The demand for electric vehicles in the United States is cooling down! General Motors and Honda's plan to produce a $30,000 affordable electric vehicle has also been abandoned.

General Motors (GM) and Honda announced on the 25th that they have canceled their plans to collaborate on the development and sale of affordable electric vehicles priced below $30,000. Both companies believe that the market environment is changing and the demand is weaker than expected. GM had already started reducing production plans.

The collaboration was originally intended to utilize GM's next-generation Ultium battery technology to mass-produce affordable electric vehicles, including popular compact crossovers, with a global launch and sales expected in 2027.

However, since the announcement of the collaboration, the prospects of the electric vehicle market have weakened due to increased costs, lack of charging infrastructure in the United States, and lower-than-expected consumer demand.

A spokesperson for GM stated, "After thorough research and analysis, we have reached a mutual decision to terminate the plan. Both companies will continue to work towards improving the affordability of the electric vehicle market."

The spokesperson also mentioned that the cancellation of the joint development plan is unrelated to GM's upcoming release of the next-generation Chevrolet Bolt. However, GM CEO Mary Barra commented on this issue during the company's previous earnings conference, stating that the new generation Chevrolet Bolt is a better choice compared to the collaborative development.

Mary Barra said, "Our previous plan was to launch several new entry-level electric vehicles and invest $5 billion over the next few years. However, after evaluating the best features of the Bolt electric vehicle and Ultium battery technology, we will introduce a product that offers better driving, charging, user experience, and is loved by consumers."

Currently, the base version of the Chevrolet Bolt electric vehicle is priced below $30,000 without considering any electric vehicle subsidies.

However, GM stated that the company will continue its other collaborative projects with Honda, including the Honda 2024 Prologue electric vehicle that uses GM's Ultium battery technology. In addition, the two companies also have collaborations in hydrogen fuel cell technology and autonomous driving.

Prior to this, GM had already reduced short-term production targets for some electric vehicle models and reset production schedules. The company announced that by the end of 2025, it will produce electric trucks at the Orion Assembly plant in the suburbs of Detroit, Michigan, delaying the original plan by at least one year.

GM stated that the production delay is to "better manage capital investments and meet the evolving demand for electric vehicles." At the same time, GM is committed to engineering improvements to enhance the profitability of the new electric vehicles. The media speculates that the production delay of electric trucks raises doubts about GM's ability to achieve its previously announced electric vehicle goals, including the cumulative production of 400,000 electric vehicles in North America from last year to mid-next year, which is a six-month delay from the initial production target.

A spokesperson for GM stated that the production delay is unrelated to the ongoing negotiations with the United Auto Workers (UAW), the largest automotive industry union in the United States. However, the media points out that labor negotiations do involve electric vehicles, and the proposed wage increase by GM is expected to increase the company's costs. General Motors CFO Paul Jacobson said at the company's third-quarter earnings conference, "We are indeed focused on ensuring that the company strives to meet its demand targets, and we are balancing production capacity based on demand."

Honda CEO Seiji Kuraishi previously stated that the company believes the low-cost electric vehicle project "may face operational difficulties."

General Motors (GM) stock fell 2.14% to $27.95 in midday trading on the 25th. Honda (HMC) rose 0.40% to $32.36.