American automaker General Motors Co. (GM) will take a one-time charge of $1.6 billion in the third quarter due to downward revisions to its electric vehicle production plans after the U.S. government scrapped a program to stimulate demand in the sector.
GM said in a statement that the company expects The pace of Americans' transition to electric vehicles is slowing as a result of recent policy changes by the US government, including the removal of tax breaks for electric vehicle buyers and the imposition of emission requirements.
"This has forced us to review the scope of electric vehicles and the structure of all production capacities", GM said in a statement.
The $1.6 billion charge will be reflected in GM's third-quarter financial results. This includes an asset write-down of $1.2 billion related to capacity adjustments, as well as $400 million in indirect costs related to contract negotiations and litigation related to (lack of) investment in electric vehicle production.
GM currently predicts that to assess the quote and it is possible that additional write-downs may be imposed in the future.
Since the beginning of the year so far, the value of General Motors shares has increased by 4.4%.