Tariffs force automakers to get creative

Today's newsletter looks at the unexpected ways that President Donald Trump's tariffs will impact auto sales across the US. You can read and share the full story on Bloomberg.com. For unlimited access to climate and energy news, please subscribe.

The cars hit hardest by Trump's tariffs

Electric cars and trucks in the US will carry the cost of tariffs more heavily than most, but that doesn't necessarily mean car buyers will see bigger price spikes for those models.

Instead, carmakers may choose to tack import fees onto the price tags of machines that drivers are willing to pay a premium for, including gas-burning, American-made cars and trucks.

"Carmakers get creative," said Frank DuBois, a professor and supply chain expert at American University. "They think: 'If we spread this tariff throughout our entire car line, it's not as painful to the consumer.'"

With the Trump administration's 25% tariff on imported vehicles and additional tariffs on steel, aluminum and parts, US drivers are trying to parse just how American their ride of choice may be in an attempt to swerve around price hikes. It's a logical bit of due diligence, but also probably fruitless. Industry experts say price increases to recoup tariff costs may have little relation to the specific cars hit with the new levies.

The response to shouldering the new financial burden — from cutting production to raising prices — may well be more complex than the tariffs themselves. Car shoppers can expect to have fewer vehicles to choose from, and may struggle to track down bare-bones, base models. Analysts and economists say drivers will be paying most of the tariff bill; they just won't necessarily know where and how.

A 2025 Ford Mustang Mach-E Photographer: Bing Guan/Bloomberg

Car shoppers have rushed to beat the tariffs and that stockpile is disappearing fast. Cars.com expects window stickers to eventually inflate by up to 15%, including possible premiums on US-made cars that would seem to escape the trade war entirely.

"Navigating tariffs is something as a consumer, you can't worry too much about," explained Cars.com analyst David Green. "It's a very muddy process."

That said, auto executives have a pretty simple approach to pricing: They charge what they can. In short, the highest-demand vehicles are typically marked up the most. Those that are harder to sell are typically marked up less or heavily discounted.

EV sales, for example, have been brisk in the US, but battery-powered cars and trucks are already expensive relative to gas-burning machines. Some 35% of EVs sold in the US last year were imported, including Ford's popular Mustang Mach-E. Meanwhile, batteries, the most expensive piece of any EV, are still hard to find in the US; nearly 70% of the batteries in US EVs come from China and are embroiled in Trump's trade war.

Since profit margins for EVs are still tight (or negative), price increases may fall on other vehicles. Consider the Cadillac CT4, a gas-burning car made at the General Motors Co. plant in Lansing, Michigan. The CT4 is widely praised for its performance and consistently sells for a steep premium. As GM CEO Mary Barra looks for cars that can tow some of her $5 billion a year tariff burden, the CT4 and similar machines are likely candidates.

To learn more about how tariffs are impacting prices for cars and how consumers are navigating the changes, read the full story.

Car prices to creep higher

$49,000

Last year's average price on a US vehicle at the dealership, roughly one-third higher than the starting price, according to Edmunds.com. Carmakers advertised a lot of models starting in the $20,000 to $35,000 range, but they weren't making many of them.

Dealerships face a dilemma

"Once the pre-existing inventory goes away, there are going to be problems. Plants are going to idle; plants are going to shut down... Down the road you can see dealerships closing."

Frank DuBois

Professor and supply chain expert at American University

DuBois expects that as carmakers are forced to raise prices, they will lower supply in step, making fewer cars and trucks. Automotive researcher JD Power estimates tariffs will reduce US auto sales by about 1.1 million units on an annual basis, or roughly 8%.

Data center makes a new battery bet

A data center builder and a battery startup have agreed to deploy a novel type of energy storage for the first time at a US data center. It's the latest example of tech companies' search for ways to manage the soaring energy needs of artificial intelligence.

Prometheus Hyperscale and XL Batteries will install what's known as an organic flow battery at the one-gigawatt data center Prometheus is building in Wyoming. The project will begin as a small pilot in 2027 with plans to install another 25 megawatts of energy storage in 2028 and 2029. Organic flow batteries are unique because they don't require lithium and rely instead on pumping positive and negative electrolytes through stacks of power cells to store and release energy.

The data centers that run artificial intelligence and cloud operations already require massive amounts of electricity, and the need is set to grow further. US data centers will rise from 3.5% of total electricity demand today to 8.6% by 2035, according to BloombergNEF projections.

A rendering of the Wyoming data center. Image courtesy of Prometheus Hyperscale

That growth has utilities and hyperscalers searching high and low for electrons by building new gas plants, restarting retired nuclear facilities and digging deep into the ground to tap the Earth's heat. Both traditional lithium-ion or unorthodox flow storage can store energy generated by renewables and help manage data center needs.

"We see unlimited demand and we hope by proving out the utility and capability of our technology, it's the tip of the spear to do a lot more," XL Chief Executive Officer Tom Sisto said.

There aren't any known organic flow batteries installed at US data centers, BloombergNEF head of battery technologies Evelina Stoikou said in an email, though she added that undisclosed projects could exist. XL's organic flow batteries use salt water as the liquid, making them cheaper to build than vanadium-based systems in which that element is dissolved into sulfuric acid. Organic flow batteries also don't rely on overseas lithium mines and can provide power for longer than lithium batteries, Sisto added.

To learn more about how companies are trying to satisfy the surge in power demand from data centers, read the full story.

More from Green

A California town is planning how to deal with coastal erosion. The San Diego suburb of Carlsbad might just have the time, space and resources to get ahead of the problem, and advocates hope the city can be a model for climate adaptation for the region.

Prime Minister Mark Carney said he'll consider altering environmental regulations passed by his predecessor, Justin Trudeau, in order to facilitate investment in major projects in Canada, including oil and gas pipelines.

There's a new use for data center waste heat: Keeping homes warm. Nordic countries are pairing computer processing facilities with district heating systems in an effort to lower their environmental impact.

Worth a listen

Australia is in a unique place when it comes to the energy transition. It is the world's largest exporter of coal and a leading exporter of gas, yet has set a target to have 82% renewable electricity by 2030 and hit net-zero by 2050. The Pacific nation is also caught juggling relations between the US — its military ally — and China — its biggest trading partner — as the two superpowers compete over trade.

It is an unenviable challenge for Prime Minister Anthony Albanese, who has just been voted back into the office with an impressive new majority and also wants Australia to host the COP31 climate summit in 2026.

A young supporter holds a sign at the Labor Party election night event in Sydney, Australia. Photographer: Brent Lewin/Bloomberg

But the Labor Party's climate credentials will be put to test very soon, says David Stringer, Bloomberg Green's Asia managing editor, on this week's episode of Zero. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.