General Motors will record a negative impact of $1.6 billion in its next quarter after tax incentives for electric vehicles were slashed by the federal government and rules governing emissions are relaxed.

The EV tax credit ended last month. The clean-vehicle tax credit was worth $7,500 for new EVs and up to $4,000 for used ones.

The Environmental Protection Agency, meanwhile, has been working on easing rules aimed at cleaning auto tailpipe emissions as the Trump administration moves to undo incentives for automakers to go electric.

President Donald Trump has
also challenged federal EV charging infrastructure money and blocked California’s ban of new gas-powered vehicle sales. Economists say that all adds up to less pressure on automakers to continue evolving their production away from gas-burning vehicles.

General Motors, which had led the way among American automakers with plans to convert production to an electric fleet of vehicles, last week said in a regulatory filing that it will have to book charges that include non-cash impairment and other charges of $1.2 billion due to EV capacity adjustments.

There’s also $400 million in charges mostly related to contract cancellation fees and commercial settlements associated with EV-related investments.

GM warned that it may take additional hits as it adjusts production, with non-cash charges potentially impacting operations and cash flow in the future.

The company said that its EV capacity realignment doesn’t impact its retail portfolio of Chevrolet, GMC and Cadillac EVs currently in production, and that it expects those models to remain available to consumers.

EVs were considered to be the future of the nation’s automotive industry by many analysts. GM had announced in 2020 that it was going to invest $27 billion in electric and autonomous vehicles in the next five years, a 35 percent increase over plans made before the pandemic.

In 2021 GM said that it planned to have more than half of its North American and China factories be capable of making electric vehicles by 2030.

A year later, GM CEO Mary Barra said that the automaker would sell more electric vehicles in the United States than Tesla by the middle of the decade. GM also had a goal of making the vast majority of the vehicles it produces electric by 2035, and the entire company carbon neutral, including operations, five years after that.