Key Points
- General Motors is taking a $6 billion charge to scale back its EV investments.
- The move is a response to the Trump administration’s policies and fading consumer demand.
- The elimination of the $7,500 federal tax credit has led to a sharp decline in EV sales.
- Rival Ford recently announced an even larger $19.5 billion writedown on its EV plans.
General Motors is the latest automaker to slow its electric-vehicle ambitions. The automaker announced on Thursday that it will take a $6 billion charge to unwind some of its EV investments. This move is a direct response to the Trump administration’s policies and a significant drop in consumer demand for electric cars.
The charge is primarily due to canceling contracts with suppliers that had geared up for much higher EV production volumes. GM, like many other automakers, had made a huge bet on an all-electric future, at one point even vowing to phase out gas-powered cars by 2035. But the market has changed dramatically.
A big reason for the shift is the elimination of the $7,500 federal tax credit for EV buyers, which ended on September 30. This led to a surge in third-quarter sales, followed by a steep 43% decline in the fourth quarter. With the incentive gone, many consumers are no longer willing to pay the premium for an electric car.
This isn’t just a GM problem. EV sales across the industry have slowed, and rival Ford recently announced an even larger $19.5 billion writedown after canceling several of its EV programs.
GM says the writedown won’t affect its current lineup of about a dozen EV models, which is the broadest in the industry. However, the company has already halted battery production at two plants and pivoted a planned EV factory to build gas-guzzling Cadillac Escalades and full-size pickups instead.
While GM’s CEO, Mary Barra, has said the company will respond to customer demand, some analysts question the decision to focus so heavily on fully electric vehicles rather than popular hybrids. For now, it seems the all-electric dream is on hold as GM and the rest of the industry adjust to a new, more uncertain reality.
