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A123 Systems and SAIC Motor Form Joint Venture for Hybrid and EV Battery Packs in China; ATBS to Be Preferential Supplier for All HEV and EVs Manufactured by SAIC and Subsidiaries

A123 Systems is forming a joint venture with SAIC Motor Co. Ltd, a leading automaker in China. The focus of the joint venture is to develop, manufacture and sell complete vehicle traction battery systems for use in hybrid electric and pure electric passenger vehicles and heavy duty truck and bus applications in China.

The new venture, called Shanghai Advanced Traction Battery Systems Co. (ATBS), will seek to develop business throughout the entire Chinese transportation market and position A123 to strategically gain market share. ATBS will also be the preferential supplier of complete energy storage systems for all hybrid electric and pure electric vehicles manufactured by SAIC Motor and its wholly-owned subsidiaries.

A123 Systems will supply the advanced automotive battery cells and work with SAIC Motor to design and develop the integrated battery systems for ATBS.

The venture’s ownership will be held 51% by SAIC Motor and 49% by A123 Systems, with the management duties of the venture being shared equally between the parties.

In concert with this agreement, ATBS has been awarded a contract to supply battery systems for SAIC Motor’s plug-in hybrid vehicle program. This program seeks to develop a plug-in hybrid vehicle that meets the growing demand for alternative-energy transportation in China.

SAIC Motor is also developing a broad overall portfolio of “new energy” vehicles. SAIC Motor previously disclosed plans for a hybrid Roewe 750 sedan and a plug-in hybrid version of the Roewe 550, which could cut fuel consumption by 20% and 50% respectively, in addition to plans for introducing electric vehicles on the market in 2012. The Roewe 550 and 750 will utilize A123 battery cells.

Comments

HarveyD

This is a very interesting JV for future development of high performance battery packs for electrified vehicles.

SAIC will effectively have the control of this JV with 51% and will certainly use it to produce the battery systems required for some of their planned electrified vehicles.

This type of vertical integration may be ideal to control cost and performance (à la Toyota). However, it may go against future standardized battery packs/modules secondary markets.

Time will tell which way it will go.

ToppaTom

A123 Systems technology is going to China.

A123 will get some short term gain but no long term share of the world market for this.

If A123 had resisted this they would get nothing.

SAIC would get new technology from some other source.

China has much of our money already and they are rapidly closing the technology gap.

Chinese capitalism is going to bury us – they pay manufacturing workers $ 0.67 (2004) while the rate in the U.S. is $5.50 (2004).


http://www.ventureoutsource.com/contract-manufacturing/trends-observations/2008/hourly-manufacturing-labor-rates-in-china

We need more laws that give increased power to the UAW and SEIU; that’ll fix it, yup.

SJC

I mentioned on here years ago that if car makers were not involved in battery making but just bought them under contract, they would be at a disadvantage. Responders said no, that GM and others would do fine buying the batteries from others...we will see.

HarveyD

TT:

Making more laws to give more power to UAW would strangle the national car manufacturers in about 3 more years. USA and Canada could then buy all their vehicles at the same address as they do for HDTVs, telephones, radios, tools, clothing, etc.

If you pay your workers 10 or 20 times more, they have to produce almost 8 to 16 times more to stay competitive. In many North American production plants, the cost of material accounts for only 80% of total production cost. Wages make all the difference. That ratio may be reversed with $1.00/hour wages or fully automated plants. If you could assemble a car with one man-hour you could pay $80/hour. When paying $1.00/hour you don't need all the automation and may use up to 80 man-hours to assemble a single car. In reality, most assembly plants, regarless where they are, use about (50 +/- 10) man-hours.

HarveyD

TT:

Making more laws to give more power to UAW would strangle the national car manufacturers in about 3 more years. USA and Canada could then buy all their vehicles at the same address as they do for HDTVs, telephones, radios, tools, clothing, etc.

If you pay your workers 10 or 20 times more, they have to produce almost 8 to 16 times more to stay competitive. In many North American production plants, the cost of material accounts for only 80% of total production cost. Wages make all the difference. That ratio may be reversed with $1.00/hour wages or fully automated plants. If you could assemble a car with one man-hour you could pay $80/hour. When paying $1.00/hour you don't need all the automation and may use up to 80 man-hours to assemble a single car. In reality, most assembly plants, regarless where they are, use about (50 +/- 10) man-hours.

HarveyD

Correction (materials .. 80% should read 20%)

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