In America: Elon Musk’s Paycheck, Tesla’s inflated value & Why Trump’s Famed Tariffs Might Not Work
Nick Brundle Photography
Is Tesla Still a Car Company?
Following decades of growth and lofty promises, the dawn of 2025 brought a drop in Electric vehicle (EV) sales for Elon Musk’s Tesla. Normally, a regression in car sales for a car company is not a big deal, but things are a bit different when the company in question is one of the magnificent seven stocks. It is widely known and seemingly accepted that most of the western world’s wealth is invested into these big seven stocks. While most others in this exclusive trillion-dollar club may perpetrate themselves to have endless growth and a seemingly never-ending roster of products and innovation to sustain that growth, Tesla is but a car company. This means that as long as they manufacture cars, they should be valued as such.
Take Toyota, for example, a car company if there ever was one. A stagnation in sales for Toyota doesn’t mean an impending stock market crash, mostly because Toyota is valued as a car company, similar to Ford, Volkswagen, or Renault. However, Tesla is valued at several trillions of dollars, partly due to its enigmatic CEO and partly due to the widespread hype surrounding the innovative technology.
Tesla's marlket Cap Dwarfs Automobile Giants
Find the data hereFollowing a poor sales year in 2024, Elon Musk did what he does best, lofty promises with no concrete delivery dates, in an attempt to reassure investors and shareholders that the company seeks to grow and grow and grow.
This time, the promises include AI-powered humanoid robots in every American household for under $20000. All while failing to address the fact that self-driving cars, which were promised in a similar earnings call in 2015, have taken over a decade to be delivered and are still extremely faulty, making it unusable in most cities.
All EVs or Just Tesla?
However, Tesla’s apparent sluggishness in car sales in not a reflection of the EV industry as a whole. While Tesla’s Cybertruck faced backlash over faulty parts, poor design choices and potentially lethal hardware, Ford, Hyundai and Li Auto, all exceeded expectations in the EV industry. Ford is the exception as the American company in that list, but the rest are all international car companies that will be expecting high tariffs in the new Presidential Administration. While Elon Musk seeks to battle in court for a potential $56 billion annual paycheck, consumers will be struck with tariffs between 25% and 100% in 2025 to buy EVs, the supposedly affordable and sustainable vehicle choice. However, a tariff on foreign cars doesn’t mean that American cars are automatically cheaper. Domestic car manufacturers like GM and Ford still import a majority of their car parts from tariff-struck countries like China or Mexico.
While the leading American EV company appears to be inflated, overpriced, and seemingly over-promising technology while despite simultaneously under-delivering on said promises, the Chinese EV market seeks to absorb the customers left behind. For instance, a mere 3 weeks after German automotive company Porschè released its flagship EV sports car, the Taycan 2024, Chinese tech mega-corp Xiaomi released its version of the car, the SU7. Not only is the SU7 cheaper than the Taycan by nearly $70000, but it also has a longer range and higher top speed, and it broke the record on Germany’s Nürburgring racetrack, widely accepted as the benchmark for car testing.
Will Trump’s Tariffs Work?
Assuming President Trump imposes a 100% tariff on the car, it will still be cheaper than its European counterpart by nearly $10,000. Are Tesla cars still going to be cheaper? Yes. But – for a little more than its current price, tariff included, the Chinese EV in question is faster, with better range and more features. This is not to say that the Chinese car has no flaws, that Tesla is perfect, or vice versa. It is an attempt to paint a picture of the EV landscape and how the incoming tariffs might not work.
American automotive parts, products, and accessory company AutoZone’s CEO Philip Daniele said during a recent earnings call, “If we get tariffs, we will pass those tariff costs back to the consumer, and we'll pass them through…As they turn through, we know what the tariffs will be; we generally raise prices ahead of that.” This sentiment is not a unique one, as Columbia, the sportswear company’s CEO, said that the company was “set to raise prices” as a reaction to the new government’s tariffs. “It’s going to be very difficult to keep products affordable for Americans,” he said.
CEO of American mega-corp, Walmart, John David Rainey, told MSNBC that tariffs are “inflationary for customers,” and that “... probably will be cases where prices will go up for customers.” Although this fact remained largely unacknowledged by the former and current US President during the campaign, he now said, "Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will all be worth the price that must be paid.”
Is China Winning the EV & AI Race?
However, this phenomenon is not unique to the EV market. Through most of the 2020s, following the release of Large Language Model ChatGPT by American company OpenAI, the LLM/AI industry has been the pride and joy of the West’s tech sector. However, a surprise release of statistics around its Chinese competitor, DeepSeek r1, stirred up some trouble in the American tech sector. The Chinese LLM is widely considered to be on-par with the computing capabilities of OpenAI’s $200 offering, at no cost. It also seemed to be quicker, more efficient, and was a fraction of the cost to train. But there is a catch: users have reported data breaches, censorship, and false information on the platform.
As it stands, the Chinese markets for EVs and LLMs are far more competitive than the US ones. In the electric car market, China benefits from large government subsidies and decades of experience in manufacturing Lithium-Ion-Phosphate batteries, with mines for the requisite resources. This, combined with little to no labor protections and lower production costs, makes the Chinese alternatives more affordable. In the LLM market, China leverages its substantial data access, large number of requisite engineers, and cost-effective data banks to make substantial advancements in the AI space. While the US also has access to substantial data and infrastructure, in their tireless effort to exponentially increase CEO compensation, American companies, be they EVs or LLMs, are much more expensive to produce, manage, and market.