GM Enters Electric Car Joint Venture With Chinese Automaker

GM Enters Electric Car Joint Venture With Chinese Automaker
Vittorio Hernandez

Detroit, MI

General Motors announced on Tuesday that it has entered into a joint venture with a Chinese automaker to develop electric cars. The deal also involves transfer of battery and other electric vehicle technology.

The 50-50 joint venture is between GM and Shanghai Automotive Industry Corp., the largest vehicle manufacturing company in China. The combined firm, Pan Asia Technical Automotive Center, is based in Shanghai and has already helped develop the Buick LaCrosse eAssist model now being sold in both countries.

China is a growing market for new cars because of the rapid pace of the country's economy, which provides the Chinese people with money to purchase vehicles. The Chinese government is encouraging the entry of electric cars and other vehicles run on new energy and even offers national and municipal subsidies of up to $19,300 a unit.

To further give electric cars a boost, Beijing is exerting pressure on foreign carmakers to bring their electric car technology to China through joint ventures. However, GM Vice Chairman Stephen Girsky said its joint venture was not linked with the Beijing government initiative.

The joint venture can also been seen as a move by GM to lower production costs by having some of the vehicles manufactured in China where there is abundant and cheap manpower.

To further curb costs, GM entered into a four-year labor agreement this week with the United Auto Workers union to encourage the highest-paid hourly workers to retire so the carmaker could employ new workers at lower wages.

The buyout packages of up to $75,000 would be offered by GM to about 10,000 skilled-traded workers. GM would also pay other workers eligible to retire $10,000 if they would stop working in the next two years. GM then would replace them with new hires at the rate of less than $16 an hour.

GM is expected to save $30 an hour for every skilled-trade worker replaced with a lower-paid employee or up to $57,000 yearly per worker, according to the Center for Automotive Research.

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