Elon Musk, whose company Tesla has long been at the forefront of the electric vehicle (EV) industry, acknowledged the growing competition from Chinese automakers. The billionaire Tesla CEO made the remarks while participating in a late-January earnings call.

“Our observation is generally that the Chinese car companies are the most competitive car companies in the world,” Musk said. “So, I think they will have significant success outside of China, depending on what kind of tariffs or trade barriers are established. Frankly, I think if there are not trade barriers established, they will pretty much demolish most other car companies in the world.”

During the fourth quarter of 2023, Chinese automaker BYD surpassed Tesla in worldwide electric vehicle sales for the first time. While Tesla managed to retain its title as the top EV-seller for the entire year, the gap between the two automakers is narrowing.

In 2022, Tesla outsold BYD by 400,000 EVs, but last year, BYD closed in further, trailing by just 230,000 cars.

One of the driving factors behind the rapid rise of Chinese companies like BYD is their ability to offer EVs at lower prices, thanks to China’s supply chain dominance over the materials used to build them and substantial state subsidies Beijing has doled out for the industry. This has resulted in the average BYD vehicle sale price dropping below $30,000. However, for Tesla, things are a bit different.

“People are really stretching their wallets to be able to afford a Tesla,” Musk said. “It’s quite a difficult thing for them to do.”

In response to the challenges posed by Chinese competitors, Tesla is now working to address the pricing issue with plans to produce more affordable models in the future. It’s a move the automaker’s leaders expect to also impact their bottom line in 2024.

In a letter sent out to shareholders, Musk warned that Tesla’s 2024 sales growth may be “notably lower” than the 2023 growth rate.

“There will be periods where we won’t be growing at the same rate as before,” Tesla CFO Vaibhav Taneja said. “In 2024, our volume growth will be lower as we have said, because we’re trying to focus a team on the launch of the next generation vehicle.”

Meanwhile, these sentiments from members of Tesla’s top brass have been costing the automaker money. Since these comments were made, the company has experienced a significant decline in market value, losing $80 billion, with the company’s stock dropping by 12%.