Cars, rockets and AI. Elon Musk has never been one to stay in his lane, and that’s what led people to hail the CEO as a visionary entrepreneur. But now, as he delves away from business and into politics, people are finding that Musk’s influence over government policy is proving to be a problem—and Tesla is the one that’s paying the price.

Welcome back to Critical Materials, your daily roundup for all things electric and automotive tech. Today, we’re talking about Elon Musk’s government meddling causing issues for Tesla, BYD’s scheme to offset tariffs in Europe and made-in-America cars are feeling the pain from China. Let’s jump in.

30%: Elon Musk’s Government Meddling Is Causing Problems For Tesla

 

Elon Musk isn’t one to shy away from controversy. Hell, the man bought an entire social media platform that he uses as a grandstand for both company announcements and personal politics. But it’s not just regulatory spats and arguments, anymore—Musk’s actions are causing real-world consequences. At the receiving end of those reverberations aren’t just Musk. Tesla (and Telsa owners) are also paying the price.

Tesla’s brand image has become increasingly entangled with Musk’s personal politics. Folks are now using that connection to show just how displeased they are with Musk’s militant meddling through protests and vandalism. Across the globe, Telsa showrooms, factories, cars and even its sales are feeling the full force of those upset with Musk.

Over the weekend, protests erupted in California and New York at Tesla showrooms to take a stand against Musk. Those involved specifically called for the boycotting of Tesla because of Musk, urging anyone who would listen to consider an EV made by—quite literally—any other automakers.

“Stop Musk’s coup,” read one protester’s sign.

“Don’t Buy Swasticars,” read another plastered to a Tesla logo, while a second taped to a Cybertruck read “Elon Musk is not my president!”

 

It’s not just protests, either. The FBI recently became involved after a Colorado Tesla showroom was vandalized. Police say that the words “Nazi cars” were spraypainted on the building (a nod to Musk’s “odd-looking” salute at the presidential inauguration last month which was also projected on Gigafactory Berlin by protesters), and someone attempted to set the showroom ablaze. Last year, while Musk was notably less controversial, one individual even spraypainted nearly three dozen Tesla Cybertrucks with anti-Elon profanity.

Even the internet has turned its back on Tesla. Posters on Reddit are reminding EV shoppers not to buy a Tesla whenever given the opportunity and urging Tesla to move on from Elon Musk’s leadership. However, Tesla’s stock has been intrinsically linked to Musk, meaning that cutting ties could be disastrous for investors. But with 10% of its market value already shaved off since the beginning of the year, maybe investors are getting the hint. Perhaps that’s why Tesla’s board has been offloading tens of millions of dollars in stock this month alone.

Let’s be real—Musk is Tesla’s greatest asset. He’s also Tesla’s biggest liability. Whether it be unveiling futuristic tech, making promises that investors expect him to make good on or landing rockets in his Tesla-adjacent businesses, the business side of Musk is what early Tesla investors bought in on. The politics side? Well, that’s the whole liability part. There’s a reason why most CEOs do their political meddling behind the curtain—whether ethical or not—and now Tesla is learning this lesson both quickly and publicly.

For years, Musk has insisted that Telsa is about the mission, not the man. But as the man’s actions in the U.S. are amplified in Europe and beyond, it’s clear that Telsa is Musk. And right now, Musk is a walking, talking controversy. Let’s just hope he doesn’t take EVs with him.

60%: BYD Will Offset EU Tariffs By Selling Carbon Credits

Photo by: BYD

BYD, China’s EV juggernaut, isn’t giving up on selling cars in Europe. Sure, the new tariffs are a hit to its bottom line, but that isn’t going to stop the EV maker from profiting in one of the world’s booming EV markets. And now it has a pretty clever way of circumventing the revenue it will lose thanks to these new duty fees.

Europe is getting pretty strict with emissions compliance. In fact, the bloc’s 2025 emission targets are about 15% lower than its 2021 levels. This means that to offset the emissions produced by gas-powered cars, at least 20% of automaker’s sales need to be battery-electric. The problem is that the overall market has stagnated at under 14%—and that means some nasty fines for those automakers that can’t cut it.

BYD’s stance? If you can’t hit those targets, buy the credits from us.

BYD is working with other automakers in Europe to form a pool that would allow other marques to purchase carbon credits from BYD to offset their respective fines. The idea itself isn’t unique—in fact, two pools were announced earlier this year that would accomplish the exact same outcome. But BYD’s stake in the game? It might just be how it can offset those pesky tariffs imposed on Chinese-built EVs.

“We are in talks, we are well underway,” confirmed Alfredo Altavilla, BYD’s special adviser for Europe, according to Automotive News.

Every EV that BYD sells technically over-performs on emissions. This means that the automaker is racking up carbon credits that it has no use for internally—but it does give them a very powerful piece of paper that they can sell other automakers who aren’t selling enough EVs to make due.

Here’s how Europe’s fines work: If an automaker exceeds the gram-per-kilometer limit of allowable emissions, it receives a fine of $98 (95 Euro) per gram, per vehicle. This means that if a vehicle exceeds the allowable limit by 100 grams, it receives a fine worth $9,800—ouch. BYD, on the other hand, will receive a surplus of credits for the number of grams below the allowable limit. So if each car is rated for 25 grams under the limit, that means each vehicle is generating $2,450 worth of credits that BYD can then sell off to other automakers.

BYD’s tariffs under the EU’s new anti-China EV scheme are at 17%, meaning a $30,000 vehicle would incur an additional $5,100 in import levies. If it manages to earn back $2,500 in carbon credits, this helps to significantly offset the cost of the new tariffs—meaning it opens an avenue to bringing affordable Chinese EVs to Europe. Especially considering that BYD can build cars for far less than its European rivals can.

However, the EU is rumored to be working on a proposal that will be more flexible for automakers. It works by “borrowing” credits from other years—if an automaker couldn’t meet the requirements by 2025 but expects to have an excess in 2027, it may be able to apply credits from 2027 to the 2025 shortage. This is something already in place for heavy vehicles and, in theory, could work for light-duty as well. And, more important to the EU’s war on China’s imports, it could put a pin in BYD’s plan.

So, no, BYD’s side hustle isn’t a get-rich-quick scheme, but it is a way for the brand to potentially gain traction in Europe without sharply raising prices for consumers. How long that will work, exactly, is an unknown. If Europe raises its emission targets, for example, due to the changing EV market, then BYD may not fully capitalize on this method in the long run. But if it’s enough to gain momentum in Europe, that could very well fund the brand’s run-up on European car buyers and undo any protections that the government may have for its domestic car market.

90%: China’s Retaliatory Tariffs Come For Ford, GM

Photo by: InsideEVs

Back on the U.S. front, China isn’t letting the latest round of Trump-era tariffs go unanswered. In a direct response to the administration’s newest blanket 10% import levies on goods from the country, China has hit back with a tariff of its own aimed directly at U.S. automakers.

China’s retaliatory tariffs will slap an extra 10% duty fee on vehicles imported from the U.S. with an engine capacity of more than 2.5 liters. This means that automakers like Ford and General Motors which are already struggling for relevancy against China’s domestic players now face an even steeper uphill battle to gain market share. And there’s collateral damage. Luxury marques like BMW and Mercedes-Benz produce many of their premium SUVs in the U.S., so the tariffs may hurt them too.

Here’s what Bloomberg has to say:

China’s 10% additional tariff on vehicles with larger engines imported from the US took effect Monday as the two countries failed to reach a deal over the Trump administration’s blanket levy on Chinese goods.

The extra tariff went into effect on Monday against goods including vehicles with engines larger than 2.5 liters, according to Chinese state broadcaster CCTV, bringing the total impost to 25%.

Exports of such vehicles are tiny relative to the number of cars that companies including General Motors Co. produce locally with joint venture partners. Manufacturers shipped about $3.1 billion worth of vehicles with larger engines from the US to China last year, according to customs data.

As mentioned, Ford and GM are likely to feel the brunt of this particular effort. Both automakers are already bleeding abroad with more and more pressure from China’s more than 100 competing automakers.

GM in particular is going into this after just reporting a loss of $5 billion in China last year. Some of its hardest-hit segments will likely be its high-dollar imports, including those sold through its lifestyle brand, Durant Guild, which peddles large SUVs like the Chevy Tahoe and GMC Yukon to China’s wealthiest buyers. Add another 10% and it makes some American vehicles a hard sell when placed up against a domestic competitor.

BMW and Mercedes are along for the ride, too. Analysts believe that Mercedes could lose around 1.5% of its annual earnings over China’s tariffs if it doesn’t institute some sort of counter-measure like raising prices. BMW has already begun the X5 in China to protect against this exact problem, but other models could still be vulnerable.

Tariffs aside, China’s move comes as a stern reminder to Western automakers: China doesn’t need U.S. cars like it used to—and frankly, its consumers may not want them, either.

GM and Ford once performed quite well in China. Hell, even BMW and Mercedes dominated the luxury segment in China. But homegrown brands like BYD, Geely, Nio, Xpeng and even Xiaomi are not just outpacing the legacy names in EV sales, but they’re also winning over China’s young, tech-savvy buyers. Add in protectionist or retaliatory tariffs and American automakers are going to have a very bad time.

100%: Would You Buy Rivian’s Van?

Photo by: Rivian

In case you haven’t heard, Rivian’s cute little EDV is officially on sale for anybody to buy. Okay, well, not anybody, but if you happen to own a business, Rivian will let you swipe your credit card.

It’s not cheap, though. And its range isn’t exactly setting any records (with the aerodynamics of a cinder block, nobody expects that). I still can’t help myself from wanting to sell off everything I own, turn one into a nomad-mobile, and become a vandweller. Kidding, of course, but it could make an awesome do-it-yourself RV.

Would you buy one of these Rivian RDVs? And if so, what would your ideal use be? Let me know in the comments.