GM and Ford Face $2 Billion Cost Hit as Truck Sales Climb

General Motors and Ford each expect material and logistics costs to reduce their profits by approximately $2 billion this year. The expense stems from rising prices for steel, copper, and computer chips, alongside high diesel fuel costs. These headwinds emerged despite a strong third quarter for light truck sales.

The cost pressure builds on tariffs imposed on imported materials since 2025. Steel, a primary component of vehicle frames, and copper, used in wiring and batteries, have become more expensive. Computer memory chips also cost more due to tight supply chains and demand from data centers. Diesel prices, which average $6.35 per gallon, further increase the cost of shipping parts between U.S. and Canadian factories.

Ford CEO Jim Farley stated on an earnings call that commodities, memory, and logistics costs represent a year-over-year headwind of about $2 billion. GM CFO Paul Jacobson provided a similar forecast for his company. Jacobson noted that GM is also paying about $2.5 billion in tariff costs, a figure lower than earlier estimates due to refunds. Stellantis, which owns Chrysler and Jeep, said it would provide more detailed cost information in the fourth quarter.

Sales data shows consumers remain active in the market despite higher prices. The average transaction price for a new vehicle was just over $50,000 in September, near a record high. GM light truck sales rose 9% year-over-year, while Stellantis pickup sales increased 34%. Ford’s F-Series continues to be a top seller. Ford CFO Sherry Ann House said customers have remained resilient amid higher fuel prices and interest rates.

The electric vehicle sector faces its own challenges. The $7,500 federal tax credit for EVs ended on Sept. 30, 2025, as part of the One Big Beautiful Bill Act. Since then, EV sales have dropped nationally. GM reported a 6% decline in third-quarter sales, partly attributed to a smaller EV market. Tesla, the only major manufacturer selling exclusively electric vehicles, saw global sales fall compared to the same period last year.

Hybrid vehicles are gaining traction as fuel prices stay high. Edmunds data shows hybrid sales up 27% in the past year. Automakers are adjusting product plans to include more hybrids. Sam Fiorani, a vice president at Auto Forecast Solutions, said the shift to fully electric vehicles will take longer than anticipated because the industry moves slowly between vehicle generations.

Tesla has reclaimed a majority of the U.S. EV market share, capturing almost 52% of new EV sales. Analysts attribute this to other manufacturers scaling back EV investments. Tesla CEO Elon Musk focused on robotaxis and humanoid robots during the earnings call. He also hinted at a potential merger with SpaceX, noting that special committees at both companies are discussing the idea.

GM plans to continue making electric vehicles while right-sizing its capacity. Ford executives highlighted the upcoming Fathom electric truck, which will be available for pre-order in early 2027 at a price under $30,000. Stellantis executives stated they are working with the industry-wide rise in raw material prices.