GM's China Deal Shows the Future Path of EVs

GM Headquarters

GM isn't sitting still.

It knows that the future of electric cars will be written in China, so the company is putting its EV development in Shanghai, not Detroit.

The world's largest automaker and its Chinese partner SAIC have signed an agreement to partner on researching, designing and developing electric vehicles.

These are EV's that will not only be sold in China, but more importantly, around the world.

The xenophobic will immediately start screaming that GM is once again putting too much in China.

The truth is, GM is simply doing what is smart.

The fact is, China has been, and will continue to be, among the most aggressive countries in the world when it comes to developing electric vehicles. You combine that commitment with the fact China is, and will remain, the world's largest auto market, and it makes perfect sense for GM to make Shanghai the "home room" for developing and designing electric vehicles. When EV's take off at some point in the future, it will be China where the growth is strongest. GM, is wise to tap that potential expertise and interest as it develops over the next several years.

Of course, Americans will be quick to bash the move and say, "Sure, we bail these guys out and they run off to China to develop electric vehicles." That argument sounds good on the surface, but makes no business sense. GM has not taken any loans from the Department of Energy for developing electric cars, so it's not obligated to make Detroit the "home room" for EV development. Also, GM says it is not sharing Volt technology with the Chinese, that program and technology remain in Detroit. Finally, GM should go to the most aggressive EV market to set up its electric vehicles operations.

When I talked with GM Vice Chairman Steve Girsky in Shanghai about the deal, he summed up the move by saying, "China is, in my opinion on the leading edge of this. They really have an electrification policy. They're going to put a lot of infrastructure in place. They're throwing a lot of money at it, and they're encouraging, basically, EV's to come into this market."

This does not mean GM will build electric cars in China and export them to the US in large numbers. It plans to build in the markets where it sell electric and plug-in electric cars.

But make no mistake, as we've said for some time, the future road of electric cars rolls through China. GM is wise to set up a shop on that road.

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