The electric vehicle (EV) revolution, once thought to be inevitable and unstoppable, is hitting a patch of bumpy road. In recent weeks, two of the world’s automotive giants—General Motors (GM) in the United States and the Volkswagen Group (VW), including its luxury brand Porsche, in Europe—have announced major shifts in their electrification strategies. These moves reflect a new reality: demand for EVs is growing, but not as quickly as once anticipated, and the financial and regulatory landscape is evolving in ways that are forcing even the most ambitious automakers to rethink their plans.
According to Electrek, GM’s third-quarter numbers for 2025 were a study in contrasts. On one hand, the company’s electric offerings are surging: Chevy, Cadillac, and GMC sold nearly 67,000 EVs in Q3, more than doubling their sales from the same period in 2024. That impressive figure gave GM a 16.5% share of all EV sales in the U.S. for the quarter. The Chevy Equinox EV has become America’s best-selling electric vehicle outside of Tesla, while Cadillac now leads the luxury EV segment with three of the top ten models—Lyriq, Optiq, and Vistiq.
Despite this momentum, GM is tapping the brakes on its aggressive EV expansion. CEO Mary Barra explained the company’s new stance in an October 21, 2025 statement: “With the evolving regulatory framework and the end of federal consumer incentives, it is now clear that near-term EV adoption will be lower than planned.” The expiration of the $7,500 federal tax credit at the end of September was a major blow, prompting GM to reassess its EV manufacturing capacity and to extend the life of its internal combustion engine (ICE) vehicles.
Barra acknowledged the company’s rapid EV build-out in recent years, saying, “We aggressively expanded our electric vehicle capacity to meet regulatory requirements.” But with policy winds shifting, GM is pivoting. “It’s clear that ICE volumes will remain higher for longer,” she said, confirming that gas-powered vehicles will continue to roll off GM assembly lines for the foreseeable future.
GM’s production plans are changing accordingly. The company will permanently end production of the BrightDrop electric van at its CAMI Assembly plant in Ontario. Meanwhile, it will onshore production of the Chevy Blazer and invest in new generations of Cadillac models, including the CT5 and XT5. In early 2027, GM will begin building the Cadillac Escalade and a new full-size, light-duty pickup at its Orion Assembly plant in Michigan. These strategic moves are expected to cost GM about $1.6 billion, a sizable sum even for a company of its scale.
Financially, GM’s Q3 results were a mixed bag. The company posted $45.59 billion in revenue and an adjusted earnings per share (EPS) of $2.80, beating Wall Street’s expectations. Share prices jumped over 13% after GM raised its full-year adjusted EBIT guidance to $12 to $13 billion, up from the previous $10 to $12.5 billion forecast. Tariff impacts are now expected to be lower than originally feared, with updated full-year gross tariff costs of $3.5 to $4.5 billion, down from $4 to $5 billion. Yet, net income plunged 57% to $1.3 billion, compared to $3.1 billion in the same quarter last year.
Profitability remains a sticking point for EVs. GM’s CFO Paul Jacobson told CNBC’s Squawk Box that only about 40% of the company’s EVs are profitable on a production basis. “We continue to believe that there is a strong future for electric vehicles, and we’ve got a great portfolio to be competitive, but we do have some structural changes that we need to do to make sure that we lower the cost of producing those vehicles,” Jacobson said. GM plans to keep investing in battery chemistry, new form factors, and architectural improvements to boost future EV profits.
Across the Atlantic, a similar story is unfolding. As reported by Automotive Manufacturing Solutions, Porsche and the broader Volkswagen Group are scaling back their EV ambitions amid cooling demand, rising costs, and significant platform delays. Porsche, which had set its sights on going largely electric in Europe by 2035, is now delaying the launch of its flagship K1 electric SUV—originally slated for 2027—until the early 2030s. The K1 will now offer internal combustion and plug-in hybrid (PHEV) powertrains, and Porsche will take a €1.8 billion write-down as a result.
The ripple effects are substantial. The much-anticipated Scalable Systems Platform (SSP)—the software-driven architecture at the heart of VW’s future EV plans—has been pushed back until the late 2020s for mainstream brands and “well into the 2030s” for Porsche’s SSP Sport variant. Suppliers working on components for models like the K1 have seen their projects paused or postponed. The current Golf ICE model’s transfer to VW’s Puebla, Mexico factory has been delayed until at least 2028. Plans to reduce production at the Zwickau plant to a single model have also been put on hold to maintain utilization levels.
Financially, the Volkswagen Group faces a hit of more than €5 billion due to these changes. The company now expects annual EV sales volumes of around 3 million in Europe and less than 2.5 million in the U.S. by 2026—down sharply from earlier projections of 5 million and 4 million, respectively. The cumulative impact of lower EU and U.S. EV sales through 2026 is now estimated at 8 million units fewer than previously forecast.
To adapt, VW is planning to cut more than 50,000 jobs and reduce annual capacity by about 1 million units, mainly in Europe. The group will focus on new entry-level EVs in Europe from 2026, such as the ID Polo, ID Cross, and ID Every1, and pursue more vertical integration in EV drivetrain production, with a shift towards lower-cost LFP battery chemistries and cell-to-pack assembly methods. Multi-brand production strategies, like building the Volkswagen Passat and Skoda Superb together in Bratislava, are expected to save hundreds of millions of euros over the vehicles’ lifecycles.
Despite these setbacks, both GM and VW insist that EVs remain central to their long-term vision. GM’s Barra maintains, “Electric vehicles remain our North Star.” Porsche, for its part, will continue with four EV models—the Taycan, Macan electric, upcoming Cayenne BEV, and electric 718 Boxster/Cayman—though the electric 718 is now delayed until 2027, and a new Macan ICE model is on the way. The iconic 911, beloved by purists, will retain its ICE powertrain for the foreseeable future.
But the path to an all-electric future is no longer linear. Both automakers are betting that hybrids and ICE vehicles will be around longer than policymakers once envisioned. If the European Union does not relax its rules banning ICE and hybrids by 2035, further cutbacks and financial pain are likely. For now, the world’s biggest carmakers are recalibrating—balancing innovation, regulation, and the bottom line as the road to electrification takes a few unexpected turns.
It’s a reminder that in the auto industry, even the best-laid plans sometimes require a detour.
