March 7, 2021

G.M. Aims the Volt at China, but Chinese Want Its Secrets

But as G.M. prepares to start selling them here by the end of this year, the Chinese government is putting heavy pressure on the company to share some of the car’s core technology.

The Chinese government is refusing to let the Volt qualify for subsidies totaling up to $19,300 a car unless G.M. agrees to transfer the engineering secrets for one of the Volt’s three main technologies to a joint venture in China with a Chinese automaker, G.M. officials said. Some international trade experts said China would risk violating World Trade Organization rules if it imposed that requirement.

The government’s demand is the latest example of China’s willingness to use the leverage of Western access to the vast Chinese market to extract concessions on advanced technologies. Policies to force technology transfers from non-Chinese companies have already helped this nation build big industries in areas like wind turbines, high-speed trains and water purification.

Western companies have complained that the tactics create an uneven playing field for business ventures trying to compete with domestic Chinese industries.

The dispute over the Volt threatens to lead to another trade dispute with the West and could affect the dynamics of a visit to China this month by the American energy secretary, Steven Chu.

The consumer subsidies in question are considered crucial for helping electric and hybrid vehicles catch on in China, which became the world’s largest car market in 2009. The government has made a priority of moving beyond cars that burn fossil fuels and emit polluting exhaust. At an industry conference here in this port city near Beijing over the weekend, government officials called for Chinese automakers to put new emphasis on producing more fuel-efficient and technologically advanced models, including gasoline-electric hybrids and all-electric cars.

Right now, the subsidies are available for electric cars made by Chinese automakers, like the e6 made by BYD, giving them a huge competitive advantage. The Volt, if G.M. proceeds with plans to begin selling it in China by year’s end, will be the first mass-market predominantly electric car imported to China by a foreign manufacturer.

The Volt has not yet been priced in China. But the Chinese subsidies are nearly half the Volt’s suggested retail price in the United States of $41,000, before including a tax break of up to $7,500 that Washington offers.

The American tax break is not restricted to domestic cars, nor does it require technology transfers.

G.M. is pressing Chinese officials to let the Volt qualify for the subsidies and tax breaks without the technology transfer. “We’ll bring it up in every conversation we have,” said Raymond Bierzynski, the executive director of electrification strategy at G.M. China, which has headquarters in Shanghai. G.M. has a series of joint ventures with several Chinese automakers, but plans to import the Volt from Michigan.

Global companies like Ford, Nissan, Toyota, Volkswagen and Daimler have spent billions of dollars to develop electric and plug-in hybrid cars. They are eager to start earning a return on those investments by selling them in China, where 17 million cars — virtually all of them gasoline-powered — were sold last year.

But Japanese and European automakers in particular have held back for fear of losing trade secrets if they are forced to share their newest technologies with Chinese companies. The Volt would be the pioneer, with the subsidy issue shaping up as a crucial test case.

G.M.’s arch rival, Ford, already intends to accede to the Chinese demand, a Ford executive said. But Ford is still conducting only demonstration projects of electric cars in China, including an effort here in Tianjin, and has not set a date for commercial sales.

Chinese automakers may need technology assistance for advanced cars because their research budgets tend to be only a tiny share of sales by international standards. That is why the Chinese government wants to ensure that its automakers gain the technology to manufacture their own electric and hybrid cars.

“We have to break through and master the core technologies,” Chen Jiachang, a deputy director of the ministry of science and technology, said in a speech Saturday at the conference here.

At least five trade experts said that Chinese government policies making it uneconomical to sell an imported electric car in China without transferring technology could violate rules of the World Trade Organization, of which China is a member.

“The rules do not allow a country to impose a requirement affecting the internal sale, distribution or purchase of a product in a way that favors its own product over imports,” said Carolyn B. Gleason, a partner at McDermott Will Emery in Washington and longtime specialist in W.T.O. cases.

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