GM drops all-EV Cadillac target after $11bn writedown

General Motors beat second-quarter earnings estimates by 37 cents a share on Tuesday and raised its full-year guidance for the second time. However, the strong results were overshadowed by a definitive strategic reversal: Cadillac will launch new gas-powered models next spring, ending the brand’s planned transition to an all-electric lineup by the end of the decade.

The automaker posted revenue of $48 billion, surpassing analyst expectations of $47 billion, while adjusted earnings rose roughly 30 percent year over year to nearly $4 billion. Yet GM simultaneously lowered its net income guidance for the second consecutive quarter to between $8 billion and $10 billion. This reflects the lingering cost of its electric retreat, which has now resulted in nearly $11 billion in writedowns covering cancelled battery contracts, idled plants, and scrapped production plans.

For European manufacturers navigating their own mandated transition away from combustion engines, GM’s retreat is a critical bellwether. The Detroit company admitted it bet wrong on the speed of consumer adoption, incurring massive financial penalties for overestimating demand. This serves as a concrete example of the balance European legacy brands must strike, demonstrating the dangers of abandoning profitable combustion vehicles before mass-market EV demand truly materialises.

The company has paid $4.5 billion of an expected $7 billion in total cash charges related to the pullback, with remaining outflows expected this year. Despite these costs, EV losses are narrowing by $1 billion to $1.5 billion compared with 2025. CFO Paul Jacobson told CNBC the company’s stock is a “bargain” at roughly $75 a share, up more than 40 percent from a year ago.

GM’s robust margins continue to come entirely from internal combustion. North American profit margins rose above 8.5 percent as average transaction prices held firm at $52,000 and warranty costs declined. Meanwhile, GM’s unit sales fell 4 percent in the second quarter as Toyota gained ground using hybrid vehicles that GM currently lacks.

CEO Mary Barra is now actively rebuilding the company around its traditional strengths. Next-generation gas-powered CT5 sedans, XT5 crossovers, and the previously discontinued XT6 SUV will join electric models in a dual-powertrain lineup. Barra also announced plans to shift full-size SUV production to a Michigan plant originally intended for electric vehicles, while the company restructures its workforce around AI and software-defined vehicles.