| Key Points: – U.S.-based production shields Tesla from Trump’s auto tariffs, unlike GM and Ford. – Musk says ending tax credits would hurt rivals more than Tesla. – Musk sees self-driving tech as Tesla’s key long-term value. |
President Donald Trump’s latest move to impose 25% tariffs on foreign automobiles and certain auto parts has shaken the auto industry, sending shares of major automakers tumbling. General Motors (GM) stock fell nearly 7%, while Ford (F) dropped 3%. But Tesla (TSLA) went in the opposite direction, climbing 5% in early trading, as analysts suggested the EV leader may be a “relative winner” in the tariff battle.
Unlike many of its competitors, Tesla is largely insulated from the impact of Trump’s tariffs thanks to its U.S.-based production. While the company operates gigafactories in China and Germany, none of the EVs built at those sites are sold in the U.S. Instead, Tesla’s American customers receive vehicles manufactured in Fremont, California, or Austin, Texas. This domestic production model allows Tesla to avoid the direct cost increases that automakers relying on foreign imports will now face.
By comparison, 77% of Ford’s vehicles are made in the U.S., followed by Stellantis (57%), Nissan (52%), and GM (52%). Many of these companies now find themselves in a difficult position, forced to absorb higher costs or pass them on to consumers. According to TD Cowen analyst Itay Michaeli, Tesla stands to benefit as its competitors struggle with price hikes. In particular, Tesla’s Model Y, a leading seller in the midsize crossover category, faces competition in a segment where nearly half of vehicles could now be subject to tariffs.
Despite Tesla’s apparent advantage, CEO Elon Musk has downplayed the impact of the tariffs on the company. In a post on X, Musk stated that Tesla is “NOT unscathed here” and that the impact on the company remains “significant.” However, he did not elaborate on how or why Tesla might be affected. While the new policy appears to hit Tesla’s competitors far harder, Musk’s comments suggest the company is still navigating challenges related to supply chains and international trade.
Trump, for his part, confirmed that he did not consult Musk before finalizing the tariffs, suggesting that the billionaire CEO “may have a conflict.” While Trump did not clarify the statement, it raises questions about whether Tesla’s relatively strong position under the new policy influenced the decision to exclude Musk from discussions.
Beyond tariffs, another potential battleground is the federal EV tax credit. Under the Inflation Reduction Act signed by President Biden in 2022, buyers can receive up to $7,500 in tax credits for purchasing an electric vehicle. Tesla has benefited from these incentives for years, particularly in its early days when it relied on federal subsidies to boost demand. However, Musk has previously indicated that Tesla no longer depends on these credits. He even suggested that if Trump and a Republican-controlled Congress were to eliminate them, it would hurt Tesla’s competitors far more than Tesla itself.
“I think it would be devastating for our competitors and for Tesla slightly. But long term, probably actually helps Tesla, would be my guess,” Musk said during Tesla’s Q2 earnings call last year.
The bigger bet for Tesla, however, isn’t just EVs—it’s autonomy. Musk has repeatedly stated that self-driving technology is Tesla’s true long-term value driver, not car sales. If Trump’s administration eases regulations around self-driving and robotaxi deployment, Tesla could benefit significantly.
For now, investors seem to agree with Musk. While traditional automakers scramble to reassess their supply chains and pricing strategies, Tesla’s stock continues to rise, reinforcing its position as one of the few beneficiaries of Trump’s aggressive trade policies.