Trump’s tariffs to impact most carmakers, but Tesla less affected

As the global auto world reeled from the potential fallout of US President Donald Trump's new car tariffs, one name stood out as less affected than others — electric vehicle maker Tesla.

Shares of the Texas-based company were the rare carmaker to trade in the green in US action on Thursday as analysts said the EV maker's supply chain and financial performance may not be as affected by the wide-ranging levies that will impact global shipments of cars and car parts to the US.

This is mainly due to the company's largely domestic production and supply chain. However the relief in the US, where Tesla CEO Elon Musk has become one of Trump's primary advisers, may not improve the brand's reputation worldwide.

The billionaire CEO, who heads the department of government efficiency (Doge), has been tasked with swiftly cutting federal spending. Tesla shares have plunged more than 40% since peaking in mid-December as a protest movement against the EV company has erupted in the US and around the world and Doge has drawn heavy criticism for going after federal workers.

Tesla's models are relatively old and competition has been increasing. The stock closed 0.4% higher on Thursday as shares of General Motors lost 7.4%, Ford Motor closed down nearly 4% and Stellantis shares lost 1.3% in US trading.

Carmakers' shares generally fell on expectations that the 25% tariffs will disrupt the global automotive industry, raise the cost of vehicles in the US and pinch earnings.

While Tesla does import some parts from around the world, it is less dependent on foreign components than other carmakers selling in the US. All of Tesla's US-sold vehicles are made in the US, whereas Toyota imports 55% of vehicles sold in the US, and GM imports 48% of vehicles for its US sales, according to research from Bernstein. Many of the imports are from Canada and Mexico.

A Bernstein analysis published on Thursday estimated 61% of Tesla's US-sold vehicle content comes from the US, with 22% coming from Mexico, 7% from Canada and 3% from China. It described Tesla as the industry outlier on tariff impacts.

"With near-total US sourcing, the company not only avoids pain but stands to gain margin as competitors raise prices," Bernstein analysts wrote.

Trump said the duties announced on Wednesday could be net neutral or good for Tesla, adding Musk did not advise him regarding car tariffs.

Several administration officials have defended Tesla in public comments in recent days, ranging from urging people to buy its stock to opening investigations into vandalism at Tesla dealerships.

Musk late on Wednesday said, "To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial."

Tesla imports lithium-ion batteries from China's Contemporary Amperex Technology and other automotive parts from countries such as South Korea, Japan and Mexico, according to import filing data through the end of February provided to Reuters by ImportYeti.

Car prices could rise by $5,000 (R91,162) to $15,000 (R273,291) if a 25% tariff on imported cars is maintained, according to Goldman Sachs.

"Tesla is a relative beneficiary given 100% US  production footprint, substantial US sourcing and with Model Y competing in a midsize crossover segment where close to ~50% of vehicles could be subject to tariffs," TD Cowen analysts said in a note.

However, the carmaker faces mounting challenges in Europe and Canada, where political sentiment and reduced electric vehicle incentives are eroding its competitive position. In Britain and the EU, Tesla is grappling with policy headwinds and shrinking subsidies that threaten to dampen demand and slow its growth trajectory. Canada has frozen a rebate program for Teslas.

Wall Street on average expects Tesla to report a 3% rise in first quarter deliveries next week, based on 20 analysts polled by Visible Alpha.

"Musk's involvement with Trump might be a factor weighing on sales outlook outside the US," said Sandeep Rao, senior researcher at Leverage Shares.