Lucid CEO Warns Tariffs to Raise US Car Prices by 10%

Lucid Group's interim CEO, Marc Winterhoff, has cautioned that the tariffs imposed by the Trump administration will inevitably drive up the cost of producing cars in the United States, even for domestically manufactured vehicles. This increase in production costs will, in turn, lead to higher prices for consumers, affecting the overall affordability of vehicles in the market.

Winterhoff's warning highlights the broader economic impact of trade policies on domestic industries. The automotive sector, a cornerstone of the U.S. economy, relies heavily on a complex supply chain that spans multiple countries. Any disruption or increase in costs within this supply chain can have a ripple effect, ultimately affecting the end consumer. The tariffs are expected to increase the cost of raw materials and components, which are essential for car manufacturing. Even if a significant portion of the production process is carried out within the United States, the reliance on imported parts and materials means that tariffs will still have a substantial impact. This situation underscores the interconnected nature of global trade and the challenges faced by manufacturers in navigating an ever-changing regulatory landscape.

Winterhoff's comments also shed light on the potential long-term effects of these tariffs. While the immediate impact may be an increase in car prices, the long-term consequences could be more profound. Manufacturers may be forced to re-evaluate their supply chains, potentially leading to shifts in production strategies and investment decisions. This could result in a more fragmented and less efficient global supply chain, ultimately affecting the competitiveness of the U.S. automotive industry.

The warning from Lucid Group's CEO serves as a reminder of the delicate balance between trade policies and economic stability. As the automotive industry continues to evolve, with a growing focus on electric vehicles and sustainable technologies, the need for a stable and predictable regulatory environment becomes even more critical. The impact of tariffs on the automotive sector underscores the importance of thoughtful policy-making that considers the broader economic implications and the interconnected nature of global trade.

Lucid Group, based in California, is actively seeking ways to mitigate the impact of tariffs by expanding the localization of its supply chain, particularly for lithium-ion battery raw materials. In June, the company signed an agreement with Graphite One to increase the supply of domestically processed graphite, a key component in batteries. Lucid has also established a cooperative relationship with Panasonic, a Japanese electronics manufacturer, for battery supply since 2022. Winterhoff noted that this cooperation was economically viable before the tariffs took effect, as advanced manufacturing production exemptions helped reduce costs. Currently, Lucid is working with Panasonic to find more ways to procure battery raw materials within the United States. However, it will not be until next year that Lucid will use batteries produced at Panasonic's new U.S. factory in its vehicles.