Undervalued Gas Truck Suppliers in the EV Era: Why Traditional Players Are Still Winning

The electric vehicle (EV) revolution has captured headlines, but the demand for gas-powered trucks remains resilient—and investors are overlooking a golden opportunity. While automakers like Tesla and Rivian grab attention, traditional players in the gas truck ecosystem are thriving, driven by surging demand for combustion-engine vehicles and undervalued suppliers of critical components. Here's why investors should pay attention.

The Gas Truck Market's Unyielding Demand

Despite the push toward electrification, gas-powered trucks dominate key segments. In Q2 2025, full-size truck sales rose 8.1% industry-wide, fueled by strong performances from Ford's F-Series (+11.5%) and GM's Silverado/Sierra (+8.2%). Even as electric trucks like the Silverado EV gain traction, gas models remain the backbone of commercial and consumer fleets. For instance, Ford's F-150 Lightning EV sales dipped 26.1% in Q2, but gas and diesel variants drove overall F-Series growth to 222,459 units—the best second quarter since 2019. This underscores a simple truth: gas trucks are still the workhorses of the automotive industry, and their suppliers are benefiting.

Supply Chain Strains and Supplier Resilience

The path to profitability isn't without hurdles. A notable challenge is General Motors' recall of 721,000 gas-powered trucks and SUVs due to engine defects. While this highlighted vulnerabilities in supply chains, it also created opportunities for suppliers capable of addressing quality issues and meeting rising demand. For example:
- Cooper-Standard Holdings (CPS), a supplier of sealing and fluid transfer systems, returned to profitability in Q1 2025 with net income of $1.6M after a $31.7M loss in 2024. Its stock surged 61.36% year-to-date, outpacing broader market gains.
- Garrett Motion (GTX), which manufactures turbochargers, saw net sales hit $878M in Q1 2025, with a 7.1% net margin. Its stock rose 21.04% YTD, reflecting its dual focus on traditional ICE (internal combustion engine) tech and EV diversification.

Key Undervalued Suppliers to Watch

1. Motorcar Parts of America (MPAA)
2. What It Does: Supplies remanufactured alternators, starters, and wheel bearings.

3. Why It's Undervalued: Despite a 25% YTD stock gain, MPAA's consensus price target suggests a 47% upside. Q3 2025 results showed a 49.4% jump in gross profit to $44.9M (24.1% margin), with net debt reduced by 26%. Its focus on high-margin aftermarket parts aligns with the aging U.S. vehicle fleet (average age: 12.6 years), which drives repair demand.

4. China Yuchai International (CYD)

5. What It Does: Engine manufacturer for trucks and commercial vehicles.

6. Why It's Undervalued: CYD's stock soared 74% YTD as its 2024 revenue hit $19.1B RMB (up 6% YoY). Its gross profit rose 12% to $2.8B RMB, benefiting from strong demand in China's commercial vehicle market.

7. Dana Inc (DAN)

8. What It Does: Axles, driveshafts, and drivetrain systems.
9. Why It's Undervalued: DAN's Q1 2025 net income of $25M beat expectations, with a 27% YTD stock gain. Its $2.4B in sales and recognition for innovation (e.g., a PACE Award) signal undervaluation relative to its role in truck drivetrains.

Risks and Investment Strategy

• Regulatory Uncertainty: New emissions standards (e.g., EPA2027) could pressure suppliers.
• EV Competition: Long-term EV adoption could erode demand, though gas trucks will dominate for years.
• Supply Chain Volatility: Semiconductors and rare earth metals remain bottlenecks.

Investment Advice:
- Buy now: Companies like CPS, GTX, and MPAA are trading below their growth trajectories.
- Focus on durability: Suppliers with margin expansion (e.g., Cooper-Standard's 11.6% gross margin) and debt reduction (MPAA's 26% net debt cut) offer stability.
- Avoid overvaluation traps: Steer clear of EV-only suppliers with speculative valuations; traditional players are cheaper and cash-flow positive.

Conclusion

The EV transition is real, but gas trucks—and their suppliers—will remain critical for years. Investors who overlook this reality risk missing out on undervalued gems like Cooper-Standard, Garrett Motion, and Motorcar Parts of America. These companies are not just surviving the shift to electrification; they're thriving by addressing core demand for reliable, cost-effective vehicles. In a market fixated on the future, the present is still very much fueled by gas.