General Motors (GM) will take an additional $7.1B charge tied to the decision to scale back its EV production and Chinese operations, in addition to the $1.6B charge that the company previously recorded in the three months ended September 30.
Shares are under pressure following the news, trading at a loss of 2% in after-hours trading.
In a regulatory filing with the U.S. Securities and Exchange Commission, the automaker conceded that the “termination of certain consumer tax incentives and the reduction of the stringency of emissions regulations” resulted in industry-wide slowing of demand for EVs in North America, leading the company to “proactively reduce EV capacity.”
As a result, the company will take a charge of $7.1B of which $6.0B will include non-cash impairments and other non-cash charges, supplier commercial settlements, contract cancellation fees, and other charges which will have a cash impact when paid.
The remaining $1.1B charge is tied to the restructuring of its Chinese joint venture, SAIC General Motors Corporate Limited, primarily related to the disproportionate share of supplier claims.
Additionally, the recent regulatory changes and impairment of emission credits may adversely affect GM’s (GM) operating and cash flow in the period which they are recognized. The company also cautioned that additional material and non-material cash charges could occur in 2026.