China May Force Foreign Automakers to Share EV Secrets

According to the Wall Street Journal, China’s Ministry of Industry and Information Technology is currently drafting a 10-year plan that has as it’s goal  making the country the world’s leading producer of plugin hybrid cars and technology by 2020.  This news was provided to the Journal from a group of international auto executives.

The policy is being designed to force foreign automakers to share critical EV technology and intellectual property with the Chinese government in exchange for being allowed to sell cars there.  The automakers would be required to enter into joint ventures with Chinese state-run companies, and would only be allowed to take  minority stakes in these ventures.

The rapidly growing Chinese market, and its emphasis on reducing petroleum dependence is extremely important to automakers looking to expand sales and profit, GM included.

Since Chinese car companies have been unable to break into international sales, blackmailing US and other automakers into giving away EV technological secrets is a shortcut to that goal.

Needless to say, foreign automakers are very unhappy and concerned about this developing policy.

The plan is “tantamount to China strong-arming foreign auto makers to give up battery, electric-motor, and control technology in exchange for market access,” a senior executive at one foreign car maker. told the Journal. “We don’t like it.”

US Representative John Dingell, a Michigan democrat, became outraged at the idea after reading the Journal article and has written a letter to China’s ambassador to the US Zhang Yesui.  Dingell said the Chinese plan would violate “the sanctity of the intellectual property laws we hold so dear in the United States.”

In the letter he said China should not “require foreign automakers to hand over electric vehicle technology to their Chinese competitors in exchange for market access in China.”

“China generally blocks U.S. companies from holding majority stakes in ventures and requires them to get Chinese partner, he added. “The U.S. has no such requirements for Chinese companies to acquire U.S. firms.”

Dingell and Senator Carl Levin also of Michigan (D) are urging a congressional committee to examine China’s actions. “We should all be alarmed by China’s attempts to dominate the renewable energy industry through measures that discriminate against foreign manufacturers,” Levin said.

GM has a large sales volume in China, even greater than its US volume.  It also plans to sell the Volt there, and is already in a joint venture with Chinese company SAIC to develop the pure electric Chevrolet New Sale for the Chinese market.  The SAIC-GM-Wuling  joint venture has been successful in selling cars in China since it was formed in 1998

There are reports that the Chinese government via SAIC is eying the upcoming GM IPO closely, and is considering buying a stake in GM from the US government, currently a 61% owner.  In fact,  the U.S. Treasury Department has conceded GM investors would be sought from “multiple geographies.”

“Shanghai Automotive is watching GM’s progress closely,” wote SAIC staff in an email to the AP. “As a strategic partner of GM, SAIC-GM hopes for a successful IPO.”

If you think you have a problem with “Government Motors,” how do you feel about “Chinese Government Motors”?