When Joint Ventures Fall Apart: Honda, GM will not co-develop cheaper EVs, scrap partnership

In a surprising turn of events, Honda Motor and General Motors have decided to abandon their joint effort to develop affordable electric vehicles (EVs), marking a change in direction just one year after their collaboration was initiated with the aim of competing with Tesla in EV sales. The move highlights General Motors’ shift in strategy, where it has opted to slow down the launch of several EV models and place a greater emphasis on profitability. The company has been grappling with mounting costs resulting from United Auto Workers strikes, which have reached a staggering $200 million per week as of this month. General Motors also took the step of withdrawing its previously stated profit outlook for 2023. Honda issued a statement regarding the decision, explaining that “after conducting some research and analyses, both parties decided to end the development.” However, both companies intend to persist in their individual efforts to provide affordable EV models to the market. This announcement reflects a notable development in the evolving landscape of the electric vehicle industry and the strategies employed by major automotive players. The Japanese company said there was no change in its plan to sell only electrified vehicles by 2040. The two firms agreed in April last year to develop a series of lower-priced EVs based on a new joint platform, producing potentially millions of cars from 2027. The automakers had said the deal was for “affordable” EVs, including compact crossover vehicles, built using GM’s Ultium battery technology. Bloomberg first reported the decision, citing an interview with Honda CEO Toshihiro Mibe. “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 said in the interview. A Honda spokesperson said its separate partnership with GM and its Cruise unit would not be impacted by a recent safety incident in California which led to a suspension of the robotaxi firm’s driverless testing permit in the US state. California on Tuesday ordered Cruise to remove its driverless cars from state roads, calling the vehicles a risk to the public and saying the company had “misrepresented” the safety of the technology. Honda said last week it aimed to establish a joint venture with GM and Cruise in the first half of 2024 to begin a driverless ride service in Japan in early 2026. (With input from agencies)