Detroit Three face $2 billion cost headwinds as Q3 revenues rise

Third quarter results from major American automakers show a mixed picture. Revenues increased across the board, but rising input costs are straining profits.

General Motors reported a 2.9% increase in revenue for the period. Ford saw a 2% rise, while Stellantis revenue grew by 1%. These gains were driven largely by strong sales of light-duty trucks. General Motors light-duty truck sales rose 9% over the past year. Stellantis pickup sales in the United States jumped 34%. Ford’s F-Series continued to serve as its best-selling model.

The high demand for these vehicles comes as the average new vehicle transaction price reached just over $50,000 in September. According to Kelley Blue Book, this figure is close to a record high. Sherry Ann House, Ford’s chief financial officer, stated that customers have remained resilient despite higher fuel prices, interest rates, and inflation. She noted that buyers are paying more for larger vehicles and high-end trims, which generate higher margins for manufacturers.

However, the cost to build these vehicles has climbed sharply. Paul Jacobson, General Motors’ chief financial officer, warned that current material prices make the coming year challenging. He cited increased expenses for steel, copper, and computer chips. Stellantis CEO Antonio Filosa described the rise in memory chip and raw material prices as an industry-wide phenomenon. Since 2025, tariffs on imported steel, aluminum, and copper have added to the expense. Copper costs have also risen due to global demand for electric vehicle batteries and data center wiring.

Logistics costs have compounded the pressure. The average price for a gallon of diesel fuel has hovered around $6.35, just below its September all-time high, according to AAA. High fuel prices make it more expensive to transport parts between the U.S. and Canada, where supply chains are deeply intertwined. General Motors forecast that material and diesel costs would run the company about $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 provided a similar estimate, saying commodities, memory, and logistics costs represent a year-over-year headwind of about $2 billion.

Electric vehicle sales have cooled since the federal tax credit ended on September 30, 2025. General Motors reported a 6% drop in overall third quarter sales, partly attributed to a smaller electric vehicle market. General Motors plans to continue producing electric vehicles while adjusting capacity to match demand. Ford executives highlighted the upcoming Fathom electric truck, which is expected to be available for pre-order in early 2027 at a price under $30,000.

Despite the dip in electric vehicle growth, sales have leveled out to about 6% of new car sales in the United States. Hybrid vehicle sales have risen 27% over the past year as consumers seek alternatives to high fuel prices. Tesla has regained a dominant position in the electric vehicle segment, accounting for nearly 52% of new electric vehicle sales in the U.S. this year, according to Edmunds. Tesla CEO Elon Musk indicated that the company is focusing on robotaxis and humanoid robots, with capital expenditures nearly double from the previous year. He also mentioned that special committees at Tesla and SpaceX are discussing a potential merger.