NEVS exits Reorganisation

The district court in Vänersborg today approved NEVS’ earlier application to exit reorganisation. 230 days have passed since the reorganisation phase started back in August 2014 and the way should now be clear to get the partners on board and the sorely needed sizable investments locked and loaded. At the same time, NEVS is set to appoint Volvo executive Stefan Tilk to its Board of Directors.

Board of Directors changes
Stefan Tilk (age 50),  has a long track record in the vehicle industry, with previous executive positions at Volvo Trucks and Geveko and currently as SVP and Deputy Managing Director North and South America at Volvo Busses. This means that the new Board will consist of Mattias Bergman (NEVS President), Stefan Tilk and Kai Johan Jiang, current NEVS majority owner. Mr Tilk is the second recent addition to the board as earlier Mr Mikael Kubu was appointed in connection with the start of the reorganisation process. Stefan Tilk and Kai Johan Jiang have a shared history at Volvo, where the latter served as advisor to former Volvo Trucks CEO (and former NEVS chairman of the Board) Karl-Erling Trogen. **update 2 July : NEVS confirmed today to have appointed Tilk as Vice Chairman of the NEVS management board. At the same time the union representatives Ronnie Hermansson (Unionen) were appointed as the ordinary member, and Stefan Larsson (IF Metall) as deputy member of the board.**

Timeline
June 2012: NEVS acquires the main assets of SAAB Automobile
January 2013: Trademark license with SAAB AB, new (black background) logo launched
September 2013: First pre-series SAAB 9-3 assembled
December 2013 : Regular production of the MY14 SAAB 9-3 starts
April 2014: First batch of MY14 9-3’s reach the market
May 2014: Production stopped
August 2014:  First electric car prototype (SAAB 9-3EV) shown
August 2014: NEVS enters reorganisation, discussions about SAAB trademark license suspension
February 2015: The last batch of MY14 9-3’s is completed
April 2015: NEVS exits reorganisation

Scepticism (or: Ambitious plans)
When NEVS took over the assets of SAAB Automobile in 2012, there was much scepticism about the viability of the plans to start developing and producing electric vehicles. In fact, it was probably hard to find anyone who didn’t have doubts. “How can they succeed without a decent line up of cars they can sell, without a dealer channel, with severely damaged trust and in an already overcrowded market? They will neither have the time nor the money to see this through.” is perhaps a good summary of the thoughts at the time of many in people in and around Trollhättan, the car industry, suppliers, press and SAAB enthusiasts. On top of this, there was a lot of debate around why on earth they were focusing on electric vehicles and were prioritising the Chinese market (versus the European and the US markets where SAAB traditionally had sold best).

Production started, against all odds
Looking back now, I think many of the doubts were founded as it obviously hasn’t been easy at all to get the company back on its feet and R&D to develop something that can actually be produced and sold. With the stated focus on electric vehicles, the announcement to start producing the MY14 9-3 with a conventional petrol engine came as quite a surprise, but was generally received with joy: more people would be hired, the Stallbacka production line would be running again and new SAABs would be available for sale again.

When I recently asked my contacts at NEVS why they took the decision to deviate from the plan, the first part of the answer was the one we already knew: “we got a new minority owner on board in the form of the Chinese city of Qingdao, and they wanted us to start production of a combustion engine-based car as soon as possible. In fact they placed an order for several hundreds.” The other main consideration to start the MY14 9-3 was in fact to get the actual production facility going again. The factory had been standing still since 2011 and to have a more or less normal production rhythm going again was seen to be vital, also in anticipation of the production of the newly designed electric cars.

With only 411 cars produced, the MY14 9-3 was short-lived, mainly as Qingdao never fully fulfilled their financial obligations, which eventually led to a significant cash flow problem, the production stop and the application for reorganisation. While I still believe that the MY14 model is the best 9-3 ever produced in Trollhättan, for a number of obvious reasons the car had a very limited sales potential (at least on the conventional markets) and needed several significant improvements and additional body styles in order to reach reasonable volumes. This may still happen (my sources state that the decision hasn’t been taken yet but that there are clear arguments either way) now NEVS no longer is in reorganisation, but this is primarily dependent on the new financial partners.

No future without committed partners
As the financing solutions available by NEVS current majority owner only are sufficient to have the company operate at bare-bone level for just a very limited number of months, getting new investors signed up is absolutely vital now. Much has been written already about the rumoured new partners for NEVS and it seems that a contract with Chinese DongFeng will be ready first. As announced earlier, the aim for this partnership is to start a joint venture around development of Phoenix-platform based components and complete vehicles. Pre-studies have already been conducted and NEVS’ President Mattias Bergman confirmed to the local media a week ago that a “multi-billion contract” is very near. In addition, several other players have recently shown interest in partnering with NEVS on co-development and/or the use of the Trollhättan production facilities. During my recent factory visit I got confirmed that some production for Volvo Cars had already been carried out.

The big (Indian) elephant in the room is of course Mahindra, the company said to want to take a majority share in NEVS. While there have been some rumblings about Mahindra supposedly having dropped out of the process, these rumours were later denied (without confirming the name of the company). The negotiations with the “larger Asian vehicle OEM” have been going on for about a year and NEVS stated that they needed to exit reorganisation to be able to complete the negotiations and get the agreements in place. This deal now needs to close in order to get “plan A” off the ground with the aim to develop and produce cars under the SAAB brand.

The trademark question remains key and I am expecting more details to become available shortly..