BofA lists three top automaker picks for 2026

Investing.com -- Bank of America reinstated coverage of the North American automotive and auto-technology sector, naming General Motors, Ford and Tesla as its top automaker picks for 2026 as the industry adjusts to shifting regulations, changing vehicle demand and advances in autonomous driving.

Analyst Alexander Perry said the sector “will outperform expectations this year as automakers adjust to a new regulatory environment that favors their higher margin accretive internal combustion engine vehicles.”

Among original equipment manufacturers (OEMs), Perry highlighted Ford and General Motors as preferred names, citing “potential for upward estimate revisions given the shift away from EVs and emissions mandates that limited profitability over the past several years.”

The analyst said the recent pivot toward more profitable gasoline-powered vehicles, particularly pickup trucks, could support margins and earnings in the near term.

He also expects production priorities to increasingly focus on these models as automakers delay or cancel lower-margin EV programs.

“We expect EV sales to decline 20%+ in 2026 from the phase out of consumer incentives, while automakers’ cancellation of 40% of EV programs and extension of over 45% of ICE programs will pressure penetration over the next several years,” Perry wrote.

Tesla was also listed as a top pick, with Perry pointing to the company’s leadership position in consumer autonomy and its ability to scale robotaxi services more profitably than competitors.

Tesla’s technology advantage in autonomous driving remains a key differentiator. “Tesla’s point-to-point software is the most advanced solution for consumer vehicles,” Perry said, adding that competition in robotaxi services is intensifying as more companies reach late-stage development.

Beyond individual stocks, Perry outlined several themes likely to shape the automotive sector in 2026. The analyst expects stronger-than-consensus U.S. vehicle sales and North American production, supported by pent-up demand after several years of constrained supply and an aging vehicle fleet.

Miles driven in the U.S. are at record levels, while the average age of vehicles on the road has climbed to about 12.8 years, both factors that could drive a replacement cycle.

At the same time, autonomous vehicles are reaching a critical stage of development. Perry said the technology has crossed from the question of “can it work?” to “how fast can it scale,” suggesting self-driving systems and robotaxi platforms could become one of the defining features of the industry’s next phase.

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