GM deepens EV development with Chinese partner

China continues to struggle with technology development despite being the world’s largest car market

September 20, 2011   by The Canadian Press

SHANGHAI—General Motors Co. (GM) has agreed to deepen co-operation with its flagship Chinese partner, government-owned Shanghai Automotive Industry Corporation (SAIC), on the development of electric vehicles amidst pressures from Beijing to hand over proprietary technology.

Investments and other details of the plan were not provided and it is unclear if the agreement is the result of a renewed push by China to acquire advanced technology its automakers still lack.

GM is due to launch sales of the Chevrolet Volt electric car in China later this year. But its market prospects are clouded by the possibility Beijing may withhold hefty new energy vehicle subsidies unless GM satisfies the technology demands.

U.S. lawmakers contend such requirements are unfair and may violate world trade rules.

The co-operation agreement 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.

“The agreement to co-develop electric vehicle architecture is further proof of GM’s and SAIC’s plan to lead the auto industry in new energy vehicle technology is a very aggressive and challenging project,” says Tim Lee, president of GM International Operations.

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.

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 1998.

Analysts suggest China’s push for advanced technologies reflect its frustrations with its continued weakness in automotive technology.

After 25 years of auto joint ventures that require local partners to hold at least a 50 per cent stake, domestic automakers still lag behind their global rivals as they struggle to master the complexities of 21st century automotive engineering.

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.

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