Ford Motor Co. (NYSE:F) and General Motors Co (NYSE:GM) are expected to report lower profits for the second quarter due to challenges in their electric vehicle (EV) strategies.

Ford is anticipated to see a 10% decrease in profits while GM’s net income is projected to drop by 7.7%.

Approximately 15,000 car dealerships throughout the U.S. that use CDK Global, a private software company, had their services disrupted in June. The software is integral to managing deal records, scheduling services and storing critical customer information.

The summer season is among the busiest times for car dealers and continued outages cut into dealers' profits.

This incident could result in a collective loss of approximately $1 billion for dealerships, reported Reuters.

GM CEO Mary Barra noted that the EV industry is seeing a slowdown, hindering the ability to reach production volumes necessary for cost reduction and profitability.

“It can’t be expected that established vehicle manufacturers, who need to make similar investments that a start-up would in vehicle design and manufacturing facilities, could turn a profit immediately,” said Sam Fiorani, vice president at AutoForecast Solutions.

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Legacy automakers like GM and Ford are grappling with intense competition from Chinese EV makers and Tesla Inc. (NASDAQ:TSLA), leading to a global price war.

Tesla had 3,907 Cybertrucks registered in May as compared to Ford's F-150 Lightning which had 2,353 registrations.

GM has backed off its goal of producing one million EVs in North America by 2025. The company plans to slash this year's production of EVs by 50,000 units to a range from 200,000 to 250,000 vehicles.

Ford is delaying the launch of all-new three-row EVs at the assembly complex in Canada to 2027 from 2025. Both companies reported slower sales growth for the quarter earlier this month.

Even, Tesla backed off on plans to build an electric car factory in Mexico.

Analysts at Evercore ISI remain optimistic about GM over Ford. They expect GM to guide towards the upper end of its full-year forecast.

Price Action: GM shares are trading higher by 0.33% at $48.46 in premarket at last check Monday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.