The plan to co-develop cheaper EVs was a rare example of the global auto industry uniting behind a common goal, with all car makers from Volkswagen to Toyota investing billions in new battery-powered vehicles over the next few years. The companies aim to beat Tesla, which has a commanding lead in sales of electric vehicles.
In a joint statement, GM and Honda said they would continue working together on other collaboration areas, including purchasing supplies, technology, design, and research. The two companies already collaborate on various vehicles in North America, with Honda selling its EVs and GM building SUVs under its Opel brand for its market.
GM is still committed to a portfolio of EVs that it expects to earn low to mid-single-digit adjusted profit margins on in 2025, without considering government clean energy tax credits that can boost a vehicle’s bottom line. It also invests in the systems it needs to ramp up production and keep its cost targets on track, including a second-generation version of its lithium-ion battery cell called Ultium.
It plans to produce the cells at a factory near Lordstown, Ohio, and other facilities in Michigan, Tennessee, and Spring Hill, Tenn. Eventually, GM expects to be able to reduce the price of its EV batteries by lowering the cost of the raw materials and improving production methods, a company official said. The executive said that the company hopes to reduce cell costs to $87 per kilowatt hour by 2025 and below $60 by later in the decade.
While a lower-cost EV is important for all automakers, it will be more of an imperative for GM as it prepares to shut down its plant in Fort Wayne, Indiana, to slow pickup truck production this year to focus on profitability. It’s also cutting its overall budget, with Barra reducing travel and advertising expenses and trimming IT spending. It’s also focusing on keeping its inventory tight to control supply and pricing, which was one of the reasons it temporarily halted pickup production at its Fort Wayne plant in February.
The partnership between GM and Honda expands a longstanding relationship on all fronts, including the companies’ investments in Cruise, GM’s majority-owned autonomous driving unit, preparing to start driverless ride-sharing services in California this fall. Honda is slated to produce two EVs for GM for the 2024 model year. It also has invested in a venture with Argonne National Laboratory to develop all-solid-state battery technology it sees as the key to lower costs. The two companies are also collaborating on other projects, including fuel cells and electric motorcycles.