(Jan 9): General Motors Co (GM) will take another US$6 billion ($7.71 billion) in charges tied to production cutbacks in its electric vehicle (EV) and battery operations as the financial fallout spreads from the weakening US market for EVs.
The announcement on Thursday brings the total write-downs from GM’s huge bet on battery-electric cars to US$7.6 billion, following smaller charges revealed in October. While the automaker warned of an additional financial toll this year, the moves are aimed at minimising the impact on reported profits going forward.
GM will recognise the latest EV charge and a separate US$1.1 billion write-down — largely related to the restructuring of its China business — in its fourth-quarter results, according to a regulatory filing.
The disclosure underscores the upheaval sown by US President Donald Trump’s moves to eliminate federal support for EVs and Americans’ continued embrace of gasoline-powered vehicles. GM and its rivals have invested billions of dollars in EVs over the past decade to comply with stringent environmental rules and meet their own overwrought view of consumers’ willingness to buy them.
Trump’s signature tax and spending bill scrapped US$7,500 federal tax credits for EV buyers, further dampening demand for battery-powered cars that was already faltering. Other moves, including a plan to significantly weaken federal fuel efficiency requirements, also removed key policies pushing the industry towards electrification.
Now, GM and its rivals are cutting back. Ford Motor Co in December said it would take US$19.5 billion in charges to scale back its own EV business, a plan that includes cancelling a future electric F-Series truck and repurposing an EV battery plant.
See also: Grab to roll out 20,000 GAC EVs across its Southeast Asia fleets
GM’s shares fell 2.2% in after-hours trading on Thursday. The stock had gained about 67% in the past 12 months, beating the S&P 500 Index’s 17% advance.
GM had boasted of its US$35 billion investment to build an EV business capable of selling a million plug-in cars per year by 2025. Chief executive officer Mary Barra even set a goal for the company to go all-electric by 2035.
Instead, it sold about 170,000 EVs last year and is now cutting production and workers. The company has already placed 5,500 workers on at least temporary furlough.
See also: Tesla loses EV crown to BYD after second annual sales drop
The write-offs are the culmination Barra’s big gamble that Americans would embrace EVs as quickly as the Biden administration wanted to see the vehicles become a mainstay on America’s roads. The company has more models than it can sell now and had planned more. Add in more than US$10 billion invested in its former Cruise robotaxi business and GM has spent a lot on technology that only lost money.
In spite of that, Barra’s GM has been very profitable through tough times. The pullback in EV sales has only drawn investors to buy the stock. Before the late decline, the shares closed at a record of more than US$85 a share on Thursday, the highest since GM went public in 2010 after emerging from bankruptcy the year before.
GM’s latest strategic shift isn’t as dramatic as the one undertaken by rival Ford. Barra has cut production and cancelled some future models, but GM still has a dozen models for sale and is still developing new battery technology.
The company is still working on autonomous vehicles for personal ownership, in lieu of robotaxis, and has EVs that are growing sales in China. Plus, if China’s automakers such as BYD Co and Xiaomi Corp make it to the US, keeping a foothold in EVs will position GM to compete, said David Whiston, an analyst with Morningstar Inc.
“It’s a matter of time before BYD gets here,” Whiston said in a phone interview. “They have to know how to do this.”
In the short term, GM is re-prioritising profits from its largest, thirstiest vehicles, as is Ford. GM plans to convert a plant in suburban Detroit to make gas-powered pickup trucks and large sport utility vehicles instead of electric pickups, which are selling in small numbers.
GM’s latest charges for its EV business include US$4.2 billion for contracts with suppliers. That will have a cash impact over the coming quarters. GM said it also expects additional write-downs this year, which should be “significantly less” than those in 2025, it said.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Barra has insisted that she wants to make EVs work in the US and that they represent the industry’s future, despite changes in regulatory policy under Trump. The company is working to lower costs on its electric models and plans to use new battery chemistry and designs to reduce the the still-high price of EVs compared to gasoline-fuelled cars.
The US$1.1 billion charge is mostly part of restructuring of GM’s China business. That cost is in addition to the US$5 billion writedown GM took in late 2024 when the automaker was resizing the business to accommodate lower sales. The new charge will have a US$500 million hit to GM’s cash flow in the coming quarters.
Uploaded by Tham Yek Lee
