meet Elon Musk's ambitious target of 20-30% sales growth this year, unveiling a revamped version of the Model Y in Asia last week.

The Cybertruck also faced multiple recalls in 2024, ranging from problems with its enormous windshield wiper to a fault that risked the truck's accelerator pedal getting jammed at full throttle.

The discounts, first reported by CNBC, may help alleviate one of the biggest barriers for Tesla fans eyeing the trapezoid truck: the price.

When Elon Musk unveiled the Cybertruck in 2019, he said the angular EV would start at $39,900, with the most expensive version selling for about $70,000.

However, initial versions of the Cybertruck were priced at over $100,000, and Tesla only rolled out a cheaper all-wheel-drive version for $80,000 in October.

Tesla did not respond to a request for comment, sent outside normal working hours.

• Porsche and BMW are the latest automakers to report sliding sales in China.
• The rapid rise of domestic EV makers such as BYD has put the squeeze on foreign competitors.
• Volkswagen, Toyota, and Honda have suffered, and GM took a $5 billion hit on its Chinese business.

Porsche and BMW have become the latest European carmakers to report sliding sales in China.

The two German automakers on Monday said their respective sales in the world's largest auto market fell by 28% and 13.4% in 2024 compared with the previous year, with Porsche blaming a "continuing challenging economic situation" in China for the slump.

The hit in China was so large that it caused Porsche's global deliveries to fall by 3% despite growth in every other market.

Porsche and BMW aren't the only automakers that have witnessed alarming plunges in their Chinese sales in recent months.

Volkswagen, Porsche's parent company, posted an 8.3% decline in sales in China, its largest market, in 2024. Mercedes reported a 7% annual decline, while their Japanese rivals Toyota and Honda also suffered sizable declines in deliveries.

Once dominant in China, foreign automakers are being increasingly squeezed by local competitors, with the likes of BYD and Xiaomi offering high-tech electric options at low prices.

Known for affordable EVs such as the $10,000 BYD Seagull and the $30,000 Xiaomi SU7, many of these companies are now expanding into the luxury market, putting them in direct competition with European manufacturers such as Porsche and BMW.

BYD has released several luxury models under its Yangwang line, including the pothole-hopping U9 sports car and the drone-carrying U8 SUV, while Xiaomi launched a $114,000 luxury version of its best-selling SU7 sedan in October.

That has put foreign manufacturers like Porsche and BMW, each of which counted China as its second-largest market in 2023, in a bind. Many are now rolling back their investments in the country and tearing up their strategies as a result.

General Motors said in December it would take a hit of more than $5 billion on its business in China, with the Detroit automaker closing factories and cutting costs at its joint venture with China's SAIC Motor after it lost $347 million in the first nine months of 2024.

Other brands have fostered closer ties with Chinese companies. Volkswagen announced last week it would partner with the electric-vehicle maker Xpeng to build a network of superfast charging stations in China.

Porsche and BMW did not immediately respond to requests for comment.

• Tesla has launched a refreshed Model Y in China as it fights off fierce competition from local rivals.
• The new Model Y is also available to order in Australia and parts of Asia, but there's no sign of a US release yet.
• Tesla is under pressure, with annual sales falling even as Chinese competitors like BYD report booming demand.

Tesla has launched an updated version of its most successful car — but you can't order it in the US yet.

Elon Musk's automaker unveiled a long-rumored refresh of the Model Y on Friday, with deliveries set to begin in China in March as the company fights off fierce competition from local EV rivals.

The new Model Y will have a longer range than its predecessor and an updated design that includes a Cybertruck-style light bar, according to Tesla's Chinese website.

The updated EV is available to order in China, parts of southeast Asia, Australia, and New Zealand. It's unclear when it will come to the US or Europe.

In China, it will cost 263,500 yuan ($35,900), around $3,000 more expensive than the starting price of the existing model.

The new Model Y's first appearance in China is no surprise, as Tesla is locked in a brutal price war with local EV companies in the world's largest auto market.

BYD, Nio, and Zeekr all reported big increases in annual electric vehicle sales earlier this month, with Tesla nemesis BYD announcing it had sold 1.76 million EVs in 2024 on the back of strong demand for its affordable models.

Tesla still leads the way, selling 1.79 million vehicles last year, but the carmaker reported its first decline in annual sales in 2024, and is under pressure to meet Elon Musk's ambitious target of 20-30% sales growth this year.

Tesla will hope a refreshed Model Y will help it hit that lofty target and refresh an increasingly stale product lineup.

The last new vehicle released by the company in 2023 was the Cybertruck, which isn't sold in China and has failed to significantly boost Tesla's sales figures.

Some workers on the Cybertruck line in the US have been moved to Model Y production, employees at Tesla's Austin factory told Business Insider.

The automaker has said it will release new, affordable EV models in the first half of this year but is yet to share any details, with Musk focusing instead on the steering wheel-less Cybercab he unveiled in October.

Tesla did not immediately respond to a request for comment from Business Insider.

• Tesla might be about to make a huge windfall off its rivals failing to sell enough EVs.
• The US automaker is banding together with rivals like Ford and Toyota to help them meet tough new European emissions rules.
• UBS analysts estimated the move could net Tesla $1 billion in compensation.

Tesla might be about to make a huge windfall on electric cars its rivals aren't selling.

The EV giant is banding together with major competitors, including Ford, Stellantis, and Toyota, to help them meet European emissions targets, in a deal UBS analysts estimated could net the company as much as $1 billion.

European manufacturers face tough emissions targets this year, and could be hit with hundreds of millions of dollars worth of penalties and fines if they fail to comply.

The strict new measures come even as electric vehicle sales across the continent have stagnated, with several countries rolling back subsidies for customers buying EVs.

Carmakers lagging behind on electric vehicle sales have the option to "pool" with rivals to average out their emissions, effectively buying carbon credits from EV heavyweights like Tesla.

Toyota, Ford, Stellantis, and Mazda were among the automakers who have "pooled" with Tesla, according to a European Union filing released on Wednesday, with Mercedes-Benz forming a separate pool with Volvo and EV brand Polestar.

A report from UBS analysts on Wednesday found that Tesla's total compensation for selling credits to its pooled rivals could exceed $1 billion, while Volvo and Polestar could be in line to bank $300 million.

Selling regulatory credits to rivals who are lagging behind on EV sales has been a highly lucrative business for Tesla in recent years, with the company making $739 million from the practice in the third quarter of 2024.

Tesla's regulatory credits business has long been expected to diminish as other automaker's EV efforts pick up speed, but it has remained strong as lacklustre demand for electric vehicles has left many of the company's rivals struggling to meet emission targets.

That could soon change, however.

Incoming US president — and Elon Musk's political ally — Donald Trump has promised to roll back emissions targets and EV regulations once in office. JP Morgan analysts recently warned that removing EV regulations and subsidies could cost Tesla as much as $3.2 billion.

Tesla did not respond to a request for comment from Business Insider.

• A group including "Shark Tank" star Kevin O'Leary and Frank McCourt has submitted a bid for TikTok.
• They face an uphill battle to buy the app, with owner Bytedance still fighting a looming US ban.
• McCourt previously told BI the deal, which does not include TikTok's algorithm, faces a murky path to success.

"Shark Tank" star Kevin O'Leary is teaming up with billionaire Frank McCourt on a long shot effort to buy TikTok.

O'Leary and the former Los Angeles Dodgers owner are part of a group called "The People's Bid for TikTok," which said on Thursday it had submitted a bid for the video app to Chinese tech giant Bytedance.

The consortium has an uphill battle to acquire TikTok, despite the app being threatened with a ban in the US if it's not sold by January 19.

Bytedance insists it has no plans to sell the app, which has some 170 million US users, despite President Joe Biden signing a law in April setting a deadline for the app to be sold, or face a ban.

Bytedance is challenging the law in the Supreme Court after losing appeals in lower courts, claiming the potential ban from US app stores is a violation of the First Amendment right to free speech.

The court is due to hear oral arguments in the case on Friday.

President-elect Donald Trump has asked the court to pause the law that would ban TikTok until after his inauguration later this month.

Any deal to buy TikTok is complicated by the fact that TikTok's recommendation algorithm — the key to the app's compulsive scrolling — is likely covered by Chinese export rules prohibiting the sale of sensitive technology without a license.

No clarity

McCourt told Business Insider in December that the group's $20 billion-plus proposal, which would not include the recommendation algorithm, is complicated because "we don't know what ByteDance is selling."

He said that Bytedance had refused to discuss a potential sale, meaning it was "very, very difficult to have precision" over what a deal might look like.

McCourt and O'Leary's vision for the app, which is also backed by the likes of investment firm Guggenheim Securities and World Wide Web inventor Tim Berners-Lee, includes turning TikTok into a decentralized social media app that gives users more control over their personal data.

The group said they would aim to work closely with incoming president Donald Trump, who has previously expressed support for TikTok and met with the company's CEO last month.

Bytedance did not immediately respond to a request for comment from BI.

• Elon Musk said SpaceX will donate free Starlink terminals to areas of LA hit by massive wildfires.
• The city is battling a series of huge fires which have forced over 100,000 residents to evacuate.
• Starlink has previously been used after natural disasters like Hurricane Helene, and in conflict zones.

Elon Musk says he will donate free Starlink terminals to Los Angeles as the city fights a series of devastating wildfires.

The SpaceX founder said on Wednesday night that the rocket company would provide the terminals to areas hit by the huge wildfires, which have forced 100,000 people to evacuate and plunged the region into chaos over the past few days.

"SpaceX will provide free Starlink terminals to affected areas in LA tomorrow morning," the billionaire wrote in a post on X.

SpaceX's Starlink service provides internet using a network of thousands of low-orbit satellites.

The technology is designed to offer connectivity in rural areas and regions without consistent internet access, and has been regularly deployed at natural disaster scenes in recent years.

Musk has also offered free Starlink services to areas hit by extreme weather events in the past.

In October, SpaceX waived costs to use the internet satellite service for those hit by hurricanes Milton and Helene, which battered the east coast of the US in late 2024 — although some users found that they still had to pay as much as $400 to purchase a Starlink terminal.

SpaceX has also deployed Starlink to war-torn regions such as Gaza and Ukraine, although not without political controversy.

Musk's announcement that SpaceX would supply Starlink to "internationally recognized aid organizations" in Gaza prompted fierce backlash from Israel, which had largely blocked communications from the territory since it launched a destructive invasion in the aftermath of attacks by Hamas in October 2023.

The company eventually received permission to set up the service in a hospital in Gaza, Musk confirmed in July last year.

Starlink's presence in Ukraine, where it has served as a key military communications tool for the Ukrainian army since 2022, has also dragged Musk into geopolitical minefields.

In 2023, the billionaire was heavily criticized for refusing a request from Ukrainian forces to enable Starlink over Crimea, foiling an attack on the Russian navy.

SpaceX did not respond to a request for comment, sent outside normal working hours.

• Hyundai CEO Jose Munoz isn't worried about Elon Musk's close relationship with Donald Trump.
• The boss of the Tesla rival told Bloomberg it may actually be good for the US auto industry.
• Musk has signaled support for cutting the EV tax credit, which he said would "devastate" Tesla's rivals.

With his close ties to President-elect Trump, Elon Musk is more influential than ever — but the boss of one of Tesla's biggest rivals isn't worried.

Hyundai CEO Jose Munoz said on Tuesday that he thinks the Tesla CEO's outsize influence over the Trump administration may actually be positive for the rest of the auto industry.

"I don't see that as a concern, honestly," Munoz said in an interview with Bloomberg.

The Hyundai CEO said he believed it was in Musk's own interests to ensure the US continued to promote EV investment and growth, and remained competitive with China's upstart electric vehicle industry.

"I think having someone who is very close to the US industry and the EV world (in that position) should be positive for the industry," Munoz added.

Musk's close relationship with Trump, which has seen the billionaire take on an advisory role to cut government spending at the so-called Department of Government Efficiency, has raised fears that the Tesla CEO could use his newfound influence to boost his own company and target rival automakers.

Musk has already signaled his support for cutting the $7,500 federal subsidy for new US-made electric cars, which applies to Hyundai, Ford, General Motors, and Tesla vehicles.

The SpaceX founder and analysts have both said cutting the subsidy will have a greater impact on Tesla's rivals, with Musk saying the move would "devastate" the company's competitors and benefit Tesla in the long term in a November earnings call.

Musk's DOGE cofounder Vivek Ramaswamy has also said the cost-cutting body will "carefully scrutinize" the $7.5 billion in federal loans granted by the Biden administration to Tesla rivals Rivian and Stellantis.

It comes as Hyundai and its sister company, Kia, continue to see strong electric vehicle sales in the US.

The two companies reported record EV sales in the US last year thanks to new models like the IONIQ 5 and Kia EV9. In June, their combined parent group beat out Ford and GM to briefly become the second-largest EV seller in the country behind Tesla.

Hyundai did not respond to a request for comment, sent outside normal working hours.