Feb 11 - By Nick Carey, European Autos Correspondent

Greetings from London!

After backing off tariffs on Mexico and Canada – to investors’ relief – President Donald Trump has returned once more to his foreign policy tool of choice with a 25% border tax now in place on all U.S. imports of steel and aluminium "without exceptions or exemptions" to protect local producers.

As the United States is reliant on imports for most of its aluminium, this could have far-reaching effects on several industries including autos. It also brings the threat of retaliation, to which Trump responded on Monday: “I don’t mind.”

One important caveat is that the tariffs don’t go into effect until March 12, which could mean they might still not happen.

Next up, Trump says he will announce reciprocal tariffs on many countries. He has, for instance, often complained about the EU's 10% tariff on auto imports, which is higher than the U.S. car rate of 2.5%.

Trump says tariffs will fix America’s problems. Various industries, economists and U.S. allies say it will drive up costs yet again for consumers for whom inflation played a not insignificant role in Trump’s election victory.

We may find out who’s right relatively soon.

Which brings us to today’s Auto File…

• Porsche’s tough times

• BYD ups the ante in EV price war?

• Tesla’s Texan robotaxis

Porsche hits the skids

Porsche’s stock took a big hit after the company said it was reversing course and investing 800 million euros in new combustion engine models – all of which would leave it with profit margins below analyst expectations in 2025.

The luxury German automaker has had a tough time in China where it faces intense competition from rising domestic rivals selling EVs, while its own electric cars have faced low demand in Europe.

Squeezed between those two challenges, Porsche PSHG_p.DE is hoping that by turning back to what it knows and has been loved for – fast cars with big engines – that it can also get some more love from investors.

Porsche’s market capitalization has halved from its May 2023 peak of just under 110 billion euros, so it is hardly surprising the company needs to take action.

But China is Porsche’s top market and China is going electric fast. So, the question is whether focusing on combustion engine models will hurt the company in the long run.

Recommended reading:

• Volvo to pay nearly nothing for Northvolt joint venture

• Autos ask for U.S. EV charging restart

• Nikola heading for bankruptcy?

BYD makes big price war move

An EV price war has been raging in China for more than two years and BYD just upped the ante.

China’s largest automaker has started offering advanced autonomous driving features on most of its models including ones priced as low as $9,555, far undercutting competitors like Tesla and making it harder for smaller automakers to keep up.

BYD has been a significant driver of China’s price war, thanks to its relentless discounts on its cars, including best-selling Dynasty and Ocean models.

The automaker has equipped all BYD-branded models priced above 100,000 yuan ($13,688) with its proprietary "God's Eye" advanced driver-assistance system, founder Wang Chuanfu said at an event livestreamed from company headquarters in Shenzhen.

BYD installed the system in three models priced below 100,000 yuan, including the Seagull, which starts at 69,800 yuan. Sales of all 21 models equipped with “God’s Eye” were launched immediately.

Wang said this would just be the "first batch” and predicted that smart-driving features would become indispensable car features like seatbelts and airbags.

Tesla’s Texan gamble

Elon Musk has been promising fully self-driving cars for around 10 years, but those elusive autonomous Teslas have always been just around the corner.

If you’re in Austin, Texas, then by June there might well just be one around the corner from you.

Maybe.

As my Reuters colleagues Chris Kirkham and Abhirup Roy report here, Tesla’s plan to roll out self-driving robotaxis by June comes in a state where the company faces virtually no regulations, raising questions about how much safety and legal risk Tesla is willing to take on as it deploys unproven driverless technology on public streets.

Nothing in Texas law would stop Tesla from launching a robotaxi service. The state takes a hands-off regulatory approach that aligns with Musk’s increasingly anti-government political stances as an advisor to U.S. President Donald Trump.

State law allows free access to public streets provided driverless cars are registered and insured, like any human-driven car, and equipped with technology to record data about potential crashes. No state agency issues permits for or oversees driverless-taxi services — and state law forbids cities and counties from enacting their own regulations.

Tesla has long  blamed its customers for accidents involving the driver-assistance systems it calls Autopilot and Full Self-Driving $(FSD)$, noting that it warns Tesla owners to stay ready to take over driving. 

But by rolling out robotaxis in Texas, legal experts say Musk will now place crash liability squarely on Tesla.

SEAT says EU tariffs will cost jobs

SEAT, Volkswagen's Spanish subsidiary, will be forced to reduce output and lay off around 1,500 workers if the EU does not lower its tariff on the brand's Chinese-made electric car by the end of March, its CEO told my Reuters colleague Victoria Waldersee. You can read about it here.

SEAT, which makes SEAT and CUPRA brand cars – has been paying an additional 20.7% charge on top of an existing 10% tariff on its CUPRA Tavascan produced at VW’s majority-owned plant in Anhui, China, since the EU imposed tariffs on all Chinese-made EVs sold in Europe in October.

CEO Wayne Griffiths said the charge, levied on a car selling at around 50,000 euros to 60,000 euros, caused the subsidiary to miss its financial targets last year and will cost it hundreds of millions of euros in 2025.

If the additional tariff is not reduced or removed in the first quarter, SEAT will be forced to cut the loss-making vehicle from its line-up, Griffiths said.

Fast Laps

- Tesla TSLA.O  posted lower sales across five European countries in January, including the United Kingdom and France, as competitors with newer models gained on the electric vehicle maker and polls show public opinion souring on CEO  Elon Musk.

- Toyota 7203.T raised its full-year operating profit forecast by 9% for its fiscal year ending March 31, in a sign of confidence in its ability to ride out the impact of any potential U.S. tariffs.

- Ferrari RACE.MI  will launch its first fully-electric car in October, while targeting an increase of at least 5% in revenues and core earnings this year.

- Shares of Dongfeng Motor 0489.HK  soared as much as 85.8% after the Chinese automaker said its parent was planning a restructuring, stoking speculation that some state-owned Chinese car companies could be merged as local competition grows.

- Stellantis STLAM.MI and French technology and artificial intelligence $(AI)$ firm Mistral have decided to expand their strategic partnership in a move which Stellantis said will speed up its industry-data analysis.

- Uber UBER.N shares jumped to a three-month high on Friday after billionaire hedge fund manager Bill Ackman said he had taken a stake worth about $2.3 billion in the ride-sharing platform.

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(Editing by Tomasz Janowski)

((tomasz.janowski@thomsonreuters.com))