US automakers are facing "tremendous" uncertainty related to tariffs, with Ford Motor (F) and General Motors (GM) potentially seeing a gross cost increase of over $10 billion, Deutsche Bank said in a note Monday.
Tesla (TSLA) and Rivian Automotive (RIVN) could see "materially" smaller increases, based on a 25% tariff on all imported vehicles and auto parts beginning May 3 but excluding US content on vehicles that comply with the US-Mexico-Canada Agreement, the bank said.
Deutsche Bank said it doesn't expect original equipment manufacturers to fully bear the burden of the additional costs as consumers and dealers will absorb some of the hit and automakers also implement various mitigation strategies.
The bank said the auto tariffs look "stickier" and won't go away amid the Trump administration's seeming flexibility on broader reciprocal tariffs.
"We think Rivian may have the cleanest set-up given its relatively small exposure to the tariffs," Deutsche Bank said. "We continue to view Tesla favorably longer term as an embodied [artificial intelligence] secular winner but acknowledge it faces many cross currents for the next quarter or two."
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