Without focusing on electric vehicles, General Motors and Ford Motor are making money through traditional vehicles.

When it comes to General Motors and Ford Motor nowadays, many people think of the rumors of "withdrawing from the Chinese market" that have been officially refuted.

In the current situation where China's new energy vehicle industry is developing rapidly and consumers' preferences and concepts towards cars have changed significantly, these two traditional American automobile manufacturing enterprises seem to be less eye-catching.

An unexpected piece of data is that in 2024, General Motors' net profit was $6 billion, and its earnings before interest and taxes (EBIT) was $14.9 billion. Ford Motor's net profit was $5.9 billion, and its EBIT was $10.2 billion. Even BYD Auto Company, which achieved a net profit of 30.041 billion yuan in 2023, finds it difficult to match them.

How do these two automobile enterprises, which are gradually losing the attention of China's mainstream consumers, make money? In their development process, is the transformation of cars into electric ones really the key to success in this era?

Let's take a look together.

Still Relying on Traditional Fuel-Powered Vehicles to Make Money?

General Motors has always maintained its advantage in the field of traditional fuel-powered vehicles.

The North American market (mainly including the United States, Canada, and other regions) is the main sales market for General Motors.

In 2024, most of General Motors' EBIT and the main part of its profit growth came from the North American market.

Thanks to factors such as reasonable vehicle pricing, high sales volume, and good control of production and operation costs, the North American market contributed $14.5 billion to General Motors' EBIT of $14.9 billion.

The excellent sales performance of full-size large SUVs (Sports Utility Vehicles, similar to big off-road vehicles) and pickup trucks (a type of vehicle with a car-like front and a cargo bed at the back) has achieved General Motors' good results in 2024, firmly securing the position of the best-selling full-size SUVs and pickup trucks in the United States.

General Motors' strong competitiveness in this market is not only reflected in the excellent sales performance of the new Chevrolet Equinox, GMC Terrain, and the new Cadillac Escalade in their respective market segments (such as market segments divided by different price ranges and uses);

It is also reflected in what is mentioned in General Motors' financial report, that is, for the new Chevrolet Tahoe, Suburban, and GMC Yukon/XL models, even though the average transaction price is 5% higher than that of the previous generation models, they can still occupy a 67% market share in their respective market segments (that is, for every 100 vehicles sold, 67 are these models).

This has brought General Motors $187.4 billion in revenue (a year-on-year increase of 9%), $14.9 billion in EBIT (a year-on-year increase of 20%), and an annual adjusted automotive free cash flow of $14 billion that can be freely allocated for automotive business.

Although Ford Motor's revenue of $185 billion (a year-on-year increase of 5%) is higher than that of General Motors, its EBIT of $10.2 billion is not as good as that of General Motors.

Looking at the performance of Ford Motor's three departments specifically, Ford Motor's profit mainly comes from its Ford Pro department (which is mainly responsible for the production and sales of commercial vehicles, such as trucks and buses, and also provides related services). This department achieved revenue of $66.9 billion in 2024 (a year-on-year increase of 15%), and its EBIT was $9.02 billion (a year-on-year increase of 25%).

Secondly, the Ford Blue department (which is mainly responsible for the production and sales of traditional fuel-powered vehicles and hybrid vehicles) achieved the highest revenue of $101.9 billion (remaining the same as the previous year), and its EBIT was $5.29 billion (a year-on-year decrease of 22%).

The only department that is still losing money is the Ford Model e department (which is mainly responsible for the production and sales of electric vehicles). Even though it has optimized costs by $1.4 billion, it still suffered a loss of $5.08 billion.

Electric vehicles have become the common weak point of these two large North American automobile enterprises.

In fact, judging from the financial reports of both companies, the ways they achieved revenue growth are the common methods of cost reduction and making good use of their traditional automobile business in which they are already proficient. The new way of making money through electric vehicles has not yet been developed.

When the whole world is vigorously developing electric vehicles, their way of making money through traditional fuel-powered vehicles will be challenged.

The Development of Electric Vehicles: Different Situations for Each?

Both Ford Motor and General Motors coincidentally slowed down the pace of developing electric vehicles in 2024.

The Ford Model e department of Ford Motor has been losing money all the time, which led Ford Motor to cancel the plan to launch a new full-size pure electric SUV in 2024 and postpone the launch of the new electric version of the F-150. Ford Motor's executives also said that unless they can make a profit within a year, they will not launch new electric vehicle products before the next-generation products come out.

The revenue from Ford Motor's traditional fuel-powered vehicles remained the same as the previous year, and there is no hope of quick profitability for electric vehicles. Ford Motor expects that the adjusted EBIT in 2025 will be between $7 billion and $8.5 billion, which is $1.7 billion to $3.2 billion less than the actual profit data in 2024, showing not much confidence in future development.

In contrast, General Motors was in a better situation in 2024.

It ranked second in automobile sales in the US market in the second half of 2024. The sales volume of the Chevrolet Equinox EV, an electric vehicle, increased by 85% quarter-on-quarter in the fourth quarter. Moreover, General Motors' electric vehicle business achieved a positive variable profit in the fourth quarter.

General Motors has started to make some good progress in the development of electric vehicles and expects that the EBIT of its electric vehicle business in 2025 will reach between $2 billion and $4 billion. However, it is not overly optimistic and expects that the annual EBIT in 2025 will be between $13.7 billion and $15.7 billion, which is similar to the profit situation in 2024.

The rumored "secret team" ("mole team") of Ford Motor, which specializes in researching electric vehicles, has not yet achieved any results. General Motors has also shifted its focus from fully developing electric vehicles to providing "practical and flexible power options" (such as having fuel-powered vehicles, electric vehicles, and hybrid vehicles, etc.). In a situation where the global automobile industry is highly competitive and complex, temporarily keeping a low profile and not developing too aggressively may be the safest choice for Ford Motor and General Motors.

However, in such a highly competitive global environment, how long can their relatively stable situation last?

Facing Competitive Pressures from Both Inside and Outside?

For Ford Motor and General Motors, there are many uncertain factors, which come from both competitors in the Chinese market and within the United States.

Relying on its advantages in the global market, General Motors sold a total of 5.998 million vehicles throughout 2024. However, its sales volume in the Chinese market decreased from 2.099 million vehicles in 2023 to 1.839 million vehicles in 2024.

The decrease in sales volume in the Chinese market also led to a decrease in General Motors' EBIT in the international market, from $1.2 billion to $300 million.

The market share in the Chinese market has been taken away by Chinese new energy vehicle brands led by BYD. In 2024, BYD's annual sales volume reached a new high of 4.2721 million vehicles, and the competition between Chinese new energy vehicle brands and joint venture brands (brands jointly produced by foreign and Chinese companies in China) has become more intense.

Ford Motor and General Motors face similar problems in the Chinese market. Through measures such as layoffs and reducing some business scopes, some of them achieved a break-even (neither making a profit nor incurring a loss) situation or started to make a profit again in the fourth quarter of 2024. Making some concessions first has become a solution to the problem.

There is even greater uncertainty from Donald Trump.

Shortly after taking office, Donald Trump signed an executive order named "Unleashing American Energy". This executive order requires stopping the use of the unspent funds in the $5 billion fund for building electric vehicle charging stations and terminating the exemption of states from the rule of achieving zero-emission vehicles by 2035.

Moreover, he also said that he is considering ending the tax credit subsidies for electric vehicles implemented by the Biden administration.

All these measures are reducing the influence of electric vehicles in the US market.

Although the mandatory requirements for the development of electric vehicles seem to have been reduced to some extent, the global trend of developing electric vehicles is still continuing. What choices will Ford Motor and General Motors make?

(The End)