Automotive tariffs: How automakers can forge ahead in a swirl of uncertainty
AI and cloud technologies can help automakers manage the uncertainty around tariffs on cars, auto components, and steel. Find out how.
The tariff rollercoaster continues to take automotive manufacturers for a ride, with the latest unexpected turn coming in late April when President Donald Trump announced plans to temporarily relax certain tariffs imposed on imported vehicles and auto parts, ostensibly to give manufacturers more time to ramp up U.S. automotive manufacturing.
Soon thereafter, reports emerged that Nissan was considering shifting production of its Sentra sedan from Mexico to a factory in Mississippi. Also this spring, Hyundai Motor Group announced plans to invest $21 billion from 2025 to 2028 to boost its annual U.S. production capacity to 1.2 million vehicles across several plants in Georgia and Alabama.
The automaker plans to enhance its parts and logistics business, and to build a steel mill that, starting in 2029, will supply steel plates to its massive new production facility in Georgia—the Hyundai Motor Group Metaplant America (HMGMA)—where it manufactures electric vehicles for Hyundai, Genesis, and Kia.
Touted as the largest economic development project in Georgia history, the HMGMA began producing vehicles less than two years after ground was broken at the site in Ellabell, Ga., according to Hyundai.
AI and cloud technologies can help automakers manage the uncertainty around tariffs on cars, auto components, and steel. Find out how.
Whether they’re building new factories or retooling existing ones, to add new production capacity in the U.S., manufacturers will need to rely heavily on smart factory concepts and capabilities.
That includes modular manufacturing processes and workstations, for example, as well as robots and other artificial intelligence-powered automations that use data collected from Internet-of Things (IoT)-connected factory equipment.
At its new plant in Georgia, Hyundai says it has created a “human-centered work environment with robots assisting human workers.” It’s using AI and real-time data to streamline order collection, procurement, logistics and production, with robotics and vision systems to ensure quality.
The level of automation in HMGMA’s assembly shop nearly doubles that of other Hyundai production plants.
Collaboration among multiple segments of the automotive value chain will also be critical to rapid production ramp-up in the U.S.
We’re already seeing this model work in places like Mesa, Ariz., where Canada-based Tier 1 supplier Magna is building a large manufacturing facility to serve a regional automotive ecosystem that includes electric vehicle manufacturers Lucid and Nikola and others.
In Alabama, meanwhile, another Tier 1 supplier, South Korea-based parts manufacturer Samkee, is building its first U.S. factory in rural Macon County to serve one of Hyundai’s production plants nearby. The Samkee facility became operational about two years after it was first announced.
To stay competitive, collaboration is essential. Three years ago, major European automakers and suppliers embraced this concept. The result: Catena-X. Boasting nearly 200 members and counting, from corporate giants on down to SMEs, it's delivering on a growing number of fronts across the automotive industry.
In the current tariff situation, however, automotive companies might not have the luxury of waiting two years for new capacity to come online. OEMs could lean more heavily on external contract manufacturers like Magna to help them boost production in the short term. Or they could decide that tapping into underutilized capacity at active, existing automotive plants is their best option to ramp up U.S. production faster.
Pointing out that U.S. plants produced 10.2 million vehicles in 2024, about 4.5 million shy of their 14.7-million-unit capacity, the UAW, the union representing American auto workers, is pushing the auto industry to take this route.
“We don’t need to break ground on a single new plant to rapidly grow auto manufacturing capacity—it’s already right in front of us, in the plants we’ve built, the skills of our members, and the communities that depend on these jobs,” said UAW President Shawn Fain.
If reactivating dormant factory capacity is the route a manufacturer chooses, here’s another opportunity to incorporate smart factory approaches and capabilities to maximize the efficiency and productivity at these existing facilities.
With the Trump Administration apparently committed to using tariffs to force a reshoring of manufacturing, automotive companies may need to lean not just on existing factories but newly built plants and outsourced production, too, to thrive in a highly uncertain business environment.