A Little Good News for Ford and GM

Key Points

• Demand for EVs came pouring in with the end of the $7,500 tax credit looming.

• Ford posted its sixth consecutive month of sales gains in the U.S.

• General Motors has emerged as the No. 2 seller of EVs in the U.S.

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All eyes were on the automotive industry, and more specifically the electric vehicle (EV) sector, for August. That's because consumers who were on the fence about making an EV purchase within the next few months rushed ahead to buy before the $7,500 federal tax credit disappears at the end of September.

Once the tax credit disappears, the industry is expected to slow down for some time, so Ford Motor Company (NYSE: F) and General Motors (NYSE: GM) needed to deliver.

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Momentum continues

Ford had some momentum as August was the automaker's sixth consecutive month of sales gains in the U.S., driven by popular SUVs and a spike in EVs due to the pull-forward of demand before the tax credit's demise.

The automaker reported a 3.9% gain in sales during August to 190,206 vehicles, compared to the prior year. Although it was the sixth consecutive month of gains, August was a slowdown compared to the prior months. Through the first eight months of the year, Ford sold 1.5 million vehicles, 6.6% more than the previous year.

On the flip side, sales of Ford's EVs were almost the opposite: They spiked 19% during August to a total of 10,671, but year to date, the company's EV sales are down 5.7% to 57,888 vehicles.

August's spike was driven not only by the surge in demand from consumers beating the end of the tax credit, but also by the Mustang Mach-E's 35% sales gain and the F-150 Lightning's 21% gain, compared to the prior year.

Ford's F-150 Lightning. Image source: Ford Motor Company.

With U.S. EV sales likely to set an all-time monthly record once August data is complete, it set the stage for General Motors to also perform well -- and it did.

Duncan Aldred, GM's president for North America, said in a press release: "August was our best month ever for EV sales -- and we expect that buying surge to pay long-term dividends, given our industry-leading manufacturer loyalty, and EV customers' overwhelming commitment to the technology. I'm grateful to our team and our dealers for helping us outperform nearly every EV competitor."

General Motors sold more than 21,000 EVs combined from its Chevrolet, Cadillac, and GMC brands and remains the No. 2 seller in the U.S., thanks in big part to the Chevy Equinox EV, Cadillac Lyriq, and GMC Sierra EV.

What's next?

September is going to be another strong month for EV sales, but then the big looming question is: What happens after the tax credit disappears? There's likely to be a whipsaw effect where the industry sees an equally strong lull in demand during the fourth quarter, and it's likely to take several months to normalize.

The key to September, as well as the third quarter entirely, will be which competitors were able to move EVs without substantial discounts. But discounts are a part of the automotive industry, and expect automakers to dish them out to move as much product as possible before the tax credit expires, since no automaker wants to find itself with bloated inventory on Oct. 1.

Investors have to remember that while EVs represent a small percentage of sales for traditional automakers, it's a huge deal for their bottom line. Consider that Ford's Model-e division, responsible for its EVs, lost roughly $5 billion in 2024. The faster the automakers scale up this business segment and turn it profitable, the faster investors see upside in their earning power.

On the bright side, Ford and GM needed to deliver a strong month for EV sales, and it was just a little good news that they both executed.

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Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.