General Motors Company (NYSE:GM) is reassessing its electric vehicle capacity and manufacturing footprint following recent U.S. government policy changes, according to a regulatory filing.
The company expects the policy shift, including the termination of certain consumer EV tax incentives and a reduction in the stringency of emissions regulations, to slow the adoption rate of EVs.
As part of this reassessment, GM will incur charges totaling $1.6 billion in the third quarter. The charges stem from a planned strategic realignment of EV capacity and production to align with the expected slowdown in consumer demand.
The charges include $1.2 billion in non-cash impairment and related charges tied to EV capacity adjustments and $0.4 billion in cash charges primarily related to contract cancellation fees and commercial settlements associated with EV investments.
GM noted that its evaluation of EV manufacturing and battery component investments is ongoing, and additional material cash and non-cash charges may be recognized in future periods.
The company emphasized that the strategic realignment will not affect its current retail lineup of Chevrolet, GMC, and Cadillac EVs, which remain in production.
GM shares fell 1.8% premarket.