General Motors Co. agreed Tuesday to deepen cooperation with its flagship Chinese partner on development of electric vehicle know-how amid pressure from Beijing to hand over proprietary technology.
GM would not say how much it’s investing in the venture with Chinese state-owned partner Shanghai Automotive Industrial Corp., and gave few details of the deal.
The Detroit company denied that the agreement was the result of a push by China to acquire advanced technology like the Chevrolet Volt electric car that its own automakers have yet to develop. The Volt can travel about 35 miles on battery power, and a gas-powered generator kicks in to run the car when the batteries are depleted. The generator technology eliminates anxiety over whether a driver will run out of electricity.
GM Vice Chairman Steve Girsky, in a conference call from Shanghai, told reporters that neither SAIC nor the Chinese government have requested Volt technology.
Under the agreement with SAIC, the two companies will equally share the cost of developing a new all-electric vehicle, reducing GM’s cost and risk, Girsky said.
GM, he said, makes a lot of money in the growing China market, and the partnership is an investment to keep that going. “This is not a political decision. This is a business decision,” he said.
However, U.S. lawmakers have complained that China is shaking down GM to get the technology that drives the Volt. GM plans to start selling the Volt in China by the end of the year, but it probably won’t sell many because it doesn’t qualify for a Chinese government subsidy that amounts to $19,000 per car. The government offers the subsidy only to electric cars made in China. There also are tariffs on cars imported to China.
Lawmakers contend such requirements are unfair and may violate world trade rules.
Girsky said GM plans to sell only a small number of Volts in China at first to test consumer reception.
But he hinted that the Volt, now built at a Detroit factory for export worldwide, could eventually be built locally in China.
“If we localize, eventually it won’t have a tariff and it will get the subsidy,” Girsky said. “We have made no decision on if, when or where we build Volt in the future.”
The agreement with SAIC was signed during a meeting of the U.S. automaker’s board in Shanghai — a visit underscoring China’s importance to the company’s future. It was the GM board’s first meeting outside of the U.S.
“We can accomplish far more by working together than we can by working separately,” Tim Lee, president of GM International Operations, said as GM and SAIC signed the agreement.
Tuesday’s agreement follows an earlier memorandum of understanding on GM-SAIC cooperation signed in November. Girsky said there will be more joint ventures.
The choice of China for the board meeting reflects the country’s crucial status as the world’s biggest market for sales of new vehicles, despite a recent decline from double-digit growth.
GM’s chairman Dan Akerson met Monday with more than 700 employees at GM’s campus in Shanghai’s eastern suburbs.
Shanghai is the site of GM’s international headquarters and its highly successful venture with state-owned SAIC, which on Monday rolled out the 5 millionth vehicle since production began in late 1998.
The push for more advanced technology reflects China’s frustrations with its continued weakness in automotive technology, analysts say. After 25 years of auto joint ventures that require local partners to hold at least a 50 percent stake, domestic automakers still lag behind their global rivals as they struggle to master the complexities of 21st century automotive engineering.
“China is not a technology leader in virtually any industry. The country has developed around low cost production,” said Bill Russo, president of the consultancy Synergistics Ltd.
“This is the irony, that the largest and biggest growth market has relatively weak domestic manufacturers,” he said.
An explosion in Chinese demand and sluggish sales in the recession-stricken West helped China overtake the U.S. as the largest car market in 2009. Last year, sales of passenger vehicles, excluding large buses, jumped by a third to 13.7 million vehicles.
Although growth in the overall market has slowed in recent months, GM’s sales in China still jumped 13.4 percent in August from a year earlier to a record 205,885 vehicles for the month.
A large share of the company’s growth has come from sales of its mini vehicles in another venture, SAIC-GM-Wuling. But strong demand for foreign-brand sedans and sport-utility vehicles has also helped.