Tesla CEO Elon Musk during the 2025 inaugural parade (Angela Weiss/Getty Images)

Steel tariffs would be terrible for Tesla’s low-cost car

Tesla CFO: “The imposition of tariffs, which is very likely, will have an impact on our business and profitability.”

2/10/25 11:18AM

Another day, another Trump policy that could be bad news for his top benefactor, Tesla CEO Elon Musk. The president’s plans for 25% tariffs on aluminum and steel imports would be painful for US automakers, especially Tesla, which has been stringing along investors for years with the promise of a mass-market vehicle, which it plans to achieve by lowering production costs.

The stock was trading down 3% earlier today, though it was recently down just 0.5%.

During a presentation at the company’s last investor day, Tesla said it was hoping to lower the cost of goods sold per vehicle by 50% for the next generation of vehicles.

In the company’s latest earnings report, the company bragged that it got its COGS per car down to less than $35,000, and it reiterated:

“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.”

As Morningstar strategist Seth Goldstein told Sherwood, “The key to their goal is to keep driving their costs down so they can offer more affordable vehicles while maintaining a strong profit margin.”

Producing its promised “more affordable models” in the first half of this year will be a lot harder to do if raw materials are more expensive. In the company’s latest 10-K, aluminum and steel were listed first among the company’s raw materials.

Additionally, about 20% to 25% of Tesla’s vehicle parts are made in Mexico, according a filing last year from the National Highway Traffic Safety Administration. Automotive supply chains are long and convoluted, but it’s safe to say Trump tariffs, or retaliatory ones, wouldn’t be good for the company or its consumers. (The filing combines parts made in the US and Canada, so you can’t break out how much of the 60% to 75% of those parts come from Canada.)

The company is seemingly aware of the damage tariffs could cause.

“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,” Chief Financial Officer Vaibhav Taneja said during the company’s fourth-quarter earnings call. “Therefore, the imposition of tariffs, which is very likely, will have an impact on our business and profitability.”

To deal with those higher costs, Tesla would likely have to raise prices on their cars — or accept that margins would fall.

“It’ll be interesting to see how they go about this, because with the new vehicle, they want it priced competitively, something like a Toyota or a Honda,” Goldstein said. “So you really can’t set a price too far above the mid-$30,000 range or else you start to lose customers.”

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FT: Meta considering “tens of billions” in new capital to fund AI

Just days after Google announced a monster $85 billion upsized equity raise, the extremely profitable Meta is seeking to sell “tens of billions of dollars” in stock, according to a new report from the Financial Times.

Meta is planning on spending between $125 billion and $145 billion on AI capital expenditure this year alone.

Shares dropped more than 5% on the news.

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FT: Anthropic staff helping the NSA use Mythos for offensive cyberattacks

Anthropic’s Mythos AI model was deemed too dangerous to release to the public, with the company citing its ability to orchestrate novel cyberattacks.

And that’s just what the National Security Agency is doing, with the help of Anthropic staff embedded at the agency, according to a report from the Financial Times.

Only a small number of companies and US allies have been given access to the advanced model, which means America’s adversaries have not had the chance to shore up their defenses against the AI model’s new offensive capabilities.

The arrangement is especially unusual as the Pentagon has deemed Anthropic’s AI a national security supply chain risk — effectively blacklisting it for defense work — in response to the company’s refusal to allow its technology to be used for any legal application, which could include autonomous killing or mass surveillance. Anthropic is currently suing the US government to fight the determination.

US National Security Agency using Anthropic’s Mythos for cyber attacks

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Longtime Tesla bear JPMorgan upgraded Tesla and raised its price target to $475 from $145

For more than a decade, JPMorgan was Wall Street’s most stubborn Tesla skeptic, anchored by auto analyst Ryan Brinkman’s strict focus on traditional car fundamentals and near-term delivery numbers.

But JPM recently handed coverage of the stock to a new analyst, Rajat Gupta, who is throwing that playbook out the window. In a note Friday, the firm upgraded Tesla to “neutral” from “underweight” and raised its price target 228% to $475 from $145. (The analyst consensus on FactSet is $403.) Instead of focusing on the company’s struggling vehicle business, the new analyst is orienting himself more toward Tesla’s idea of the future, now modeling Tesla’s physical AI and robotaxi fleets all the way out to the year 2040.

Here are the main reasons for the capitulation:

Looking past the car lot: Gupta argues that Tesla “is at the forefront of physical AI, entering uncharted TAMs” and therefore “deserves the benefit of the doubt to be valued on LT earnings potential” rather than near-term speed bumps.
Unmatched vertical integration: Tesla’s control over everything from battery cells to custom silicon gives it a massive moat. JPM notes this starting point advantage is “unmatched at an industrial level scale” and “still somewhat under-appreciated and misunderstood.”
The AWS flywheel effect: Deploying Optimus robots inside its own factories “should not only lower COGS for the base automotive business, but more importantly, help validate the product at an industrial scale.” Gupta called it “a classic flywheel effect, somewhat analogous to AWS and Kiva at AMZN.”

For Tesla bulls who have argued for years that this is an AI company and not a carmaker, JPM’s sudden $3.9 trillion valuation model is the ultimate validation.

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