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Automobiles

Honda and GM to share EV platform for lower-cost North American models

Pricing and engineering pressures push rivals to seek scale together

Honda will share its platform for midsize electric cars in exchange for information from GM on the development of larger EVs. (Source photos by AP and Reuters) 

TOKYO -- Honda Motor will start selling electric vehicles in the North American market made with over 50% of the same parts as General Motors cars, Nikkei has learned, the latest shift in an auto industry forced to realign by environmental and other pressures.

The Japanese automaker plans to provide GM with design information on its EV platform -- the base structure on which the body and key components are built.

Since a car's platform to a large extent determines its engineering, the automakers will be building very similar EVs under this partnership.

Carmakers, under increasing pressure to reduce the environmental impact of their products, are accelerating their push into electric vehicles. The need to keep costs down while transforming their lineups has pushed many industry players to collaborate in order to survive.

Honda is developing its e:Architecture platform for small and midsize EVs that are expected to hit North American showrooms by the late 2020s. GM will use the same platform.

In return, GM will share information on the development of its larger electrics.

The companies will sell EVs that share over 50% of their components in terms of cost. Only exterior and interior designs will differentiate the partners' vehicles.

In general, developing one EV model requires about 50 billion yen ($455 million), with batteries alone accounting for about 40% to 50% of the production cost. Converting production lines to cater to EVs costs about 10 billion yen to 15 billion yen per factory.

By sharing EV platforms, Honda and GM will be able to standardize motors, batteries, inverters and other key components. This kind of collaboration will bring cost savings through ordering large quantities of the same parts.

GM has vowed to phase out fossil fuel-powered cars and sell mostly zero-emission cars and trucks by 2035. Honda also is transitioning away from gasoline and diesel, with plans to sell only battery-powered and fuel cell vehicles by 2040.

The European Union will effectively ban sales of new petrol and diesel cars, including hybrid vehicles, starting in 2035. Japan and the U.S. have also announced a series of policies aimed at encouraging the development and use of EVs.

In August, U.S. President Joe Biden set a national target -- that half of all new U.S. vehicles sold be electric or fuel cell by 2030 -- in a bid to slash greenhouse gas emissions. As of 2020, EV sales accounted for about 2% of total U.S. vehicle sales, but the Biden administration aims to reach its goal by deploying more charging stations and consumer subsidies.

For automakers, expanding the number of EV models is crucial. But they are pinned between high expenses for batteries and relatively low profits on electric vehicles, making better cost strategies essential.

Honda and GM are not the only automakers to join hands as the world shifts toward decarbonization.

Nissan Motor and Renault, which are in an alliance with Mitsubishi Motors, plan to share around 70% of EV motors, batteries and other parts. They have finished developing a shared EV platform.

Toyota Motor, Suzuki Motor and Daihatsu Motor have formed a partnership to develop electrified commercial vehicles. Volkswagen and Ford Motor are also teaming up to develop EVs.

Competition among automakers to offer affordable EVs is also intensifying.

In July 2020, SAIC-GM-Wuling Automobile launched a budget EV for about $4,500. The EV, produced by the joint venture that includes China's state-owned SAIC Motor and GM, is smaller than the minicars that ply the streets of Japanese cities. Although the EV's speed and range is limited, it has grown popular in rural China.

This is not the first time Honda and GM have worked together. In 2017, they established a joint venture in the U.S. to produce hydrogen fuel cell systems. In autonomous driving, Honda has invested in GM's Cruise subsidiary with the intention of researching unmanned ride-sharing services.

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