Core Insights - General Motors (GM) is implementing a multi-faceted strategy to enhance profitability, which includes reducing tariff exposure, improving electric vehicle (EV) profitability, and expanding software services, leading to an increased profit guidance of $12 billion to $13 billion, up from $10 billion to $12.5 billion [3] Software Services - GM's software services, including OnStar and Super Cruise, have generated nearly $2 billion in revenue this year, with OnStar subscribers increasing by 34% year-over-year and Super Cruise customers nearly doubling [4] - The company anticipates robust double-digit revenue growth through the end of the decade, with growth margins around 70% [4] Production Strategy - GM is increasing domestic production to mitigate tariff impacts and to produce more full-sized gas-powered trucks and SUVs for the U.S. market, as the company reassesses its EV strategies in light of potential changes in emissions standards by the EPA [5] - The company expects internal combustion engine (ICE) volumes to remain high for an extended period, with plans to retool its Lake Orion, Michigan plant to produce new Cadillac Escalade and full-size pickup trucks by early 2027 [6] Financial Performance - GM reported a 57% year-over-year decline in Q3 net income, primarily due to $1.1 billion in tariff costs and a revised EV production strategy amid cooling demand [7] - Despite the quarterly setback, GM's CEO expects that actions to improve manufacturing capacity and EV battery production will restore EBIT margins to historical levels of 8% to 10% [7]

Industry 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]