General Motors on Thursday said it will lose another $6 billion as a result of its decision to pull back on electric cars.
It comes on top of a $1.6 billion charge it disclosed in October for changes to its EV plans.
It’s another sign of the significant cost to traditional automakers after President Donald Trump ended federal policies that were intended to foster the adoption of zero emissions vehicles.
GM and other automakers invested heavily in EV plans in anticipation of stringent environmental regulations put in place during the Biden administration. They also expected some states to follow the lead of California and ban gas-powered vehicle sales within a decade. GM had previously announced a goal to produce only electric vehicles by 2035.
But the Trump administration has rolled back those emissions rules along with the financial support for EVs. It is also challenging the states’ authority to set their own tougher rules.
Electric cars aren’t going away entirely, however, as significant demand remains in the United States and demand continues to soar higher in other markets.
Much of GM’s $6 billion charge against its earnings will go towards settling canceled contracts with parts suppliers.
GM’s latest charge follows a Ford announcement in December that it would take a similar $19.5 billion charge against its earnings from its own change in EV plans.
GM did not announce that it would be discontinuing any particular electric cars at the moment, nor did it announce that it would be closing any factories or cutting any jobs. But it already announced in October that it would be eliminating one shift at its Factory Zero EV plant in Detroit, placing 1,200 hourly workers on indefinite layoff. It also placed 550 workers at an EV battery plant in Ohio on indefinite layoff as well.
Demand for electric vehicles surged through the summer and September due to the scheduled expiration of a $7,500 US tax credit for EV buyers. But US sales of electric models fell sharply across the industry in the fourth quarter, both compared to a year earlier as well as from the record third quarter.
GM CEO Mary Barra told investors in October that “electric vehicles remain our North Star,” but that it was now clear that sales of cars and trucks with traditional internal combustion engines “will remain higher for longer.”
