GM takes $6bn earnings hit as it scales back EV production due to slower demand after consumer incentives scrapped

In a regulatory filing to the US Securities and Exchange Commission on January 8, 2026, GM confirmed it expects to record charges of approximately $6 billion in final three months as a result of a continued review of its EV capacity and investments.

It already recorded charges of $1.6 billion for the previous three months in October 2025, when it announced a broader reassessment of its EV capacity and manufacturing footprint to “align with expected consumer demand”.

Read more: US Senate passes ‘Big Beautiful Bill’, ends EV tax credits

The US Senate has passed ‘The One Big Beautiful Bill’ act, a budget bill that has several implications for the automotive industry, including the ending of EV tax credits in September 2025.

GM noted that “with the termination of certain consumer tax incentives and the reduction in the stringency of emissions regulations, industry-wide consumer demand for EVs in North America began to slow in 2025”.

At the beginning of 2025, during the first week US president Donald Trump’s return to the Oval Office, the Trump administration revoked the Biden administration’s 2030 EV sales target and paused funding from the Inflation Reduction Act (IRA), which was introduced in 2022 to boost incentives for EV adoption. Then in September 2025, the US Senate passed the ‘Big Beautiful Bill’, which saw the end of consumer EV tax credits.

Responding to demand slowing down as a result of these actions, GM proactively reduced EV capacity. As part of this, it pivoted its assembly plant in Orion, Michigan from EV production to the production of ICE vehicles – specifically full-size SUVs and pickup trucks, where GM believed it had unmet demand.

Similarities with Ford’s recent strategic shift

This comes after Ford announced its own strategy shift in December 2025, ending production of the F-150 Lightning electric truck, expanding its powertrain mix and launching a battery energy storage system business.

Read more: Ford scraps F-150 Lightning in favour of 'next-generation' hybrid, says "the business case has eroded"

Ford has revealed a series of actions to "drive profitable growth", including ending production of the F-150 Lightning electric truck, expanding its powertrain mix and launching a battery energy storage system business.

Like GM, Ford said it was "shifting to higher-return opportunities" and "executing a decisive redeployment of capital to meet customer demand and drive profitable growth" in light of lower-than-expected demand, high costs and regulatory changes.

GM's $6 billion EV charge, whilst substantial, appears modest compared to the $19.5 billion writedown announced by Ford. Ford CEO Jim Farley told Reuters in a December interview that "when the market really changed over the last couple of months, that was really the impetus for us to make the call." The comparative scale of these writedowns reveals different strategic positions and degrees of exposure.

GM had at one point planned to invest $30 billion in EVs, targeting dozens of new models and substantial battery production capacity. The company previously stated ambitions to essentially phase out ICE passenger cars and trucks by 2035. Whilst that target officially remains in place, recent operational decisions point toward a more measured transition timeline.

Analysts have noted that GM's limited exposure to hybrid vehicles represents a potential vulnerability. Competitors including Toyota have maintained robust hybrid portfolios that provide fuel efficiency without requiring customers to commit fully to battery-electric powertrains, and Ford’s December pivot focused heavily on expanding its powertrain mix. CFRA Research equity analyst Garrett Nelson observed that "GM's lack of hybrid exposure could partially reverse recent market share gains."

Layoffs and battery production impact

The magnitude of GM's retrenchment becomes evident when examining the production adjustments already under way. Factory Zero, the automaker's dedicated EV assembly plant in Detroit, has shifted from two-shift to single-shift operation. The move placed approximately 1,200 workers on indefinite layoff whilst reducing output of the GMC Hummer EV, Chevrolet Silverado EV, GMC Sierra EV and Cadillac Escalade IQ.

Read more: Energy companies divert EV battery investment to energy storage

Changes in joint ventures launched by OEMs like Ford and Honda signal a pivot away from EV battery investment towards battery energy storage amid underwhelming EV demand.

Battery production has faced even more dramatic curtailment. GM halted operations at its two Ultium Cells joint-venture facilities in Warren, Ohio and Spring Hill, Tennessee for a six-month period beginning in January this year.

The Ohio plant placed 850 workers on temporary layoff while 700 workers were affected in Tennessee. These facilities, developed in partnership with LG Energy Solution, represented cornerstone investments in GM's vertical integration strategy for battery cell production. Their idling until mid-2026 signals a fundamental mismatch between installed capacity and actual market absorption.

This reflects a trend seen more broadly with some energy companies that launched joint ventures with OEMs to produce EV batteries in the US reconsidering their agreements in response to slower-than-expected demand for EVs in major markets like the US.

Honda recently bought LG Energy Solution’s stake in their joint venture in Ohio, while Ford and SK On agreed to dissolve their joint venture, with SK On owning and operating the JV’s Tennessee battery plant while Ford is set to launch a battery energy storage system business that will own and operate the JV’s two Kentucky battery plants.