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Trump’s trade war could upend California’s EV agenda
An electric vehicle charges in Los Angeles. Tariffs could lead to fewer EVs on dealers' lots and higher prices for consumers.
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Patrick T. Fallon
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AFP
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President Donald Trump’s 25% tariff on imported cars and auto parts that took effect earlier this month is expected to hit all car manufacturers, but electric vehicles are especially vulnerable. While they have fewer parts than their combustion engine counterparts, around a third of an EV’s cost is its battery — a market dominated by Chinese manufacturing.
State of play: The scope of the pain for auto manufacturers will largely depend on how much of their supply chains are already located in the United States. Some of the best-selling EVs in California could be in trouble. Models like the Ford Mustang Mach-E, Mercedes-Benz EQE and BMW i4 — which combined accounted for 6% of the state’s market in 2024 — are built with few, if any, parts manufactured in the United States, according to data from the National Highway Traffic Safety Administration.
Why it matters: Car buyers will likely see prices jump as current inventory on lots runs out and companies prepare to ship new models in the fall. California officials are trying to increase the adoption of electric vehicles as the state aims to increasingly phase out fossil fuel cars before a complete ban on combustion engine models starts in 2035.
What about Tesla? Tesla CEO Elon Musk has broken with Trump and vocally opposed tariffs, but his car company is the most insulated from the trade war. A Bernstein analysis last month estimated that 61% of Tesla’s U.S.-sold vehicle content comes from the United States, among the highest in the industry. Another 22% comes from Mexico, 7% from Canada and 3% from China.
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Tesla has other problems to worry about: The company has lost market share in California and nationally as competitors like BMW, Kia and Hyundai increase their EV offerings, and as it faces international backlash over Musk’s role as Trump’s cost-cutter-in-chief.
For more, read the full story in POLITICO's California Climate newsletter.
This story is published in partnership with POLITICO.
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