General Motors stated this week it will build a battery factory in China this year. China desires new automobiles to be electric as soon as possible. China says it expects all automakers to make “new energy vehicles”– specified as plug-in hybrid, battery electric, fuel cell or other alternative fuel automobiles– at least 8% of their item mix in coming years.
China is largest new automobile market globally, which implies any company with pretensions of being a force in the worldwide automobile industry should be part of the action in China. However it imposes limitations on vehicle companies they don’t deal in other markets. Cars imported to China pay considerable tariffs. To be competitive, companies such as GM, Ford, Mercedes, Jeep, and Volkswagen are needed to form joint ventures with regional companies to construct automobiles in the country.
However things get a bit more complicated than that. In order to succeed, it is vital not to annoy Chinese government officials, who have the power to make life hard for those who disappoint them. Just recently, South Korea revealed it was triggering a new missiles defense system given by the United States. The system is created to safeguard South Korea from a nuclear attack by North Korea, however China is worried the missiles could be used against it.
Unexpectedly, the plug-in hybrid vehicles that Hyundai assembles in China were prohibited from utilizing battery packs made in South Korea, the home of Samsung SDI and LG Chem. Hyundai is now rushing to source its batteries from a Chinese company that remains in the good graces of the government.
General Motors has obviously read the writing on the wall and chose it had best build its own battery factory in China as a hedge against the day when president Donald Trump tweets something that provokes annoyance from the Chinese government.
The automaker says that two thirds of all brand-new models presented to the Chinese market between now and 2020 will be “new energy” automobiles. It presented the Buick Velite 5, a reinnovated version of the Chevrolet Volt, to the Chinese market at the 2017 Shanghai Motor Show. The batteries for all those vehicles will be manufactured in a new battery assembly plant located in Shanghai that is arranged to start operations later this year.
