GM Takes Big Loss on China Overhaul
General Motors (NYSE: GM) announced it will record a total of $7.1 billion in special charges for the fourth quarter of 2025, stemming from a massive scaling back of its electric vehicle (EV) ambitions and a restructuring of its operations in China.
The bulk of the financial damage, $6 billion, is tied directly to GM’s decision to downsize its EV production capacity in North America, moving its total EV-related writedowns for the year to $7.6 billion.
GM Announces Massive Writedown on EV Pullback
The most painful part of this charge is a $4.2 billion cash hit, which will go toward settling contracts and compensating suppliers who had built out infrastructure and tooling based on GM’s original production targets.
The remaining portion consists of non-cash impairments, representing the write-down of assets and specialized equipment that are no longer needed as the company shifts back toward gas-powered vehicles.
According to the filing, “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,” said GM in its report.
This slowdown in demand is attributed to the changing regulatory environment, which has reduced the incentives for consumers to purchase electric vehicles, and as a result, GM has had to adjust its production capacity to match the lower demand, including pivoting its assembly plant in Orion, MI from EV production to the production of full-size SUVs and full-size pickups powered by internal combustion engines.
Restructuring in China
Parallel to the EV writedown, GM is taking a $1.1 billion charge related to its joint venture in China (SAIC-GM), which covers the costs of adjusting the business to match much lower sales volumes.
This follows a previous $5 billion writedown GM took in late 2024, signaling that the company is struggling to find its footing in what was once its largest market.
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GM isn’t alone in this retreat, as its primary rival, Ford, took an even larger $19.5 billion hit in December 2025 to scale back its “Model e” division and cancel several future electric truck programs.
Analyst Upgrades
Despite the EV woes, analysts have been bullish on GM amid strength in its internal combustion engine business, with Morgan Stanley upgrading the stock last month, citing several compelling reasons for the upgraded forecast.
These include exceptional operational execution, a favorable mix shift to high-margin vehicles, strategic capital discipline, a shifting policy environment, and anticipated economic benefits.
GM posted $48.6 billion in revenue in Q3 2025, which was nearly flat compared to the same period in the prior year, yet comfortably exceeded market expectations of $45.26 billion.
The company’s adjusted pre-tax profits came in at $3.38 billion, which was well ahead of the $2.72 billion that analysts were expecting, although the headline figure for GAAP net income attributable to stockholders was $1.3 billion, representing a significant drop of over 56% year-over-year.
GM raised its full-year 2025 guidance, citing improved clarity on the impact of tariffs and a more contained outlook for EV-related losses as the main drivers, and now forecasts its full-year adjusted EBIT to be between $12 billion and $13 billion.
GM expects its 2026 earnings to be higher than this year, with CFO Paul Jacobson saying, “We have multiple levers to carry our current momentum forward, including progress on [electric vehicle] losses, warranty costs, tariff offsets, regulatory requirements, and fixed costs.”
In the Q3 shareholder letter, CEO Mary Barra said, “Our top priority is to restore North America to our historical 8–10% EBIT-adjusted margins, we are focused on driving EV profitability, maintaining production and pricing discipline, managing fixed costs, and further reducing tariff exposure.”
