Tesla CEO Elon Musk said during a conference call with industry analysts that he believes the electric vehicle automaker's biggest competitor will come from China, not the United States. During this meeting, the outspoken CEO was asked about the status of Chinese carmakers regarding their aggressive moves towards electrification and related technologies.

Per Bloomberg, Musk replied that these rivals "work the hardest, and they work the smartest" and are major competitors. "If I were to guess," he continued, "probably some company out of China is the most likely to be second to Tesla." Who are these Chinese automakers, specifically?

The growing list includes Xpeng, Aito, and BYD. The latter, China's biggest EV brand, outsold Tesla last year, but only if you included its plug-in hybrid sales with pure electric vehicles. BYD even planned on selling cars in the USA but stopped its plans for several reasons.

Tesla has faced recent customer backlash in China, the world's largest automotive market, over Model 3 and Model Y price cuts. US market customers have also vented their frustrations over this issue, but China, at least in Musk's mind, is viewed differently. Musk added during the conference call that China is currently the most competitive EV market.

According to the China Passenger Car Association, China sold 5.67 million EVs and plug-ins in 2022. In the US, just 918,464 plug-ins were sold last year. Tesla's reliance on China couldn't be more evident: it manufactured over 710,000 vehicles at its hardworking Shanghai Gigafactory last year, which translates to about 52% of its global output.

Assuming no major pandemic-related disruptions in 2023, Musk believes Tesla's global output could hit 2 million vehicles. American automakers, meanwhile, are finally nearing the point of consistent and mass EV production, but it took them several years to catch up.

Last summer's Inflation Reduction Act was a huge step forward in providing consumers with expanded federal tax credits to purchase plug-ins and making a friendlier business environment for carmakers and suppliers.

Detroit's Big Three are now well underway with their respective electrification plans, but one critical issue still needs work: a charging infrastructure. Tesla solved this with its Supercharging network, but rival charging companies like Electrify America and ChargePoint need to catch up with the number of charging stations. They are expanding, and the IRA will contribute, but it'll take time.

China's massive EV push that began several years ago has placed it in a very comfortable position, at least in Musk's mind.