GM to take $1.6 billion charge as tax credit blow muddies EV plans

Core Viewpoint - General Motors is taking a $1.6 billion charge in Q3 due to a shift in its electric vehicle strategy following the removal of a key federal incentive, which is expected to negatively impact demand for EVs [1][2]. Group 1: Financial Impact - The $1.6 billion charge includes a $1.2 billion non-cash impairment related to adjustments in EV capacity and $400 million for contract-cancellation fees and commercial settlements [4]. - These charges will be reflected in GM's non-GAAP results for the third quarter, which will be reported early next week [5]. Group 2: Market Dynamics - The removal of the $7,500 federal tax credit for EVs is anticipated to slow the adoption rate of electric vehicles, as stated by GM [2]. - U.S. automakers, including GM and Ford, have delayed or canceled new EV models and battery plants due to weaker-than-expected demand [1]. Group 3: Industry Reactions - Some industry executives, like Ford's CEO, have expressed concerns that EV sales will significantly decline without the tax credit, while others, such as Hyundai's CEO, believe the EV market remains resilient [3]. - GM and Ford had previously planned to allow dealers to offer a $7,500 tax credit on EV leases after the federal subsidy expired but have since retracted those plans [3].