UK platform + US battery = Chinese EV?

A123 Systems announced that its lithium-ion batteries will be used in Shanghai Auto's (SAIC) Roewe branded electric vehicles.

The Roewe brand (荣威 - rong wei -- yes, it sounds like "wrong-way" -- go figure) was created by Shanghai Auto prior to its merger with Nanjing Auto, after which the two combined the intellectual property and auto platforms purchased from the UK's MG-Rover several years ago.

The first electric Roewe will be the 750 (pictured above) which is derived from the British Rover 75. The battery supplier (and IP-owner), A123 Systems, is a purely American company, headquartered in Massachusetts. Though SAIC does own the IP of the Roewe, it was not originally designed in China.

Since the introduction of China's 2004 Auto Industry Development Policy, the constant refrain from Beijing has been a wish for Chinese automakers to develop Chinese-branded "new energy vehicles" using Chinese intellectual property.

While it is a good thing that SAIC is on board with the new energy vehicle trend, I'm not sure this is exactly what Beijing had in mind when it urged Chinese automakers to develop their own hybrid and electric vehicles. The battery, after all, is the heart of the EV -- its most expensive component.

It also calls into question the viability of BYD's battery technology (or that of any other Chinese battery company) when a fellow Chinese automaker would rather pay royalties to an American battery company.

It seems a reasonable assumption that a Chinese-designed battery would be less expensive than an American-designed one. Perhaps the fact that SAIC's partner, GM, which is putting an A123 battery in the Chevy Volt was able to get SAIC a good deal on batteries?

IP issues aside, SAIC's Roewe 550 (below) which was designed in China, will eventually be electrified as well. (And it's a very nice-looking car, in my opinion.)