GM Executives: It’s Time to Shrink EV Operations
General Motors Corp. will spend the next several years squeezing costs out of its electric-vehicle efforts as the market for EVs takes a serious step backward in the wake of the expiration of consumer tax credits. That, executives said Oct. 21, will include reducing capacity, a push that includes ending production of the BrightDrop electric delivery van.
Alongside GM’s better-than-expected third-quarter results, Chairman and CEO Mary Barra said EVs remain the company’s “North Star” for the long term and said the company—which ranks second to Tesla in U.S. market share—will continue to build the electric Chevrolet Equinox and Cadillac Escalade IQ, among other models. But because buyers’ adoption of EVs was slowing even before the Sept. 30 end of tax credits, GM booked a $1.6 billion charge to its Q3 results and will need to similarly account for the end of the BrightDrop, which has been manufactured at the CAMI plant in southern Ontario.
“The commercial electric van market has been developing much slower than expected and changes to the regulatory framework and fleet incentives have made the business even more challenging,” Barra said on a conference call with analysts. “By acting swiftly and decisively to address overcapacity, we expect to reduce EV losses in 2026 and beyond, making us much better positioned as demand stabilizes.”
CFO Paul Jacobson told analysts that, after large investments in EV capacity and technology marked the first half of this decade, “the next few years is going to be about lowering the cost and making structural improvements to the battery cells and to the architecture.” EV sales have dropped off significantly this month, he added, and likely won’t stabilize—and begin to accurately reflect longer-term demand—until early next year.
That means GM is likely to continue to trim production capacity for both its vehicles and batteries. (The company this spring sold its share of a joint venture battery cell plant in Michigan to LG Energy Solution for about $2 billion.) And Jacobson said his team doesn’t want to do that in small steps, a strategy he said “really wreaks havoc” on GM’s suppliers and logistics partners.
“We need to make sure that we rightsize the capacity footprint to be able to not have to absorb a lot of those fixed costs,” Jacobson said. “So while it’s unfortunate, I think it is a quick adjustment to the reality around us that we’re facing.”
Better-than-Expected Numbers and a Big Pop in the Stock
GM rang up revenues of $48.6 billion in the third quarter, which was down slightly from the same time in 2024, and net income fell to about $1.3 billion from $3.1 billion. Adjusted for the $1.6 billion charge and other items, earnings before interest and taxes came in at $3.4 billion compared to $4.1 billion.
The company delivered about 1.56 million vehicles globally during the quarter, up about 6% year over year. North American deliveries also rose roughly that much to 837,000, which pushed GM’s market share to 16.1% from 15.8%. (It was slightly higher in the first half of the year.)
Jacobson told investors and analysts that tariffs hit GM’s numbers to the tune of $1.1 billion during the third quarter, which is slightly less than expected because of lower imports from Korea. For the full year, tariffs are now expected to cost GM between $3.5 billion and $4.5 billion, a reduction of $500 million from executives’ summer forecast. The Trump administration’s announcement last week of a rebate program for vehicles assembled in the United States but using imported parts will reduce that figure in 2026, Jacobson added.
The reported results and earnings-call commentary gave a big lift to GM shares (Ticker: GM). Heading into the close of regular trading Oct. 21, they were up 15% to about $66.70, their highest level since the company emerged from bankruptcy in the wake of the Great Recession. The company’s market capitalization now is about $64 billion.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has been in business journalism since the mid-1990s and writes about public companies, markets and economic trends for Endeavor Business Media publications, focusing on IndustryWeek, FleetOwner, Oil & Gas Journal, T&D World and Healthcare Innovation. He also curates the twice-monthly Market Moves Strategy newsletter that showcases Endeavor stories on strategy, leadership and investment and contributes to other Market Moves newsletters.
With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati in 1997, initially covering retail and the courts before shifting to banking, insurance and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in early 2008. He led a team that helped grow the Post's online traffic more than fivefold before joining Endeavor in September 2021.