- GM was forced to adjust its EV capacity to the tune of $1.2 billion.
- Its EV sales skyrocketed 105 percent through the first three quarters.
- Changes will not affect the current EV lineup of Chevy, GMC and Cadillac.
The removal of the federal electric vehicle tax credit at the end of September is set to cost General Motors as much as $1.6 billion in the next quarter, a direct result of the adjustments it must make to its electric vehicle strategy.
This follows Ford’s recent announcement that it will write down up to $400 million in manufacturing assets and reduce $1.5 billion in EV-related spending, scaling back projects including a three-row electric SUV and a full-size electric pickup.
Industry Recalibration
In its third-quarter report, GM confirmed that its board of directors had approved $1.6 billion in charges tied to what it described as the “strategic realignment of our EV capacity and manufacturing footprint to consumer demand.”
Read: GM Pulls Off Its Strongest US Comeback In A Decade But One Brand Is Slipping
The company specified that $1.2 billion of that amount relates to adjustments in its EV capacity, while the remaining $400 million stems “primarily from contract cancellation fees and commercial settlements associated with EV-related investments, which will have a cash impact.”
GM also noted that “it is reasonably possible that we will recognize additional future material cash and non-cash charges that may adversely affect our results of operations and cash flows.”
GM emphasized that the measures it’s taking will not affect its existing range of electric models sold under the Chevrolet, GMC, and Cadillac brands.
Electric vehicle sales in the United States climbed sharply through the third quarter, yet GM cautioned in its filing that it expects “the adoption rate of EVs to slow” due to “the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations.”
During the July-September period, GM’s sales of electric vehicles rose 107 percent and have increased 105 percent year-to-date. In Q3, it sold a total of 66,501 EVs, and Chevrolet cemented its position as the second-largest EV brand in the country. In addition, the Equinox EV was the best-selling non-Tesla-branded electric vehicle.
