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Honda Pulls Out of Joint Venture with GM on Electric SUVs

BY: Chris Brown
Electric SUV plugged into a charging station

As we transition away from combustion engines, electric vehicles (EVs) continue to dominate the automotive conversation. The latest development involves Honda’s joint venture with General Motors to co-produce affordable electric SUVs and how, unfortunately, that seems to have fallen apart.

The Honda-GM Joint Venture

In 2022, Honda and GM announced that they were planning to co-develop a series of affordable electric SUVs using GM’s next-generation Ultium battery technology. According to Doug Parks, GM’s executive vice president of global product development, the plan was to have an electric SUV priced lower than the 2024 Chevrolet Equinox EV, starting at around $30,000.

At the time, Honda Motor’s Senior Managing Executive Officer, Shinji Aoyama, was excited about the prospect, stating: “We believe holistic collaboration is mutually beneficial, not only the [vehicle] platform but with purchasing and procurement. Collaboration is the future.”

Codenamed AEV (affordable electric vehicle), the companies expected to work together on battery chemistry, vehicle engineering, and manufacturing in order to drive down costs. The range of vehicles would have included a compact crossover and was expected to go on sale in North America in 2027.

“Both Honda and GM have enough technologies to build [our own cars],” Aoyama said. “So now the engineers from both entities are disclosing the technologies that we have, then trying to discuss which technologies could be optimal for both.”

While the idea of an affordable EV is certainly welcome, the collaboration was about more than just the cars themselves. Both Honda and GM have plans to reach carbon neutrality by 2040 and 2050, respectively, and would have used shared intelligence as an opportunity to accelerate that.

By evaluating their logistics and production facilities to identify the most effective way to acquire the materials, human-power, and space needed to build the entry-level EV, they were also hoping to find more environmentally friendly ways of working in the process.

The Strategic Pivot: Honda’s Withdrawal Explained

Those who were excited to purchase their affordable electric vehicle were unfortunately let down when Honda unexpectedly announced its withdrawal from the collaboration only a year and a half in. This represents the latest in a string of decisions by GM to scale back or cancel previously announced EV projects.

Since the two automakers first made their plans public, the outlook for EVs has lost some of its promise due to higher costs, lack of infrastructure, and slower-than-expected consumer demand. In an email, GM spokesman Darryll Harrison said: “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.”

Harrison emphasized that the cancellation of the $5bn program was in no way connected to the GM plans to introduce the next-generation Bolt, but GM CEO Mary Barra appeared to contradict this somewhat during an earnings call with investors. “Our prior portfolio plans included several newly designed vehicles in the entry-level segments and a capital commitment of $5 billion over the next several years,” she said. “However, by leveraging the best attributes of today’s Bolt EUV as well as Ultium … we will deliver an even better driving, charging, and ownership experience with a vehicle we know customers love.”

While project AEV is officially dead in the water, Harrison said other partnerships between the companies, such as a deal for GM to build the 2024 Honda Prologue EV, continue. This also extends to partnerships around hydrogen fuel cells and autonomous vehicles.

In light of the news, Honda CEO Toshihiro Mibe told Bloomberg Television that the company determined the affordable EV program “would be difficult as a business.”

The Broader Impact on Electric Vehicle Development

The news may be a blow for electric vehicle development, but experts aren’t surprised by it. Alan Amici, president and CEO of the Ann Arbor-based Center for Automotive Research, told CBS News: “Lots of learning going on. How do you make EVs affordable and profitable? And so, I think companies are going through that process, and they’re learning, and they’re finding that they may be able to produce a more affordable and perhaps more profitable vehicle if they take a little bit more time for a little bit more optimization. So I think that may be what we’re seeing here.”

He continued: “As far as General Motors’ strategy here, it may be to focus more on the Chevy Bolt as their entry-level EV than to pour additional money into a joint venture with Honda for entry-level EVs.”

With this in mind, it isn’t all doom and gloom for electric vehicles. Companies like GM will continue to put resources into making affordable EVs but are doing so slower and ultimately more meticulously. While the end goal is the same, this approach will hopefully result in a higher-quality product that will benefit both consumers and automakers alike.

Honda’s Path Forward: Focusing on Independent EV Strategies

While joint plans have been scrapped, Honda CEO Toshihiro Mibe said: “GM and Honda will search for a solution separately.” This is good news in some respects, as hopes for an affordable EV aren’t dashed completely. Given enough time, the brand should be able to deliver sub-$30k electric cars sometime in the future, though it may take until after 2027 for these vehicles to materialize.

Thankfully, the breakup shouldn’t affect the launch of the Honda Prologue and Acura ZDX, which utilize GM’s Ultium battery tech and are closely related to the Chevy Blazer EV and Cadillac Lyriq. If all goes to plan, the Prologue and ZDX deliveries should still begin in early 2024.

GM’s Response: Adjusting to a Solo EV Future

GM has been open and seemingly level-headed in the aftermath of the decision. GM spokesperson Darryll Harrison provided the following statement to news outlets:

“Last year, GM and Honda began working on an affordable EV program for global markets, which was slated for introduction in 2027. 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 continue to work on co-developed electrified vehicles such as Acura ZDX and Honda Prologue, advancing state-of-the-art fuel cell technology, autonomous ride-hail vehicles — now expanding our efforts globally with the recent announcement in Japan and other areas that will transform mobility.

GM’s focus over the next two years will continue to be on scaling the Ultium Platform and battery cell capacity, expanding a robust domestic EV supply chain, and delivering a comprehensive portfolio of EVs across categories, including lower cost models.”

What Is an Extended Warranty?

In the simplest possible terms, an extended warranty is a fantastic way to save money on the cost of car ownership. But we should take you back to the beginning to give you the full picture.

Every new vehicle rolls off the production line with what’s known as a factory warranty or manufacturer warranty. This essentially acts as the automaker’s promise to repair or replace any components that fail due to fault within a predetermined number of years or miles traveled (whichever comes first). How long this lasts will completely depend on your manufacturer and vehicle model/make, but there’s one thing you can be certain of once the coverage ends, you’re out on your own.

If you want to continue enjoying freedom from repair bills, there are two routes you can go down. The first is a more traditional extended warranty, which can usually be purchased via your dealership or directly from your manufacturer. This does exactly what you’d expect and continues your factory warranty coverage beyond the expiry date. While this sounds great on the surface, there are some major pitfalls.

For example, you’re tied to dealerships for all authorized repairs (which isn’t good news if you break down hundreds of miles from one). To make things even trickier, your factory warranty needs to be active to qualify. You’ll be denied if you purchase an extension one day late.

The second—and almost universally preferred—coverage route is a vehicle service contract (VSC) from a third-party provider. These are superior because third parties are incentivized to give you better value for money, offering almost like-for-like coverage at a much more affordable price point. If that wasn’t enough, they also often throw in bonus perks to sweeten the deal, such as roadside assistance and replacement travel.

You’re also free to have repairs carried out at the certified auto shop of your choice, and as long as you meet the provider’s eligibility criteria, a vehicle service contract can be purchased regardless of factory warranty status.

It’s worth pointing out that an extended warranty and auto insurance are completely different types of coverage. To spell it out: an extended warranty protects you from repair bills incurred by unexpected component failure, while auto insurance protects you from repair bills incurred by a collision or other such incident. They work great together, however, so it’s always a good idea to take out both. Then you’re covered from all angles.

The Importance of Extended Warranties for EVs

EVs might be the most advanced automobiles on the road, but even electric components fail. These more complex parts are also pricier to repair, making an extended warranty even more essential for EV owners. However, despite the widespread adoption of EVs, only the most forward-thinking providers offer coverage.

For example, Endurance has plan options for including hybrids and Teslas. As with coverage for traditional vehicles, each warranty provider will specify which parts its EV extended warranties cover. In general, this will include the electric motor, charge port, onboard charger, battery pack, and inverter unit.

With the average cost of EV battery replacement in the thousands of dollars, you don’t want to leave things up to chance. Take out an extended warranty or vehicle service contract as soon as you can because you can’t put a price on peace of mind.

Driving Your EV with Confidence

EVs are the future of automobiles, but they aren’t infallible. Whatever the vehicle, it’s unfortunate that all components fail eventually, and when they do, you could be hit with a repair bill that empties your bank account. You need an extended auto warranty to protect yourself (and your wallet) from the rising cost of car ownership. And Endurance is your top choice.

Since opening our headquarters way back in 2006, we’ve helped almost half a million American drivers save some serious money, earning us the title of America’s most trusted warranty provider. We have a wide selection of plans aimed at drivers of every kind, including casual commuters, summer roadtrippers, rideshare drivers, and even select luxury vehicle owners. Our eligibility and flexibility are unrivaled, so if the base plans aren’t quite right for your needs and budget, our award-winning customer service team will be more than happy to customize a plan.

As well as quality coverage, we also offer some of the best benefits in the business. Our plans come with standard 24/7 roadside assistance, trip interruption costs, and rental car reimbursement. On top of that, every new Endurance customer receives a year of Elite Benefits, adding on tire repair/replacement, key fob replacement, total loss protection, and much more. Pay a small activation fee, and you’re ready.

Experts across the web rate us as the best auto warranty provider around, but don’t just take their word for it—we also have thousands of five-star reviews from happy customers on sites like Trustpilot. Check them out, and when you’re ready to find out more, contact (800) 253-8203 to request a FREE quote or shop online to see your price now.

Find more helpful automotive articles just like this one on our extended warranty blog, so make sure to head on over and take a look.

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