After Receiving Bailout, GM May Move Volt Production to China

Posted on January 4, 2012 at 9:03pm by Becket Adams

Although it happened back in September, 2011, it appears many American taxpayers are unaware that General Motors struck a deal in Shanghai wherein the company has agreed to develop an electric vehicle (EV) platform with its longtime Chinese partner SAIC.

What else was included in this deal? GM has agreed to effectively move all future EV development to China. It could also mean that production of the vehicle itself will be moved overseas.

The agreement is the result of the Chinese government coercing foreign automakers into giving Chinese companies the EV technology they lack, according to an Associated Press report. Unsurprisingly, some U.S. lawmakers have voiced concerns that the deal is little more than a “shake down” from the Chinese to get GM’s Volt secrets. GM has denied reports that it will hand over the intellectual property underlying the Volt.

GM Vice Chairman Steve Girsky, in a conference call from Shanghai, said that neither SAIC nor the Chinese government have demanded Volt technology but that any future EV developments would, of course, draw on GM’s Volt “experience and technology,” according to a USA Today report first published in September, 2011.

Under the deal, SAIC and GM will equally share the cost of developing a new all-electric vehicle, Girsky said.

As per the arrangement, GM started exporting Michigan-made Volts to China. However, it is highly unlikely that GM will sell many of the unsuccessful vehicles.

“The Chinese government is pushing electrics with a subsidy that amounts to about $19,000 per car — but only if the car is made in China. No imports allowed,” writes Chris Woodyard of USA Today. “There also are tariffs on cars imported to China, which lawmakers argue are unfair and may violate world trade rules.”

But, as mentioned in the above, what has some people truly upset is the fact that Girsky hinted that the Volt could eventually be built in China.

“If we localize, eventually it won’t have a tariff and it will get the subsidy. We have made no decision on if, when or where we build Volt in the future,” Girsky said.

USA Today further explained China’s quest for EV technology:

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 global rivals in automotive engineering.

“China is not a technology leader in virtually any industry. The country has developed around low-cost production,” said Bill Russo of consultancy Synergistics. “This is the irony, that the largest and biggest growth market has relatively weak domestic manufacturers.”

It was because of the sudden growth in Chinese demand and faltering sales in the recession-stricken West that China was able to surpass the U.S. as the largest car market in 2009. Just this year, sales of passenger vehicles, excluding large buses, jumped by a third to 13.7 million vehicles.

Two final thoughts: First, considering that all of GM’s EV development was financed with taxpayer dollars, it seems perfectly reasonable that many people are upset with the car manufacturer. On the other hand, given what appears to be GM’s failure to develop a successful, affordable and stable EV, one might feel compelled to say of the Shanghai deal, “They can have it.”

Second, given the fact that Federal government helped itself to millions and millions of taxpayer dollars under the pretense that it was going to combat high unemployment by creating “green jobs,” it would seem that moving research and development (and possibly manufacturing) overseas is slightly, well, counterproductive.

(h/t Weasel Zippers)

[Editor's note: Although the USA Today article dates back to September, it is just now starting to catch on in the blogosphere. Since nothing has changed in the agreement between GM and SAIC, The Blaze found the story both relevant and necessary to report.]