Tuesday, May 28, 2024
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As EV growth slows, GM and Ford rely on gas-powered trucks.

When US automakers General Motors and Ford reveal their first-quarter earnings next week, they will both have to contend with the difficulty of explaining to investors where profit growth will originate from in the coming months as electric vehicle (EV) growth slows.

Over the past 12 months, US automakers have been compelled to postpone investments and reduce expenses due to the slowdown in global demand for electric vehicles, growing competition from Chinese automakers, and high financing rates. An acceleration of macroeconomic development appears unlikely given the slowing Chinese economy and the high level of US inflation.

Due of this, automakers such as General Motors and Ford are concentrating on selling their primary gasoline-powered cars, which account for the majority of their profits. The results from GM and Ford are expected to be released on Tuesday and Wednesday, respectively.

Strong demand for the automaker’s very profitable pickup trucks and SUVs under the Chevrolet and GMC brands will help GM CEO Mary Barra. Barclays increased its target price for GM shares by 10% to $55 earlier this month, citing strong sales of the company’s truck and SUV lines.

While Ford Chief Financial Officer John Lawler reiterated the company’s forecast for full-year profit, GM Chief Financial Officer Paul Jacobson stated that the year was off to a strong start and that the company felt optimistic about the direction that demand was moving.

History U.S. manufacturers have been hindered by increased costs associated with electrifying their vehicle portfolios and erratic demand for battery-electric vehicles, as they mainly rely on sales of heavy trucks and SUVs.

In a research note, Chris McNally, an analyst at Evercore ISI, stated that as the rise in EV sales slows, the momentum has switched for the prior victors, like Tesla. He continued, “Investors are now more focused on companies like GM, Stellantis, Toyota, and others that depend less on EVs.”

GM’s high proportion of EVs to gas-burning trucks in its North American sales mix will somewhat offset the automaker’s anticipated loss from its operations in China. GM reported that while retail sales increased 6%, US car sales fell 1.5% in the first quarter due to fewer deliveries to business customers.

Barra has not yet provided any ideas for reorganizing GM’s operations in China. GM reported delivering 2.1 million cars to China last year, nearly half as many as it did for the 4.04 million it sold there in 2017.

On April 9, Cruise said that it will reintroduce human drivers to some of its vehicles in Phoenix, Arizona.

When the Detroit carmaker announced that extra money will be distributed to stockholders in January, its stock price spiked.

Ford derives its power from its commercial vehicle operations, specifically Ford Pro, and its combustion truck division. The carmaker reiterated its prediction of a core profit of $10 billion to $12 billion for this year.

The carmaker announced earlier this month that it would halt two significant programs for electric vehicles. At an investor presentation, CFO Lawler stated that EV investments won’t proceed until they can “stand on their own” and turn a profit.



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