Bank of America reinstated coverage of the North American automotive sector, naming Ford, General Motors, and Tesla as top picks for 2026. Analyst Alexander Perry expects the industry to outperform as automakers benefit from regulatory shifts favoring higher-margin internal combustion engine vehicles amid changing demand.

Perry highlighted Ford and General Motors as preferred original equipment manufacturers, citing potential for upward estimate revisions as the industry pivots away from EVs. The analyst noted that recent focus on profitable gasoline-powered vehicles, particularly pickup trucks, could support margins in the near term.

Beyond individual stocks, Perry outlined several themes shaping the automotive sector in 2026. He expects stronger-than-consensus U.S. vehicle sales and North American production, supported by pent-up demand and an aging vehicle fleet averaging 12.8 years. The analyst also sees autonomous vehicles reaching a critical development stage.