Khan is a professional trader and business writer with over 7 years of experience in several financial markets. Khan takes pride in sharing insightful articles with his readers that help them improve their investment portfolios.

2022-04-05 18:47

General Motors Company Inc. stock closed 4.0% down on Tuesday after expanding its EV partnership with Honda.

Details of the announced partnership
GM and Honda have stated their plan to take their partnership to the next level by co-developing a line of cheap electric vehicles based on a new global design and next-generation Ultium battery technology.

Both automakers are collaborating to manufacture of millions of electric vehicles globally, particularly compact crossovers, starting in 2027, by combining their technology, design, and sourcing methods.

The firms will also collaborate to harmonize equipment and processes in order to attain world-class quality, increased throughput, and lower costs. With yearly sales of more than 13 million vehicles, the compact crossover market is the world's largest.

In addition, GM and Honda will examine future EV battery technology partnership potential in order to lower the cost of electrification, increase performance, and ensure future vehicle sustainability. GM is already striving to advance new technologies such as lithium-metal, silicon, and solid-state batteries, as well as manufacturing techniques that can be used to quickly upgrade and update battery cell manufacturing processes.

General Motors CEO Mary Barra’s comments
Honda is making headway with its all-solid-state battery technology, which it regards as a key component of future electric vehicles. Honda has set up a demonstration line for all-solid-state batteries in Japan and is moving closer to mainstream manufacturing. Mary Barra, GM chair and CEO said:

"GM and Honda will share our best technology, design and manufacturing strategies to deliver affordable and desirable EVs on a global scale, including our key markets in North America, South America and China. This is a key step to deliver on our commitment to achieve carbon neutrality in our global products and operations by 2040 and eliminate tailpipe emissions from light duty vehicles in the U.S. by 2035.”

Over the years, GM and Honda have maintained a tight working partnership, with many key efforts focusing on electric and autonomous car technologies. The two companies started collaborating in 2013 on the development of a next-generation fuel cell technology as well as hydrogen storage technologies.

Honda joined GM's efforts to create electric vehicle battery modules in 2018. In 2020, GM and Honda disclosed plans to collaborate on two electric vehicles, including the Honda Prologue, which will debut in early 2024, and Acura's first EV SUV. Furthermore, the companies have a long-standing partnership with Cruise and are collaborating on the Cruise Origin which is among the first purpose-built fully autonomous cars meant for driverless ride-hailing and delivery.

With a market cap of $60 billion, General Motors now trades at a PE multiple of 6.18.