Why Trump's tariffs may not hit Tesla
While foreign automakers and American consumers anticipate climbing car prices, the electric vehicle (EV) manufacturer — led by Musk — may be safe from Trump's 25 percent tariff because of its domestic production.
'Tesla made a business model choice that has served them well,' said Simon Ellis, who leads supply chain practices at IDC Manufacturing Insights. 'They can … argue more compellingly that their cars are really made in America.'
'And in the current climate, that probably helps them,' Ellis added.
Trump's 25 percent tariff is set to go into effect on April 2 as part of the president's broader trade war. He argued the tariffs will encourage foreign car manufacturers to move production into the U.S. and increase American jobs.
Tesla produces all of its North American vehicles in the U.S. at factories in California and Texas, potentially lessening the impact for Musk-led company, industry experts said.
'[Tesla] is well positioned because they have vertical integration,' said Stephanie Valdez Streaty, Cox Automotive's director of industry insights. 'They produce the vehicles they are building, the batteries. … They can have more control over that supply chain, which helps them out.'
The tariffs are meant to force automakers to move production to the U.S., which could be a lengthy and expensive process.
Trump told NBC's 'Meet The Press' in a Sunday interview he was fine with Americans paying higher prices for cars, so long as they were made in the U.S.
'I couldn't care less. I hope they raise their prices, because if they do, people are going to buy American-made cars. We have plenty,' Trump said.
Tesla has a head start to this transition, observers said, given the manufacturing process already takes place in the U.S.
'It going to take a while for some of these other manufacturers that don't have anything. It's going to take longer for them to retool the plants or shift production,' Valdez Streaty said. 'So that's another advantage.'
Check out the full report at TheHill.com tomorrow.
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