Chinese auto group invests millions in next-gen cars

China’s Guangzhou Automobile Group Co. Ltd, known as GAC Group, announced at their recent board of directors meeting that they plan to spend $88 million on a new subsidiary focused on electric vehicles.

The new subsidiary will be known as Guangzhou Automobile New Energy Automobile Co., Ltd. The first registered capital will be half of the total investment amount with the remaining $44.1m being available based on project requirements.

GAC Group — founded in 1997 and was acquired by Guangzhou Automobile Industry Group in 2005 — said they plan on achieving a new energy vehicle production capacity of 200,000 before the end of 2020. It is clear that this goal is already being taken seriously by the company as one-third of all new models already or planning to be launched in 2017 will utilize new energy.

See also: Baidu wants you to tour China by autonomous car

China is making large strides both from a consumer opinion and a technology stance not only for new energy vehicles but for connected cars as well. According to a survey conducted by PwC in October of last year, 40% of surveyed Chinese consumers stated they were willing to change automobile brands for better connectivity. But, the most astounding statistic from the PwC survey was 85% of respondents stated not only are they interested, but “eager” to own an autonomous car.

In March of this year, Toyota, one of GAC Group’s most important partners, announced they would be partnering with NTT, one of the largest carriers in Japan, for research and development on connected car technology. GAC also partners with other European and Asian automakers, including Fiat, Mitsubishi, Honda, and Isuzu.

Western automakers should pay heed

In a recent TechCrunch article, it was stated that part of the technology being collaborated on would include 5G networks. This is significant as China’s Huawei is leading the way for 5G standards. As a result of Huawei being located and starting their 5G network in China, it is likely that Toyota will utilize GAC Group to test whatever R&D technologies utilize the 5G network.

Then with the creation of this new subsidiary with such significant initial funding, it is possible that we will see GAC Group create the first highly connected and fully electric car in the Chinese market.

American auto manufacturers should be paying close attention to new strides made in China with connected car technology as well because it is possible that if the two were to be elegantly connected, it is possible the United States would witness the first Chinese-branded automobiles that have a massive advantage against the current American technology.

With a potential like this available, it is likely that GAC Group, Toyota, and NTT will be pushing hard to make it a reality.

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