Honda And GM Make A HUGE Announcement

Industry News / 11 Comments

The two are teaming up for something big.

Last month, General Motors announced some truly ambitious electric vehicle plans including, among other things, a cost-effective new battery pack architecture dubbed "Ultium". The goal with Ultium is to drive down the cost-per-kWh to $100 or lower - the point at which many analysts believe EVs might reach price parity with their internal combustion peers - and to make a battery pack that's truly modular, with "pouch"-style cells that can be stacked vertically or horizontally for greater packaging flexibility. It will power GM's full lineup of next-generation electric vehicles, including the announced GMC Hummer EV.

Apparently, as GM announced all this, they gained a fan from Japan: Honda Motor Company. GM has just announced that it has entered into an agreement with Honda to jointly develop a pair of battery-electric vehicles using GM's Ultium battery tech.

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Such arrangements are by no means rare in the auto industry, of course. Early in the last decade, Toyota entered into a similar joint-development agreement with Subaru to co-develop a sports car: the Subaru BRZ/Scion FR-S, or "Toyota 86" as it's now called. Toyota sourced the content for its new Mk V Supra from BMW; Fiat's 124 Spider is little more than a Mazda MX-5 Miata with an engine swap; and going back even further, the Toyota Matrix/Pontiac Vibe were essentially the same car.

If those cars all share something in common - a low-margin compact and a pair of sports cars - it's that they're all programs that likely would have proven difficult for an automaker to break even on going it alone.

2021 GMC Hummer Grill GMC

Similarly, electric vehicles have proven difficult to break even on; before his passing, former FCA CEO Sergio Marchionne famously quipped that no one should buy the Fiat 500e because the company lost $20,000 on each one sold. In sharing the cost of development with Honda, GM is giving its pair of forthcoming EVs a better chance of turning a profit and keeping the price tag within reason.

"This collaboration will put together the strength of both companies, while combined scale and manufacturing efficiencies will ultimately provide greater value to customers," says Honda's US Executive VP, Rick Schostek. "This expanded partnership will unlock economies of scale to accelerate our electrification roadmap and advance our industry-leading efforts to reduce greenhouse gas emissions."

The cars are expected to go on sale for the 2024 model year, with US-market production, at least, taking place in North American GM plants.

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