There could be stormy times ahead for Tesla (TSLA) and the broader EV industry. According to an exclusive Bloomberg report, U.S. graphite producers have filed petitions with two federal agencies, calling for an investigation into alleged anti-dumping violations by Chinese companies. The producers are pushing for significant tariff increases on Chinese graphite, a critical material for electric vehicle (EV) batteries.
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The trade association behind the petition argues that Beijing’s state subsidies artificially lower graphite prices, creating an uneven playing field that American companies cannot compete with. If the petition is approved, punitive tariffs could soar as high as 920%. This sets the stage for a high-stakes showdown between strategic industries, in line with Donald Trump’s push for aggressive import duties.
What Would Higher Tariffs Mean for the EV Industry?
A sharp tariff hike on graphite would be no small matter for the EV sector. As Bloomberg reports, Sam Abuelsamid, an analyst at Guidehouse Insights, noted that graphite currently makes up about 10% of the cost of an EV battery cell. A staggering 900% price surge could potentially double battery production costs, making U.S.-manufactured EVs significantly more expensive.
Compounding the issue, data from the International Energy Agency indicates that battery manufacturing in the U.S. already costs 20% more than in China. If the tariffs are implemented, the price hikes could severely strain domestic EV makers—especially as Trump’s administration considers rolling back EV subsidies.
How Will the Tariffs on Chinese Graphite Impact Tesla?
As the dominant U.S. EV manufacturer, Tesla relies heavily on Chinese graphite and could feel the pinch more than most. The company has repeatedly sought tariff exemptions since 2019, arguing that suitable domestic alternatives are hard to find. Earlier this year, Tesla renewed its request for an exemption, stating it needed more time to source a viable replacement for Chinese graphite.
In its original application, Tesla highlighted the stakes, arguing that denial of the exemption “would create a competitive disadvantage to Tesla” and could hinder investments in its Nevada Gigafactory. Without relief, the company and the broader EV industry may be forced to grapple with soaring costs in an already competitive market.
Is Tesla a Buy, Sell, or Hold?
Analysts remain sidelined about TSLA stock, with a Hold consensus rating based on 13 Buys, 12 Holds, and nine Sells. Over the past year, TSLA has surged by more than 90%, and the average TSLA price target of $287.10 implies a downside potential of 38.3% from current levels.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
