General Motors and Honda to jointly develop vehicles in North America

General Motors

General Motors and Honda Motor on Thursday revealed plans to team up in North America to make a series of vehicles, deepening their ties as the auto industry comes under more pressure to share technology and costs to meet demands for cleaner automobiles.

Under the alliance, both automakers said, they intend to share common vehicle platforms, including electrified and internal combustion propulsion systems.

The companies still need to finish a definitive agreement and officials said greater details on expected cost savings would be available then, but a person knowledgeable about the matter said the savings would run in the billions of dollars for each company.

The partnership represents a major expansion of present collaborations between the two companies on electric and autonomous vehicles, connected vehicle technology, and fuel cells. Honda is an investor in Cruise Automation, the self-driving business that is mostly owned by GM.

“Overall, we believe this alliance would help both companies realize significant cost savings in the development of our vehicle portfolios,” said General Motors President Mark Reuss.

The deal marks another milestone in the consolidation of the international auto industry, as pressures to cut emissions and move toward electric vehicles strain the capital and engineering resources of even the largest players.

Former Fiat Chrysler Automobiles (FCA) CEO Sergio Marchionne had for years pushed for consolidation in the global auto industry, arguing it was inevitable to handle prohibitive capital costs.

FCA announced a $50 billion merger with PSA in 2019 to create the world’s fourth-largest automaker, Stellantis, in a move to address cost and scale issues. That deal is expected to close by the end of the first quarter of next year.

Japanese automaker Toyota Motor has been expanding ties with smaller Japanese automakers such as Mazda Motor and Subaru.

Ford Motor and German automaker Volkswagen have forged a wide-ranging alliance covering electric and commercial vehicles and self driving technology.

Analysts and GM investors have been pushing for a transformational change at the Detroit automaker, with repeated concerns regarding the spinoff of its EV operations into a separate company. GM CEO Mary Barra has said such an option was not off the table.

GM and Honda said in April they would jointly work together on two new EVs for Honda and were preparing to explore more ways to expand their alliance. They have already worked together on the design of an autonomous vehicle named Cruise Origin, and also collaborated on fuel cells and batteries.

Honda has for years remained largely independent and not engaging in any industry mergers. But the GM alliance will give it economies of scale it cannot achieve alone, Honda Executive Vice President Seji Kuraishi said. North America is Honda’s largest market and GM’s second-largest after China.

GM and Honda said joint development discussions will start immediately, with engineering work starting in early next year.

The companies plan to explore vehicle platform-sharing possibilities in over four core segments including crossovers and midsized pickup trucks, together with propulsion systems, infotainment and connectivity services, advanced driver-assist features, vehicle connectivity, and other technology. They also will cooperate on purchasing.

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