GM and Ford face $2 billion cost headwinds despite revenue growth

General Motors forecasts that the cost of materials, including computer chips and diesel fuel, will reduce its profit by as much as $2 billion this year. Ford Motor Co. expects a similar year-over-year headwind of approximately $2 billion from commodities, memory, and logistics costs. These figures were disclosed during third-quarter earnings calls held on Wednesday, revealing that rising input costs are offsetting gains in vehicle sales.

The financial reports show a mixed performance for the Detroit-based manufacturers. General Motors reported a 2.9% increase in revenue over the past year, while Ford saw a 2% rise and Stellantis reported a 1% increase. Sales of light-duty trucks, a key profit driver, remained strong. GM truck sales rose 9% year-over-year, and Stellantis pickup sales in the United States increased by 34%. Ford's F-Series continues to serve as a bestseller for the company.

Analysts attribute the revenue growth to resilient consumer demand despite high vehicle prices. The average new vehicle transaction price reached just over $50,000 in September, approaching a record high according to Kelley Blue Book. Sherry Ann House, Ford's chief financial officer, stated on an investor call that customers have remained resilient amid higher fuel prices, interest rates, and inflation. She added that the company is not yet seeing these fuel costs impact customer demand for trucks and fleet vehicles.

However, the cost of manufacturing has risen due to several factors. The Trump administration implemented additional tariffs on imported steel, aluminum, and copper starting in 2025. Copper prices have also surged due to global demand for electric vehicle batteries and data center infrastructure. Computer memory chips have become more expensive due to tight supply chains and demand from the artificial intelligence sector. Additionally, the average price of diesel fuel hovered around $6.35 per gallon, just below its September all-time high, increasing logistics costs for shipping parts across the North American supply chain.

Paul Jacobson, GM's chief financial officer, noted that the company is still paying about $2.5 billion in tariff costs, a figure lower than earlier forecasts due to tariff refunds. Antonio Filosa, CEO of Stellantis, described the higher prices for memory chips and raw materials as an industry-wide phenomenon. He indicated that Stellantis would provide more detailed information on these costs in its fourth-quarter report.

The electric vehicle market has also faced disruption following the expiration of the $7,500 federal tax credit on September 30, 2025. General Motors reported that its third-quarter sales fell 6% overall, partly due to a smaller EV market. Jacobson said the company is right-sizing its capacity to align with demand. Meanwhile, Ford executives emphasized the upcoming Fathom electric truck, which is set for pre-order in early 2027 with a price under $30,000. Hybrid vehicle sales have risen 27% in the past year, prompting automakers to adjust product plans.

Tesla has regained a leading position in the U.S. electric vehicle market, capturing almost 52% of new EV sales, according to Edmunds data. CEO Elon Musk focused his earnings call on future technologies, including robotaxis and humanoid robots, while noting that capital expenditures are nearly double last year's levels. Musk also suggested on a SpaceX earnings call that special committees are discussing a potential merger between the two companies, stating that shareholders would need to support such a move.

Sam Fiorani, a vice president at Auto Forecast Solutions, warned that the industry moves at a glacial pace between vehicle generations, making it difficult to adapt to rapid supply chain disruptions. He expects the Detroit Three automakers to offer more hybrid vehicles in coming years because the transition to fully electric vehicles is taking longer than anticipated.