The most rigid joint venture automaker begins to formulate local strategies.

Author | Xing Ruifang

Editor | Mao Shiyang

Original content by AutoPix (ID: autopix)

01.

Flagship Electric Car Abandons GM's Plan

SAIC-GM has been advancing its five-year new energy transformation strategy since 2021, almost in line with GM's pace in North America. However, this year, which is the penultimate year of the strategy, SAIC-GM is no longer closely following GM's pace and has started to make adjustments to some products, adopting flexible approaches tailored to the domestic market.

We exclusively learned that Buick, a brand under SAIC-GM, is developing a new model codenamed NDLB, which was originally scheduled for mass production (SOP) this quarter. However, as development neared completion, company executives decided to change the product plan, shifting from an exclusively battery-electric vehicle (BEV) to a dual-mode model offering both BEV and extended-range electric vehicle (EREV) capabilities. Although the addition of an EREV option seems minor, NDLB required a switch in vehicle architecture to accommodate both powertrain systems. In this new development direction, NDLB will replace GM's VIP architecture with SAIC-GM's self-developed CLEA architecture.

NDLB is based on Buick's all-electric concept car, the "Electra-L," which was first showcased by SAIC-GM at the Beijing Auto Show in April this year. The resulting NDLB is a mid-to-large-sized flagship sedan and Buick's most premium all-electric model to date. Originally, the car was expected to launch in the first half of 2025.

This change was a difficult decision. Before switching architectures, we learned that NDLB had undergone nearly three years of development. Switching architectures just before mass production meant that most of the project needed to be redone, pushing back the launch date by over a year, from the end of this year to early 2026.

A responsible person at SAIC-GM told us that under NDLB's original plan, the starting price of the new car after its launch would be significantly higher than that of its competitors. The benchmark in the same-level market, the BYD Han EV, starts at 179,800 yuan, while the plug-in hybrid version, the Han DM, is even cheaper by 14,000 yuan. To capture market share, attackers often choose lower prices. For example, the starting prices of the Changan Qiyuan A07 and Geely Galaxy E8 are both around 150,000 yuan. The newly launched all-electric sedan, Lynk & Co Z10, has opted for a staggered competition strategy with a starting price of 186,800 yuan, not much higher than that of the Han EV. The pricing of leaders in the market often sets the price anchor for the segment. However, under NDLB's original plan, the starting price would likely exceed 200,000 yuan.

▍Buick Electra-L at the 2024 Beijing Auto Show

NDLB cannot afford to follow the old path of launching first and then losing money on price cuts. In September this year, the starting price of Buick's all-new Envision PLUS was "officially reduced" to around 160,000 yuan, nearly 60,000 yuan lower than the original pricing. The Envision PLUS, which was launched in June this year, had an original starting price of 229,900 yuan. The high cost control difficulty of the VIP architecture contributed to the high pricing.

The price reduction of the Envision PLUS is merely an acknowledgment of channel prices, as dealers had already been selling it for around 160,000 yuan. This approach of launching first and then significantly reducing prices based on market conditions reflects the failure of SAIC-GM's product strategy and increases financial burdens. According to SAIC Motor's financial report, SAIC-GM suffered a net loss of 2.27 billion yuan in the first half of this year, its first loss in recent years and the only loss among SAIC Motor's major joint venture automakers.

Brand premiums for joint venture automakers are no longer guaranteed, especially in the new energy vehicle market. NDLB needs to adopt a more pragmatic strategy and choose a competitive price range within 200,000 yuan. Compared to manufacturing costs after mass production, product development costs are always relatively small.

We learned that in addition to adding an EREV option, another goal of the revised NDLB plan is cost reduction by replacing the VIP architecture with the lower-cost CLEA architecture. Interior modifications are also planned, such as potentially replacing the original 6K curved screen in the new plan.

02.

Targeting a Blockbuster Product to Rebuild Internal and External Confidence

The abandonment of GM's plan for the flagship model NDLB is a microcosm of SAIC-GM's product strategy adjustment.

SAIC-GM's peak years were 2017 and 2018, with annual sales of around 2 million vehicles each year. However, sales have declined for six consecutive years, falling to 1 million vehicles in 2023, halving from its peak. In the first nine months of this year, SAIC-GM's cumulative sales were less than 280,000 vehicles, a year-on-year decline of nearly 62%.

Despite sales being less than a quarter of their peak, SAIC-GM is still largely following the transformation strategy set by GM years ago. At that time, GM hoped to unify the main sales product lines in both China and the US through the new energy transformation.

Rigid execution has led to a disconnect between SAIC-GM's product strategy and marketing reality. While new energy vehicles being promoted are high-end models, on the marketing front, prices are significantly adjusted, and attention is diverted away from new models, relying instead on low-priced older models to boost sales.

Since 2021, Buick has launched four electric vehicles in China, including the Mavel 7, Mavel 6, ELECTRA E5, and E4. According to Buick's established product strategy, electric models first enter the mid-to-low-end market before moving upmarket. This is also the approach adopted by domestic autonomous brands like BYD and Geely in their new energy product lines, where mid-range and low-end products lay the foundation for sales, supporting high-end product lines, which in turn reinforce the mid-range and low-end markets through brand power, creating a virtuous cycle.

Sales of Buick's four electric vehicles have not been impressive. The first launched Mavel 7 has been discontinued. In the first nine months of this year, the cumulative sales of the E4, the best-performing of the four, were only 861 units, while the E5 sold 8,385 units, equivalent to the monthly sales of popular new energy vehicles from emerging brands. It is the older model, the Mavel 6, that is selling well, thanks to price cuts that bring the price below 100,000 yuan, with cumulative sales of 42,000 units in nine months.

Not only Buick but also two Cadillac pure electric SUV models, the IQ Ruige and IQ Aoge, which share the same platform as the E5 and E4, sold only 977 and 2,001 units respectively in the first nine months of this year in China, marking a near-total failure for SAIC-GM's new generation of pure electric products.

In August this year, Lu Xiao, the former Executive Deputy General Manager of Pan Asia Technical Automotive Center, took over as General Manager of SAIC-GM, tasked with leading the joint venture automaker in urgent need of strategic adjustments. At this time, SAIC-GM's internal and external public opinion environment was not favorable, with the joint venture agreement expiring in 2027, raising concerns about the automaker's future.

Pan Asia, a research and development center jointly established by GM and SAIC Motor, has been in operation for 27 years, providing technical support for SAIC-GM's products. Unlike most domestic joint venture automakers, which usually do not have dedicated research and development centers or, if they do, lack the capability for independent product development, Pan Asia is an exception. With a research and development team of over 3,000 people for a long time, it has independently developed many successful models, including the GL8.

With a background in Pan Asia, Lu Xiao is familiar with products and technology. One of his tasks as the new head of SAIC-GM is to improve the automaker's product offerings. At the end of September, Lu Xiao stated that upon taking office, he aimed to fight "four battles," two of which focused on products.

Hope comes from self-research. SAIC-GM is attempting to convert existing gasoline-powered vehicles into plug-in hybrids (PHEVs) ahead of schedule, rather than continuing to launch brand-new electric models.

In April this year, SAIC-GM launched two PHEV products: the Buick GL8 PHEV and the Chevrolet Equinox Plus. In September, the GL8 PHEV, priced between 350,000 and 400,000 yuan, sold 4,691 units, becoming the top-selling model among SAIC-GM's three brands for the month. If not for capacity constraints of certain key components, GL8 PHEV sales could have been even better.

▍GL8 PHEV

SAIC-GM's new leadership hopes to rebuild internal and external confidence through "blockbuster" products. In late September and mid-October, SAIC-GM held intensive celebration events to mark the offline production of the 2 millionth GL8 and the 1.7 millionth Envision, respectively.

The P1+P3 PHEV solution used in the GL8 PHEV is self-developed by SAIC-GM, rather than imported from GM. SAIC-GM is applying the same approach used to develop the GL8 to its next-phase new energy vehicle strategy.

The key to the product strategy is speed. At the end of September, Lu Xiao, who had been in office for just over a month, stated that SAIC-GM had shortened all product development timelines to 18 months, down from the previous average of over 24 months.

We exclusively learned that in addition to NDLB, SAIC-GM will introduce a new A-segment model with the support of SAIC Motor's technology. This model may compete with BYD's Qin, forming a product portfolio similar to SAIC-GM's "LaCrosse + Regal + Excelle" lineup during its peak gasoline-powered vehicle sales era.

03.

No Longer Closely Following GM's Strategy

Over the past four years, joint venture automakers whose parent brands are further away from the Chinese market, such as Toyota and Stellantis, have often shown less urgency in their new energy transformation. In contrast, automakers closer to the Chinese market, like Volkswagen and GM, have faced more pressing transformation needs. GM, with operations concentrated in China and the US, faces competition from Tesla on one hand and numerous domestic new energy automakers inspired by Tesla on the other.

As early as April 2021, SAIC-GM announced plans to invest 50 billion yuan in China by 2025 to launch at least 10 new energy vehicles. By the end of 2022, this plan was expanded, targeting 15 new energy vehicles by 2025 with an increased investment of up to 70 billion yuan – a scale that could fund a leading new automaker.

In just 14 months, from October 2021 to December 2022, SAIC-GM completed the construction of two Ultium Factories in Shanghai's Jinqiao and Wuhan, and immediately initiated construction of a third factory in Yantai.

With such a determined investment, GM hopes to achieve two strategic goals through its new energy transformation: first, to transform into a technology company similar to Tesla; and second, to bridge the divide between its operations in China and the US.

After strategically contracting its global operations in 2017, exiting markets like Europe and India, GM has focused its business on China and the US. However, the main sales categories differ significantly between these two markets. In the US, GM relies heavily on pickup trucks and mid-to-large SUVs, with Chevrolet and GMC as its top-selling brands. In China, Buick outperforms Chevrolet, with a product lineup skewed towards economical sedans and SUVs.

GM hopes to unify its product offerings in both markets through transformation. The Ultium platform is GM's global intelligent electric platform and the foundation for both GM and SAIC-GM's new energy transformation, similar to Geely's SEA Architecture. GM has invested heavily in the development of the Ultium platform, which boasts strong compatibility, enabling the development of nearly all its new energy vehicle models across brands like Chevrolet, GMC, Buick, Cadillac, and Hummer, ranging from pure electric pickup trucks to compact sedans.

GM's goal is to phase out internal combustion engines by 2035 and fully electrify its fleet. As a core executor of GM's transformation strategy, SAIC-GM differs from other joint venture automakers that focus solely on the Chinese market. Over the past four years, SAIC-GM has quickly lost technical support for its economical gasoline-powered vehicles, with the once best-selling A-segment sedan, the Excelle, exiting the market due to declining sales. This contributed to SAIC-GM's dismal sales figures, in contrast to Volkswagen's North and South operations, which still maintain annual sales above 1 million vehicles, thanks in part to price cuts on A-segment sedans.

It is still too early to declare the Ultium platform a failure. SAIC-GM's problems stem from its product and R&D capabilities. For example, the Ultium platform's rigorous investments in battery safety and motor performance have led to cost control challenges. Additionally, software bugs frequently occur in the VIP electrical and electronic architecture. The aggressiveness of SAIC-GM's electrification strategy, which focuses solely on pure electric vehicles, has proven inadequate as hybrids have a more significant substitution effect for gasoline-powered vehicles in China.

Before the pure electric era truly arrives, like most joint venture automakers, SAIC-GM needs to enter the hybrid market faster to address its immediate survival concerns.

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