General Motors (GM) said Wednesday that it would record two non-cash charges totaling over $5 billion on its joint venture operations with SAIC Motors in China, according to Reuters.
The automaker expects a $2.7 billion charge for reduced joint-venture value and a $2.6 billion to $2.9 billion charge for restructuring costs, according to Reuters. GM has struggled in the Chinese auto market, and lost about $350 million in the region in the first three quarters of 2024, Reuters reported.
China’s auto industry has seen robust demand and has experienced a boost in car sales largely bolstered by government subsidy programs and tax rebates. Chinese vehicle sales rose 4.3% in September from the previous year, in part due to subsidies for buyers trading in older vehicles for electric vehicles (EVs) and more fuel-efficient vehicles, according to Reuters.
U.S. and European carmakers are increasingly struggling to compete in China’s EV market, partly due to high production costs and Chinese manufacturers’ increasingly technologically competitive vehicles, according to CNBC. GM announced Monday a change in its EV strategy by agreeing to sell its share of a nearly completed battery plant to its joint venture partner, LG Energy Solution of South Korea. Attempting to avoid mass layoffs, GM gave 5,000 employees voluntary buyout offers in 2023, according to CNN. However, the automaker cut 1,000 jobs in November of 2024 in an attempt to reduce costs following losses associated with its EV division.
The Biden-Harris administration has led a push for nationwide EV adoption in the U.S. as part of President Joe Biden’s green energy agenda. The administration’s ambitious goal of building 500,000 EV charging stations across the U.S. by 2030 has thus far faced several delays.
Many major automakers in the U.S. have been attempting to cut costs associated with EV lines and autonomous cars after spending heavily on both. Many vehicle manufacturers have hemorrhaged cash on EV lines amid a lack of consumer demand and a struggling market. Ford Motor Company recently lost $1.2 billion on EVs in the third quarter of 2024, and announced in September that it would begin to offer free chargers and home installations in an attempt to incentivize consumers to purchase EVs.
GM did not immediately respond to a request for comment from the Daily Caller News Foundation.
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