Bank of America recommends three major auto stocks for 2026 after regulatory policy shifts

Investing.com – U.S. banks have resumed coverage of the North American automotive and automotive technology sectors, emphasizing that as automakers adapt to a regulatory environment favorable to high-margin internal combustion engine vehicles, investment opportunities will emerge.

The bank expects the automotive industry to outperform expectations this year, with consumer acceptance of autonomous vehicles and driverless taxis accelerating.

Analysts believe investors will increasingly focus on alternative profit sources for automakers, including humanoid robots and energy generation. These, along with autonomous vehicles, could define the new era of Automotive 2.0 and mobility.

Against this backdrop, U.S. banks have selected three automakers as their top OEM stocks.

Ford Motor

U.S. banks have reaffirmed a buy rating for Ford Motor, with a target price of $17, based on a 3.8x enterprise value to adjusted 2027 EBITDA estimate.

The bank believes Ford is well-positioned to capitalize on significant regulatory shifts, allowing it to focus on the most profitable trucks and SUVs. Ford increased its U.S. market share by 50 basis points in 2025, reaching 13.2%, ranking third overall.

The company ranks second in the pickup truck segment with over 30% share, with its F-Series being the best-selling vehicle in the U.S. U.S. banks expect Ford’s retail business to benefit from stronger-than-expected U.S. demand, with multiple drivers boosting Ford Blue’s EBITDA by $1.2 billion.

The electric vehicle division, Model E, is projected to incur a $4.3 billion loss in 2026, but this is an improvement of $500 million compared to 2025.

Recent news includes Piper Sandler reaffirming an overweight rating for Ford, highlighting progress in software and services. Ford also announced recalls of nearly 4.4 million vehicles due to software issues that could cause trailer lighting and brake system failures.

General Motors

U.S. banks have reaffirmed a buy rating for General Motors, with a target price of $105, based on a 3.5x enterprise value to 2027 EBITDA. The bank sees GM as a key beneficiary of recent regulatory changes, which enable shifting its product mix toward higher-margin trucks and SUVs.

GM is the leading automaker in the U.S. market, with a retail share of 17.1%, up 110 basis points over the past three years. The company holds three of the top ten models in the U.S., including Chevrolet Silverado, GMC Sierra, and Chevrolet Equinox.

U.S. banks expect some capacity constraints in 2026 due to factory shutdowns related to new truck launches, but anticipate growth in 2027, with an estimated additional capacity of 300,000 units.

GM reported an adjusted Q4 2025 EPS of $2.51, beating analyst estimates. Following the report, Benchmark raised its target price, citing stronger-than-expected execution.

Tesla

U.S. banks have reaffirmed a buy rating for Tesla, with a target price of $460, considering it the current leader in consumer autonomous driving. The bank expects Tesla to quickly become a leader in autonomous taxi services, as its expansion is more profitable than competitors’.

Tesla’s autonomous taxis are already operating in San Francisco and Austin, with plans to enter seven more markets in the first half of 2026. U.S. banks estimate that autonomous taxi operations account for about 52% of Tesla’s valuation.

The bank views Tesla’s full self-driving software as the leading consumer autonomous driving solution, with 1.1 million FSD subscriptions, representing about 12% of its current fleet.

Analysts also see growth potential in Optimus humanoid robots and energy businesses, with valuations exceeding $30 billion and $90 billion respectively.

Tesla’s February sales results in Europe were mixed, with a 45.2% decline in the UK year-over-year. However, the company’s market share increased in France and Norway during the same month.

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