Power the Future founder Daniel Turner discusses the Trump administration’s pursuit of California over its truck emissions standards and electric vehicle mandates on The Bottom Line.
General engines said Tuesday it plans to take a $1.6 billion charge in the third quarter to revamp its electric vehicle strategy, as the end of the federal government’s tax credit for electric vehicles is expected to slow demand.
GM’s move comes as automakers are reviewing their electric vehicle production plans after consumer demand slowed over the past two years.
The Trump administration’s decision to end the $7,500 federal tax tax credit for electric vehicleswhich has helped support the emerging industry, has prompted executives to warn of a decline in consumer demand.
GM said in a filing that it expects “the adoption rate of electric vehicles to slow” following recent policy changes, which included not only the end of the tax incentive but also a move to roll back an emissions rule that is expected to push automakers to make more electric vehicles.
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General Motors said it would charge $1.6 billion after losing federal electric vehicle tax credits. (Paul Hennessy/SOPA Images/LightRocket via Getty Images / Getty Images)
The automaker told Reuters the tax “is a special item driven by our expectation that electric vehicle volumes will be lower than expected due to market conditions and changes in the regulatory and policy environment.”
Garrett Nelson, senior equity analyst at CFRA Research, said the accusation “is no surprise given recent market developments and the fact that GM has probably made the most aggressive push into electric vehicles of any traditional automaker.”
“We believe that automakers that have chosen to invest more in hybrid vehicle development, such as Toyota and Honda, are poised to benefit from the U.S. auto market,” Nelson added.
| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| General manager | GENERAL MOTORS CO. | 57.15 | +1.53 |
+2.75% |
GM PROFIT REDUCED DESPITE STRONGER SALES
THE the Trump administration Tariffs and trade policy changes have also created financial difficulties for automakers like GM, which suffered a $1.1 billion loss in the previous quarter.
GM estimates its net impact will be between $4 billion and $5 billion this year due to headwinds on customs dutiesand said it could take steps to offset at least 30% of the impact.
These include a $1.2 billion non-cash writedown related to electric vehicle capacity adjustments and $400 million in contract cancellation fees and trade settlements.
GM CEO Mary Barra warned of the impact of tariffs and the elimination of EV credits. (Anna Moneymaker/Getty Images/Getty Images)
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GM said the charges would be recorded as adjustments to third-quarter non-GAAP results, which are expected to be released early next week.
Shares of GM rose 0.68% during Tuesday’s morning trading session following the news.
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Reuters contributed to this report.
