U.S. Auto Industry 2025 Review and What to Expect in 2026

Despite high vehicle prices, rising financing costs and tariff pressure, the U.S. auto industry had a surprisingly strong 2025. Total sales rose about 2% to roughly 16.2 million units, marking the best year since 2019. Early-year demand, especially for trucks and SUVs, fueled growth, though the market slowed in the fourth quarter as electric vehicle (EV) demand cooled following the expiration of federal tax credits.

Car buyers faced record prices, paying an average of $50,326 for a new vehicle in December 2025, per Kelley Blue Book. That marked a 0.8% increase from November’s $49,814 average, highlighting the continuing pressure on affordability in the U.S. auto market.

Against this backdrop, here’s a closer look at how the U.S. auto industry and major auto giants performed in 2025.

Key Highlights - 2025

Top Automakers by Sales

General Motors GM held its position as the top-selling automaker in the United States, delivering 2.85 million vehicles in 2025, up 5.5% from 2024. Gains came across Chevrolet, Cadillac, GMC and Buick. The company extended its leadership in full-size pickups for the sixth straight year, with sales reaching 940,000 units. General Motors also ranked as the nation’s second-largest EV seller.

Toyota Motor TM was the second largest seller in the country, delivering 2,518,071 vehicles, an 8% rise from 2024. Electrified models accounted for 47% of the sales. The Toyota brand delivered 2,147,811 units, while Lexus had a record year with 370,260 sales, driven by popular models like the RAV4 and Camry.

Ford F was the third best seller, with total annual sales reaching 2.2 million vehicles, giving the company a 13.2% market share. Ford’s F-Series remained America’s best-selling truck in 2025, with sales topping 828,832 units, up 8.3%.

While F and GM sport a Zacks Rank #1 (Strong Buy) each at present, Toyota carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

EV Trends & Tesla’s Struggle

U.S. EV sales had a rollercoaster year. Early demand spiked ahead of the expiring federal tax credit, driving a record third quarter but the fourth quarter saw a sharp slowdown as incentives ended and affordability concerns grew.

Tesla TSLA faced its second consecutive annual delivery decline.  For the full year, deliveries totaled roughly 1.64 million vehicles (comprising 1.58 million units of Model 3/Y and 50,850 other models). That denotes a decline from nearly 1.8 million vehicles sold in 2024. Falling incentives, competition from Chinese EV makers like BYD, and an aging fleet contributed to the full-year decline.

Legacy automakers adapted to cooling EV demand. Companies like Ford, General Motors and Stellantis STLA made aggressive EV commitments during the Biden years. But with consumer demand cooling and incentives fading, they decided to “right-size” their EV plans to match real demand. These companies are now shifting resources toward higher-margin vehicles and proven revenue drivers.

As such, GM is set to book $7.6 billion in EV-related charges for 2025, while Ford is expecting $19.5 billion in special charges, with $5.5 billion impacting cash flows through 2026–27. Stellantis has delayed its all-electric RAM pickup and the Ramcharger EREV to late 2026, pivoting toward hybrids and a balanced lineup. STLA acknowledged that strategic changes will lead to meaningful one-time costs, but hasn’t disclosed the exact amount.

Autonomous Vehicles

Companies are accelerating in autonomous mobility. Waymo, Zoox, and Tesla expanded robotaxi services, signaling that self-driving technology is becoming a core focus.

U.S. Auto Industry Outlook - 2026

The U.S. auto industry enters 2026 with caution. While easing inflation and expected interest rate cuts should support buying power to some extent, a slower labor market and weaker job growth may affect consumer confidence, making families more hesitant to spend on big-ticket items like cars.

Government policy will remain a major factor. Tariffs, changing fuel economy rules and potential tax policy shifts will create a constantly changing environment. The renegotiation of the USMCA trade deal in 2026 will be especially important for automakers. Meanwhile, the EV market will enter a new phase. Incentives have expired, and many off-lease EVs will flow into the used market, which may reshape pricing and demand.

Artificial intelligence will continue to transform the industry. Companies are making investments in AI to improve efficiency. Early adopters will gain an advantage, but rising competition may also intensify pressure. The big question is whether AI spending will truly create value or pull resources away from critical traditional R&D.

Per Cox Automotive, new-vehicle sales are projected to fall to about 15.8 million units in 2026, down 2.4% from 2025.

So, while 2026 may not match the strength of 2025, the industry remains focused on strategic positioning, disciplined execution and preparation for the next major phase of transformation.

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

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