General Motors said it will lose $1.6 billion as it pulls back its production plans amid dwindling government support for electric vehicles, and slower-than-expected take up.
GM said on Tuesday that about $1.2 billion of the charges were down to adjusting its EV capacity, and that plans to address its manufacturing footprint are “ongoing.” That means it is “reasonably possible” that more costs could be on their way. The other $400 million is down to cancelled contracts and settling other commercial arrangements linked to its EV investments, it said. Shares were down 1.6% in premarket trading.
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The automotive giant had gone big on EVs, announcing in 2021 that it would phase out gas and diesel cars globally by 2035. This announcement came shortly after the then-president Joe Biden took office pledging to boost EV sales. At one point it was planning to spend $30 billion on EVs by this year, including an all-electric lineup further down the track.
Things have changed since then, with President Donald Trump ending federal tax credits that helped American buyers afford to buy expensive U.S.-made electric cars. These tax credits were originally passed in 2022 as part of the Biden administration’s efforts to support EVs and green energy, and were phased out by President Trump’s “One Big Beautiful Bill Act.”
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“Following recent U.S. Government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow,” GM said. The company also said last month that it plans slower output of the Chevrolet Bolt, and is also scaling back producing its Cadillac Lyriq and Vistiq, saying at the time that it is “making strategic production adjustments in alignment with expected slower EV industry growth and customer demand.”
John Murphy, a longtime analyst with Bank of America, warned earlier this year of such write-downs for automakers that invested heavily in EVs. “There’s a lot of tough decisions that are going to need to be made,” Murphy, who’s now with Haig Partners, said in June during an event for Bank of America’s “Car Wars” report. “Based on the study, I think we’re going to see multibillion-dollar write-downs that are flooding the headlines for the next few years.”
Ford has also cut down on investments, dropping models and taking a $1.9 billion charge last year. Chief executive Jim Farley recently said the market will be “way smaller than we thought.”