In the increasingly competitive automotive market, General Motors Co. and rival automakers have realized pairing up is not only beneficial but necessary for cost reduction and quicker technological advancement.

GM has long understood the benefits of partnerships. The Detroit automaker, for example, has a longstanding partnership with Japanese automaker Honda Motor Co. More recently, GM and South Korean automaker Hyundai Motor Co. said they signed a memorandum of understanding to collaborate "to reduce costs and bring a wider range of vehicles and technologies to customers faster."

The companies haven't provided further information on the partnership, but experts and analysts have cheered it on as a smart move. They expect more mash-ups — if not outright industry consolidation — as automakers face rising expenses, a choppy transition to electric vehicles and competition from innovative, low-cost Chinese manufacturers.

"It's something that I talked about for many years about the need to partner up," said Martin French, partner and managing director at Berylls by AlixPartners, a global consulting firm. "If you look at the challenges that this industry is faced with and what are the key attributes for what will make you a winning OEM, it's going to be cost efficiency and time to market. And the most effective way of doing that is through partnerships."

Last week, Japanese automakers Honda and Nissan Motor Corp. announced plans to work toward a merger that would form the world’s third-largest automaker.

"This is a smart deal as the writing was on the wall for Nissan," said Dan Ives, a senior equity analyst at Wedbush Securities, in a note to The Detroit News. "They had to do a deal in a consolidating EV landscape."

Hyundai and GM have been mum on specific details of their alignment while they work to finalize it. Still, the companies have said that they would explore the co-development of internal combustion engines and "clean-energy" vehicles and research combining sourcing for battery raw materials and steel.

“GM and Hyundai have complementary strengths and talented teams," GM CEO Mary Barra said at the time of the MOU announcement in September. "Our goal is to unlock the scale and creativity of both companies to deliver even more competitive vehicles to customers faster and more efficiently.”

GM had been talking to Hyundai for "a while," Barra told reporters during a fireside chat with the Automotive Press Association earlier this month. "There was a period where a lot of OEMs, everyone was talking to everyone, but we continued to have conversations.

"We're very aligned at the top. We have the most senior people in each company having the conversations and setting the tone for the team. We're very pleased that we signed the MOU. There's quite a bit of work going on what will become definitive agreements, but I don't want to get ahead of those announcements."

The Hyundai/GM lineup "could bring outsized synergies for both companies while remaining competitors at the core level," said Paul Waatti, director of industry analysis at market research firm AutoPacific Inc. "Partnerships accelerate technological development by pooling resources to tackle the capital-intensive nature of the advanced tech R&D the industry is embracing."

On GM's third-quarter earnings call in October, Barra emphasized the importance of partnerships.

"One of the things people say about the auto industry is we ... all do a lot of different things and don't always leverage where we can partner with other OEMs or with other companies," she said. "And so we're really looking to leverage that, especially across the business, as we've mentioned with the MOU that we have with Hyundai, the continuing work that we do with Honda.”

GM and Honda partner on the development of hydrogen fuel cell technology and collaborated on the development of Honda's Prologue and Acura ZDX electric vehicles. The companies were also planning to jointly develop a line of affordable EVs together but nixed those plans in 2023.

Ford Motor Co. in 2021 also axed its plans to develop an EV with startup Rivian Automotive Inc., which last month entered a $5.8 billion joint-venture deal with Volkswagen AG. In a news release, the German automaker said the partnership would "create cutting-edge software and electronics architectures and scale the electric vehicle platforms and architectures."

Said Waatti: "Partnerships must remain flexible with room for reassessment and revision. It’s often better to adjust or kill a joint venture than to continue going down the wrong road, even if the investment is already massive."

At GM's October Investor Day event, Barra mentioned GM was having "ongoing discussions" with "potential partners" for its Cruise LLC autonomous vehicle unit. Two months later, GM said it would stop funding Cruise's robotaxi program after $10 billion in investment since 2017.

GM, the majority owner of Cruise, is planning to combine the Cruise and GM technical teams into one to continue to work on AV tech. The automaker's focus will now be on its Super Cruise advanced driver assistance system with the goal of developing fully autonomous personal vehicles.

"GM pulling the plug on the Cruise partnership to stop the bleeding and realign capital is the latest example of this challenging dynamic, particularly considering the potential revenue upside — still many billions of dollars and years down the road," Waatti said.

Cruise's restructuring followed months of efforts by GM to restart the operation after a pedestrian accident in October 2023 with a Cruise self-driving vehicle halted operations. GM had restarted testing in several cities, and in August, Cruise and Uber Technologies LLC announced a multiyear deal for customers to book autonomous Cruise robotaxis through the Uber platform starting in 2025.

It's unclear where the Cruise and Uber partnership stands after GM's move to defund the robotaxi program. Uber did not respond to a request for comment and a Cruise spokesperson deferred to GM.

GM spokesperson Jim Cain said: "We've proposed a restructuring, and a lot of these potential opportunities depend on how that gets resolved."

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