Cand Honda Unveil Plan to Jointly Build Millions of Small Electric Vehicles

(Bloomberg) -- General Motors Co. and Honda Motor Co. will jointly develop affordable electric vehicles in major global markets, dramatically expanding a partnership that already spans gas-powered models, batteries and self-driving technology.

The automakers plan to create a new architecture based on GM's Ultium EV battery that will be used primarily for small crossover SUVs, with the first models available in North America in 2027, they said in a statement Tuesday. The project is intended to produce EVs that will be priced below GM's planned $30,000 Chevrolet Equinox and similar future offerings from Honda, the companies said on a call with journalists.

“GM and Honda will share our best technology, design and manufacturing strategies to deliver affordable and desirable EVs on a global scale, including our key markets in North America, South America and China,” GM Chief Executive Officer Mary Barra said in the statement.

The collaboration marks a major move toward democratizing electric vehicles, most of which are expensive and out of reach of many consumers. By joining forces, GM and Honda believe they can reduce battery costs faster and develop EVs at prices that even market-leader Tesla Inc. appears to have stopped pursuing.

With the latest move, GM and Honda are deepening ties as they aim to share development costs and increase sales. The automakers have been working together on hydrogen fuel cells since 2013 and more recently announced collaborations on EV batteries, gas-powered vehicles and self-driving technology.

GM slipped less than 1% at 9:35 a.m. in New York. The stock had tumbled 26% this year through Monday while the S&P 500 declined 3.9%. Honda's American depositary receipts fell 1.6% Tuesday.

Last year, Honda became the first Japanese automaker to say it will stop selling gasoline-powered vehicles, setting a target to phase them out completely by 2040. GM plans to build and sell 30 EVs by 2025 and eliminate gasoline and diesel-powered vehicles a decade later.

“Honda is committed to reaching our goal of carbon neutrality on a global basis by 2050, which requires driving down the cost of electric vehicles to make EV ownership possible for the greatest number of customers,” Honda CEO Toshihiro Mibe said in Tuesday's statement.

GM and Honda have been jointly developing engines and crossover sport utility vehicles to cut costs and redirect spending toward EVs. The companies said in 2020 that they planned to cooperate in areas such as parts and materials purchasing, research activities and connected-car services as well.

The 2020 link with GM was a big step for the Japanese automaker, which long had eschewed big strategic alliances. Building on the momentum, Honda last month announced plans to join forces with tech giant Sony Group Corp. to develop battery-powered cars.