Honda and General Motors (GM) announced October 25 that the two companies were scrapping plans to jointly develop and manufacture more affordable electric vehicles (EVs), roughly a year after they agreed to work together on a $5 billion to out-perform Tesla sales.

"After studying this for a year, we decided that this would be difficult as a business, so at the moment, we are ending development of an affordable EV," said Honda’s CEO, Toshihiro Mibe, in an interview.

According to Reuters, GM withdrew its 2023 profit outlook on October 24.

"After extensive studies and analysis, we have come to a mutual decision to discontinue the program,” the organizations said in a joint statement. “Each company remains committed to affordability in the EV market.”

Honda said that it will not change its plans to sell only EVs by 2040.

GM shares were relatively unchanged in pre-market trading on October 25, coming in at $28.52. Honda’s stock closed up 0.8% in Tokyo prior to the decision being announced.

Honda and GM agreed to develop a series of lower-priced EVs based on a joint new platform in April of 2022 with the hope of producing millions of cars by 2027. The deal for “affordable” EVs included compact crossover vehicles built with GM’s Ultium battery technology.