How Automakers Are Adapting to U.S. Tariff Policies

Let’s play: Who’s better prepared for a #tariff war? #EV startups like Rivian may be better off than Detroit 😉. Rivian just put an #EVbattery supply inside their factory that buffers a few years– and that makes all the difference when trade gets weaponized. Tesla’s been balancing domestic and offshore inputs for years. But what about everyone else? Spoiler: No one “wins” a trade war. But some are better insulated than others. Here’s the catch: EV startups were largely ignored during their early launches. So out of necessity, they became vertically integrated. Rivian and Tesla build in-house. Legacy OEMs like GM and Ford? Not so much. Detroit’s legacy automakers rely on 70%+ tiered suppliers for their components – and many of those parts cross the border up to 10 times, especially at Windsor, Ontario. Every crossing? A potential new tariff hit. Example: • A seat frame gets stamped in Michigan. • Assembled in Ontario. • Gets foam in Indiana. • Wrapped in leather in Mexico. • Final trim in Detroit. Each crossing is a cost multiplier. Multiply that by hundreds of parts per vehicle. 85% Rule: A loophole or a lifeline? Back in the Bush-era bailouts, automakers used “substantial transformation” rules to claim “American-made” even when key assemblies came from abroad. If 85% of the car was assembled in the U.S., you could claim domestic – even if the guts were global. Don’t be surprised if something similar re-emerges now. Trump’s recent Detroit visit signals more tariffs – but it’s unclear if there’ll be any real concessions. If anything, the current vibe leans toward populist protectionism over negotiated relief. So…who’s ready? Rivian is quietly making wins in the supply chain war. Tesla stays agile by controlling its core tech stack. Legacy Detroit? They’ll need to rethink fast – because in a trade war, every bolt, bracket, and border matters. #EV #supplychain #tariffs #manufacturing #Rivian #Tesla #GM #Ford #Lucid #batteries #autoparts #geopolitics #Electrek

The Impact of American Tariffs on Canada and Mexico: A Deep Dive into the Automotive Industry The recent imposition of tariffs by the United States on imports from Canada and Mexico has sent ripples through various sectors, with the automotive industry being one of the hardest hit. These tariffs, which include a 25% tax on goods from Canada and Mexico, have far-reaching implications for the industry, affecting everything from production costs to consumer prices. The automotive industry is highly interconnected, with parts and components often crossing borders multiple times before a vehicle is fully assembled. The new tariffs mean that each crossing incurs additional costs, which can quickly add up. For instance, the tariffs could increase the cost of manufacturing a vehicle by anywhere from $4,000 to $12,000, depending on the type of vehicle and the extent of its reliance on imported parts This increase in production costs is likely to be passed on to consumers, leading to higher prices for new vehicles. Analysts predict that the price of new cars could rise by as much as 10% This price hike could make new vehicles less affordable for many consumers, potentially driving them towards the used car market, which may see increased demand as a result. Broader Economic Implications The tariffs are not just a concern for automakers; they also have broader economic implications. Higher vehicle prices could lead to reduced sales, which in turn could result in job losses within the industry. The tariffs could also disrupt supply chains, leading to production delays and further increasing costs. Moreover, the retaliatory tariffs imposed by Canada and Mexico on American goods could exacerbate the situation. Strategies for Cost Reduction Short-Term Measures: 1. Diversifying Supply Chains: Automakers can look for alternative suppliers in countries not affected by the tariffs. This could help reduce the immediate impact of the tariffs on production costs.  2. Increasing Efficiency: Implementing lean manufacturing techniques and optimizing production processes can help reduce waste and improve efficiency, thereby lowering costs Long-Term Measures: 1. Investing in Automation: Automation can help reduce labor costs and improve production efficiency. By investing in advanced manufacturing technologies, automakers can reduce their reliance on imported parts and lower overall production costs  2. Developing Local Supply Chains: Building a more localized supply chain can help reduce the impact of tariffs and other trade barriers. 3. Innovating Product Design: By designing vehicles that are less reliant on imported parts, automakers can reduce their exposure to tariffs. This could involve using more locally sourced materials or developing new manufacturing techniques The road ahead may be challenging, but with innovation and strategic planning, the industry can navigate these turbulent times and emerge stronger. Your comments are indeed welcome!

The tariffs are in. So what’s next? 25% on imported vehicles. Auto parts, including engines and transmissions are next. This isn’t theory anymore. It’s happening. Roughly 46% of vehicles sold in the U.S. last year were imported. That’s almost half of the new car market now hit with an added cost. Some automakers are more exposed than others. Wall Street’s already reacting. Forecasts show earnings getting hit. Margins thinning. Volatility rising. So where does that leave us? At Honda and Acura, the impact is real, but it’s not the full story. → Honda’s been building cars in the U.S. since 1982. → Acura’s key models (the MDX, RDX, TLX) are all assembled in Ohio. → Roughly 70% of the vehicles we sell here are made here. That matters. But even “U.S.-built” doesn’t mean fully U.S.-made. Parts come from dozens of countries. No automaker is insulated. So what now? We don’t spin. We prepare. Here’s how I’m thinking about it as a dealer: 1. We need to lead with transparency. → Customers will ask questions. Some already are. → Don’t sugarcoat it. Don’t dodge it. → Explain the facts. Educate them. → Let them know which models may be affected. Which ones aren’t. 2. Be ready for price sensitivity. → $48,000 was already the average new vehicle price. → Now some are predicting up to $10K increases. → It’s going to impact how people buy, especially in the entry-level segments. → Think CR-V, HR-V, Civic, even Accord depending on build location. You’ll need to help customers rethink what value means. Payment, reliability, longevity. Show the total picture. 3. Train your teams and fast. → Sales need new focus. → F&I need sharper offers. → Service should expect more questions about parts availability and pricing. → Parts managers need to rethink sourcing if tariffs shift the cost curve. Every department is affected. So every department needs to be ready. 4. Control what you can. → We can’t control trade policy. → But we can control how we respond, how we show up, how we lead. Your culture, your inventory mix, your pricing strategy, your customer experience and that’s where the real work is. This isn’t about panic. It’s about preparation. Customers want confidence right now. So give it to them with facts, with clarity and with a calm plan forward. No noise. No drama. Just real leadership. — Brian ————— “Everything will be OK in the end, and if it’s not OK, it’s not the end”. ~ John Lennon

My colleague Ben Storrow and I dove into how Trump's new 25% tariffs on imported cars will affect EVs. Here's what we found: - Losers: All EV makers. While U.S. automakers are working to localize their battery supply chains, the reality is that most of the stuff in an EV battery comes from China. While the Trump administration hasn't spelled out what materials exactly are covered by this new tariffs, China imports are definitely getting more expensive. (Before this new action, Trump had already tariffed all China imports by 20%.) - Most likely winner: Tesla. Because it has the highest domestic content of any automaker, Tesla is likely to be least damaged. (Everyone's costs will go up, including suppliers, automakers and car buyers; however, Tesla will likely see its costs go up least because it imports fewer vehicles and parts.) - Possible loser: General Motors. General Motors' entry into affordable EVs is centered on the Chevy Blazer EV and the Chevy Equinox EV. They will now both be a lot less affordable because they are made in Mexico. - Possible winners: Hyundai and Honda. Both automakers have made enormous investments in building U.S.-based supply chains. Hyundai has its big new factory in Georgia (which, coincidentally, opened the same day Trump announced the tariffs). Honda is renovating its auto plants in Ohio and adding a huge new battery plant. Thus both companies will pay less in tariffs. - Possible winner: Ford. Ford is moving its battery production from Poland to Michigan, removing a huge tariff item. It is also building another battery plant in Kentucky. But like so many of these battery plants, they take a long time to build and are not yet online. Underneath all this lies another huge trend: It is unlikely that any of these EV or battery plants will thrive if Republicans follow through on plans to slash EV tax credits and roll back regulations that support EVs. In short, when it comes to EVs, Trump's tariffs and Trump's efforts to kill incentives are working against each other. Our story:

General Motors Outpaces Expectations but Tariffs Tighten the Squeeze General Motors delivered a Q2 2025 earnings beat, navigating a $1.1B tariff hit with resilient U.S. sales and strategic manufacturing shifts. Yet, with margins under pressure and EV uncertainty looming, the road ahead remains bumpy. The Numbers: EPS: $2.53 adj. vs. $2.44 expected (–17% YoY) Revenue: $47.12B vs. $46.28B expected (–1.8% YoY) Net Income: $1.9B vs. $2.93B YoY Adjusted EBIT: $3.04B vs. $2.89B est. (–32% YoY) North America margin: 6.1% vs. 10.9% YoY Vehicles Sold: 974,000 vs. 1 million expected EV Sales: 46,300 units Market Reaction: Shares fell ~3% premarket as investors digested another quarter of tariff exposure and shrinking margins. What Drove It: GM beat the Street despite a $1.1B tariff hit from Trump’s 25% auto levies. Full-year guidance, lowered in May, was reaffirmed, with a projected $4B–$5B tariff drag baked in U.S. sales rose 7%, pricing held firm on trucks/SUVs, and China swung back to profit. But margin pressure, especially in North America, underscored the cost of doing business under current trade rules. The Strategic View: GM is acting fast to de-risk: $4B in U.S. plant investments, reshoring production from Mexico, and scaling Michigan capacity. CFO Paul Jacobson said consumer prices won’t rise directly from tariffs—but H2 will carry full exposure. EV momentum is wobbling. The $7,500 federal tax credit expires 30 September. GM expects a short-term sales rush, then softer demand. Mary Barra says electrification remains the goal, but rollout will now track consumer appetite. Full-Year Guidance (Tariff Adjusted): Adj. EBIT: $10B–$12.5B (was $13.7B–$15.7B) Net Income: $8.25B–$10B (was $11.2B–$12.5B) Free Cash Flow: $7.5B–$10B (was $11B–$13B) Final Word: GM beat the quarter but is firmly in cost-control mode. Tariffs are real, but management is steering into it with localization, no price hikes (yet), and sharp financial discipline. EVs? Still part of the playbook, but for now, GM is driving through fog, not riding a green wave. What’s your take on GM’s tariff strategy? #GM #Earnings #Tariffs

Will Tariffs Reshape the Automotive Industry? The U.S. has imposed 25% tariffs on imported cars and auto parts, a move that could significantly impact the automotive sector—not just in terms of costs, but also in supply chains and production strategies. How Will Automakers Be Affected? - Tesla appears to be in a strong position since its cars are manufactured in California and Texas, but it may still face cost pressures due to importing some components. - General Motors heavily relies on overseas manufacturing, particularly in Mexico, where imported vehicles accounted for 40% of its U.S. sales. - Ford produces 80% of its vehicles domestically but depends on imported key components like engines, making it vulnerable to additional costs. Impact on Prices and Consumers Analysts predict that car prices could rise by approximately $6,700 per vehicle. The key question: Will automakers absorb these costs, or will they pass them on to consumers? Price Comparison After Tariffs Higher tariffs increase the cost of imported cars, narrowing the price gap between them and locally manufactured vehicles. For example: 📌 Tesla Model 3 (U.S.-made) → Starting price: $42,490 📌 BYD Han EV (imported from China) → Price before tariffs: $32,800, after 25% tariff: $41,000 The result? A smaller price gap, making local brands like Tesla more competitive against Chinese manufacturers. Boosting Investment in U.S. Manufacturing To adapt to these policies and reduce reliance on foreign suppliers, Hyundai Motor has announced massive investments in the U.S.: ✅ $21 billion by 2028 to expand domestic EV production. ✅ $7.6 billion for a new plant in Georgia, with an annual capacity of 500,000 vehicles. ✅ Thousands of new jobs and a stronger local supply chain. 💬 What do you think? Will these tariffs drive local industry growth, or are they just an added burden on consumers? #Economy #AutomotiveIndustry #Tariffs #EVs #Manufacturing #GlobalTrade

Assuming that some level of tariffs will be a (semi) permanent part of US policy, some OEMs are adjusting their global Go to Market plans As it appears the #US will maintain a 25% tariff on imported vehicles and auto parts, most global OEMs are adjusting their global investments and US pricing strategy. 🔹#Volkswagen announced a $5.8 billion investment in EV startup #Rivian to boost domestic manufacturing (and leverage SDVs). 🔹#Toyota committed $13.9 billion to its North Carolina battery plant. 🔹#Hyundai & #Kia are likely to increase prices due to diminishing pre-tariff inventory. 🔹Hyundai scaled back South Korean production, canceling shifts at its Ulsan Plant to reduce EV output. 🔹GM is investing $888 million in its NY engine plant, focusing on next-generation ICE instead of shifting entirely to #BEVs. For most companies, the pricing strategy can be adjusted relatively quickly and sales incentives can be adjusted before starting to change the MSRP. However, changes in #CAPEX strategy will be costly to change and, more importantly, will take years to see the changes at the factory level. It's a gamble that OEMs are taking in adjusting investments. But if I was advising them I would also recommend planning for the worst scenario -tariffs are permanent and no government assistance will be available. #eMobility #eMobilityStrategyMarketingLLC #HireThisHuman #Strategy ______________________________________________ Do you like the content? 𝕋𝕙𝕒𝕟𝕜 𝕐𝕠𝕦🙏🏼 Want to get more content like this? 𝔽𝕠𝕝𝕝𝕠𝕨 𝕄𝕖 + ℂ𝕝𝕚𝕔𝕜 𝕋𝕙𝕖 🔔