General Motors to take $1.6 billion hit following government U-turn on massive program

[In It to Win It]

NYT - Gift Link

The slowdown in electric car sales is now starting to ripple through the finances of automakers.

On Tuesday, General Motors said that it would record a $1.6 billion hit to its earnings, mainly to reflect the drop in value of plants, equipment and other assets related to its electric vehicle operations.

The pace of sales for battery-powered cars and trucks has been slowing since the beginning of 2024, and is now expected to tumble after Congress and President Trump eliminated, on Sept. 30, a federal tax credit of $7,500 that was available to purchasers of new models.

In a filing with the Securities and Exchange Commission, G.M. said that it would take a $1.2 billion accounting charge “as a result of adjustments to our E.V. capacity” and a $400 million cash hit related to canceling supplier contracts associated with E.V. investments.

G.M. said the $1.6 billion charge would be taken as a special item against its third-quarter earnings.

[SheltieLover]

1. Is pootin happy yet?

[doc03]

2. I bought a new hybrid vehicle in January to avoid Trump's tariffs. Now the resale value of any EV or hybrid will

be going down. So much winning.

[genxlib]

3. Are you sure?

With the end of the subsidies, new EVs will cost more.

So any comparison shoppers would be more likely to buy used and should hold up the value.

[doc03]

4. You have a point but the demand for new EVs have been going down and probably

used ones as well.

[Prairie Gates]

5. Literally every other country is going to be fully electric and we're going to be driving around

in clunky old gas-powered cars.

A total joke.

[tinrobot]

6. Meanwhile, Norway is ending their subsidies for the right reason.

That reason is 98% of new cars sold in Norway last year were electric. They already made the switch.

https://insideevs.com/news/776141/norway-phase-out-ev-incentives/

The rest of the world is following that course. The US auto industry is being left behind.

[MichMan]

7. Consumers showed with their wallets they did not want EV vehicles

They were languishing in the showrooms. Now that gas prices have dropped, they are even less appealing.

The best way to get people to want EV is significantly higher gas prices. There is no political will to tax gasoline any higher since voters will vote accordingly. Foolish to think that consumers will demand EV as long as gas prices are low.

[lostnfound]

8. These are paper changes and they are probably thrilled to avoid paying taxes on profits

Special charges usually don’t affect their stock price for very long. Lowers the amount of taxes they would otherwise have to pay

I suspect the U-turn on electric vehicles is driven not only by the petroleum industry (always in bed with the GOP) but also by the tech companies and their AI-driven-obsession which is constrained by the pace of growth in electricity generation.

The expectation of building power plants to support AI / data centers is a boon to utility stocks and a political gravy train to various industries.