Convergence: How Global Automakers Are Using The Buddy System To Manage Their EV Plans
Regular CleanTechnica readers have seen this coming for some time. As the EV revolution moves forward, new alliances between existing companies are being forged in an effort to meet the challenges of building emissions-free vehicles without going broke. Over the past century, hundreds, if not thousands, of new car companies have emerged. Most failed, many were absorbed by larger companies, and a few survived to dominate. Consolidation has always been an integral part of the car business — Audi, General Motors, Stallantis, and Renault/Nissan are prominent examples. Here are three stories just in the past few weeks that indicate that process may be accelerating.
Honda To Buddy Up With General Motors
Honda and Toyota have both been bitten by the hydrogen fuel cell bug, largely because the Japanese government decided after the Fukushima nuclear disaster that the country should transition to a hydrogen economy. Of the two companies, Toyota has embraced the fuel cell dream with all its might, while Honda has been more interested in battery-electric cars while dipping a toe in the world of fuel cells at the same time.
At present, Honda has only one battery-electric car in production, the Honda E city car, a vehicle that is loaded with the kind of smart technology we are used to from Honda. But it is sold only in Europe, where its high price and short range have kept sales low. We reported back in April that Honda said it would transition away from cars with internal combustion engines by 2040 — not the most ambitious goal, but certainly better than what Toyota has in mind. Brand T fully intends to be selling its Synergy Drive hybrids with gasoline engines well into the later half of this century.
Citing a report by Automotive News, Inside EVs says Honda’s new CEO, Toshihiro Mibe, has gone on record this week as favoring closer cooperation with General Motors. “We feel there’s a rush to electrification, particularly after Mr. Biden took office. But it’s still going to take some time. So we don’t want to focus too much effort onto it right now and wear ourselves out,” Mibe said. “At this point, I don’t think we should be doing it alone. We should team with partners like General Motors and then build to a certain volume to ensure business feasibility. That’s the strategy we have for the initial period in North America. Once we reach a certain volume, we will consider rolling out Honda original products. And not just EV products.”
It is known that GM will build an electric SUV for Honda alongside the Cadillac Lyriq at its Spring Hill, Tennessee factory. The stated goal of the Honda-GM partnership is to jointly develop vehicles for North America based on a common platform, and to share electrified, electric, and internal combustion powertrains. Yet Honda is not ready for an exclusive relationship with GM. It is also strengthening ties to other automakers, especially Mazda and Subaru. It also wants to work with Ford and Volkswagen on electric vehicles and autonomous driving technology.
Toyota To Buddy Up With BYD
Toyota is being dragged kicking and screaming into the EV revolution. It lobbies against tougher emissions rules in the the US, and joined a stupid lawsuit filed by the Trump administration to strip California of its power to set its own clean transportation rules. Its CEO, Akio Toyoda, has warned recently that the transition to electric cars will have dire consequences for Japan’s economy.
It can play political games in the US, but it can’t ignore the dictates of the Chinese government. If it wants to sell cars in China, it will need battery-electric cars, but has none to offer. Enter BYD. According to Reuters, while Toyota hopes solid-state batteries will power its electric cars later this decade, in the present it will rely on BYD Blade batteries to power a new electric sedan similar to the current Corolla next year. Four people with knowledge of the discussions say the car will have somewhat more room than the Corolla in the rear seat — an important consideration for Chinese customers.
The sources said the breakthrough was due primarily to BYD’s less bulky lithium iron phosphate Blade batteries and its lower cost engineering know-how — an interesting turn of events, since BYD’s popular F3 sedan was inspired by the Toyota Corolla back in 2005. The new car will be unveiled as a concept car at the Beijing auto show in April and will be the second model in Toyota’s new BZ series of all-electric cars, even though it will only be available in China for the time being.
“The car was enabled by BYD battery technology,” one of the sources told Reuters. “It has more or less helped us resolve challenges we had faced in coming up with an affordable small electric sedan with a roomy interior.” It will be marketed as a less expensive alternative to the Tesla Model Y or the Nio ES6. One source said the as yet unnamed new car will sell for under 200,000 yuan ($30,000), a segment of the Chinese market Tesla is expected to target with a small car within the next two years.
For many years, Toyota was content to let Chinese manufacturers go their own way, but when BYD launched its Tang plug-in hybrid that boasted significant improvements in safety, quality, and performance at a price that was 30% cheaper than a comparable Toyota model, the company realized it couldn’t ignore the local manufacturers any longer.
In 2017, Toyota’s top engineering leaders, including then-executive vice president Shigeki Terashi, drove several BYD cars such as the Tang at its proving ground in Toyota City. Terashi subsequently visited BYD’s headquarters in Shenzhen and drove a prototype of its Han electric car. “Their long term quality is still a question mark, but the design and quality of these cars showed levels of maturity, yet they were much cheaper than comparable Toyota models,” said one of the four sources, who participated in the test drives. “We were all kinda floored by that.”
Two of the sources said the BYD evaluations pushed Toyota to create its research and development joint venture with BYD last year. Toyota now has two dozen engineers in Shenzhen working side-by-side with about 100 BYD counterparts.
Ford To Buddy Up With Volkswagen
Two weeks ago, we reported that Ford is making plans to offer a second battery-electric vehicle in the European market that will be based on the Volkswagen MEB platform. The company said it plans to purchase 600,000 MEB chassis between now and 2028. Some may see that as a sign the Ford is not fully committed to electric cars. If it were, wouldn’t it develop its own platform?
Perhaps. But Europe has always been an intensely competitive market. GM pulled out several years ago to concentrate on North America and China by selling its Opel division to the PSA Group. Maybe Ford sees cooperation with Volkswagen as the best way to keep costs down so the cars its sells in Europe can be priced competitively.
Put all three of these small stories together and what you get is a picture of an auto industry that is converging in on itself. There’s little doubt that some brand names we are familiar with are likely to disappear in the years ahead, joining such illustrious predecessors as Pontiac, Plymouth, DeSoto, Hudson, and yes, Isotta Fraschini. It’s all part of the process known as creative destruction that is at the heart of capitalist theory.
Honda and Toyota are the most likely to disappear, as neither has much of a commitment to electric vehicles in the same way Volkswagen, Ford, and General Motors have. The transition to EVs will be as painful as it is inevitable. What well-known brand names do you think will disappear by the end of this decade?
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