GM takes a $1.6 billion hit as EV tax credit ends and it rethinks its strategy

"General Motors said on Tuesday it would take a $1.6 billion charge in the third quarter as it reshapes its electric vehicle strategy following the scrapping of a key federal incentive, a move likely to dampen demand. U.S. carmakers have delayed or canceled new EV models and battery plants and pared other investments, citing weaker-than-expected demand. The market faces further strain after the Trump administration removed a $7,500 federal tax credit for EVs, a key support for the industry."

""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 in a filing on Tuesday. Shares of the Detroit, Michigan-based automaker were down 2.5% in premarket trading. The stock has been up about 4.5% this year."

"The Detroit automaker warned of the possibility of further charges as a result of the reassessment of its capacity and manufacturing footprint, which it said was still ongoing. The charges comprise a $1.2 billion non-cash impairment related to EV capacity adjustments and $400 million for contract-cancellation fees and commercial settlements. The charges will be recorded as adjustments to the automaker's non-GAAP results for the third quarter scheduled for early next week."

General Motors will take a $1.6 billion third-quarter charge as it reshapes its electric vehicle strategy after removal of a key federal tax credit. Automakers have delayed or canceled new EV models, battery plants, and other investments amid weaker-than-expected demand. GM expects EV adoption to slow following U.S. government policy changes that terminated consumer tax incentives and relaxed emissions rules. GM and Ford briefly planned a dealer program to provide a $7,500 tax credit on EV leases but reversed course. GM's current Chevrolet, GMC and Cadillac EVs in production remain unaffected. The charges include a $1.2 billion non-cash impairment and $400 million for contract cancellations and settlements, recorded as non-GAAP adjustments for the quarter.

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