GM and Honda to Make Fuel Cells in Michigan

Strange bedfellows?

General Motors Co. (NYSE: GM) and Honda (NYSE: HMC) will start the auto industry’s first joint venture to “mass produce” a hydrogen fuel cell system that will be used both companies.

It’s the latest example of how increasing capital costs and pressure from stock markets on overall returns are forcing unlikely alliances between competitors within the auto industry.

Honda began delivery of its all-new vehicles to U.S. customers in December 2016 following a spring 2016 launch in Japan. The Clarity Fuel Cell received the best driving range rating from the EPA of any electric vehicle without a combustion engine at 366 miles and fuel economy rating of 68 miles per gallon of gasoline-equivalent combined. (2017 Honda Clarity Fuel Cell Deliveries Start, Chevrolet Colorado ZH2 Fuel Cell Ready for Army Testing)

The so-called Fuel Cell System Manufacturing will be at GM’s existing battery pack plant in Brownstown, Michigan, south of Detroit. Mass production of fuel cell systems is expected to begin around 2020 and create only~100 new jobs. The companies are making equal investments totaling $85 million in the new joint venture. (GM and Honda Target 2020 for Viable Fuel Cell EVs)

Honda and GM have been working together since July 2013.with an agreement that established the co-development arrangement for a next-generation fuel cell system and hydrogen storage technologies. The companies integrated their teams and shared hydrogen fuel-cell intellectual property to make an allegedly more affordable commercial solution for fuel cell and hydrogen storage systems.

“Over the past three years, engineers from Honda and GM have been working as one team with each company providing know-how from its unique expertise to create a compact and low-cost next-gen fuel cell system,” said Toshiaki Mikoshiba, chief operating officer of the North American Region for Honda Motor Co. and president of Honda North America.

The Fuel Cell System Manufacturing (FCSM) joint venture will be operated by a board of directors with three executives from each company that will include a rotating chairperson. In addition, a president will be appointed to rotate between each company.

GM and Honda have more than 2,220 patents between them, per the Clean Energy Patent Growth Index. GM and Honda rank No. 1 and No. 3, respectively, in total fuel cell patents filed in 2002 through 2015.

“The eventual deployment of this technology in passenger vehicles will create more differentiated and environmentally friendly transportation options for consumers,” said Mark Reuss, GM executive vice president, Global Product Development, Purchasing and Supply Chain.

Fuel cell technology, of course, addresses petroleum dependency, emissions, efficiency, range and refueling issues for slow selling Electronic Vehicles. Fuel cell vehicles can operate on hydrogen made from renewable sources such as wind and biomass. Water vapor is the only emission from fuel cell vehicles.

In addition to advancing the performance of the fuel cell system, GM and Honda said they are working together to reduce the cost of development and manufacturing through economies of scale and common sourcing. The two companies also continue to work lobby governments on the refueling infrastructure that is critical for the long-term viability and consumer acceptance of fuel cell vehicles.

GM and Honda collaborated in a powertrain cross-supply arrangement in 1999 under which Honda manufactured 50,000 V6 engines for the Saturn Vue and Honda received diesel engines from GM’s Isuzu affiliate for use in Europe.