California electric car parts maker expands in China

SAN FRANCISCO Fri Dec 3, 2010 4:35pm EST

SAN FRANCISCO (Reuters) - California's privately owned AC Propulsion said on Friday it would double production of its electric vehicle drive systems in China by building a new manufacturing plant in Beijing.

The announcement served as another reminder that, despite attention on the introduction of mass-market electric cars in the United States, China is emerging as a battery-powered powerhouse.

While AC Propulsion said the government offered incentives to build a second factory in China -- the company already operates a plant in Shanghai -- the potential size of the Chinese electric vehicle, or EV, market also drove its decision to build in Beijing.

"Going forward, we plan to allocate at least 65 percent of our capacity to China sales," Tom Gage, AC Propulsion's chief executive, said in an e-mail on Friday. "China has more car companies that are receptive to EV technology and more government focus on getting EVs on the road."

Gage noted the Chinese government has committed $15 billion to developing the nation's electric car manufacturing capacity.

Global automakers have responded by bringing their electric models to China. General Motors Co, for instance, will sell its Chevrolet Volt electric hybrid in China.

Nissan Motor Co Ltd is considering marketing its electric Leaf in China, Toyota Motor Corp announced plans this month to conduct electric car battery research in China, while Mitsubishi Motors Corp has said it will sell its iMiEV electric car there.

Gage said China is not requiring AC Propulsion, which supplied the electric drive train for BMW's battery-powered Mini E, to transfer any of its technology as a condition of receiving financial incentives to build the factory in Beijing.

"They do require local production and collaboration with Chinese" manufacturers, Gage said. "It does not involve transfer of core technology related to the drive system."

The company will manufacture the production equipment to make electric drives at its San Dimas, Calif., headquarters and ship the machines to China.

(Editing by Peter Henderson; editing by Andre Grenon)