General Motors (GM) and Honda (HMC) have teamed up to develop a series of cheap electric vehicles (EVs), counting on the strategy to help them overtake current market leader, Tesla (TSLA).
American automaker GM has a global footprint. It makes a variety of vehicles under brands such as Chevrolet, Cadillac, Buick, and Wuling. Honda is a Japanese multinational that not only builds vehicles, but also makes aviation and power products.
Although GM and Honda have a substantial share of the gas-powered vehicle market, they lag behind in the EV market. In their latest collaboration, the companies have agreed to share their best in technology, design, and production strategies to give the world affordable EVs. They aim to offer electric cars that would cost less than the coming Chevrolet Equinox EV, which will start at $30,000.
GM and Honda Targeting a Popular Segment in the EV Race
In their effort to make EVs accessible to the masses and boost their sales in that category, GM and Honda plan to build compact crossover vehicles, which is the largest segment in the world, with annual volumes of more than 13 million vehicles.
Tesla currently leads in global EV sales, giving it a market share of 14%. But most of the EVs produced currently are targeted at the luxury market. Thus, delivering cheap models may help GM and Honda grow their sales quickly and capture a bigger share of the EV market. The affordable EVs from the new GM-Honda partnership are expected to go on sale starting in 2027, beginning in North America.
GM CEO, Mary Barra, said, “By working together, we’ll put people all over the world into EVs faster than either company could achieve on its own.”
Honda CEO, Toshihiro Mibe, said, ““Honda and GM will build on our successful technology collaboration to help achieve a dramatic expansion in the sales of electric vehicles.”
GM and Honda Considering Advanced EV Battery Technologies
To further drive down the cost of EVs, GM and Honda are also looking at collaborating on EV battery technology as well. The companies are already independently working on advanced battery technologies, including the solid-state battery type.
GM and Honda are longtime partners. For example, Honda is among the investors in the GM-controlled self-driving rideshare provider Cruise. Honda has tapped GM to build some of its upcoming EV models. The latest deal expands on their existing partnerships.
Wall Street’s Take
Consensus among analysts is a Strong Buy based on 12 Buys and three Holds. The average General Motors price target stands at $72.93 and implies upside potential of 76% to current levels. Meanwhile, GM shares have declined 32% year-to-date.
Stock Investors
TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on General Motors, with 2.7% of portfolios tracked by TipRanks increasing their exposure to GM stock over the past 30 days.
Key Takeaway for Investors
There is a strong demand for EVs, but these vehicles can be expensive to purchase. Making affordable EVs would enable GM and Honda to accelerate their sales and contribute to reducing their carbon footprint.
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