GM Faces $1.6 Billion Loss in Q3 Amid Major Shift in EV Strategy After Tax Credit Ends:

General Motors (GM) has announced it will take a $1.6 billion charge in the third quarter of 2025 as it reassesses its electric vehicle (EV) strategy following a major change in U.S. policy. The move comes after the federal government, under President Donald Trump’s administration, scrapped the $7,500 tax credit for electric vehicles — a key incentive that had supported EV sales across the country. The Detroit-based automaker said in a statement on Tuesday that this one-time charge reflects its expectation of “lower-than-planned EV volumes” due to changing market conditions and a shifting regulatory environment. This includes the end of consumer tax incentives and relaxed emissions standards, both of which are likely to weaken EV adoption in the near term. In a regulatory filing, GM warned that the EV market is set to cool, at least temporarily, due to the withdrawal of government support. Auto industry executives have also echoed these concerns, predicting a dip in electric vehicle sales before the market stabilizes and picks up again. Out of the $1.6 billion charge, $1.2 billion is related to non-cash impairments due to adjustments in EV production capacity. The remaining $400 million stems from contract cancellation fees and other commercial settlements. GM also signaled that further financial hits may be coming as it continues to evaluate its manufacturing footprint and future capacity. This isn’t GM’s first financial setback linked to government policy. In the previous quarter, the company reported a $1.1 billion loss due to Trump’s tariffs. Overall, GM estimates trade-related impacts could cost the company between $4 billion and $5 billion this year. It is currently working on strategies to offset at least 30% of that burden. While the company has been at the forefront of EV investments among traditional automakers, some analysts suggest that rivals like Toyota and Honda — who prioritized hybrid vehicles — may now be better positioned in the U.S. market. Garrett Nelson, a senior equity analyst at CFRA Research, noted that GM’s aggressive EV push is now facing serious headwinds. Earlier plans by GM and Ford to help dealers continue offering the $7,500 tax credit through EV lease programs have also been shelved. Despite the financial setback, GM confirmed that its existing lineup of electric vehicles under the Chevrolet, GMC, and Cadillac brands will remain unaffected. The charges will be recorded as adjustments to the company's non-GAAP financial results, with third-quarter earnings scheduled for release next week. Interestingly, GM’s stock rose by 1% on Tuesday morning despite the news, although it remains down more than 2% over the past five trading days.

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