President-elect Donald Trump has announced plans to impose a 25% tariff on all goods imported from Mexico and Canada, a move that could have significant implications for the U.S. EV market. The Honda Prologue and the Chevy Equinox EV, two of the best-selling non-Tesla EVs in the third quarter, are among the vehicles that could be affected by this tariff. Both of these models are assembled in Mexico, making them vulnerable to the proposed policy change.
While Tesla’s EVs are all manufactured in the U.S., it’s important to note that around 20-25% of the parts content in all Teslas is sourced from Mexico. This means that even Tesla vehicles could feel the impact of the tariffs. The potential disruption in global trade and the uncertainty surrounding the tariffs have already caused share prices of several automakers, including General Motors, Ford, Volkswagen, and Toyota, to fall.
The list of model year 2024 EVs and PHEVs reveals the percentage of vehicle content sourced from different countries. The Ford Mustang Mach-E, Chevy Blazer EV, Chevy Equinox EV, and Honda Prologue, among others, undergo final assembly in Mexico. On the other hand, Tesla’s Model 3, Model Y, Model S, and Model X are predominantly manufactured in the U.S., but they still rely on some components sourced from Mexico.
Japanese and Korean automakers appear to be relatively more insulated from the proposed tariffs, as they source a small percentage of components from China. The Hyundai Ioniq 5, for example, is now manufactured in the U.S. at Hyundai Motor Group’s plant in Georgia. On the other hand, American EVs, trucks, and SUVs are likely to bear the brunt of the new duties if the tariffs are implemented.
It remains to be seen whether Trump will make exceptions for certain automakers, including Tesla, given Elon Musk’s involvement in the new Department of Government Efficiency and his contributions to Trump’s campaign efforts. Trump has also indicated that he plans to increase tariffs on Chinese-made goods by an additional 10%, further complicating the landscape for the EV market.
In conclusion, the proposed tariffs could have far-reaching implications for the U.S. EV market, affecting both domestic and international automakers. Japanese and Korean manufacturers may have a competitive advantage if the tariffs are implemented, while American automakers are likely to face challenges in sourcing components and keeping prices competitive. The future of the EV market in the U.S. hangs in the balance as the industry awaits further developments on Trump’s trade policies.