While President Trump puts new tariffs on China’s assets and threatens a commercial war with allies such as Mexico and Canada, it is likely that a global company will suffer less than most of its competitors: Tesla.
But the electric car manufacturer led by Elon Musk, which represents a third of the richness of the billionaire, is also vulnerable if relations with China worsen. That country is the second largest market in the company after the United States and produces more cars there than anywhere else.
Tesla has built supply chains largely self -sufficient in the United States and China, a rarity in an interconnected world of trade. As a result, tariffs imposed by the Trump administration on Chinese products, and the continuous threat of putting them in Mexican and Canadian products, could help Tesla hurting their competitors more.
Although there is no evidence that Mr. Musk is shaping commercial policies, tariffs are one of several measures taken by the Trump administration that can benefit Tesla at the expense of their rivals. On Wednesday, Mr. Trump stopped 25 percent tariffs on most cars and pieces made in Canada and Mexico, but the respite expires in a month, leaving automobile manufacturers in the United States that depend on foreign supply chains in a state of uncertainty.
The administration is also trying to eliminate financial support for the construction of fast charging stations for electric vehicles, a movement that could harm companies that seek to compete with the extensive Tesla network. And tries to reduce or eliminate loans and subsidies that competitors such as Ford Motor and Rivian are using to finance electric vehicles and batteries.
Musk has said almost nothing about the trade or crusade of the administration to promote fossil fuels and prevent sales of electric vehicles, which could also damage Tesla. And his support for Mr. Trump has inspired protests in Tesla’s dealers and has weighed the price of Tesla’s shares. But his position as a de facto member of Mr. Trump’s cabinet gives him an influence that exceeds any other car executive.
“The conflict of interest makes it very slightly here,” said John Helveston, an assistant professor at George Washington University who teaches engineering management.
Tesla did not respond to a request for comments. A White House official said his policies were prior to Mr. Musk’s support to Mr. Trump.
“President Trump constantly criticized the policies of electric vehicles that kill Biden’s work in the campaign since the summer of 2023, more than a year before Elon Musk even supported President Trump, and has constantly pressed companies to make their products in the United States since he was running for president in 2015,” said Kush Desai, a spokesman for the White House, in an email.
Trump’s commercial war and other policies also have risks for Tesla when the company is already in crisis, and sales collapse in China and Europe, even when the general market for electric vehicles increases.
The extensive investments of Musk in China leave it vulnerable as commercial tensions between the Chinese government and the Trump administration increase.
“It could become a pawn in all this,” said Lei Xing, an independent car analyst based in Massachusetts that focuses on China.
Tesla is already fighting in Europe and China due to the competition of Chinese electric car manufacturers and a shortage of new models. The anger for the political activities of Mr. Musk, including the promotion of extreme right parties, has also harmed the demand in Germany, the United States and other markets. The personal wealth of Mr. Musk is linked to Tesla’s actions, which has been a strong decline.
When Tesla began producing mass producers in a factory in Fremont, California, in 2012, he designed a supply chain that depended less on imports than practically all its competitors. Electric vehicles were a new technology, which forced Tesla to largely develop their own sources of batteries, engines and other components.
Tesla built a battery factory in Nevada in association with Panasonic in Japan, and remains one of the few automotive companies to produce batteries in the United States.
When, in 2014, Mr. Musk began talking about the construction of a factory in China, he received a warm welcome from government officials. Tesla opened a factory in Shanghai six years later in unusually favorable conditions. Beijing changed property rules so that the company could be established without a local partner, the first for a foreign car manufacturer in China. The Chinese government also secured low interest loans, access to the main leaders and even changes that Tesla had sought in emission regulations.
But Mr. Musk kept supply chains for relatively separate Chinese and American factories, unlike other automotive companies that depend largely on imported parts.
“He prepared very well in the event that the trade is left sideways and the tariffs rise more,” said Michael Dunne, a automotive consultant from China for a long time. “And that serves well today.”
Today, cars manufactured in Shanghai are sold in Europe, Southeast Asia or in the Chinese national market, but not in the United States.
The cars that Tesla sells in the United States are manufactured in factories in Fremont and Austin, Texas. Tesla also produces cargo equipment for its patented cargo network, the largest in the country, in Buffalo, Ny Tesla, plants an annual cars.com ranking, an online shopping site, how much of a vehicle is made by the United States.
“Tesla is in a good position” to resist the tariffs, said Patrick Masterson, who supervises the compilation of the data that go to the classification of Cars.com. “His national production is robust.”
Tesla is still vulnerable to the tariffs of the assets of China and Mexico because a quarter of the components and materials in the car is imported, measured by value, according to the data compiled by the National Administration of Traffic Safety on Roads. But electric vehicles manufactured by Tesla competitors are much more vulnerable to tariffs.
General Motors’ Chevrolet Equinox Sport Vehicle Utility, for example, is done in Mexico. With an initial price of $ 34,000, the equinox with drums is a threat to the Tesla Model and, which starts at $ 45,000 before government incentives. The 25 percent rate of the Trump administration will erase most of that advantage, assuming to be maintained.
The risk for Tesla in China is more difficult to measure. Until now, Chinese leaders seem to see the role of Mr. Musk in the Trump administration as an advantage, seeing it as a possible point of contact. In January, when Han Zheng, vice president of China, flew to Washington to attend Mr. Trump’s possession, met with Musk.
“The Us-China policy has often operated through specific personal relationships,” said Iliaria Mazzocco, a leading business member and Chinese economy at the Center for Strategic and International Studies, a group of Washington experts. “There is hope in China that I can play a constructive role.”
But Mr. Musk has also lost some negotiation power in China.
When the Chinese leaders illuminated the Shanghai factory, Tesla was seen as a technology leader who would stimulate the development of the EV industry. However, with falling sales in Europe and weakening in China, the production of Tesla in Shanghai fell 50 percent in February of the previous year. Chinese car manufacturers such as Byd and Xiaomi are presenting new models that rival Tesla in characteristics such as autonomous driving.
The prestige and leverage of Tesla in China can be decreased as a result.
“Tesla can no longer control China,” said Jia Xinguang, an independent automotive analyst in Australia. “But China, on the contrary, can control Tesla.”
Even so, China would probably think twice before attacking Tesla and Mr. Musk because doing so could attract foreign investment, said Wang Yanhang, a member of the Chongyang Institute for Financial Studies of the Renmin University in Beijing that tracks commercial problems. “China will not shoot in the foot,” he said. “It’s the last option.”
Until now, China has moved away from cars by retaliation against Trump administration tariffs on Chinese products, instead of increasing the duties of US agricultural products such as chicken and wheat.
Tesla has silently fought at least one potential tariff on Chinese materials that would have a direct impact on their competitiveness.
China is the main source of high purity graphite, an essential material for batteries. In December, a group of companies trying to produce battery graph in the United States accused China of pouring and asked the United States International Trade Commission to impose punitive duties that could be more than 800 percent.
In an audience on the subject in January, Tesla hired a prominent Washington law firm to discuss their case, and four Tesla executives spoke, according to public documents. Tesla is “going back because they don’t see an alternative to Chinese graphite,” said Iola Hughes, Rho Motion research director, which tracks the battery industry.
Last month, the commercial agency said there was a “reasonable indication” that Chinese graphite exports were damaging US producers. The agency has not issued a final decision. Trump’s rhetoric on trade has not included any graphite mention.
Joy Dong Contributed reports.
