The impact of falling government support for electric vehicles – and slower-than-expected take-up – was brought into sharp focus Tuesday, as General Motors $GM said it will lose $1.6 billion from pulling back its production plans.
Washington scrapped subsidies for EV buyers last month, and many U.S. manufacturers have been forced to pare back production plans
Emily Elconin/Bloomberg via Getty Images
The impact of falling government support for electric vehicles – and slower-than-expected take-up – was brought into sharp focus Tuesday, as General Motors $GM said it will lose $1.6 billion from pulling back its production plans.
The Detroit automotive giant was one of the first to go big on EVs, announcing in 2021 that it would phase out gas and diesel cars globally by 2035. The announcement came shortly after former President Joe Biden took office pledging to boost EV sales. At one point it was planning to spend $30 billion on EVs by this year, including an all-electric lineup further down the track.
Now, things look very different. President Donald Trump ended federal tax credits that helped American buyers afford to buy expensive U.S.-made electric cars last month, while Chinese automakers have pulled off one of the fastest industrial takeovers in modern history by building about 70% of the world's EVs this year.
GM said Tuesday that about $1.2 billion of the charges were down to adjusting its EV capacity, but added that plans to address its manufacturing footprint are “ongoing”. That means it is “reasonably possible” that more costs could be on their way.
The other $400 million is down to cancelled contracts and settling other commercial arrangements linked to its EV investments, it said. Shares were down 1.6% in premarket trading.
“Following recent U.S. Government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow,” GM said in the filing.
GM said last month that it plans slower output of the Chevrolet Bolt, and is also scaling back producing its Cadillac Lyriq and Vistiq, saying at the time that it is “making strategic production adjustments in alignment with expected slower EV industry growth and customer demand.”
Ford $F has also cut investment, dropping models and taking a $1.9 billion charge last year. Chief executive Jim Farley recently said the market will be “way smaller than we thought.”
—Jackie Snow contributed to this article.
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