China has introduced “dual credits” that require automakers to sell a certain proportion of electric vehicles. GM is keen to sell electric cars in China, only to be exposed to the concerns of China’s battery industry when it comes to the local production of electric-car batteries that does not reach GM requirements.
The Wall Street Journal reported that GM was scheduled to produce a hybrid car “Buick Velite 6” next month, and next year it will release battery-powered electric vehicles. However, insiders say the plan has been postponed because of the battery produced by A123 Systems, a group owned by China’s Wanxiang Group, which failed to achieve GM’s standards for performance and safety. A123 Systems has factories in Hangzhou to supply the needs of the Chinese market. The electric vehicle battery is quite complex and cannot be replaced easily. Therefore, it is likely that the Velite 6’s production schedule will experience a big delay.
GM had intended to use LG Chem’s batteries, but in 2016 China made it mandatory for carmakers to use government-approved battery suppliers, all of them Chinese, without a single foreign dealer on the list. Carmakers complained that the exclusivity was an example of Chinese protectionism and that the authorities had cut out foreign dealers and had a monopoly on local manufacturers. Thomas Barrera, president of the battery consultancy LIB-X Consulting, said there may be quality and safety risks in the Chinese industry’s rush to develop battery technology. Chinese batteries are cheap, but they may not have gone through the required quality testing before they hit the market.
China’s electric car policy has troubled foreign automakers, who must use Chinese-made batteries to produce electric cars without compromising on quality, using batteries with poor quality and the risk of ignition. Although most foreign automakers have expressed confidence in public that they will be able to meet the Chinese government’s targets and the electric car output will take up 3-4% the total output in 2019, few have detailed instructions on how to do so.
（Image: Sino-German Urbanisation Partnership via Flickr CC BY 2.0）