General Motors $GM ( ▲ 0.04% ) on Thursday said it will record $7.1 billion in charges against its fourth-quarter earnings. The charges relate to the automaker’s plans to scale back EV production and a restructuring of its joint deal with China’s SAIC Motor Co., according to a Jan. 8 regulatory filing.
For context: Consumer demand for electric vehicles slowed last year amid a backdrop of policy changes, including consumer tax incentives evaporating and the weakening of emissions regulations, the company said in the filing.
That landscape led to GM reworking its EV plans that at one point included a proposed $30 billion investment by 2025. But restructuring is coming at a cost.
In the third quarter, GM racked up $1.6 billion in charges against its third-quarter earnings.
By Q4, additional charges reached a total of $7.1 billion.
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The breakdown: About $6 billion of the charges include “non-cash impairments and other non-cash charges of approximately $1.8 billion as well as supplier commercial settlements, contract cancellation fees, and other charges of approximately $4.2 billion.”
The remaining $1.1 billion in charges relate to GM’s restructuring of its deal with its joint venture with China’s Saic Motors, where sluggish sales continue to plague.
GM said its realignment policy will not affect its production of Chevrolet, GMC and Cadillac EVs.
Looking ahead: More charges, not related to EVs, may come in 2026, though probably not to the tune of billions, the company predicted.
“We expect to recognize additional material cash and non-cash charges in 2026 related to continued commercial negotiations with our supply base, which we believe will be significantly less than the EV-related charges incurred in 2025,” GM wrote in the filing.
GM’s announcement comes after Ford revealed similar charges to its earnings as the EV landscape gets reworked. The good news is that these one-time charges shouldn’t directly affect daily auto retail operations.
The company is set to release its fourth-quarter and full-year earnings report on Jan. 27.
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