According to Financial Times News, Ford and General Motors have reduced their combined maximum tariff exposure from $7 billion to $5 billion this year despite President Trump’s trade war initially creating chaos. GM raised its profit guidance in October with CFO Paul Jacobson telling investors 2025 would be “even better,” sending shares up 15%. Stellantis now expects just €1 billion in net tariff impact instead of €1.5 billion, while Ford would have upgraded its outlook if not for a $2 billion hit from a supplier fire. The improved prospects come from new Trump administration relief measures including rebates covering 3.75% of vehicle value through 2030 and relaxed EV regulations. Stellantis is betting big with a record $13 billion US investment pledge that would increase production by 50% and create over 5,000 jobs.
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The Regulatory Relief That Changed Everything
Here’s the thing about trade wars – they’re messy as hell at first, but then everyone starts gaming the system. The Trump administration basically created an escape hatch for automakers with that 3.75% rebate scheme. It’s like getting a discount coupon to offset your own tariff pain. And they just extended it through 2030, which gives Detroit some serious runway.
But the real game-changer might be the EV regulation rollbacks. Think about it – Ford was staring down $3.6 billion in EV losses over nine months. GM took a $1.6 billion charge to scale back its electric ambitions. These companies were being forced to sell money-losing electric vehicles while trying to navigate tariff chaos. Now? They can focus on what actually makes money: gas-guzzling trucks and SUVs.
Why European Automakers Are Getting Squeezed
Tom Narayan from RBC Capital Markets nailed it when he said US automakers are now better positioned than their European rivals. European companies don’t get the same rebate benefits, and they’re still stuck with aggressive EV mandates back home. It’s like watching two different races – Detroit gets to pump the brakes on electric while Europe’s foot is still slammed on the accelerator.
And let’s be real – the Big Three know their home turf. Stellantis saw North American sales jump 35% year-over-year last quarter. When you’re selling high-margin Jeeps and Rams instead of struggling with electric vehicles that nobody wants to buy at scale, suddenly the math works better. The tariff relief measures just sweeten the deal.
But Don’t Pop the Champagne Yet
Look, there’s still massive uncertainty here. Ford’s Jim Farley talked about “very big decisions” ahead regarding those billions in EV losses. GM warned about more charges coming. These companies already sunk fortunes into electric vehicle factories and technology that might now sit underutilized.
The competition is getting brutal too. Farley admitted the industry faces “lower returns due to EV overcapacity and global pressures.” Basically, they’ve got one foot in the old world of profitable gas vehicles and one foot in a money-losing electric future. Policy changes can help in the short term, but they don’t solve the fundamental transition challenge.
Still, for now, Detroit’s playing the hand it’s been dealt. And surprisingly, that hand is looking better than anyone expected just a few months ago. The question is whether these policy tailwinds can overcome the structural challenges facing the entire auto industry. We’re about to find out.
