General Motors is developing an electric vehicle in China–for the global market

Is China trying to coerce U.S. companies into to handing over electric vehicle technology? The U.S. press has been full of indignant stories recently saying China was doing just that as the price of market entry.  http://www.npr.org/templates/story/story.php?storyId=140620106 Maybe the Chinese government has been pressing for foreign technology, I wouldn’t put it past them. GM vice chairman Steve Girsky says China never asked for Volt technology, but for as long as I’ve covered GM in China—which is about 10 years—the U.S. automaker has been pretty obsequious towards the Chinese government in order to smooth its way in China. http://detnews.com/article/20110920/AUTO01/109200383/GM–Chinese-partner-to-develop-electric-vehicle

Even if China is asking for EV technology, however, so what?   Chinese automakers still have to take that technology, integrate it with a lot more technology, and turn out a quality electric vehicle. And most Chinese automakers don’t have the knowledge or skill to do that right now.  (As an aside, according to my sources in China, Chinese OEs are losing their enthusiasm for producing pure electric vehicles as it becomes apparent they can’t do it without foreign help, and as the government wavers on its policies to support such development.)

The main issue for GM seems to be the lack of subsidies for the purchase of the imported Volt if it doesn’t hand over technology. Even with a subsidy, the Volt would still be pricey, however. And do you think GM thought it would sell lots of Volts in China? Not. As I blogged about months ago, GM is only using the Volt to test the market.  GM’s Girsky said as much recently.

So what is GM up to in China as far as electric vehicles are concerned? It plans to use China as a low-cost electric vehicle technology development site, and export that technology globally. That started to become apparent to me when I interviewed John Du, head of GM’s China Science Lab, last year. The Science Lab is part of the GM China Advanced Technical Center, which just officially opened.  (see my April 22 blog for more on that interview.) http://media.gm.com/content/media/us/en/buick/news.detail.html/content/Pages/news/cn/en/2011/Sep/092102

Using China to develop technology for GM globally became official GM policy at the recent opening of the Advanced Technical Center in Shanghai.  Said GM chairman Dan Akerson :  “As one of GM’s most important and comprehensive technical and design facilities, it will lead GM’s global research and development efforts in targeted areas.” Such as electrification.

The opening of the Center followed the announcement on September 20 that GM and SAIC will jointly develop an electric vehicle at the Pan Asia Technical Automotive Center.  http://www.insideline.com/chevrolet/gm-and-saic-will-jointly-develop-evs-in-china.html

PATAC,  http://www.patac.com.cn/ as it is known, is a 50/50 research and engineering venture between GM and SAIC. That was not unexpected. The two did announce at the Guangzhou auto show last November that they would jointly develop new energy vehicles with architecture “appropriate” for China i.e. lower cost.

According to GM, the electric vehicles developed at PATAC will be sold under Shanghai GM and SAIC brands. That is no surprise. But the press release also contained this tell-tell sentence: “SAIC and GM will also use the architecture to build electric vehicles around the globe for their own purposes.” So, we might see a China-made, GM-brand electric vehicle on the road here in the U.S. one day, though developing countries are the more likely target markets.

So, GM has always planned to bring electric vehicle technology to China, as anyone who followed GM’s strategy in China would know.  Far from giving its technology to China in return for market access, GM is using China to develop lower-cost electric vehicles for the global market.

GM’s Girsky said the jointly-developed vehicle will be a dedicated electric vehicle, not based on current model. (I’m not sure what that means for the future of the Chevy Sail electric vehicle that SGM showed at the Guangzhou auto show last year.) http://green.autoblog.com/2010/12/22/general-motors-sail-electric-concept-guangzhou-auto-show/

What does GM’s plan to develop a pure electric vehicle with SAIC mean for local auto makers such as BYD that are already trying to market pure electric vehicles in China? An executive at a local automaker producing battery electric vehicles said he welcomed new entrants into the market. “GM-SAIC doing an EV only brings more credibility to this growing market,” he said. “I like all green products — even those from competitors.”

There is a crucial element missing in all this, of course—a market for the EVs. Will Chinese consumers actually buy electric vehicles? It isn’t happening in the U.S. yet.  When will it start happening in China?