Tariffs, Trade Wars, Tesla's Dilemma: Is The EV Boom Hitting A Roadblock?

Zinger Key Points

Tariffs on Canadian/Mexican auto imports could add $3,000 to car prices, impacting both ICE and EV production.
US-China graphite tariffs may drive up battery costs, creating more hurdles for EV makers like Tesla.
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A fresh wave of tariffs threatens to shake up the auto industry, with U.S. automakers caught in the crossfire. If tariffs on Canadian and Mexican auto imports return, car prices could rise by as much as $3,000, according to Bloomberg Government.

Meanwhile, Tesla Inc. TSLA and other EV makers are resisting steep new tariffs on Chinese graphite, a critical battery component.

JPMorgan's Bill Peterson warns that these trade tensions could fuel cost inflation across the industry, threatening EV adoption.

US Auto Tariffs: A Pricey Problem in the Making

The temporary pause on tariffs for Canadian and Mexican auto imports is set to expire soon, and if reimposed, the impact could be massive—disrupting $250 billion in trade.

Nearly 80% of airbags and seat belts come from these countries, making production costlier for both traditional and electric vehicles.

JPMorgan notes that with EVs already carrying an 18-60% MSRP premium over ICE vehicles, higher costs could push them further out of reach for consumers, especially if the $7,500 EV tax credit also disappears.

Graphite Tariffs: A Shock to the EV System?

On the battery front, Tesla is fighting against tariffs on Chinese graphite, which could rise as high as 920%.

U.S. graphite producers argue that cheap Chinese supply undercuts domestic mining, but JPMorgan points out that graphite is the largest volume material in lithium-ion EV batteries. Any price hike could directly hit EV makers, further squeezing margins and making affordability an even bigger challenge.

The EV Equation: Higher Costs, Slower Growth?

Between supply chain inflation, tariff risks, and tax credit uncertainties, JPMorgan sees potential headwinds for EV growth in the U.S.

If prices keep rising, consumer adoption could slow, impacting not just automakers but also EV charging companies like ChargePoint Holdings Inc CHPT and EVgo Inc EVGO.

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