ZACKS·2025-09-26 13:31Industry Overview - The auto industry is at a turning point, with legacy automakers defending profits from gas-powered vehicles while investing billions into EVs, software, and new mobility [1] - Higher tariffs are impacting margins, and competition is intensifying [1] Ford Analysis - Ford has a strong home base and solid liquidity, with $46 billion in liquidity, including $28 billion in cash, which supports its EV and tech initiatives [2][5] - The Ford Pro segment, covering commercial vehicles, software, and services, is performing well, with paid subscriptions up 24% year over year to 757,000 [4] - Ford's vehicle lineup remains robust, particularly with F-series trucks and various SUV models [3] - Despite challenges, including $12 billion in losses from its EV division and $800 million in tariff costs, Ford is pivoting to a new low-cost EV platform [6] - Ford's dividend yield above 5% is attractive for income investors, with plans to return 40–50% of free cash flow to shareholders [5] Stellantis Analysis - Stellantis is facing significant challenges, with U.S. sales declining for eight consecutive quarters due to delayed launches and high prices [7] - Financially, Stellantis reported a 13% revenue drop to €74.3 billion in the first half of 2025, swinging to a net loss of €2.3 billion [8] - The leadership change adds uncertainty, with new CEO Antonio Filosa expected to outline a turnaround plan in early 2026 [9] - Stellantis projects €1.5 billion in tariff costs for 2025, with a net financial position slipping to €9 billion and net debt rising to €6.5 billion [10] Competitive Landscape - Ford's stock has increased by 17% year to date, while Stellantis shares have dropped over 28% [11][15] - Stellantis is lagging in EV development and has pulled back from hydrogen fuel cells and advanced driver-assistance systems, which may hinder its competitiveness [12] - The Zacks Consensus Estimate for Stellantis' 2025 EPS implies a 57% decline year over year, while Ford's EPS estimates have been revised upward [16][17] Conclusion - Ford is navigating its challenges by reshaping its EV strategy and leveraging its strong balance sheet, while Stellantis is struggling with financial setbacks and execution challenges [18] - Until Stellantis presents a credible recovery strategy, Ford appears to be the more stable investment option [19]