Automakers are tired, boss. The last three months have felt like a year for them as tariff uncertainty, backtracking and political chest-beating contests taking center stage. The automotive industry is over it and, at the minimum, wants predictability.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Today, automakers are asking politicians to just chill out already. Plus, Musk dukes it out with Trump's top trade adviser over tariffs and Nissan reverses course on slowing of U.S. production. Let's jump in.
30%: Automakers Just Want Politicians To Chill Out Already
Europe's biggest car companies aren't really taking these tariffs quietly. BMW, Stellantis and Volkswagen (as well as the European Automobile Manufacturers’ Association, the ACEA, which represents the 16 major Europe-based carmakers) marched into a meeting with the European Commission President, Ursula von der Leyen, and basically begged for tariff mercy before Europe's entire auto industry falls victim to the international ego bout.
In the closed-door meeting, the automakers made it crystal-clear that the new global tariffs—we're talking about the U.S. tariffs as well as all of the global retaliatory tariffs—are essentially setting fire to the entire transatlantic supply chain. They want all sides to cool off and roll back the tariff threats, then hammer out some sort of grown up solution, preferably before the walls close in on the entire auto industry.
Those pleas line up with the European Commission's current plan, which is attempting to negotiate some sort of trade treaty. Brussels even offered a "zero-for-zero" trade pact with the U.S., which the Trump administration declined unless the EU purchased energy from the U.S. to help balance the trade offset.
The ACEA laid it out bluntly: $73 billion of European exports for the auto industry are at risk in the trade war. That number should raise concern, but the actual impact calculated by the ACEA is even worse. The overall hit from tariffs is expected reach a combined $87.5 billion between first-hand and combined reciprocal duty fees.
It's not just passenger cars that are feeling the heat either. Heavy hitters like Iveco, Daimler Truck, Traton and Volvo were also present to express their concerns.
Then there were component suppliers that joined in. Bosch, Valeo, and the European Association of Automotive Suppliers (which represents just about every other major company in the auto supply chain) sounded the alarm about the potential impact on their side of the industry for any exported goods.
It's a reminder of just how vast the modern automotive supply chain really is. You've got a German transmission here, a Polish battery there, some seats made in Slovakia. There's no real single country of origin for one single car. So when you toss a 25% tariff on importing cars and parts into the U.S., and then retaliatory tariffs compound any import or export of a component that makes up the final product, you quickly see how these costs can add up across the industry.
The real panic? Timing. Trump's tariffs are already rolled out and the exemptions for any vehicle built in North America ends in less than a month, meaning that automakers are funneling cars and parts into the States as quickly as possible before tariffs begin to take hold. What happens after the tariffs go into effect is anyone's guess. Thousands of jobs and entire companies are at risk here.
For now, the big automakers are being civil and taking their concerns to the top powers who oversee trade in their home markets for help. But with tens of billions of dollars on the line, it won't be long before meetings have torches and pitchforks on the agenda.
60%: Musk Dukes It Out With Trump's Top Trade Adviser
Elon Musk may be "almost done" cosplaying as the czar of government efficiency, but before he packs up his desk, he's decided to throw a curve ball at the Trump administration. He's publicly feuding with the president's top trade adviser, Peter Navarro, who also happens to be the brain behind the cabinet's controversial tariffs.
The fight started when Musk suggested that the U.S. and Europe should become trading partners with "zero tariffs" to create a free-trade zone—you know, kind of like the relationship that the U.S. had with its neighbors, Canada and Mexico, for many products. That didn't go over well with Navarro, who brushed off Musk's idea when speaking to CNBC.
Reuters brings the specifics:
Peter Navarro, President Donald Trump's top trade adviser, on Monday dismissed tech-billionaire Elon Musk's push for "zero tariffs" between the United States and Europe, calling the Tesla CEO a "car assembler" reliant on parts from other countries.
Navarro, widely seen as the architect of Trump's tariff plans, told CNBC Musk had done a good job with his work to streamline government, but his comments on tariffs were not surprising given his role as "car person," the latest salvo in a growing feud between the Trump advisers.
"When it comes to tariffs and trade, we all understand in the White House—and the American people understand—that Elon is a car manufacturer, but he's not a car manufacturer. He's a car assembler," Navarro said, adding that many Tesla parts came from Japan, China and Taiwan.
"He's a car person. That's what he does, and he wants the cheap foreign parts."
Navarro is basically saying the Musk isn't a subject matter expert with authority to speak on tariffs. His job is to assemble cars out of parts sourced from different countries—seemingly insinuating that Tesla isn't truly building cars since many of the automaker's parts aren't sourced from the U.S.
"The difference is in our thinking and Elon's on this is that we want the tires made in Akron. We want the transmissions made in Indianapolis. We want the engines made in Flint and Saginaw, and we want the cars manufactured here," said Navarro.
The adviser's comments upset Musk, of course, who took to his social media platform to criticize Navarro:
Europe did offer the Trump administration this very same "zero-for-zero" trade deal on Monday after the spat between Musk and Navarro. However, the U.S. declined unless Europe committed to spending $350 billion to even up the trade deficit that the States currently have with Europe. Meanwhile, Europe and India are using the trade war as a way to negotiate down vehicle import tariffs, potentially bringing India's 100% duty fee down to as low as 10%.
Interestingly, Musk's spat with Navarro might be one of the most public fights on behalf of Tesla with the current administration in recent months. The CEO has been criticized recently for the perceived lack of involvement with the automaker, even prompting an investigation and potential lawsuit from the New York City comptroller. However, Musk's spat—whether for ego or for Tesla—is one that is lobbying for open trade between allied countries, something that all automakers want.
The coming months might be some of the most interesting for Musk—and Tesla—yet. Tesla's stock has fallen 55% since December 2024 and with the way the market has been looking, may continue to sink. Meanwhile, Musk's political participation over the last few months has alienated buyers and driven down brand value. Investors have called for Musk's divesting from Tesla while looking for more reined-in leadership. That really sparks an important question: Can Tesla survive Musk?
With Musk headed out of the White House and back to Tesla HQ, the automaker will soon have to navigate Trump's trade policy without a familiar face in the West Wing. Sure, Musk might have some political favors up his sleeve to call, but the company will need to position itself carefully to avoid ending up on the wrong side of Trump's pen (or Sharpie, if we're being technical).
90%: Nissan Considers Reversing Course On U.S. Production Shrinkage Over Tariffs
A new report from Nikkei suggests that Nissan executives are mulling over the idea of moving production of at least one model from its plant in Fukuoka, Japan to the U.S. The reasoning? Tariffs, of course.
Nissan's potential move would make it the very first automaker in Japan to transfer production of some of its Japan-built automobiles to the U.S. over Trump's newly-imposed blanket automotive tariffs. And it could happen as early as this summer.
Here's the scoop from Nikkei's report:
Nissan Motor is considering transferring some Japanese production of a flagship vehicle for the American market to the U.S. as early as summer, Nikkei has learned, in a bid to limit the effect of new tariffs introduced by President Donald Trump.
Some production of the Nissan Rogue sport utility vehicle would be moved from a factory in Fukuoka prefecture. This marks the first reported transfer production from Japan since the tariffs were announced.
Currently, the U.S.-built Rogue is assembled in Smyrna, Tennessee. However, with Nissan's uncertain footing in the States, the brand planned to cut down on shifts at its Tennessee plant. The potential reversal means that Nissan could be scrambling to avoid a financial gut-punch, especially at it is preparing a hybrid Rogue for launch later this year.
Nissan isn't the only Japanese automaker trying to problem-solve at light speed, either. Toyota has also found itself at odds with the tariffs. It's furiously trying to figure out how to keep selling its cars without jacking up prices or changing its export strategy. That's seeming harder and harder to do. The whole Japanese auto industry—which makes up about 10% of the country's GDP—is naturally a bit queasy right now.
For Japan, moving production overseas could be a big hit to local economies. Nikkei notes that production cuts at Fukuoka alone could have negative effects on small and medium parts suppliers. Japanese officials are already working to provide support to industry. In fact, Nikkei says that the Japanese government is preparing to dispatch teams to areas "where the auto industry is concentrated" to ensure that the local economies are strengthened while U.S. tariffs cause uncertainty.
100%: How Much Of A Price Hike Would Make You Switch Brands?
The word on the street is that cars are about to get even more expensive. I know, I know—file that under "obvious news." Recently, it had me thinking: Inflation drove up the price of the Tesla Model 3 above the $35,000 cost that it was originally planned to hit when launched.. When you account for inflation, Tesla actually hit its goal (though it took a few years). What if the same thing happens to the Rivian R2? Rivian doesn't exactly have the same scale or prowess Tesla had to backstop it when times got hard.
I saw this thread on Reddit this morning pretty much addressing this. Folks are concerned that tariffs will raise the R2 far beyond what they expected it to cost, potentially pricing it out of consideration.
That being said: how much is too much when it comes to a tariff (or inflation) induced price hike? Let me know in the comments.
