The EV challenge: Ford and GM are running out of time to reinvent themselves in the wake of a Chinese expansion

The essential accoutrement for auto executives this year was a cap. As in, of the red baseball variety.

Tesla Inc.’s Elon Musk had one virtually glued to his head (for a little while anyway).His more measured counterparts in Detroit donned them virtually via flattery to President Donald Trump, even (especially?) when he was tormenting them.Most surprisingly, Toyota Motor Corp.’s Chairman Akio Toyoda ditched the protocol of neutrality to sport the real thing, along with a Trump-Vance t-shirt, at a Nascar event in Japan.The fortunes of the auto industry revolved largely around Trump this year.That applies especially to Detroit. After taking an initial salvo from the president’s haphazard trade war, General Motors Co.

and Ford Motor Co. rallied on his subsequent carve outs and war on fuel economy and electric vehicles.Both should beat the S&P 500 Index handily for the first time in four years.So Detroit enters 2026 on a roll.

Tariff headwinds have abated somewhat and US vehicle sales are expected to be stable. Washington’s swing back toward internal combustion engines also offers opportunities to raise margins.And yet, in relative terms, Ford and GM look as unloved as ever.Detroit’s safe space involves selling ever more big, tricked-out vehicles sporting engines without worrying about environmental penalties or interlopers.That is kind of where they are now, shielded by anti-green and pro-protectionist policy.

Can it last? Judging by Ford’s and GM’s single-digit earnings multiples, investors regard this happy state as finite—and with good reason.The most dangerous time for an incumbent is when their business is doing well, eclipsing signs of disruption gathering around them. In autos, that takes several forms.China’s