Donald Trump’s recent adjustments to automobile tariffs were intended to provide relief for major U.S. carmakers, but according to analyst Dan Ives of Wedbush Securities, Tesla stands to benefit the most. This development may give Tesla a slight advantage, especially considering its CEO, Elon Musk, donated nearly $300 million to Trump and other Republican causes during the previous election cycle.
While the first round of tariffs highlighted Tesla’s relative protection compared to other major carmakers, Trump’s new executive order scales back some auto tariffs. This move was sought after by domestic automakers who faced significant duties on imported car parts. Although the latest tariff adjustments might offer temporary relief to some of the Big Three automakers, Tesla retains an edge.
Wedbush noted that Tesla’s strong localization of its supply chain—85% to 90% in the U.S.—means it will be exempt from many of these tariffs. According to the ‘2024 Made in America Auto Index,’ Tesla models dominate in terms of domestic content, with the Model 3 Performance and Model Y leading the rankings.
Despite Tesla’s advantage, analysts have warned that Trump’s initial tariffs could threaten Musk due to potential lower economic growth. Musk has been vocal in urging Trump to reduce tariffs on cars and other items, reiterating this stance during Tesla’s recent earnings call.
Wedbush remains cautious about the future of the auto industry, predicting that the average car price could increase by $5,000 to $10,000. They estimate that current tariffs cost the industry $100 billion annually, which will likely be passed on to consumers, reducing demand.
Musk has historically benefited from government support, strengthening his position with Trump’s administration. Following financial challenges due to protests against Tesla, both Musk and Trump staged a live advertisement for Tesla on the White House lawn, with Trump labeling related vandalism as domestic terrorism.
— new from The Intercept