General Motors (NYSE:GM) will impose a $1.6 billion levy as it reshuffles electric vehicle (EV) production as the federal government rolls back clean energy incentives and emissions standards.
In one regulatory filing on Tuesday (Oct. 14), GM said the charges include a $1.2 billion non-cash impairment charge due to EV capacity adjustments, in addition to $400 million in cash expenses for contract cancellations and commercial settlements related to EV investments.
“Following the U.S. government’s recent policy changes, including the end of certain consumer tax incentives for purchasing electric vehicles and the reduction of more stringent emissions regulations, we expect electric vehicle adoption rates to slow,” GM said in the filing.
The announcement sent GM shares down nearly 2 percent before the opening bell in New York. The stock is up about 4.4 percent so far this year, lagging the broader S&P 500 (INDEXSP:.INX), which is up about 13 percent.
The setback comes just months into the Trump administration ended the federal EV tax creditwhich was previously worth up to $7,500 for new electric vehicles and $4,000 for used ones, while also weakening fuel economy and emissions standards.
The board has also moved block California’s planned phaseout of new gas-powered vehicle sales and freezing federal funding for electric vehicle charging infrastructure.
These reversals have reduced pressure on automakers to move away from internal combustion engines, once again shifting the market toward gasoline vehicles that deliver higher profits in the short term.
For GM, long considered one of America’s most aggressive advocates for an electric transition, the changing climate marks a sharp turn in the trajectory.
Despite the setback, the Detroit-based company said the EV capacity realignment will not impact the retail availability of current Chevrolet, GMC and Cadillac electric models.
GM is scaling back its EV ambitions
GM’s pivot is in stark contrast to its ambitions just a few years ago.
In 2020, the automaker pledged to invest $27 billion in electric and autonomous vehicles within five years — 35 percent more than pre-pandemic plans — and to convert more than half of its North American and Chinese factories to electric vehicle production by 2030.
GM also pledged to make nearly all of its vehicles electric by 2035 and achieve full carbon neutrality by 2040. Chief Executive Mary Barra even predicted that GM would surpass Tesla (NASDAQ:TSLA) in US electric vehicle sales by the middle of the decade.
Still, the company’s latest filing suggests that this goal may now be out of reach, at least in the short term.
While electric cars remain an important part of GM’s portfolio, the economic and regulatory environment has become more volatile, forcing automakers to hedge their bets between electric and gas-powered models.
Ironically, GM’s cut comes amid record-breaking EV sales across the country. In the third quarter of 2025, US electric vehicle sales rose to a record high of 438,487 units, up 41 percent from the previous quarter and up nearly 30 percent year over year. This increase also accounted for 10.5 percent of all new vehicle sales.
However, the increase was largely driven by buyers rushing to complete their purchases before the federal tax credits expired.
Despite the policy uncertainty, GM itself posted robust sales figures for the quarter.
U.S. auto sales rose 8 percent year-over-year, supported by gains in both the electric and traditional segments. The company also delivered a record 66,501 electric vehicles in the third quarter, more than doubling its volume from a year earlier, and total electric vehicle sales this year rose 105 percent to 144,668 units.
Yet the current status of the Western market is skewed. While major companies all posted significant EV gains, other companies reported flat or declining sales.
Competitive pressure is further exacerbated by the rapid rise of Chinese automakers such as BYD (HKEX:1211,OTC Pink:BYDDF)where sales rose 31 percent to 2.1 million vehicles in the first half of 2025, powered by Beijing’s heavy subsidies and growing global reach.
BYD and other Chinese brands are now targeting markets in Europe and Southeast Asia with cheaper alternatives, posing new challenges for older Western carmakers.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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