Why Ford and GM Will Struggle in 2025

Just a few months ago, I looked at Ford (NYSE: F) and saw a potential bargain. However, that’s no longer the case. And similarly, rival General Motors (NYSE: GM) is primed to struggle, as well.

Basically, American car manufacturers face a raft of challenges including softness in China, sluggish EV sales, inflation, and, maybe most worryingly of all, tariffs being floated by the incoming Trump administration. 

Ford has been up and down all year, by turns beating analysts estimates and falling short of them. 

The company’s last quarter was headlined by a 25% decline in earnings and lower full-year forecast. 

One big problem was higher warranty expenses, which have been a problem for the company all year. Ford paid nearly $4.8 billion in warranty claims in 2023, up 15% from 2022. And 2024 hasn’t been much better this year, as the company had racked up $2.3 billion of warranty expenses as of the second quarter — an $800 million increase year over year.

Ford’s electric vehicle division, Model E, has been another source of consternation. It lost $4.7 billion last year and is on track to lose another $5 billion this year.

Ford also cut production plans for the electric version of its F-150 earlier this year, citing weak demand. 

Of course, that’s not just a Ford issue. EV adoption across the board has lagged analysts expectations of late. And an economic slump in China has thrown the brakes on the world’s premier EV market. 

Making matters worse, Chinese automakers have flooded their home market with cheaper, government-subsidized vehicles, stealing away market share. Chinese automakers now account for about 70% of automotive sales in their home country, which is almost double the market share they held just five years ago.  

GM’s China sales fell 19% in the first nine months of the year, and the company lost $347 million on its Chinese joint ventures in that time. 

GM says its net income will be reduced by more than $5 billion due to the problems in China. It also recently suspended sales of its brand-new electric Chevy Blazer due to performance problems.

The EV market isn’t likely to improve under President Trump, either. He’s pledged to eliminate the $7,500 EV tax credit, which is going to set the market back even further. 

The real threat, though, is the tariff policy Trump campaigned on. 

That policy includes a blanket 25% tariff on all imports from Mexico and Canada. That would be a major problem for the U.S. automotive industry, which has outsourced much of its production and assembly to our neighbors. 

It will also mean higher costs for imported parts at domestic automotive plants. Entire supply chains are set to be affected by these tariffs. And GM and Ford, which rank No. 1 and No. 2 in automotive exports from Mexico, respectively, will bear the brunt of it.

That’s going to make it hard for Ford, which saw its stock lose a third of its value over the summer, to change its fortunes. And GM, whose stock has risen 44% this year, could easily stall in 2025.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…

In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.

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