A collaboration between global automakers GM and Honda to develop affordable electric vehicles (EVs) will face significant cost challenges to bring their plans to fruition, according to analytics and business information company GlobalData.
The US and Japanese auto giants announced their plans “to expand the two companies’ relationship to a new chapter by developing a series of affordable EVs based on a new global architecture using next-generation Ultium battery technology.”
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GM and Honda are also looking at global production of millions of EVs starting in 2027, including their compact crossover vehicles. The compact crossover segment is the largest in the world, with annual volumes of more than 13 million vehicles, according to GM. Additionally, the development will include both the companies’ technology, design and sourcing strategies.
Bakar Sadik Agwan, a senior automotive consulting analyst at GlobalData, said: “The plan, which aims to develop a series of new low-priced EVs based on a new joint platform, is an expansion of the partnership between GM and Honda announced in 2020.
“This association aims to build two electric models for North America on GM’s Ultium platform by 2024 – the Honda Prologue and a D-SUV from Acura.
“However, the recent low-priced EVs progress comes as a positive development for both Honda and GM, as it will accelerate Honda’s EV vision and offer GM regional scalability, especially in Asian and European EV market.
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By GlobalDataGM and Honda
“Affordable EVs is the next battleground for most established players in the global EV market. Automakers such as Tesla, GM, Toyota, BYD and VW all share an under US$25,000-30,000 EV ambition, and there are two key routes to achieve this – partnerships with OEMs to develop/share a flexible EV platform or co-develop batteries with the suppliers, alter chemistries to bring down the cost.
“In the existing GM-Honda partnership, Honda noted that it would bring its ADAS expertise to the association while utilising GM’s Ultium battery and platform. But with the Sony-Honda alliance that happened this year, Honda is now positioned to contribute more. If Sony’s involvement happens, it could be highly important as the partnership envisages taking on Tesla and Sony could significantly contribute with its imaging, sensing and other ‘in-cabin’ technologies.
“Another connecting dot in the rumoured 40GWh battery JV between Honda and LG (also battery supplier to GM) in the US is cost-sharing. However, with limited visibility, there are significant grey spots to sense the direction where the deal is heading and the contribution by both OEMs.
“With the material prices of core battery materials on the rise and existing macroeconomic instability, it is unclear how automakers will limit the costs of new products.
“Potentially, lower battery capacity vehicles such as 50kWh with a driving range between 100-200kms in A or B-segments could be a solution. From this perspective, the market trends towards affordable EVs in the developed part of the world would have a domino effect in markets like Asia-Pacific, where there is a bigger addressable market for compact and affordable cars.”
Motor Finance is a GlobalData website.
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