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Already, the General Motors (NYSE: GM) scheme to share its trade EV secrets to China is paying off and growing the industry, as now General Electric (NYSE: GE) will join the task with GM to formulate EV standards for the country.
Yet, despite the continuation of the stock market sell-off that affected literally everything tradable including gold, General Motors (NYSE: GM) and General Electric (NYSE: GE) stocks at least had something positive for stock holders: a signed memorandum of agreement to cooperate on deploying electric vehicle charging stations in China.
This news didn’t pop up easily as it normally does at GM and GE websites. This one had to be found first in a report from Beijing via Reuters and MarketWatch.com , a website used by astute investors to track market action around the world.
According to the MarketWatch report, GM and GE said in a statement that they would introduce GE charging systems in Shanghai's Jiading district and at GM's Shanghai headquarters.
The companies will work together with Chinese ministries, regulators and grid operators to formulate electric vehicle standards in the country, the statement said.
The statement also revealed GE would purchase GM's Chevrolet Volt electric vehicle to use at its China headquarters in Shanghai, and that GM will begin selling the Volt in China before the end of the year.
GE’s purchase of the Chevy Volt is not new news, as Jeff Immelt, CEO of GE made the decision some time ago for the U.S. This time, though, that purchase extends to China.
For the record, the Jiading district government announced earlier this year that it had plans to establish 770 recharging stations by the end of 2011. Considering it’s September, one has to wonder if that schedule is on time.
Still, no big deal if it isn’t at least for GM and GE, as just being part of China’s EV and charging structure plans rates wins for both companies and many kudos from investors.
China is, after all, in a major bind to control air pollution simply due to the rapidly expanding number of cars on its roads. So, the government is demanding and the automakers in China are responding by producing a variety of . For the record, it was 2009 when China overtook the United States to be the world's largest automobile market in 2009.
Furthermore, I reported here at TN on the behind the scenes events of General Motors (NYSE: GM) revealing its electrical technology secrets to China just before GM China hosted the "Driving Technology to Tomorrow" event.
Things are moving fast, especially for China. The GM-GE cooperation comes just two days after GM and its Chinese partner SAIC Motor Corp signed their agreement to develop and build electric vehicles in China.
That strategy allows GM and SAIC to offer EVs that qualify for expected Chinese "green" subsidies, because the Chevy Volt is not eligible because it is not built in China. So, the GM-GE agreement to help define the charging infrastructure surely makes sense.
And speaking of Investors
No matter what auto-sector news came out today, it was no match for the market’s reaction to yesterday’s FOMC announcement.
The Bernanke announcement that the FOMC would engage Operation Twist for the second time since 1961 wasn’t what really spooked the market, though. Then again, you had the read the entire announcement to find the culprit. Yes, it was those key words again that sank the market‘s mother ship.
It appears the Ben Bernanke's Federal Reserve warning included the words, "significant downside risks to the economic outlook" and later spoke of "strains in global financial markets." Well, the markets looked at that evidence of what the FOMC was really saying and definitely chose not to like; two days ina row, too; and all the put buying might indicate further downside.
If, however, there is any kind of respite tomorrow, I would not be surprised of a spike upward soon. So I will watch the futures market along with Asia tonight and Europe in the morning, and I will be watching like a hawk.
General Electric (NYSE: GE) stock has major monthly chart support at 13.75 dating back to July, 2010. It closed on Thursday at 15.04 just above the major low of the past 4 months at 14.72.
GM simply plunged to new post-IPO low, one step closer to major support at its book price. Recall that I wrote on 9/6 that the only sure price levels GM stock has at this point are round numbers like 20, 15, 10, 5 and zero. The other is book price, which sat at 19.67 the last time I checked MarketWatch.com ; and that level might be tested this month.
And if this sell-off gets worse, be prepared to test 19.67 with GM stock.
Full Disclosure: At time of publication, Sherosky, creator of the auto sector charts for TN, is neither long or short with the mentioned stocks or futures, though positions can change at any time. None of the information in this article constitutes a recommendation, but an assessment or opinion.
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About the Reporter: After 39 years in the auto industry as a design engineer, Frank Sherosky now trades stocks, futures and writes articles, books and ebooks like, "Perfecting Corporate Character," "Awaken Your Speculator Mind", and "Millennial World Order" via authorfrank.com. He may be contacted here by email: [email protected] or via his Twitter i.d. @Authorfranks
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