Honda Motor and General Motors have announced that they will no longer be collaborating on the joint effort for affordable EV’s. This decision comes just a year after the two companies agreed in an effort to surpass Tesla in sales.
The reason behind this decision lies in GM’s strategic shift towards slowing down the release of multiple electric vehicle models. This shift is in order to prioritize profitability. This shift has been prompted by the increasing costs associated with the ongoing strikes by United Auto Workers. Estimates have reached a staggering $200 million per week this month.
It’s all in the Data:
As a result of conducting research and analyses, both parties have decided to terminate the development of affordable electric vehicles. However, they have reaffirmed their commitment to individually working towards offering affordable models in the EV market. Honda has also clarified that its plan to exclusively sell electrified vehicles by 2040 remains unchanged.
The initial agreement between Honda and GM, established in April of last year, this joint effort for affordable EV’s was based on a new combined platform. The collaboration had the potential to produce millions of cars starting from 2027. The automakers specifically focused on creating affordable EVs, including compact crossover vehicles, utilizing GM’s Ultium battery technology.
According to Bloomberg’s report:
Honda CEO Toshihiro Mibe stated in an interview that, after a year of study, it was determined that pursuing the development of an affordable EV would be difficult as a viable business. Thus, the decision was made to cease the project.
No impact from Cruise:
A recent safety incident in California involving GM and its Cruise unit will not impact Honda’s separate partnership with the two entities. The incident resulted in the suspension of Cruise’s driverless testing permit in California. The state authorities deemed the vehicles to pose a public risk and accused the company of misrepresenting the safety of its technology.
Despite these setbacks, Honda plans to establish a joint venture with GM and Cruise in the first half of 2024. This project with the goal of launching a driverless ride service in Japan by early 2026.
GM has not yet provided a response to Reuters’ request for comment.