GM Takes $6 Billion EV Charge as Automaker Pulls Back Amid Policy Shifts and Slowing Demand

BY COMFORT OGBONNA

General Motors said on Thursday it will take a $6 billion charge to unwind portions of its electric-vehicle investments, becoming the latest major automaker to scale back EV spending as policy changes under the Trump administration and weakening consumer demand reshape the U.S. market.

The charge reflects a reduction in GM’s planned EV production and the resulting impact on its supply chain, the company said in a regulatory filing. The move follows a similar, but significantly larger, writedown announced by rival Ford Motor just weeks earlier, underscoring the mounting financial pressure facing automakers that made aggressive bets on battery-powered vehicles.

Most of GM’s writedown consists of a $4.2 billion cash charge tied to contract cancellations and settlements with suppliers that had geared up for much higher EV volumes before demand slowed. GM said these suppliers had expanded capacity based on earlier growth expectations that no longer align with current market conditions.

Despite the pullback, GM said the charge will not affect its U.S. lineup of roughly a dozen electric models, which remains the broadest EV offering among traditional automakers. The company said it plans to continue offering these vehicles to consumers, signaling that it is scaling back ambitions rather than abandoning the segment entirely.

GM will record the charge as a special item in its fourth-quarter earnings report. It also expects to incur additional EV-related charges in 2026 as negotiations with suppliers continue, though it said those costs are likely to be smaller than the charges booked for 2025.

Shares of GM fell about 2% in after-hours trading following the announcement, after rising 3.9% during the regular session to close at $85.13.

The decision highlights how quickly the EV landscape has shifted over the past year. GM and many other automakers began dialing back EV production and factory plans last summer after President Donald Trump’s sweeping tax and spending package darkened the outlook for electric vehicles. The elimination of a $7,500 federal tax credit for EV buyers on September 30 dealt a major blow to sales, triggering a sharp pullback in consumer demand.

Ford, GM’s longtime rival, said in December it would take a $19.5 billion writedown spread over several quarters as it canceled multiple EV programs, including a fully electric version of its F-150 Lightning truck, as well as planned electric trucks and vans. The scale of Ford’s charge highlighted how deeply entrenched EV investments had become across the industry.

GM, the largest U.S. automaker by sales, was among the most aggressive in embracing an all-electric future. At one point, the company pledged to largely phase out internal-combustion engines by 2035. While GM has not formally walked back that target, analysts have significantly reduced long-term EV sales forecasts in the U.S., GM’s most profitable market. CEO Mary Barra has said the company will continue to adjust its strategy based on customer demand.

GM’s EV sales showed signs of momentum in late 2024 after years of manufacturing setbacks, helped by the rollout of more affordable models. That push briefly lifted GM to second place in U.S. EV sales behind Tesla. However, the loss of consumer incentives has since reversed much of that progress.

In addition to the EV charge, GM said it will record a $1.1 billion charge in the fourth quarter related to the ongoing restructuring of its China joint venture, adding to the financial headwinds facing the automaker.

GM had already begun writing down EV-related investments last year, including a $1.6 billion charge in the third quarter. More recently, the company halted EV battery production for six months at two joint-venture plants and cut output to a single shift at an EV-only factory in Detroit. It also abandoned plans for a new Michigan plant that was expected to build electric vehicles, opting instead to produce the Cadillac Escalade and full-size pickup trucks.

The strategy shift comes even as GM gained U.S. market share in 2025, driven largely by strong sales of gasoline-powered pickups and SUVs, alongside contributions from its EV lineup. Still, some analysts have raised concerns about GM’s heavy focus on fully electric vehicles at a time when hybrids are gaining popularity.

CFRA equity analyst Garrett Nelson warned that GM’s limited exposure to hybrid models could undermine its recent market share gains, noting that demand for hybrids has surged as consumers seek a middle ground between gasoline and fully electric vehicles.

Across the industry, EV sales have weakened noticeably. GM’s EV deliveries fell 43% in the fourth quarter after the tax credit expired, following a record surge in the prior quarter as buyers rushed to make purchases before incentives ended. Industrywide EV sales rose just 1.2% in 2025 compared with the previous year, according to Omdia, a sharp slowdown from earlier growth rates. Edmunds expects EVs to account for about 6% of U.S. vehicle sales in 2026, down from 7.4% in 2025.

Ford’s retrenchment has been even more dramatic, with the automaker effectively scrapping its planned second generation of EVs. Ford CEO Jim Farley has described the move as painful but necessary as market conditions cooled. Ford is now pinning its EV strategy on a new vehicle architecture aimed at producing more affordable models, beginning with a $30,000 electric pickup slated for 2027.

Together, the moves by GM and Ford signal a broader recalibration across the auto industry, as automakers balance long-term electrification goals with near-term economic realities and shifting consumer preferences.