Latest News

Elon Musk’s Tesla will be less affected by Trump’s auto tariffs

Tesla, the electric vehicle manufacturer, was less affected by Donald Trump's auto tariffs than other automakers.

Analysts said that Tesla's financial performance and supply chain may not be affected due to the large levies on global shipments, including cars and parts, to the United States. This is mainly because the company produces a majority of its products domestically.

Even though Musk is now one of the primary advisors to President Trump, Musk's task may not be to improve the reputation of the brand worldwide. Musk was appointed by Trump as his chief adviser and has been tasked with cutting federal spending quickly.

Tesla shares are down more than 40% from their peak in mid-December. A protest movement has erupted against the EV firm in the U.S. as well as around the globe. The Department of Government Efficiency, led by Musk, has been heavily criticized for targeting federal workers. Stocks were up over 6% on Friday.

The 25% tariffs will disrupt the global auto industry, increase the price of vehicles in the United States and squeeze the earnings of automakers. Ford, General Motors, and Chrysler parent Stellantis all saw their shares fall between 1.2% to 5.8%.

Tesla imports some parts, but the majority of its vehicles are produced in the United States.

Trump claimed that the tariffs announced on Wednesday may be neutral for Tesla or even beneficial to it. He also said that Musk, his close friend and ally, did not give him any advice regarding the auto tariffs.

In recent days, several administration officials have publicly defended Tesla. They ranged from encouraging people to purchase its stock to opening an investigation into vandalism in Tesla dealerships.

Musk said late Wednesday that "To be clear," this would affect the cost of parts for Tesla cars imported from other countries. Cost impact is not a trivial matter.

ImportYeti's data on import filings through the end February shows that Tesla imports lithium ion batteries and other automotive components from China, South Korea, Japan, and Mexico.

Goldman Sachs estimates that car prices could increase by $5,000 to $15,000.

Analysts said that automakers will likely pass the tariffs on to their customers through higher prices. This could help close the gap between Tesla’s electric car and other gas-powered vehicles.

TD Cowen analysts wrote in a report that Tesla is a relative winner, given its 100% U.S. manufacturing footprint and substantial U.S. sourcing. Model Y competes in a midsize cross-over segment where up to 50% of vehicles may be subject to tariffs.

Tesla's competitiveness is being eroded by political sentiment in Europe and Canada and the reduced incentives for electric vehicles.

Tesla faces policy challenges and decreasing subsidies in Britain and the European Union that could dampen demand, and even slow down its growth trajectory. Canada has frozen its rebate program for Teslas.

Seth Goldstein of Morningstar, an analyst, said that if all automakers raised prices to fully reflect tariff effects, Tesla would be cheaper than other luxury cars.

(source: Reuters)