GM and Honda abandon plans of building lower cost EVs

General Motors Company (NYSE: GM) says it has decided to exit plans of working with Honda Motor Co Ltd (TYO: 7267) on lower cost electric vehicles for now. Its shares are down another 2.0% at writing.

Why is GM and Honda parting ways?

The U.S. automaker had partnered with Honda in April of 2022 to build a range of electric vehicles priced at under $30,000 – and play catch up with Tesla Inc in terms of annual sales.

The $5.0 billion effort aimed at producing millions of affordable EVs per year from 2027.

On Wednesday, however, General Motors scaled back on those plans as it shifted the focus of its EV segment from quantity to profitability. In a joint statement with Honda, the car manufacturer said:

After extensive studies and analysis, we have come to a mutual decision to discontinue the programme. Each company remains committed to affordability in the EV market.

Watch here: https://www.youtube.com/embed/NGai_D7WB1M?feature=oembed

UAW strike continues to hurt General Motors

The announcement also underscores its ongoing struggles related to the UAW strike – the cost of which surpassed $200 million per week for General Motors this month.

United Auto Workers expanded its strike to the automaker’s Arlington factory that produces its highly profitable full-size SUVs right after GM reported a strong third quarter on Tuesday.

Just hours later, California also ordered Cruise – its self-driving unit to remove its vehicles from state roads citing they’re a threat to public safety. The Department of Motor Vehicles (DMV) also accused General Motors of misrepresenting how safe its technology really is.

California SUSPENDS GM/CRUISE VEHICLES! What will this to to GM, Waymo, and Tesla?! pic.twitter.com/tvId0Hsz3X

— DrKnowItAll (@DrKnowItAll16) October 25, 2023

Honda is slated to partner with Cruise next year to launch a driverless ride in Japan in the first quarter of 2026. Today’s development also did not affect its plans of becoming a pure-play electric vehicles company by 2040.

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