General Motors and Honda have ended plans to build millions of affordable and smaller electric vehicles in the face of high interest rates and battery costs, coupled with a dampening of demand for EVs.
The decision comes after the two companies announced plans to co-develop affordable electric vehicles. The partnership centered around GM’s Ultium EV platform and both automakers’ robust manufacturing capabilities. Under the partnership, the automakers had expected to bring these EVs — many of which were expected to be priced under $30,000 — to North America in 2027, according to Yahoo! News.
“After extensive studies and analysis, we have come to a mutual decision to discontinue the program,” GM spokesperson Darryll Harrison said in a statement, pointing out each company remains committed to affordability in the EV market. “GM’s focus over the next two years will continue to be on scaling the Ultium Platform and battery cell capacity, expanding a robust domestic EV supply chain, and delivering a comprehensive portfolio of EVs across categories, including lower cost models.”
The news comes a day after GM announced it would slow its launch of EVs, including backing off the 100,000 EV production target it had for the second-half of 2023. Earlier this year, the automaker reversed plans to kill off the Chevy Bolt EV and announced intentions to produce a next-generation version of the affordable EV hatchback.
CEO and Chair Mary Barra stuck by plans to produce the next-gen Chevy Bolt EV during the company’s third-quarter earnings call Tuesday.
“Another key launch for us is the next-generation Chevrolet Bolt EV,” Barra said. “I know there has been some speculation in the market as to why we are developing a new Bolt EV. Our strategy is to build — is to build on the tremendous equity we have in the brand and to do it as efficiently as possible. Our prior portfolio plans included several newly designed vehicles in the entry level segments and a capital commitment of $5 billion over the next several years.”
Honda and GM have a history of working together, including a previous deal to co-develop the Honda Prologue and Acura’s first EV. The two automakers are also working together with GM’s self-driving car subsidiary Cruise, and jointly developed the Cruise Origin.
In a Wednesday note, Emmanuel Rosner, Deutsche Bank research analyst, wrote: “We indeed struggle to understand GM’s message around its new EV trajectory and the underlying driver of its changes.”
“With considerable uncertainty around EV demand, pricing, input costs and magnitude of labor cost increases, and spotty execution so far, we find it difficult to acquire comfort in the achievability of these targets,” Rosner wrote.
