How tariffs could complicate the EV picture

The Street

Jessica Caldwell, Head of Insights at Edmunds, joins TheStreet to discuss the potential impact tariffs could have on the V market.

Transcript

00:00Now, you mentioned that while sales might slow of EVs here in the U.S., they're strong

00:05in Europe and in Asia.

00:07So given that global trend toward EVs, how might what happens here in the U.S. impact

00:15our standing against foreign competitors?

00:18Yeah.

00:19I mean, I think that's a really important point because we think about the foreign competitors,

00:24particularly the Chinese automakers who have never necessarily challenged significantly

00:28in the U.S. for this market despite rumors for decades now.

00:34But the automakers, particularly here in Detroit, it's like they really can't take their foot

00:38off the accelerator because they will ultimately get passed by some of their global competition.

00:43And that's a really scary thought because, you know, companies like General Motors and

00:47Ford, they've been trying to stay on the tip of this, you know, this wave of electrification

00:52because in the past they have definitely been accused of and guilty of being behind the

00:56trend.

00:57And that almost, you know, as we saw in 2008, led to some serious ramifications for those

01:01companies.

01:02So I think that it is it is challenging when your home market, maybe it seems a bit hard

01:07to gain momentum, but you look around the world and that's not necessarily the case.

01:12And how are you going to be able to compete with Chinese automakers who are going so strongly

01:16in their market, but also looking to export more?

01:19And that's going to be a tall order for particularly the Detroit automakers as we look to the next

01:2410 to 20 years.

01:26And so sticking with this theme of competition, I'm wondering if we see this pullback in infrastructure

01:32and possibly this pullback in this federal tax credit, and then you put on top of that

01:37this tariff situation, how does that impact this whole supply and demand thing?

01:44Or will it at all, since so many foreign automakers already assemble their cars here in the U.S.?

01:51It definitely, I think, gets a bit tricky just because how far do the tariffs go if

01:56they start to go to parts?

01:57I mean, that's a different story than if it is final assembly of where the vehicle is

02:01manufactured.

02:02If that is the case, then maybe the risks are not as bad because, as you pointed out,

02:07a lot of the foreign automakers do already assemble the vehicles here.

02:11But I think what probably is more daunting is the thought that all the parts coming in

02:16from different parts of the world, Mexico, Taiwan, Asia, all of those will be tariff

02:21because that I mean, not only is that a logistical nightmare, because you're talking about so

02:23many parts coming from so many different places and a lot of times parts are made in

02:27different parts of the world.

02:28So how does it all work together?

02:30So from an administration standpoint, that is extremely tough.

02:33But then also adding costs, if you have elimination of a federal tax credit, plus you're paying

02:37tariffs on all of these extra parts, there's only so much that the consumer can absorb

02:43at this point in time.

02:44And especially, again, with cost of living increasing so much just in the past few years,

02:48interest rates continuing to be high, despite the fact that they're easing, but they're

02:52still high from historical norms, it really makes a situation where it's tough for consumers

02:58to support this new technology, even though if all parts are taxed, then all vehicle prices

03:05will go up.

03:06So that can really change things.

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