GM expects to reach $1.6 billion after the federal electric vehicle tax credit program ends

GM It said Tuesday it plans to take a $1.6 billion charge in the third quarter as it revamps its electric vehicle strategy as the expiration of the federal government’s tax credit on electric vehicles is expected to slow demand.

GM’s move comes at a time when automakers are reformulating their plans to produce electric cars after a decline in consumer demand over the past two years.

Trump administration moves to end federal $7,500 Tax credit for electric vehicleswhich helped support the nascent industry, prompted executives to warn of declining consumer demand.

GM said in a filing that it expects “the rate of EV adoption to slow” in the wake of recent policy shifts, which included not only ending tax incentives but also a move to eliminate an emissions rule that was expected to push automakers to make more electric vehicles.

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The carmaker told Reuters that the tariffs “are a special provision driven by our expectations that electric vehicle volumes will be lower than planned due to market conditions and the changing regulatory and political environment.”

The charges “do not come as a surprise given recent market developments and the fact that GM has probably made the most aggressive EV push of any traditional automaker,” said Garrett Nelson, a senior equity analyst at CFRA Research.

Nelson added: “We believe that automakers that have chosen to invest more in developing hybrid vehicles, such as Toyota and Honda, are poised to benefit from the American auto market.”

tape	protection	last	It changes	% changes
GM	General Automotive Company	55.62	+0.27	+0.49%

GM profits shrink despite strong sales

the Trump administration Tariffs and shifts in trade policy also created financial headwinds for automakers like General Motors, which took in $1.1 billion in the previous quarter.

GM estimated its ultimate impact at between $4 billion and $5 billion this year due to… Tariff headwindsIt said it could take steps to offset at least 30% of the impact.

These include $1.2 billion in non-cash provisions associated with electric vehicle capacity modifications and $400 million in contract cancellation fees and trade settlements.

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GM said the charges will be recorded as an adjustment to third-quarter non-GAAP results, which are scheduled to be released early next week.

GM shares rose 0.68% during Tuesday morning trading after the news.

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Reuters contributed to this report.