A surge of 90% in one year, the aluminum "black hole" hits the US auto industry, Ford becomes the biggest victim!

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The American automotive industry is currently facing a supply crisis triggered by a soaring aluminum price; multiple factors are eroding carmakers’ profits, shrinking dealer inventories, and threatening this summer’s peak sales season.

According to the Wall Street Journal on Sunday local time, sources revealed that Ford Motor Company has applied to the Trump administration for an exemption from the 50% import tariff on aluminum, but has not yet received a response. Meanwhile, Ford has raised its expected commodity costs for this year from $1 billion to $2 billion, mainly due to the continued climb in aluminum prices. Rivian CEO RJ Scaringe also said during last week’s earnings call, “Metal costs, particularly the cost of aluminum, have become a major focus for us.”

The sharp rise in aluminum prices stems from several concurrent shocks: the U.S.-Iran war has cut off aluminum exports from the Persian Gulf region, which accounts for about one-fifth of U.S. aluminum consumption; the U.S. government has imposed a 50% tariff on imported aluminum; and a series of fires at Ford’s main aluminum supplier's plants last fall disrupted production. According to S&P Global Energy data, the current U.S. spot aluminum price is about $6,100 per ton, compared to just $3,220 a year ago, nearly a 90% increase.

The aluminum market is experiencing its biggest supply gap in more than twenty-five years. According to an earlier article by Wallstreetcn, JPMorgan has warned that the global aluminum market has entered what it calls a supply "black hole". Even if Middle East conflicts were to end immediately, it would not stop this deep and lasting shortage—aluminum prices may exceed $4,000 per ton.

Ford Hit the Hardest, F-150 Inventory Shortage

Ford is the most affected company in this aluminum crisis.

In 2014, Ford switched the body material of its best-selling U.S. model, the F-150, from steel to aluminum, making it the largest aluminum buyer in the auto industry. Ten years later, this strategic decision is now a heavy burden.

Ford’s main aluminum supplier, Atlanta-based Novelis, suffered several fires at its Oswego, New York plant last fall, leading to shutdowns, directly cutting Ford’s adjusted profits by $2 billion last year.

According to Motor Intelligence, Ford’s F-series truck sales reached about 160,000 in the first quarter of this year, down from 190,000 in the same period last year. Ford says it plans to boost truck production by another 150,000 this year—on top of already reduced 2025 levels—to make up for the supply gap.

Ford COO Kumar Galhotra told industry analysts last week, “If any hiccups occur, we have contingency plans and extra aluminum supplies to make sure factory production isn’t disrupted.” Ford says the aluminum rolling line at the Oswego plant is expected to restart this month, but Novelis had previously set a late June target, and even if production resumes, it will be gradual, making it difficult to quickly replenish inventory in the short term.

Dealer Inventory Under Pressure, Uncertainty for Summer Peak Season

The effects of the aluminum shortage have spread to end sales. Texas Ford dealer Sam Pack, who owns four stores in the Dallas-Fort Worth area, says the F-150 and Super Duty trucks are the “cornerstone” of his business. Currently, he only has about 42 days’ F-150 inventory in stock, below the typical 60-day level.

“We wish we had more inventory,” Pack said. He is worried about not having enough stock to meet the busy summer sales season: “The next 90 days will be truly crucial.”

The report says Ford has recently applied to the Trump administration for an exemption from the 50% aluminum import tariff, hoping to maintain full production at the Oswego plant, but so far officials have not yielded.

Last year, North America’s auto industry consumed 3.7 million tons of aluminum, nearly 30% higher than in 2020. According to metal market consultancy CRU, aluminum has become a key material for automakers to improve fuel economy and overall vehicle efficiency. However, the 50% tariff means that regardless of source, automakers and other buyers must bear this additional cost.

Return to Steel? The Industry Is Divided

High aluminum prices have sparked discussion over whether carmakers will revert to using steel.

Cleveland-Cliffs, the largest U.S. automotive steel supplier, CEO Lourenco Goncalves said in April, “I’ve never seen momentum for replacing steel with aluminum so strong.”

However, many industry insiders are skeptical of a large-scale shift back to steel. Steel Dynamics CEO Mark Millett said, “I don’t think that’s going to happen.” He noted that converting aluminum component production equipment to steel component production is very expensive and time-consuming. Steel Dynamics also supplies aluminum to the auto industry.

Sam Fiorani, vice president at consulting firm AutoForecast Solutions, holds a similar view, especially for Ford: “Their entire vehicle is designed around aluminum. Changing the body structure would be extremely difficult.” He also pointed out, “Ford’s exposure to aluminum costs is far greater than any other car manufacturer.”

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