GM and Honda ditch plan to build cheaper electric vehicles

“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 said in the interview with Bloomberg, which was the first to report the news.

“We are ending development of an affordable EV”

GM confirmed the development. “Last year, we began working on an affordable EV program for global markets, which was slated for introduction in 2027,” GM spokesperson Sanaz Marbley said in an email. “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.”

GM and Honda are not completely abandoning their mutual partnership. The two companies worked together on the Honda Prologue, the Japanese company’s first long-range EV for the North American market set for release next year.

But the decision to scrap plans for more affordable EVs is sure to deepen worries about the future of the EV market in the US and abroad. Tesla’s price cuts, shrinking profit margins, and softening demand has kicked up a hornet’s nest of anxiety about the massive shift to electric vehicles that’s currently underway.

But the decision to scrap plans for more affordable EVs is sure to deepen worries about the future of the EV market

And that anxiety is being reflected in a number of the big player’s moves, including GM’s recent announcements about longer wait times for its upcoming slate of electric trucks and Ford’s move to temporarily cut one of three shifts at the factory that builds the electric F-150 Lightning. Many analysts are wondering whether the auto industry bit off more than it could chew, especially with all the uncertainty surrounding the United Auto Workers strike.

The new GM / Honda EVs were supposed to be priced below the upcoming 2024 Chevy Equinox EV, which GM has said would start at $30,000. Most EVs on the market today are more expensive than their gas equivalents, though EV sales numbers are still ticking up as more models become available.

The average sale price of an EV is still higher than the average gas-powered vehicle, but it is slowly dropping — thanks almost entirely to Tesla’s price cuts. In July 2023, the average price Americans paid for a new EV was $53,633. In August 2023, the price fell by $257 to $53,376.