China’s Auto Industry Shows Why GM and Ford Are Stuck in a Catch-22

No one said the transition to electric vehicles would be easy, and China’s traditional automakers are finding that out. Their experience shows why Ford Motor and General Motors are effectively in a Catch-22.

China’s traditional automakers earned an operating profit margin of roughly 5% between 2019 and 2022. But profit margins have declined as their core market has given up ground to battery-powered cars. Operating profit margin in 2022 came in at less than 3%, and 2023 profit margins are expected to be about 4% even as total industry sales volume is expected to be at near-record levels.

That’s the crux of the problem for Ford and GM . If they don’t invest aggressively in EVs, they risk losing market share and seeing profitability erode. And if they invest in EVs—which both are—there is no guarantee they will win against upstarts such as Tesla and Rivian Automotive . Failing to produce popular EVs also means losing market share and weaker profitability at Ford and GM.

As easy as it would be to focus on gasoline-powered cars for these legacy automakers, it would be difficult to ignore the trends. EVs are getting better and cheaper, and are backed by environmental policies around the globe.

United States United States Latest News, United States United States Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Strike likely to start tonight in the auto industry | Car NewsThe labour standoff between US automakers and the UAW union is ramping up into a dispute, with strike action set to begin tonight. Auto123 has more.
Source: auto123 - 🏆 566. / 51 Read more »

A Historic Strike Is Underway In America’s Auto IndustryThe targeted walkouts are aimed at throwing the 'Big 3' off balance as the union battles for new contracts.
Source: HuffPostWomen - 🏆 27. / 68 Read more »

Strike or No, the U.S. Auto Industry Isn’t Going Back to NormalThe pandemic, supply shocks, and the EV revolution all point in one direction: U.S. auto production won't look like it did a few years ago, writes Sam Fiorani.
Source: MarketWatch - 🏆 3. / 97 Read more »

Explainer: Auto industry on tenterhooks ahead of potential UAW strike against 'Detroit Three'The United Auto Workers (UAW) union expects to go on strike against the Detroit Three automakers later this week if no agreement is reached over new contracts, setting the stage for one of the largest worker actions this year.
Source: Reuters - 🏆 2. / 97 Read more »

Head of Chinese auto industry group urges EU be objective on China EVsChina's electric vehicle (EV) industrial chain is highly competitive, Cui Dongshu, secretary general of the China Passenger Car Association, said on Thursday, urging the EU to take an objective view of the industry's development.
Source: Reuters - 🏆 2. / 97 Read more »

China auto industry body ‘firmly opposes' EU probe on Chinese EV subsidies, urges objectivityThe European Commission unexpectedly launched an investigation Wednesday on the level of state subsidies that benefits China’s electric vehicle makers.
Source: NBCDFW - 🏆 288. / 63 Read more »