GM Takes $7.6 Billion Hit as EV Retreat Accelerates
General Motors announces $7.1 billion in fourth-quarter charges related to its electric vehicle pullback and China restructuring, bringing total EV writedowns to $7.6 billion.
General Motors is done pretending the EV transition would be smooth.
The automaker disclosed Thursday it will record $7.1 billion in fourth-quarter charges—roughly $6 billion from electric vehicle pullbacks and $1.1 billion from restructuring its Chinese joint venture. Combined with the $1.6 billion writedown announced in October, GM has now taken $7.6 billion in EV-related hits since the policy environment shifted.
The stock dropped nearly 2% Friday. But the bigger story isn't the charge itself—it's what it signals about the trajectory of American electric vehicle adoption.
The Charge Breakdown
The $6 billion EV component includes $1.8 billion in non-cash impairments and roughly $4.2 billion in supplier settlements, contract cancellations, and other unwinding costs. GM had built a supply chain for an EV future that isn't materializing as planned.
The company warned additional charges are likely in 2026 as supplier negotiations continue, though management expects those to be smaller than last year's. The existing dozen EV models sold in the US will continue—GM isn't abandoning electrification entirely—but the pace and scale of the buildout is dramatically slower than planned.
What Changed
Two forces converged. First, consumer demand for EVs softened. GM's EV sales fell 43% in the fourth quarter after the consumer tax credit expired. The $7,500 federal incentive had masked underlying demand weakness; without it, sticker shock returned.
Second, the Trump administration's policy pivot eliminated the regulatory pressure that had been pushing automakers toward electrification. Emissions standards are loosening. EV mandates are being reconsidered. The compliance calculus that justified billions in battery and assembly investment no longer computes.
Edmunds projects EVs will account for roughly 6% of US vehicle sales in 2026, down from 7.4% in 2025. That's not a growth trajectory—that's a correction.
GM Isn't Alone
Ford disclosed $19.5 billion in EV-related charges in December, dwarfing GM's writedowns. Stellantis has pulled back from multiple EV programs. The entire legacy auto industry is recalibrating.
The contrast with Tesla is stark. Elon Musk's company remains profitable on EVs precisely because it never built a parallel combustion business to maintain. Legacy automakers are managing two transitions simultaneously—away from ICE slowly, toward EVs slowly—and that's proving expensive.
For GM specifically, the China exposure adds another layer. The $1.1 billion restructuring charge reflects a joint venture that's struggling against Chinese EV competitors like BYD. GM once sold 4 million vehicles annually in China; that number has been declining for years.
What It Means for Shareholders
The charges are non-cash and don't affect GM's 2025 adjusted earnings guidance, which management reaffirmed. That's the good news. The company's core combustion vehicle business—trucks and SUVs—remains profitable and generates substantial cash flow.
The bad news is that GM's EV strategy is now in limbo. The company spent years positioning itself as an electrification leader, announcing ambitious production targets and launching the Ultium platform. Those investments are now partially stranded.
Valuation reflects this uncertainty. GM trades at roughly 5x forward earnings, a compressed multiple that reflects both cyclical auto industry risks and questions about long-term strategic positioning. A cleaner story—either full commitment to EVs or clear retreat—might attract a higher multiple.
The Broader Auto Trade
The sector faces a complicated 2026. Lower mortgage rates (from the Trump bond directive) could support consumer spending on durable goods, including vehicles. But tariff uncertainty weighs on supply chains, and the EV transition remains stuck in an awkward middle ground.
For traders, GM at these levels is a bet on truck and SUV profitability carrying the company through the transition confusion. The EV charges are sunk costs—what matters now is execution on the profitable segments and clarity on where electrification fits long-term.
The $7.6 billion writedown is an admission that the old roadmap was wrong. The market is waiting for a new one.