Honda and GM scrap affordable electric car plan

Carmakers had agreed to work together in effort to beat Tesla in sales

Honda said there was no change in its plan to sell only electrified vehicles by 2040.

Honda Motor and General Motors are scrapping a plan to jointly develop affordable electric vehicles, the companies said, just a year after they agreed to work together in a $5bn (€4.7bn) effort to try to beat Tesla in sales.

The decision underscores GM's strategic shift to slow the launch of several electric car models to focus on profitability. The US car maker withdrew its previous 2023 profit outlook. 

Honda said there was no change in its plan to sell only electrified vehicles by 2040. GM cited a joint statement that pointed to the projects the companies were still working on together in acknowledging the end of electric car plan.

GM chief executive Mary Barra said during an earnings call the US car maker was shifting its electric vehicle push from efforts in the entry-level segments, that included a $5bn commitment over the next several years to GM's Bolt electric vehicle. 

The two firms agreed in April last year to develop a series of lower-priced electric vehicles on a new joint platform, producing potentially millions of cars from 2027. 

The automakers had said the deal was for "affordable" EVs, including compact crossover vehicles. "After studying this for a year, we decided that this would be difficult as a business, so at the moment, we are ending development of an affordable EV," Honda chief executive Toshihiro Mibe said. 

• Reuters