General Motors Co. (GM) plans to develop electric cars in China through its joint venture, Pan Asia Technical Automotive Center, with Shanghai Automotive Industry Corporation (“SAIC”) in order to take advantage of strong demand for EVs, and national and municipal subsidies in the country.
GM intends to transfer battery and other electric car technologies for the program as the Chinese government requires foreign automakers to transfer important parts of the technology to a joint venture in the country to become eligible for the subsidies.
As part of the agreement, SAIC will also contribute technology to Pan Asia. It has already made cash contributions to the joint venture in response to technology contributions by GM over the years. The Shanghai-based Pan Asia has helped GM develop the Buick LaCrosse eAssist, which is currently on sale in the U.S. and China.
GM also plans to import Chevrolet Volt plug-in electric hybrid from U.S. into China by 2011-end. However, Volt would not be eligible for government subsidies, putting the sale of the car at a disadvantage. The automaker clarified that the launch of Volt in China is not connected to the Pan Asia joint venture.
The Volt, which went on sale in mid-December last year with a price tag of $41,000, is the most fuel-efficient compact car sold in the U.S. as rated by the United States Environmental Protection Agency (EPA).
GM has been focusing on electric car technology intensively since 1990s while most of the other automakers are interested in hybrids. The automaker gained attention in 1996 with the launch of EV1, the predecessor to the Volt.
However, EV1 failed to capture the market due to lack of proper marketing efforts. As a result, GM suspended the sale of EV1 and started leasing it, partly to discourage foreign automakers from buying, disassembling and copying the vehicle.
Apart from GM, Toyota Motor Corp. (TM) and Nissan Motor Co. (NSANY) also plan to develop and sell electric cars in China. Toyota has decided to build and sell the current generation of the Prius gasoline-electric hybrid while Nissan is collaborating with Dongfeng Motor to jointly develop an electric car.
GM, a Zacks #3 Rank (Hold) stock posted a profit of $2.54 billion or $1.54 per share in the second quarter of the year, which almost doubled from $1.33 billion or 85 cents per share in the same quarter of 2010. With this, the automaker has beaten the Zacks Consensus Estimate by 33 cents per share.
Revenue in the quarter appreciated 19% to $39.37 billion (including $330 million from GM Financial) on worldwide sales of 2.32 million units versus 2.16 million a year ago, thereby capturing a market share of 12.2%. It also exceeded the Zacks Consensus Estimate of $36.61 billion.
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