Despite Elon Musk’s close ties to Trump, Tesla’s CFO admits the president’s tariffs plan would impact ‘business and profitability’

Tesla’s CFO claims that just because Elon Musk is Donald Trump’s “first buddy” doesn’t mean the president’s policies won’t have an adverse effect on his electric vehicle company. During the company’s fourth quarter earnings call on Wednesday, chief financial officer Vaibhav Taneja warned that Trump’s tariff policies could be particularly harmful. “We have worked to localize our supply chain in every area over the years, but we still rely heavily on parts from around the globe for all of our operations. Therefore, our business and profitability will be impacted by the introduction of tariffs, which is highly likely to occur,” he stated.

Fortune contacted Tesla for comment, but the company did not immediately reply. Taneja’s remarks coincide with an almost 60% increase in Tesla’s stock since the election that put Trump, an ally of Musk, back in the White House. After spending $100 million to help Trump win the election, Musk is now leading the Department of Government Efficiency (DOGE), an advising group that aims to reduce the federal budget by trillions. Some analysts like Wedbush Securities’ Dan Ives have claimed that Musk’s influence in Trump’s administration will be a boon for Tesla and could skyrocket the company’s valuation to $2 trillion from its current $1.29 trillion market cap.

It’s unclear how any tariffs Trump imposes will impact Tesla. Tesla is renowned for producing its automobiles in the United States. With the Model Y, Tesla topped Cars.com’s American-Made Index in 2024 for the third year in a row. However, all automobiles, including those built in the United States, use foreign-sourced parts and other components. Just two of the 400 cars examined by the Cars.com index had at least 75% of their parts supplied from the United States and Canada. Regarding Tesla, the business sources its batteries from foreign businesses. Chinese firms BYD and CATL, the world’s biggest producer of EV battery cells, are among its suppliers. Because the Department of Defense thinks CATL is assisting China in modernizing its military, it was placed on a Pentagon blacklist earlier this month. In a prior statement, CATL refuted the accusation.

Trump’s promise to put tariffs on China, the first of which may be implemented by February 1, could have an impact on both businesses. Trump pledged to impose tariffs of up to 60% on the second-largest economy in the world during his campaign. As seen by the 25% tariffs that were almost applied to Colombia when its president refused to permit military aircraft carrying undocumented immigrants to land there, the president has already demonstrated his willingness to levy taxes on nonconforming nations. However, any upcoming tariffs have not deterred CEO Musk in the slightest. “I see a way. At the earnings call on Wednesday, he stated, “I’m not saying it’s an easy path, but I see a path to Tesla being the most valuable company in the world by far.”