The collaboration was meant to produce entry-level, affordable EVs, a strategy both companies no longer intend to pursue.
General Motors and Honda are scrapping a partnership intended to develop EVs to chase after U.S. market leader Tesla.
GM CEO Mary Barra said during the company’s Q3 earnings call Oct. 24 it is shifting its plan from entry-level, affordable EVs in an attempt to gain profitability and recover margins, as the automaker is one of several dealing with UAW strikes.
Barra also said in the call GM is eliminating a specific $5 billion commitment over the next several years. GM confirmed Barra was referring to its partnership with Honda.
“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,” GM and Honda said in a joint statement reported by Reuters.
In April 2022, the companies 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.” 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 was to 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 told Bloomberg.
The news came just one week after Honda and GM announced plans to develop driverless ride services in Japan with Cruise.