In a significant setback for its electric vehicle ambitions, American automotive giant General Motors (GM) is set to record charges of approximately $6 billion. This massive financial hit comes as the company grapples with slower-than-expected sales of electric cars, a situation exacerbated by recent policy changes in the United States.
Policy Shifts and Financial Fallout
The Detroit-based automaker disclosed in a late Thursday filing with the Securities and Exchange Commission (SEC) that the substantial charges will be booked in the fourth quarter. This follows a similar but smaller charge of $1.6 billion announced in October for the previous quarter. The primary drivers are the US government's decision to cut tax incentives for buying electric vehicles and its relaxation of stringent auto emissions standards.
The crucial federal tax credit for electric vehicles, which offered up to $7,500 for new EVs and $4,000 for used ones, ended in September. This removal of a key purchase incentive has directly contributed to the cooling of consumer demand, forcing GM and other automakers to reassess their aggressive plans to transition their fleets to electric power.
Breaking Down the $6 Billion Charge
GM's detailed filing reveals the composition of the financial impact. The total includes non-cash impairments and other non-cash charges amounting to roughly $1.8 billion. The remaining $4.2 billion stems from supplier commercial settlements, contract cancellation fees, and various other expenses. This financial move triggered a nearly 3% slide in GM's shares on Friday, reflecting investor concern.
Once the most ambitious US automaker regarding phasing out internal combustion engines, GM's strategy has faced serious headwinds. The company had previously announced in 2020 a monumental $27 billion investment plan for electric and autonomous vehicles over a five-year period, marking a 35% increase from its pre-pandemic goals.
A Shifting Global Landscape and Rival Plans
The volatility in US economic and environmental policies between the Biden and Trump administrations has created uncertainty, shaking the foundations of long-term automotive planning. Meanwhile, China has surged ahead, establishing itself as a global leader in EV technology. Chinese factories are producing millions of electric cars and building extensive charging networks.
In a symbolic shift earlier this month, Tesla was dethroned as the world's largest EV maker by China's BYD, which manufactured an impressive 2.26 million electric vehicles last year.
The challenges are not unique to GM. In a related development on Friday, Stellantis, the Netherlands-based parent company of Jeep, Dodge, and Chrysler, announced it would "phase out plug-in hybrid (PHEV) programs in North America beginning with the 2026 model year." The company cited shifting customer demand and a need to focus on more competitive electrified solutions.
GM's earlier vision was bold: making the majority of its vehicles electric by 2035 and achieving complete company-wide carbon neutrality by 2040. It had also pledged to boost its investment in EV charging infrastructure by nearly $750 million through 2025 and expected over half of its factories in North America and China to be EV-capable by 2030. The recent $6 billion charge is a stark indicator of how difficult that road to an all-electric future has become.
