Former Tesla Inc TSLA executive Rohan Patel said on Tuesday that nothing, including protectionist measures such as tariffs on foreign imports, will protect automakers from industry upheaval going forward unless they are efficient and innovative.
What Happened: “No amount of protectionism in the form of tariffs and subsidies and regulations will protect companies that aren't able to be insanely efficient and innovative,” Patel said in response to reports that Volkswagen is considering shutting its factories in Germany for the first time in its 87-year history owing to heightened competition and pricing pressure.
The upcoming 10 years in the auto sector will be “unpredictable and uneasy” for companies throughout the automobile supply chain, he said.
“The upheaval in the auto sector over the next ~10 years promises to be unlike anything we've seen since the early 20th century,” Patel, who was Tesla's vice president of global public policy and business development until April earlier this year, wrote.
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Musk’s Response To Volkswagen’s Hardships: Tesla CEO Elon Musk on Monday raised doubts about California-based EV startup Rivian Automotive getting money from Volkswagen as part of a recently announced joint venture between the two players.
"Where will they get the money?," Musk wrote on X in response to a Tesla enthusiast who mocked Rivian for banking on Volkswagen for as much as $5 billion in funding when the German automaker itself is shutting down factories in Germany.
The new comments from both the former Tesla exec and the CEO come on the heels of reports that the German automaker is considering closing factories in Germany in light of pricing pressure from rivals including Chinese automakers.
The company is now considering closing vehicle production and component factories in a bid to cut costs, reported the New York Times. IG Metall union, which represents automotive workers, has said that they will resist job cuts.
Union leaders and workers' representatives hold half the seats on Volkswagen's supervisory board.
Musk, like Patel, has previously slammed the imposition of tariffs and subsidies to protect auto companies saying, “Things that inhibit freedom of exchange or distort the market are not good.”
The European Commission said last month that it is looking to impose additional duties of up to 36.3% on EV imports from China alleging that it would level the playing field between domestically manufactured vehicles and cheaper Chinese imports.
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