Honda discontinues its collaborative efforts with General Motors (GM) to produce affordable electric vehicles.
Honda and GM’s partnership aimed to introduce EVs based on GM’s Ultium battery primarily for small SUVs by 2027.
GM faces financial uncertainties, with potential losses linked to the UAW strike and unforeseen costs.
CEO Toshihiro Mibe cites concerns over costs and battery performance as reasons for discontinuation.
According to Automotive News, Honda has decided not to continue its joint venture with General Motors (GM) to design and produce budget-friendly electric vehicles (EVs). This collaboration, initiated in April 2022, aimed to construct a novel EV design centered around GM’s Ultium battery technology, primarily targeting the small SUV sector. The first models under this partnership were anticipated to arrive in North American markets by 2027.
However, GM, facing escalating financial pressures, recently expressed doubts about attaining its projected $14 billion profit for the current year. This uncertainty stems from the ongoing UAW strike, which has led to substantial weekly losses for the company. The financial turbulence has so far amounted to an approximate cost of $1 billion, considering both the strike-related weekly losses and prior accumulated costs.
Toshihiro Mibe, Honda’s CEO, communicated this decision during a Bloomberg Television interview, stating, “After studying this for a year, we decided that this would be difficult as a business, so at the moment we are ending development of an affordable EV.” He did not directly attribute the UAW strike as the primary reason but highlighted concerns over the costs and potential performance of the EV batteries.
The vision of the partnership was to introduce EVs priced below GM’s projected $30,000 Chevrolet Equinox and Honda’s future comparable models. Both automotive giants were optimistic that their combined efforts would enable them to compete with established market leaders like Tesla and BYD by fast-tracking battery cost reductions. Prior to this, GM and Honda had been amplifying their collaborative efforts, sharing developmental expenses, and boosting sales. Notably, their partnership dates back to 2013, focusing on hydrogen fuel cells, and more recently, on EV batteries, gasoline-powered vehicles, and autonomous driving technologies.