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GM, SAIC To Develop Electric Cars for China

September 22, 2011
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(Story courtesy of Edmunds AutoObserver ) General Motors and its Chinese partner SAIC Motor Corp. have agreed to co-develop vehicle architecture and components for electric cars in China. GM Vice Chairman Steve Girsky said in a conference call from Shanghai Tuesday that the vehicles the companies will develop will be pure electric, not range extended like the Chevrolet Volt. They will be dedicated EVs and not a current model converted to be electric. Both GM and SAIC will have their own versions of the new EV. He refused to reveal timing of their introduction and would not reveal the investment being made in the project, except to say it would be a 50-50 split between the two companies.

Girsky likened the GM-SAIC electric car deal to an agreement announced in August with Korea’s LG Chem to develop electric cars. The major difference is the GM-SAIC will be for China; the GM-LG Chem developed EVs will be for the rest of the world. “We have said we will co-develop with partners new technologies that are expensive and high risk,” Girsky told analysts and media Tuesday. “We will use partners where it is prudent to lower the investment cost, lower the risk, help bring the technology to market faster and, hopefully, scale the technology to bring down costs.” And there will be more such deals, Girsky assured, with traditional automakers like SAIC as well as non-traditional companies like LG Chem. “We (GM) are going to have a broad range of advance propulsion systems – electrics, hybrids, plug-in hybrids, extended range vehicles. We will use different partners for different products.”

Partners for nearly 15 years, GM and SAIC will co-develop the electric vehicle architecture – their first – at their 50-50 jointly-operated Pan Asia Technical Automotive Center (PATAC). Under the agreement, teams of SAIC, GM and PATAC engineers will work together to develop key components, as well as vehicle structures and architectures. Vehicles resulting from the partnership will be sold in China under Shanghai GM and SAIC brands. While Girsky said the vehicles will be sold in China, GM’s statement said it SAIC “will also use the architecture to build electric vehicles around the globe for their own purposes.” EVs are seen as part of the solution to meet more stringent emission and fuel economy regulations required by China as well as other countries.

The GM-SAIC electric car deal comes against the backdrop of the United States squabbling with China over intellectual property. It was reported that the Chinese government was insisting on access to the technology used in the Chevrolet Volt, which goes on sale in China soon, in exchange for government rebates that total nearly $20,000 a vehicle, incentives aimed at spurring sales of advanced technology vehicles. Girsky denied that was the situation. “Let’s get the Volt story off the table,” he said early in his conference call Tuesday. “There’s been a lot of noise around the Volt. We’ve had no requests for intellectual property from our partner SAIC or the Chinese government,” he insisted.

Girsky said GM knew from the start that the Volt would be subject to tariffs on imported vehicles – the Volt will not be built in China for now but imported from GM’s Detroit plant. GM also recognized that the imported Volt would not qualify for incentives on locally produced, advanced technology vehicles – incentives Girsky said GM hopes will be extended to all vehicles – including the Volt – in the future. Still, Michigan Sen. Carl Levin and Sen. Debbie Stabenow have called for a formal investigation of Chinese trade practices-described as attempted “shakedowns” of American companies to provide technology secrets. "The Chevrolet Volt represents intellectual property developed in the United States and paid for by General Motors research and development dollars," Levin wrote in his letter to government officials. "The U.S. government must not allow China to coerce American companies to give their technology away to foreign competitors in order to have access to their markets."

Girsky pointed out that GM, one of the first Western companies to set up shop in China, has been doing business with its sole Chinese partner, SAIC, for nearly 15 years with no issues around intellectual property. “We’ve got 10 joint ventures with SAIC. We’ve been growing share in the market and making a lot of money because we are working with our partner SAIC to satisfy customers. This is not a political decision but a business decision,” he said of the EV partnership. As for the Volt, GM’s plans to import it to China are moving forward. GM intends to sell a small number of Volts in lots of markets to gauge consumer reaction to the range-extended EV around the globe. “Then we’ll see where we go from there,” Girsky said.

The GM-SAIC agreement for electric-car development was signed Tuesday in Shanghai by SAIC Chairman Hu Maoyuan and GM Chairman and CEO Dan Akerson on the heels of a just-completed, two-day monthly meeting of the GM board of directors, a new board formed after GM’s 2009 Chapter 11 bankruptcy. As the first board meeting held outside of the United States by the new board, China was selected because it is now the world’s largest vehicle market and is critically important to GM, which is the largest foreign vehicle manufacturer in the country. Girsky said the board toured GM’s operations and met with GM’s China team as well as with SAIC. In addition to its ventures in China, SAIC and GM operate a joint venture in India, and SAIC is an investor in GM Korea Co. Girsky noted that the buzz has long been that China has excess capacity and break-neck growth is unsustainable. “Demand has been slowing from its very strong pace of the last few years,” he said. “But we think there’s a lot of long term opportunity here for development of the passenger car market.”

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