GM and GE Go All-In for Chinese Subsidies

immelt photoProfessional subsidy-sucking General Motors, which seems content to marinate in its taxpayer “investment” indefinitely, is getting ambitious. No, not in the sense of paying back the $50 billion U.S. government bailout, or in producing vehicles people actually want to buy, but instead in finding other governments to subsidize its products.

Not surprisingly the new partner – in a 50-50 joint venture with the state-run auto industry – is China. And also unsurprisingly, General Electric will join GM in a related partnership in the communist nation.

And you probably already guessed the agreements surround the development and sales of electric vehicles. But GM took great pains to emphasize that it does not have an ambitious plan in the Peoples’ Republic for the Chevy Volt – whose sales have been a dud in the U.S. – because it is not allowed to take advantage of generous Chinese government subsidies for electric vehicles, because the Volt (and also Nissan with its Leaf) are produced outside the country.

Instead, in order to be able to grab the eye-popping $19,300-per-car incentives, automakers must share their technology with Chinese counterparts and produce the vehicles over there. So we now have the GM China Advanced Technical Center in Shanghai, adjacent to the company’s local headquarters and in a 50-50 partnership with Chinese state-run SAIC Motor Corporation. And rather than call it the Volt, the combined venture will likely develop and implement the electric technology in the Shanghai GM Chevy Sail model, which was introduced late last year. According to The Economic Times:

The agreement finalizes a nonbinding memorandum on cooperation for green-vehicle development SAIC and GM signed last November. At the time, SAIC agreed to buy a 1 percent stake in GM through an initial public offering held to make GM a public company again and cut the U.S. Treasury’s stake in the company. 

In addition, the New York Times reported this week that “G.M. holds minority stakes in manufacturing joint ventures in China that sell more cars each year than G.M. sells in the United States. Of the move to jointly advance technology, GM vice president Stephen J. Girsky told the newspaper, “This is not a political decision today. It’s a business decision.” Undoubtedly it’s both.

Meanwhile, as has been forecast many times by NLPC’s Mark Modica, GM is unloading a number of the worthless Volts on General Electric for use in China, it was announced Thursday. In addition, GE will install a number of charging stations (also certain to be subsidized) “at a government-assigned international EV demonstration zone in Shanghai’s Jiading District and at the GM Headquarters office in the city.” That will put a token number of Volts on the road in China (just like in the U.S.) to make it look like GM isn’t just after a naked grab of government subsidies – at least until the joint venture produces its electric Sail or other qualifying vehicle.  As for GE’s motivations, Associated Press reported: 

GE builds natural gas-fired generators for utilities, electric motors, advanced electric meters and electric car charging stations, all of which could be in higher demand if drivers buy electric cars. The company estimates the expanding market could bring it up to $500 million in revenue over the next three years.

The charging station installations replicate the infrastructure build-up efforts in the U.S., via grants from the Department of Energy, which subsidize the costly chargers for GE and other companies.

What a shame that once-proud U.S. companies like GM and GE have developed such short-sighted leadership that elevates their hunger for short-term cash over long-term viability and credibility, that is self-sufficient and not dependent on taxpayer dollars. GM has been drawn so deep in the muck that one of its iconic models, Cadillac, was implicated in the endorsement of a Chinese propaganda film that celebrated the 90th anniversary of the Chinese Communist Party. While the company’s U.S. operations denied involvement with the project (“It is not GM. It is not GM money. And it is in no shape or form, or indirectly, taxpayer money”), the fact is that production company – China Film Group – felt cozy enough with GM to plaster its Cadillac logo on background endorsements at the film’s premiere. 

As John Hayward of Human Events explained, China Film Group even filmed a Cadillac commercial in Los Angeles, credited to “Cadillac Film Group,” and ended with the Cadillac logo. “It makes that ten-foot-pole separating GM from the China Film Group look awfully flimsy,” Hayward wrote.

Now watch: the next round of whining you will hear is how U.S. electric vehicle manufacturers can’t compete, just like the solar industry, because of China’s massive subsidies to their EV industries. And the environmentalists and government handout hogs will cry for more U.S. government “investment,” lest the Solyndra-like companies fail and the precious “Green jobs” (of the future!) are destroyed.

Paul Chesser is an associate fellow for the National Legal and Policy Center and is executive director of American Tradition Institute.


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