Tesla Hit Mexican Wall

By Douglas A. McIntyre Published Sep 13, 11:33AM EDT

Key Points

Tesla Faces Large Tariffs In Mexico
Tesla Is Trying To Expand Outside Its Traditional Markets

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Tesla Hit Mexican Wall — © White Sands Missile Range 2012 (CC BY 2.0) by ShashiBellamkonda

As if Tesla (NASDAQ TSLA | TSLA Price Prediction) did not have enough problems with the US and EU, the cars it manufactures in China and exports to Mexico may soon face a 50% tariff.

The problem is simple, according to Reuters, “All of Tesla’s Model 3 and Model Y cars that were sold in Mexico since mid-2023 were manufactured in the company’s Shanghai factory.” While Mexico ranks No.12 in terms of total cars sold by country, Tesla, like Chinese EV makers, is trying to find places to expand its footprint.

Tesla has roadblocks around the world. To some extent, based on Elon Musk’s political activity and increased competition from BYD and legacy car companies, Tesla’s sales have declined in the EU. In the US, Tesla once held 80% of the market share; that dropped to 47% in the second quarter of this year. And, in China, the world’s largest EV market, there are dozens of local Tesla competitors. There are reasonable concerns that Tesla’s 2025 global sales could be a sharp drop from 2024.

The Mexico problem, added to those around most of the world, means Musk has to lean even more heavily on his pitch that Tesla is an AI, robotics, and autonomous vehicle company. To some extent, this has worked. Tesla, with a market cap of $1.28 trillion, is still the 10th most valuable company in the world. It may be worth more than every other major company on Earth combined.

After faltering badly in the early part of the year, its stock is now down only 5% compared to a 12% jump in the S&P 500. However, in the last three months, Tesla’s stock has been up 24% to 9% for the S&P

Musk would like Wall St. to forget that Tesla makes cars. Auto companies get low multiples. GM, America’s largest car company, has a market cap of only $56 billion. GM (NYSE: GM) ranks 4th in the world based on unit sales. It is behind Toyota, VW, and Hyundai/Kia.

What is impossible to ascertain is whether falling auto sales will catch up with Tesla more quickly than it can introduce commercially available robots and self-driving cars. If he can pull that off, the Mexican tariffs won’t matter. If he can’t, Mexico is a big deal.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.