As President Donald Trump pushes for tariffs that could ignite a global trade conflict, the automobile sector is running low on fuel with no clear resolution in sight.
Nonetheless, despite a recent dip in sales, Tesla’s stock has been on an unexpected surge over the past week.
But could there be obstacles ahead?
The automobile industry is known for its wide-ranging international operations, where car components are produced and assembled across different nations. Consequently, many parts traverse several borders before a vehicle is fully assembled.
This week, Trump intends to impose a 25% tariff on imported passenger cars, light trucks, and certain auto parts. For established manufacturers like GMC, Ford, and Stellantis, this could severely impact their profit margins.
As a consequence, these companies have experienced a decline in stock values over the past two weeks due to increasing market apprehension. In contrast, Tesla’s stock has soared 20%, rising to $268 per share after hitting a low on March 10.
Why is Musk’s electric vehicle brand ascending while others face uncertainty? Here’s what to know.
Austin-based Tesla and other electric vehicle brands are leading the pack
Despite a 32% decline in Tesla’s stock year-to-date, the company is now experiencing an unexpected rebound, even after a recent quarterly report indicated a 13% drop in sales at the beginning of the year.
This sales decline coincides with national protests occurring outside Tesla dealerships, including multiple incidents in Austin. A potential bright spot for the company is that many of its components do not need to traverse an international supply chain for a vehicle to be completed.
According to Cars.com, approximately 70% of the parts for Tesla’s popular Model Y are sourced from the U.S., which has led the website to recognize the brand as the top American-made vehicle. In comparison, a Ford F-150 comprises about 55% U.S.-made parts, as reported by USA Today.
With the stock gaining momentum, Trump has attempted to clarify that Musk was not involved in the tariff decision-making process. Additionally, Musk has acknowledged that Tesla will still face challenges due to these tariffs.
“It’s important to note that Tesla is NOT unscathed here,” Musk mentioned in a post on X. “The cost impact is not trivial.”
Another electric vehicle manufacturer known for U.S. production is Rivian. Its stock, experiencing a turbulent trajectory, has surged 15% in the past month as investors believe it can withstand the tariffs.
Nevertheless, it is anticipated that when these tariffs are enacted, all automakers will be impacted, and many may pass the added costs onto consumers.
All this follows Tesla’s stock reaching an all-time high post-election, peaking at $479.86 on December 17, but it has since dropped by 42%.
This decline can be attributed to record-high numbers of trade-ins by Tesla owners, according to an analysis by national car shopping platform Edmunds. The analysis revealed that March had the highest percentage of Tesla trade-ins for new or used vehicles from dealerships of other brands.
Beck Andrew Salgado covers trending topics in the Austin business ecosystem for the American-Statesman. To share additional tips or insights with Salgado, email Bsalgado@gannett.com.
