GM will incur an extra $6 billion expense for its electric vehicle division

GM Announces Additional $6 Billion Charge for Electric Vehicle Division

General Motors (GM) revealed in a recent SEC filing that it will record an extra $6 billion charge related to its electric vehicle operations. This decision follows lower-than-anticipated demand for EVs and the expiration of the federal EV tax credit at the close of the third quarter in 2025.

According to the filing, GM stated, "After an ongoing evaluation of our electric vehicle capacity and investments during the fourth quarter, we anticipate incurring charges totaling around $6 billion for the quarter ending December 31, 2025, primarily within GM North America."

The automaker detailed that these charges will consist of approximately $1.8 billion in non-cash impairments and other non-cash items, along with $4.2 billion in cash outflows such as supplier settlements, contract termination fees, and additional expenses. GM emphasized that these charges will not impact its EBIT-adjusted (earnings before interest and taxes) results.

Elsewhere in its business, GM also recorded a $1.1 billion charge unrelated to EVs, stemming from a restructuring of its joint venture in China with SAIC General Motors (SGM). Of this amount, $500 million is expected to have a direct cash impact.

Regarding its EV segment, the newly announced charge adds to the $1.6 billion write-down reported in the third quarter following a reassessment of the EV business, bringing the total EV-related write-downs to $6.6 billion. These costs are associated with GM scaling back EV and battery production and repurposing some EV facilities to manufacture gasoline-powered SUVs and trucks in the future.

GM also indicated that it anticipates further cash and non-cash charges tied to its electric vehicle business in 2026, but expects these to be "significantly lower than the EV-related charges incurred in 2025." The company also pointed out that recent changes to federal greenhouse gas emissions regulations will affect its ability to sell emissions credits.

This announcement from GM follows a similar move by Ford (F), which recently reported a $19.5 billion charge due to weak demand for its electric vehicles, particularly large models like the F-150 Lightning, which has since been discontinued in its current form.

GM is expected to provide further details on these charges during its earnings report scheduled for January 27.

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