General Motors Co. and Honda Motors Co. will jointly develop a range of affordable electric vehicles, with the first units slated to roll off the production line in 2027. The cars will sell for around $30,000, making them much cheaper than Tesla’s basic model.
The average EV in the U.S. costs around $60,000, compared with $45,000 for cars overall, according to research website Edmunds.com. An EV’s large battery pack can account for roughly one-third of the cost of the vehicle. GM and Honda will keep costs down by sharing development, reduce battery costs and facilitate global production.
Affordable EVs are mostly found in China, where local and foreign automakers offer limited-range compacts suited to urban use. GM’s Chinese brand Wuling, for example, has had success selling the modest Hongguang Mini, priced at $5,000.
The two companies said they will develop a base chassis and technology platform for several models, including a compact sports utility vehicle for the Americas and China. GM and Honda will use the new system in millions of their cars under various brands.
GM, the world’s fifth-largest carmaker, currently produces 26 EVs across its various brands and is aiming for 30 by 2025. It also said last year it would stop producing internal combustion engine vehicles by 2035. Conversely, Honda was slow to develop EVs, and so far built one that is only available in Japan and Europe. In order to catch up, it announced plans this week that it will release 30 EVs globally by 2030.
Tesla’s CEO Elon Musk previously said he eventually wants to introduce lower-price models to broaden EV adoption. In 2020, Musk said the company would make an EV for about $25,000 but earlier this year he said the project had been temporarily put on hold. There seems little incentive to reignite that idea since Tesla is still the leader in EV markets of the U.S. and Europe.
EV models recently introduced in the U.S. and Europe are pricey and generally sold in small volumes. GM for example, recently introduced a GMC Hummer electric pickup truck priced at more than $100,000.
GM said its project with Honda extends work between the companies in other areas, including driverless cars.
“Further, the companies have an ongoing relationship with Cruise and are working together on the development of the Cruise Origin, one of the first purpose-built fully autonomous vehicles designed for driverless ride-hail and delivery,” GM said in its news release from April 5.
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