Tesla Faces Stiff Competition as Sales Dip Amid Chinese Market Pressure

Tesla

In a competitive turn of events, U.S. electric vehicle (EV) giant Tesla reported a slight decline in its 2024 sales, down by 1% from the previous year, marking the first annual drop in sales in over a decade. The downturn is attributed to the rise of low-cost Chinese EV manufacturers, which are beginning to eclipse Tesla's older models with more affordable and innovative alternatives.

Competitive Dynamics and Market Shifts

Tesla's slight decrease in sales to 1.79 million units barely managed to outpace Chinese rival BYD, which reported 1.76 million battery electric vehicle (BEV) sales. Including plug-in hybrid EVs (PHEVs), BYD's total climbed to 4.3 million units, emphasizing the intense competition in a market that has been crucial for Tesla. The firm responded to this rising competition by cutting prices multiple times throughout the year, despite facing new challenges like the European Union's tariffs on Chinese-made EVs. Notably, Tesla secured a bespoke duty discount of 9%, mitigating some of the financial impacts.

Production Hurdles and Strategic Adjustments

Despite optimistic forecasts by CEO Elon Musk for a 50% annual sales growth, Tesla announced a 10% workforce reduction following a dip in quarterly sales—the first in nearly four years. Production also took a hit, decreasing by 3.9% to 1.77 million EVs in 2024, affected by scaled-back production of models 3 and Y. However, the fourth quarter showed some recovery with a record 495,570 EV deliveries, thanks in part to a shift in production to an updated version of the Model 3.

Regulatory Challenges Ahead

The landscape could grow even more challenging for Tesla in 2025 with the upcoming administration under President-elect Trump proposing a 25% tariff on all imported goods from Mexico and Canada. Given that approximately 20% of Tesla's parts are sourced from Mexico, these tariffs could significantly affect the firm's production strategy and cost structure.

Seabed Mining Rule-Making Likely to Slow Under New Leadership

International negotiations to establish rules for seabed mining are expected to decelerate with the election of a new leader for the International Seabed Authority (ISA). Leticia Carvalho, a Brazilian oceanographer, was recently elected as the new Secretary-General of the ISA, a United Nations agency responsible for regulating the extraction of minerals from the deep seabed. Carvalho will assume her role in January, succeeding British lawyer Michael Lodge, who had been at the helm since 2016.

The ISA has been embroiled in lengthy discussions among 168 countries about setting up a regulatory framework for extracting metals like cobalt, nickel, rare earth, and copper from the deep seabed, areas beyond any national jurisdiction. These negotiations have become increasingly contentious, with some governments and environmental groups raising concerns about the potential environmental damage and acceleration of climate change that deep-sea mining could cause.

Carvalho's election signals a shift in approach. Unlike her predecessor, who was eager to push forward with mining agreements, Carvalho has been described as more conservative and cautious. According to a Caribbean delegate, this change in leadership is expected to slow down the movement towards exploration and extraction. A European delegate echoed this sentiment, noting that Carvalho’s stance could mean more time will be spent on preparatory work before any mining licenses are issued.

Under Lodge’s leadership, the ISA had been working toward a mining code that would govern mineral extraction in international waters. However, Carvalho has emphasized the need for comprehensive regulations to be in place before any mining begins. These regulations would include measures to monitor the environmental impact and determine how the benefits from extracted metals would be distributed.

The ISA has already granted 31 exploration contracts for areas in the equatorial Pacific but has not yet authorized any actual mineral recovery. As discussions continue, the pace at which seabed mining progresses will likely slow down under Carvalho’s cautious leadership.

India's Tata Steel Tests Biomass at Ferro-Chrome Plant

India's Tata Steel has carried out a trial using charcoal as a feedstock at its domestic ferro-chrome unit, with it also open to importing the biomass product. It said it finished the trial on 20 July, in which it replaced conventional reductants such as coke in the Athagarh ferro-chrome plant in east India's Odisha state with carbon-neutral biomass charcoal, made from the low-temperature burning of wood in an oxygen-starved atmosphere. The carbon released during the ferro-chrome production process was balanced by carbon absorbed by the trees from which wood for the charcoal was taken, it added.

The trial was part of Tata Steel's sustainability drive to cut emissions from its operations. Athagarh has a ferro-chrome production capacity of 55,000 t/yr. The use of 5pc of biomass in production is expected to lower carbon dioxide (CO2) emissions by 0.08/t of ferro-chrome, Tata Steel said, which is about 6pc of total CO2 emissions from the plant.

The company is carrying out more trials and feasibility studies to stabilize the use of biomass in ferro-chrome production, it said, adding that plans to commercialize biomass use as a feedstock have not been finalized yet. Tata Steel might also consider imports of charcoal if it is commercially and technically feasible.

Tata Steel is also working with Australian resources firm BHP to adopt low-carbon iron and steel production. This includes using biomass and carbon capture and utilization technology, which could cut emissions by up to 30pc for integrated steel mills.