General Motors Co. and Ford Motor Co. are emphasizing their ability to be flexible in responding to consumer demand in light of potential policy changes under President-elect Donald Trump's administration.

The incoming administration could see the elimination of the Inflation Reduction Act's tax credit of up to $7,500 on plug-in vehicles, limits on the most aggressive fuel economy and carbon emission policies in the country's history passed by the Biden administration, greater influence from Tesla Inc. CEO Elon Musk potentially serving in his Cabinet, the renegotiation of the United States-Mexico-Canada trade agreement and a federal framework for self-driving vehicles. Such changes could slow consumer adoption of electric vehicles and elongate the automakers' recuperation of investments in that technology.

"The writing is on the wall," said Daniel Ives, analyst at investment firm Wedbush Securities Inc. "They are going to have to peal back their EV strategy. Until everything is official, everyone will stay middle of the road, but big change is coming."

Executives of these two Detroit crosstown rivals both said it's unclear exactly what the future will hold, but they expressed confidence in their companies' abilities to navigate that future long-term. GM Chief Financial Officer Paul Jacobson emphasized manufacturing flexibility to switch between building internal combustion engine vehicles and EVs. Meanwhile, John Lawler, Ford's chief financial officer and vice chairman, said the Dearborn automaker's strength lies in its existing offerings of gas- and diesel-powered vehicles, EVs and hybrids.

Ford is forecasting with various models about potential scenarios, Lawler said. The company already understands that if the tax credits were to end, EV demand and production will decrease unless the company can find a way to bring prices down, though it's already losing money on its EVs. The company last week paused production on its F-150 Lightning truck in Dearborn into the new year to preserve profitability as it projects a $5 billion loss on its Model e EV division. It, however, has eliminated more than $1 billion in costs within the division this year.

Consumers aren't willing to pay a premium on EVs, though they are for hybrids, added Sherry House, Ford's vice president of finance and incoming CFO.

"What we do is provide choice: ICE, multi-energy hybrid, plug-in, HEV, others," Lawler said. "There'll be other multi-energy choices coming and then EVs, so the strategy is not going to change. We are going to provide consumers choice. They can choose the best propulsion system that fits their duty cycle."

Lawler added: "Of course, the IRA plays into it, etc., all that's going to change. So, what we're doing is we're modeling various scenarios, and we will adjust accordingly. We're in pretty good shape, because we do have hybrid vehicles, and we can pivot."

GM, on the other hand, doesn't have hybrids in North America after planning to go all in on EVs only to reverse that decision once EV adoption missed expectations. The automaker is planning to reintroduce plug-in hybrids in 2027, because that's the first year of the Biden administration's greenhouse gas tailpipe emission limits.

GM also is more vulnerable to a tax credit elimination. Chevrolet has five vehicles that qualify for the full $7,500 and Cadillac has one. Executives expect to produce and wholesale about 200,000 EVs by the end of 2024. Ford has one vehicle that qualifies for the $7,500 tax credit, one for a $3,750 subsidy and luxury brand Lincoln has one eligible for a $3,750 incentive.

Jacobson emphasized that the Detroit automaker will continue to reduce its costs and simplify products. The automaker last week announced more layoffs: 1,000 hourly and salaried employees globally in various departments, with a majority working out of the Detroit automaker's Global Technical Center in Warren.

"We're going to continue to scale up with demand on the platform that we've established, and we're going to continue to lean into that, because we do believe that EV penetration is a long-term objective," Jacobson said. "We've got to make sure that we have reasonable regulation alongside where consumers are and where demand is. The technology is going to continue to win people over, but we've got to be able to produce vehicles that our customers want, and we have the unique position … of having a lot of flexibility embedded into our operation, to be able to respond to where consumer demand is."

He specifically referenced the Spring Hill Manufacturing plant in Tennessee. It's a flexible plant that produces both gas-powered and electric vehicles on the same line. Workers there build the Cadillac Lyriq EV and Cadillac XT5 and XT6 SUVs as well as Honda Motor Co. Ltd. EVs.

Jacobson added that GM will work with the incoming administration on the best path forward while focusing on cutting costs. GM has a cost-reduction program with a $2 billion goal it's expecting to hit by the end of 2024.

Ford is focused on further reducing costs, too. It has eliminated $2 billion is expenditures this year, and the company on Wednesday announced 4,000 layoffs in Europe by 2027. The company has a $7 billion cost disadvantage to its competition, Lawler said: about $4 billion from warranty costs, $2 billion from materials and $1 billion from footprint.

"That's the big unlock for us," Lawler said, "when we think about these product launches."

Footprint will change over time, Lawler said, though he noted a heavy U.S. footprint could become more of an advantage in light of potential increased tariffs on Mexican-built vehicles and components.

"When we talk about some of our cost disadvantage versus competition, that's part of it," he said, "but maybe that becomes a positive going forward."

Meanwhile, with Tesla prioritizing its large-margin business of self-driving semi-autonomous software, creating national standards for the deployment and regulation of that technology could be a priority.

Ford especially has emphasized data and telematics software offerings with its Ford Pro commercial business. It also has been expanding the number of models on which consumers can use its BlueCruise hands-free highway driving technology, whose prices it slashed in October.

GM has a similar Super Cruise technology. It's also rebooting Cruise LLC, its self-driving business, after a pedestrian crash in October 2023 led to major safety scrutiny. Cruise has started supervised driving in multiple markets. GM recently named Marc Whitten, a former Amazon executive and founding engineer at Xbox, as its new CEO.

Cruise was a bragging point for GM at its Investor Day in 2021. Executives boasted the unit could deliver annual revenue of $50 billion by decade's end, helping to double the automaker's revenues to about $280 billion by 2030. At its October 2024 Investor Day event, GM CEO Mary Barra said the company would be disciplined with its investments in Cruise and that it was having discussions with potential partners.

"For people that are worried about the future, I don't think GM goes to zero If Cruise isn't successful," Jacobson said. "It's a case of: Can we do what we've been doing really well, and is there a growth story attached to it that comes with software? So we're really prioritizing software execution and getting the vehicles to the level where they can support a whole host of over-the-air upgrades. That takes a little bit of time, but it's progress that we're making."

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