The death knell for the cheap EV? Honda and General Motors scrap $5 billion plan to develop more affordable electric vehicles – after Ford boss warned eco-cars had become a ‘political football’
Automakers Honda and General Motors have abandoned a $5 billion plan to create more affordable electric vehicles amid an industry-wide slowdown in electric vehicle development.
The manufacturers agreed in April 2022 that they would join forces to reduce the battery costs of eco-cars and develop vehicles under GM’s $30,000 Chevrolet Equinox. The partnership was intended to compete with Elon Musk’s Tesla, which has aggressively cut prices this year.
But today Honda CEO Toshiro Mibe confirmed the project had been cancelled, citing costs and logistical challenges.
He told Bloomberg: ‘After a year of studying, we decided that this would be difficult as a company, which is why we are currently ending the development of an affordable EV.
GM and Honda will separately look for a solution. The project itself has been cancelled.”
Automakers Honda and General Motors have ditched a $5 billion plan to create more affordable electric vehicles amid an industry-wide slowdown in electric vehicle development
President Biden has previously pledged to make half of all car sales electric by 2030
He made no mention of the strike organized by the United Auto Workers (UAW) against GM, Ford and Stellantis, which is causing problems for manufacturers. GM claims the action is costing the company $200 million a week.
Honda confirmed that the news did not change its ambition to sell only electric vehicles by 2040.
Mibe’s comments come as a host of carmakers struggle to keep up with their ambitious EV rollout plans. President Biden has previously pledged to make half of all car sales electric by 2030.
But affordable electric cars are crucial to driving mass adoption. And manufacturers are struggling to increase production and reduce costs at the same time.
GM warned earlier this week that it can no longer say whether it will achieve its $14 billion profit forecast this year. The manufacturer has also postponed production of its Chevrolet Silverado due to declining demand.
Meanwhile, Ford announced last week that it would lay off about 700 workers at its Detroit plant that produces the electric F-150 Lightning pickup.
Tesla CEO Elon Musk also told investors during an earnings call last week that the company was struggling to ramp up production of its highly anticipated “Cybertruck.” Musk said the company has “dug our own grave” with the plan.
Ford Motor CEO Jim Farley warned over the weekend that electric cars have become “a political football.” Commentators have speculated that Biden’s support for the vehicles could hurt his re-election chances next year.
In a recent survey of Michigan voters statewide, Trump led Biden from 46 percent to 43 percent among United Auto Workers union members.
Biden’s decline among union workers is believed to be due to the president’s vocal support for electric cars, which workers worry could threaten their jobs.
GM warned earlier this week that it can no longer say whether it will achieve its $14 billion profit forecast this year
The Biden administration’s support for electric cars has taken the form of an active push to embrace the cars by his Energy Department, as well as expanding tax breaks for electric car buyers and subsidizing their production.
The current administration’s plan has come under fire from Republicans who want to oust Biden in 2024, claiming the green EV policy will eliminate jobs in the US auto industry and ultimately force unpopular policies like the future mandate of California for the sale of zero-emission vehicles.
Trump and Biden have both spent time in Michigan in recent weeks addressing the issue.
The former predicted that Biden’s EV policy would result in “hundreds of thousands of American jobs” disappearing.
“I don’t understand why Ford and GM, why these automakers, aren’t fighting … to make cars that will sell, to make cars that can go long distances,” he said at a meeting last month.