In less than three years, the contract between General Motors (GM) and SAIC Motor will expire.

In the 27th year since the establishment of this Sino-American joint venture, its performance has halved compared to its peak. Logically, the parent companies should collaborate to find a way out, but GM continues to dig holes for SAIC.

"We will cease using the Ultium brand for electric vehicle batteries and technologies," announced Kurt Kelty, GM's vice president of battery systems, during an investor day event. Apart from joint ventures like SAIC-GM's established factories and other facilities, Ultium, an electric brand vigorously developed since 2021, will become a thing of the past.

Original text: It now makes business sense to transition from one-size-fits-all to new program specific batteries. As we do so, we will sunset the brand name Ultium for our EV batteries and technologies. Ultium will continue to be used in reference to our joint venture manufacturing sites and other facilities. But as we enter the next phase of our journey, the time is right to begin this transition.

Explaining the decision to abandon the Ultium brand, Kurt Kelty cited cost and market demand considerations. Taking battery types as an example, Ultium previously focused on the research and application of ternary lithium-ion batteries, but GM will now strengthen its layout in less expensive lithium iron phosphate batteries.

However, according to insiders, GM's announcement of abandoning the Ultium brand overseas has limited impact on SAIC-GM.

"Ultium has been used more diversely by SAIC-GM, especially from a technical perspective. In terms of battery types, it includes both BYD's lithium iron phosphate and CATL's ternary lithium-ion batteries, while overseas only LG's ternary lithium-ion batteries are used. Therefore, there is no need for SAIC-GM to switch to lithium iron phosphate batteries," said the insiders.

GM's sudden announcement has put SAIC-GM in a passive position. When searching for "Ultium" on search engines and social platforms, keywords like "abandonment" and "deemed too expensive" appear at the top of the results.

This is a setback for SAIC-GM, which has painstakingly built the Ultium brand in China for many years. For reference, there are over 5,600 posts related to Ultium on the Little Red Book platform, only slightly fewer than the hundreds of posts related to CATL, which invested heavily in building its C-end influence this year. This indicates that Ultium has gained a certain level of recognition among the general public.

Abandoning Ultium is just one of the pits that GM has dug for SAIC. If SAIC-GM doesn't want to keep filling holes, it may need to take risks.

01

The dragging GM

In deciding to abandon the Ultium brand, GM could have handled it more intelligently to allow its domestic partner to respond more calmly. For example, lithium iron phosphate batteries could have been incorporated into the Ultium brand, as Ultium was originally conceived as a collection of advanced electric vehicle technologies.

Whether GM's concern is that the cost-effectiveness of lithium iron phosphate batteries does not align with the premium positioning of the Ultium brand, or it follows a purely technical rationale that new battery technologies require new branding, ultimately, it reflects a lag in GM's market analysis.

Taking the image of lithium iron phosphate batteries as an example, in China's technologically advanced market, they are no longer seen as a second-best option to ternary lithium-ion batteries. They are safer, more affordable, and can support high charge-discharge rates. According to data from the China Automotive Battery Industry Innovation Alliance, the installed capacity of lithium iron phosphate batteries has surpassed that of ternary lithium-ion batteries for three consecutive years in China.

GM's realization of the value of lithium iron phosphate batteries overseas comes too late, as the market has already moved on. Fortunately, SAIC-GM did not blindly follow GM's strategy and has already tested Ultium-standard lithium iron phosphate batteries in models like the Buick E5 and E4.

However, batteries are just one aspect where GM is lagging behind. GM's new vehicle architectures are also failing to keep up with the domestic market's pace, requiring redesigns.

According to AutoPix, SAIC-GM is making significant adjustments to a key new model code-named NDLB. Originally planned as a pure electric vehicle under GM's strategy, SAIC-GM has decided to replace GM's VIP architecture with its self-developed CLEA architecture to better meet domestic market demand, allowing the new model to offer an extended-range hybrid version.

"NDLB can be seen as the LaCrosse of Buick's new energy era. By switching to the self-developed architecture, not only can an extended-range version be added, but the overall price range should be more competitive," an insider close to SAIC-GM told Yuan Media on October 25.

NDLB, a significant electric vehicle model, has been under development for three years. Now that the architecture has undergone significant changes, the timeline for mass production has been delayed again. While some may argue that SAIC-GM was slow to react, GM's lack of market foresight also deserves blame.

02

A last-ditch effort for survival

With its insensitive market sense and inability to keep up with demand, SAIC-GM has been sidelined for a long time. According to SAIC Motor's production and sales report for September 2024, SAIC-GM sold 278,485 vehicles in the first three quarters of the year, a year-on-year decrease of 61.55%.

How SAIC-GM can escape its current predicament is an urgent task for the new general manager, Lu Xiao, and deputy general manager, Xue Haitao. Currently, the "Lu-Xue duo" is breaking out of the cage drawn by GM over the years and embarking on reforms at SAIC-GM. It is reported that SAIC-GM is currently waging a "four-pronged battle" across products, marketing, sales, and channels.

On the product front, new plug-in hybrid models like the Chevrolet Equinox Plus and Buick GL8 PHEV, developed specifically for the Chinese market, are just the appetizers. By 2025, a series of pure electric, plug-in hybrid, and extended-range models, benefiting from SAIC's technological feedback, will be launched successively.

On the marketing front, SAIC-GM's "fixed price" pricing mechanism has successfully secured considerable orders for new models like the Cadillac XT5 upon their launch, avoiding the old pattern of "cold launch – terminal discounts – sales stimulation through discounts."

However, this is clearly not enough.

Against the backdrop of the growing influence of Chinese brands, the influence of SAIC-GM's three brands – Chevrolet, Buick, and Cadillac – has fluctuated, particularly that of Chevrolet.

Data shows that Chevrolet's share of national auto sales has fallen below 1%. In terms of terminal prices, recent visits to multiple Chevrolet dealerships in Guangzhou revealed that the transaction prices of new Chevrolet models have dropped to the RMB 100,000-150,000 range, while Buick models are priced at RMB 150,000-200,000 and Cadillac models at RMB 200,000-300,000.

The decline in brand value is a more challenging problem for SAIC-GM to recover from than sales. Meanwhile, GM's high-end imported car and lifestyle platform, Daolange, is eager to take control of high-margin premium models.

According to Tianyancha information, Daolange Automobile Sales and Service (Shanghai) Co., Ltd. is 100% owned by GM (China) Investment Co., Ltd., which in turn is 100% controlled by GM China Co., Ltd.

In this context, rumors about GM planning to sell Buick to SAIC, which have been circulating for some time (and have since been officially denied), may even be beneficial for SAIC-GM to shake off its "piggyback partner" and focus on development.

SAIC and GM's cooperation agreement will expire in three years, and anything is possible.

An insider told Yuan Media that in August of this year, Jia Jianxu, the newly appointed president of SAIC Motor, flew to the United States. This tough-talking "tyrant president" may have presented GM with an option unlike any of the past 27 years.

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