FARMINGTON HILLS, Michigan — Bank of America's annual "Car Wars" report forecasts a "rough ride" for the U.S. industry in the next couple of years because of low model replacement rates and struggling electric vehicle growth.

The annual study led by analyst John Murphy predicts automaker performance in the U.S. market by looking at product launches over the next few years with the premise that automakers with higher showroom replacement rates will perform better. The report predicts those rates in the next couple of years will be historically low ahead of major truck launches from the Detroit Three later this decade, and because of cutbacks in electric vehicle products from low demand.

"What's wild this year is that we expect 159 models to be launched over the next four years," Murphy said before the Automotive Press Association. "Last year, it was over 200. Traditionally, it's over 200" over a four-year stretch.

He added: "This year, at 159, is a dramatic decline from above 200 last year. We have never seen this kind of change before."

Murphy noted there are 29 new model launches this year, the lowest in decades. He attributed the declines to a pullback in EV investment. Adoption of vehicles with all-electric powertrains has failed to meet industry expectations, with them comprising about 8% of annual U.S. sales. Limited access to charging stations, higher prices of EVs compared to gas-powered alternatives, range anxiety and more have limited adoption.

Car Wars is predicting 71 EV nameplates being offered over the next four years. That's about half of what the forecast had expected two years ago.

"There are a lot of tough decisions that are going to be made," Murphy said. "Based on the study, I think we're going to see multi-million dollar write-downs that are flooding the headlines for the next few years."

Ford Motor Co. last year wrote off nearly $2 billion when it canceled plans for a three-row all-electric SUV, saying it wasn't going to be profitable within the first year.

Murphy underscored that automakers will best serve their shareholders by emphasizing their core business — which is gas- and diesel-powered SUVs and trucks — and leveraging connectivity to get customers returning to smaller, strengthened dealer franchises. From those revenues, then, it can invest in future technologies like EVs, autonomy and other software applications and brave threats like tariffs and Chinese competition.

"I do think, as we look at this, although we've said lower product intros, that these core products that generate a lot of profit for the companies, including the D3, will likely create a pretty profitable next few years for the industry," Murphy said. "So although it looks a bit scary at the moment, I do think we're looking at a pretty good upside to earnings, and potentially stocks over the coming years."

Traditionally, replacement rates average about 15% in the industry. Car Wars predicts rates at about 11% in 2026 and 2027.

"It's gonna be a little bit of a rough ride for these two years," Murphy said.

The report predicts the Detroit Three's replacement rate from model year 2026 to 2029 will fall around the industry average of 16%, indicating a likely stagnant market share. Ford's was at 16.1%, General Motors Co.'s was 15.7% and Chrysler parent Stellantis NV's was at 15.4%.

Ford Motor Co. spokesperson Mike Levine emphasized the Dearborn automaker has new product in the marketplace today, including the full-size Ford Expedition and Lincoln Navigator SUVs that recently went on sale.

"Ford is committed to offering our customers vehicles that they love and can’t live without," he said in a statement. "We are investing in all-new ICE, hybrid and electric vehicles to provide customers with freedom of choice to find the best vehicle to meet their needs."

Representatives for GM and Stellantis declined to remark on the report.

On the upper end of replacement rate, meanwhile, is Tesla Inc. It has a 22.4% replacement rate, indicating the Texas EV maker could grow its market share in the coming years. But the rate is also a bit "dubious," Murphy declared, noting Tesla has postponed launches and favors more frequent updates to its vehicles versus total redesigns.

"That's questionable whether that all will happen," Murphy said, "given their track record of not really introducing new-generation models."

On the lower end is Nissan Motor Co. Ltd. with a 12.3% replacement, indicating it could lose market share. The automaker is under financial stress, has cut jobs and is losing market share in the United States with aging product.

"Nissan remains a mess," Murphy said. "It's just unclear what their commitment is, in their current form, to the U.S. market."

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