General Motors (GM.US) announced on Thursday that it will record a $60 billion charge to divest certain electric vehicle investments, becoming the latest automaker to scale back its EV operations due to the Trump administration's policies and cooling demand. In a regulatory filing, the company stated that the charge stems from plans to reduce electric vehicle production targets and the resulting ripple effects on its supply chain; this move comes just three weeks after its rival Ford Motor (F.US) announced a similar, though larger, charge. The bulk of General Motors' impairment—a $42 billion cash outflow—relates to contract terminations and settlements with suppliers who had prepared for significantly higher production volumes that the shifting market can no longer support. The company clarified that this impairment will not affect its current lineup of approximately ten electric vehicle models available in the US market, which it still claims is the industry's most comprehensive battery-powered portfolio. "We plan to continue offering these models to consumers," the filing stated. This charge will be presented as a special item in the fourth-quarter earnings report. The company anticipates additional expenses in 2026 due to ongoing negotiations with suppliers, though the amount is expected to be lower than the 2025 special charges related to electric vehicles. At the time of writing, General Motors' shares were down nearly 2% in pre-market trading, following a 3.9% gain on Thursday to close at $85.13. General Motors had placed a massive bet on electric vehicles. Since last summer, several automakers, including its crosstown rival Ford, have begun scaling back EV production capacity. This shift occurred as US President Trump introduced large-scale tax cuts and spending programs, casting a shadow over the future of electric vehicles. Following the federal government's cancellation of the $7,500 EV purchase tax credit on September 30, sales of battery-electric vehicles collapsed. In December, Ford announced it would take a $195 billion impairment charge over several quarters due to the cancellation of multiple EV projects—including the all-electric F-150 Lightning pickup truck, another electric truck, and an electric van. As the top-selling automaker in the United States, General Motors was once one of the most aggressive global investors in the electric vehicle sector, having previously committed to largely phasing out internal combustion engine passenger cars and trucks by 2035. Although the company has not publicly rescinded this target, analysts have significantly lowered their forecasts for US EV sales over the next decade—the slowdown in EV demand growth in the US, General Motors' largest and most profitable market, has prompted a widespread industry reassessment. In response, CEO Mary Barra stated that the company would dynamically adjust its strategic direction based on customer demand. After years of production setbacks, General Motors' electric vehicle sales began to accelerate significantly towards the end of 2024. By introducing more affordable models, the company's sales jumped to second place, trailing only Tesla (TSLA.US). The company also stated on Thursday that it will record an additional $11 billion charge in the fourth quarter related to the ongoing restructuring of its joint ventures in China. Since last year, General Motors has already begun writing down some of its EV-related investments, including a $16 billion charge taken in the third quarter. This month, the company paused battery production at two joint-venture plants for six months and reduced production to a single shift at an all-electric factory in Detroit. Furthermore, the company abandoned plans to build a new electric vehicle factory in Michigan, opting instead to use the facility for producing the Cadillac Escalade and full-size pickup trucks. In 2025, General Motors successfully expanded its market share in the United States, driven by strong performance from its gasoline-powered full-size pickups, SUVs, and electric vehicles. However, this growth concealed strategic controversies—some analysts have questioned its strategic direction of "going all-in on pure electric while neglecting hybrids." CFRA equity analyst Garrett Nelson explicitly stated in a report on Thursday: "GM is almost entirely absent in the hybrid segment, which could partially offset its recent market share gains." He particularly emphasized that market enthusiasm for hybrid models is currently rising at a remarkable rate. Industry-wide electric vehicle sales are declining. Following the removal of the consumer tax credit, General Motors' fourth-quarter EV sales plummeted by 43%; this drop came after a record quarter as consumers rushed to buy before the credit expired. According to Omdia data, industry-wide EV sales in 2025 grew by only 1.2% year-over-year, significantly lower than growth rates in previous years. Automotive data supplier Edmunds predicts that EVs will account for about 6% of total US vehicle sales in 2026, down from 7.4% in 2025. Ford's recent strategic shift essentially involved canceling its entire planned second generation of electric vehicles, leading to its larger impairment charge. CEO Jim Farley described it as a painful but necessary decision in the face of a cooling market. In an interview last December, Farley stated, "The market has indeed changed over the past few months, which prompted us to make this decision." Ford is now pinning its EV hopes on an entirely new architecture designed to produce affordable models, with the first product being a $30,000 electric pickup truck slated for launch in 2027.
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