GM Takes Big Hit on China Overhaul
General Motors announced it would record a total of $7.1 billion in special charges for the fourth quarter of 2025, primarily due to a massive scaling back of its electric vehicle ambitions and a restructuring of its operations in China.
The bulk of the financial damage, $6 billion, is tied directly to General Motors’ decision to downsize its EV production capacity in North America, bringing its total EV-related writedowns for the year to $7.6 billion.
This move includes a $4.2 billion cash hit to settle contracts and compensate suppliers who had built out infrastructure and tooling based on General Motors’ original production targets.
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, according to the filing.
General Motors is also taking a $1.1 billion charge related to its joint venture in China, covering the costs of adjusting the business to match lower sales volumes.
This follows a previous $5 billion writedown General Motors took in late 2024, signaling the company is struggling to find its footing in what was once its largest market.
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General Motors’ primary rival, Ford, took an even larger $19.5 billion hit in December 2025 to scale back its electric truck programs.
Both companies are now focusing on hybrid technology and high-margin gasoline vehicles as a bridge to an uncertain electric future.
Despite the EV woes, analysts have been bullish on General Motors amid strength in its internal combustion engine business, with Morgan Stanley upgrading the stock last month.
Morgan Stanley praised General Motors for its industry-leading U.S. inventory and incentive discipline, suggesting the company is effectively managing supply to maintain pricing power and profit margins.
Morgan Stanley noted GM’s improved capital allocation, including the strategic realignment of its electric vehicle (EV) and autonomous vehicle (AV) plans and the completion of a $10 billion accelerated share repurchase program.
The company has also raised its dividend for four consecutive years.
