Umair Gaines
Honda, GM, and Ford have not ended the production of electric vehicles but have instead scaled back or scrapped plans to produce them. Honda and GM have canceled their joint venture to co-produce affordable electric SUVs, citing challenges in the business and economic climate, including slower-than-expected demand and changing market conditions. Despite this, both companies remain committed to developing electric vehicles independently, and Honda plans to launch its first mass-market EV in the US in 2024. Meanwhile, GM has announced delays in the production of several upcoming electric vehicles and is focusing on scaling its Ultium Platform and battery cell capacity. Ford has also made adjustments by temporarily cutting one of three shifts at the factory that builds the electric F-150 Lightning. These decisions reflect the evolving strategies of automakers as they navigate the complexities of the EV market and work towards carbon neutrality goals.
| Characteristics | Values |
|---|---|
| Honda and GM's plan to co-develop affordable electric vehicles | Scrapped |
| Reason for scrapping | Slower-than-expected demand, price wars, rising competition, shrinking profit margins, and changing market conditions |
| Honda's plan for electric vehicles | Honda CEO Toshihiro Mibe said that Honda will search for a solution separately and hopes to deliver sub-$30k electric cars sometime in the future |
| GM's plan for electric vehicles | GM's focus over the next two years will be on scaling the Ultium Platform and battery cell capacity, expanding a domestic EV supply chain, and delivering a comprehensive portfolio of EVs across categories, including lower-cost models |
| Ford's plan for electric vehicles | Ford has temporarily cut one of three shifts at the factory that builds the electric F-150 Lightning |
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What You'll Learn
- Honda and GM end their $5 billion plan to co-develop affordable EVs
- Honda's first mass-market EV for the US, the Prologue, is still on track for 2024
- Honda and GM will continue to work on other co-developed electrified vehicles
- Honda and GM's decision reflects a wider trend of automakers scaling back EV plans
- Honda and GM's collaboration was about more than just cars, including a shared goal of carbon neutrality
Honda and GM end their $5 billion plan to co-develop affordable EVs
Honda Motor and General Motors (GM) have decided to scrap their $5 billion plan to co-develop affordable electric vehicles (EVs). The companies confirmed the news in an email on Wednesday, 25 October 2023, just a year after they agreed to collaborate. The decision reflects a shift in GM's strategy to slow the launch of several EV models and focus on profitability. The company is facing rising costs due to United Auto Workers (UAW) strikes, which have surged to $200 million per week.
The original plan was for Honda and GM to jointly produce millions of EVs for the North American market, utilising GM's Ultium battery technology, with Honda designing the vehicles' exteriors and interiors. The companies expected to start production in 2027, aiming to make EVs more accessible to the masses.
However, after a year of studying the feasibility of this venture, Honda CEO Toshihiro Mibe announced that they had decided it would be challenging to execute as a business. "We are ending development of an affordable EV," Mibe stated in an interview with Bloomberg. GM also confirmed the development, expressing their mutual decision to discontinue the program.
This decision by Honda and GM is part of a broader trend in the automotive industry, as some automakers, including GM and Ford, are reining in their EV ambitions due to various factors. These factors include weakening demand, rising competition, and price wars led by Tesla, which have resulted in shrinking profit margins. For instance, when GM reported its third-quarter earnings, it revealed plans to scale back its goal of building 400,000 EVs by 2024 to cut costs and manage the impact of the UAW strike.
Despite ending their joint affordable EV program, Honda and GM continue to have other partnerships. Honda remains committed to its plan to sell only electrified vehicles by 2040, and GM still intends to have the capacity to build 1 million EVs annually in North America by the end of 2025.
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Honda's first mass-market EV for the US, the Prologue, is still on track for 2024
Honda, GM, and Ford have all recently scaled back their electric vehicle production plans. In late October 2023, Honda and GM announced that they were abandoning their $5 billion plan to co-develop affordable electric vehicles for the North American market. The companies had initially planned to start producing millions of jointly developed EVs using GM's Ultium battery technology in 2027.
Despite this setback, Honda remains committed to introducing its first mass-market EV in the US, the Prologue, in 2024. The Prologue is a midsize crossover SUV that shares a platform with GM's Chevrolet Blazer EV and the Acura ZDX. It is built on GM's BEV3 platform and Ultium batteries, and it offers a single-motor, front-wheel-drive powertrain or a dual-motor, all-wheel-drive powertrain. The single-motor version is estimated to have a range of around 300 miles, while the dual-motor setup is projected to produce 288 horsepower and 333 lb-ft of torque.
The Prologue is also equipped with Honda's latest infotainment software, featuring Google integration and improved voice commands. It includes safety technologies such as a blind-spot warning system, adaptive cruise control, and lane-keeping assistance. Additionally, it has an 85-kWh battery pack and fast-charging capability up to 155 kW.
The 2024 Prologue represents Honda's transition towards battery-electric vehicles in the US market. While it may not showcase the brand's passion for engineering, it is a strategic step for Honda to enter the EV market without a massive capital investment. The Prologue is priced at $48,795 for the EX trim with front-wheel drive and $59,295 for the top-of-the-line test car.
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Honda and GM will continue to work on other co-developed electrified vehicles
Honda and GM have recently scrapped their $5 billion plan to co-develop affordable electric vehicles for the North American market. The decision, which comes amidst a changing economic climate, is a result of slower-than-expected demand and rising competition in the EV market.
However, Honda and GM will continue to work together on other co-developed electrified vehicles. This includes the Acura ZDX and Honda Prologue, which are closely related to the Chevy Blazer EV and Cadillac Lyriq and utilize GM's Ultium battery technology. The Honda Prologue, Honda's first mass-market EV in the US, is expected to be released in early 2024 and will come with a single-motor, front-wheel-drive powertrain or a dual-motor, all-wheel-drive powertrain.
In addition to these vehicles, Honda and GM are also working on advancing state-of-the-art fuel cell technology and autonomous ride-hail vehicles. They have also co-designed the Cruise Origin, an autonomous shuttle that is set to debut in the US in 2025 and Japan in 2026.
While the cancellation of the initial plan to produce affordable EVs is a setback, Honda and GM remain committed to electrification and will continue to leverage their respective technologies and partnerships to bring electrified vehicles to market.
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Honda and GM's decision reflects a wider trend of automakers scaling back EV plans
Honda and GM's decision to scrap their joint plan to build affordable electric vehicles (EVs) reflects a wider trend of automakers scaling back or ending their EV projects. The companies had planned to leverage GM's Ultium battery technology to produce millions of EVs priced under $30,000 for the global market, with a 2027 launch. However, they cited challenges in executing this plan, including slower-than-expected demand and changing market conditions, such as price wars and competition from Tesla.
This move by Honda and GM aligns with a broader pattern of automakers re-evaluating their EV strategies. For instance, GM itself has scaled back its goal of building 400,000 EVs by 2024 and delayed the production of electric trucks like the Chevy Silverado EV and GMC Sierra EV. Similarly, Ford has temporarily reduced shifts at the factory manufacturing the electric F-150 Lightning. These adjustments indicate a response to shifting market dynamics and demand fluctuations.
The trend of automakers scaling back EV plans can be attributed to various factors. Firstly, softening demand and rising competition have created anxiety in the EV market. Additionally, price cuts by Tesla have intensified profit margin pressures. These factors have prompted automakers to reassess their production targets and timelines. The shift away from EV investments also extends beyond Honda and GM, with Ford making similar adjustments.
While the decision to scale back EV plans may be a strategic response to market conditions, it has sparked concerns about the future of the EV market in the US and globally. The joint effort between Honda and GM was intended to make EVs more accessible to a wider range of consumers, and its cancellation raises questions about the pace and scope of the transition to electric mobility. However, despite these setbacks, it's important to note that some automakers, like GM, still aim for significant EV production capacities in the long run, indicating their continued commitment to electrification.
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Honda and GM's collaboration was about more than just cars, including a shared goal of carbon neutrality
Honda and General Motors (GM) have recently decided to end their $5 billion collaboration to build affordable electric vehicles (EVs) for the North American market. The two companies had planned to start producing millions of jointly developed EVs in 2027 using GM's Ultium battery technology. However, their partnership was about more than just cars. Honda and GM shared a goal of carbon neutrality, with Honda aiming to achieve this by 2050.
Honda has set targets for reducing its CO2 emissions and is implementing various strategies to reach its carbon neutrality goal. The company has started operating an internal carbon pricing (ICP) system to accelerate the reduction of CO2 emissions at its Japanese business sites. Honda is also focusing on developing innovative technologies and preparing for business expansion to facilitate the changes needed to achieve carbon neutrality.
GM and Honda's collaboration on EVs was intended to help expand the sales of electric vehicles and make EV ownership more accessible to customers. The two companies had previously worked together on the co-development of a next-generation fuel cell system and hydrogen storage technologies, as well as the Cruise Origin, a purpose-built autonomous shuttle.
Despite ending their joint EV plans, Honda and GM's shared goal of carbon neutrality and commitment to reducing CO2 emissions remain a key aspect of their individual efforts and strategies. Honda's pursuit of carbon neutrality extends beyond its products to all corporate activities, with the company striving for a recycling-oriented society with zero environmental impact.
In summary, while Honda and GM's collaboration on affordable EVs has ended, their shared goal of carbon neutrality and commitment to environmental initiatives demonstrate that their partnership was about more than just cars.
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Frequently asked questions
Honda and GM have ended their partnership to produce affordable electric vehicles. However, Honda has not ended the production of electric vehicles altogether. In 2024, the company plans to launch the Prologue, its first mass-market EV for the US market.
Ford has not ended production but has cut one of three shifts at the factory that builds the electric F-150 Lightning.
Honda CEO Toshihiro Mibe cited the cost of the program and difficulty achieving sufficient highway range as reasons for the cancellation. He also stated that the changing economic climate made the collaboration difficult as a business.
Honda and GM planned to co-develop affordable electric SUVs using GM's next-generation Ultium battery technology. The vehicles were expected to be priced below $30,000 and go on sale in North America in 2027.
The decision to scrap plans for affordable EVs has deepened worries about the future of the EV market in the US and abroad. It reflects the anxiety caused by Tesla's price cuts, shrinking profit margins, and softening demand in the industry.
