General Motors (GM) will endure charges of nearly $6 billion as sales of electric vehicles decline in the wake of the federal government’s decision to cut tax incentives to encourage their purchase, as well as the move toward eased auto emissions standards. This follows a $1.6 billion charge incurred for the same reason in the fourth quarter last year.
The $6 billion in charges include non-cash impairments and other non-cash charges of about $1.8 billion as well as supplier commercial settlements, contract cancellation fees, and other charges of approximately $4.2 billion.
In 2020, GM announced $27 billion of investment in electric and autonomous vehicles under the expectation that more than half of its factories in North America and China would be capable of making electric vehicles by 2030, but the elimination of the clean vehicle tax credit, which was worth $7,500 for new EVs and up to $4,000 for used ones, has dampened sales.
This pullback will also have implications for the supportive infrastructure for EVs, as GM pledged to increase its investment in EV charging networks alongside investment in shifting its production capacity from combustion to electric-powered engines. Its goal was to make the majority of its vehicles electric by 2035 and achieve carbon neutrality as a company five years after that.
