GM's EV partnership with Honda hits the brakes amid UAW strike, production delays
LAKE ORION, Mich. (CBS DETROIT) – A day after General Motors says it's slowing down electric vehicle production amid the UAW strike, Honda has pulled out of a partnership with GM to make affordable EVs.
The widely touted partnership between Honda and GM would have used GM's Ultium battery technology to make a series of electric vehicles beginning in 2027 that would have cost less than $30,000
On Wednesday, both companies announced that after extensive studies and analysis, they're ditching the $5 billion effort.
Alan Amici, president and CEO of the Ann Arbor-based Center for Automotive Research, says he isn't surprised by this latest development.
"Lots of learning going on. How do you make EVs affordable and profitable? And so, I think companies are going through that process, and they're learning, and they're finding that they may be able to produce a more affordable and perhaps more profitable vehicle if they take a little bit more time for a little bit more optimization. So I think that may be what we're seeing here," Amici said.
This all comes after GM said last week they're delaying the production of two electric pickups at the Orion Assembly plant until late 2025. The company is idling the plant at the end of this year and relocating the 1,000 employees on-site to other facilities.
On Tuesday, GM said in its earnings call that it's scaling back on the goal to build 400,000 EVs through mid-2024
"As far as General Motors' strategy here, it may be to focus more on the Chevy Bolt as their entry-level EV than to pour additional money into a joint venture with Honda for entry-level EVs," Amici said.
GM spokesperson Darryll Harrison provided the following statement to CBS News Detroit:
Last year, GM and Honda began working on an affordable EV program for global markets, which was slated for introduction in 2027. After extensive studies and analysis, we have come to a mutual decision to discontinue the program. Each company remains committed to affordability in the EV market.
GM and Honda continue to work on co-developed electrified vehicles such as Acura ZDX and Honda Prologue, advancing state-of-the-art fuel cell technology, autonomous ride-hail vehicles - now expanding our efforts globally with the recent announcement in Japan and other areas that will transform mobility.
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.
"These are long-term capital investments, 15 to 20 years. This is difficult to walk away from. This is difficult to turn the aircraft carrier around. So once those investments are made, it's very expensive to switch gears or to change," Amici said.
For more on the UAW strike, visit here.
