Ford and GM Face Challenges as EV Market Slows and Cyber Issues Persist

Ford, GM Face Profit Decline As EV Sales Slow And Cyber Outages Persist - Ford Motor (NYSE:F), General Motors (NYSE:GM)

GM and Ford expected to report lower Q2 profits.Cyberattack on CDK disrupts dealership sales operations. Ford Motor Co. F and General Motors Co GM are expected to report lower profits for the second quarter due to challenges in their electric vehicle (EV) strategies. Ford is anticipated to see a 10% decrease in profits while GM's net income is projected to drop by 7.7%. Approximately 15,000 car dealerships throughout the U.S. that use CDK Global, a private software company, had their services disrupted in June. The software is integral to managing deal records, scheduling services and storing critical customer information. The summer season is among the busiest times for car dealers and continued outages cut into dealers' profits. This incident could result in a collective loss of approximately $1 billion for dealerships, reported Reuters. GM CEO Mary Barra noted that the EV industry is seeing a slowdown, hindering the ability to reach production volumes necessary for cost reduction and profitability. "It can't be expected that established vehicle manufacturers, who need to make similar investments that a start-up would in vehicle design and manufacturing facilities, could turn a profit immediately," said Sam Fiorani, vice president at AutoForecast Solutions. Also Read: GM's Cruise Attempts To Build Better Relations With Emergency Responders After Its AV's Involvement In An Accident Last Year Legacy automakers like GM and Ford are grappling with intense competition from Chinese EV makers and Tesla Inc. TSLA, leading to a global price war. Tesla had 3,907 Cybertrucks registered in May as compared to Ford's F-150 Lightning which had 2,353 registrations. GM has backed off its goal of producing one million EVs in North America by 2025. The company plans to slash this year's production of EVs by 50,000 units to a range from 200,000 to 250,000 vehicles. Ford is delaying the launch of all-new three-row EVs at the assembly complex in Canada to 2027 from 2025. Both companies reported slower sales growth for the quarter earlier this month. Even, Tesla backed off on plans to build an electric car factory in Mexico. Analysts at Evercore ISI remain optimistic about GM over Ford. They expect GM to guide towards the upper end of its full-year forecast. Price Action: GM shares are trading higher by 0.33% at $48.46 in premarket at last check Monday. Read Next: LG Energy, GM Adjust US Plant Plans Due To Waning EV Market Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

LG Energy, GM Adjust US Plant Plans Due To Waning EV Market - Ford Motor (NYSE:F), BMW (OTC:BMWYY)

LG Energy slows Michigan plant construction.Concerns over U.S. political changes impact investments. LG Energy Solution Ltd., a South Korean battery manufacturer, is slowing down the construction of its third plant with General Motors Co. GM in Michigan due to weak demand for electric vehicles and concerns over potential political shifts in the U.S. LG Energy said it is "adjusting the speed of overall investment" and exploring "flexible operation" options for its facilities, according to a message sent to Bloomberg News. LG Energy and GM commenced the project in 2022 with an investment of approximately $2.6 billion, targeting the first half of next year for operational commencement. Also Read: GM's Cruise Attempts To Build Better Relations With Emergency Responders After Its AV's Involvement In An Accident Last Year Additionally, Korean firms are apprehensive about the U.S. presidential election, having invested significantly in North America following President Joe Biden's clean energy initiative, which promotes domestic EV production and reduces dependence on Chinese suppliers. Former President Donald Trump has pledged to dismantle the Inflation Reduction Act and reverse Biden's pro-EV measures if he returns to office. At last week's Republican National Convention, Trump promised to "end the electric vehicle mandate on day one." The Biden administration set a goal for 50% of all new vehicles sold to be electric by 2030. Earlier this month, LG CEO Kim Dong Myung emphasized the need to adjust investment speeds and urged employees to seek ways to enhance investment flexibility and efficiency. Meanwhile, GM is also revising its expectations for its EV program. CEO Mary Barra recently stated that the company would not meet its goal of producing one million EVs by the end of next year. Samsung SDI Co., another major Korean battery maker and supplier for BMW AG BMWYY and Stellantis NV STLA, has highlighted the slowdown as "a new crisis." The company has two planned plants with Stellantis in Indiana and another with GM in the same state. Similarly, SK On Co., a supplier for Ford Motor Co. F and Hyundai Motor Co HYMTF, has declared an emergency after reporting significant losses in Q1. Parent company SK Innovation Co. is evaluating options to enhance SK On's competitiveness, including potential restructuring. SK On has two operational plants in Georgia, with another planned in collaboration with Hyundai. The company also intended to establish three additional plants with Ford -- two in Kentucky and one in Tennessee -- financed through Biden's administration funds. However, the start of a second Kentucky facility has been postponed due to slowing EV sales. A June report from the Korea Institute for Industrial Economics & Trade indicated that Korean battery manufacturers might consider scaling back their U.S. investment plans if the IRA is altered following the US presidential election. Read Next: Tesla Sees 24% Drop In California Registrations As EV Competition Heats Up Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs