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Aston Martin latest at China's doorstep as electric cars beckon
[BEIJING] For the world's top automakers wanting to join the race for electric vehicles, China is proving too hard to resist.
Aston Martin, the legendary British brand immortalised by James Bond movies, is seeking a joint venture in China to help break into the world's biggest market for EVs, chief executive officer Andy Palmer said in an interview Thursday. Aston Martin isn't the only one. Magna International Inc, the Canadian contract manufacturer, is in talks with Beijing Automotive Group Co for an alliance, people familiar with the matter said.
As the auto industry transforms rapidly toward battery powered vehicles and autonomous cars, major manufacturers are bracing for challenges including billions of dollars in investment with uncertain payoffs. China, which surpassed the US as the top market for EVs in 2015 with government subsidies and stringent emission regulations, has already become an attractive destination for makers from Volkswagen AG to Ford Motor Co.
"The market size determines everything," said Zhou Jincheng, an analyst at automotive market researcher Fourin Inc. "To make sure they will continue to have a foothold in the market, they are willing to take out some of the profits from their traditional vehicles to invest in EVs, which may not be profitable until 2025 to 2030."
While Aston Martin Holdings Ltd doesn't have plans to produce EVs bearing the UK brand in China, it's seeking collaboration to share its lightweight materials and aerodynamic technologies with the Chinese partner as China looks to improve the performance of EVs, CEO Palmer said. Talks are underway with established carmakers and startups, he said in Beijing.
But, others have tied up with local companies to make in China. Later this year, Volkswagen is expected to roll out the first domestically made electric car through an alliance with Anhui Jianghuai Automobile Group Corp, while Ford has teamed up with Anhui Zotye Automobile Co to make and sell a line of EVs.
Sales of new-energy vehicles in China may top 700,000 units in 2017 and 1 million in 2018, according to the China Association of Automobile Manufacturers.
On Wednesday, Aston Martin announced a five-year trade and investment drive worth more than £600 million (S$1.12 billion). The company currently imports models such as the Vantage for sales in China.
Chinese battery maker Contemporary Amperex Technology Ltd, or CATL, is among a list of battery suppliers Aston Martin is considering for its first electric sportscar, said Mr Palmer. Some specific regulations from China on batteries have given a competitive advantage to local suppliers.
In the case of Magna, the discussions range from an equal partnership with Beijing Auto to cooperation in areas including manufacturing and parts supply, the people said, asking not to be identified as negotiations are private. Beijing Auto is the owner of Beijing Electric Vehicle Co, or BJEV, the biggest EV maker in China.
The negotiations are preliminary and may not lead to an agreement. Representatives for Beijing Auto and Magna declined to comment.
China requires foreign automakers to form joint ventures with Chinese companies to be able to sell locally. While such partnerships are the quickest way to make EVs in the country, they are also limited by permits. China has dished out only 15 licenses so far for production of new-energy vehicles, posing a barrier to many hopefuls.
Shares of BAIC Motor Corp, the listed unit of the group, rose as much as 2.7 per cent in Hong Kong on Friday and were headed for their best performance in a week.
A partnership with Magna, whose Magna Steyr unit has contract manufacturing partnerships with companies including Daimler AG, could help Beijing Auto position itself better in a market that surpassed the US in 2015 as the world's largest for EVs.
Aurora, Ontario-based Magna is one of the world's biggest auto suppliers with 328 manufacturing operations around the world, according to its website.