NewsGlobalGeneral Motors Takes $6 Billion Writedown as Company Scales Back Electric Vehicle InvestmentsGeneral Motors Takes $6 Billion Writedown as Company Scales Back Electric Vehicle Investments
General Motors announced a $6 billion writedown to unwind electric vehicle investments, with $4.2 billion in cash charges for supplier contract cancellations. The company will maintain its current dozen EV models despite scaling back production plans. GM shares fell 2% after-hours following the announcement, reflecting broader industry challenges including declining EV sales after federal tax credit elimination.
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General Motors announced on Thursday it will take a $6 billion charge to unwind electric vehicle investments, becoming the latest major automaker to scale back EV commitments amid changing market conditions and policy shifts. The writedown reflects the company's decision to reduce planned EV production and addresses the resulting supply chain implications.
Financial Impact and Breakdown
The substantial charge will be recorded as a special item in GM's fourth-quarter earnings report. The majority of the writedown consists of cash charges related to supplier agreements and production adjustments.
| Component | Amount | Details |
|---|---|---|
| Total Writedown | $6.00 billion | Complete charge for EV investment unwinding |
| Cash Charge | $4.20 billion | Contract cancellations and supplier settlements |
| Additional Charges | Expected in 2026 | Supply base negotiations, less than 2025 amounts |
The $4.2 billion cash charge specifically addresses contract cancellations and settlements with suppliers who had prepared for significantly higher production volumes before market conditions shifted. GM expects to incur additional charges in 2026 from ongoing supply base negotiations, though these are anticipated to be smaller than the current writedown.
Market Response and Stock Performance
GM shares fell 2.00% in after-hours trading following the announcement. The stock had closed the regular Thursday session up 3.90% at $85.13, indicating the writedown news came as a surprise to investors who had been optimistic about the company's near-term prospects.
Product Lineup Continuity
Despite the significant financial charge, GM emphasized that the writedown will not affect its current US electric vehicle offerings. The company maintains approximately a dozen EV models, representing what it describes as the industry's broadest portfolio of battery-powered vehicles.
Key commitments include:
- Continued availability of existing EV models to consumers
- Maintenance of current product lineup
- No immediate changes to consumer offerings
GM CEO Mary Barra has indicated the company will respond to customer demand patterns as they evolve in the electric vehicle market.
Industry Context and Broader Challenges
The automotive industry has experienced significant shifts in EV demand and policy support. Sales of battery-powered vehicles declined substantially following the elimination of the $7,500 federal tax credit for EV buyers on September 30. GM's EV sales specifically dropped 43.00% in the fourth quarter after the loss of the consumer tax credit.
| Metric | Performance | Context |
|---|---|---|
| GM Q4 EV Sales | -43.00% | Following tax credit elimination |
| Industry EV Growth 2025 | +1.20% | Significantly slower than previous years |
| Projected 2026 EV Share | 6.00% | Down from 7.40% in 2025 |
Ford Motor announced a similar but larger writedown in December, totaling $19.5 billion over several quarters as it canceled multiple EV programs including the fully electric F-150 Lightning truck.
Operational Adjustments
GM has made several operational changes to align with revised market expectations. The company halted EV battery production at two joint-venture plants for six months and reduced production to one shift at a Detroit EV-only factory. Additionally, GM pivoted away from plans for a Michigan factory originally slated for EV production, instead choosing to build the Cadillac Escalade and full-size pickups at that location.
The company also announced a separate $1.1 billion charge in the fourth quarter related to ongoing restructuring of its China joint venture, indicating broader strategic adjustments across multiple markets and business segments.
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