Elon Musk's Tesla will significantly boost key rivals in the automotive sector after President Trump imposes 25% tariffs on all foreign-made cars and auto parts, according to financial analysts.
Tesla manufactures all electric vehicles sold in the US at its California and Texas plants. This is an important factor protecting mask pioneering companies from the worst effects of tariffs.
Meanwhile, competitors like GM and Ford and international rivals like South Korea's Hyundai and Germany's Volkswagen can suffer.
“Tesla wins and Detroit will bleed,” an analyst at Bernstein, a research firm, said in a memo Thursday.
Ford and GM could face a 30% decline in revenue before interest and tax (EBIT). It says this is an important measure of profitability in 2025 as a result of tariffs.
“Tesla is a clear structural winner. It has strong localized market share, better insulation from trade risk,” the analyst added. “For everyone else, this is a margin reset and effectively drags on short-term profitability.”
Tesla shares surged nearly 4% in trading Thursday, but the Big 3 all struggled. GM plunged 8%, Ford fell 4%, and Stellantis, which owns the Jeep and Chrysler brands, fell nearly 3%.
In total, Bernstein estimates that taxation will result in car manufacturers' “annual tariff costs up to $110 billion,” forcing manufacturers to eat or pass on higher costs to customers.
The company estimates that the vehicle price will average an average rise of $3,700.
Morgan Stanley analyst Adam Jonas made the cost even higher at nearly $6,000 per vehicle.
According to CFRA analyst Garrett Nelson, Tesla is “the least exposed to tariffs” of the major automakers.
He said Tesla was named “the most American-made car company” by Cars.com from 2022 to 2024.
“Tesla has primarily produced and delivered local automotive products by establishing manufacturing presence and sourced parts in three major U.S. markets,” Nelson said.
The White House said it hopes tariffs will generate $100 billion in annual tax revenue and boost domestic manufacturing by businesses to build more state plants.
Certain auto parts complying with the US-Canada trade agreement “left without tariffs” and the Department of Congress works to calculate tariffs on non-US content.
“For years, we have been fooled by almost every country in the world, both friends and enemies. But the day is over – America's first!!!” Trump wrote on the Truth Social Post on Thursday.
Tesla is completely immune from tariffs, and faces higher production costs from the use of imported parts.
Musk downplayed the notion that tariffs were purely positive for Tesla.
“It is important to note that Tesla is not unharmed here. The impact of tariffs on Tesla remains important,” Musk wrote in X.
Trump has already placed a 20% tariff on all imports from China. The company is increasingly challenging Tesla's control in the EV sector.
Both the US and Canada have imposed 100% tariffs on Chinese-made electric vehicles, which effectively blocked them from the market.
However, companies like BYD have taken Tesla's lead in the Chinese market, Europe and elsewhere.
