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Trump’s border tax would massively help Tesla

February 6th, 2017 at 5:24 PM

In recent weeks, Donald Trump has been kicking around the idea of an import tax on Mexican goods. The specifics are nowhere to be found — probably because they don’t exist — but that hasn’t stopped research shop Baum and Associates from working out what the impact would be on the nation’s automakers.

Across the board, the report doesn’t paint a pretty picture. The price of cars would go up for nearly every car manufacturer, with some companies seeing a per-vehicle increase of over $10,000. But the one car company that would be sitting pretty? Tesla.

The report, which was seen by Bloomberg, factors in the cost of importing an entire car or components, given a border-adjusted 20 percent tax. According to the estimates, conventional automakers would face radically different price increases: Ford would be hit with an additional $242 per vehicle, while Land Rover and Volvo would be looking at nearly $10,000 per car. That would make overseas production unfeasible at current prices, and passing the full cost of the tax onto consumers would see radically lower sales.

Tesla, on the other hand, manufactures its vehicles in the USA. It famously uses fewer third-party components than other automakers, and is even working on building a Gigafactory to produce batteries, one of the few things it currently buys elsewhere.

It’s worth mentioning that both GM CEO Mary Barra and Tesla CEO Elon Musk sit on Trump’s Economic Advisory Forum, which has input on trade and taxation policy. Although a border tax would make producing cars more expensive for GM, it would likely benefit overall from a border-adjusted tax policy. Competitors, particularly for higher-margin SUVs, would be hit much harder by the tax, which would likely push customers to GM and Ford.




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