GM books USD 1.6 billion aluminium-exposed loss in EV pullback

General Motors Co. will incur USD 1.6 billion in charges following its retreat from electric vehicles, highlighting the damage US policy shifts are causing to plug-in car demand. The company announced on Tuesday that USD 1.2 billion will be derived from a non-cash impairment related to realigning EV capacity with demand. The remaining costs, tied to contract cancellations and commercial settlements, will have a cash impact. GM will recognise the special items in its third-quarter results on 21 October. The automaker also warned that it may face further charges as it continues to review its manufacturing footprint. The disclosures underscore the challenges for EVs under President Donald Trump, whose policies, such as the removal of EV tax credits and rollback of fuel economy standards, favour gasoline vehicles.

Other automakers, including Ford Motor Co. and Stellantis NV, are revising product plans to reflect softer EV demand. Tesla Inc. recently launched cheaper models to boost sales, with Elon Musk warning of a “rough” period due to the subsidy loss. 

“Following recent US 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,” the company said.

GM’s shares gained 0.7 per cent in early New York trading and have risen 4.4 per cent this year, lagging the S&P 500’s 13 per cent increase.

“GM’s USD 1.6 billion EV capacity impairment likely reflects a right-sizing that could lead to rationalisation of its EV portfolio amid weaker demand after the USD 7,500 credit expiry. The automaker could be scaling back some midsize EVs and pickups like the Blazer EV, Silverado EV and Hummer EV, while prioritising higher-volume models such as the Bolt EV and premium models from Cadillac, which commands stronger pricing power.” - Steve Man, autos senior industry analyst

Also read: Aluminium usage in EV market is affected as the tax credit expiry prompts discounts

In June, GM said it would build gas-powered pickups and SUVs at a Michigan factory originally meant for electric Chevrolet Silverado and GMC Sierra models. The automaker also plans to relaunch the Chevrolet Bolt EV in December with one production shift in Kansas, down from two. GM will schedule downtime in December at its Tennessee plant for the Cadillac Lyriq and Vistiq, cutting output to one shift from January to May. GM said it was “making strategic production adjustments in alignment with expected slower EV industry growth and customer demand.”

The move mirrors Ford’s strategy of delaying or cancelling plug-in models and diverting funds from its loss-making EV business. Ford recorded a USD 1.9 billion loss last year after scrapping plans for an electric SUV. Since then, the EV outlook has worsened, with CEO Jim Farley stating the market will be “way smaller than we thought.” Consumers recently rushed to buy EVs before tax credits expired, lifting GM’s US sales by 8 per cent in the third quarter, as EV deliveries doubled to over 66,000 vehicles.

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