TOKYO – Honda Motor and General Motors (GM) have abandoned a plan to jointly develop affordable electric vehicles (EVs), the two companies announced Wednesday, just a year after launching a $5 billion effort to try to beat Tesla on its sales.

The decision highlights GM’s strategic shift from slowing the launch of several EV models to focus on profitability as costs related to the auto workers’ strike continue to rise. The group announced that these amounted to $200 million per week in October.

The automaker abandoned its previous profit forecast for 2023 on Tuesday.

“After extensive study and analysis, we have reached a joint decision to discontinue the program. Each company remains committed to the importance of affordable EVs,” the two companies said in a joint statement.

Honda said its plan to sell only EVs by 2040 still stood.

GM released a joint statement, which discusses other joint projects on which the two companies will continue to collaborate.

(Reporting Daniel Leussink in Tokyo, Gursimran Kaur in Bangalore and Ben Klayman in Detroit, Corentin Chappron, editing by Kate Entringer)

Copyright © 2023 Thomson Reuters