As the industry edges toward electrification while still building gas-powered vehicles, “where do we find the economies on both sides of it? In one case, you’ve got a very large existing competitive business. And then on the other, you have this new and growing opportunity,” Carlisle said. Collaborating with Honda is “putting us on a better and better footing.”
The alliance would build on a partnership announced in April under which GM is helping to develop two new Honda EVs powered by GM’s upcoming Ultium batteries.
A broad alliance could help push Honda further into the EV space and potentially add large SUVs and pickups to its lineup. For GM, the arrangement could create an inexpensive way to reenter the small-sedan segment it has abandoned and to continue selling a midsize sedan in a market increasingly tilted toward crossovers.
Honda said it expects to jointly develop gasoline, hybrid and electric vehicles, and it highlighted the sedan segment as having high potential. Honda has a lot to offer, based on its perennially popular Civic and Accord sedans.
“I think [GM] would like to still have some presence in that market,” Abuelsamid said. “There is still some potential there, but not necessarily enough to justify developing their own new vehicle platforms or even retaining production capacity for that. They probably see this as a good opportunity to maintain a foothold in those segments with a comparatively low investment.”
GM also has reduced investments in internal-combustion powertrains over the past few years, he said.
“Honda makes excellent internal-combustion powertrains. This gives them an opportunity to leverage Honda’s strength to maintain a presence in that market, even at a reduced level that can still be profitable for both companies,” Abuelsamid said.
GM and Honda haven’t finalized the terms of the alliance yet, but Honda spokesman Koji Watanabe said the agreement does not entail a capital alliance or purchase of shares. The objective, he said, is to raise the efficiency of operations in North America, freeing up more resources to deploy around the world, and a capital tie-up was not deemed necessary to achieve that.
“This is about surviving in North America,” Watanabe said. “In order to survive globally, we need to boost our competitiveness and allocate more to future technology.”
GM and Honda could divide manufacturing focus by vehicle size, with Honda specializing in sedans and crossovers and GM working on midsize and large vehicles, said Jeff Schuster, senior vice president of forecasting with LMC Automotive.
The two Honda EVs that Honda and GM previously said they plan to co-develop are slated to be built at a GM plant. Other EVs that emerge from the alliance also likely would be built at GM plants, Abuelsamid said, but if GM “wanted to do a new Chevy Malibu or Buick sedan based on the next-generation Accord, they would probably be built in Ohio or some other Honda plant.”
While platforms, powertrains and other underpinnings may be shared, the companies will differentiate vehicles through interior and exterior design as well as through tailored driving dynamics, Watanabe said.
Honda’s relationship with GM dates back to 1999, when it supplied the U.S. automaker with V-6 engines. Cooperation has since expanded to fuel cells, electric vehicles and autonomous-driving technology.
“We have come to this decision largely because of our relationship of trust with GM,” Watanabe said.
Naoto Okamura contributed to this report.