Originally published on Gas2.
General Motors said this week it will construct a battery factory in China this year. China wants new cars to be electric as soon as possible. China says it wants all manufacturers to make “new energy vehicles” — defined as plug-in hybrid, battery electric, fuel cell or other alternative fuel vehicles — at least 8% of their product mix in coming years.
China is the world’s largest new car marketplace, which means any company with pretensions of being a force in the global automobile industry must be part of the action in China. But it imposes restrictions on car companies that they don’t face in other markets. Cars imported to China pay significant tariffs. To be competitive, companies like GM, Ford, Mercedes, Jeep, and Volkswagen are required to form joint ventures with local companies to build cars in China.
But things get a little more complex than that. In order to be successful, it is critical not to annoy Chinese government officials, who have the power to make life difficult for those who displease them. Recently, South Korea announced it was activating a new missile defense system provided by the United States. The system is designed to defend South Korea from a nuclear attack by its lunatic neighbor to the north, but China is worried the missiles could be used offensively against it.
Suddenly, the plug-in hybrid cars that Hyundai assembles in China were banned from using battery packs made in South Korea, home to Samsung SDI and LG Chem. Hyundai is now scrambling to source its batteries from a Chinese company that is in the good graces of the government.
GM has apparently read the writing on the wall and decided it had best build its own battery factory in China as a hedge against the day when putative president Donald Trump tweets something that provokes displeasure from the Chinese government.
GM says that two thirds of all new models introduced to the Chinese market between now and 2020 will be “new energy vehicles.” It introduced the Buick Velite 5, a reskinned version of the Chevy Volt, to the Chinese market at the recent Shanghai auto show. The batteries for all those cars will be manufactured in a new battery assembly plant in Shanghai that is scheduled to begin operations later this year.
Panasonic has also recently announced it is beginning construction of a battery manufacturing plant in China that is expected to be producing batteries by early next year.
Source: Inside EVs
Reprinted with permission.