Dylan Lumis, host of Electrified, begins by thanking his newest patron and addressing the recent US auto tariffs. He intends to focus on the reactions to the news rather than get bogged down in the specific details until the tariffs solidify.
Britain is actively seeking an exemption from the US auto tariffs and considering a review of subsidies benefiting Tesla to better support its own automotive industry. Finance Minister Rachel Reeves suggested a review of the electric vehicle incentive scheme, including subsidies granted to Tesla, to aid carmakers like Jaguar, Rolls Royce, and Aston Martin. Negotiations are ongoing before the tariffs take effect, indicating a potential negotiation window. The UK is also re-evaluating the zero-emission vehicle (ZEV) mandate, which directs some funds to Tesla, to potentially redirect support towards domestic car manufacturers. Cars are the UK's largest export to the US, valued at nearly $10 billion annually. The White House anticipates the tariffs will generate $100 billion in revenue for the US.
Lumis clarifies that the tariffs aren't paid directly by exporting countries but by American companies importing vehicles or parts, such as dealerships and US divisions of foreign automakers. He uses Lamborghini as an example; importing a $750,000 Lamborghini incurs a $187,500 tariff for the dealership. He discusses the predicament of Ford, which is losing money on its EV program and likely forced to pass the tariff costs onto consumers for vehicles like the Mach-E made in Mexico. The USMCA agreement introduces a wrinkle, applying the 25% tariff only to non-US content of vehicles made in Canada or Mexico.
Cox Automotive estimates a potential 30% production disruption in the initial week of the tariffs, leading to production and delivery cuts, reduced supply, decreased incentives, and increased new and used car prices, potentially eliminating some brands. US auto imports contribute significantly to the US GDP (almost 1%).
Elon Musk acknowledges that Tesla will be impacted by the tariffs, even on the percentage of parts Tesla sources internationally, affecting Tesla's margin profile. This statement contradicts the mainstream media narrative suggesting Tesla will solely benefit from the tariffs. This proactive comment could also be a strategy to prepare investors for lower margins in the coming quarters due to factors outside Tesla's control.
Bernstein analysts suggest Tesla as the "clear structural winner" and better insulated from trade risk. Other auto manufacturers like Ford and GM could experience substantial declines in earnings (up to 30% in EBIT). Other than Tesla, Rivian and Lucid make 100% of their vehicles in the U.S. for U.S. customers, implying they won't be affected by the tariffs on imports. Despite the potential conflict of interest, Trump stated he did not consult with Elon regarding the auto tariffs. Tesla previously warned that the tariffs could lead to retaliation from US export partners and higher prices for Tesla parts sourced internationally.
Lumis offers his opinion that the tariffs pose a short-term headwind for Tesla's margins and could cause supply chain disruptions. However, in the long run, Tesla's ability to adapt, reduce costs, maintain positive margins, and improve its products at lower price points will create a competitive edge. Jean Munster's analysis indicated a scenario where Tesla vehicles could effectively appear 5% cheaper compared to the rest of the new car market, resulting in potentially 20,000 to 25,000 additional vehicles sold over the next 12 months.
He then transitions to Ground News, a sponsor, to emphasize the importance of unbiased news. Lumis highlights the dangers of relying solely on headlines, using contrasting headlines of the same story as examples. Ground News offers an objective, data-driven approach to news consumption, combating polarized narratives.
In other news, Tesla's Hollywood diner will indeed be run by chef Eric Greenspan. Cyber truck leasing options are now available in Canada. The Shanghai mega factory's first batch of megapacks is going to the second stage of the giant western downs battery in Australia. A Chinese influencer and former Tesla skeptic had a positive experience with FSD (Full Self-Driving). However, a report shows Tesla FSD confusing a portapoddy for a stop sign. A Tesla FSD almost caused an accident by turning into on-coming traffic.
Lawmakers in New York are looking to target Tesla, by pooling Tesla's permits for in-person sales in New York. A Tesla owner is suing a man that keyed his model X for $1 million dollars. A man who drove a four-wheeler into multiple Tesla vehicles is being charged with felony criminal mischief. The man who was responsible for the Tesla fires at the collision center has been arrested. Tesla, Pilot, EVGO and GM are installing fast charging stations across 25 states. Stellantis is offering voluntary buyouts to UAW employees.