General Motors and Honda are teaming up to co-develop “affordable” electric vehicles expected to hit the market by 2027.
The new cars will be built with GM’s Ultium battery technology and sold by both brands in a bid to challenge Tesla in the rapidly growing electric vehicle space, according to an announcement on Tuesday.
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“Our collaboration with Honda and the continuing development of Ultium are the foundation of this project, utilizing our global scale to enable a lower cost foundation for this new series of EVs for millions of customers,” Doug Parks, GM’s executive vice president of global product development, purchasing, and supply chain, said in a statement.
An uptick in prices at the gas pump over recent months has brought a renewed focus on electric vehicles. President Joe Biden has touted the vehicles as the future and insists they can save consumers money. Currently, electric vehicles cost an average of $10,000 more than the industry average, per an estimate from Kelley Blue Book. Although the upfront cost is typically higher than their gas-powered counterparts, electric cars can have a lower cost to drivers in the long run.
GM aims to sell the new cars at a lower price point than the Chevrolet Equinox EV, which is expected to cost $30,000 when it is released in late 2023. Neither company has disclosed the exact financial terms and cost of the venture. As part of the initiative, the two companies will work to standardize equipment between the vehicles to lower “throughput” costs, according to GM’s press release. The new cars produced in the joint venture will include a compact crossover vehicle, which is one of the largest segments of the auto industry, accounting for 13 million volumes annually.
Both companies have been collaborating on electric vehicles since 2018. In 2020, they announced plans to co-develop the Honda Prologue, which is set to be launched in 2024. Additionally, the companies have worked to advance battery technology by investing in research on solid-state batteries, which scientists believe could be safer and have a higher life cycle than current lithium-ion batteries.
“The progress we have made with GM since we announced the EV battery development collaboration in 2018, followed by co-development of electric vehicles including the Honda Prologue, has demonstrated the win-win relationship that can create new value for our customers,” said Shinji Aoyama, Honda’s senior managing executive officer.
Another area of collaboration between the two companies has been Cruise Origin, an autonomous vehicle venture in which GM owns a majority stake. Honda previously injected $750 million into Cruise.
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Honda initially slow-walked development of battery electric vehicles, focusing instead on hybrid vehicles, but has begun shifting toward battery electric. The company is still planning to develop its own battery technology, an executive told reporters, per CNBC. The companies also said they will continue to “discuss future EV battery technology collaboration opportunities” in the future in a joint press release.
