General Motors (GM), a cornerstone of the American automotive industry, is bracing for a significant financial blow in the third quarter of 2025. The company announced on Tuesday, October 14, that it will take a $1.6 billion charge as it reshapes its electric vehicle (EV) strategy in response to sweeping changes in U.S. policy. The move comes after the Trump administration scrapped the federal EV tax credit and loosened emissions regulations, developments that are expected to slow consumer demand for electric vehicles and reshape the landscape for automakers nationwide.
The $7,500 federal tax credit, which had served as a critical incentive for new EV buyers, ended in September 2025. Used EVs had also qualified for up to $4,000 in credits. According to Reuters, GM confirmed in a regulatory filing that the charge comprises a $1.2 billion non-cash impairment tied to EV capacity adjustments and an additional $400 million for contract cancellation fees and commercial settlements associated with EV-related investments.
"The charge is a special item driven by our expectation that EV volumes will be lower than planned because of market conditions and the changed regulatory and policy environment," GM told Reuters. The company further warned that these adjustments may not be the last: as GM reassesses its manufacturing footprint and capacity, additional non-cash charges could impact operations and cash flow in the future.
Notably, GM emphasized that its current portfolio of Chevrolet, GMC, and Cadillac EVs in production will remain available to consumers. The company’s EV capacity realignment will not affect these models, providing some continuity for buyers already invested in the electric future. However, the broader implications for GM’s ambitious electrification plans are profound.
GM has long positioned itself as a leader among U.S. automakers in the transition to electric vehicles. Back in 2020, the company announced a $27 billion investment in electric and autonomous vehicles over five years—a 35% increase over pre-pandemic plans. By 2021, GM aimed for over half of its North American and China factories to be capable of producing EVs by 2030. The company also pledged nearly $750 million to expand EV charging networks through 2025, underscoring its commitment to infrastructure as well as manufacturing.
In 2022, CEO Mary Barra set the bar even higher, declaring that GM would outsell Tesla in U.S. EV sales by the middle of the decade. The automaker also outlined a vision to make the vast majority of vehicles it produces electric by 2035, with the entire company—including operations—going carbon neutral by 2040.
But the recent policy changes have cast a shadow over these bold ambitions. According to Fox Business, the Trump administration’s decision to end the EV tax credit and roll back emissions rules is expected to slow the adoption rate of EVs. "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, as reported by Reuters.
Industry analysts and executives are divided on the long-term impact. Ford CEO Jim Farley has warned of a significant drop in EV sales without the tax credit, while the CEO of Hyundai Motor North America remains optimistic about the market’s resilience. Garrett Nelson, a senior equity analyst at CFRA Research, noted, "The charge doesn’t come as a surprise given recent market developments and the fact GM had made probably the most aggressive EV push of any traditional automaker." He added, "We think the automakers who chose to invest more heavily in hybrid vehicle development, such as Toyota and Honda, are poised to benefit in the U.S. auto market."
GM is not alone in feeling the pressure. U.S. carmakers across the board have delayed or canceled new EV models, battery plants, and pared other investments, citing weaker-than-expected demand. Both GM and its crosstown rival Ford had initially rolled out programs to allow dealers to offer a $7,500 tax credit on EV leases after the federal subsidy expired, but ultimately walked back those plans.
Compounding the challenge, GM is also contending with the financial headwinds of tariffs and shifting trade policies. The company took a $1.1 billion hit in the previous quarter due to tariffs and estimates a bottom-line impact of $4 billion to $5 billion for 2025 from trade headwinds. GM has stated it hopes to offset at least 30% of this impact, but the environment remains uncertain.
Meanwhile, the competitive landscape is heating up. Chinese automaker BYD reported a 31% growth in sales in the first half of 2025, reaching 2.1 million cars. BYD’s rapid expansion—fueled by a government-driven EV boom in China—poses a formidable challenge to GM, Tesla, and other global players, especially as BYD pushes into Europe, Southeast Asia, and other overseas markets with more affordable EV options.
On Wall Street, GM’s announcement triggered a mixed reaction. Shares dipped between 2% and 3% before the opening bell on Tuesday, though the stock had been up about 4.5% for the year before the news. By 11 a.m. in New York, shares had rebounded slightly, up about 1%, but remained down more than 2% over the last five trading days.
GM’s charges will be recorded as adjustments to its non-GAAP results for the third quarter, with official results scheduled for release early next week. The company’s disclosure, one of the clearest signals yet that U.S. automakers are scrambling to adapt to a rapidly changing policy and market environment, has left industry watchers and investors wondering what’s next for the electric vehicle revolution in America.
As the dust settles, GM’s experience underscores the volatility of the EV market—where government policy, global competition, and consumer sentiment can shift the ground beneath even the biggest players. For now, the company’s electric dreams remain alive, but the road ahead looks bumpier than ever.
