General Motors Co. (GM) announced Tuesday that it will scale back its electric-vehicle (EV) investment plans and take a $1.6 billion charge after the U.S. federal government ended a crucial $7,500 EV tax credit, a move that had been supporting demand and production expansion across the auto industry.
In a filing with the U.S. Securities and Exchange Commission (SEC), GM said about $1.2 billion of the charge is tied to adjustments in its EV manufacturing capacity, while the remaining $400 million relates to contract cancellations and commercial settlements connected to its EV initiatives.
GM said it is conducting a “reassessment of our EV capacity and manufacturing footprint, including our investments in battery component manufacturing,” adding that it remains “reasonably possible” the company will record additional charges in the future. The automaker is scheduled to report third-quarter earnings next week.
Despite the news, GM shares rose 2.8% on Tuesday, while Ford Motor Co. (F) gained about 1% and Tesla Inc. (TSLA) slipped 1.5%.
The decision follows a surge in EV sales during the September quarter, with total industry sales reaching 438,000 units, up nearly 30% year-over-year, according to Cox Automotive. The growth was largely driven by consumers rushing to take advantage of the expiring federal tax credit before it ended on September 30. GM sold 66,501 EVs in the quarter, with the Chevrolet Equinox EV emerging as the bestselling non-Tesla electric car.
GM said the end of the federal credit is expected to slow EV adoption, though the company emphasized that the changes will not affect its current EV lineup. It also confirmed plans to bring back the Chevy Bolt EV next year.
The move marks the latest in a series of pullbacks by major automakers adjusting to weaker-than-expected EV demand. GM had previously planned to invest up to $35 billion in electric and autonomous vehicles through 2025, but shifting market dynamics have prompted a more cautious approach. Rival Ford faced similar challenges last year, taking a $1.9 billion charge related to canceled and delayed EV projects.
As the industry grapples with rising costs, policy uncertainty, and cooling consumer enthusiasm, GM’s reassessment highlights a broader reality: the road to mass EV adoption may take longer and cost more than once expected.