GM EVs Find Platform in China - Analyst Blog
September 23 2011 - 12:26PM
Zacks
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.
GENERAL MOTORS (GM): Free Stock Analysis Report
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TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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