Tariffs Could Cost Ford $1.5 Billion This Year

Oh boy, more tariff talk. Okay, it might not be thrilling or evocative in the same manner as industry gossip, but these taxes paid by importers on goods brought into America are going to affect a lot of things, and they’re continuing to shake up the deeply global car industry like it’s a Little Tikes Cozy Coupe left out in the yard during an F2 tornado.

Ford just withdrew its guidance due to the expected impacts of tariffs, and the estimated dollar figure is certifiably huge. We’re talking ten figures, specifically a billion-and-a-half dollars.

At the same time, Tesla sales aren’t doing so well in the U.K. and Germany, Audi is really looking into U.S. production, and Lotus just bought Lotus. All this coming up on today’s edition of The Morning Dump, so pull yourself a cup of whatever’s the least-worst Nespresso pod in your office break room because it’s time to digest some car news between Zoom meetings.

Ford Expects A Ten-Figure Tariff Pinch

It goes without saying that $1.5 billion dollars is an absurd amount of money. If you inherited that much money the day you turned 18 and lived to be 90, you’d need to spend around $400,000 a week to wrap up your time on this pale blue dot with nothing in the bank. However, that’s the sort of damage Ford’s estimating this year due to tariffs on products imported to America. The automaker released its Q1 financial results on Monday, and that document contains this doozy of a paragraph:

Based on what the company knows now, and its expectation of how certain details and changes will be resolved related to tariffs, the company estimates a net adverse adjusted EBIT impact of about $1.5 billion for full-year 2025. Given material near-term risks, especially the potential for industrywide supply chain disruption impacting production, the potential for future or increased tariffs in the U.S., changes in the implementation of tariffs including tariff offsets, retaliatory tariffs and other restrictions by other governments and the potential related market impacts, and finally policy uncertainties associated with tax and emissions policy, the company is suspending guidance. These are substantial industry risks, which could have significant impacts on financial results, and that make updating full year guidance challenging right now given the potential range of outcomes. The company will provide an update during the Q2 earnings call.

Yep, another car company pulling its guidance for the year, meaning prior fiscal predictions are out the window thanks to these tariffs, and this expected $1.5 billion hit comes despite Ford’s strong U.S. manufacturing base.

The F-Series pickup trucks, Transit van, Ranger and Bronco, Expedition and Lincoln Navigator, Explorer and Lincoln Aviator, Escape and Lincoln Corsair, and all but one variant of the Mustang are made in the contiguous 48, but thanks to a handful of models being imported and the automotive supply chain being set up for a free trade economy, the company is still expecting to take a huge hit. Obviously, this isn’t just something a company can absorb unaffected, so don’t be surprised if higher prices are possible in the near future to mitigate financial damage caused by tariffs.

Europe Goes Cold On Tesla

Speaking of pain, things aren’t going so well for Tesla in Europe right now. Reuters reports that in April, Tesla sales were down 60 percent year-over-year in Germany to 885 cars, and down 62.1 percent year-over-year in the United Kingdom to 512 cars. There are probably more Teslas in the SoFi Stadium parking lot on any given night than were sold in two of Europe’s biggest markets last month, and it’s not like general EV sales are falling in Europe either. Per Reuters:

Overall car sales in Germany dropped by 0.2% in April, but those of electric vehicles grew by 53.5%, KBA said.

In Britain, battery-electric car registrations increased by 8.1% in the month, while total car sales were down 10.4%, the SMMT data showed.

Part of this decline is due to increased competition, with Chinese EVs continuing to gain traction in Europe, but part of it’s just that Tesla’s rocket is now its anchor. While the cult of personality around CEO Elon Musk initially fuelled wild success, recent actions by the boss of Tesla haven’t reflected brilliantly on the company. From protests to middle fingers, the public reacted pretty decisively, and scaring off potential customers isn’t a great way to grow sales.

Can Tesla come back from this? I wouldn’t count it out just yet, but if it happens, it won’t be for a while. Stripping away all the current baggage, the refreshed Model 3 is objectively a pretty good car, and although the updated Model Y looks a bit cheap, it’s still in the mix on paper. Perhaps with new management, a more successful future could be on the horizon. Just ask Volkswagen.

Audi Might Be Inching Closer To U.S. Production

Over the past 30-plus years, German luxury automakers have laid down production roots in America. Mercedes-Benz has its Tuscaloosa plant and BMW has its Spartanburg plant, both churning out high-volume, high-margin SUVs, but Audi builds nothing in the United States right now. A few months ago, this wasn’t a huge problem, but auto tariffs introduced by the current U.S. administration have thrown a wrench in things. Logically, Audi needs production capacity in the lower 48, and Automotive News reports that the automaker is looking at it. As a representative from the automaker told the outlet:

“We want to increase our presence in the U.S.” the spokesperson said. “We are currently examining various scenarios. We are confident that we will be able to decide on the specific details in consultation with the Group before the end of this year.”

Volkswagen’s Chattanooga plant is already configured to build vehicles on the MEB platform, and Audi uses that platform for the Q4 e-tron electric compact crossover. Beyond that, Automotive News claims the Q8 e-tron might be built in the upcoming Scout plant in South Carolina. Would these be the right products, considering the current push to roll back emissions standards in America? Time will tell, but the second-best time for Audi to build something in America other than yesterday is now.

Geely-Owned Lotus Just Bought Lotus From Geely

Yes, you read that correctly, Lotus, the company known for its sports cars, has just bought Lotus as of last week. If that sounds confusing, allow me to make it comically-so before tidying it all up at the end. Prior to this, there were multiple Lotuses, sort-of. See, there’s Lotus Advance Technologies, which is all the sports car stuff that happens in the U.K. along with engineering consulting, and then there’s Lotus Technology, a Geely-formed subsidiary established in 2018 to create EVs. Now, Lotus Technology has bought Geely’s 51 percent stake in Lotus Advance Technologies, bringing the two companies under one umbrella that’s still majority owned by Geely, because Lotus Technology traded shares to Geely for a majority stake in Lotus Advance Technologies.

So what does this actually mean? Well, it means that everything at Lotus now happens under one corporate roof, which could assist the development of future models, but you can really just think of it as simplifying and adding corporate lightness. Either that or some sort of Abbott and Costello routine.

What I’m Listening To While Writing TMD

By modern musical duo standards, The Hellp is particularly enigmatic. Formed by members with blue-collar youths out of the fear of dying without being in a cool band, the group’s lore is impressive, from the Harvard talk to one track being on Frank Ocean’s rotation in the Blonde era. It’s a tightrope of trying too hard and looking effortless, resulting in soundscapes tinged with electric tension and razor-wire anxiety that sound years ahead of their time. This track, “Hot Fun,” is a re-work of a five-year-old demo, officially dropped last week, and still feels up-to-the-minute.

The Big Question

Alright, let’s switch things up a bit and play a game. Imagine you’re given any two cars and a garage to keep them in for free, but they have to be your only household daily drivers, and the cars have to be made by the same parent company. What are you picking?

Top graphic credit: Ford