Bloomberg Businessweek - USA (2019-11-25)

Bloomberg Businessweek November 25, 2019

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designedtoreverseitsfortunesinChinaandother

profit-challengedlocales.

OverseeingtheChinarolloutis MattTsien,a GM

veteranwhofirststartedasa 15-year-oldintern.

He’snowtheShanghai-basedheadoftheChina

business.HelandedinChinain 1995 asGMwasin

theearlystagesofnegotiatinganagreementwith

SAIC.Tsien,then35,wasworkingatGMsubsid-

iaryDelcoElectronicswhenGMtappedhimto

movetoChinaaschieftechnologyofficerandhelp

clinchthedeal.Hespenttwoyearsworkingoutof

a ShanghaiHolidayInn.“Nobodyimaginedatthat

timethatelectrificationwasgoingtotakehold,”

Tsiensays.

The Shanghai office where he’s now

based,originallybuilttohousemanyofGM’s

internationaloperations,is eerilyquiet.In2013,

GMmovedeveryoneexcepttheChinateamtoits

Singaporeoffice.SomeworkersintheShanghai

officewatchcricketoncafeteriatelevisionsat

lunch.Executiveshavelargeoffices.There’sso

muchextraspacethatevenaninternsitsina

massivebeigecubicle.Inthebathrooms,a flyer

hangsinstallsexplainingtheimportanceofreturn

oninvestedcapital,a metricmostlyunknown

tostartups butprizedbymature companies

expectedtoefficientlyputtheirassetstowork.To

generatea 1%increaseinROIC,GMmustincrease

earningsby$500millionorreducecapitalusage

by$25billion,theflyerexplains.

Tsien,whoholdsseveralpatentsrelatedto

systemsengineering,saysGMwillhititsgoalof

producing 10 newelectric-carmodelsinChinaby

nextyearandanadditional 20 by2023.“We’repur-

poselybeingdeliberateaboutourrollout,”hesays.

GMwillbedisplayingitsfirstall-electricChevrolet

fortheChinesemarket,theChevyMenlo,atanauto

showinthesouthernChinesecityofGuangzhou

fromNov. 22 toDec.1.Thesedaniscapableof

travelingmorethan 400 kilometers(249miles)

ona singlecharge.Othernewmodelsincludethe

CadillacCT5,a sedanlaunchedonNov.18,andthe

XT6,a CadillacSUVthatwentonsaleinJuly.

GMneedstorefreshitslineuptokeeppace

withnewcarsfromestablishedrivalssuchasVW,

Mercedes-Benz,andToyota,aswellaslocalchalleng-

erslikeBYDCo.andGuangzhouXiaopengMotors

TechnologyCo.KnownasXpeng,theelectric-car

startup is backed by Chinese e-commerce

powerhouseAlibabaGroupHoldingLtd.“[New-

energyvehicle]technologyopensa windowfor

Chinatopotentiallyleveltheplayingfieldwith

foreignautomakersandtakegloballeadership,”says

BillRusso,CEOofconsultingfirmAutomobilityLtd.

There’salsoa newTeslaInc.gigafactoryin

Shanghaitocontendwith.Teslaisrunningtrial

operationsatthefactory,itsfirstoutsidetheU.S.

MassproductionoftheTeslaModel3 is expected

tostartinDecember.Thecompanyhassaidit will

make150,000Model3sa yearinShanghaiafter

rampingupthefirstphaseofproduction.

NoothercountrycomesclosetoChinainterms

ofscaleandadoptionofnew-energyvehicles.More

electriccarshavebeensoldinShanghaialonethan

inalloftheU.S.,U.K.,orGermany.By 2032 salesof

electriccarsareexpectedtoovertakesalesofnew

combustion-enginevehiclesinthecountry,accord-

ingtoBloombergNEF,BloombergLP’sprimary

researchserviceonenergytransition.

GMis tryingtokeeppaceascompetitorsmove

aheadwithaggressiveexpansionplansdespite

theongoingsales downturn.Volkswagenhas

introduced 14 newversionsoftraditionalmodels

since2018,andtheGermanautomakerexpectsto

launch 10 electrifiedversionsofexistingmodelsin

Chinabytheendofnextyear.

ToyotaMotorCorp.is forminga jointventure

withShenzhen-basedBYDtomakeEVs,while

HondaMotorCo.is workingwithContemporary

AmperexTechnology Ltd., a leading Chinese

makeroflithium-ionbatteries.EvenGM’sstruggling

rival,FordMotorCo.,couldmakeitsnewelectric

MustangMach-EinChina,FordCEOJimHacketttold

BloombergNews.

Not only is GMbeing challenged byother

automakers,buttheoverallcarindustryinChinais

gettinglessgovernmentsupport.Thegovernment

○ Tsien

40%

20 %

0 %

2014 2018

○ ShareofGM

vehiclesales

China

U.S.

Europe

 An EV charging

station outside a Buick

dealership in Shanghai

 For more information

on the future of

transportation, go

to Bloomberg.com/

hyperdrive

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