Tariffs mean Tesla will either have to raise prices or accept lower margins
Trump’s newly enacted tariffs are bad news for one of his biggest benefactors, Tesla CEO Elon Musk, whose company has been stringing along investors for years with the promise of a low-cost car.
As we wrote last month after Trump first floated 25% tariffs on aluminum and steel imports, Tesla’s supply chain, like all US carmakers, is highly entwined with Mexico and Canada, where parts pass back and forth over the process of constructing a car.
If it costs the electric vehicle maker more money to produce its cars, which it will, Tesla will either have to take a hit on its margins or pass those costs on to consumers. That’s really hard to do when you’re trying to launch a cheaper car.
As Morningstar strategist Seth Goldstein told Sherwood News last month:
“It’ll be interesting to see how they go about this, because with the new vehicle, they want it priced competitively. So you really can’t set a price too far above the mid-$30,000 range or else you start to lose customers.”
Tesla was down as much as 8% today but has since recovered and is now only down about 1.8% as of 2:45 p.m. ET.
If it costs the electric vehicle maker more money to produce its cars, which it will, Tesla will either have to take a hit on its margins or pass those costs on to consumers. That’s really hard to do when you’re trying to launch a cheaper car.
As Morningstar strategist Seth Goldstein told Sherwood News last month:
“It’ll be interesting to see how they go about this, because with the new vehicle, they want it priced competitively. So you really can’t set a price too far above the mid-$30,000 range or else you start to lose customers.”
Tesla was down as much as 8% today but has since recovered and is now only down about 1.8% as of 2:45 p.m. ET.
