By on May 10, 2011

While Michigan Senators, aided by the Detroit News, are chasing their own tails complaining about Chinese EV draft regulations that only exist in rumor form, a major European manufacturer practices Realpolitik and covers all possible bases: Volkswagen appears to launch an indigenous, all-electric brand for China, and (at least for the time being), for China only.

Auto Sohu, one of China’s internet giants, practiced some serious investigative reporting. They scanned a catalog of cars submitted to China’s Ministry Of Industry and Information Technology. If you ever need an authoritative list of Chinese car manufacturers, here it is. In Chinese. Under type code FV7002, Sohu found a brand they had not seen before: “Kai Li” – which could be roughly translated as “Carrier”, but probably won’t, such as not to attract the ire of an air conditioner manufacturer. (And let’s not even think of an escalation of the trade war, which could attract other carriers.) That “Kai Li” brand had been registered by the FAW-VW joint venture in China with the listed purpose of “electric cars.”

Due to recent comments here, I will have to make it a habit to be more of a Mr. Obvious. Here it goes: That new brand is not one of the many FAW brands, of which FAW has plenty. It will be a brand of the FAW-VW joint venture. That JV currently makes cars under two brands only: Volkswagen and Audi. “Kai Li” will be Volkswagen’s “China brand” . And it will be all-electric. With the caveat that this information is all based on Sohu, and a document retrieved from the Chinese Ministry of Industry.

So how is Volkswagen covering all bases?

  • Volkswagen already has some Golf Blue-e-motion prototypes running around silently in Beijing. As we said in that piece, “Volkswagen’s joint venture partner FAW, maker of the Golf, would be delighted to produce the electrified version.” VW had intimated that they would have EVs ready for the Chinese market in the 2013/2014 timeframe.
  • Volkswagen’s joint venture can also build an electrified Polo, Golf, or whatever, with the “Kai Li” badge. If GM can plop a “BaoJun” on a slightly outdated Excelle,  what’s keeping Volkswagen?
  • Or, as so often practiced by Volkswagen, they can sell the cars under multiple brands.

Why would they do that? Well, the Chinese government is strongly suggesting that Chinese joint ventures should develop their indigenous brands, even if most of the technology hails from abroad, and even if the only true indigenous item is the badge on the hood and the manual in the glovebox. Then, the Chinese government is even more strongly suggesting that EVs should hit the roads en masse. Put Germans and Chinese in one room, and you will have a breeding ground of anticipatory obedience. A pure electric, indigenous car? Zu Befehl! The all-electric “Kai Li” fulfills all desires of the Chinese government.

Instead of clucking about unlaid eggs, Volkswagen can now sit back and relax.  There is that matter of generous subsidies for EVs and the exemption from harsh license plate limitations for EVs. It looks like VW has all options covered.

  • If China requires the EVs to be made in China to qualify, bingo, Volkswagen will have two brands on offer (and possibly more, wait until SVW wants its own indigenous brand – it’s only a matter of time.)
  • If China requires the EVs to be “Chinese” – bingo, Volkswagen will have a “Kai Li” (and quite possibly a southern variant.)
  • Volkswagen will not shed a tear over imported EVs possibly being denied governmental largesse – an EV has a hard time competing as it is, with freight and a 25 percent import duty, importing EVs to China is bordering on the insane. A fact that was obviously lost on Levin, Stabenow and their propaganda organ.
  • If China does nothing to raise the ire of the WTO and will give subsidies and license plates to domestic and foreign EV makers alike – no skin off VW’s back, the market will decide.

Speaking of Volkswagen’s southern joint venture partner: A few days ago, the Guangzhou Daily reported that they heard  from SAIC that they are working with VW together on electric compacts Cars for the China market.

Speaking of the WTO: If the WTO takes action against any untoward subsidies if and when they go into effect, it can be a long time until the matter is resolved. The U.S.-China tire war was started in 2009. China took the matter to the WTO. China lost the case in December 2010 and appealed. This can go on forever.

Back to the indigenous brand: China blogs from China Car Times to Car News China are joining their Chinese colleagues in speculation about what car that mysterious FV7002 might be.  An electric Bora? A Golf? Car News China has the best answer: “Bet on a concept at the 2012 Beijing Auto Show.” The list doesn’t come with pictures, Sohu made that picture up.

PS: From what we understand of the proposed and hitherto unpublished regulations, they favor pure plugins over hybrids in the subsidy department. Voices in Beijing maintain that only pure plug-ins will be exempt from the license lottery when the new rules are “promulgated”, as they fancy to say in China.

Write that down, Senators: A range extended Volt or even a plug-in hybrid Prius would have to try its luck in the lottery. A Nissan Leaf would be in. If all fails, under a Dongfeng badge.

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