Car manufacturer General Motors said on January 8, 2026, that it would be absorbing $6 billion in costs, due to a reassessment of its EV strategy, as sales volumes dip for the market.
The update comes as multiple EV manufacturers grapple with a new environment in which federal tax credits are no longer available.
Under U.S. President Donald Trump’s “Big Beautiful Bill”, they were scrapped, leaving brands such as Tesla and Lucid Motors without any additional incentives from the government to sell their cars.
As a result of Trump’s new legislation, federal tax credits were considered void after September 30th, 2025.
“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,” read the 8-K filing.
In its disclosure, General Motors said that it first absorbed costs of $1.6 billion in Q3 2025, after which it started to change track in strategy for its EV segment—mainly by putting the brakes on production as fast as possible.
This created a spike in EV sales in its third quarter as consumers raced to avail the tax benefit while it was still there, after which EV sales slumped again in Q4.
The cutting of the scheme marks an end to a comprehensive legislative package created under the Obama administration in 2009, in which an incentive to buy EVs was presented to consumers.
Car manufacturers could access the tax credit scheme as well, but the total amount was to be phased out on a quarterly basis as their production increased.
The tax incentive was further concretized in 2022 under the Inflation Reduction Act, under which U.S. residents could avail a federal tax credit of up to $7,500, giving popular EV brands leeway when it came to lowering their selling prices across their product range.
“With the evolving regulatory framework and the end of federal consumer incentives, it is now clear that near-term EV adoption will be lower than planned. That is why we are reassessing our EV capacity and manufacturing footprint,” read General Motors’ Q3 2025 shareholder letter.
“The work, which is ongoing, resulted in a special charge in the third quarter, and we expect future charges. By acting swiftly and decisively to address overcapacity, we expect to reduce EV losses in 2026 and beyond,”
In 2025, the company declared record sales for most of its models under its four main brands— GMC, Chevrolet, Cadillac, and Buick—and is still considered the market leader in North America for ICE (Internal Combustion) vehicles. Sales increased by 6% in 2025, with 700,000 Chevrolet and Buick models sold.
At the time of writing, General Motors shares were priced at $82.51.