Auto Giants Face-Off: GM vs. STLA - Which Stock Wins Out?

The global auto industry is at a crossroads. Legacy automakers are racing to protect profits from their traditional gas-powered lineups while pouring billions into electric vehicles (EVs), software and next-gen mobility. At the same time, rising tariffs are squeezing margins and intensifying competition.

U.S. legacy player General Motors GM is banking on its dominant position at home, using robust demand for pickups and SUVs to help fund its EV and tech ambitions. Italian-American giant Stellantis STLA, meanwhile, is grappling with weak sales, shrinking profits and leadership transition. Let’s dig deeper to assess which automaker looks like the stronger choice right now.

The Case for General Motors

General Motors is America’s top-selling automaker, driven by steady demand for its pickups and SUVs. In the first half of 2025, GM’s U.S. market share climbed to 17.3%, up 1.2 percentage points from the year-ago period, reflecting its continued strength in the domestic market. The company is expanding its U.S. manufacturing footprint and supply chain, while also investing heavily in battery technology, software and autonomous driving.

Internationally, GM is working to strengthen its position in China. By streamlining inventory and collaborating closely with its joint venture partner, it aims to lift sales and profitability in the world’s largest auto market.

On the EV front, GM is gaining traction. Chevrolet has become the second-largest EV brand in the United States, thanks to strong demand for the Blazer EV and Equinox EV. Cadillac was ranked as the fifth-largest EV brand in the last reported quarter. The company is pushing its Super Cruise hands-free driving system as well, which is expected to generate more than $200 million in revenues in 2025 and more than double that figure in 2026.

GM’s balance sheet is also a positive. The automaker held $22.3 billion in cash and equivalents at the end of June, providing financial flexibility. It has also been rewarding shareholders and completed a $2 billion accelerated share repurchase program in the second quarter of 2025. GM even resumed open-market buybacks in July, a move that signals confidence in its long-term outlook.

Still, challenges loom. Tariffs are a major concern, with $1.1 billion in net costs last quarter and expectations for an even higher impact in the third quarter. For the full year, GM projects a $4-$5 billion tariff hit, though it hopes to offset around 30% of this. Rising warranty costs, tied to issues with the L87 powertrain and early EV software, are another headwind.

Capital spending also remains elevated. It is projected to be $10-$11 billion in 2025 and is likely to rise slightly in the following two years as GM ramps up new models. This will weigh on free cash flow, which is now expected at $7.5–$10 billion, down from $13.2 billion in 2024.

All in all, GM’s strong market position and long-term investments in EVs, autonomy and technology position it well for the future, but near-term margins and cash flow will remain under pressure.

The Case for Stellantis

Stellantis, the auto giant behind brands like Jeep, Chrysler, Fiat and Peugeot, is navigating a difficult stretch in its key North American market. The company has now posted eight straight quarters of declining U.S. sales, hurt by delayed model launches, high sticker prices and limited incentives. Retailers have also pointed to lackluster lineups and reduced marketing spend as reasons for the weak demand.

Financial results highlight the strain. In the first half of 2025, revenues fell 13% year over year to €74.3 billion. The company swung to a net loss of €2.3 billion against a profit of €5.6 billion in the same period last year. Adjusted operating income dropped sharply to €500 million, with margins thinning to just 0.7% from 10% in the first half of 2024. Industrial free cash flow turned negative at €3 billion, as operating income could not keep up with heavy capex and R&D spending. Foreign exchange pressures, higher tariffs and falling light commercial vehicle sales in Europe added to the pain.

Following the abrupt departure of CEO Carlos Tavares, new chief executive Antonio Filosa is expected to outline his turnaround strategy in early 2026—as the company looks to stabilize operations and reposition itself for the EV transition.

Near-term headwinds remain intense. Tariffs remain a big concern. Stellantis now estimates a €1.5 billion net tariff impact for 2025, with €0.3 billion absorbed in the first half. Cash flow pressure has also shifted the company’s balance sheet. Its industrial net financial position fell to €9 billion, while net debt increased to €6.5 billion after the cash burn in the first half of 2025. Another period of negative free cash flow in the back half of the year is not ruled out.

Competitive positioning is also a challenge. Stellantis continues to lag rivals like General Motors in the EV race, while facing rising pressure from Chinese automakers expanding into global markets. The company has also halted its hydrogen fuel cell program, citing high costs and weak demand, a move that could leave it behind if the hydrogen market accelerates later this decade. Stellantis also shelved its Level 3 driver-assistance program amid high costs and technological challenges. These retreats may help cut expenses but risk ceding ground in next-generation technologies.

All in all, Stellantis faces financial, strategic and competitive headwinds. Its turnaround will hinge on Filosa’s leadership, disciplined execution and sharper positioning in the global EV market.

Price Performance & Estimates

Over the past year, shares of General Motors have increased 20% against Stellantis’ decline of more than 40%.

The Zacks Consensus Estimate for STLA’s 2025 EPS implies a 54.5% decline year over year. The EPS estimates for the current year and the next have been revised downward over the past 60 days.

The Zacks Consensus Estimate for GM’s 2025 EPS implies a 11% decline year over year. EPS estimates for the current and the next year have been revised upward over the past 60 days.

Conclusion

General Motors and Stellantis are both legacy automakers with global scale, but their fortunes are diverging. GM is balancing near-term cost pressure with a solid competitive position, backed by healthy cash reserves and a growing EV footprint. Stellantis, meanwhile, is contending with sharp financial setbacks and competitive disadvantages in key markets. Until Stellantis outlines a credible turnaround plan, GM looks like the more resilient choice for investors, even if near-term headwinds temper enthusiasm.

While Stellantis carries a Zacks Rank #5 (Strong Sell), General Motors is #3 Ranked (Hold), currently.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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