President Donald Trump’s new auto tariffs will have a “significant” effect on Tesla (TSLA0.00%), CEO Elon Musk says.
“Important to note that Tesla is NOT unscathed here,” Musk said on his X on Wednesday evening. “To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial,” he added in another post.
The Trump administration’s new 25% tariffs on all imports of finished cars and trucks and of autoparts are set to go into effect on April 3. Almost half of all vehicles sold in the U.S. are imported, as are almost 60% of all parts in vehicles assembled in the U.S.
While it’s unclear how much the duties will affect Tesla, CFO Vaibhav Taneja said on a January earnings call that the tariffs will hit the company’s business and profitability. Despite Tesla’s work to localize its supply chains, it still relies on parts sourced worldwide.
In a recent letter to the U.S. Trade Representative (USTR), Tesla said that even with “aggressive” localization of the supply chain, some parts are “difficult or impossible” to source domestically. The Austin, Texas-based automaker asked the USTR to consider the downstream effects of proposed actions.
According to the National Highway Traffic Safety Administration, between 60% and 75% of the parts used in Tesla’s electric vehicles are made in the U.S., although that varies by model. Like other automakers, Tesla buys parts like body panels and headlamps from Mexican suppliers. By the end of 2024, Mexico exported more than $182 billion worth of vehicles, engines, and autoparts to the U.S.
Trump told reporters the tariffs may be “net neutral or they may be good” for Tesla. He added that the tariffs will be good for “anybody that has plants in the United States.”
Tesla is expected to be among the least-affected automakers, according to JPMorgan (JPM-0.04%) analysts, alongside fellow EV maker Rivian (RIVN0.00%).
“We consider Tesla the least exposed to the tariffs, noting that it was named the ‘most American-made car company’ from 2022 to 2024 by Cars.com (CARS0.00%),” CFRA analyst Garrett Nelson said on Tuesday.
Tesla assembles its Cybertrucks and Model Y in Austin, while the Model S, Model 3, Model X, and some Model Y units are produced in Fremont, California. Rivian currently makes its electric trucks in Normal, Illinois, and is working on a plant near Atlanta, Georgia.
JPMorgan analysts now expect the auto industry to take a $82 billion annual hit, up from an initial estimate of $41 billion, assuming that automakers absorb the cost of the tariffs. If they decide to pass the costs on to consumers, light vehicle prices could rise by up to 11.4%.
Foreign automakers, such as Volkswagen (VWAGY0.00%) and Hyundai Motor (HYMTF0.00%), are expected to be the hardest hit by the tariffs. Domestic automakers, including General Motors (GM0.00%), will also likely take billions of dollars in losses, according to analysts.
The Michigan-based Anderson Economic Group previously estimated that a 25% tariff on Mexican and Canadian imports would add between $4,000 and $10,000 per unit to vehicles assembled in North America. Trump’s tariffs on imports of aluminum and steel add another $250 to $800 per gas-powered vehicle and up to $2,500 on EVs.
“Under the new scheme virtually all automakers will face significant pressure to raise prices, making it more likely domestic automakers will be able to effect price increases to better offset tariff costs without the risk of material market share loss,” JPMorgan’s Ryan Brinkman said in a Wednesday note.
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