How Trump Cost General Motors $1.6 Billion

General Motors is on a hot streak with its electric cars. The Chevrolet Equinox EV topped 25,000 in sales during the third quarter of this year, becoming America’s best-selling electric vehicle that’s not a Tesla. The revived Chevy Bolt is due to arrive just after the new year at a starting price under $30,000, and the company promises that more low-cost EVs are on the way. And a variety of new electric offerings have, at the very least, breathed new life and intrigue into the struggling Cadillac brand.

With its Ultium platform helping GM to scale up production of these battery-powered cars, the Detroit giant seems well-positioned among the legacy carmakers to find success in the EV era. Yet last week, GM put out information for investors that predicted a loss of $1.6 billion compared to its previous outlook on the EV market.

Blame chaos. Automakers crave the boring and the predictable. It can take years to tweak the looks or the specs of an existing vehicle, to say nothing of the half-decade or more required to design and build a new car from scratch. With so much time and money on the line, car companies want to know what kind of world will greet their new creations.

But because of the shifting political winds in America, predictability has been hard to come by. Automakers planned and publicized big pushes into electric cars on the assumption that federal policy would continue to move the nation in that direction. They started to move manufacturing into the U.S. to satisfy Biden-era rules for tax credit eligibility. Then they were jerked in the opposite direction by a Trump administration that killed those federal incentives, slapped on haphazard new tariffs that penalize EVs, and got rid of the pollution penalties that nudged carmakers toward a cleaner future.

GM says its newly gloomy outlook is based partly on a decrease in predicted demand. In the absence of federal tax credits that made it more affordable for drivers to choose EVs (gone as of October 1), GM revised down the number of electric cars it expected Americans to buy. As the car market abruptly changes direction — again — GM must change plans to keep up, which means retooling factories to produce fewer EVs and more still-profitable ICE vehicles.

As GM says in its official investor release: “Following recent U.S. government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow. These charges include non-cash impairment and other charges of $1.2 billion as a result of adjustments to our EV capacity.” Another $400 million in estimated losses come from “contract cancellation fees and commercial settlements associated with EV-related investments,” which is how they arrive at the total of $1.6 billion.

The conglomerate says that this bit of bad news won’t affect its current lineups. But its predicament is emblematic of how the car giants find themselves stuck between the past and the future. In China and other nations around the world, EV adoption continues apace, but the established big automakers simply can’t compete there with the rock-bottom prices of Chinese-made EVs. In the West, meanwhile, the new wave of EV antagonism is pushing the industry back toward the fossil fuels that provided their profits in the past — despite the billions they’ve already invested in electrification.

GM is not alone in this, of course. Ford has gone through several rounds of whiplash during its electrification process — first losing billions on its early EVs, then slowing its EV development plans to retreat toward the easy profitability of combustion, before recently unveiling a different vision to make its EVs scalable and affordable. Companies like Hyundai, which tried to win the EV race, find themselves penalized for trying to qualify for the now-dead Biden tax incentives. Those that dragged their feet, like Toyota, are well-positioned to keep making money in this weird moment.

The end result is that for the sake of survival, companies like GM find themselves talking out of both sides of their mouth. At the end of the previous decade, when it looked as though the 2020s would be the era of EVs, GM pledged itself to a zero-emissions future. And while GM has been an EV success story of late, the Detroit giant also has spent enormous amounts to lobby the federal government against clean air regulations whose disappearance would make its combustion sector more profitable.

If there’s a positive sign from GM’s sour note, it is the statement from James Cain, executive director for finance and sales communications, that, regarding its stable of current EVs, “we will build them to demand.” In other words, it’s not as though GM is throwing in the towel — if Americans keep buying electric Cadillacs and Chevys despite the mess of a market, it’ll keep making them. Even if that means changing plans and retooling factories again.