Elon Musk believes Volkswagen is the company making the most progress on electric vehicles besides Tesla, the billionaire entrepreneur said during an interview with Financial Times.

Asked which EV startup has impressed him the most, Elon Musk avoided a direct answer, giving a rather surprising reply. He didn't nominate actual startups like Rivian, Lucid, Nio and so on, singling out legacy automaker Volkswagen instead.

"I think the company making the most progress besides Tesla is actually VW which is not a startup but could be viewed in some ways as a startup from an electric vehicle standpoint. So VW is doing the most on the electric vehicle front."

Of course, every legacy automaker that also builds electric vehicles can be viewed as a startup from an EV standpoint, but the fact that Musk nominated Volkswagen and not another company is significant. It may or may not have something to do with his friendly relationship with VW Group CEO Herbert Diess

The two CEOs have acknowledged each other's accomplishments in electric vehicles, exchanged test drives of Tesla and VW EVs, with Diess even inviting Musk to address 200 Volkswagen executives via a video call in October 2021. Musk's comment on VW being second in EVs after Tesla may be seen as returning one of the many compliments Diess has made to Musk and Tesla in recent months.

VW aside, Tesla's CEO sees strong competition from Chinese EV makers going forward.

"I think there will be some very strong companies coming out of China. There's a lot of super talented, hardworking people in China that strongly believe in manufacturing. They won't just be burning the midnight oil, they'll be burning the 3 am oil. They won't even leave the factory type-of-thing, whereas in America, people are trying to avoid going to work at all."

Again, Musk did not nominate any Chinese EV startups but the fact that Tesla operates a manufacturing plant in Shanghai has allowed him to get a unique perspective on the work ethic there and how fast things are moving in China's electric vehicle market.

You can watch the entire interview in the video at the top of this page.

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