The US government is in preliminary talks with Ford Motor (F) and General Motors (GM) about the production of weapons and military equipment. The talks are in the early stages and no deals have been announced. But for investors in both stocks, it’s worth asking the question: Could a defense pivot add real value to these companies?
The answer depends on how seriously each company is leaning and whether its underlying businesses are already strong enough to carry the weight.
According to a report by The Wall Street JournalThe Trump administration approached the CEOs of Ford and GM, as well as executives at GE Aerospace (GE) and Oshkosh Corp. (OSK), to gauge their appetite for producing military supplies and munitions.
The talks reportedly began before the conflict with Iran and are linked to concerns that first arose when the United States and NATO began shipping weapons to Ukraine after the 2022 Russian invasion.
Defense officials want to understand where gaps exist in domestic production capacity and what companies could help fill them.
President Donald Trump’s proposed fiscal 2027 budget underscores how seriously the administration takes it. Defense spending would increase more than 44% under the proposal, bringing the total to $1.5 trillion, up from about $1 trillion this year.
Ford CEO Jim Farley has already connected the dots between the skilled labor shortage and national defense.
Farley previously warned that the mechanic shortage at Ford dealerships, with more than 6,000 service positions empty across the United States due to a lack of qualified technicians, is not just a business problem. He has even gone so far as to point out that tech giants like Alphabet’s (GOOG) Google (GOOGL) couldn’t build tanks and planes in a war scenario.
From a financial point of view, Ford is in a better situation than it was a few years ago. The company posted $6.8 billion in adjusted earnings before interest and taxes (EBIT) for the full year 2025, despite absorbing about $2 billion in costs related to tariffs and another $2 billion tied to disruptions at aluminum supplier Novelis.
Revenue grew for the fifth consecutive year to $187 billion, the company reported in its fourth-quarter 2025 earnings call.
Ford’s commercial vehicle business, Ford Pro, continues to excel. It generated more than $66 billion in revenue and $6.8 billion in EBIT with a double-digit margin in 2025. That business already serves government and fleet customers, making it a logical entry point for defense-adjacent work.
Of the 23 analysts covering F stock, five recommend “Strong Buy”, 15 recommend “Hold” and three recommend “Strong Sell”. The average price target for Ford shares is $13.49, up from the current price of $12.87.
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General Motors is also well positioned for this conversation, although its speech to the Pentagon would be different.
GM Chief Financial Officer Paul Jacobson spent much of the company’s recent presentation at Bank of America’s Global Automotive Summit discussing the power of its connected vehicle platform, OnStar.
The system now serves 12 million customers worldwide and is expected to reach 13 million subscribers by the end of the year with about $7.5 billion in deferred revenue on the balance sheet. That connected intelligence capability – the ability to track, manage and communicate with vehicles remotely – has obvious applications in logistics-heavy defense operations.
On the bottom line, GM has been generating $10 billion or more in free cash flow annually for four consecutive years. The company has between $10 billion and $12 billion in capital expenditures planned for 2026 and 2027 and a pension that is almost fully funded.
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Of the 28 analysts covering GM stock, 17 recommend “Strong Buy”, three recommend “Moderate Buy”, six recommend “Hold” and two recommend “Strong Sell”. The average price target for GM stock is $92.07, up from the current price of $81.32.
In short, both companies have the financial muscle to take on defense contracts without putting their core operations at risk if the terms are right.
The honest answer: not yet.
These are preliminary conversations. No contracts have been signed. And auto-to-defense conversions, even partial ones, require time and capital to execute.
What this does indicate, however, is that both Ford and GM are operating at a scale and level of stability that makes them credible partners for the federal government. This is a significant change from where these companies found themselves during the worst of the pandemic-era supply chain crisis.
For investors considering F and GM as long-term options, the defense angle is another potential tailwind, worth watching closely as the administration’s defense spending plans take shape.
On the date of publication, Aditya Raghunath had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
