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General Motors (NYSE: GM) announced a $1.6 billion charge in the third quarter of 2025, primarily tied to the strategic realignment of its electric vehicle (EV) business and manufacturing capacity. This move is a direct response to a reassessment of the US EV adoption rate, which the automaker expects to slow following recent US government policy changes that eliminated the federal EV tax credit effective last month.
GM To Take a $1.6 Billion Hit on EV Slowdown
The total charge of $1.6 billion is divided into two main components:
- $1.2 billion in Non-Cash Impairment: This significant portion consists of non-cash impairment and other charges resulting from adjustments to GM’s EV capacity and manufacturing footprint. An impairment charge is an accounting mechanism that reflects a reduction in the value of assets (like EV-related investments) because the future cash flows expected to be generated by those assets no longer justify their current value on the balance sheet.
- $0.4 billion in Cash Charges: This amount is predominantly related to contract cancellation fees and commercial settlements associated with prior EV-related investments.
The Trump Administration Ended EV Tax Credits
GM’s decision stems from a re-evaluation of its prior aggressive investment and production commitments for EVs. The company specifically cited changes in US government policy as a key factor expected to slow the pace of EV adoption. These policy shifts include the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations. The tax incentives, which had previously spurred sales, expired at the end of September 2025, leading to a projected dip in consumer demand.
“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,” GM said in its filing.
The $1.6 billion charge will be reflected in GM’s third-quarter 2025 earnings report as an adjustment to its non-GAAP financial measures. While the write-down reflects a necessary recalibration of its EV strategy, GM has affirmed that the realignment does not affect its current retail portfolio of Chevrolet, GMC, and Cadillac EVs already in production. These models are expected to remain available to consumers.
Despite the charge, GM had set a new EV sales record in Q3 2025, with 66,501 deliveries, marking a significant year-over-year increase. However, this surge was partially attributed to consumers rushing to purchase vehicles before the $7,500 federal EV tax credit expired, suggesting that sustained, incentive-free growth remains a challenge.
US EV Adoption Rates Spiked in September
The US EV market saw a significant acceleration in adoption in September, with sales and market share hitting a new record high for the month. This surge was primarily fueled by a rush from consumers to take advantage of impending deadlines for federal tax credits.
According to market data, the electric vehicle (EV, including Battery Electric Vehicles or BEVs, and Plug-in Hybrid Electric Vehicles or PHEVs) market share of new light-duty vehicle sales climbed to an estimated 12.2% to 13% in September. This is a notable increase from earlier in the year, helping push the overall EV share for the third quarter to a new record of around 10.5%.
Battery Electric Vehicles (BEVs) reached a record market share of approximately 11.8% of all new vehicles sold in September, demonstrating robust consumer interest in fully electric models.
GM Will Release Its Q3 Earnings Later This Month
GM will release its Q3 2025 earnings later this month. The Detroit auto giant posted better-than-expected earnings, but fears of Trump’s auto tariffs eating into its profits led to a sell-off post the confessional.
GM reported revenue of $47.1 billion, a 1.8% decrease from Q2 2024, but ahead of the $46.28 billion that analysts had expected. Net income attributable to stockholders, however, fell 35.4% year-over-year, landing at $1.9 billion. The company’s adjusted EBIT fell 31.6% to $3.0 billion, leading to a contraction in adjusted EBIT margin from 9.3% in Q2 2024 to 6.4% in Q2 2025. Diluted EPS-adjusted came in at $2.53, down from $3.06 in the corresponding quarter last year but ahead of the $2.44 that analysts were modelling.
The tariffs had a net impact of $1.1 billion on GM’s Q2 profits, which is in line with the annual guidance of between $4 billion-$5 billion. For the full year, GM expects to offset at least 30% of the tariffs through strategic actions like manufacturing adjustments, targeted cost initiatives, and pricing actions.
Notably, GM is more exposed to tariffs compared to Ford, as it imports not only parts and vehicles from Mexico and Canada but also finished cars from South Korea and China into the US.
GM Lowered Its 2025 Guidance Amid Tariffs
GM maintained its previous guidance of adjusted EBIT of between $10 billion and $12.5 billion this year, which it provided in May. In January, while releasing its Q4 2024 earnings, the company had forecast an adjusted EBIT between $13.7 billion and $15.7 billion.
Similarly, it cut the adjusted automotive free cash flow to between $7.5 billion and $10 billion, compared to the previous guidance of between $11 billion and $13 billion.
For the full year, GM expects net income attributable to stockholders of $8.25 billion to $10 billion, down from $11.2 billion to $12.5 billion that it originally guided for before the tariffs.
GM Has Been Aggressively Repurchasing Shares
Meanwhile, over the last year, GM was aggressively repurchasing its shares. In April, while releasing its Q1 earnings, GM put its share buyback plan on hold amid the tariff uncertainty. However, the company has since resumed the repurchases.
During their Q2 2025 earnings call, GM confirmed that they had completed the $2 billion accelerated share repurchase (ASR) program. This program was part of a larger $6 billion share buyback authorization approved by the board in February 2025.
The company retired 10 million shares through this program in Q2 2025. While the ASR is concluded, GM still has $4.3 billion of capacity remaining under its broader share repurchase authorizations for additional, opportunistic buybacks.