On March 25, 1997, in Beijing’s Great Hall of the People, with Vice President Al Gore and Chinese Premier Li Peng looking on, GM Chairman and CEO Jack Smith and SAIC Auto President Chen Xianglin signed a $1.5 billion agreement to form a joint venture to manufacture vehicles for Chinese consumers. The historic agreement created the Pan Asia Technical Automotive Center (PATAC), a Shanghai-based design and R&D facility intended to adapt Western vehicles for the Chinese market.
SAIC, directly controlled by the Shanghai municipal government, needed to learn how to build world-class automobiles, and GM was eager to teach. Over the following decades, GM transferred critical U.S.-developed intellectual property to its state-controlled Chinese partner, including Bob Lutz’s pioneering Chevrolet Volt plug-in hybrid technology. Wall Street rewarded the strategy because it generated profits. SAIC embraced it because it accelerated China’s climb up the automotive value chain.
SAIC and GM just renewed their partnership for another 20 years. Notably, GM CEO Mary Barra wasn’t at the signing.
Three decades ago, GM supplied the engineering prowess while SAIC did the learning and helped with local manufacturing. Today, GM has been reduced to a rent-a-nameplate operation, allowing SAIC to market Chinese-engineered vehicles under Cadillac, Buick, and Chevrolet badges around the world, including North America.
The renewed agreement goes far beyond building vehicles for Chinese consumers. It calls for developing 30 new energy vehicles by 2030 in Shanghai, engineered by Chinese teams. Some will even be assembled in North America to circumvent trade barriers, including GM’s plan to shift production of the Buick Envision from Shanghai to its Fairfax, Kansas, plant starting in 2028. GM has committed to manufacturing SAIC-engineered vehicles at its plants in Mexico, using domestic production to shelter Chinese vehicle architectures from prohibitive import tariffs.
As Chinese trade journal Gasgoo observed, the former “teachers” are now learning from their “students.”
Wall Street, obsessed with quarterly earnings, cheers GM whoring out its brands because it’s easy money. The company can earn profits without investing another nickel in additional engineering. SAIC, meanwhile, pockets something far more valuable than quarterly earnings: the engineering expertise that will determine who dominates the industry long after today’s shareholders are gone. Ceding engineering sovereignty to third parties, particularly one controlled by a government determined to dominate advanced manufacturing, is corporate suicide.
In the automotive industry, the highest margins don’t reside in chrome trim or famous badges. They reside in platforms, software, battery integration and the engineering expertise embedded in them. By surrendering platform development to Shanghai, GM didn’t simply outsource engineering. It outsourced the industry’s most valuable intellectual property, forfeiting much of its ability to independently develop competitive vehicles for export and leaving its iconic brands at the mercy of a state-owned partner that could ultimately outgrow the need for GM’s badges.
In China, that’s already happened with Chevrolet and its iconic bowtie emblem.
When Barra assumed command of GM in 2014, the automaker had a 15 percent share of the Chinese auto market, with Chevrolet alone generating sales of 767,000 vehicles. In the first half of 2026, only 36 Chevrolet vehicles were sold in China. Not surprisingly, SAIC-GM will no longer sell Chevrolet-badged vehicles in China but will leverage the brand in Mexico and South American markets where the bowtie still has some legacy cachet.
In China, SAIC-GM will market electric vehicles and plug-in hybrids under the Cadillac and Buick nameplates, which historically were highly regarded. Former GM vice chairman Bob Lutz disclosed on a podcast that Buick was originally slated to be killed after GM’s bankruptcy, but it was saved because eliminating it in the U.S. would have diminished its prestige in China if Americans no longer valued the nameplate.
The humiliation doesn’t end with GM being relegated to a nameplate supplier. SAIC-GM discarded GM’s Super Cruise hands-free driving technology in favor of Momenta, a Suzhou-based AI startup in which GM itself invested $300 million. While Barra touts Super Cruise to investors as the company’s competitive ace in the hole and recruited autonomy executive Dr. Sterling Anderson with a package worth up to $40 million to accelerate development, the system failed to resonate with Chinese buyers.
Super Cruise is essentially a high-tech train on invisible tracks. It relies on hyper-detailed, pre-mapped roads to steer the car, making it practically useless on the unpredictable, constantly changing inner-city streets where Chinese commuters spend much of their time.
Instead, SAIC-GM opted for self-driving technology engineered by China-based Momenta. Rather than relying on expensive premade digital maps, Momenta’s AI uses camera-based vision models, including its R6 Flywheel platform, to “see” and navigate chaotic city streets in real time, much like a human driver. It costs a fraction of the hardware price and continuously improves through over-the-air software updates delivered in weeks rather than Detroit’s and Silicon Valley’s multiyear development cycles.
The transformation is now reflected in who runs the joint venture. SAIC recently placed Xu Ping, a former executive deputy general manager of PATAC with deep roots in powertrain engineering, at the helm of SAIC-GM as general manager. His predecessor, Lu Xiao, another PATAC veteran and the first Chinese engineer to lead a GM global platform, was rotated to run SAIC’s domestic passenger vehicles to replicate SAIC-GM’s EV turnaround.
Day-to-day operational and technical leadership of the joint venture is now run entirely by local Chinese executives.
Barra and Ford CEO Jim Farley routinely point to Chinese state subsidies to explain why Detroit is falling behind on technology. Subsidies matter, but so do Washington’s policies and Detroit’s own capital allocation practices. While Washington touted consumer EV tax credits to spur domestic manufacturing, GM and Ford leaned on Mexican assembly plants and foreign supply chains to build lower-cost entries, still collecting taxpayer-backed subsidies while offshoring core hardware and engineering.
Those supply chains carry direct operational risks. GM relies heavily on foreign components, including Chinese-owned Tier 1 suppliers operating in Mexico. One such supplier manufactured the defective third-row power-folding seat module that forced GM to recall every Cadillac Vistiq assembled at its Spring Hill, Tennessee, plant, exposing how dependent Detroit’s flagship domestic EVs remain on vulnerable global vendor chains.
It’s mind-boggling that the Pentagon continues awarding GM’s defense subsidiary lucrative military contracts while GM relies on Chinese state partners, Chinese AI, and foreign supply chains for its long-term survival. GM helped build and refine the manufacturing ecosystem that powered China’s automotive rise, all while portraying itself as an indispensable pillar of American defense.
Defenders will argue GM still designs pricey trucks and SUVs for the U.S. It does. But it has largely ceded to SAIC and South Korea its ability to design and engineer an affordable mass-market vehicle. While Barra insists the best automotive technologists are in Silicon Valley, there’s compelling evidence they are based in China, and they command dramatically lower compensation than Sterling Anderson’s $40 million incentive package.
None of this has diminished Wall Street’s enthusiasm. GM continues to spend billions buying back its own stock while Barra and other insiders have sold nearly $150 million worth of shares this year. CFO Paul Jacobson recently touted GM stock as “a bargain” on CNBC.
The investor website TipRanks recently warned that GM stock reflects “a very negative insider confidence signal.” Investors can decide for themselves whether management’s capital allocation reflects confidence in GM’s long-term engineering future or simply confidence that financial engineering can continue to mask its erosion.