Elon Musk’s Tesla will get a major boost on key rivals in the auto sector after President Trump imposed 25% tariffs on all foreign-made cars and auto parts, according to financial analysts.
Tesla manufactures all of the electric vehicles it sells in the US at plants in California and Texas – a key factor that should shield Musk’s pioneering company from the worst impacts of the tariffs.
Meanwhile, competitors like GM and Ford – as well as international rivals like South Korea’s Hyundai and Germany’s Volkswagen – are likely to suffer.
“Tesla wins, Detroit bleeds,” analysts at research firm Bernstein said in a note on Thursday.
Ford and GM could face 30% declines in earnings before interest and taxes (EBIT), a key measure of profitability, in 2025 as a result of the tariffs, according to the note.
“Tesla is the clear structural winner: localized, strong market share, better insulated from trade risk,” the analysts added. “For everyone else, this is a margin reset and real drag on near-term earnings power.”
Tesla shares surged by nearly 4% in Thursday trading, while the Big Three all suffered. GM plunged 8%, Ford fell 4% and Stellantis, which owns the Jeep and Chrysler brands, dropped nearly 3%.
In total, Bernstein estimates that the levies will result in “up to $110 billion in annual tariff costs” for automakers, which will force manufacturers to either eat the higher costs or pass them along to customers.
Vehicle prices will see an average increase of $3,700, according to the firm’s projections.
Morgan Stanley analyst Adam Jonas put the costs even higher at nearly $6,000 per vehicle.
Out of the major automakers, Tesla is the “least exposed to the tariffs,” according to CFRA analyst Garrett Nelson.
He noted that Tesla was named the “most American-made car company” from 2022 through 2024 by Cars.com.
“Tesla has largely regionalized auto production and deliveries by establishing a manufacturing presence and sourcing parts across the three major markets of the US,” Nelson said.
The White House said it expects the tariffs to generate $100 billion in annual tax revenue as well as boost domestic manufacturing by nudging companies to build more stateside plants.
Certain auto parts that are compliant with the US-Mexico-Canada trade agreement “will remain tariff-free” while the Department of Congress works to calculate tariffs on their non-US content.
“FOR YEARS WE HAVE BEEN RIPPED OFF BY VIRTUALLY EVERY COUNTRY IN THE WORLD, BOTH FRIEND AND FOE. BUT THOSE DAYS ARE OVER — AMERICA FIRST!!!” Trump wrote in a Truth Social post on Thursday.
Tesla isn’t totally immune from the tariffs and will still face some higher production costs from its use of imported parts.
Musk downplayed the notion that the tariffs were a net positive for Tesla.
“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant,” Musk wrote on X.
Trump has already placed 20% tariffs on all imports from China – whose companies have increasingly challenged Tesla’s dominance in the EV sector.
Both the US and Canada impose 100% tariffs on Chinese-made electric vehicles, which has effectively blocked them from the market.
However, firms like BYD have chipped away at Tesla’s lead in the Chinese market, Europe and other locales.
