| Thanks for reading Hyperdrive, Bloomberg's newsletter on the future of the auto world. Read today's featured story in full online here. Bracing for More Sticker Shock | Tariffs on Canada and Mexico risk driving up US car prices by as much as $12,000, further squeezing consumers and wreaking havoc across the intricate web of automotive supply lines spanning the continent. The cost to build a crossover utility vehicle will rise by at least $4,000, while the increase would be three times that for an electric vehicle examined in a new study from Anderson Economic Group, an economic consultancy in East Lansing, Michigan. And those costs would likely be passed on to consumers, the study found. "That kind of cost increase will lead directly — and I expect almost immediately — to a decline in sales of the models that have the biggest trade impacts," Patrick Anderson, CEO of Anderson Economic Group, said in an interview.  New Toyota pickups crossing into the US at the Otay Mesa port of entry in San Diego, California, on Feb. 14. Photographer: Sandy Huffaker/Bloomberg Tariffs of 25% on imports from Canada and Mexico threaten to exacerbate an automotive affordability crisis that's already driving buyers out of the market. Even before the duties, sticker prices were approaching $50,000 on average, up more than 20% from five years ago. The situation also calls into question President Donald Trump's campaign promises to stem inflation as consumer confidence falls to a four-year low on fears over the impact of his import taxes. After a month's reprieve, Trump said last week that the levies on the top US trading partners would take effect today. The vow brushed aside industry leaders who've warned that measures will cause severe damage to industry sales, profits and employment. They'll also affect some of the industry's most recognizable and best-selling models, such as the Chevrolet Silverado pickup and Ford Bronco Sport SUV. Top executives from General Motors, Ford and Chrysler parent Stellantis last week spoke in a Zoom meeting with the Commerce Department to warn of the dire economic consequences of the proposed tariffs, according to people familiar with the matter. During the meeting, Ford and Stellantis executives stressed that the White House should focus instead on the millions of imported vehicles with no US parts content, one of the people said. The Detroit News reported the meeting earlier. Consumers may find some vehicles vanish altogether as automakers stop producing models squeezed especially hard. And even if the tariffs prove to be short-lived, carmakers are already taking steps to contain the fallout. Anderson Economic Group's analysis estimated how a 25% tariff on Mexico and Canada and an additional 10% levy on imports from China would raise the cost of specific models made in North America, which it didn't identify. A large SUV with significant content from Mexico would see a nearly $9,000 increase, while a pickup would see an $8,000 increase, the study found. Car sales are already faltering as consumers grapple with high prices and borrowing costs. A decline in January sales dragged down a broader measure of inflation-adjusted consumer spending by the most in almost four years, according to government data released Friday. Dan Hearsch, leader of the Americas automotive practice at consultant AlixPartners, said US auto sales could drop by half a million vehicles, even under the less severe price hikes he anticipates. That's because automakers will stop producing certain models in Canada and Mexico and move as much production as possible to their US factories. "Some of those vehicles that can't be produced in the US just probably won't be made for a while," Hearsch said. Ford, for example, only builds its popular Maverick small pickup, Bronco Sport compact SUV and electric Mustang Mach-e in Mexico. Ford CEO Jim Farley warned in February that a 25% tariff on Mexico and Canada will "blow a hole in the US industry that we have never seen."  Ford CEO Jim Farley speaking at the Rouge Electric Vehicle Center in Dearborn, Michigan, in April 2022. Photographer: Emily Elconin/Bloomberg GM produces its full-size Chevrolet Silverado pickups in Mexico, Canada and the US, while Stellantis makes Ram pickups in Mexico and the US. Those automakers may relocate some of that output domestically, Anderson said. But they likely will have to stop selling some versions of those trucks made in Canada and Mexico. "You'll see some model and trim types just disappear," Anderson said. Trump proposed the Canada and Mexico tariffs to stem the flow of undocumented immigrants and illegal drugs into the US. That has fueled hopes in the industry that the measures will be temporary if the US allies can show enough progress to satisfy the president. "The expectation is that — at worst — they're around for a couple months and, at best, they keep getting pushed" off, said Hearsch, who's in regular consultation with automotive leaders. "Those are not intended as trade actions. Those are border security negotiations." In the meantime, auto companies are stockpiling supplies to cushion the blow. Ford's engine plant in Windsor, Ontario, is racing product over the US-Canada border in anticipation of the tariffs, said local union representative John D'Agnolo. The company has spent the past month securing warehouse space in the US to store finished engines and parts. "We usually store them here until we're ready to send to the truck plants," D'Agnolo said. "But they're finding places in the states to store those engines so that they don't get tariffed." Automakers also are pushing their suppliers to build up parts inventory and move them quickly to US warehouses "so that we can at least create a buffer," Hearsch said. It's difficult to quantify the precise impact on automaker profits until the tariffs are enacted. But the potential blow is immense, considering the industry struggles to maintain single-digit profit margins and is losing billions on its new EV model lines. It's all that automotive executives are talking about right now, according to Hearsch. Long-term planning issues have been moved to the back burner while car bosses try to prepare for the tariff fires on the horizon. "It's got everybody in an absolute spin," Hearsch said. Stellantis and Volkswagen are highly exposed to Trump's new tariffs on vehicles imported from Mexico and Canada, with Bloomberg Intelligence estimating the levies could wipe out €5.88 billion ($6.2 billion) of European automakers' earnings this year. The owner of the Jeep, Ram, Chrysler and Dodge brands may import around 417,000 vehicles into the US this year from Mexico and Canada, BI senior industry analyst Michael Dean wrote in a report Tuesday. Assuming no mitigating measures are implemented, he estimates €3.44 billion of Stellantis and €1.77 billion of Volkswagen earnings are at risk.  Source: Uber Uber has begun offering customers driverless Waymo rides in Austin, getting what's likely to be a multi-month head start before Tesla. Riders who request an Uber could be matched with Waymo's electric Jaguar vehicles at no additional cost, the company said Tuesday. Customers will have the option to accept or switch to a non-driverless vehicle before a nearby Waymo is dispatched. Uber told users last month they could increase their chances of being sent an autonomous vehicle if they indicated their preference in the Uber app. Elon Musk has said Tesla is aiming to launch a self-driving service in the Texas capital in June. Read More: Didi's self-driving unit seeks funds at $5 billion valuation. | 
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