Partners in China: A Perspective on EV Joint Venture for GM and SAIC

Tim Dunne

The complicated pas-de-deux carried on between General Motors and Shanghai Automotive Industry Corp. (SAIC)* in China may have gotten just a little more complex.

The two companies, which already operate 10 automotive-related joint ventures together, added an 11th JV company to their stable on Tuesday, September 20. This new JV was entered into specifically to develop electric cars in China. The new electric vehicles (EVs), according to General Motors, will not be based on the proprietary technology developed by GM for its Chevrolet Volt extended-range electric vehicle, or based on its Sonic small-car platform.

The EVs will be designed at GM’s Pan Asian Technical Center (PATAC) in Shanghai, another GM and SAIC joint venture. Who gets the new electric vehicles—and how they will be branded—was not announced.

While GM and SAIC maintain that they work well together and can trust each other, the creation of this newest joint venture—as yet unnamed—may be an indication that trust in business and politics has its limits. Otherwise, what is the need to create another joint venture to create an EV, when General Motors already has one available for production?

China Government Pushes Development of Domestic EVs

China’s government has been pushing hard for the development of a domestic EV industry, because the country is already the largest global vehicle market and second- largest consumer of oil in the world. China now imports the majority of the crude oil it uses on a daily basis, which puts the country in the geopolitically sticky situation of depending on other countries to power its economy and future growth.

To mitigate this situation, China wants to convert its national automotive fleet to EVs (with power produced by coal-burning electrical power plants) as quickly as possible. In the pursuit of new energy sources, news reports have indicated that government agencies in China have been “encouraging” foreign automakers (including GM) to share their highly-prized EV technology with domestic Chinese companies. GM, for its part, has maintained publicly that the Chinese government has not pressured the company to share its Volt plug-in hybrid electric vehicle (PHEV) technology.

The 11th Joint Venture May Be a Way to Ease Pressure

The creation of a separate joint venture to develop the new electric vehicles may be a move to keep the tensions surrounding the urgency in China to develop an EV industry—and the gentle pressure being applied by government agencies—away from the operations of the successful and highly profitable Shanghai GM joint venture, which builds conventional Buick and Chevrolet-branded vehicles. It gives both SAIC and GM the latitude to tell the government they are jointly working on an EV program, without causing disruption to their existing good thing.—Tim Dunne, director of global coordination at J.D. Power and Associates

For more details about the outlook for China’s automotive industry, download the J.D. Power special report, “China 2015: The Cost of Opportunity.”

Also, download J.D. Power’s “Drive Green 2020: More Hope than Reality?” special report to learn more about the introduction of hybrid electric vehicles and battery electric vehicles around the world, and to see our outlook for these alternative-energy vehicles.

*General Motors and Shanghai Automotive Industry Corp. (SAIC) are the two largest-volume automakers in China. SAIC, which is owned by the Shanghai municipal government, is the largest passenger-vehicle production group in China, mainly due to joint ventures with GM (Buick, Chevrolet and Cadillac) and Volkswagen AG brands (VW and Skoda). GM, based in Detroit, MI, is one of the world’s largest automakers and its largest national market is China, followed by the United States.

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