Just about every car company is sweating the Trump administration’s rapid-fire tariffs and tariff threats. It’s hard to say what’s worse, frankly; the potential price increases to new cars if tariffs do go into effect, the costs of retooling their businesses if tariffs stick around long-term, or the back-and-forth “will they, won’t they” rhetoric that makes it impossible to plan for the future.
The idea was that perhaps Tesla was the automaker least impacted overall by tariffs since it makes so many of its cars and parts here in the United States. But now even Tesla is warning that it’s in for some pain—even with the CEO’s cozy relationship with President Trump.
That kicks off this Friday edition of Critical Materials, our morning roundup of technology and industry news. Also on today’s docket: the Volkswagen Group’s Cupra brand remains set to launch in the U.S. despite tariffs, and BMW takes some heat in China. Let’s dig in.
30%: ‘Exposed To Disproportionate Impacts’
Photo by: InsideEVs/Andrei Nedelea
Most observers went into this year thinking that Trump’s alliance with Elon Musk would yield unlimited dividends for Tesla, especially when it comes to tailoring regulations for self-driving cars. But even as heavily U.S.-made as Tesla’s cars are, tariffs on imported goods—and retaliatory tariffs from other countries on our exports—will touch every business.
Now, Tesla is reportedly being more proactive about the risks involved. The Financial Times reports that the automaker sent a letter to U.S. trade representative Jamieson Greer advising some caution here. But nobody at the company wants to take credit for this given, well… everything.
From the FT:
In an unsigned letter addressed to US trade representative Jamieson Greer, Tesla said it “supports” fair trade but warned that US exporters were “exposed to disproportionate impacts when other countries respond to U.S. trade actions”.
“For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries,” the Austin, Texas-based company wrote in the letter dated March 11.
[…] One person familiar with the process of sending the letter said: “It’s a polite way to say that the bipolar tariff regime is screwing over Tesla.”
The person added: “It is unsigned because nobody at the company wants to be fired for sending it.”
All cars you can buy in America consist of some parts made in other countries. Yet Tesla’s cars consistently rank among the most U.S.-made options. Even so, parts and extra costs for exports will be bad for its business at a time when it desperately needs to make some sales.
Will the Trump administration prioritize tariffs or Musk’s company? Grab some popcorn, this one’s going to be fun to watch.
60%: VW’s Cupra Is Still A Go, Despite Tariffs
Meanwhile, the Volkswagen Group is hinging a lot of its future on the U.S. market. The European scene is thoroughly cooked and the conglomerate is getting hit hard in China, so it needs to take American buyers seriously. This is also why it’s relaunching the Scout Motors brand here.
The second part of that plan is importing its European Cupra brand to our shores. Cupra itself is a spinoff of Seat in Spain, and when it arrives here, it will focus on stylish and performance-minded EVs aimed at younger and more affluent buyers.
Obviously, tariff concerns make that plan tough to game out, especially if Cupra’s cars will continue to be made in Europe. But Automotive News reports that the plan is on track:
Cupra, Volkswagen Group’s sporty Spanish brand, still plans to enter the U.S. market by 2030 despite the Trump administration’s threat to impose additional tariffs on European cars, CEO Wayne Griffiths said.
“Our decision to bring Cupra to the U.S. by the end of the decade remains unchanged,” Griffiths said March 13 at the Cupra/Seat’s annual financial results news conference here. “This is a long-term decision that cannot be determined on the basis of short-term fluctuations.”
President Donald Trump has said European passenger cars will face 25 percent tariffs, up from 2.5 percent now. Cupra models are built in Europe and China.
Not surprisingly, Cupra’s plan is to offer some gas-powered cars here too:
Griffiths said every VW Group brand needs to align its strategy with the reality of each market — not only political changes but also shifting consumer preferences.
“We have to be flexible, we need to go with both battery electric and combustion vehicles, and we need to use vehicles that we can also sell in Europe,” he added.
2030 can feel like a long, long time away, but these kinds of launches take years to execute. The VW Group could certainly use some clarity right now if it’s really going to do this.
90%: BMW’s Profits Drop 37% Amid China Slump
BMW is doing better than many so-called “traditional” automakers when it comes to EVs, but none so far have been immune to the increased competition in China. As CNBC reports today, that led to a big hit to BMW’s profits last year:
Net profit for the year fell by an annual 36.9% to 7.68 billion euros ($8.32 billion). The print was in line with an LSEG forecast, according to Reuters. Shares were trading 2% lower at 8:57 a.m. London time on Friday.
The carmaker said that it expects an earnings margin for cars of around 5% to 7% in 2025, compared with 6.3% achieved last year, but noted that the implementation of tariffs was set to have a negative impact on earnings in the year ahead.
“A challenging competitive environment and macroeconomic, trade and geopolitical developments could all have a significant impact on business performance,” the company said in a statement.
In an interview, BMW CEO Oliver Zipse warned of damage from the tariffs, especially now that the various global markets and supply chains are so interconnected. “The world will see very quickly that this might not be the smartest way to improve your competitiveness,” he said.
I have yet to hear from any car company who’s thrilled about these tariffs, whether they’re based in America or not.
100%: Would Cupra Be A Hit In The U.S.?
I’ve always thought that Cupra and Seat’s cars looked great when I saw them in my travels outside of the U.S. But does the VW Group really need another brand over here? Or does it need to fix the fundamentals with Volkswagen and find ways to reach Americans with more affordable models that way? Let us know in the comments what you think of Cupra’s plans.
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