Power the Future founder Daniel Turner discusses the Trump administration suing California over truck emissions standards and EV mandates in The Bottom Line.
General engines said Tuesday it plans to charge $1.6 billion in the third quarter as it revamps its electric vehicle strategy, as the end of the federal government’s EV tax credit is expected to slow demand.
GM’s move comes as automakers are reworking their electric car production plans after consumer demand weakened over the past two years.
The Trump administration’s decision to end the $7,500 federal government tax credit for EVsthat helped support the nascent industry prompted executives to warn of a slump in consumer demand.
GM said in a filing that it expects “electric car adoption rates to slow” due to the recent policy changes, which include not only the end of the tax incentive but also a move to roll back an emissions rule that was expected to push automakers to make more electric cars.
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General Motors said it will take a $1.6 billion charge after losing federal EV tax credits. (Paul Hennessy/SOPA Images/LightRocket via Getty Images/Getty Images)
The automaker told Reuters that the charge is “a specialty item driven by our expectation that EV volumes will be lower than planned due to market conditions and the changing regulatory and policy environment.”
Garrett Nelson, a senior equity analyst at CFRA Research, said the accusation “comes as no surprise given recent market developments and the fact that GM has probably made the most aggressive EV push of any traditional automaker.”
“We believe the automakers that chose to invest more heavily in hybrid vehicle development, such as Toyota and Honda, are poised to benefit in the U.S. auto market,” Nelson added.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GM | GENERAL MOTORS CO. | 55.62 | +0.27 |
+0.49% |
GM PROFIT SHRINKS DESPITE STRONGER SALES
The The Trump administration tariffs and shifts in trade policy have also created financial headwinds for automakers like GM, which took a $1.1 billion hit in the previous quarter.
GM estimated this will have an impact of $4 billion to $5 billion this year rate headwindand said it could take steps to offset at least 30% of the impact.
These include a $1.2 billion non-cash impairment charge tied to EV capacity adjustments and $400 million in contract cancellation costs and commercial settlements.
GM CEO Mary Barra has warned about the impact of tariffs and the removal of EV credits. (Anna Moneymaker/Getty Images/Getty Images)
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GM said the charges will be recorded as adjustments to its third-quarter non-GAAP results, which are expected to be released early next week.
GM shares rose 0.68% in the morning trading session on Tuesday following the news.
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Reuters contributed to this report.
