GM and Ford face $2 billion in cost increases from tariffs and chip prices

General Motors and Ford both expect a $2 billion hit to their bottom lines this year from higher input costs, despite reporting revenue growth in the third quarter.

GM's revenue rose 2.9% year over year, while Ford's increased by 2%. Stellantis reported a 1% increase. All three companies noted strong sales for light-duty trucks and pickups, which are high-margin vehicles. GM's light-duty truck sales climbed 9% in the past year. Stellantis U.S. pickup sales jumped 34%. Ford's F-Series remained its top seller.

The average new vehicle transaction price reached just over $50,000 in September, near a record high. Sherry Ann House, Ford's chief financial officer, stated that customers have remained resilient despite higher fuel prices, interest rates, and inflation. However, manufacturers face rising expenses for key materials.

Steel, copper, and computer chips have all increased in price. GM's chief financial officer, Paul Jacobson, warned that sustained high prices will complicate planning for next year. Antonio Filosa, CEO of Stellantis, described higher memory chip and raw material costs as an industry-wide phenomenon. Since 2025, the administration has imposed additional tariffs on imported steel, aluminum, and copper, which are essential for vehicle frames and wiring.

Copper costs have risen due to tariffs and global demand from electric vehicle batteries and data centers. Computer memory chips are also more expensive because of a tight supply chain and demand from the artificial intelligence sector. Logistics costs have increased as the average price for a gallon of diesel hovers around $6.35, just below its September peak. This affects freight costs for parts moving across the U.S.-Canada border.

Ford's CEO, Jim Farley, said commodities, memory, and logistics costs represent a year-over-year headwind of about $2 billion for the company. GM is paying approximately $2.5 billion in tariff costs, a figure lower than earlier forecasts due to refunds. Stellantis executives said they will provide more specific cost data in the fourth quarter.

Electric vehicle sales have cooled since the $7,500 federal tax credit expired on September 30, 2025. GM reported a 6% drop in third-quarter sales, partly due to a smaller EV market. Jacobson said GM is right-sizing its production to match demand. EVs currently account for about 6% of new car sales in the U.S. Hybrid sales, however, are up 27% in the past year.

Tesla has regained market share, capturing almost 52% of new U.S. EV sales this year. Ivan Drury of Edmunds noted that buyers are defaulting to Tesla as other manufacturers pull back. Elon Musk stated on an earnings call that Tesla is investing heavily in robotaxis and humanoid robots, with capital expenditures nearly double what they were a year ago. He also hinted at a possible merger with SpaceX, noting that special committees at both companies are discussing the idea.