GM Says It Will Take a $1.6 Billion Hit as EV Sales Plunge

The sinking demand for electric vehicles (EVs) is starting to take a hit on car manufacturers. In recent years, carmakers have made major investments, betting on electric cars becoming more mainstream, as well as to meet government regulations, but recent shifts in policy and politics have now made those bets costly.

General Motors is the latest company to show how this change is hitting its bottom line. The company said today, in a filing with the U.S. Securities and Exchange Commission (SEC), that it would take a $1.6 billion hit on its quarterly earnings ending Sept. 30. The charge stems mostly from a drop in the value of its plants and equipment tied to its EV operations along with $400 million in fees and settlements related to canceling supplier contracts associated with EV investments.

“Following recent U.S. 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.

U.S. demand for EVs had already started to drop early last year, but it’s now expected to really crater under President Donald Trump’s policies targeting the market. The biggest blow is the end of the federal $7,500 EV tax credit, which officially expired on Sept. 30. That incentive was scrapped under the administration’s One Big Beautiful Bill Act.

But the loss of subsidies isn’t the industry’s only hurdle. Earlier this year, Trump rolled back federal emissions standards and stripped states of the ability to set their own stricter rules. That move wiped out California and other states’ requirements that automakers sell more zero-emission vehicles.

The EV industry also faces cultural and consumer challenges. Elon Musk’s growing unpopularity has turned off some buyers, potentially dragging down demand not only for Teslas but for EVs in general.

GM said a “reassessment of our E.V. capacity and manufacturing footprint” is ongoing and could lead to even more costs in the future.

GM isn’t the only company bracing for an EV slowdown. Car companies like Nissan, Honda, and Ford are shifting their strategies, delaying launches and quietly shifting money back into internal combustion vehicles.

Just weeks ago, Ford CEO Jim Farley said at the Ford Pro Accelerate conference in Detroit that EV sales in the U.S. could be slashed in half in the foreseeable future.

“I wouldn’t be surprised if EV sales in the US go down to 5%,” Farley told the audience, according to Bloomberg. EVs currently account for nearly 10% of the broader domestic market.

For his part, Farley thinks the industry should move toward “partial electrification” with more hybrid options. In his view, fully electric models make the most sense as commuter vehicles with short drives, accounting for only about 5% to 7% of the market. He said Ford is already looking to retool its battery and EV plants to include hybrid production.