DETROIT – General Motors Co. said it intends to take a $1.6 billion impairment charge on its third-quarter earnings because of slowing sales and adoption rates of electric vehicles.
The automaker announced in a regulatory filing Tuesday that a combination of less stringent fuel economy standards and the expiration Sept. 30 of tax credits toward the purchase of qualifying EVs influenced the decision.
“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,” the company said in an 8-K filing. “These developments have caused us to reassess our EV capacity and manufacturing footprint.”
The charges include noncash impairment and other charges of $1.2 billion as a result of adjustments to EV capacity, GM said. Another $400 million in charges are related to contract cancellation fees and commercial settlements associated with EV-related investments.
“The reassessment of our EV capacity and manufacturing footprint, including our investment in battery component manufacturing, is ongoing,” GM said, noting that future impairment charges are likely.
Among the companies that could be impacted by the pullback is Ultium Cells LLC, a joint venture between GM and Korea-based LG Energy Solution, which operates battery cell manufacturing plants in Lordstown and Spring Hill, Tenn.
The Lordstown plant employs approximately 2,200 people.
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