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As GM redirects its focus toward making a profit amid grim earnings outlooks, strikes and rising costs, the U.S. auto giant has announced it is ditching a $5-billion plan to develop affordable EVs in partnership with Honda.
The multi-billion-dollar plan was to beat Tesla at the sales game and the decision to scrap it comes only a year-and-a-half after its conception.
"After extensive studies and analysis, we have come to a mutual decision to discontinue the program. Each company remains committed to affordability in the EV market," the companies said in a joint statement carried by Reuters.
"After studying this for a year, we decided that this would be difficult as a business, so at the moment, we are ending development of an affordable EV," Honda CEO Toshihiro Mibe told Bloomberg. In April 2022, General Motors (NYSE:GM) and Honda Motors (NYSE:HMC) announced plans to co-develop a series of affordable electric vehicles using next-generation lithium battery technology, with the goal of enabling production of millions of EVs beginning in 2027.
United Auto Workers (UAW) union strikes have continued for five weeks, targeting Detroit giants, with walk offs starting on Tuesday and expanding to GM’s Arlington Assembly plant in Texas. According to NBC News, this is the first time the UAE has gone on strike against all three American auto giants simultaneously.
GM released its Q3 earnings report on Tuesday, beating expectations, but withdrawing its earlier guidance for the year, along with near-term EV targets due to slower-than-expected demand. According to GM’s earnings report, the strike has so far cost the company $800 million in pretax profits, prompting the withdrawal of its previous guidance for the year. Honda says it is sticking to its plans to go all-electric by 2040, despite withdrawal from the joint plans with GM.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com