The honeymoon is over, even before the wedding had begun.General Motors and Honda on Wednesday called off a highly touted USD$5 billion marriage of the respective EV production lines, citing a ‘deteriorating’ business environment for battery-powered cars barely a year after announcing it..“We’re taking immediate steps to enhance the profitability of our EV portfolio and adjust to slowing near-term growth,”GM CEO Mary Barra.Also on Wednesday, GM announced it was delaying production of the Chevrolet Silverado EV, the GMC Sierra and Chevy Equinox while it attempts to make engineering and manufacturing tweaks.“We’re taking immediate steps to enhance the profitability of our EV portfolio and adjust to slowing near-term growth,” GM CEO Mary Barra told analysts.While the GM boss didn’t directly blame an ongoing workers strike in the US for the delays, analysts said the real issue stems from the industry’s inability to make EVs profitable. .Although EV unit sales hit an all-time high of about 300,000 units in the US last quarter, that is still a fraction off overall auto sales and shows signs of slowing down or even falling off altogether..“EV demand next year could be lower than expectations,” added Lee Chang-sil, South Korean battery maker LG Energy Solution’s chief financial officer, which was to supply the power cells for the venture. LG cited rising global economic uncertainty and specifically, higher interest rates that are making purchases of the often expensive units unaffordable..The GM-Honda partnership was to roll out its first EV crossovers in 2027..It follows warnings from Tesla CEO Elon Musk last week that saw his company halt construction on a new factory in Mexico and cut production lines following a 40% profit drop.“I am worried about the high interest rate environment that we’re in,” he said on Tesla’s third quarter earnings call. “I just can’t emphasize this enough that (for) the vast majority of people buying a car (it's) about the monthly payment. If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car.”.It follows similar moves by auto giant Volkswagen, which has cut production of its top-rated EV models in Germany after the government reduced or eliminated EV incentives. Likewise Ford has reported steep losses in its own EV division.The shortfall is hitting demand for the rare Earth minerals used in battery manufacturing; spot prices for lithium carbonate are off more than 67% this year while prices for cobalt metal are down more than 50% since May of last year..In a press release GM said it was using the pause “to accelerate new technologies” such as more sustainable and reliable lithium-metal, silicon, and solid-state batteries.
