General Motors looks to snatch EV lead in China away from BYD

General Motors China has long had a knack for elbowing in to segments domestic automakers are doing well in and taking market share from the domestics. Its electrification road map, announced in late August, is the next chapter in that strategy.

Local automaker BYD is China’s top seller of electrified vehicles. Its Qin and Tang plug-in hybrid electric vehicles are selling like gang busters.  That hasn’t escaped GM’s notice.

“The Qin and Tang are very viable in Shanghai,” Martin Murray, deputy director, electrification engineering at GM China tells ChinaEV.  “That has given SAIC and GM the motivation to compete.”

BYD sold 19,134 Tang SUV plug-in hybrid electric vehicles in the first six months of 2016, and 11,129 Qin D segment units. They were the top two electrified vehicle models in China, according to electriccarsreport.com. Total PHEV sales in China  for the first six months were 126,950. (BYD also recently began to produce pure electric versions of the Qin, hence the photo  below, which I took at the  BJ show in April.)

BYD Qin EV 300 pure electric vehicle at the Beijing Auto Show in 2016

The Qin and Tang buyers are “real people” (as opposed to ghost companies and government employees, I suppose), says Murray.  But he sees a weakness.  “We think those cars can be better,” he says.

GM China is out to prove that.

“We are looking at GM technology which has the safety and performance people like, and GM’s affordable models, and putting the two together in China,” he says. “The object is to make these high volumes. We are going protect these (GM) brands; these are going to be super high-quality products.”

Murray didn’t say it, but implicit in his comments is the idea that foreign automakers -or at least GM — can still produce a better car than local automakers in China.  Chinese automaker’s quality and safety has improved a lot, so it is not a sure thing that GM China can produce a much more high-quality, much safer electrified vehicle than BYD.

But even an equally good, equally safe product would draw its share of buyers because the GM name in China does carry the connotation of a good, safe vehicle.  And Chinese consumers often still trust foreign automakers more than local ones. So BYD better watch out.

Battery production localization – woohoo!

I think the most interesting, and indeed most crucial, part of GM China’s electrification road map is the plan to fully localize its battery pack production. It will build a new battery plant in Shanghai to accomplish this.  That will help it compete with BYD on price and to produce a vehicle that consumers will still want to afford even after the government subsidies for electric vehicles run dry.

Murray says much of the current demand is driven by government subsidies, but GM figures that the subsidies will end at some point. But the need for GM to sell electric vehicles in China will not because of China’s aggressive fleet fuel economy standards.  Given that, “the key point is to have affordable (electrified) cars,” says Murray.

The battery is the most expensive component in an electrified vehicle. Local production should help keep the cost down.

Murray has significant experience producing batteries, including leading battery pack engineering at GM’s battery operations in the U.S.  He tells ChinaEV that GM will duplicate the entire battery production process at Brownstone Charter Township in Michigan at the planned Shanghai plant.

That means, among other things, that the plant will produce a full range of EV batteries, from power packs for hybrids to high-density energy packs for extended-range EVs such as the Volt. “We will make all the products in China that we now make in Brownstone,” says Murray.

Interestingly, he didn’t mention pure electric vehicles. And a pure electric vehicle isn’t included in the products GM mentioned in the electrification roadmap press release. The first electrified products that will be localized are the Chevrolet Malibu XL hybrid and Buick LaCrosse hybrid, and the Cadillac CT6 PHEV.

Why no pure electric vehicle, I ask Murray?

GM’s GFE electric propulsion system is scalable, he says, without really answering my question. He mentions the Springo BEV, a derivative of the Spark small car that GM China produced in limited volume. “We have plans,” says Murray a bit mysteriously.

Local production usually means local sourcing.  What will GM China source locally and has GM identified the suppliers, I ask? There are 60-90 parts for each battery pack, says Murray. GM went through the list and identified parts that “made sense” to source locally, he says, mentioning sheet metal, harnesses, hoses, and the like.

Those are components that all vehicles use. What about EV-specific components such as battery cells, I ask? GM purchases cells from partners, he says, and “we are going to make packs here in China with cells from our friends.”

Some friends are more equal than others, it seems. LG is GM’s partner at its battery plant in Michigan. “But not necessarily in China,” says Murray.

GM’s long-time partner in China, SAIC, has a joint venture with A123, Shanghai Advanced Traction Battery Systems Co that produces battery cells in China. Will GM be sourcing form ATBS, I ask?  “We do stay in close touch with SAIC, says Murray. “They have a lot of interesting ideas.”  Sounds a bit like a no to me.

The planned battery plant in Shanghai is, in any case, a joint venture with SAIC (or perhaps with Shanghai GM, the press release is a bit unclear and I forgot to clarify). GM has licensed “all the necessary” intellectual property to SAIC GM, says Murray. The battery plant project is being driven by the Pan Asia Technical Automotive Center, a 50/50 GM/SAIC research and engineering center in Shanghai.

“Our goal at PATAC is to leverage ideas in China, (and) leverage good ideas from local suppliers,” says Murray.

Finally, I asked Murray if GM China would be producing China-specific electrified vehicles.  His reply leads me to believe GM is taking the Chinese approach to planning, i.e. “crossing the river by feeling for the stones.” Which is a good idea as that is the way China’s central government is making its NEV policy, so best to be flexible.

GM will have some products that are specific to China, but have common solutions under the hood, he says. More details will come out over the next four to five years, he says.

“We are going to set the industry trend for driving experience,” says Murray. “We are here for the long run.”