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Why GM and (once-shy) Honda are holding hands
Batteries and innovation have them walking down the EV aisle
Honda (HMC) was relatively late in producing cars; it didn’t start until the mid-’60s, having previously manufactured motorcycles since its founding just after World War II. And it has always — except for a short-lived joint venture with Subaru (FUJHY) and Isuzu (ISUZY) in the 1990s — been fiercely independent.
It also has been very innovative. It never used rear-wheel drive. It was first with an all-aluminum automobile — both engine and body — the trailblazing NSX sports car. And it has long eschewed gas-guzzlers: from 1984 to 2010, five of EPA’s top 10 most fuel-efficient cars were Hondas — more than any other automaker.
So, it is somewhat surprising that it has recently teamed up with General Motors (GM) to produce electric vehicles and that the companies just announced they are developing a series of EVs expected to be priced below $30,000.
“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 CEO Mary Barra said in a press release.
Cheaper EVs are crucial to mass adoption in America, with current models mostly selling at $40,000 and above (the cheapest Tesla (TSLA), the Model 3, is priced at nearly $42,000). In other words, they amount to luxury items.
So, what’s behind the wedding bells? Well, Honda wants GM’s next-generation Ultium batteries. And like fellow Japanese giant Toyota (TM), it has been slow to develop EVs — it sells none, having concentrated on hybrids, including the industry’s first model, the Insight, which came to market in 1999. It has even turned to GM to produce its first EVs (the Prologue and an as-yet unnamed vehicle for its upmarket Acura division, which are set to debut in 2024).
Meanwhile, GM, although it won’t say it out loud, is undoubtedly eyeing Honda’s reputation for innovation and reliability, with Honda and Acura producing four of the top 10 most reliable vehicles sold in the U.S., according to RepairPal.com’s ratings, and the lowest average annual repair costs.
A marriage made in EV heaven? We’re watching it with great interest.