How SAIC’s recharged venture with GM plans to catch up with top EV makers in China

China's SAIC Motor has extended its partnership with General Motors by 20 years, with the joint venture set to continue until 2047. The agreement, signed on Wednesday, aims to help both companies compete with domestic rivals in the rapidly growing Chinese electric vehicle (EV) market. SAIC and GM, the largest automakers in China and the United States respectively, have a long-standing relationship that began in 1995 and culminated in the establishment of the SAIC-GM joint venture in 1997.

SAIC's chairman, Wang Xiaoqiu, emphasized the importance of leveraging each company's strengths - technology, branding, global distribution, and local resources - to open new avenues for development in the global EV market. The renewal of the deal comes at a time when sales from the SAIC-GM joint venture and its affiliates have dropped from a peak of over 4 million vehicles in 2017 to around 2.17 million units last year.

Despite the decline, GM's global car sales have also fallen sharply to about 6.2 million units in 2021, down from over 10 million units in 2016. Nonetheless, the partnership remains crucial for both companies as SAIC benefits from China's vast supply chain, while GM leverages its extensive production network and loyal customer base.

David Zhang, general secretary of the International Intelligent Vehicle Engineering Association, pointed out that while Chinese carmakers like BYD and Leapmotor currently dominate the domestic market, the Chinese market is large enough to accommodate cooperation between Chinese and US automakers. Zhang also highlighted the potential advantage of GM's overseas plants and sales channels, which could facilitate the shipment of SAIC-made cars to markets such as North America, where escalating trade tensions may pose challenges.

Despite the decline in sales, SAIC remains China's largest carmaker by sales, with 2.38 million vehicles delivered between January and July 2023, surpassing BYD's 2.2 million EV units sold during the same period. SAIC's ownership of the historic British brand MG has contributed to its strong presence in Europe, where the brand has consistently been the top-selling carmaker for 11 consecutive years.

However, BYD's aggressive expansion in Western Europe has threatened SAIC's dominance, with BYD overtaking MG in the latest quarter. As trade barriers intensify and international marques continue to enter the Chinese market, partnerships between Chinese and foreign automakers remain essential for survival and growth in the highly competitive EV market.