Elon Musk: "Chinese electric car manufacturers will "demolish" their competitors, in the absence of trade barriers"

Chinese electric car manufacturers will have "significant" success outside China, believes Elon Musk, the founder of Tesla, writes CNBC.

"China's car companies are the most competitive car companies in the world. So I think they're going to have significant success outside of China, depending on what tariffs or trade barriers are put in place," Musk said on Tesla's earnings call on Wednesday. "Honestly, I think that if trade barriers are not established, they will demolish almost most companies in the world."

The European Commission, the Union's executive arm, is currently investigating subsidies to Chinese electric vehicle manufacturers. The investigation began last year, but has not yet been concluded, writes CNBC. According to the American publication, there is a possibility that the European Union will consider imposing higher tariffs on electric vehicles from China, at a time when they are aggressively expanding in Europe.

Chinese automaker BYD, which in the fourth quarter sold more battery-powered cars than Tesla, has expanded its sales to markets in Europe, the Middle East and Southeast Asia. Companies like Nio and Xpeng have also launched their machines in Europe.

CNBC recalls that Chinese manufacturers presented their products at one of the largest auto exhibitions in Europe last year. At the time, analysts said these companies could pose a challenge to traditional auto firms.

This is not the first time Musk has praised Chinese electric vehicle manufacturers. Last year, the billionaire described Chinese electric vehicle firms as "the most competitive in the world", pointing out that they will probably be among the most important car companies in the world.

"If I had to guess ... probably a Chinese company is second to Tesla," Musk said.

For the fourth quarter, Tesla reported revenue and profit below market expectations. Revenues from the sale of motor vehicles amounted to $21.6 billion, up just 1% year-on-year. Earnings per share were 71 cents, below Wall Street estimates of 73 cents. But the biggest concerns are about the company's prospects.

According to the electric car maker, vehicle volume growth in 2024 "could be considerably lower" than last year, and the company is working on launching the "next-generation vehicle" in Texas. Tesla warned investors that it is currently "between two major growth waves," according to CNBC.

The company is known for its innovative electric vehicles, such as the Model S, Model X, Model 3 and Model Y, and recently the Cybertruck. In addition to its electric vehicles, Tesla also produces energy storage batteries under the MegaPack brand.