Electric vehicle (EV) makers Tesla (TSLA) and BYD (BYDDF) are expected to be hit hardest by Mexico’s announcement last week about increasing tariffs on automobiles and other imports from China and various Asian countries to 50%. While the proposal has yet to be approved by Mexico’s Congress, it reflects a steep rise from the current tariff rates, which range from 15% to 20%.
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Meanwhile, China’s Ministry of Commerce has warned Mexico of retaliatory measures if the tariffs are hiked to 50%.
BYD and Tesla Could Lose the Most Due to Mexico’s Tariffs
Reuters noted that the elevated tariffs planned to be imposed by Mexico will impact BYD and Tesla the most, while sparing legacy automakers – General Motors (GM), Ford (F), and Stellantis (STLA). Under a 2003 decree, automakers with production plants in Mexico are permitted to import a percentage of vehicles without tariffs from countries such as China, which don’t have a free trade agreement with Mexico. This decree protects General Motors, Ford, and Stellantis, as these three automakers have production plants in Mexico.
Interestingly, both BYD and Tesla have previously dropped their plans to establish production plants in Mexico. Last year, BYD stalled its plans to build a factory in the country, citing uncertainty from U.S. President Donald Trump’s trade policies. Despite this setback, BYD’s sales in Mexico have been growing rapidly since the company forayed into the country in late 2023. After selling around 40,000 cars in Mexico last year, BYD stated in August that it had doubled the pace of sales in the country so far in 2025. Given the robust sales, the potential steep increase in tariffs could have a notable impact on the demand for BYD’s EVs.
Meanwhile, the elevated tariffs are also expected to weigh on Tesla’s sales, as reportedly all of the company’s Model 3 and Model Y cars sold in Mexico since mid-2023 were produced in the company’s Shanghai factory. Reuters noted that according to Eugenio Grandio, president of the Electric Mobility Association in Mexico, Tesla likely has an inventory of EVs already in Mexico, which would give it some time to shift its Mexican imports from China to its factories in other parts of the world.
The news of steep tariffs adds to the woes of BYD investors, who are already concerned about the company’s profitability due to its strategy to offer steep price cuts to stay competitive. BYD has been leveraging low costs and subsidies in China to offer its EVs at very competitive prices in other countries and undercut rivals. Meanwhile, Tesla has been under pressure due to weak deliveries amid intense competition in key markets and a lack of innovation.
A Look at Wall Street’s Ratings on BYDDF and TSLA Stocks
Using TipRanks’ Stock Comparison Tool, let’s look at Wall Street’s ratings on the two EV stocks.
Wall Street currently has a Strong Buy consensus rating on BYD’s U.S.-listed stock, with the average BYDDF stock price target of $25.65 indicating about 91.6% upside potential from current levels. BYDDF stock is up 18.2% so far this year.
Meanwhile, the consensus rating on Tesla stock is a Hold, with the average TSLA stock price target of $311.11 indicating 21.4% possible downside from current levels. TSLA stock is up about 6% year-to-date.
