Business

The reason why General Motors is losing billions on electric vehicles

After big promises and bold investments, GM’s EV dream is hitting reality, and it’s costing billions.

Rebecca Cook

Scottish sports journalist and content creator. After running his own soccer-related projects, in 2022 he joined Diario AS, where he mainly reports on the biggest news from around Europe’s leading soccer clubs, Liga MX and MLS, and covers live games in a not-too-serious tone. Likes to mix things up by dipping into the world of American sports.

Update: Oct 15th, 2025 18:11 EDT

General Motors has revealed it will take a $1.6 billion charge in the third quarter of 2025, the costly result of being forced to scale back its struggling electric vehicle plan. The move follows the cancellation of a key federal initiative promoting EV purchases, which is expected to cause a steep drop in demand.

Breakdown of GM’s $1.6 billion hit

GM’s charges include “non-cash impairment and other charges of $1.2 billion as a result of adjustments to our EV capacity,” the automaker said in a public filing on Tuesday. The remaining $400 million will have a cash impact, mainly related to contract cancellation fees and commercial settlements tied to EV investments, the company explained.

Early EV gamble fails to pay off

The Detroit-based manufacturer was one of the first in the United States to make a major commitment to electric vehicles, a decision that hasn’t delivered the expected returns. GM currently produces the widest range of EV models in the country and holds a 13.8% market share, second only to Tesla’s 43.1%.

However, the overall market is considerably smaller than anticipated just a few years ago. In October 2021, GM announced plans to spend $35 billion on EV and autonomous vehicle development by 2025, a plan that was scaled back.

Impact of policy changes and slowing demand

In Tuesday’s filing, GM acknowledged it now expects “adoption rates of EVs to slow,” largely due to the Trump administration scrapping the $7,500 tax credit for EV buyers that had been introduced under President Biden.

“The charge doesn’t come as a surprise given recent market developments and the fact GM had made probably the most aggressive EV push of any traditional automaker,” Garrett Nelson, a senior equity analyst at CFRA Research, told Reuters.

Industrywide struggles with EV strategy

Ford Motor, one of GM’s main competitors, has also announced a $1.9 billion charge tied to its EV business. Industry insiders warn that more bad news could follow for automakers navigating the volatile electric market.

“I think we’re going to see multibillion-dollar write-downs flooding the headlines for the next few years,” Bank of America analyst John Murphy said in June.

Another financial blow after tariff impact

The $1.6 billion charge follows a $1.1 billion hit GM took in the second quarter of 2025, primarily due to tariffs imposed by President Trump.