General Motors said on Tuesday it would take a $1.6 billion charge in the third quarter as it reshapes its electric vehicle strategy following the scrapping of a key federal incentive, a move likely to dampen demand.

U.S. carmakers have delayed or canceled new EV models and battery plants and pared other investments, citing weaker-than-expected demand.

The market faces further strain after the Trump administration removed a $7,500 federal tax credit for EVs, a key support for the industry.

EV adoption rate to slow

“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,” GM said in a filing on Tuesday.

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