As US trade tensions escalate, Elon Musk’s gamble on Tesla’s Cybercab and Semi may be doomed by steep tariffs. The automaker’s future hangs in the balance as its plans to import parts from China are suspended.
Elon Musk has gambled Tesla‘s future on the Cybercab, a small, autonomous vehicle intended to spearhead the automaker’s charge into the robotaxi business. However, Trump‘s steep tariffs on Chinese goods have forced Tesla to suspend its plans to import parts for the Cybercab and its electric tractor unit, the Semi.
Elon Musk is a South African-born entrepreneur, inventor, and business magnate.
He is best known for his ambitious ventures in private space exploration with SpaceX and his electric car manufacturer Tesla.
Musk co-founded PayPal, which was later sold to eBay for $1.5 billion.
He has also made significant contributions to solar energy through SolarCity, now a subsidiary of Tesla.
With an estimated net worth of over $200 billion, Musk is one of the richest people in the world.
The Tariff Tsunami
The situation is dire for both vehicles. The development of the Cybercab already faces significant hurdles, while the Semi has been years behind schedule. Trump‘s tariffs have see-sawed back and forth, but their current rate of 145 percent is unprecedented. This has forced Tesla to suspend its plans to import parts from China, which were scheduled to start in the upcoming months.
The United States has been involved in several trade tensions with its major trading partners, including China, the European Union, and Canada.
These tensions have led to retaliatory tariffs, impacting global supply chains and economies.
According to a study by the Peterson Institute for International Economics, US trade tensions resulted in $68 billion in lost economic output in 2019.
The Trump administration's 'America First' policy has been a driving factor behind these tensions, prioritizing domestic industries over international cooperation.
A gamble that’s no longer paying off
Tesla had been preparing for the tariffs by sourcing more of its parts from North America. However, when Trump raised the tariffs to 84 percent, it was a rate firmly in the rear view mirror. Now, with the tariffs at 145 percent, Tesla is facing a major disruption.
The Cybercab was touted as a game-changer for Tesla, promising trillions of dollars and entering production by 2026. However, both promises are being severely threatened by the tariffs. The situation is more dire for the Semi, which has faced repeated setbacks and is years behind schedule.
A cybercab, also known as a self-driving taxi, is an autonomous vehicle designed for on-demand transportation.
These vehicles use advanced technologies like GPS, sensors, and artificial intelligence to navigate roads and transport passengers.
Cybercabs aim to revolutionize urban mobility by reducing traffic congestion, increasing road safety, and providing efficient door-to-door services.
A rift between Trump and Musk?
There are signs that the punishing tariffs are forming a rift between Trump and Musk. Musk has raged against the president’s senior trade advisor, ‘Peter Navarro, calling him a ‘moron’ and worse.‘ Musk also made comments vowing his support for ‘free trade,’ and personally tried to change Trump‘s mind behind the scenes.
However, so far, there are no clear signs of Trump relenting. The situation remains dire for Tesla, with its stock continuing to dive amid fears of retaliatory tariffs on US goods.
