DETROIT, MI (WOWO) — General Motors will take a $1.6 billion hit in the next quarter after the U.S. government slashed electric vehicle tax incentives and rolled back key environmental regulations, the company announced Tuesday.

In a regulatory filing, GM said the financial blow includes $1.2 billion in non-cash impairment charges tied to adjustments in its electric vehicle production capacity, plus another $400 million related to canceled contracts and commercial settlements.

The clean vehicle tax credit, worth up to $7,500 for new EVs and $4,000 for used ones, officially expired last month as part of a broader policy shift under the Trump administration. The Environmental Protection Agency is also moving to ease tailpipe emission rules, reducing pressure on automakers to transition away from gas-powered vehicles.

GM’s stock dipped nearly 2% in premarket trading following the announcement.

Despite the setbacks, GM says its Chevrolet, GMC, and Cadillac EVs currently in production will remain available, and that the cuts won’t affect its existing retail lineup.

But the long-term outlook is murky.

The company warned of more potential losses tied to production shifts, saying future non-cash charges could impact operations and cash flow. GM had previously committed to investing $27 billion in EV and autonomous vehicle development by 2025 and aimed to be carbon neutral by 2040.

The EV rollback comes as global competition ramps up, particularly from Chinese automaker BYD, which sold over 2 million vehicles in the first half of the year, a 31% jump fueled by China’s aggressive EV policy. BYD’s growing global presence poses a challenge to GM, Tesla, and other major automakers trying to balance environmental commitments with evolving U.S. policy and market forces.