“The only thing that is different is everything”- that’s the way I would summarize what happened when newly formed National Electric Vehicle Sweden (NEVS) acquired the main assets of SAAB Automobile AB in June 2012. A tiny company taking over the legacy of an iconic brand with the goal to build electric vehicles. Huge expectations were raised, especially from the side of the SAAB fans. Three years have since passed and some 400 MY14 9-3’s and seven 9-3EV prototypes left the production line. The earlier financial challenges have been addressed, a whole flurry of new partnerships in China and now Turkey have been announced but there still aren’t any new SAABs rolling off the Stallbacka assembly line. Sounds like a doom scenario? Not necessarily… Later today the authors of four popular books about SAAB are hosting a meeting with the title “What actually happened with SAAB?”. Svenska Dagbladet journalist Jonas Fröberg, former deputy minister of economic affairs Jöran Hägglund and TV4 reporter Jens B. Nordström have been providing behind- -the-scenes information and analyses in their books that primarily deal with the period GM-Spyker, although Nordström’s latest book “SAAB’s sista strid” (“SAAB’s final battle”) also briefly touches on the NEVS era. I’ve read all four of them and from my perspective they are all very insightful and help to put the different pieces of the puzzle together.
Why am I bringing this up? Besides the fact that this meeting is a rather unique gathering of minds just by itself, my strong impression is that the general opinion on what is happening in Trollhättan is still mostly based on the enormous firehose with media coverage from that 2009-2012 period. Great hopes were raised with SAAB Automobile’s takeover from “the evil GM” by little Spyker Cars and its flamboyant CEO. The brand new and long awaited models 9-5NG and 9-4X came to market and there was a great and positive buzz. Then the big anti-climax with the bankruptcy. Everybody declared SAAB dead. Then came NEVS.
National Electric Vehicle Sweden. –“Say that again? Electric vehicles only? And they will be taking over the SAAB Automobile assets? I don’t get it.” Massive confusion in the market, especially amongst the die-hard SAAB fans was caused by this newly formed company owned by Kai Johan Jiang, Chinese-Swedish business man. Another shock. A Chinese owner. What now? I still remember Mattias Bergman’s presentation at the 2013 Saabfestival well. At that point he was in charge of PR for NEVS and only a few months had passed since they had acquired SAAB Automobile’s main assets. Back in 2013 the number of electric vehicles sold in Sweden was really low. My guestimate is a few hundred at the most, and that for a country that claimed to be at the forefront in this field. In many other markets around the world hadn’t even seen an electric car, let alone understood the concept or in indeed driven or bought one.
Bergman started his presentation talking about the proud legacy of SAAB innovations to then quickly shift the main focus over to the situation in China. The enormous pollution this country is suffering from and its need for sustainable transportation solutions, where electric powertrains are seen as a very viable alternative and to close by confirming the NEVS mission: to build premium electric vehicles under the SAAB brand.
“Mr. SAAB”, the late Erik Carlsson, joined Bergman on stage at the end of the presentation and publicly declared that he strongly believed in the vision, that he was a NEVS supporter and that he encouraged the audience to do so as well. That statement drew a resounding applause but the questions and doubts remained in many people’s minds. The fans were expecting to hear about new Turbo-based models. They wanted to know what they would look like and when they would become available in their respective countries. Not just China. And why electric vehicles only? Nobody else did this and the infrastructure wasn’t even there….
Things then really accelerated. NEVS started hiring hundreds of people and actually restarted the production. Of the SAAB 9-3 based on the Epsilon platform. With a petrol engine. For the Swedish market. But hold on. Didn’t they say that they were going to produce electric vehicles only and that the new Phoenix platform would be the base? During his earlier speech, Bergman had confirmed that NEVS had got a new shareholder, the Chinese city of Qingdao. The exact terms of the agreement were never made public but it became clear that in return for their investment they wanted NEVS to build conventional 9-3’s first. As we now know, Qingdao didn’t deliver on their promise to provide the money they had committed which in turn caused NEVS to get into financial difficulties, with a yet again halted production, lay-offs and an application for reorganisation as a result. I won’t be going into the details of the reorganisation process again as much has been published about it already, but the “Qingdao adventure” had as a positive effect that the factory had been running again and that a significant part of the critical supply chain was re-established. The other positive effect was that over 400 brand new MY14 SAAB 9-3’s were made. I am the proud owner of one and am still enjoying it every day.
The one thing that I do want to highlight from the reorganisation phase however, is the plan that was shared with the court and the creditors. The document lays out the NEVS plans pretty clearly and how they want to achieve them. If you haven’t read it yet I would encourage you to read it. The bottom line is that their main objective remains to develop, produce and market premium electric cars under the SAAB brand for a worldwide market. This is called “plan A”. The second part of the plan is to offer contract manufacturing. Essentially the monetization of all sorts of services for 3rd parties, from design and testing to production. This is called “plan B” and is also known as “NEVS Industrial Services”. Both of these elements were subsequently confirmed again in detail at multiple occasions, with probably Bergman’s presentation at this year’s Saabfestival (now as the NEVS president) as arguably the best delivery. Again, if you haven’t read the transcript of this speech yet, I would very much encourage you to do so for further context.
Selling out to China?
Then in June, shortly after the Saabfestival, NEVS announced that they had secured a new shareholder and would be building a completely new factory plus a R&D centre in Tianjin, China. Another shareholder, SRIT, was announced at the same time and just four days later the first spade for the new factory hit the ground in China and even more partners were announced: Teamsun and Bank of China. Interestingly, these news facts probably caused the most confusion and possibly suspicion in the market. Statements like “everything is simply a cover up, they don’t care about SAAB and are just selling out to China and then closing down Trollhättan” and worse were circulating, but essentially confirming that the link between the announcements and the bigger picture wasn’t clear. Most importantly, NEVS needs partners. Just Kai Johan Jiang’s New Modern Energy Holdings (NME) as the main shareholder isn’t enough. In order to execute on the business plan, partners that provide the financial means, but also to get access to markets and technology are needed. Tianjin, a city with 16 million inhabitants, delivers on multiple of these aspects. This city needs new mobility solutions to cope with their growing congestion and pollution problems and is willing to invest some serious money to get solutions (to put this into perspective, the reports from the worldwide climate conference in Paris confirm that 80% of all air pollution is caused by urban areas). As Tianjin is under direct control of the central government, access to the Chinese market with its nearly 1,5 billion people (that’s more than Europe, Australia and North America combined) is expected to be significantly easier. As a part of the agreement, NEVS will be providing expertise to build and run the new local factory and the development of the EV for the Chinese market. And not just any EV. Through the new partnerships two IT companies, the earlier mentioned SRIT (State Research Information Technology Co, partially owned by China Unicom, one of the world’s largest telco’s) and Teamsun, technologies like the self-driving car are planned to developed. So rather than “selling out” to China, NEVS is acquiring market access to the world’s 2nd largest economy, R&D and investment Dollars. The new factory and R&D centre in China are targeted to produce for the domestic market while Trollhättan remains the headquarter and main production and R&D facility, targeted at the rest of the world.
Then in August, the partnership with Dongfeng Motors was announced. Although not widely known, they are one of the largest vehicle manufacturers in the world and own 14% of the Peugeot Citroën Group. For NEVS this is a very important step, mainly as it provides them access to Dongfeng’s purchasing power. Dongfeng’s output was nearly 4 million units last year while the volumes NEVS is considering for their own line up under “plan A” are in the lower 5-digit range. It doesn’t take a rocket scientist to understand that this can provide huge cost advantages. Add to this a collaboration on the R&D side and there are more costs and time savings possible.
The partner announcement that came mid October was the one with TÜBITAK and Turkey’s national car project. Although this doesn’t involve an investment and a change of ownership structure, the latest partnership news resembles the earlier one with the city of Tianjin. Again a new factory and development and production for the domestic market, but this time we’re talking about NEVS licensing out the MY14 9-3 platform and selling services to help Turkey realize their national car project.
** start update 9 November**
On October 21st another piece was added to the puzzle. An agreement with Japanese semiconductor company Renesas Electronics Corporation was signed. Renesas is a publicly listed company with nearly 40,000 employees and is a joint venture between Hitachi, Mitsubishi Electric and NEC. According to the press announcement, NEVS and Renesas will be collaborating to to build advanced automotive electronics technologies. The companies will engage in the development of high-end automotive control systems for new energy vehicles. This includes R&D of motor drive systems, automotive information systems, ADAS (Advanced Driving Assistance System), and safety control systems, and will also extend to the development of such new automotive applications as cloud-connected systems.
So after SRIT and Teamsun, another important player added to the team that will be working on intelligent car solutions.
**end update 9 November**
I tried to visualize the different currently known players and their respective functions in the diagram below.
New SAAB EV’s from Trollhättan…
And again the questions: “Great with all these partnerships, but when is it going to lead to any new SAAB’s I can and want to buy in my own country? NEVS hasn’t done anything but more of the old 9-3 yet, when are they finally showing something new? Under Spyker the factory was at least running and there were new models released.” Interesting. When Spyker bought SAAB Automobile from GM, they also bought the 9-5NG Sedan, SportCombi, 9-4X and the basis for the Phoenix platform with it. All of these had already been in development for years and while the 9-5 and 9-4X were completed under the new management, they had received a massive head start, but only lasted for about two years. NEVS has been in operation for over three years now. When they bought the main assets from the bankruptcy estate, they weren’t able to acquire the rights for the 9-5NG and the 9-4X as GM didn’t allow this. So with only the old 9-3 and the Phoenix platform in the portfolio but with a pretty sophisticated production and R&D facility and some really skilled people they started their journey.
Quite some work went into the first seven prototypes of the 9-3EV. Despite the financial difficulties the R&D department had continuously been in full operation more or less from day 1. The reports from the automotive press were positive and I drove a 9-3EV myself on the factory test track and was quite impressed. OK, the platform used was still the old 9-3, but the technology under the hood and –possibly more importantly- in the floor… the batteries is quite competitive and a strong base for the future line up of products. R&D has continued on both a new powertrain, the battery technology but also on the underlying Phoenix platform, the base from which NEVS is aiming to build a number of different models on. In fact, the ambition is “to have a broader model portfolio than SAAB Automobile has ever had”.
So when are they coming and what about the SAAB brand name? I don’t know. The NEVS interim report that is expected this week might be more specific on both topics. The SAAB brand name remains a hot item. Or better maybe, a hot potato. As I wrote in a previous post, there is no clarity either way at this point. Under Swedish bankruptcy law, no contract partner may benefit from a company entering reorganisation so the consistent story in the media about SAAB AB suspending the rights when NEVS entered this phase last year can therefore not be true. NEVS in the meantime kept on using the name on many things like their website, in presentations, in press releases and in job ads, but has so far been cautious in making strong and unambiguous public statements about the future. Having said that everyone at NEVS I have spoken with over the years deeply cares for the SAAB trademark and the brand values it represents and I have consistently heard the ambition to in fact refine, update and further strengthen it. Or as NEVS’ Frank Smit recently said in an interview: “…cars that will give you goose bumps. Cars many people aspire to have and maybe aren’t accessible to all, but touch your heart. When you look at them, when you have one standing in your driveway, and when you drive it of course. Like the SAAB car always has been: not like all the others and cars that are really fun to drive.”
Now to the new models. What is clear to me is that, besides time, NEVS will need more capital. The partnerships that are already in place and the work that is being done through the Industrial Services part is generating good income but –without having seen the balance sheet- my assumption is that 6 to 9 figure capital injections will be needed over the course of the next few years. Is this possible? It won’t be easy, but why not.
Nobody expected Nokia to get marginalized when the iPhone was first introduced. The record labels were all laughing when Spotify was introduced. Nobody took Tesla seriously when they were founded in 2003.
The global market has clearly significantly changed and NEVS has the vision, the people, the facilities and the guts to try and make a difference. “The only thing that is different is everything”.