General Motors sent a letter to the Commerce Department today complaining that further tariffs on imported auto parts and materials could result in higher car prices and, ultimately, a smaller GM. The Trump Administration last month requested a study on the national security risks of imported cars and auto parts. The administration wants to know if such risks might justify a new 25% tariff.
As GM alludes to in its letter, the threat of more tariffs comes at a sensitive time for the company. Half of the cars on the road will be electric by 2030, estimates show.
“The auto industry also happens to be in the midst of a fast-paced transportation revolution led by cutting-edge technologies that promise to redefine the industry as we know it,” the letter reads. “If U.S. auto companies are to lead in this space—as we currently are—we absolutely must rely on our existing strengths and invest resources accordingly.”
The company has been somewhat of a pioneer in electric vehicles with its Chevy Volt and Bolt models. But so far it has failed to make money selling EVs. CEO Mary Barra told investors early this year her company would begin turning a profit in EVs by 2021.
However, a January Reuters article says that success will depend more on Chinese plants and employees, while GM North America would keep producing more traditional vehicles, like trucks. GM plans to combine “proprietary battery technology, a low-cost, flexible vehicle design and high-volume production mainly in China,” Reuters reports, citing six current and former GM and supplier executives and six industry experts.
Even if that’s true, shrinking demand for EVs in North America could have a global effect on GM’s operations.
GM says it has 110,000 employees working at 47 manufacturing locations and 25 parts and service facilities in the U.S. The company says it most of its R&D, design, and engineering work happens in the U.S., too.