startups

China’s hottest EV startups aren’t actually allowed to make their own cars


In recent years, China’s government has encouraged more domestic companies to produce electric vehicles. It’s worked: The country now has close to 500 EV makers (paywall), prodded on by government incentives.

Yet as of last week, only eight new carmakers (link in Chinese) had secured the two key licenses needed to make and sell pure-electric vehicles. Some of the country’s hottest EV startups, often likened to Tesla and aiming at the premium market, aren’t among them, highlighting the challenges they face in the world’s largest auto market.

The first license needed allows a new EV maker to establish its own production line for pure-electric vehicles, while the second lets it sell such cars. Well-established carmakers need neither one (link in Chinese). Getting both of these licenses has proven so difficult for young EV ventures that most have instead partnered with (link in Chinese) companies unconstrained by such requirements—usually state-owned automakers with long histories.

New EV makers that do manage to get both licenses tend to be joint ventures or subsidiaries of, again, state-owned carmakers with long histories. Chery EV, the latest (link in Chinese) among the eight automakers to get both, is under the wing of state-owned firm Chery. BJEV, the first (link in Chinese), is a subsidiary of state-owned BAIC Group. Another, Yundu New Energy (link in Chinese), is a subsidiary of state-owned Fujian Motor.

NIO, an EV startup founded in 2014 and backed by internet giant Tencent, has teamed up with JAC Motor, a state-owned company that has 50 years of history. The two firms will open a plant in Shanghai in 2020 that will churn out NIO’s flagship ES8 SUV.

Xiaopeng Motors, which launched in 2014 in Guangzhou, teamed up with Haima, founded over a quarter century ago. While Haima struggled last year (link in Chinese) in sales and profitability, the newcomer is valued at $3.6 billion and has the backing of e-commerce titan Alibaba. Late last year, the two companies produced their first batch of cars at Haima’s plant in Zhengzhou, and aim to deliver at least 1,000 G3 SUVs by year’s end. (Xiaopeng is also building its own factory.)

WM Motor, a three-year-old startup based in Shanghai, took a different approach: Early last year it acquired the well-established carmaker Huanghai in the northern city of Dalian—and now it has its own plant and doesn’t need the two licenses.

NIO, which recently filed to go public in the US, mentioned in its IPO filing the pros and cons of working with an older Chinese carmaker like JAC Motor. While the approach offers some “flexibility, scalability, and speed to market,” quality control and production adjustments become more difficult—one reason NIO missed the original March delivery target (link in Chinese) for its ES8 model.

Xiaopeng Motors founder He Xiaopeng, who sold a browser he developed to Alibaba in 2014, has noted the difficulty of making adjustments to cars, especially compared to software products. Unlike upgrades on mobile phones, he said, it can take two years to make one small change on a car. “I found that it’s impossible to make quick [software and system] upgrades,” he said.

For all the hoopla surrounding the sector, no Chinese EV startup, He believes, will be able to deliver more than 10,000 cars by the end of this year.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.