The Honda-General Motors EV saga may be ending sooner than expected. Honda’s CEO, Toshihiro Mibe, said the automaker is scrapping plans to build affordable EVs with GM because of the “changing business environment.”
“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 an interview with Bloomberg Television.
Mibe added that “GM and Honda will search for a solution separately. This project itself has been canceled.”
GM and Honda revealed plans to expand their relationship in April 2022 by codeveloping a series of affordable EVs using next-gen Ultium battery tech.
The first models, including electric compact crossover vehicles, were expected to roll out in 2027. In the press release, GM said it was “working to accelerate new technologies” like lithium-metal, silicon, and solid-state batteries.
However, it looks like the plans are falling through. GM announced it would be delaying production of the Equinox EV, Silverado EV RST, and GMC Sierra electric truck following its Q3 earnings Tuesday.
Honda and GM go separate ways on affordable EVs
GM’s CEO Mary Barra explained the move will “make our vehicles less expensive to produce and more profitable” in the future.
The American automaker plans to slow EV production in North America “to protect pricing” while introducing new engineering enhancements and other improvements.
GM also withdrew its profit guidance for the year following the UAW strike. The company said once new contracts are signed, they will have more clarity around financials.
Despite choosing not to release EV margins, GM said it’s still aiming to achieve double-digit profit margins on its electric vehicles by 2025. Meanwhile, the company pushed back its goal of making 400,000 EVs in North America by mid-2024.
Mibe didn’t cite the UAW strike as the reason behind the move but did mention cost and range limitations were behind it.
Honda and GM were planning to build EVs starting under the expected $30,000 Equinox EV price. However, GM has already raised the starting price of the Blazer EV while a petition is going around calling for the company to stand by its $30,000 Equinox EV starting price.
Barra explained on the company’s earnings call that the next-gen Bolt EV will be the first Ultium-based EV to receive LFP batteries, which will help lower costs.
Honda’s first EV in North America, the Prologue electric SUV, will go on sale later this year based on GM’s Ultium platform.
The electric SUV is expected to start in the upper $40,000s (before taxes and incentives) with up to 300 miles of range.
Meanwhile, GM has struggled to ramp up Ultium EV output all year. Deliveries of Ultium-based EVs like the Cadillac Lyriq and Hummer EVs finally began picking up in the third quarter. In addition, the Chevy Blazer EV started to roll out. The company expects 2/3 of EV production to be Ultium-based in Q4.
With the delay of the Equinox EV and no mention of a release date for the next-gen Bolt, GM might want to consider keeping the existing Bolt around as an affordable option.
The electric car continues carrying sales, and with the Equinox EV being pushed back, it could leave GM in a tight spot over the next few quarters.
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