With China’s automakers releasing cheap EVs that boast looks, interiors, tech, and features to rival those from outside brands, automakers like Honda have started to struggle with sales in the country. Honda’s sales in China dropped from 1.62 million units in 2020 to just 640,000 units in 2025, and annual production volume in the country may fall below 600,000 by the end of 2026.
In late February 2026, Honda CEO and President Toshihiro Mibe visited an auto parts manufacturer in China to see how the nation’s automakers were making so many cars so quickly — and he left the factory with a sense of urgency. “We have no chance against this,” Nikkei Asia reported
innovations allows Xiaomi to build 1,000 vehicles a day. That’s enough for Ford CEO Jim Farley to tell CBS Sunday Morning in late 2025 that China had the capacity to build enough vehicles for all of North America and “put us all out of business.”
“I think China will be by far the biggest competitor in the humanoid robot market. China is extremely good at scaling and manufacturing, and is also strong in AI — the models being released there are already quite good and are improving rapidly,” Musk said, in response to a question about the recent surge of startups — particularly from China — entering the humanoid market, and about the long-term competitive advantages that would keep Tesla ahead and how Optimus will fundamentally differ from these competitors.
Time to move on?
Hawkwin
Who will note that the tariff on Chinese robots is even higher than the tariff on Chinese cars - for now.
I think Hawkwin was asking how that could possibly be correct, since the Chinese government is backing firms in all of Tesla’s current and future business segments: EV’s, autonomous driving EV’s, humanoid robots, and indeed AI and embodied AI generally. If the correct business move is to get out of segments the government is supporting, then what’s left for Tesla’s business model?
From robots? China is subsidizing their robots MORE THAN they are subsidizing their EV industry.
Does that mean Tesla should move on from robots?
China currently appears to be directing massive, accelerating investment into its robotics industry (potentially $400 billion in 2026, with over $20 billion in direct, recent subsidies), surpassing the scale of current direct consumer-facing subsidies for electric vehicles (EVs). While EV subsidies (totaling roughly €5.3 billion up to 2022) were historically crucial in establishing the market, recent subsidies for robots are higher in absolute terms due to comprehensive national strategic planning.
No, not from robots or cars or batteries or chips or chargers or insurance or storage or taxis or AI or lithium or semis or etc. etc. You guys are looking piecemeal, try the holistic approach. Try comparing Tesla’s cash flow vs. BYD’s.
So called dual use…Make things to sell to consumer and at the same time make weapons for the world. The change in Japanese constitution has occurred, and now they are selling weapons and war frigates to Australia and arming the region.
The US is welcoming this. Japan and Australia will stand guard on the eastern front while the US wants to retreat and pass the imagined burden to their ‘allies’. In the West, the US is also attempting to pass the torch to the Europeans.
Will the US be more isolationist? No not at all. It will continue to wield its influence and work to get their proxies to stand in front and to get them to spend money for war. It is a good era for arm makers and dealers everywhere. The US battle cry is democracies against autocracies but mainly its message is ‘comply if you don’t want to be messed with’.
BYD is spending every dime they have and more on building out vertical integration including factories, battery plants, semiconductor fabs, and even its own shipping fleet, spending almost 20 times more than Tesla..
Charlie Munger described investing in BYD as “holding onto my hat lurching around the track.” I don’t know enough to say if this approach will be successful (more successful?), but BYD is definitely swinging for the fences.
If I read this right, BYD is out-selling Tesla four times while going deeper into debt by $57.9 Billion. This is a strategy designed to bankrupt competition but you cannot bankrupt a competitor that has positive cash flow.