Investing.com -- Deutsche Bank downgraded General Motors (NYSE:GM) to "Hold" from "Buy" and slashed its price target to $43 from $58 given the structural risks tied to newly implemented U.S. auto tariffs that could weigh on Detroit automakers for years.

Ahead of first-quarter earnings, DB flagged “tremendous uncertainty” for U.S. automakers stemming from a 25% tariff on all imported vehicles and auto parts taking effect May 3.

While Deutsche Bank expects a strong first half of 2025 driven by consumer pre-buying, it sees a sharp decline in volumes in the second half as tariffs drive up average transaction prices.

The firm forecasts full-year U.S. light vehicle sales to fall to 15.4 million from 16.0 million in 2024.

Ford and GM could each see gross cost increases exceeding $10 billion from the tariffs, Morgan Stanley estimates.

Deutsche Bank don’t expect OEMs to bear the full burden, noting that strategies such as price increases, production shifts, and vertical integration are likely.

However, they warned that moving production to the U.S. may incur higher labour costs, especially with union wages up to 10 times those in Mexico when including benefits.

For GM, Morgan Stanley expects solid first-quarter results with EBIT of $3.5 billion, above consensus of $3.35 billion, but sees volume falling 8% in North America for the full year as prices climb in the second half.

Brokerage anticipates GM will withdraw full-year guidance as it implements mitigation plans.

Assuming these tariffs are truly permanent, GM will face structural challenges for years, the analysts say, calling it a “no-win” situation between absorbing costs or facing political backlash for not onshoring.

Rivian (NASDAQ:RIVN) was viewed as having the “cleanest set-up” due to its limited exposure to tariffs and potential upside from the R2 product cycle.

Tesla (NASDAQ:TSLA) also remains a favored long-term pick as a secular AI winner, though Deutsche Bank acknowledged short-term volatility.

While the Trump administration has signaled some flexibility on broader tariff issues, auto tariffs are likely to remain a cornerstone in America’s new industrial policy, the bank said.

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