GM just wrote down $7.6 billion on its EV business—and grew market cap by the same amount

The Detroit giant, long seen as the standard-bearer for traditional U.S. carmaking, reported 2025 adjusted Ebit of $12.7 billion, landing at the high end of its guidance range, and $10.6 billion in adjusted automotive free cash flow. GM also said 2025 marked its highest U.S. market share in a decade and its fourth straight year of share gains, supported by low dealer inventories, low incentives, and firm pricing on trucks and SUVs.​

Write-down resets EV strategy

The headline negative in the quarter came from already known struggles in GM’s electric vehicle business. Management booked a total of $7.6 billion dollars in EV-related restructuring charges in the second half of 2025, including impairments and cash costs tied to right-sizing capacity after demand and U.S. policy shifted against aggressive EV targets.​

CFO Paul Jacobson said the charges stem from decisions such as discontinuing the BrightDrop electric van and impairing certain EV assets, along with contract cancellations and supplier settlements; about $4.6 billion of the total is expected to be settled in cash, mostly in 2026, with $400 million already paid last year. Despite the reset, GM emphasized it has not impaired its core retail EV portfolio and still expects EVs to become profitable over time as new battery chemistries, cost cuts, and more rational market conditions take hold.​

Investors reward cash and discipline

What overshadowed the write-down was GM’s ability to generate cash and return it to shareholders even as it absorbed tariff costs, along with restructuring its EV line. Over the past two years, GM has produced nearly $25 billion in free cash flow, Jacobson said, while investing more than $20 billion in capital projects and retiring $1.8 billion of debt in 2025 alone.​

Shareholders are seeing that windfall directly. GM repurchased $6 billion in stock in 2025, including $2.5 billion in the fourth quarter, cutting its diluted share count by more than 465 million shares, or nearly 35%, since late 2023 and leaving about 930 million shares outstanding at year-end. The board approved a fresh $6 billion buyback authorization and boosted the quarterly dividend by 20% to 18 cents per share, moves Jacobson said reflect confidence in structurally higher annual free cash flow.​

Fortune contributor Jeffrey Sonnenfeld, a Yale School of Management professor, highlighted CEO Mary Barra’s performance as one of the best in 2025, saying that GM faced an “unimaginable year” of volatility after Trump’s “Liberation Day” in April. Since then, it has beaten expectations each quarter, even after reraising its earnings before interest and taxes guidance twice, while making $3.5 billion worth of buybacks and paying down $1.3 billion in debt. It was the best-performing major automaker stock of the year, up 60%, the strongest year for GM since emerging from bankruptcy in 2009. 

Back to 8% to 10% margins in North America

On Tuesday, GM also delivered an outlook reassuring investors that it can grow earnings even in a choppy macro and regulatory environment. For 2026, the company guided to $13 billion to $15 billion of adjusted Ebit, $11 to $13 in adjusted EPS, and $9 billion to $11 billion in adjusted automotive free cash flow, underpinned by a planned return to 8% to 10% Ebit margins in North America.​

Even as it trims EV spending, GM is doubling down on profitable mainstays and software-driven services. The company will invest $10 billion to $11 billion annually in 2026 and 2027, with about $5 billion each year earmarked to expand U.S. manufacturing capacity for high-demand pickups and SUVs and to mitigate tariffs through onshoring production.​

On the tech side, GM reported a record 12 million OnStar subscribers in 2025, including more than 120,000 Super Cruise users, with the advanced driver-assist service expected to add $400 million of high-margin revenue in 2026 and push total deferred software and services revenue to about $7.5 billion. CEO Barra said GM plans to launch a next-generation software-defined vehicle architecture and a new “eyes-off, hands-off” driving system in 2028, debuting on the Cadillac Escalade I, alongside a new LMR battery chemistry aimed at cutting EV cell and pack costs by several thousand dollars.​

A slower, more profitable EV transition

Barra framed the write-down and capacity cuts as a pivot to a more measured EV rollout that better matches customer demand and a changing U.S. policy landscape. GM has sold its stake in an Ultium battery plant, shifted the Orion Assembly plant back to internal-combustion production, and will introduce hybrids in key segments while continuing to expand its EV lineup.​

“We continue to believe in EVs,” Barra told investors, noting that nearly 100,000 new EV customers joined GM in 2025 and that drivers who switch rarely return to gasoline. For now, Wall Street appears to agree with the company’s slower-but-profitable approach: Even with a multibillion-dollar EV hit, investors pushed GM’s stock sharply higher, betting that Detroit’s standard-bearer has found a way to make the transition on its own terms.