Study: Tesla makes the most “American” cars

Tesla makes the most American cars, according to a new study from American University’s Kogod School of Business. However, no car is made exclusively in the United States, and the global nature of the auto industry could complicate President-elect Trump’s plan to impose tough new tariffs on Mexico and Canada.

Every year, researchers at American University measure the percentage of parts originating in the United States or Canada in every car sold in the United States. The result, the school’s Made in America Auto Index, is an excellent tool for examining how interconnected the global automotive industry is.

Telsa took the top two spots last year and the top four in 2024 in a list full of draws.

American and Canadian parts?

You may have noticed above that researchers considered parts originating in the United States – or Canada – as domestic content. Why this wrinkle?

Because even the US government makes no distinction between American and Canadian parts. The American Automobile Labeling Act requires manufacturers to report the proportion of American and Canadian parts used in cars, but does not differentiate between the two.

Kelley Blue Book spoke with the study’s lead author, Frank DuBois, associate professor of information technology and analytics at American University.

He explains that the automotive industry was already a global enterprise when the labeling law was passed in 1992. “It was a different world back then, much less global than it is today,” he says. But automakers have already told Congress that they “cannot truly separate the U.S. and Canadian parts.”

Today the company is far more globally integrated.

Several policies influence where parts come from

The law isn’t the only government policy affecting where automakers source their parts.

The researchers note that since the 1994 North American Free Trade Agreement (NAFTA), domestic automakers have “been more likely to rely on Mexican suppliers for many of their parts and components.” DuBois cited NAFTA as the most significant source of changes in the source of parts he found in the eleven years since the index was published.

The U.S.-Canada-Mexico Agreement (USMCA), which replaced it in 2020, has encouraged automakers to “relocate” production of some parts. “Specifically, the requirement that the percentage of hourly labor costs must exceed a certain level and that a percentage of the steel and aluminum used in vehicles must come from North America in order to receive duty-free access to the U.S. market,” the researchers say.

The Inflation Reduction Act 2022 also plays a role. To qualify for tax credits of up to $7,500, electric car manufacturers must use an increasing proportion of parts from the U.S. or certain trading partners.

Related: With new law, automakers are moving production of electric cars to the US

An evolving industry changes content regularly

The guidelines are causing automakers to shift production around the globe.

“VW, Toyota, Nissan and Honda all increased their US share, while GM, Ford and Stellantis saw a decline in domestic sourcing,” the researchers write.

A model can evolve significantly. A case in point is the Lincoln Corsair – it ranked 44th in 2021. In 2022, it jumped to first place when Lincoln switched to a US-made engine. This year it fell to 10th place due to content changes.

A global industry makes tariffs complicated

President-elect Trump has threatened to impose tariffs of up to 25% on goods from Canada and Mexico to force those countries to better police U.S. borders. The global nature of the auto industry means such tariffs could drive up the price of each car.

US-based Wolfe Research has estimated the move could increase the price of an average new car by $3,000, with some models costing up to $10,000 more.

Even most of them ‘American car has many imported parts

DuBois points out that even prices for cars at the top of the index would rise under a tariff program.

“Tesla still has Chinese content in its vehicles,” he explains. The company now builds most of its engines and batteries in the USA, but also imports other parts from China.

Excluding motors and batteries, the second-place Model 3 Long Range has “40% Chinese content,” he says. The Cybertruck has a 20% share, with Chinese parts typically found in “seats, dashboard components, etc.,” he explains.

‘Car executives like to see stability‘

“Automotive executives like to see stability in trade relationships with our key trading partners,” DuBois noted. “We are going to see a period of real instability,” with Trump’s tariff threats and possible retaliation.

If the final customs policy requires tracking American and Canadian parts separately, “there will be a data problem. A nightmare, I might say.”

Costly tariffs could penalize some companies more than others, he notes. “What happens to a company like Polestar that gets all of its models from China?” Volvo is also heavily dependent on China, he explains, while the ailing Nissan imports more parts and vehicles from Mexico than many competitors.

The 25 cars in the top 10:

Two trim levels of the same car may differ in domestic content because manufacturers may use more imported parts to build some trim levels.