Ryan Felton
Appearances
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
Yeah, the main things that they put out were cutting spending for one part and then increasing production where they can. There's been a lot of talk in recent days, in particular from the United Auto Workers, which has a big representation at GM about how much extra capacity these American automakers already have to boost production. There's some...
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
It's a very simplified way of explaining that extra capacity. But with all that said, GM did say this week that's planning to build more profitable pickup trucks at a factory in Indiana and start trying to make more electric vehicles, batteries in the U.S. and then just trim costs wherever else it can.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
Yeah, so they're still planning to name their CEO at some point before the end of the first half. They say they're on track for that. But they, too, are in a difficult position because they make a lot of their profitable, bigger pickup trucks for the market in Mexico. So they have to start thinking about making some changes as to where some of their...
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
more popular, more profitable products are made and finding ways to trim costs on those in particular. And at the same time, they have said that they're planning to reopen a factory in Illinois, which it's not something that you can just do overnight.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
The way that I always think about cars in the broadest sense is it's the second biggest thing that most people buy. People in bigger cities may not need a car, but 80, 90 percent of the public does. It really complicates things for a lot of consumers downstream. And that partially explains, I think, why you saw sales spike the way that they did the past couple of months.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
There was some effort by companies to offer promotions and the like to kind of reel people in before this essentially necessary deadline.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
That's the most standout item from their call is that Elon says he's going to be devoting more time to the company. But at the same time, they still are preparing to launch a new updated version of the Model Y SUV, which is their top selling vehicle. So that was partially what they said was to explain for the sales drop off.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
But still, at the same time, a lot of people are starting to come around to the idea that they've basically had the same models for years now, and that maybe is starting to impact consumer appetite for it. But that said, Tesla told investors that it's planning to introduce what they're calling more affordable models, which has been a bit of a mystery. What exactly that is.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
It could be a brand new car, possibly what it was long hoped for. But now the expectation is that it'll be an even more stripped down version of the Model Y and Model 3.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
Thinking about how the semiconductor crisis kind of played out, it was something that was percolating for a while and then it just blew up. What we've been seeing and talking with folks in the industry here is there has been a lot of back and forth for the better part of two months now between companies over who's paying what on the tariff. Are you paying everything? Am I paying everything?
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
Are we splitting it? And if those discussions break down, that's where you can start to have discussions. hiccups in supply chain challenges. One supplier, this isn't just hyperbole, it's been proven over time, one supplier can really wreak havoc on the entire industry. There's a lot of really specialized components and only so many companies that make them.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
And so if one goes down, it can immediately become a challenge.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
So far, the way that companies have said they're going to handle this is we're not going to raise prices for now. That's because most companies have, roughly speaking, two months worth of unsold new cars on dealer lots. So that kind of gives you a bit of a runway to start figuring out contingencies. And there's reason to think things could play out where consumers may not see a significant jump.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
This change, for example, to the auto parts tariff that the Trump administration introduced last week, it made the tariff on a lot of auto parts within this North American region exempt from the tariffs, at least for now. So if that stays in place and a lot of these parts continue to be exempt, I think it's possible you could see the damage limited.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
But that said, thinking of a company like Subaru, for example, or Volvo is another good example. Volvo's earnings were pretty bleak. Customers who like cars, very import-heavy carmakers may be the ones who see the issues first because unlike a company such as Ford or GM, they have less levers to pull to really figure out how to maneuver this.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
Thanks so much for having me on.
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
Hedging is probably the best way to put it. The major automakers pulled back on their forecast for the rest of the year, projecting a lot of additional costs in the billions of dollars to compensate for the tariffs and then just trying to start figuring out how to
WSJ What’s News
What’s News in Earnings: How Car Companies Are Prepping for Tariffs
get production set up in a way to minimize the tariff liability, which I think at this point has definitely been described as a bit of a challenge because things are continuing to evolve at the administration and how they're trying to set this up as well, including as recently as within the past week.
WSJ What’s News
Harvard Hit With $2 Billion Government Funding Freeze
I'm looking at something to help some of the car companies where they're They're switching to parts that were made in Canada, Mexico, and other places. And they need a little bit of time. because they're going to make them here, but they need a little bit of time.