Detroit automakers face $2 billion material cost hit as tariffs and diesel prices rise

General Motors projects that rising costs for materials and diesel fuel will cost the company up to $2 billion this year, according to a report to investors issued on Wednesday. The automaker is also paying approximately $2.5 billion in tariff costs, a figure that Chief Financial Officer Paul Jacobson noted is lower than earlier forecasts due to refunds.

Ford Motor Co. reported a similar financial headwind. Chief Executive Officer Jim Farley stated on an earnings call that commodities, memory components, and logistics costs represent a year-over-year headwind of about $2 billion for the company. Despite these increased expenses, revenue figures for the major Detroit-based manufacturers have risen. General Motors reported a 2.9 percent increase in revenue, while Ford saw a 2 percent rise and Stellantis reported a 1 percent gain.

The companies attribute their revenue growth to strong demand for large vehicles. General Motors said light-duty truck sales rose 9 percent over the past year. Stellantis reported a 34 percent increase in U.S. pickup sales. Ford’s F-Series remains a top seller. The average new vehicle transaction price in September reached just over $50,000, near a record high, as consumers pay more for high-end trims and larger models.

Input costs have climbed due to tariffs on steel, aluminum, and copper, as well as higher prices for computer chips. Sherry Ann House, Ford’s chief financial officer, said higher fuel prices are impacting freight and energy costs, though customer demand for trucks and fleet vehicles remains stable. Diesel prices have hovered around $6.35 per gallon, slightly below their September peak.

The end of the $7,500 federal electric vehicle tax credit on September 30, 2025, has also affected the market. General Motors reported a 6 percent drop in third-quarter sales partly due to a smaller EV market. Jacobson said the company is right-sizing its capacity to align with demand. Meanwhile, hybrid vehicle sales have risen 27 percent in the past year, according to Edmunds data.

Tesla, which produces only electric vehicles, saw global sales fall during the quarter compared to the previous year. However, the company has regained the majority of the U.S. EV market share, capturing almost 52 percent of new EV sales this year. Elon Musk, Tesla’s CEO, indicated on an earnings call that special committees at Tesla and SpaceX are discussing a potential merger. He said shareholders would need to support such a move, which would combine Tesla’s automotive business with SpaceX’s satellite and AI operations.