General Motors will record a negative impact of $1.6 billon in its next quarter after tax incentives for electric vehicles were slashed by the U.S. and rules governing emissions are relaxed.
Shares dipped 3% before the opening bell Tuesday.
The EV tax credit ended last month. The clean vehicle tax credit was worth $7,500 for new EVs and up to $4,000 for used ones.
General Motors, which had led the way among U.S. automakers with plans to convert production to an electric fleet of vehicles, said in a regulatory filing on Tuesday that it will have to book charges include non-cash impairment and other charges of $1.2 billion due to EV capacity adjustments. There’s also $400 million in charges mostly related to contract cancellation fees and commercial settlements associated with EV-related investments.
GM warned that it may take additional hits as it adjusts production, with non-cash charges potentially impacting operations and cash flow in the future.
The company said that its EV capacity realignment doesn’t impact its retail portfolio of Chevrolet, GMC and Cadillac EVs currently in production, and that it expects those models to remain available to consumers.
