Elon Musk has acknowledged that Tesla will not escape the effects of President Donald Trump’s newly imposed 25% tariff on imported cars and auto parts, even though the company builds all its vehicles in the United States.
Musk, who also serves as a senior advisor to Trump, noted that the tariffs would increase the cost of Tesla cars due to its reliance on imported components, particularly from Mexico.
“To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial,” Musk posted on his X social media platform late Wednesday.
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Official U.S. data confirms that between 20% and 25% of Tesla’s total vehicle value originates from Mexico, meaning the automaker will feel the sting of Trump’s protectionist trade policies. The auto industry as a whole, which is heavily dependent on global supply chains, has been sent into turmoil by the tariffs, as automakers scramble to determine how the added costs will affect their businesses and consumers.
The tariffs have triggered widespread concerns among car manufacturers, particularly in Europe, where German automakers and their suppliers have called the move a “fatal signal” for economic growth. Even companies that manufacture cars in the U.S. rely heavily on imported components, making them vulnerable to cost spikes.
BMW, for example, has its largest plant worldwide in South Carolina, yet still depends on a complex global supply chain to produce its vehicles. The new tariffs threaten to disrupt production and increase costs, which could ultimately be passed on to consumers.
Transportation industry expert Art Wheaton of Cornell University warned that the tariffs would have severe financial consequences.
“The 25% tariff on autos and parts will create immediate price increases and wreak havoc on supply chains,” Wheaton said, estimating that consumers could see prices rise by as much as $10,000 to $20,000 per vehicle.
Analysts Believe Tesla is Better Of Than Others
Despite Musk’s admission, analysts believe Tesla is in a much stronger position than its traditional American competitors. Compared to Ford, General Motors, Chevrolet, and Jeep parent Stellantis, Tesla will suffer the least from the tariffs, according to Deutsche Bank analyst Edison Yu.
Yu, in a Thursday note to clients, wrote that Tesla is “best off” among U.S. automakers when it comes to the fallout from Trump’s new trade directives. Unlike its Michigan-based counterparts, Tesla assembles all of its vehicles in the United States, which shields it from the worst of the import levies.
By contrast, General Motors is considered the “worst positioned” U.S. carmaker under the new tariff rules. JPMorgan analyst Ryan Brinkman estimates that General Motors, which sources around 40% of its cars from Canada and Mexico, could suffer a $14 billion hit to earnings from the tariffs.
Tesla is “NOT unscathed,” Musk emphasized in his X post, acknowledging that the tariffs would still have a significant effect.
However, Deutsche Bank analysts noted that the company’s primary imported auto part facing the tariffs is wire harnesses from Mexico. To offset the increased costs, Tesla would only need to raise vehicle prices by about 1.8%—a far smaller adjustment than the 5.8% or more that Ford, General Motors, and Stellantis will likely have to make.
Tesla Stock Outperforms as Rivals Struggle
Tesla’s relative insulation from the tariffs was reflected in the stock market’s reaction. In Thursday’s New York trading session, Tesla shares rose by 4%, while Ford saw a 4% decline, General Motors plunged 9%, and Stellantis fell 2%.
The pain extended beyond U.S. automakers, as European car companies with significant U.S. operations also took a hit. Shares of Ferrari and Mercedes each dropped at least 2% amid investor concerns that the tariffs could disrupt their business models.
Is Tesla The Clear Winner?
Some analysts believe Tesla is emerging as the biggest beneficiary of Trump’s trade moves. In a research note on Thursday, Bernstein analysts led by Daniel Roeska framed the situation in stark terms.
“Tesla wins, Detroit bleeds,” Roeska wrote. “Tesla is the clear structural winner… For everyone else, this is a margin reset and real drag on near-term earnings power.”
While Tesla will still have to navigate the challenges posed by the tariffs, its domestic production advantage and relatively low reliance on foreign-sourced parts make it far more resilient than its legacy rivals. As Ford, GM, and Stellantis scramble to adapt, Tesla appears to be in a stronger position to weather the storm—and potentially emerge even stronger in the U.S. auto market.