Ford Motor and General Motors don't want to be just car companies -- for good reason.
Ford is now competing in a race to build the Army's new tactical truck, joining General Motors and others, The Wall Street Journal reported Monday.
Ford stock was up 0.9% in midday trading, while the S&P 500 was down 0.3%. The truck news wasn't the only thing helping. Jefferies upgraded Ford stock to Buy from Hold.
The news is just the latest example of Ford and GM trying to morph beyond cars. Ford recently announced the formation of an energy storage business that will use lithium-ion battery capacity to make utility-scale power solutions. Tesla is a pioneer in that area. GM is doing similar things.
GM is also branching out into defense, bidding on the truck and recently signing a deal with Lockheed Martin to leverage GM's high-volume manufacturing expertise in the lower-volume defense sector.
GM Defense was a compelling growth opportunity for the company, said CEO Mary Barra on GM's July second-quarter earnings conference call.
"The Chevrolet Colorado-based Infantry Squad Vehicle is case in point. After initial multiyear order of about 1,200 ISVs, the US Army now plans to procure more than 10,000, if the appropriations is passed," Barra said.
That's the use case Ford is bidding on, too.
"We are excited to start work on this Army contract," the company said. "Ford's off-the-shelf solutions can deliver unmatched capacity and scale, cutting-edge technologies, and the rugged capabilities that can offer game-changing value and performance and meet the needs of governments and the military in a highly cost-effective way."
To be sure, the U.S. government wants more, lower-cost commercial solutions, instead of purpose-built vehicles that can cost hundreds of thousands of dollars each.
For the car companies, the goal is to generate more growth, which has been a challenge for a generation. Ford generated about $6.5 billion in 2015 operating profit, similar to the amount generated in 2025.
Lower-than-market earnings growth is why Ford and GM trade for single-digit price-to-earnings ratios, while the S&P 500 fetches 20 times earnings expected over the coming 12 months.
The power business can boost Ford's operating profit by roughly $500 million by the end of the decade, according to Wall Street. Investors should probably think of the defense opportunity in the same light.
General Dynamics' Combat Systems business, which makes the Abrams tank, generates roughly $10 billion in annual revenue and more than $1 billion in operating profit. GM and Ford generate more than $360 billion in combined annual sales, and are expected to generate about $24 billion in combined operating profit. (GM has the edge in expected profits with about $14 billion forecast.)
The potential for Ford and GM defense operating profit is likely measured in the hundreds of millions of dollars, if both auto makers are successful in selling more into the defense arena.
It isn't enough to completely reshape the businesses, but a few hundred million certainly isn't a bad thing.
Investors will have a chance to hear about the opportunity when Ford reports second-quarter numbers later this week.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 27, 2026 14:48 ET (18:48 GMT)
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