GM to take $1.6B charge as EV plan realignment after tax credit end

General Motors will record a $1.6 billion charge in its third quarter as it realigns electric vehicle plans following the end of a federal tax credit and changes to emissions rules, the company said in a regulatory filing on Tuesday. The charge includes a $1.2 billion noncash impairment tied to EV capacity adjustments and about $400 million for contract cancellation fees and commercial settlements. Shares fell about 2 to 2.5 percent in premarket trading.

GM said recent federal policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, are expected to slow the adoption rate of electric vehicles. The federal clean vehicle tax credit, worth up to $7,500 for new EVs and up to $4,000 for used models, officially expired at the start of October. The company warned it may record additional charges as it adjusts production, and said some noncash items could affect operations and cash flow.

Industry data show a marked surge in EV purchases ahead of the tax credit deadline. Market research firm Rho Motion estimated that as many as 90 percent of battery-electric and plug-in hybrid vehicles sold...