| Thanks for reading Hyperdrive, Bloomberg’s newsletter on the future of the auto world. Read today’s featured story in full online here. Long gone are the days when an imported car meant a foreign car. And no company proves the point more than General Motors. The Detroit stalwart imported more cars into the US last year than any other automaker, even Japan’s Toyota. Nearly half of the vehicles GM sold in the US last year – 1.23 million autos – were built abroad, according to researcher GlobalData. That includes many of its most affordable models, like the Korean-made Chevrolet Trax and Buick Envista SUVs, whose low prices depend on cheap production. Now, no American automaker stands to lose more in President Donald Trump’s trade war. Trump has slapped 25% tariffs on imported autos, arguing it’s a response to unfair barriers that American-made cars face in other countries. But the tariffs have GM scrambling to manage levies of up to $5 billion this year, which despite some offsets will slash 2025 earnings before interest and taxes by about 20%, the company estimates.  Chevrolets bound for export at South Korea’s Port of Incheon in 2013. Photographer: SeongJoon Cho Other US automakers — the very companies Trump says he’s trying to help — will suffer as well, if not quite as much as GM. Except for Tesla and upstarts like Lucid and Rivian, they all build cars elsewhere to sell in the US. Ford on Monday said it is facing a $2.5 billion tariff hit this year, which it aims to offset with $1 billion in cost savings. “It used to be that when you bought a Toyota, it was made in Japan, and when you bought a Chevy, it was made here in the US,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “Now, some Toyotas are made in Japan and some are made in the US. And if you buy a Chevy, it might have been made overseas.” GM will use cost cuts to offset 30% of its tariff impact, rather than raise prices on its cars, CFO Paul Jacobson told reporters last week. It also is moving production of some models, including pickup trucks, into its US factories. Analysts say GM could get some relief if a new trade agreement can be reached with South Korea, where the company operates three factories. “There are ongoing discussions with key trade partners that may also have an impact,” Mary Barra, GM’s CEO, said in a May 1 letter to shareholders. “We will continue to be nimble and disciplined.” The automaker remains committed to its Korean operations, which play a critical role as a global export base for GM’s lower-priced models, a company official said, asking not to be identified because the plans were confidential. GM, Ford and Stellantis combined to import 2.2 million cars into the US last year — about 28% of all automobiles that crossed the US border from foreign nations. They aggressively lobbied the White House for a break on tariffs and won a partial reprieve on April 29, when Trump agreed to phase in tariffs on auto parts over two years, giving companies time to move production to the US. He also exempted them from paying additional levies on materials such as steel and aluminum. Stellantis imports about 44% of the Chryslers, Dodges, Jeeps and Rams it sells in the US. Ford is less exposed, relying on imports for about 21% of its domestic sales. It isn’t just GM’s large number of imports, however, that makes the company so vulnerable to Trump’s tariffs. It’s also the location of some of its foreign factories. Cars made in Korea bear the full brunt of the 25% tariffs that went into effect April 3. GM also imported almost 55,000 cars last year from China, which now face a tariff of 145%. Vehicles that GM and other Detroit automakers produce in Canada or Mexico face lower levies because Trump gave a break to cars that comply with the US-Mexico-Canada free trade agreement he negotiated during his first term. Ford said Monday it is looking to make more auto parts in the US but has no plans to curtail production at two Mexican factories that produce Maverick pickups, Bronco Sport SUVs and Mustang Mach-E EVs. GM’s history in Korea dates back more than 50 years. The company grew to become South Korea’s third-largest automaker after it acquired the assets of Daewoo Motors in 2002. The country is now essential to GM’s ability to produce low-cost vehicles like the Chevy Trax or Trailblazer, both of which start under $25,000, and export them globally.  GM is shifting some pickup production to its assembly plant in Fort Wayne, Indiana. Photographer: Emily Elconin/Bloomberg Jeff Schuster, former vice president of research at GlobalData, projects that carmakers selling in the US will cease building 1.5 million mostly lower-priced vehicles because the tariffs will make them uncompetitive. That would worsen an auto affordability crisis in the US, where the average price of a new car exceeds $48,000, up 21% from five years ago. “It does take away the entry market and obviously hurts those buyers that are in that space,” Schuster said. “The collateral damage on that consumer is probably greater than is being anticipated.” Trump’s larger goal is to build more cars in the US, and to some extent, that’s already happening. Hyundai, which imported more than 1.1 million cars into the US last year, announced a $21 billion US expansion plan with a goal of doubling production in the states. Toyota has ramped up US manufacturing, with almost half of the cars it sold in the country last year coming from domestic factories. “Our philosophy has always been to build where we sell and buy where we build,” Toyota said in a statement. “With over $50 billion invested in the US, including 10 manufacturing plants and more than 49,000 direct jobs, we are fully compliant with the USMCA trade agreement and will continue to deepen our investments in America.” Even if Trump succeeds in forcing companies to build more vehicles in the US, it may not produce a jobs boom. Automakers will find ways to protect profits and offset higher production costs in America, according to Mark Wakefield, global auto market lead for consultant AlixPartners. “If you move a job from Mexico to the US, you’re going to add more robot sales than you are jobs, because you’re going to end up automating a lot of things,” Wakefield said.  A BMW i4 EV at a dealership in Los Angeles. Photographer: Eric Thayer/Bloomberg BMW’s earnings held up better than expected in the first quarter as electric vehicle sales in Europe helped buoy the German carmaker amid slumping demand in China and the threat of US tariffs. Earnings before interest and tax came in at €3.14 billion ($3.6 billion), a 23% drop from last year, the German manufacturer said Wednesday. BMW’s carmaking margin was 6.9%, better than the 5.8% average analyst estimate compiled by Bloomberg.  Nikola founder Trevor Milton leaving a New York federal court in December 2023. Photographer: Yuki Iwamura/Bloomberg Trevor Milton was at home in mid-March when his phone lit up. The caller ID indicated the “Executive Office of the President of the United States” was on the line. “I thought it was fake,” said Milton, founder of the now-bankrupt electric-truck maker Nikola, who was convicted of fraud in 2022. But about two months earlier, Milton had joined a throng of white-collar defendants keen to take advantage of the Trump administration’s apparent enthusiasm for upending prosecutions and cutting prison sentences. The 43-year-old donated almost $1.7 million to support Trump’s 2024 campaign and had two lawyers well-known in conservative circles in his corner. All the effort appeared to pay off when, after 30 seconds on hold, Trump got on the line and told Milton that he was going to grant him a full pardon. In a follow-up call a week later, the president confirmed the deed was done. “He said ‘It’s signed. You’re cleaner than a baby’s bottom, you’re cleaner than I am, Trevor,’” Milton recalled. | 
