China, U.S. Firms Enter Car-Battery Deal

By PATRICIA JIAYI HO
BEIJING—Two leading Chinese car makers have enlisted U.S. automotive-battery suppliers to help develop clean-energy vehicles as competition to bring an affordable electric car to the world's largest auto market heats up.
A123 Systems Inc., of Waterrown, Mass., on Thursday said it is setting up a joint venture with SAIC Motor Corp. to develop battery systems for hybrid-electric and pure-electric passenger and commercial vehicles. SAIC, China's largest auto maker by sales volume, will hold 51% of the venture, A123 said in a statement.
Shanghai Advanced Traction Battery Systems Co., as the joint venture is called, will be the preferential supplier of battery systems for hybrid-electric and electric vehicles made by SAIC, A123 said. SAIC is planning to develop a hybrid Roewe 750 sedan and a plug-in hybrid version of the Roewe 550. It also plans to launch electric vehicles in 2012.
Also Thursday, Zhejiang Geely Holding Group Co. said it signed a wide-ranging global cooperation agreement with Milwaukee-based Johnson Controls Inc., an indication the Chinese auto maker is getting more serious about developing its own clean-energy vehicles.
The partnership will cover auto parts, including vehicle seats, and new energy, Geely said. It didn't give financial details of the deal. A person familiar with the matter said the cooperation will definitely involve batteries but details are still being discussed. JCI has a partnership with France's Saft Groupe SA to make lithium-ion batteries for hybrid, plug-in and electric vehicles.
Last month, Zhejiang Geely's listed unit, Geely Automobile Holdings Ltd., signed a deal to buy electric vehicles from Taiwan's Yulon Motor Co. The electric cars will be based on Geely's small Panda gasoline-powered car. Yulon Motor will be responsible for research and development and converting the Panda into an electric car powered by lithium-ion batteries. The car will be sold in both Taiwan and China, with shipments to China starting in 2011.
In addition to the deal with Yulon, Zhejiang Geely will continue to develop its own electric cars, the company has said. Geely, the preferred bidder for Ford Motor Co.'s Volvo unit, and SAIC join global car makers in ratcheting up their electric-car efforts.
Nissan Motor Co. plans to test-market its Leaf electric vehicle in China in 2011 by making it available to government agencies and other fleet customers in the city of Wuhan. General Motors Co. intends to mass-market the plug-in hybrid-electric Chevrolet Volt in China starting in 2011. The Volt is powered by lithium-ion batteries and is supplemented by a gasoline engine.
Toyota Motor Corp. has also said it will likely test-market a plug-in hybrid in China, and Daimler AG will introduce its electric Smart minicar in selected Chinese cities next year.
Chinese auto manufacturers such as BYD Co., which is partly owned by Warren Buffett's MidAmerican Energy Holdings Co., have also developed their own battery technology. —Norihiko Shirouzu contributed to this article.