Can Ford Overcome Tariff and Commodity Cost Headwinds in 2026?

Ford Motor Company F is facing several potential headwinds as it enters the second half of 2026. The company will not benefit from the repeat of the $1.3 billion IEEPA tariff-related EBIT benefit recorded in the first quarter. Commodity costs also remain a factor, with Ford currently planning for four quarters of impact compared with three quarters in 2026. Any further softening in commodity prices, however, could provide an earnings tailwind.

Despite these challenges, Ford believes its operations have become more efficient, durable and better positioned to absorb external pressures. Reflecting this confidence, the company raised and narrowed its full-year adjusted EBIT guidance to $10-$11 billion, representing a $1 billion increase at the midpoint.

Ford is also making progress in managing the recovery of its Novelis aluminum supply. The company remains confident in achieving a net $1 billion EBIT improvement, with the majority of the benefit expected in the second half of the year. Ford has incurred roughly $800 million in temporary Novelis-related costs year to date and now expects the full-year impact to reach approximately $1.5 billion.

The restart of the Novelis hot mill remains on track, while Ford has secured contingency material to support production during the recovery. U.S. inventory stood at 52 retail days of supply, slightly below the company's target range of 55-65 days. Ford expects inventory levels to return to the targeted range as the aluminum supply situation improves. F carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Headwinds Faced by Other Automakers

Tesla’s TSLA Energy business faces uneven deployments, lower pricing and execution risks. In the second quarter of 2026, Tesla’s storage deployments rose to 13.5 GWh and revenues grew 13% year over year, but energy gross margin fell to 20.4% from 39.5% due to a $240 million warranty charge, lost tariff benefits and lower industrial storage pricing. Tesla expects long-term energy gross margins in the low-to-mid 20% range, suggesting volume growth may not translate into similar profit growth as the business scales.

General Motors Company GM continues to face elevated costs from commodities, logistics and DRAM components. GM expects commodity inflation, including logistics, to total $1.2-$1.7 billion in 2026, an improvement from its previous outlook but still a meaningful drag on profitability. The company also maintained its estimate for gross tariff exposure of $2.5-$3.5 billion this year. In addition, onshoring expenses are expected to increase as GM shifts more production to the United States. Together, these cost pressures are likely to weigh on margins in the near term.

F’s Price Performance, Valuation and Estimates  

Ford has outperformed the Zacks Automotive-Domestic industry in the last six months. Its shares have gained 11.1% against the industry’s decline of 4.8%. 

Image Source: Zacks Investment Research

 
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.3, lower than the industry’s 3.34. 

Image Source: Zacks Investment Research

 
The Zacks Consensus Estimate for F’s 2026 and 2027 EPS has moved up 20 cents and 9 cents, respectively, in the past 60 days. 

Image Source: Zacks Investment Research

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research