Detroit automakers face $2 billion material cost hit

General Motors and Ford expect material and logistics costs to reduce their profits by about $2 billion this year. Both companies reported third quarter results on Wednesday, citing rising prices for steel, copper, and computer chips. These inputs are essential for vehicle manufacturing and electronic systems.

The cost pressure stems from tariffs imposed by the Trump administration on imported metals. Diesel fuel prices also remain elevated, hovering near $6.35 per gallon. This is just below the record high set in September, according to AAA. High fuel costs increase the price of shipping parts and finished vehicles across the North American supply chain.

GM CFO Paul Jacobson stated that the company is still paying approximately $2.5 billion in tariff costs. This figure is lower than earlier forecasts, partly due to tariff refunds. Ford CEO Jim Farley confirmed that commodities, memory, and logistics costs represent a year-over-year headwind of about $2 billion at Ford. Ford CFO Sherry Ann House noted that growth in software services and parts is helping offset these expenses.

Despite rising costs, revenue increased across the major U.S. automakers. GM reported a 2.9% rise in revenue, while Ford saw a 2% increase and Stellantis a 1% gain. Sales of light-duty trucks remain robust. GM truck sales rose 9% over the past year, and Stellantis pickup sales increased 34%. Ford’s F-Series continues to be its top-selling vehicle. The average new vehicle transaction price reached just over $50,000 in September, near a record high.

The electric vehicle sector faced a shift following the expiration of the $7,500 federal tax credit on September 30, 2025. GM reported overall third quarter sales fell 6% year-over-year, partly due to a smaller EV market. GM plans to continue making electric vehicles while right-sizing production capacity to match demand. Ford executives highlighted the upcoming Fathom electric truck, which will be available for pre-order in early 2027 at a price under $30,000.

Tesla regained market share in the United States as competitors scaled back EV investments. The company now accounts for almost 52% of new EV sales in the U.S., according to Edmunds. Tesla’s global sales fell during the quarter compared to the same period last year. CEO Elon Musk spent little time discussing cars on the earnings call, focusing instead on robotaxis and humanoid robots. He also hinted at a potential merger with SpaceX, stating that special committees at each company are discussing the idea.

Hybrid vehicle sales rose 27% in the past year as consumers responded to high fuel prices. EVs currently make up about 6% of new car sales in the U.S. Sam Fiorani of Auto Forecast Solutions said the transition to fully electric vehicles will take longer than anticipated, leading manufacturers to develop more internal combustion and hybrid models.

Stellantis executives said they would provide more details on material costs in the fourth quarter. GM and Ford both indicated that growth in other business areas is helping balance the increased manufacturing expenses.