Skip to main content
Sister Publication Links
  • European Rubber Journal
  • Plastics News
  • Tire Business
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Automotive
    • Tire
    • Non-Tire
    • Suppliers
    • ITEC
    • Silicone
    • Online Exclusive
    • Latex
    • Technical Notebooks
    • Executive Action
    • Government/Legal
    • Opinion
    • Rubber Division IEC
    • Blogs
    • Sustainability
    • Products
    • Wacky World of Rubber
  • War in Ukraine
  • Custom
    • Sponsored Content
    • White Papers
  • Resources
    • Directory
    • Classifieds & Mold Mart
  • Data
  • Events
    • RN Events
    • RN Livestreams/Webinars
    • Industry Events
    • Past Events
    • Rubber News M&A Live
    • 2022 Hose & Belt Manufacturers Conference
    • 2022 International Silicone Conference
    • 2022 International Tire Exhibition & Conference (ITEC)
    • 2022 Women Breaking the Mold
  • Advertise
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. Automotive
September 17, 2020 10:39 AM

GM isn't traveling alone into the EV era

Hannah Lutz
Automotive News
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    DETROIT—General Motors' latest strategy: Give and take.

    Partnerships with Honda Motor Co., electric vehicle startup Nikola Corp. and battery supplier LG Chem show GM's willingness to share technology and manufacturing power for the mutual benefit of itself and its allies. The approach also can shave the massive costs required to become an EV leader.

    GM CEO Mary Barra said the partnerships will give the auto maker greater scale and drive down costs more quickly, which will be key to unlocking the EV market. Morgan Stanley predicts the Ultium batteries GM plans to make with LG Chem will be used in more than 5 million EVs annually by 2040, including more than a million non-GM vehicles.

    GM has been investing in EVs and hydrogen fuel cell technology for years but so far has little to show for it in terms of sales.

    "We're going to leverage that and really seize the opportunity that we have to be able to grow in areas that, in the past, most of the traditional OEMs didn't," Barra said. "This is a new path, and we're very excited."

    The tie-ups bring to mind the late Fiat Chrysler Automobiles CEO Sergio Marchionne's 2015 manifesto—"Confessions of a Capital Junkie"—on the need for industry consolidation to rein in vehicle development costs as well as Carlos Ghosn's alliance linking Renault, Nissan and Mitsubishi.

    GM's alliances are not exactly what Marchionne and Ghosn envisioned, but they demonstrate a realization that the company doesn't have to figure out the technologies of the future on its own while balancing investing in the profitable vehicles of today, Gartner analyst Mike Ramsey said.

    "This idea that their brands are monoliths and that we have to be able to do everything ourselves is something that has hurt the industry in general over time," Ramsey said.

    GM last week said it would take an 11 percent stake worth $2 billion in startup electric truck maker Nikola under a partnership that calls for GM to engineer and build Nikola's Badger pickup and another vehicle using Ultium batteries.

    Nikola will reimburse GM for up to $700 million of capital expenses for manufacturing capacity of up to 50,000 units per year of the initial two vehicles, according to a Nikola filing with the U.S. Securities and Exchange Commission.

    That deal came days after GM and Honda revealed plans to form a North American alliance that could include sharing vehicle platforms in four core segments. The partnership would combine Honda's sedan clout and continued internal-combustion focus with GM's pickup and SUV strength and its commitment to electrification. It builds on an earlier agreement for GM to help develop two Ultium-powered EVs for Honda.

    "There are some auto makers that for strategic reasons haven't made EVs as much of a priority as GM has, and now they can rely on GM's expertise," said David Whiston, senior equity analyst for Morningstar.

    Both deals were made possible in part by the $2.3 billion joint venture GM formed in late 2019 with LG Chem to mass-produce Ultium batteries near GM's former assembly plant in Lordstown, Ohio. The venture aims to have at least 1,100 employees and open by January 2022.

    "We said with that platform we would be able to provide a wide range of EVs that would be profitable. The partnerships we have are additive to that," Barra said. "It's important that we have great partners that we know we can work with, that we can explore opportunities, brainstorm with each other, solve challenges in a win-win fashion."

    Growing scale

    GM's partnerships with LG Chem and Honda are the results of long-standing, mutually beneficial collaborations, but its stake in Nikola marks a new relationship with a young auto maker. Nikola is unproven, but it went public with the help of former GM vice chairman Steve Girsky and already has cachet among Wall Street investors who have tended to be skeptical of GM.

    "I could easily see GM start to envision using this partnership strategy as a means to grow scale and not just be focused on selling GM vehicles," Ramsey said. "They have other ways of making money, and it could be through licensing their technology."

    GM has a checkered history with joint ventures and alliances. It paid $2 billion to get out of a tie-up with Fiat in 2005. And an alliance with Daewoo fell apart in 1992 before GM eventually bought the brand and turned it into GM Korea. GM built vehicles with Toyota Motor Corp. from 1984 to 2010 at the California plant that Tesla now owns, and it successfully collaborated with Suzuki and Isuzu for long stretches as well.

    GM's newest partnerships may show that the company has transformed itself from a quality laggard that let Japanese competitors steal significant market share in the 1980s and 1990s into one of the auto industry's technological leaders.

    "Even today, there are still plenty of Americans who think America's auto makers make lousy cars, which I don't think is fair," Whiston said. But with the Honda-GM alliance, "a Japanese auto maker [is] coming to an American auto maker saying, 'We need your expertise.' I think that's pretty cool."

    Fuel cells

    With Nikola, GM will commercialize its fuel cell technology in high volumes and extend the use of its fuel cell system to the semitruck market. Barra said there is a multibillion-dollar market for fuel cell-powered vehicles, and the Nikola partnership allows GM to refine the technology and apply it to more industries.

    GM and Honda have co-developed hydrogen fuel cell technology since 2013, but "fuel cells aren't getting the attention they deserve," said Brian Moody, executive editor of Autotrader.

    Honda, Toyota and Hyundai Motor Co. have fuel cell-powered vehicles available in some regions.

    "By GM forming a partnering with Honda and now Nikola, it shows they're serious about alternative-fuel vehicles," Moody said.

    GM told investors it could apply fuel cell technology to other areas, such as aerospace and sea. It is planning a fuel cell-powered Badger with Nikola.

    "All of a sudden, you've got all these auxiliary businesses that supplement selling pickup trucks and SUVs," Whiston said. "I think GM feels, 'We can do this by ourselves but still get some outside help without taking a lot of risk.' The [partnerships] are low-risk, high-reward."

    Related Article
    GM, Honda to form North American auto alliance
    GM claims wireless battery system speeds EV development, extends range
    To save the auto industry, they all talked
    GM ramps up for EVs despite recession
    Letter
    to the
    Editor

    Rubber News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

    Most Popular
    1
    Workers across 4 Elkem sites on strike
    2
    Metro Detroit auto supplier bankruptcy could signal storm approaching
    3
    Fourth generation of leadership at French Oil Mill Machinery
    4
    SRI upgrading, boosting 'advanced' tire capacity
    5
    Bolder and Liberty: A rock-solid partnership
    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Rubber News delivered straight to your inbox, free of charge.

    Subscribe Today

    Subscribe to Rubber News to get the best coverage and leading insights in the industry.

    SUBSCRIBE
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter

    MISSION

    To serve companies in the global rubber product industry by delivering news, industry insights, opinions and technical information.

    Contact Us

    2291 Riverfront Pkwy, Suite 1000
    Cuyahoga Falls,
    OH 44221

    Customer Service:
    877-320-1726

    Resources
    • About Us
    • Digital Edition
    • Staff
    • Advertise
    • Order Reprints
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Partner Sites
    • Tire Business
    • European Rubber Journal
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    • Automotive News
    • Crain Brands
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Automotive
      • Tire
      • Non-Tire
      • Suppliers
      • ITEC
      • Silicone
      • Online Exclusive
      • Latex
      • Technical Notebooks
      • Executive Action
      • Government/Legal
      • Opinion
      • Rubber Division IEC
      • Blogs
        • Products
        • Wacky World of Rubber
      • Sustainability
    • War in Ukraine
    • Custom
      • Sponsored Content
      • White Papers
    • Resources
      • Directory
      • Classifieds & Mold Mart
    • Data
    • Events
      • RN Events
        • 2022 Hose & Belt Manufacturers Conference
        • 2022 International Silicone Conference
        • 2022 International Tire Exhibition & Conference (ITEC)
        • 2022 Women Breaking the Mold
      • RN Livestreams/Webinars
      • Industry Events
      • Past Events
      • Rubber News M&A Live
    • Advertise
    • DIGITAL EDITION