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General Motors announced on January 27, 2026, that it expects significantly lower EV volume in 2026 after absorbing $7.6 billion in one-time EV-related charges in 2025. CEO Mary Barra stated the company continues to believe in electric vehicles despite the adjustments, which stemmed from contract cancellations, supplier settlements, and discontinuing the BrightDrop electric van.
The charges severely impacted 2025 earnings, with net income dropping 55% to $2.7 billion for the full year. A bulk of $6 billion hit in Q4 included $4.2 billion for contract cancellations and $1.8 billion tied to BrightDrop's end.
Reasons Behind the EV Pullback
GM's shift aligns with the Trump administration's policy changes, including the elimination of the $7,500 federal EV tax credit by late September 2025. New tariffs on imports from China and Korea further pressured operations, affecting models like the Buick Envision.
To right-size capacity, GM plans smaller but material EV-related charges in 2026, expecting losses to improve by $1-1.5 billion through reduced volume. This follows a regulatory filing on January 8 detailing the initial $6 billion in extra costs.
Strong Outlook Driven by ICE Vehicles
Despite EV setbacks, GM raised its 2026 profit guidance to $13-15 billion, fueled by higher sales of internal combustion engine (ICE) trucks and SUVs. North American operations target an 8-10% profit margin, considered robust in the industry.
- New full-size pickup trucks launch in 2026, with retooling downtime but disciplined pricingno major hikes or deep incentives.
- Upcoming Buick Envision shifts to U.S. production at Fairfax Assembly in Kansas starting 2028, alongside Chevrolet Equinox, in a $4 billion investment for gasoline models. This displaces the updated Chevy Bolt EV.
Future EV and Software Strategy
GM invests billions in software for software-defined vehicles on a new 2028 architecture, enabling over-the-air updates and new features. Services will underpin this transition while prioritizing profitable ICE segments short-term.
Barra called 2025 results 'exceptional' given policy turbulence, positioning GM for a stronger 2026. Competitors like Chevrolet's reincarnated Bolt and Nissan LEAF eye affordable EV returns under $30,000, but GM focuses on capacity alignment.
Market Context and Competitor Moves
The announcement coincides with broader industry trends. Kia priced its 2026 Niro EV similarly to last year but faces pricing pressure from cheaper rivals like the 2027 Chevy Bolt ($28,995, 255 miles) and 2026 Nissan LEAF ($29,990, 303 miles).
GM's adjustments reflect a pragmatic response to demand softness and incentives loss, contrasting with EV enthusiasm elsewhere. Electrek notes ongoing affordable EV competition from Nissan, Toyota, and others.