Trump's tariffs resulted in GM incurring over a billion dollars in losses during the second quarter
In the ever-evolving landscape of the automobile industry, the recent implementation of drastically increased US import tariffs has left a significant mark. Let's take a closer look at how this development has affected some major players, including Audi, Tesla, and General Motors (GM).
Audi's financial performance in the first half of the year has been impacted, with the operating margin now forecasted to be within the range of 5-7%, down from the earlier range of 7% to 9%. This shift comes as the company's revenue for 2025 is now expected to be between €65 to €70 billion ($76 billion-$82 billion), down by more than €10 billion.
Tesla, another prominent player, has also felt the pinch. The company's Q2 losses due to US tariffs amounted to $300 million, with a projected increase in the coming months. Tesla's Q2 net profits dropped by 16% to $1.17 billion, and automotive revenue fell 16% to $16.6 billion. Approximately two-thirds of the tariff costs affected the automotive division, while the remainder affected the energy business.
GM, on the other hand, is making efforts to mitigate the impact of tariffs. The company's Q2 earnings presentation mentioned an investment of $4 billion through 2027, while keeping overall capital spend within $10-12 billion. This investment includes additional production of full-size internal combustion-engine (ICE) SUVs and trucks, as well as around $900m towards next-generation V8 engine production in Tonawanda, New York. The new V8s are expected to be 4-6% more efficient than current generation engines.
GM's CFO, Paul Jacobson, stated that the company is making progress to mitigate at least 30% of the tariff impact on income. However, the Q3 net impact from tariffs is expected to be higher than Q2 due to the timing of indirect tariff costs.
Stellantis, another automaker, expects to lose €2.3 billion ($2.7 billion) due to US tariffs and other factors in the first half of the year. No relevant information was found regarding an automobile brand announcing a $4 billion investment in US manufacturing to reduce tariff burdens.
As the industry navigates these challenges, it's clear that adaptability and resilience will be key. The rollout of additional capacity, expected to come online in 18 months, could provide a much-needed boost for companies like GM, who project building more than 2m vehicles in the US each year after this period.
In the face of these changes, it's an exciting time to watch the automobile industry adapt and evolve in response to the shifting landscape.
