The cost of a 100% 'Made in the USA' vehicle is expected to be significantly high
From CNBC: 2025-05-16 09:00:00
A white 2025 Ford Expedition with bronze trim has rolled off the assembly line at Ford’s Kentucky Truck Plant, assembled by American workers. However, 58% of its main parts were made outside the U.S., including 22% from Mexico. The global automotive supply chain is complex, with challenges of high tariffs and sourcing parts locally. President Trump is pressuring automakers to build in the U.S., but experts say a fully U.S.-made vehicle may not be feasible due to lack of local manufacturing facilities and potential high costs.
Ford CEO Jim Farley highlighted that sourcing all parts in the U.S. would increase vehicle costs significantly, potentially pricing many consumers out of the market. The U.S. lacks processing plants for materials like steel, aluminum, and semiconductors, which are essential for vehicle manufacturing. Despite efforts to promote American manufacturing, achieving a 100% U.S.-made vehicle is challenging due to the complexity and costs involved.
Experts suggest that achieving a 100% U.S.-made vehicle would require significant time and investment in establishing local sourcing and manufacturing facilities. The costs would increase exponentially as companies strive to reach higher percentages of U.S. content in vehicles. Building facilities for processing raw materials would take years and require considerable financial resources, making it unrealistic to produce a fully U.S.-made vehicle at this time. Manufacturing vehicles with higher U.S./Canadian parts could cost companies an extra $10,000 to $20,000 per car. The average new car price in the U.S. is $48,000, while U.S.-assembled vehicles average over $53,200. Establishing all-American supply chains for cars would be costly and challenging, experts say.
Creating a new car company in the U.S. from scratch may cost billions of dollars. While some automakers can reach the 75% U.S./Canadian parts threshold by 2025, others face challenges. Luxury vehicles often have little U.S.-sourced content, and meeting the American Automobile Labeling Act’s requirements can be complex.
The American Automobile Labeling Act of 1992 requires automakers to report U.S./Canada content percentages. Many luxury vehicles have minimal U.S.-sourced content, despite being imported. Cars.com’s “American-Made Index” ranks vehicles based on assembly location, parts content, and more, with Tesla, Honda, and Volkswagen topping the list.
Interest in the “American-Made Index” has surged amid tariff policies and nationalism. The 2025 Ford Expedition is expected to score higher due to increased domestic content. Making a 100% U.S.-made vehicle is deemed extremely difficult. Manufacturers face challenges in localizing production and meeting high U.S./Canadian parts standards. 1. The stock market experienced a significant drop today, with the Dow Jones Industrial Average falling by 500 points. This was attributed to concerns over rising inflation and interest rates.
2. A new study released by the CDC found that the Delta variant of COVID-19 is more transmissible than previous strains. The study also revealed that vaccinated individuals are less likely to be hospitalized or die from the virus.
3. The United Nations reported that global temperatures are on track to exceed the 1.5°C target set by the Paris Agreement. This increase is expected to lead to more frequent and severe heatwaves, droughts, and other extreme weather events.
4. The US economy added 500,000 jobs in the month of August, exceeding expectations. However, the unemployment rate remained at 5.2%, indicating that there is still progress to be made in the post-pandemic recovery.
5. Tesla announced plans to build a new factory in Texas, which will focus on producing its Cybertruck and Model Y vehicles. The factory is expected to create thousands of jobs and further solidify Tesla’s position in the electric vehicle market.
Read more at CNBC: How much a 100% ‘Made in the USA’ vehicle might cost