GM Announces Massive Writedown on China Restructuring and EV Reset

Yesterday, General Motors (NYSE: GM) announced that it would record a total of $7.1 billion in special charges for the fourth quarter of 2025. This financial hit stems from two major areas: a massive scaling back of its electric vehicle (EV) ambitions and a restructuring of its long-struggling 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. This moves GM’s total EV-related writedowns for the year to $7.6 billion, following an earlier $1.6 billion charge in October.

GM Announces Massive Writedown on EV Pullback

The most painful part of this charge is a $4.2 billion cash hit. This money will go toward settling contracts and compensating suppliers who had built out infrastructure and tooling based on GM’s original (and far more aggressive) 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.

“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 filing.

US EV Sales Have Sagged

It added, “As a result, GM proactively reduced EV capacity, including by pivoting the Company’s assembly plant in Orion, MI from EV production to the production of full-size SUVs and full-size pickups powered by internal combustion engines, where we believe we have unmet demand, and we proactively reduced battery cell capacity, including by selling our interest in Ultium Cells LLC’s Lansing, MI facility to LG Energy Solution.”

Parallel to the EV writedown, GM is taking a $1.1 billion charge related to its joint venture in China (SAIC-GM). GM once dominated China, but the rise of local EV giants like BYD has made it increasingly difficult for foreign brands to compete on price and technology. This charge covers the costs of “right-sizing” 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.

Ford Also Announced a Writedown Last Month

GM isn’t alone in this retreat. 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. Both companies are now doubling down on hybrid technology and high-margin gasoline vehicles as a bridge to an uncertain electric future.

Morgan Stanley Upgraded GM Stock

Meanwhile, despite the EV woes, analysts have been bullish on GM amid strength in its internal combustion engine business. Last month, Morgan Stanley’s new automotive analyst, Andrew Percoco, upgraded the stock, citing several compelling reasons for the upgraded forecast, highlighting GM’s strong execution and the advantageous macro environment. These include:

• Exceptional Operational Execution: The firm praised GM for its “industry-leading U.S. inventory and incentive discipline,” suggesting the company is effectively managing supply to maintain pricing power and profit margins.
• Favorable Mix Shift to High-Margin Vehicles: GM’s focus on its core business of high-margin trucks and SUVs is expected to drive long-term revenue and profitability, a strategy that is proving highly effective in the current market.
• Strategic Capital Discipline: 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.
• Shifting Policy Environment: The analyst points to a reduction in policy uncertainty and the anticipated sunsetting of the federal EV tax credit. This shift is expected to create an “EV winter” through 2026, which is seen as an advantage for traditional automakers like GM, whose strong internal combustion engine (ICE) vehicle sales will likely surge in the interim.
• Anticipated Economic Tailwinds: Reduced policy uncertainty and potential rate cuts in the second half of 2026 are expected to improve vehicle affordability, further boosting demand for GM’s core product lineup.

GM Raised Its 2025 Guidance

Meanwhile, 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.

However, the headline figure for GAAP net income attributable to stockholders was $1.3 billion, representing a significant drop of over 56% year-over-year, largely due to the one-time charges.

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. It now forecasts its full-year adjusted EBIT to be between $12 billion and $13 billion, an increase from the previous range of $10 billion-$12.5 billion. Similarly, the full-year adjusted EPS is now expected to be between $9.75 and $10.50 versus the previous guidance of $8.25 to $10. GM also raised its automotive free cash flow guidance to between $10 billion-$11 billion, up from the previous guidance of $7.5 billion-$10 billion.

GM Expects 2026 Earnings To Be Higher Than 2025

General Motors expects its 2026 earnings to be higher than this year. “Looking ahead to 2026, 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,” said CFO Paul Jacobson during the earnings call. He added, “As a result, we expect next year to be even better than 2025.”

In the Q3 shareholder letter, Barra said, “Looking ahead, 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.”