Automakers Report Revenue Growth Amid $2 Billion Cost Headwinds

The three major U.S. automakers reported rising revenues in the third quarter, but executives warned that rising input costs are eroding profits. General Motors, Ford, and Stellantis all posted year-over-year revenue increases. However, each company identified material cost pressures of approximately $2 billion for the year, driven by tariffs and supply chain expenses.

The cost pressures stem from several converging factors. Since 2025, the administration has imposed tariffs on imported steel, aluminum, and copper. These metals constitute the structural frame and wiring of most vehicles. Additionally, the price of computer memory chips has risen due to tight global supply and high demand from the artificial intelligence sector. Logistics costs have also climbed, with the average price for a gallon of diesel hovering near $6.35. This rate is close to the all-time high recorded in September.

General Motors stated that the cost of materials, including chips and diesel, will run the company up to $2 billion this year. The company is also paying approximately $2.5 billion in tariff costs, a figure lower than earlier forecasts due to refunds. Ford CEO Jim Farley projected a similar headwind, noting that commodities, memory, and logistics costs represent a year-over-year increase of about $2 billion. Stellantis executives indicated they would provide more detailed cost breakdowns in the fourth quarter.

Despite these expenses, sales remain strong in the truck and SUV segments. General Motors reported a 9% increase in light-duty truck sales over the past year. Stellantis saw U.S. pickup sales rise by 34%. Ford’s F-Series continues to lead company sales. The average new vehicle transaction price reached just over $50,000 in September, near a record high. Ford CFO Sherry Ann House noted on an investor call that customers have remained resilient despite higher fuel prices and interest rates.

The electric vehicle market has shifted following the expiration of the federal tax credit on September 30, 2025. General Motors reported an overall sales decline of 6% in the third quarter, citing a smaller EV market. The company stated it is right-sizing its EV production capacity to align with current demand. Tesla, which manufactures only electric vehicles, reported global sales fell compared to the same period last year. However, the company has regained a majority of the U.S. EV market, accounting for almost 52% of new EV sales according to Edmunds.

Hybrid vehicles are seeing a surge in popularity. Sales of hybrids have increased by 27% over the past year, driven by high fuel prices. Analysts predict that automakers will introduce more hybrid models in coming years as the transition to full-electric vehicles takes longer than initially projected. General Motors CFO Paul Jacobson said the company expects EV penetration to rise further given current oil prices, and it aims to be prepared for that shift.

Tesla CEO Elon Musk discussed the company's strategic direction on an earnings call. He stated that the company is focusing on new technologies, including robotaxis and humanoid robots. Capital expenditures for these initiatives are nearly double the amount from the same period last year. Musk also hinted at a potential merger between Tesla and his rocket company, SpaceX. He said special committees at both companies are discussing the idea, and he believes it would be a good idea, provided shareholders are supportive.

The auto industry faces a complex landscape of shifting consumer preferences and global supply chain disruptions. General Motors, Ford, and Stellantis are adjusting their production plans to balance the strong demand for internal combustion trucks with the growing, albeit slower, adoption of electric and hybrid vehicles. The companies are working to offset cost increases through software services and parts revenue while navigating the post-tax-credit market environment.