The situation: Automakers face an increasingly difficult environment as President Donald Trump’s tariffs and the removal of EV tax credits reshape supply chains and production strategy.

• Tariffs cost General Motors and Stellantis $1.1 billion and €300 million ($324.6 million), respectively, in Q2.
• The need to retool supply chains to minimize tariff impacts—and potentially adjust EV production strategy in anticipation of slowing adoption—is also adding billions to automakers’ costs at a time when demand is becoming harder to predict.

Stellantis falls behind: Stellantis’ disappointing Q2 performance exemplifies the pressures automakers are under in the US.

• The company reported a surprise loss of €2.3 billion ($2.5 billion) in Q2—partly due to tariff costs, but also as a result of scrapped investments in hydrogen and electric vehicles.
• Stellantis is also struggling to keep pace with its “Big 3” peers: North America shipments fell 25% YoY due to softening demand as well as an attempt to reduce its tariff exposure.
• US unit sales slumped 10% in Q2, owing mainly to plunging demand for its Chrysler and Dodge brands.

GM under pressure: Like Stellantis, GM is struggling to adapt to the fast-changing environment in the US. While the automaker led the industry in growth for the first six months of the year, the conditions going forward are considerably more challenging.

• The full tariff impact is yet to hit. GM expects the bulk of its tariff costs to take effect in the latter part of 2025, with imports from South Korea alone accounting for roughly $2 billion of the estimated $4 billion to $5 billion impact.
• EV tax credits are going away. The $7,500 federal incentive will be phased out on September 30, a major headwind to GM’s goal of eventually exclusively offering EVs. While that has fueled a short-term surge in EV sales, which more than doubled in Q2, the automaker expects demand to slow once the tax credits are eliminated.
• Reshoring plans are expensive—and lengthy. GM announced a $4 billion investment to boost its US production capabilities but noted that it would take 18 months for the additional capacity to come online—forcing it to rely on alternative measures to reduce tariff exposure in the short term.