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Tesla or General Motors: Which Stock is Better Positioned Now?
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Key Takeaways
General Motors appears better positioned now, with improving margins, software growth and capital returns.
GM sees North America EBIT margins at 8-10% in 2026, up from 6.8% in 2025 on lower costs and mix.
TSLA is ramping up robotaxis and robotics, but the strategy is capital-heavy and its 2026 EPS view is down.
Tesla (TSLA - Free Report) and General Motors (GM - Free Report) are two dominant players in the U.S. auto space. While Tesla remains the largest electric vehicle (EV) seller, General Motors leads in overall vehicle sales volume in the country.
However, the landscape is shifting. Under the Trump administration’s less supportive stance on EVs—particularly the rollback of federal EV tax incentives—electric vehicle demand has slowed. General Motors, which had initially committed billions toward EV expansion, is now scaling back investments in response to cooling demand.
Tesla, on the other hand, is facing its own set of challenges. Beyond policy headwinds, intensifying competition from Chinese automakers and an aging model lineup are weighing on its sales momentum.
In response, Tesla’s CEO Elon Musk is pivoting toward robotics, autonomous driving and artificial intelligence as the company’s next growth engines. Meanwhile, General Motors is refocusing on internal combustion engine (ICE) vehicles and hybrids, while also building momentum in software and services.
Year to date, GM shares have declined around 10%, while Tesla stock is down roughly 18%. As both companies recalibrate their strategies amid a changing auto landscape, the key question remains: which stock is better positioned now?
Image Source: Zacks Investment Research
The Case for Tesla
Tesla’s near-term fundamentals are under pressure. Deliveries declined for the second consecutive year in 2025, with the slowdown accelerating, down just 1% in 2024 but falling more than 8% in 2025. That raises valid concerns around weakening demand, intensifying competition, and eroding pricing power. The decision to phase out the Model S and Model X by the second quarter of 2026 further underscores a broader reset of its legacy lineup.
But focusing only on autos misses the bigger picture.
Tesla’s energy generation and storage business is emerging as a powerful growth engine. The segment delivered record deployments of 14.2 GWh in the fourth quarter and 46.7 GWh for the full year, marking a robust 49% year-over-year increase. Momentum here looks sustainable, supported by the rollout of Megapack 3 and the new Megablock solution. Visibility is also improving, with the company expecting to recognize nearly $5 billion in deferred revenues from energy projects this year—more than double 2025 levels. Its $4.3 billion LFP cell deal with LG Energy further strengthens domestic supply and positions Tesla to scale storage deployments meaningfully from 2027 onward.
Still, the real investment thesis lies beyond both EVs and energy.
Tesla is doubling down—aggressively—on artificial intelligence, autonomy, and robotics. Planned capital expenditures are set to exceed $20 billion in 2026, a massive step-up aimed at building out a future ecosystem spanning robotaxis, AI infrastructure, and the Optimus humanoid robot. Robotaxi expansion into multiple U.S. cities is already underway, with management envisioning rapid scaling—though execution timelines remain uncertain.
That’s the trade-off. Tesla’s next chapter could be transformational, but it is capital-intensive, high-risk, and likely years away from delivering material financial returns.
The Zacks Consensus Estimate for Tesla’s 2026 EPS has declined in the past 60 days.
Image Source: Zacks Investment Research
The Case for General Motors
Last year, General Motors captured its highest U.S. market share in a decade—around 17%—a sign that its core vehicle portfolio remains competitive even in a shifting demand environment.
Profitability is also moving in the right direction. GM expects North America EBIT margins to expand to 8-10% this year, up from 6.8% in 2025. The drivers are straightforward but powerful: lower costs, a richer product mix, and the absence of one-off headwinds that dragged down prior results. In a cyclical industry, that kind of margin recovery matters.
Beyond vehicles, GM’s software and services business is becoming a meaningful differentiator. Platforms like OnStar and Super Cruise are gaining traction, with subscription levels hitting record highs in 2025. Deferred revenues from these offerings are projected to reach $7.5 billion by the end of 2026—up nearly 40% year over year. This growing base of recurring, high-margin revenues could structurally improve GM’s earnings profile over time.
Internationally, the turnaround in China is gaining traction. Management’s restructuring efforts—rightsizing operations, optimizing dealer networks, and cutting costs—are starting to show tangible results, reducing a long-standing drag on profitability.
Of course, near-term headwinds persist. EV-related charges of $7.6 billion in 2025 reflect slower-than-expected demand and shifting policy support, with some continued impact expected in 2026. Tariffs also remain a pressure point, with projected costs of $3-4 billion this year.
But these challenges look manageable—especially when stacked against GM’s strong cash flow and capital allocation discipline. The company returned significant capital in 2025 and is doubling down with a new $6 billion buyback and a 20% dividend hike.
Put simply, GM offers a story of steady execution, improving margins, and shareholder-friendly capital returns.
The Zacks Consensus Estimate for General Motors’ 2026 EPS has risen in the past 60 days.
Image Source: Zacks Investment Research
Our Take: GM Appears Better Placed
Both Tesla and General Motors carry a Zacks Rank #3 (Hold). However, GM appears better positioned. The company is delivering tangible improvements in margins, scaling a high-margin software business, and returning meaningful capital to shareholders—all backed by rising earnings estimates. Tesla’s long-term vision remains compelling, but its payoff is uncertain and capital-intensive. Until clearer monetization emerges, General Motors’ execution, visibility, and cash flow strength make it the more attractive today.
View the Zacks #1 Rank List
Image: Bigstock
Tesla or General Motors: Which Stock is Better Positioned Now?
Key Takeaways
Tesla (TSLA - Free Report) and General Motors (GM - Free Report) are two dominant players in the U.S. auto space. While Tesla remains the largest electric vehicle (EV) seller, General Motors leads in overall vehicle sales volume in the country.
However, the landscape is shifting. Under the Trump administration’s less supportive stance on EVs—particularly the rollback of federal EV tax incentives—electric vehicle demand has slowed. General Motors, which had initially committed billions toward EV expansion, is now scaling back investments in response to cooling demand.
Tesla, on the other hand, is facing its own set of challenges. Beyond policy headwinds, intensifying competition from Chinese automakers and an aging model lineup are weighing on its sales momentum.
In response, Tesla’s CEO Elon Musk is pivoting toward robotics, autonomous driving and artificial intelligence as the company’s next growth engines. Meanwhile, General Motors is refocusing on internal combustion engine (ICE) vehicles and hybrids, while also building momentum in software and services.
Year to date, GM shares have declined around 10%, while Tesla stock is down roughly 18%. As both companies recalibrate their strategies amid a changing auto landscape, the key question remains: which stock is better positioned now?
The Case for Tesla
Tesla’s near-term fundamentals are under pressure. Deliveries declined for the second consecutive year in 2025, with the slowdown accelerating, down just 1% in 2024 but falling more than 8% in 2025. That raises valid concerns around weakening demand, intensifying competition, and eroding pricing power. The decision to phase out the Model S and Model X by the second quarter of 2026 further underscores a broader reset of its legacy lineup.
But focusing only on autos misses the bigger picture.
Tesla’s energy generation and storage business is emerging as a powerful growth engine. The segment delivered record deployments of 14.2 GWh in the fourth quarter and 46.7 GWh for the full year, marking a robust 49% year-over-year increase. Momentum here looks sustainable, supported by the rollout of Megapack 3 and the new Megablock solution. Visibility is also improving, with the company expecting to recognize nearly $5 billion in deferred revenues from energy projects this year—more than double 2025 levels. Its $4.3 billion LFP cell deal with LG Energy further strengthens domestic supply and positions Tesla to scale storage deployments meaningfully from 2027 onward.
Still, the real investment thesis lies beyond both EVs and energy.
Tesla is doubling down—aggressively—on artificial intelligence, autonomy, and robotics. Planned capital expenditures are set to exceed $20 billion in 2026, a massive step-up aimed at building out a future ecosystem spanning robotaxis, AI infrastructure, and the Optimus humanoid robot. Robotaxi expansion into multiple U.S. cities is already underway, with management envisioning rapid scaling—though execution timelines remain uncertain.
That’s the trade-off. Tesla’s next chapter could be transformational, but it is capital-intensive, high-risk, and likely years away from delivering material financial returns.
The Zacks Consensus Estimate for Tesla’s 2026 EPS has declined in the past 60 days.
The Case for General Motors
Last year, General Motors captured its highest U.S. market share in a decade—around 17%—a sign that its core vehicle portfolio remains competitive even in a shifting demand environment.
Profitability is also moving in the right direction. GM expects North America EBIT margins to expand to 8-10% this year, up from 6.8% in 2025. The drivers are straightforward but powerful: lower costs, a richer product mix, and the absence of one-off headwinds that dragged down prior results. In a cyclical industry, that kind of margin recovery matters.
Beyond vehicles, GM’s software and services business is becoming a meaningful differentiator. Platforms like OnStar and Super Cruise are gaining traction, with subscription levels hitting record highs in 2025. Deferred revenues from these offerings are projected to reach $7.5 billion by the end of 2026—up nearly 40% year over year. This growing base of recurring, high-margin revenues could structurally improve GM’s earnings profile over time.
Internationally, the turnaround in China is gaining traction. Management’s restructuring efforts—rightsizing operations, optimizing dealer networks, and cutting costs—are starting to show tangible results, reducing a long-standing drag on profitability.
Of course, near-term headwinds persist. EV-related charges of $7.6 billion in 2025 reflect slower-than-expected demand and shifting policy support, with some continued impact expected in 2026. Tariffs also remain a pressure point, with projected costs of $3-4 billion this year.
But these challenges look manageable—especially when stacked against GM’s strong cash flow and capital allocation discipline. The company returned significant capital in 2025 and is doubling down with a new $6 billion buyback and a 20% dividend hike.
Put simply, GM offers a story of steady execution, improving margins, and shareholder-friendly capital returns.
The Zacks Consensus Estimate for General Motors’ 2026 EPS has risen in the past 60 days.
Our Take: GM Appears Better Placed
Both Tesla and General Motors carry a Zacks Rank #3 (Hold). However, GM appears better positioned. The company is delivering tangible improvements in margins, scaling a high-margin software business, and returning meaningful capital to shareholders—all backed by rising earnings estimates. Tesla’s long-term vision remains compelling, but its payoff is uncertain and capital-intensive. Until clearer monetization emerges, General Motors’ execution, visibility, and cash flow strength make it the more attractive today.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here