Two opinions!

The Chinese are preparing to “kill” Tesla for Huawei

31.05.2019 Anton Chekhov

The trade war between the United States and China has reached a new level. After hitting to Huawei, the Chinese impose additional duties and restrict the export of rare-earth metals that are vital to the United States. The first blow can hit Tesla, which already has enough problems.

The arrest of the director of Huawei Meng Wanzhou in Canada was the trigger for the Chinese authorities. By the way, there is still no news regarding the fate of the Huawei CEO. Most likely, she is kept somewhere in a Canadian detention center, which only lawyers have access to.

Without Google, the Chinese have been living quietly for many years, as well as without other search engines hailing from the United States. In addition, the “cut down Huawei” on the vine will not work. The PlayMarket service, which simplifies application updates, of course, can be closed exclusively for Huawei, but the source code of the Android operating system will still be publicly available. That is, you can find an application for YouTube or Facebook, although without updates, it will still be possible. But the Chinese can respond to outright aggression in such a way that it little will not seem little to American business.

In response to the sanctions against Huawei and protective duties on all Chinese goods, the PRC not only makes a mirror stroke, but also raises the stakes. In the near future, the Chinese are going to limit the export of rare earth metals, vital for the production of microelectronics for both civilian and military enterprises. In this niche, the Chinese have almost a monopoly – they own 70 percent of exports. They will continue to mine and process these metals for their companies, but not for the American ones.

After such a statement, Ilon Musk, who invested hundreds of millions of dollars in the construction of the Tesla plant in China, probably began to worry. There are several possible scenarios. The first and the worst variant.  China can ask Tesla to leave, following Apple, one of America’s most profitable companies, because of inadequate US foreign policy. The Chinese themselves have been producing quite high-quality electric cars for a long time, and the refusal to cooperate with Tesla will pass for them almost imperceptibly. In any case, it will be much easier to master the market for electric cars without serious competitors.

For Tesla, whose financial situation can become very critical soon, restricting or banning Chinese raw materials will be the last nail in the coffin lid. Neither automobile bodies nor rechargeable batteries will be produced without Chinese metals.