GM takes $1.6B financial hit as EV tax credit changes force strategy overhaul

General Motors said Tuesday that it plans to take a $1.6 billion charge in the third quarter as it revamps its electric vehicle strategy as the end of the federal government's EV tax credit is expected to slow demand.GM's move comes as automakers are reworking their plans for producing EVs after consumer demand softened over the last two years.The Trump administration's move to end the $7,500 federal tax credit for EVs, which helped support the emerging industry, prompted executives to warn about a drop-off in consumer demand.GM said in a filing that it expects "the adoption rate of EVs to slow" following the recent policy shifts, which included not only the termination of the tax incentive but also a move to roll back an emissions rule that was expected to push automakers to make more EVs.NEWSOM SAYS GM'S MARY BARRA 'SOLD US OUT' ON ELECTRIC VEHICLE POLICIES AND FEDERAL SUBSIDIESThe automaker told Reuters that 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."Garrett Nelson, a senior equity analyst at CFRA Research, said that 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.""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," Nelson added.GM PROFIT SHRINKS DESPITE STRONGER SALESThe Trump administration's tariffs and trade policy shifts have also created financial headwinds for automakers like GM, which took a $1.1 billion hit in the prior quarter.GM estimated it has a bottom-line impact of $4 billion to $5 billion this year due to tariff headwinds, and said that it could take steps to offset at least 30% of the impact.Those include a $1.2 billion non-cash impairment tied to EV capacity adjustments and $400 million in contract cancellation fees and commercial settlements.CALIFORNIA EV DRIVERS ARE ABOUT TO LOSE A MAJOR PERK AFTER 25 YEARSGM said the charges will be recorded as adjustments to non-GAAP results for the third quarter, which are scheduled to be released early next week.GM shares rose 0.68% during the morning trading session on Tuesday following the news.GET FOX BUSINESS ON THE GO BY CLICKING HEREReuters contributed to this report.Weiter zum vollständigen Artikel bei FOX Business Weiter zum vollständigen Artikel bei FOX Business