General Motors (GM) has projected a $1.6bn charge in the third quarter as it revises its electric vehicle (EV) strategy in the light of recent US federal policy changes that could hinder demand.
In a regulatory filing, GM indicated that the adoption rate of EVs is anticipated to decline following the cessation of certain consumer tax incentives and the relaxation of emissions regulations.
The EV tax credit, which provided up to $7,500 for new vehicles and $4,000 for used ones, expired last month.
The company outlined that the charge will encompass non-cash impairment and other costs totalling $1.2bn, attributed to adjustments in EV capacity.
Additionally, GM expects to incur $400m in expenses primarily associated with contract cancellations and commercial settlements linked to its EV investments.
It has cautioned that further financial impacts may arise as it continues to reassess its EV capacity and manufacturing footprint, including investments in battery component production.
The automaker stated that it is “reasonably possible” it will recognise additional material cash and non-cash charges that could negatively influence its operational results and cash flows.
Despite these adjustments, GM clarified that the realignment of its EV capacity will not affect its current retail offerings, including the Chevrolet, GMC, and Cadillac EV models that are already in production.
Last month, GM decided to scale back production at one of its key EV manufacturing facilities.
A report from Reuters indicated that the company will temporarily halt production of two electric Cadillac SUV models at its Spring Hill, Tennessee plant in December, responding to the reduced federal support for EVs under the current administration.
The Spring Hill facility is responsible for the production of the Cadillac Lyriq, a popular midsize EV, along with the larger Vistiq model.
“GM to take $1.6bn charge amid EV strategy overhaul” was originally created and published by Just Auto, a GlobalData owned brand.
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