GM to take $1.6 billion charge related to EV pullback

DETROIT — General Motors’ Next week’s third-quarter results will include a $1.6 billion impact from all-electric vehicle plans not coming to fruition as expected.

Detroit automaker Tuesday morning public filing The impact will come from $1.2 billion in non-cash, special charges as a result of adjustments to EV capacity, he said. The remaining $400 million in cash relates primarily to contract cancellation fees and commercial agreements related to EV-related investments, according to the filing.

The automaker said a reassessment of EV capacity and production footprint is “ongoing,” signaling that additional charges may be announced for future quarters.

The charges will be reported as special items when GM reports third-quarter results on Oct. 21. That means these will affect the automaker’s net results but not its adjusted earnings or EBIT-adjusted results, which are closely watched by Wall Street.

GM was one of the first companies to invest billions of dollars in an EV market that didn’t pan out. At one point, the company planned to invest $30 billion in electric vehicles by this year, including dozens of new models and battery production capacity.

The accusations come as regulations on electric vehicles have changed under the Trump administration, particularly the expiration of $7,500 in federal tax credits, as President Joe Biden has defended the vehicles.

“Following recent U.S. Government policy changes, including ending certain consumer tax incentives for electric vehicle purchases and reducing the stringency of emissions regulations, we expect the adoption rate of electric vehicles to slow.” GM said in the application:.

John Murphy, a longtime analyst at Bank of America, warned earlier this year about such writedowns from automakers investing heavily in electric vehicles.

“There are a lot of difficult decisions to be made,” Murphy, now at Haig Partners, said at an event for Bank of America’s “Car Wars” report in June. “Based on the study, I think we’ll see multibillion-dollar articles flooding the headlines over the next few years.”

GM’s EV retreat accusations come more than a year after its crosstown rival Ford Motor It announced a $1.9 billion impact from its EV plans.

Ford’s figure included nearly $400 million for impairment of manufacturing assets, as well as additional expenses and cash outlays of up to $1.5 billion, including canceling a large, electric three-row SUV currently in development and delaying production of a next-generation electric full-size pickup truck.

GM, which offers the most EV models in the U.S., has made significant gains in EV sales this year, but the size of the market is niche compared to expectations at the beginning of this decade.

Motor Intelligence reported that the Detroit automaker grew from an 8.7% market share of all electric vehicles at the beginning of this year to 13.8% in the third quarter, outpacing Hyundai Motor’s 8.6% share, including Kia, by September. Still chasing US electric vehicle leader Tesla’sIt is estimated to have a 43.1% market share by September.