General Motors Co. on Tuesday reported that it sunk roughly $1.6 billion into electric vehicle manufacturing capacity that it no longer is using because of shifting federal auto policies under President Donald Trump.
GM reported the loss to the Securities and Exchange Commission as what’s known as an impairment charge. Impairment charges reflect assets that are not expected to bring in profits as initially expected.
GM “made significant investments and contractual commitments in the development of electric vehicles (EVs) to help the Company’s vehicle fleet comply with emissions and fuel economy regulations that were scheduled to become increasingly stringent,” according to a company filing.
“Following recent U.S. Government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow,” according to GM’s filing. “These developments have caused us to reassess our EV capacity and manufacturing footprint.”
GM executives have continued to call electrification the company’s “North Star.” But, along with other EV makers, the company has been shaken this year by Republicans’ removal of a $7,500 tax credit for EV buyers and lessees, as well as Trump’s efforts to pull back federal rules limiting vehicle greenhouse gas emissions.
GM more than doubled its electric vehicle sales in the third quarter compared with the same period a year ago, largely due to drivers hoping to take advantage of the tax credits before they expired Sept. 30. Analysts predict a steep drop-off in EV sales in the coming months.
Interest in EVs among U.S. drivers, while increasing, is also doing so at a far slower pace than many in the industry expected.
The bulk of GM’s impairment charge — $1.2 billion — represents machinery and other equipment to make EVs that is now sitting unused. The other $400 million is mostly from canceled contracts with suppliers to provide GM with more parts, materials and equipment than it now can use.
