When General Motors (GM) and Ford report their earnings next week, they’ll face a common challenge: explaining to investors how they plan to grow profits when the demand for electric vehicles (EVs) slows down.
Over the past year, the demand for electric cars has slowed down globally. This, along with competition from Chinese automakers and high borrowing costs in the U.S., has made it difficult for GM and Ford to invest in new projects and keep costs down.
With China’s economy slowing down and inflation rising in the U.S., it’s hard for these companies to see a boost in overall growth. So, instead, they’re focusing on selling their gasoline-powered vehicles, which make up most of their profits.
GM is expected to do well because of the high demand for its Chevrolet and GMC brand pickup trucks and SUVs. This is good news for them because trucks and SUVs bring in a lot of profit for the company.
GM’s Chief Financial Officer, Paul Jacobson, said that the year started off well for them and they’re optimistic about the future. Ford’s CFO, John Lawler, also said that vehicle prices are holding up better than they expected.
These traditional U.S. automakers mostly sell large trucks and SUVs. They’ve faced challenges with the costs of making their vehicles electric and dealing with the ups and downs of electric vehicle demand.
Investors are now paying more attention to companies like GM, Stellantis, and Toyota, which rely less on electric vehicles. This shift has happened as the growth in electric vehicle sales has slowed down.
In North America, GM sells more gas-powered trucks than electric vehicles, which helps balance out the losses it’s facing in China. In the first quarter, GM’s U.S. vehicle sales went down a bit, but retail sales went up.
GM’s CEO, Mary Barra, hasn’t announced any specific plans yet for fixing the company’s struggling Cruise robotaxi unit. The unit has been losing money since GM bought it in 2016.
Ford is also doing well with its gas-powered truck business and its commercial vehicle operations. They expect to make between $10 billion to $12 billion in profit this year.
Recently, Ford decided to slow down two of its major electric vehicle programs. Lawler said they won’t invest in new electric vehicle projects unless they can make a profit from them.
