Tariffs have been a hot topic over the past two weeks. The number one uncertainty is if those tariffs would be enacted as promised how they would affect the price of … well, everything, including EVs. And despite all of the dancing around who would be paying for those increased prices, Ford’s CEO has no problem telling the world exactly who would be paying for the increased cost of the automaker’s parts: you.

Welcome back to Critical Materials, your daily roundup for all things electric and automotive tech. Today, we’re scribing about Ford’s confirmation that tariffs would mean higher prices for new car buyers, Toyota seeking out new love in China, and Xiaomi’s goal to earn a billion dollars from the new SU7 Ultra. Let’s jump in.

30%: Ford Says The Quiet Part Out Loud: Tariffs Mean Higher Prices

Photo by: Ford

Ford CEO Jim Farley didn’t mince words during the company’s latest financial call on Wednesday. The Blue Oval’s brand chief made it clear: if U.S. President Donald Trump enacts 25% tariffs on imports from Canada and Mexico, new car buyers will be the ones who end up footing Ford’s higher bills.

“There’s no question that tariffs at the 25 percent level with Canada and Mexico, if they’re protracted, would have a huge impact on our industry,” warned Farley, echoing the words said by nearly every industry analyst over the past week. He continued:

“With billions of dollars of industry profit wiped out, and adverse effects on US jobs as well as the entire value system in our industry, tariffs would also mean higher prices for customers.”

Trump officially announced tariffs against the long-standing U.S. trade partners over the weekend, noting that they would go into effect Tuesday alongside an additional 10% levy hike on goods imported from China. As the deadline approached, Trump announced a 30-day stay for Canada and Mexico’s trade terms during which the countries will negotiate specific terms. In short: no additional tariffs just yet, but that 25% isn’t fully off the table.

Farley’s concern isn’t unfounded. Ford—like many other automakers that sell cars in the U.S.—has its supply chain heavily intertwined with its neighbors to the north and south. Take the Ford Mustang Mach-E, for example, which is assembled in Cuautitlan, Mexico. Or Ford’s four separate engine plants in Ontario, Canada that build the powertrains for many of its cars, trucks, and commercial vehicles. If prices surge simply because of tariffs, consumers footing the bill should come as no surprise. And that might happen regardless of what plays out with Canada and Mexico since China’s 10% tariffs went into effect this week.

How big is the surge, you ask? The average cost increase is expected to be somewhere around $3,000 per vehicle. However, some analysts put price targets as high as $9,000 or more depending on the nameplate. Higher prices could mean a slump in sales, which could lead to a cut in production and potentially layoffs across the industry. These rippling effects would likely continue working down the supply chain across North America.

Now for the good news. Farley says that Ford is cautiously optimistic about the future of the auto industry under the current administration:

“We believe, based on our conversations in DC with the Trump administration and congressional leaders, that they are committed to strengthening, not weakening, our nation’s auto industry,” said Farley.

Consumers are stuck playing the hurry-up-and-wait game while the countries all figure out the solution to Trump’s trade problems. If no mutual understanding can be reached next month, it could mean consumers are the ones paying the price. And even if North America wards off a trade war, auto executives certainly aren’t forgetting about this tariff turmoil.

60%: Toyota Bringing Wholly-Owned Lexus Factory To China

Photo by: Toyota

Toyota has been an automaker that feared commitment. BEVs? Well, let’s try PHEVs too. Mild hybrids? Might as well throw hydrogen in while we’re at it. That’s the multi-pathway approach, and it’s how Toyota hedged its bets in a rapidly evolving consumer market. It turns out that was the smart move all along.

Toyota’s BEV sales didn’t exactly skyrocket in North America. As GM CEO Mary Barra said, the market was simply “not developing” across the continent as quickly as anticipated. So Toyota is turning to China where BEVs and PHEVs are loved, and it’s taking a page right out of Tesla’s playbook: a wholly-owned EV and battery factory right in the heart of Shanghai.

“We decided to establish a wholly owned company for the development and production of Lexus BEVs and batteries in Shanghai, China,” said Toyota CFO Yoichi Miyazaki following the company’s quarterly earnings release on Wednesday. Miyazaki continued: “Our goal is to become a company that is more loved and supported by the people of China.”

If you’re not familiar with ownership rights in China, it’s extremely rare for a foreign entity to own or operate an automotive brand in China without a joint partnership. For example, Volkswagen has partnerships with SAIC and FAW, Ford with Changan and JMC, and even Toyota with FAW and GAC. The list goes on. But Tesla made history when it became the first foreign automaker to host a wholly-owned venture in China when it opened Gigafactory Shanghai in 2019.

Toyota appears to be next on that list, and it’s utilizing its Lexus marque for the task. From Fortune:

Toyota’s Shanghai factory will develop a new BEV under its premium Lexus brand, with production starting from 2027. Initial capacity will be 100,000 units per year, with 1,000 new jobs created during the startup phase.

In its statement, Toyota added it wanted to meet Chinese demand for new energy vehicles, a term that includes both battery electric vehicles and plug-in hybrids, more quickly.

Toyota may be taking a page from Tesla’s playbook with its new Shanghai factory. The U.S. carmaker wholly owns its gigafactory in Shanghai, the first car plant in the country to operate without a local partner.

China began easing restrictions on foreign automakers in 2018, prior to Tesla’s operation breaking ground. Shanghai is now home to Tesla’s largest operation globally. Then again, China has no shortage of automakers pumping out electric cars. So what exactly is the play here?

With Toyota being the largest automaker by volume, China might see this as an opportunity to showcase the value of building and exporting products from within its borders—should Toyota choose to export Lexus vehicles produced in Shanghai. Perhaps that could help to convince the world of the country’s necessity as an automotive export hub at a time when many nations are instead slapping it with tariffs. Or, maybe Toyota just sees the opportunity to capitalize on its third-largest market behind the U.S. and Japan. Time will tell.

90%: Xiaomi Wants To Sell 10,000 Six-Figure SU7 Ultras This Year

If there’s one Chinese EV that should make Americans jealous, it’s the Xiaomi SU7. Don’t believe me? Just ask Ford CEO Jim Farley. The SU7 is cool, but Xiaomi isn’t stopping there. The company is making a tire-shredding luxury version called the SU7 Ultra, and folks, this is the one that any performance-minded person wants to drive.

Xiaomi’s founder and CEO, Lei Jun, is super confident that the cell phone-maker-turned-car-builder is going to sell a ton of these. And with the response that the SU7 is getting, why wouldn’t he be? As the company returns to work after the Chinese New Year, Jun is setting the company’s annual goals. One particularly ambitious goal is to deliver at least 10,000 units of the Ultra-trimmed SU7 by the end of the year.

Now, that seems pretty doable considering that Xiaomi delivered more than 135,000 cars last year (its first full year as an automaker). The SU7 sold so well that Xiaomi kept raising the delivery targets for the car throughout the year. And now it plans to complement its electric sedan with a Model Y-fighting SUV, the YU7. If all goes as planned, Xiaomi expects to deliver 300,000 cars in 2025.

The catch is that this particular version of the SU7 is particularly expensive. At an eye-watering $112,000, it’s nearly as much as a new Porsche 911. At the other end of the spectrum, the regular SU7 starts at just $29,900. That translates to an $80,000 premium if you want to unlock all 1,526 horsepower. Still, Jun is convinced that the company can make it happen.

Xiaomi officially started taking preorders of the SU7 Ultra when it revealed the car in late October. Within 10 minutes of opening the order books, the brand amassed a whopping 3,680 preorders. The car officially goes on sale in March alongside the company’s new Xiaomi 15 Ultra smartphone. Quite an interesting launch combination.

100%: Will Tariffs Push More EVs Towards Luxury Pricing?

Photo by: Lucid Motors

EVs in the U.S. aren’t cheap (yet). You know it, I know it. It’s the reality as the market sits today. That’s not to say costs haven’t come down on components. By the end of this year, battery prices could be half of what they were in 2019, and that trend is likely to continue for the rest of the decade (albeit with a significantly weaker curve). That hasn’t helped much on the MSRP of new EVs though. As it sits, the average transaction price for EVs reached more than $55,000 in December.

While Canada and Mexico experienced a pause in the tariff war, China didn’t get as lucky and is now facing a 10% duty fee hike that American consumers will soon start to feel in daily life. Eventually, that will reach the automotive market, potentially offsetting any savings from falling prices on EV tech. All in the name of a trade war. Does that mean EVs may sit in pseudo-luxury limbo for the foreseeable future?

Let me know your thoughts in the comments.