USA: GM takes $1.6 bn charge amid slower EV outlook
The adjustment follows the Trump administration’s decision to end the $7,500 federal EV tax credit, which has been scrapped as of 30 September. The move initially sparked a new EV sales record in the third quarter. GM’s own EV sales in the United States rose sharply, with deliveries doubling to more than 66,000 vehicles as consumers sought to benefit from the tax credit before it expired. However, it remains to be seen how the market will develop post-incentives.
In a regulatory filing, GM said the charge reflects revised expectations for EV demand, citing “recent US government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations.” The manufacturer added: “We expect the adoption rate of EVs to slow.”
According to the automaker, the special items include a $1.2 billion non-cash impairment related to EV capacity adjustments and $400 million for contract cancellation fees and commercial settlements. GM noted that the measures would be recorded as adjustments to non-GAAP results for the third quarter, due for release next week.
The manufacturer also warned of potential additional charges as it continues to assess its manufacturing footprint and capacity plans. “The charge is a special item driven by our expectation that EV volumes will be lower than planned because of market conditions and the changed regulatory and policy environment,” GM said in a statement to Reuters.
Industry analysts suggest the company’s latest charge reflects a “right-sizing” of its EV portfolio. According to CFRA Research, “GM had made probably the most aggressive EV push of any traditional automaker.” Nevertheless, in June, the US carmaker announced a $4 billion investment to boost production at its US facilities. However, it also allocated a significant portion to petrol-powered vehicles. Bloomberg Intelligence noted that GM may prioritise higher-volume or premium models in the future, such as the Bolt and Cadillac EVs, while scaling back others like the Blazer EV and Silverado EV.
GM’s recent restructuring includes adjustments to its EV production schedules. Just last month, the manufacturer scaled back production of the GMC Hummer EV and Cadillac Escalade IQ at its dedicated EV plant in Detroit-Hamtramck. A few days later, the carmaker also cut production of the Cadillac Lyriq and Vistiq at the Spring Hill plant in Tennessee. Moreover, it was reported that GM is postponing the start of a second shift at its Fairfax assembly plant near Kansas City “indefinitely.” Production of the new Chevrolet Bolt is scheduled to begin there later this year. However, only with one instead of the initially planned two shifts.
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