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September 3, 2020 12:30 PM, EDT

GM Signs Deal With Honda to Develop Future Products

GM and Honda have reached a deal to share vehicle platforms and technology.GM and Honda have reached a deal to share vehicle platforms and technology. (Associated Press)

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General Motors and Honda have a deal to share vehicle platforms and technology in North America starting next year.

On Sept. 3 the automakers said they have signed a nonbinding memorandum of understanding to establish a North American automotive alliance. The deal has come together after extensive discussions.

The proposed alliance will include sharing a range of vehicles, to be sold under each company’s distinct brands, as well as cooperation in purchasing, research and development, and connected services.

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The alliance will help GM and Honda achieve substantial cost savings in developing future products.

“This alliance will help both companies accelerate investment in future mobility innovation by freeing up additional resources,” GM President Mark Reuss said in a statement. “Given our strong track record of collaboration, the companies would realize significant synergies in the development of today’s vehicle portfolio.”

In April, GM and Honda announced they have agreed to jointly develop two all-new electric vehicles for Honda. Those vehicles will be on GM’s global EV platform powered by proprietary Ultium batteries, but Honda will design the exteriors and interiors. The platform will be engineered to match the way Honda vehicles handle on the road. At the time, GM said this was “another step” toward its vision of an all-electric future.

The GM-Honda relationship, which began more than two decades ago, includes recent collaborations on fuel cells, batteries and the Cruise Origin shared autonomous vehicle.

Under the latest proposed alliance, Honda and GM would collaborate on a variety of segments in North America, intending to share common vehicle platforms including both electrified and internal combustion propulsion systems that align with the vehicle platforms.

Co-development planning discussions will begin immediately, with engineering work beginning in early 2021.

“Through this new alliance with GM, we can achieve substantial cost efficiencies in North America that will enable us to invest in future mobility technology, while maintaining our own distinct and competitive product offerings,” said Seiji Kuraishi, executive vice president of Honda Motor Co. Ltd. “Combining the strengths of each company, and by carefully determining what we will do on our own and what we will do in collaboration, we will strive to build a win-win relationship to create new value for our customers.”

Analysts said the deal makes sense given the industry has been seeing and likely will continue to see more of these kinds of joint ventures and strategic alliances to achieve costly technological advancements to compete. It is better to “share than go it alone,” said Michelle Krebs, executive analyst for Autotrader in Detroit.

“This is very significant news. GM and Honda have been working on a number of projects over the years,” Krebs said. “This takes their relationship to a whole new level. What’s notable about Honda is that it has remained fervently independent while others merge or do joint ventures.”

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