GM Takes $1.6B Charge, Abandons 2035 All-EV Goal Amid Slow Demand

General Motors is recording a $1.6 billion charge as it scales back EV ambitions, abandoning its 2035 all-electric goal amid shifting U.S. policies, slashed tax incentives, and softening demand. The company is pivoting to hybrids and internal-combustion engines, reflecting broader industry caution and potential further impairments.
GM Takes $1.6B Charge, Abandons 2035 All-EV Goal Amid Slow Demand
Written by Emma Rogers

General Motors Co. is facing a significant financial setback as it scales back its ambitious electric-vehicle ambitions, recording a $1.6 billion charge amid shifting U.S. policy and softening demand. The Detroit automaker, once a vocal proponent of an all-electric future, has abandoned its goal of phasing out gasoline-powered vehicles by 2035, opting instead to prioritize hybrids and traditional internal-combustion engines. This pivot comes as federal tax incentives for EVs have been slashed and emissions regulations relaxed, creating headwinds for the industry’s transition to battery-powered mobility.

According to a regulatory filing, GM attributes the charges primarily to the diminished value of manufacturing equipment, factories, and other assets tied to its EV production ramp-up. The company warned that additional impairments could follow as it reassesses its strategy, potentially affecting operations and cash flow. This development underscores the volatility facing U.S. automakers, who must navigate erratic policy environments that swing with each administration.

Policy Shifts and Market Realities Force a Reckoning In recent months, the expiration of a $7,500 federal tax credit for new American-made EVs, set to end on September 30, has compounded challenges for manufacturers like GM. As reported by Business Insider, several automakers including Porsche, Honda, Jeep, and Ford are similarly dialing back EV plans, bracing for reduced consumer incentives. GM’s move reflects broader industry caution, with executives citing weaker-than-expected demand and infrastructure limitations as key factors.

The charges break down to about $1.2 billion in asset impairments and $400 million in inventory writedowns, directly linked to production realignments. Analysts note that GM’s earlier investments in battery plants and supply chains, once hailed as forward-thinking, now appear overextended in a market where EV adoption has slowed. Bloomberg Intelligence’s Steve Man highlighted in a Bloomberg video that this could signal more pain ahead, as GM reevaluates its entire EV portfolio.

Broader Implications for Detroit’s Big Three This isn’t GM’s first retreat; the company previously walked back a target of 400,000 EVs by mid-2024 and delayed its 1 million-unit capacity goal for 2025. Posts on X (formerly Twitter) from industry observers, such as those noting GM’s production shortfalls, capture the sentiment of skepticism around aggressive EV timelines. Yet, GM insists it’s not abandoning electrification entirely, planning to integrate plug-in hybrids as a bridge technology.

Rivals like Ford and Stellantis are encountering similar hurdles, with Ford reporting losses on its EV division and Stellantis pausing some battery projects. The New York Times detailed how slowing EV sales are prompting these write-downs, estimating GM’s hit mainly from devalued assets. For industry insiders, this highlights the risks of betting big on government-backed transitions, especially when political winds shift.

Strategic Pivot Amid Economic Uncertainty Looking ahead, GM’s leadership, under CEO Mary Barra, is focusing on profitability over volume in EVs. The company aims to leverage its strengths in trucks and SUVs, where hybrid options could appeal to cost-conscious buyers wary of full electrification. However, this strategy raises questions about long-term competitiveness against global players like Tesla and Chinese manufacturers, who continue aggressive EV expansions.

Critics argue that policy inconsistency hampers innovation, as echoed in reports from The Hartford Courant, which pointed to administrative changes disrupting automakers’ planning. GM’s $1.6 billion charge may be just the tip of the iceberg, signaling a more cautious era for Detroit’s EV aspirations. As the industry adapts, the balance between regulatory support, consumer demand, and technological readiness will determine who thrives in the evolving automotive sector.

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