U.S. carmakers are placing renewed focus on large gasoline-powered vehicles as profits from electric cars remain weak and government pressure to promote EVs eases. The shift highlights the growing challenge Detroit faces in staying competitive with fast-moving Chinese electric vehicle makers while protecting short-term earnings.
According to a report by the Wall Street Journal, recent policy changes have made gasoline vehicles more attractive. Fuel-economy rules have been relaxed, penalties for missing targets have been removed, electric vehicle tax credits have expired, and California has lost the authority to set its own emissions standards. At the same time, global demand for EVs has slowed. BloombergNEF estimates that U.S. EV sales fell 24% in the final quarter of 2025 compared with a year earlier.
Major automakers including General Motors, Ford and Stellantis are responding by prioritising trucks and SUVs, which offer higher profit margins. Several electric vehicle factories have paused production, and thousands of EV-related jobs have been cut. Analysts warn that even small misjudgements in EV output can result in large financial losses.
Electric vehicle programmes have weighed heavily on company finances. Ford reported nearly $13bn in EV losses between 2021 and 2024 and now expects further charges of $19.5bn, mostly linked to electric models. By contrast, looser regulations could boost profits significantly. TD Cowen estimates gains of $4bn for Ford, $3bn for GM and €1.4bn for Stellantis over the next two years.
Despite the shift, carmakers continue to say they are committed to electric vehicles. GM chief executive Mary Barra has said the company still aims for profitable EV production, while Ford’s Jim Farley has warned that Chinese firms such as BYD and Geely pose a serious long-term threat. Together with Tesla, Chinese manufacturers now account for nearly 40% of global EV sales, while the three major U.S. automakers hold less than 5%.
Consumer demand remains a key obstacle. Many buyers have resisted expensive electric versions of large vehicles, particularly for long-distance travel or commercial use. Ford plans to launch a smaller electric pickup priced around $30,000 in 2027, while GM is redesigning EVs to reduce weight and improve efficiency. Both companies are also keeping production flexible by building electric and gasoline vehicles in the same factories.
Industry analysts say that flexibility comes at a cost. Producing different vehicle types on the same lines can reduce efficiency and slow efforts to cut battery costs, which depend heavily on large-scale production.
Some experts argue that U.S. carmakers could follow the example of oil companies that focused on their most profitable products rather than investing heavily in alternatives. Demand for gasoline cars and hybrids remains strong, and S&P Global Mobility expects sales of these vehicles to rise globally until at least 2032.
The risk, however, is that the global shift to electric vehicles accelerates faster than expected. If that happens, U.S. automakers could fall further behind. For now, though, profits from gasoline-powered vehicles remain too strong for Detroit to ignore.
