GM Absorbs $1.6 Billion Charge on EV Rollout
General Motors records a $1.6 billion special charge in the fourth quarter of 2025, tied to excess battery capacity and deferred engineering costs for its Ultium-based electric vehicle platforms amid slowing U.S. demand. The write-down affects production at Factory Zero in Detroit and Orion Assembly in Michigan, where output of models like the ‘Chevrolet Silverado EV’ and ‘GMC Hummer EV’ falls short of initial projections by 25 percent. This adjustment follows October’s 30 percent year-over-year drop in national EV registrations to 74,835 units, according to Cox Automotive, as the federal $7,500 tax credit expired on September 30. GM’s move signals a broader recalibration for Detroit’s largest automaker, which invested $35 billion in EVs through 2025 but now faces inventory levels exceeding 50,000 unsold units across its electrified lineup.
The charge comprises $1.1 billion in asset impairments for unused cathode materials sourced from LG Energy Solution and $500 million in capitalized development expenses for next-generation architectures. Ultium’s modular battery system, with pouch cells offering up to 200 kWh capacity, powers vehicles with ranges from 250 to 440 miles, but utilization rates at joint-venture plants in Ohio and Tennessee hover at 65 percent of design capacity. GM’s fourth-quarter EV deliveries total 38,000 units, down 18 percent from the third quarter, contributing to a full-year figure of 145,000 vehicles against an original target of 200,000. Production pauses of two weeks at Factory Zero in November idled 1,200 workers, while Orion shifts to single-shift operations starting December 15.
This financial hit coincides with competitors’ similar retreats, as Ford delays its mid-size EV truck to 2027 and Stellantis idles Belvidere, Illinois, for six weeks. GM’s EV market share slips to 12 percent through October, from 15 percent in 2024, per S&P Global Mobility data, with average transaction prices climbing to $52,000 versus $48,000 for internal combustion models. The company’s cash reserves stand at $22 billion post-charge, supporting ongoing investments like the $2 billion expansion of Spring Hill, Tennessee, for the ‘Cadillac Optiq’ crossover slated for early 2026 production. CEO Mary Barra attributes the adjustment to “prudent portfolio management” in a November 28 earnings call, emphasizing hybrid transitions for trucks like the ‘Chevrolet Tahoe’ to bridge demand gaps.
Ultium Cells’ three U.S. facilities, with combined annual output potential of 160 GWh, now prioritize high-volume sedans over low-selling pickups, reallocating 20 percent of capacity to suppliers like Honda under a 2023 memorandum. The ‘Silverado EV WT’ work truck variant, priced at $76,000 with 440 miles of range, sees fleet orders from 15,000 units annually, but retail uptake lags at 2,500 deliveries through November. GM’s over-the-air updates enhance features like bidirectional charging at 11.5 kW for the ‘Hummer EV’, which tows up to 7,500 pounds, yet consumer surveys from J.D. Power indicate range anxiety persists for 40 percent of potential buyers in Midwest states.
Looking forward, GM accelerates hybrid rollouts, with the ‘2.8-liter Duramax turbo-diesel’ paired to a 48-volt mild-hybrid system in 2026 full-size trucks delivering 25 percent better fuel economy than gas counterparts. The company forecasts EV sales rebound to 10 percent of total volume in 2026, supported by state incentives in California and New York totaling $1,500 per vehicle. Battery recycling partnerships with Redwood Materials process 95,000 tons of Ultium packs annually, recovering 92 percent of lithium and nickel for reuse. This charge reduces GM’s full-year profit to $10.2 billion, down 8 percent from 2024, but positions the automaker for cost savings of $300 million in 2026 through optimized sourcing.
Industry analysts from BloombergNEF project U.S. EV penetration stabilizing at 9 percent in 2026 before climbing to 26 percent by 2035, contingent on battery prices dropping to $80 per kWh. GM’s response includes leasing incentives averaging $5,000 on ‘Equinox EV’ crossovers, which start at $35,000 with 319 miles of range and qualify for commercial credits under the Inflation Reduction Act. Production of the ‘Chevrolet Blazer EV’ resumes at Ramos Arizpe, Mexico, in December, adding 50,000 units yearly with dual-motor all-wheel drive producing 288 horsepower. These steps underscore a strategic pivot toward diversified powertrains as legacy manufacturers navigate subsidy voids and raw material tariffs impacting cobalt imports by 15 percent.
The $1.6 billion figure emerges from quarterly audits revealing $800 million in deferred tax assets no longer recoverable under revised EV forecasts. GM’s supplier network, encompassing 1,200 Tier 1 partners, absorbs 10 percent of the cost through renegotiated contracts for anode materials. Vehicle quality metrics show Ultium platforms achieving 98 percent uptime in fleet tests, with NHTSA five-star ratings across braking and crash avoidance. As December sales push toward year-end clearances, GM allocates $400 million in rebates, targeting 45,000 additional EV deliveries to offset the charge’s earnings drag. This episode highlights vulnerabilities in aggressive electrification timelines, prompting board reviews of capital expenditures for 2027 models like the three-row ‘Cadillac Escalade IQ’.
