Steer Clear Of GM As It Revs Up Risky EV Venture With Honda – Forbes

April 6, 2022 by No Comments

A battery pack and GM’s new Hummer EV stand outside an event where General Motors (Photo by JEFF … [+] KOWALSKY / AFP) (Photo by JEFF KOWALSKY/AFP via Getty Images)

AFP via Getty Images

Two legacy car companies located on opposite ends of the glob are getting together to make the least expensive electric vehicle to date. What could possibly go wrong?

Honda Motor (HMC) and General Motors
GM
(GM)
executives announced Tuesday a plan to make a sub-$30,000 EV, starting in 2027. They probably expected a positive response. It didn’t work out that way.

Investors should continue to avoid General Motors.

The EV explosion is in its infancy. Although the uptick in ownership is growing fast in Europe and China, the important American and Japanese markets have yet to embrace electric cars and trucks. EVs comprise less than 4% of the total market in those key markets according research from the International Energy Association.

A large part of the sluggish adoption rate can be attributed to vested interests in Detroit and Tokyo. Ford (F), Stellantis (STLA), GM, Toyota (TM), and Honda still make a lot of money peddling internal combustion engines. Well, at least that used to be true.

Most of the automotive industry has been in a deep funk since the pandemic.

With one exception, all of the major automakers cut orders in 2020 for key semiconductors. Executives assumed sales would slow given so many countries chose to lock down their economies. That fateful decision created the current semiconductor shortage. Chip contractors simply replaced automotive orders with demand from consumer electrics companies.

Tesla
TSLA
(TSLA)
did not cut chip orders. Its popular EVs were presold.

Legacy automakers desperately want to duplicate that business model. It removes so much risk. However, getting there is going to be a struggle. Parts modularity is a big deal in the legacy world. Wiring harnesses, brake assemblies and other auto parts are interchangeable across brands. Even small disruptions in the supply chain can be catastrophic for the entire sector. The transition to EVs will exacerbate those potential problems.

Honda and GM want to make a low cost EV, yet they can’t even begin production until 2027.

The timeframe is especially worrisome given the two companies have a history together, the project will use battery technology developed in 2020, and the new vehicles will be manufactured in existing GM facilities.

The Cruise Origin is a quirky EV jointly developed in 2020 by Honda and GM. The promotional website notes Origin will have no steering wheel, no pedals for braking or acceleration, and bus-like format where two sets of passengers will sit facing each other. The prototype was supposed to showcase what was possible with technologies developed by Cruise Automation, an autonomous vehicle startup.

The 2027 collaboration is not expected to be autonomous, yet it will be powered by GM’s Ultium battery platform and built in its North American factories, according to a joint press release.

With so many of the necessary pieces in place, the production hold-up is inexcusable.

Tesla is the global EV leader and the firm is moving at breakneck pace. The Austin, Tex.-based company started EV production in 2010 in a refurbished Fremont, Calif. factory that was previously owned by Toyota. A …….

Source: https://www.forbes.com/sites/jonmarkman/2022/04/06/steer-clear-of-gm-as-it-revs-up-risky-ev-venture-with-honda/

Tags:

Leave a Comment

Your email address will not be published.