Honda Motor (NYSE:HMC) and General Motors (NYSE:GM) announced Wednesday the cancellation of their collaborative efforts to produce budget-friendly electric vehicles (EVs), as confirmed by the Japanese company. This development comes a year after their initial agreement to join forces in an attempt to surpass Tesla (NASDAQ:TSLA) in terms of sales.
The decision highlights GM’s strategic reorientation towards delaying the introduction of multiple EV models in order to prioritize profitability. This decision is a response to the challenges posed by the escalating costs of the United Auto Workers strikes, which have spiked to a staggering $200 million per week as of this month.
GM, on Tuesday, withdrew its previous 2023 profit outlook.
"After conducting some research and analyses, both parties decided to end the development," Honda said. "Each company will continue to work towards offering affordable models to the EV market."
The two automakers reached an agreement last year to collaborate on the development of a range of more economical EVs, drawing from a newly established shared platform. The collaboration was expected to yield a substantial output of vehicles, potentially reaching into the millions, starting from 2027.
According to the initial plans, these "affordable" EVs were set to include compact crossover vehicles, all designed utilizing GM's cutting-edge Ultium battery technology.