“Even Tesla” will be forced to raise prices thanks to tariffs
“The winner in our view from this tariff is no one,” says Wedbush analyst Dan Ives.
Wedbush Securities analyst Dan Ives says President Trump’s 25% auto tariffs will be terrible for the auto industry —Tesla included. While the electric vehicle company is more sheltered from the tariffs than other automakers, since it manufactures vehicles in the US, it’s still heavily reliant on imports for auto parts.
“The winner in our view from this tariff is no one,” Ives wrote in a note today, “as even Tesla still is hit from these tariffs and will be forced to raise prices.”
“Every auto maker in the world will have to raise prices in some form,” the note said, driving up prices on average by $5,000 to $15,000. “We believe this adds up to $100 billion of costs annually to the auto industry and will essentially get passed directly onto the consumer.”
As we’ve mentioned before, tariffs mean that Tesla will either have to raise prices or take a hit on margins, neither of which is good news for the company, which has been trying to raise margins and offer cheaper vehicles.
From the company’s latest earnings report:
“Affordability remains top of mind for customers, and we continue to review every aspect of our cost of goods sold (COGS) per vehicle to help alleviate this concern.”
Additionally, if Tesla raises prices, it’s possible that would push the cost of some of its cars above the threshold for receiving the $7,500 federal tax credit. A recent survey by insurance comparison website Insurify found that more than a third of Tesla owners wouldn’t have purchased their vehicles without it.
Tesla has itself acknowledged that tariffs could hurt the business.
Tesla CEO Elon Musk recently tweeted, “Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant.”
On the company’s fourth-quarter earnings call, Chief Financial Officer Vaibhav Taneja said, “Over the years, we’ve tried to localize our supply chain in every market, but we are still very reliant on parts from across the world for all our businesses. Therefore, the imposition of tariffs, which is very likely, will have an impact on our business and profitability.”
