GM and Ford brace for $2 billion hit from material and fuel costs

General Motors and Ford each expect a financial drag of roughly $2 billion this year due to rising costs for computer chips, diesel fuel, and raw materials. The figures were disclosed in third-quarter earnings reports released by the Detroit-based automakers. The cost pressure is mounting even as the companies posted revenue increases. This creates a narrow margin between top-line growth and bottom-line profit.

General Motors reported that its revenue rose 2.9% over the past year. Ford saw a 2% increase, while Stellantis reported a 1% gain. Sales of large vehicles also climbed. GM said its light-duty truck sales grew by 9%. Stellantis noted a 34% jump in U.S. pickup sales. Ford’s F-Series continued to lead its sales rankings.

The industry has spent the last year dealing with a complex set of economic forces. Since 2025, the Trump administration has imposed additional tariffs on imported steel, aluminum, and copper. These materials are essential for vehicle frames and wiring. The average price of a gallon of diesel hovered near $6.35 recently, just below its September peak. High fuel costs increase the expense of moving parts across the U.S. and Canadian border. Parts often cross the border multiple times during assembly.

Paul Jacobson, the chief financial officer of General Motors, warned that current price levels make the path forward more difficult. He stated that the company is still paying about $2.5 billion in tariff costs. This figure is lower than earlier forecasts, partly because of tariff refunds. Jim Farley, Ford’s chief executive officer, provided a similar estimate for his company. He projected that commodities, memory, and logistics costs would create a year-over-year headwind of about $2 billion at Ford.

The market for electric vehicles has shifted sharply. One year after the federal $7,500 tax credit expired on Sept. 30, 2025, EV sales have dropped nationally. General Motors reported that its third-quarter sales fell 6% compared to the previous year. The company cited the smaller EV market as a primary factor. Tesla, the largest U.S. EV maker, reported that its global sales declined during the quarter compared to the same period last year.

Despite the dip, EVs still represent about 6% of new car sales in the U.S., according to Edmunds. Hybrids have seen a surge in popularity. Sales of hybrid vehicles rose 27% in the past year. Sherry Ann House, Ford’s chief financial officer, said customers remain resilient despite high fuel prices and interest rates. She noted that the company is not seeing a drop in demand for trucks and fleet vehicles at this time.

Tesla has reclaimed its position as the market leader in electric vehicles. The company now accounts for almost 52% of new EV sales in the U.S. Ivan Drury, director of industry insights at Edmunds, attributed this shift to consumer preference for a known brand. He described Tesla as the default choice for many buyers. On its earnings call, Tesla CEO Elon Musk focused on new technologies rather than car sales. He mentioned that special committees at Tesla and SpaceX are discussing a potential merger. Musk told investors he believes the combination would be a good idea, but shareholders would need to support it.

Sam Fiorani, a vice president at Auto Forecast Solutions, described the auto industry as moving at a glacial pace between vehicle generations. He said the recent disruptions from tariffs and international trade changes have thrown off supply chain calculations. He expects the Detroit Three automakers to offer more hybrid vehicles in the coming years. He stated that the transition to fully electric vehicles will take longer than originally anticipated. Ford executives said they would provide more details on specific costs in the fourth quarter. General Motors said it is right-sizing its EV capacity to align with current demand.