The slowdown in electric car sales in now starting to ripple through the finances of automakers.
On Tuesday, General Motors said that it would record a $1.6 billion hit to its earnings, mainly to reflect the drop in value of plants, equipment and other assets related to its electric vehicle operations.
The pace of sales for battery-powered cars and trucks has been slowing since the beginning of 2024, and are now expected to tumble after Congress and President Trump eliminated, on Sept. 30, a federal tax credit of $7,500 that was available to purchasers of new models.
In a filing with the Securities and Exchange Commission, G.M. said that it would take a $1.2 billion accounting charge “as a result of adjustments to our E.V. capacity” and a $400 million cash hit related to canceling supplier contracts associated with E.V. investments.
“The reassessment of our E.V. capacity and manufacturing footprint, including our investments in our battery component manufacturing, is ongoing,” the company said in the filing, warning that it was “reasonably possible” that it could face more charges in the future.
In recent investor presentations, G.M.’s chief financial officer, Paul Jacobson, said the company had not yet been able to earn a profit on its electric cars. Now that it expects lower sales, the company is working to focus on making them at lower costs.
“The journey to profitability was heavily driven by scale, and the reality is we’re probably going to scale up much slower now over the next few years,” he said last month at a conference hosted by JP Morgan. “But we’re in a position now where we have the opportunity to deploy the capital into electric vehicles not to proliferate the portfolio, but rather to focus on structural cost reductions within E.V.s.”
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