General Motors and Honda are scrapping a partnership they had to develop electric vehicles to chase after U.S. market leader Tesla.
GM CEO Mary Barra stated during the company’s Q3 Earnings Call on Tuesday that it would shift its plan away from entry-level and affordable EVs in an attempt to gain profitability and recover margins as the automaker is one of several dealing with UAW strikes.
In a joint statement, the companies said (via Reuters):
“After extensive studies and analysis, we have come to a mutual decision to discontinue the program. Each company remains committed to affordability in the EV market.”
Barra also said in the call that a specific $5 billion commitment over the next several years would be one of the things that GM would shift away from. The company confirmed Barra was referring to its partnership with Honda.
In April 2022, GM and Honda vowed to “share our best technology, design, and manufacturing strategies to deliver affordable and desirable EVs on a global scale, including our key markets in North America, South America, and China.”
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It was a step for both companies to achieve carbon neutrality in global products and operations by 2040, as well as eliminate tailpipe emissions from light-duty vehicles in the U.S. by 2035.
The partnership would yield EVs in price points below $30,000, which GM has managed to do on its own with the Chevrolet Bolt EV. The companies expected to develop a lineup of these low-priced EVs by 2027.
However, it was also expected to result in potential partnerships that would develop other “EV battery technology collaboration opportunities, to further drive down the cost of electrification, improve performance and drive sustainability for future vehicles.”
It seems there was simply not enough in the cards for the partnership to flourish after both companies potentially took into account current macroeconomic conditions.
“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,” Honda CEO Toshihiro Mibe said to Bloomberg.
The news comes just one week after Honda and GM announced plans to develop driverless ride services in Japan with Cruise.
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