GM Stands Firm, Refuses To Share Chevy Volt Secrets With China

September 20, 2011

It's common for people to cite China as a nation bent on world domination at the expense of the environment. After all, how many articles were written about the massive (and massively failed) cleanup of Beijing prior to the 2008 Summer Olympics, or the devastation wrought by the Three Gorges Dam

But on the automotive front, China is trying to shed such images and reinvent itself as a leader in the electric car sector. To do that, however, it may need help from General Motors -- and for now, GM is saying "no".


General Motors is a major player in China's auto market, which is booming thanks to the rapid expansion of the middle class. (For reference, light vehicle sales in China hit 16.6 million last year, compared to 11.6 million in the U.S.) GM wants to bring one of its newest products, the Chevy Volt, to Chinese shoppers, but before that can happen, the Chinese government has asked for a few more details about the vehicle -- namely, the Volt's entire research-and-development dossier

Now, it's no secret that China heavily regulates its marketplace. (That's what tanked HUMMER and may very well 86 Saab, too.) To buoy the country's auto sector, Beijing offers massive incentives to manufacturers of highly fuel-efficient and plug-in vehicles under its "New Energy Vehicle Development Plan". But before non-Chinese companies can take advantage of that funding, they have to hand over the intellectual property rights for their green vehicle technology to a Chinese automaker.

Not only that, but the Chinese recipient of this information must have "mastery" of one of the technology's major components: the electric motor, battery pack, or power electronics associated with the foreign company's vehicle(s). In other words, to compete in China's EV market, foreign automakers have to fork over their trade secrets and educate a competitor on those trade secrets until they're proficient. Ouch.

General Motors' position

For General Motors, the option of handing over its Voltec extended-range electric vehicle technology is a dicey proposition. Not only did GM spend years and countless dollars developing it, but it's substantially different from most other EV powertrains. To forfeit the rights to that technology is humiliating in the short run and potentially dangerous in the long.

For now, General Motors' Dan Akerson has decided to ignore Beijing's demands. In doing so, the company likely to forfeit the aforementioned government incentives, which amount to subsidies of up to $19,200 per vehicle, or roughly half the Volt's sticker price. Without such incentives, no one is certain how attractive the Volt will be to Chinese consumers.

But all hope isn't lost for GM fans. This morning, GM announced that it would pair up with its longtime Chinese partner, SAIC, to build a "new electric vehicle architecture in China". The details of that development aren't clear just yet, but things may get very interesting down the road.

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