Tesla Is Desperate To Unload New Model Ys

Good morning! It’s Tuesday, May 13, 2025, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. This is where you’ll find the most important stories that are shaping the way Americans drive and get around.

In this morning’s edition, we’re looking at Tesla’s desperate attempts to get people to buy the refreshed Model Y, as well as the trade war-induced rise in car prices. We’ll also look at Honda’s grim profit estimates, and Ford’s upcoming strike in Germany.

Tesla refreshed the Model Y earlier this year, taking a crossover with poorly aging style and redesigning it to look like everyone’s favorite truck: The Tesla Cybertruck, which has in no way become a problematic vehicle at all. Everyone loves the Cybertruck, and borrowing its distinctive light bars for the Model Y could only help sales. Right? From Reuters:

Tesla investors had pinned their hopes on a refresh of the company’s flagship compact SUV to reinvigorate sales. But rock-bottom financing deals for the Model Y and its easy availability suggest that this expectation is unrealistic.

The electric vehicle maker is offering financing deals as low as 0% on the spanking new version of the Model Y. While other automakers including Kia and General Motors are offering similar deals on some EV models, such offers within weeks of a model rolling out are rare.

Early signs of weak demand for the restyled Model Y- launched in January – come amid stiff competition and customer aversion to CEO Elon Musk’s divisive politics.

The styling is, of course, not the only issue with the Model Y. Elon Musk personally took 260,000 federal workers out of new-car-buying contention this year, and in so doing angered many others who will likely no longer ever consider a Tesla product. Plus there are also just better competitors on the market now, with less nauseating suspension tuning and usable rear headroom. 

Everything’s getting more expensive, thanks to our latest trade war, and cars are no exception. The automotive market has been a primary concern of President Trump’s throughout all his tariff lobbing, and now it seems that concern is coming back to bite him. If only someone could have predicted this. From Reuters: 

U.S. new-vehicle prices surged in April, data released on Monday showed, a sign that the effects of President Donald Trump’s auto-tariff measures are rippling through the car market.

The average price consumers paid, after discounts and promotions, rose 2.5% from March, more than double the typical 1.1% increase over those two months in recent years, Cox Automotive’s Kelley Blue Book showed. In the past decade, the only larger such increase was in April 2020, when prices rose 2.7% during pandemic-related factory shutdowns.

You read that right: The largest April spike in new car prices since the pandemic shuttered factories and ground global supply chains to a halt. Anyone want to put their money down on a number for May? Can we hit 3% or higher?

Tariffs are hitting every automaker, with all the big names scrambling to figure out just how the new rules will affect their bottom lines. Honda, for its part, is estimating some truly dire numbers: A 59% drop in income relative to last year. From Reuters:

Japan’s Honda Motor forecast a 59% profit decrease in the current financial year and said it would put on hold a plan to build an EV supply chain in Canada, amid the uncertainty stemming from U.S. President Donald Trump’s tariffs.

Japan’s second-biggest automaker expects operating income to total 500 billion yen ($3.38 billion) in the year to March 31, 2026, versus 1.21 trillion yen in the year that just ended.

Honda’s forecast is the latest signal of the difficulty car makers are having navigating Trump’s tariffs on foreign-made automobiles at the same time the industry is being hit by the rise of Chinese EV producers.

Now, is this an example of what my therapist would call “catastrophizing?” Possibly, but in Honda’s case it makes sense to plan for the worst outcomes. Either the company is pleasantly surprised by a more open regulatory environment than it expected, which puts earnings far above estimates, or it’s battened down the hatches to weather what may well be four years of storms. 

As companies work to cut losses in the face of new tariffs, though, many of those “losses” end up being human beings — automakers end up letting workers go rather than continue to pay them through economic headwinds. Ford is trying this in Europe, but Ford’s European employees aren’t too keen on the idea. They’d rather strike, actually. From the Detroit Free Press: 

Ford workers at the U.S. automaker’s two plants in Cologne, Germany, will go on strike on Wednesday, their works council head said Monday, as tensions rise over planned job cuts across its European operations.

Ford said in November last year it would cut around 14% of its European workforce, mostly in Germany and Britain, blaming losses due to weak demand for electric vehicles and poor government support for the shift to the new technology.

…

Ford’s workers in Cologne voted last week in favor of industrial action, with labor representatives insisting at each stage of talks that management find alternative measures to restructure its business.

Unions are good, strikes are good, and with any luck the workers over in Germany will get concessions out of Ford with this labor action. It’s likely not going to be the last time we see a story like this, though, as profits fall and the international trade environment gets ever more precarious and unpredictable.