(Credit: GM)
Honda and GM have called off plans to co-develop small, cheap electric vehicles.
The companies struck the deal in April 2022, with plans to launch a sub-$30,000 lineup by 2027. Eighteen months later, the deal is kaput, according to Honda CEO Toshihiro Mibe, who says it's no longer a feasible proposition.
"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," Mibe tells Bloomberg, which first reported the news. "GM and Honda will search for a solution separately. This project itself has been canceled."
GM confirmed in an email to PCMag that it was a mutual decision made after "extensive studies and analysis."
"Each company remains committed to affordability in the EV market," says Sanaz Marbley, director of strategic technology communications at GM. This goal has become increasingly difficult for all automakers due to high battery costs, meaning the number of affordable electric vehicles available to consumers will go down in 2024.
GM reported a 28% increase in Q3 EV sales in yesterday's earnings report but says it plans to slow down production and focus on profitability in the near term.
"We are moderating the acceleration of EV production in North America to protect our pricing, adjust to slower near-term growth in demand, and implement engineering efficiency and other improvements that will make our vehicles less expensive to produce, and more profitable," CEO Mary Barra wrote in the Q3 letter to shareholders.
Barra also said the United Auto Workers strike will result in "higher labor costs."
But it's not the end of the road for Honda and GM, which will continue to collaborate on other projects. Honda's upcoming EVs, the 2024 Honda Prologue and Acura ZDX, will run on GM's Ultium battery platform. The two companies have also been developing hydrogen fuel cell technology since 2013, according to Bloomberg.
GM is also looking to expand its efforts globally. This week, it announced a new project with Honda to launch an autonomous ridesharing service in Japan with GM-backed Cruise vehicles. Cruise faced challenges of its own this week, as California officials revoked its license to operate over public safety concerns.