Tesla stock surged by as much as 7% Thursday morning, outpacing traditional automakers during a challenging market day, primarily due to President Donald Trump’s newly announced auto tariffs. In contrast, General Motors experienced the steepest declines among the S&P 500, plummeting by 9% at intraday lows, while both Ford and Volkswagen dropped around 5%.
The rationale behind this trend is clear: Tesla is perceived as relatively insulated from tariffs that will adversely affect companies heavily dependent on vehicle and parts imports. Notably, two of the electric vehicle maker’s largest factories are situated in California and Texas. “Tesla would be less exposed to tariffs as their production and assembly is all in the US,” stated Wedbush Securities analyst Dan Ives.
Other electric vehicle stocks also benefited from this development, with Rivian rising by 8% and Lucid gaining 4% at intraday highs. The underlying reason is evident: all vehicles sold in the US by these three companies are produced domestically.
“Among auto manufacturers and suppliers, we consider the most exposed to these tariffs to be the ‘Detroit Three’ automakers GM, STLA, and F, along with Canada-based auto supplier MGA, while TSLA appears to be the least affected,” noted CFRA Research in a Tuesday report, referencing earlier tariffs on Canada and Mexico.
In response, Tesla highlighted on X that its vehicles are the “most American-made cars,” which aligns with a Cars.com index also referenced by CFRA. However, CEO Elon Musk acknowledged the potential impact on Tesla, stating, “The tariff impact on Tesla is still significant.”
Mark Malek, the chief investment officer at Siebert Financial, added in a written commentary, “Even Tesla, which manufactures most of its vehicles in the US, will pay more for parts due to competition among all manufacturers vying for the limited supply of non-tariffed parts, materials, and components.
