GM and Ford are betting on gasoline-powered trucks as growth in electric vehicles slows

US automakers General Motors and Ford face a common challenge when they report their first-quarter results next week: telling investors where profit growth will come in the coming months as the pace of growth in electric vehicles slows.

Slowing global demand for electric vehicles, increased competition from Chinese automakers and high borrowing costs in the United States have forced American car companies to postpone investment and cut costs over the past 12 months. Given the slowdown in China and high inflation in the United States, macroeconomic growth seems far off.

That’s why companies like GM and Ford focus on selling their main products that run on gasoline, which makes most of their profits. GM and Ford will report their results on Tuesday and Wednesday, respectively.

GM boss Mary Barra will benefit from strong demand for profitable pickups and SUVs from the Chevrolet and GMC brands. Barclays raised its price target on GM stock by 10% to $55 earlier this month, citing strong sales of GM’s truck and SUV lineup.

GM Chief Financial Officer Paul Jacobson said the year started well and the company is optimistic about demand trends. Ford Chief Financial Officer John Lawler reiterated full-year profit forecasts and said vehicle prices continue to be better than expected.

Traditional U.S. automakers, which rely heavily on sales of large trucks and SUVs, have been slowed by the high costs associated with electrifying their vehicle lineups and fluctuating demand for battery-powered vehicles.

Evercore ISI analyst Chris McNally said in a research note that the momentum has shifted for early winners like Tesla as EV sales growth slows. Investors have instead focused on GM, Stellantis, Toyota and others less committed to electric vehicles.

A higher ratio of gasoline-powered trucks to EVs in GM’s North American sales mix will help offset expected losses in the automaker’s China business. GM reported first-quarter US auto sales fell 1.5% due to fewer deliveries to commercial customers, while retail sales rose 6%.

Barra has yet to present concrete plans to overhaul GM’s China business. Last year, GM delivered 2.1 million vehicles in China, nearly half the 4.04 million the company reported in 2017.

Meanwhile, investors want an update on GM’s struggling robotaxi division.

Barra did not comment on how GM plans to fund the business’s restart and rebuild after the fatal crash forced the company to halt driverless operations. GM has said it will cut Cruise spending by $1 billion this year. The division has lost more than $8 billion since it was taken over by GM in 2016.

Cruise said on April 9 that it will put some cars on the road in Phoenix, Arizona, with human drivers.

Shares of the Detroit automaker rose in January as the company signaled that more cash would be returned to shareholders.

Ford also draws strength from its light truck business and its Ford Pro commercial vehicle business. The automaker reiterated its forecast for underlying profit of $10 billion to $12 billion this year.

The automaker said earlier this month that it would scale back two key electric vehicle programs. Chief Financial Officer Lawler told an investor conference that future investments in electric vehicles will only be made if they can “stand on their own” and generate profits. (Reporting by Joe White in Detroit Additional reporting by Ben Klayman in Detroit Editing by Matthew Lewis)