GM and Ford face $2 billion in new costs from materials and fuel

General Motors and Ford each expect to absorb approximately $2 billion in additional costs this year due to higher prices for raw materials, computer chips, and diesel fuel.

The two Detroit-based automakers disclosed these figures during their third-quarter earnings calls, held on Wednesday. While both companies reported revenue growth, executives cautioned that rising input costs are pressuring profit margins as they look toward fiscal 2027.

General Motors reported that its revenue increased by 2.9% over the past year. The company’s sales of light-duty trucks rose by 9% during the same period. Paul Jacobson, GM’s chief financial officer, stated that material costs, including computer chips and diesel, would impact the bottom line by up to $2 billion. He noted that GM is also paying about $2.5 billion in tariff costs, a figure he said was lower than earlier forecasts due to partial refunds.

Ford reported a 2% rise in revenue, driven largely by continued strong sales of its F-Series trucks. Jim Farley, Ford’s chief executive officer, said that commodities, memory components, and logistics costs would create a year-over-year headwind of about $2 billion. Sherry Ann House, the company’s CFO, added that growth in software services and parts sales is helping to offset these rising expenses.

Stellantis, the parent company of Chrysler and Jeep, reported a 1% increase in revenue. Its U.S. pickup truck sales rose by 34%. CEO Antonio Filosa described the rise in memory chip and raw material prices as an industry-wide phenomenon. Executives at Stellantis said they will provide further details on these specific costs during the fourth quarter.

The cost increases stem from several factors. The federal government has imposed additional tariffs on imported steel, aluminum, and copper since 2025. Copper prices have risen due to these tariffs and increased global demand for electric vehicle batteries and data center infrastructure. Computer memory chips are also more expensive because of a tight supply chain and high demand from the artificial intelligence sector.

Logistics costs have also climbed. The average price for a gallon of diesel fuel has hovered around $6.35, near its all-time high recorded in September. This affects the cost of shipping vehicles from factories to dealerships. It also impacts the cross-border movement of parts between the U.S. and Canada, where supply chains are deeply intertwined.

Consumer demand remains strong for larger vehicles. The average transaction price for a new vehicle in September was just over $50,000, close to a record high, according to Kelley Blue Book. Sherry Ann House said customers have remained resilient despite higher fuel prices and interest rates. Ford’s CFO noted that while fuel prices affect freight and energy costs, they have not yet reduced customer demand for trucks or fleet vehicles.

The industry is also adjusting to the end of the $7,500 federal tax credit for electric vehicles, which expired on Sept. 30, 2025. General Motors said its third-quarter sales fell by 6% overall, partly due to a smaller EV market. The company is aligning production with current demand. Ford executives did not address EV sales specifically but highlighted the upcoming Fathom electric truck, which is planned for pre-order in early 2027 at a price under $30,000.

Hybrid sales have increased by 27% in the past year, according to Edmunds data. Sam Fiorani, a vice president at Auto Forecast Solutions, said the transition to fully electric vehicles will take longer than initially anticipated. He expects the Detroit automakers to offer more hybrid models in the coming years. Tesla has regained market share, accounting for almost 52% of new EV sales in the U.S. this year, as other manufacturers scale back EV investments.