How much would a 100% 'Made in the USA' vehicle cost? It's complicated

CNBC

16-05-2025

LOUISVILLE, Ky. — A white 2025 Ford Expedition SUV with bronze exterior trim rolls off the assembly line at Ford Motor's Kentucky Truck Plant. It was assembled — from its frame to completion — by American workers at the factory. But it's far from being completely "Made in the USA."
A majority of its main parts — at least 58% as stated on a window sticker — were made outside of the country, including 22% from Mexico. That includes its Ford-engineered, 3.5-liter twin-turbocharged V-6 Ecoboost engine, the heart of the vehicle.
The popular large SUV is a prime example of how complicated the global automotive supply chain is, and underscores the reality that even vehicles rolling off U.S. assembly lines from quintessentially American companies such as Ford can rely heavily on non-domestic content.
The massive Kentucky assembly plant that has more than 9,000 people building the Expedition, F-Series pickup trucks and Lincoln Navigator SUV is exactly the kind of facility President Donald Trump is pressuring automakers to build in the U.S. through his use of aggressive tariffs.
After Trump put 25% tariffs on imported vehicles and many automotive parts, automakers started scrambling to tout U.S. investments and localize supply chains as much as possible. But while the country would benefit from jobs and economic output if all auto parts were sourced and manufactured in the U.S., experts say it's just not feasible.
"Some parts that have been offshored will still be cheaper to manufacture in those locations rather than the USA at scale even with some of the imposed tariffs," said Martin French, a longtime supplier executive and partner at Berylls Strategy Advisors USA.
Processing and production plants for things such as steel, aluminum and semiconductor chips, especially older ones used for autos, as well as raw materials like platinum and palladium, aren't prevalent enough in the U.S. without establishing new plants or mines. Those are processes experts say would take a decade or more to create in scale.
On top of that, the increased costs of a 100% U.S.-made vehicle could price many consumers out of the new vehicle market. That could in turn lead to less demand and likely lower production.
"We can move everything to the U.S., but if every Ford is $50,000, we're not going to win as a company," Ford CEO Jim Farley said last week on CNBC's "Squawk Box." "That's a balancing act that every [automaker] will have to do, even the most American company."
Farley said 15% to 20% of commoditized vehicle parts are difficult, if not impossible, to currently source in the U.S. That includes things such as small fasteners, labor-intensive wiring harnesses and almost $5,000 in semiconductors per vehicle, which are currently sourced largely from Asia.
S&P Global Mobility reports there are on average 20,000 parts in a vehicle when it's torn down to its nuts and bolts. Parts may originate in anywhere from 50 to 120 countries.
For example, the Ford F-150, which shares a platform and some parts with the Expedition, is exclusively assembled in the U.S. but has roughly 2,700 main billable parts, which exclude many small pieces, according to Caresoft, an engineering benchmarking and consulting firm.
The Trump administration could ease higher prices for an American-made vehicle by offering tax breaks or consumer incentives, much like the up to $7,500 electric vehicle credit Trump previously promised to eliminate.
But the costs of a 100% American-made vehicle are far greater and more complex than they might seem at first blush. It's even hard to track what comes from the U.S., as automakers are required to report a combined percentage of Canadian and U.S. content in a vehicle, not just U.S. content.
The material costs alone, excluding manufacturing investments, would add thousands of dollars to a vehicle's price point, which would wipe out profits for automakers and force price increases for consumers, a handful of automotive analysts and executives told CNBC.
The people, who were given anonymity to speak freely, estimated it would add thousands of dollars with each step you took to get closer to 100% U.S. and Canadian parts.
Mark Wakefield, a partner and global automotive market lead at consulting firm AlixPartners, said nothing's necessarily impossible with time, but the investment needed for U.S. and Canadian sourcing and added costs would increase exponentially the closer a company came to a 100% "Made in the USA" vehicle.
"The cost gets quantumly more the higher the closer you get to 100%," Wakefield said. "Getting above 90% gets expensive, and getting about 95% would get really expensive, and you just start getting into things that you'd have to a take a long time [to do]."
To get that last 5% to 10%, if, or when, you could, Wakefield said, it would start "getting really expensive" and likely take a decade or more to set up raw material sourcing and reshore production of some parts.
"I don't think you could do it more than about 95% on average, at any cost at the moment, just because you need to build a lot of stuff that's going to take a long time," he said. "The processing and the raw material stuff, it takes a really long time, because those are multibillion dollar facilities that process it."
Two executives with auto suppliers told CNBC it would be "unrealistic," if not impossible, for a company to profitably build a 100% U.S.-made vehicle at this time. Another executive at an automaker estimated the average cost increase for an American-assembled U.S. full-size pickup would jump at least $7,000 to source as many components as currently possible from the U.S. and Canada.
One expert, generalizing the costs, said it could cost $5,000 more to get a vehicle that's under 70% U.S./Canadian parts to 75% or 80%; another $5,000 to $10,000 to hit 90%; and thousands more to a higher percentage than that.
Using that as a basis, the average transaction price of a new vehicle in the U.S. is currently around $48,000, according to Cox Automotive. Say that vehicle is made up of $30,000 in materials and parts. Adding the above costs would come out to roughly $10,000 to $20,000 more for companies.
Cars.com reports the U.S. is by far the most expensive country to manufacture a vehicle in. The average new-car price of a U.S.-assembled vehicle is more than $53,200, according to its data. That compares with roughly $40,700 in Mexico, $46,148 in Canada and roughly $51,000 in China.
Excluding raw materials, someone could theoretically start a new car company — let's call it U.S. Motors — from scratch. U.S. Motors could spend billions of dollars to build new factories and establish an exclusively American supply chain, but the vehicle it would produce would likely be low-volume and excessively expensive, experts say.
Think of Ferrari: Every car from the iconic automaker comes from Italy, with as many components as possible sourced from the company's homeland.
But even Ferrari's multimillion-dollar sports cars have parts or raw materials for things such as airbags, brakes, tires, batteries and more that come from non-Italian suppliers and facilities.
"If you did it at really low volume and you're extremely innovative and different with the vehicle, you could make $300,000-$400,000 vehicles that are all-American," Wakefield said. "To do it at scale, it would be 10-15 [years] and $100 billion to do that."
Getting vehicles to 75% U.S. and Canadian parts and final assembly in the America is a far more achievable target that "doesn't really force you to do uneconomic things," Wakefield said, noting that a few vehicles meet that standard today.
But even reaching that threshold on a larger scale would likely take billions of dollars in new investments from automakers and suppliers to localize production. Some automakers could make the move more easily, while others would require massive shifts in sourcing and production.
Vehicles that meet the 75% U.S./Canada parts standard for the 2025 model year include the Kia EV6, two versions of the Tesla Model 3 and the Honda Ridgeline AWD Trail Sport, according to the latest vehicle content data required by the National Highway Traffic Safety Administration. Nearly 20 others are at 70% or higher, while some vehicles still need to be added to the data.
That compares to 2007 model-year NHTSA data, where the top 16 vehicles — all from GM and Ford — had 90% or more U.S. and Canadian content. Ford's Expedition at that time was among the highest at 95%, but that was before the expanded globalization of the auto industry supply chain after the Great Recession — and before several major technological advances in cars made new parts and materials more important.
For decades, there has been a trend for less U.S./Canadian content because of the globalization of supply chains and the increase in the use of Mexico as a source of parts and components, according to American University's Kogod School of Business.
Imported vehicles from many luxury brands, specifically German manufacturers as well as Toyota's Lexus, feature little U.S.-sourced content. Many have none or 1%, according to the federal data.
The U.S./Canada percentages, under the American Automobile Labeling Act of 1992, are calculated on a "carline" basis rather than for each individual vehicle and may be rounded to the nearest 5%. They are calculated by automakers and reported to the government.
However, a high threshold of North American parts also doesn't mean the vehicles are produced in the U.S. The 2024 Toyota RAV4, for example, was reported to have 70% U.S./Canadian parts and is built in Canada.
"You could have a vehicle, theoretically, that is made in the U.S., but only has 1% parts, content," said Patrick Masterson, a lead researcher for Cars.com's "American-Made Index."
Cars.com's annual index of the top U.S. vehicles takes vehicle assembly, parts and other factors into account. No vehicles from Ford or General Motors made the top 10, while two Teslas, two Hondas and a Volkswagen took the top five spots.
The study ranks 100 vehicles judged through the same five criteria it's used since the 2020 edition: assembly location, parts content, engine origin, transmission origin and U.S. manufacturing workforce. More than 400 vehicles of model-year 2024 vintage were analyzed to qualify the 100 vehicles on the list.
The white 2025 Ford Expedition that recently rolled off the assembly line in Kentucky is expected to score higher than the prior model year, which ranked 78th, because of an increase in domestic content.
Masterson said there's been increased interest and popularity for the "American-Made Index" this year amid Trump's tariff policies and nationalism.
"Traffic on the 'American-Made Index' this year is way, way up. … People are concerned about this, perhaps more than ever," Masterson said, later adding "it would be extremely difficult to make a 100% U.S.-made [vehicle]."