How the 25% Auto Tariffs Will Impact Tesla

By Karan Singh
Not a Tesla App

On March 27, the U.S. Administration announced a 25% tariff on all imported vehicles and foreign-made automotive parts, an attempt to strengthen domestic manufacturing. Currently, Tesla and Rivian stand out as the major EV automakers with a predominantly U.S.-built lineup.

In this analysis, we’ll explore the potential impact of these tariffs, examining key factors and what they mean for the industry moving forward.

Percentage of American Parts

One key item we want to point out here before we continue is that the NHTSA defines North American made parts as parts built in either the United States or Canada - Mexico is not included in this number. In November 2024, we found out the percentage of parts Tesla uses that come from the U.S. and Canada. At the top we have Tesla’s Model 3, which uses 75% North American parts.

We’ll be sticking with overall percentage of North American parts since we don’t actually know what percentage Tesla sources from Canada. We do know today that some cameras, essential die parts, and other key components are sourced from Canada for nearly every vehicle in Tesla’s lineup - so it isn’t an insignificant percentage.

Insulated from Tariffs?

At first glance, Tesla may seem insulated from these tariffs. However, its dependence on a global supply chain—particularly parts moving across the U.S.-Canada border under the US-Mexico-Canada Agreement (USMCA)—adds complexity to the equation. Additionally, potential retaliatory tariffs from Canada could further pressure Tesla, a trend already evident in the company being excluded from multiple EV incentives across the country.

While Canada isn’t Tesla’s largest market, it still accounts for a meaningful share of sales. Even a small decline in that market could have a noticeable impact on the company’s bottom line.

Domestic Advantage

Tesla’s domestic advantage is impressive—it manufactures all vehicles sold in North America at just two facilities: Tesla Fremont and Gigafactory Texas. The initial 25% tariff, set to take effect on April 2, 2025, applies to cars and light trucks assembled outside the U.S., likely dealing a heavy blow to competitors like Hyundai and Volkswagen. According to a Goldman Sachs report, these tariffs could drive up vehicle prices by $5,000 to $15,000.

However, this advantage is partially offset by exemptions under the USMCA. To avoid the full tariff, vehicles and parts must meet a strict “rules of origin” requirement, meaning at least 75% of components must come from the U.S., Canada, or Mexico. This exemption remains in place until May 3, 2025, when the second stage of tariffs kicks in—targeting non-U.S. content more directly.

Effectively, the NHTSA and USMCA’s existing framework for defining “North American-made” components is being upended. This shift plays to Tesla’s strengths, but to understand the full impact, we need to take a closer look at its supply chain.

Supply Chains

Tesla’s supply chain is deeply integrated across North America. Approximately 25% of the Model 3 Long Range RWD and AWD comes from Mexico - and some undefined percentage also comes from Canada. That number rises significantly for the other vehicle’s in Tesla’s line-up, which is available in the chart below from early November 2024.

Phase 2 of the tariffs will place an increasing impact on Tesla - especially as it won’t be simple nor quick for Tesla to move all part production to the United States. 

Vehicle

Pct made in US/Canada

Model 3 LR AWD/RWD

75%

Model 3 Performance

70%

Model Y (All Variants)

70%

Cybertruck

65%

Model S

65%

Model X

60%

Battery Production

This is particularly evident in Tesla’s reliance on Canadian minerals, which are crucial for its battery production. Tesla sources key materials like nickel, lithium, and cobalt from Canadian mines, with most of these resources being shipped across the border in an unrefined state. Currently, these shipments face a relatively low 10% tariff from Canada. However, potential retaliatory tariffs could drive costs higher or even restrict access to these essential minerals.

While limiting access may seem extreme, Ontario has already threatened to halt nickel exports from Canada’s largest nickel mine to the U.S.—a move that could pose a serious challenge for Tesla.

Even Elon Musk has acknowledged that Tesla won’t emerge from these tariffs unscathed.

Retaliatory Tariffs

Tariffs are rarely a one-way street. Canada and Mexico are likely to respond with retaliatory tariffs on U.S.-made auto parts or vehicles. Both countries have already explored reducing EV incentives by excluding Tesla from certain rebates. Additionally, there have been discussions about imposing tariffs specifically on Tesla, partly due to Elon Musk’s political involvement.

Consumer Impact

Several scenarios impacting consumers can unfold in response to these upcoming tariffs.

In the short term, higher prices for competitors could drive more customers toward Tesla as they seek more affordable products. However, increased import costs could force Tesla to either absorb the expense or raise prices—potentially offsetting any sales gains.

Cox Automotive, a leading industry analyst, has warned that by mid-April 2025, North America could see reduced production, tighter supply, and rising vehicle prices. Tesla, despite its domestic production, won’t be immune to these effects due to its reliance on a continental supply chain.

To mitigate long-term costs, Tesla could explore securing domestic mineral rights—an expensive move initially but one that could provide stability if tariffs remain in place for years under the current administration.

However, Tesla CFO Vaibhav Taneja acknowledged during the Q4 2025 Earnings Call that the company remains heavily dependent on global parts sourcing. Given Tesla’s own admission of the impact, consumers should expect price increases as the company adjusts to the shifting trade landscape.

What to Take Away

Overall, the 25% tariff presents a double-edged sword for Tesla. While it may offer short-term advantages by making competitors’ vehicles more expensive, long-term, Tesla will also be impacted. Tesla’s reliance on cross-border parts, coupled with potential retaliatory tariffs, could quickly escalate costs and increase vehicle prices.

As the political landscape around tariffs continues to evolve on what seems to be a daily basis, Tesla will need to navigate these changes carefully. Tesla’s supply chain has been optimized for cost-effectiveness and efficiency. Any changes that happen could be driven by the new tariffs. Tesla may be forced to make changes that prioritize reducing tariff costs, potentially at the expense of efficiency. However, if these policies continue to evolve or if tariffs are later removed, Tesla is then stuck with a less-efficient supply change.

The company will likely address these challenges in detail during the Q1 2025 Earnings Call, though that remains several weeks away.

Tesla May Add Lumbar Support to Driver Profiles, Offer Turn Signal Stalk Retrofit

By Karan Singh
Not a Tesla App

Tesla’s Vice President of Vehicle Engineering, Lars Moravy, recently took to X and opened the floor for user input. There, he asked the community for features and improvements they’d like to see to make Teslas better heading into 2026.

This post generated thousands of suggestions - and we recapped the best of them. There were also a few that Lars responded to, giving owners hope for some much-requested future changes, so let’s take a look at what may be coming

Lumbar Profile Support

Today, lumbar support is one of the few items that is not saved in the Tesla profile. That means if you have multiple drivers who use the same vehicle, you’re often left adjusting this setting manually, as it retains the setting that was last used. One community member suggested saving your lumbar setting to your profile just like Tesla does for other seat settings.

Lars said making this change seems doable, but it’ll take some engineering magic. The lumbar support isn’t tied to an absolute sensor like the other seat settings. This suggests that Tesla does not have an exact value to save, as it does with other seat functions, but Lars believes Tesla can find a way to save lumbar preferences. Tesla could potentially time how long the motor runs to get to the user’s lumbar setting and save this value.

With that said, it seems the vehicle engineering team may take a look at this one, and we may see it included in a future update.

Model 3 Signal Stalk Retrofit

The move away from traditional stalks in favor of the steering wheel buttons on the Refreshed Model 3 has been a point of debate. While the author is squarely in the camp of steering wheel buttons (at least with the Cybertruck), many dissent and say that the buttons on the Refreshed 3 aren’t as satisfying or easy to use.

Many other drivers also prefer the tactile feel and muscle memory of a physical stalk for signaling. Tesla appears to favor stalks, as they retained the turn signal stalk with the new Model Y. There are also rumors that Tesla is going to reintroduce the turn signal stalk to the Model 3.

If Tesla adds stalks back to the new Model 3, current 2024+ Model 3 owners are still left without stalks. However, a user suggested adding stalks as a retrofit option. Lars said that he would try to consider a retrofitted signal stalk for the Refreshed Model 3, similar to the simplified version in the Refreshed Model Y.

While less definitive than the lumbar support response, it appears that Tesla may at least consider offering a stalk retrofit for the new Model 3. If you’re a lover of signal stalks and can’t wait for Tesla to get an official one - we recommend the Enhauto S3XY Stalks, which are customizable and feel very close to Tesla’s original fit and finish.

With that said, it’s nice to see Tesla incorporating more community feedback into its vehicle design these days. Perhaps one day, they’ll address the infamous auto wipers. They have gotten better, but they’re still not as reliable as what’s available in most other vehicles. With that said, we look forward to the changes that will emerge from these recent conversations.

Tesla to Issue TCU Fix That Prevents Vehicles From Sleeping in Update 2025.14.6

By Karan Singh
Not a Tesla App

Sometimes, even with Tesla’s intensive bug-testing regime, bugs manage to make it out into the wild. In this particular case, a European user (@darkwaffle48484 on X) noticed that their 2024 Model 3 was using up more battery than normal while parked. Normally, they noted that the vehicle would lose about 1-2% per week; however, recently, they noticed much larger drops of 3-4% per night.

They monitored their Tesla widget and noticed the car wasn’t entering deep sleep. The widget consistently showed a recent connection time—usually within the past 45 minutes.

Fix Inbound

After discussing the issue with other Tesla owners and realizing it was somewhat widespread, they contacted Tesla Service. The service team confirmed that it was a firmware bug affecting the Telematics Control Unit (TCU), which prevented the vehicle from entering deep sleep mode.

The TCU is essentially the communications hub of your Tesla - and is mounted on the ceiling of newer vehicles such as the Model 3 and the new Model Y. It enables cellular and location services (via GPS) and also handles Wi-Fi and Bluetooth services. Tesla Service stated that this bug is planned to be fixed in update 2025.14.6, although the exact version number could change. However, they confirmed that they are aware of the issue and it is being addressed.

@darkwaffle48484

When the user reached out to Tesla Service, Tesla Service responded with the following (translated from Dutch):

“It has been confirmed that this is a firmware bug. The fix is in one of the next updates. Currently, it is planned for 2025.14.6 (subject to change). Do you have any more questions?”

Potentially Region-Specific

This bug could potentially be region-specific. TCUs often require specific hardware components, such as modems, as well as specific firmware versions that support different regions and cellular providers. These enable Tesla to comply with local cellular standards and regulations and ensure that your vehicle can connect to the networks available in that particular region.

At this point, it’s not clear when the fix will roll out, but given that update 2025.14.1 has practically stopped rolling out, Tesla may be waiting to resume the rollout with update 2025.14.3 or this 2025.14.6 version.

If you’ve noticed this issue and are in a non-European nation, let us know.

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