NEVS CEO Mattias Bergman in an interview with EFN, a daughter company to Swedish bank Handelbanken.
Ellinor Beckett (EB): In Sweden, electric vehicle company NEVS, is mostly known for its acquisition of the bankruptcy estate from Saab. They’ve taken over the factory in Trollhättan. This is where 1,000 people are working right now, but they aren’t actually building cars. Mattias Bergman, CEO for NEVS, can you summarize who NEVS are?
Mattias Bergman (MB): As you said, we are building on a history from Saab and the assets we acquired. But we are fully focused on electric vehicles and we’re making the step to deliver mobility services.
EB: You are now finally going to show the EV NEVS 9-3 in Shanghai next month, but this car isn’t made in Trollhättan. What are these 1,000 people in Trollhättan actually working on?
MB: About 700 of these 1,000 people are engineers. Which means that a big part has been around the development of cars. Now we are going from development to industrialisation. There are about 200 suppliers that we are getting started with. We’re building a new factory in Tianjin, which is supported by our team in Trollhättan. We acquired another car company in the south of China and we’re starting up that production now. So we’re preparing an industrialisation of the cars that will be coming out during summer next year. The frame and different subsystems will be built by Trollhättan, but final assembly will happen in China.
EB: You’ve started a collaboration with electric vehicle brand Iconiq, and you will be sharing your platform -that has cost a lot to develop- with them, what does this entail?
MB: There is big money required to develop a completely new platform and to create the necessary tools to make new car systems. This means that we both can start earlier and share costs. Iconiq’s car will be manufactured in our factory in China, which means that this is a good business case for us. But they also contribute with a lot of partnership and innovation.
EB: NEVS is also working with contract manufacturing. Can you talk some more about this, as not everything you are doing is getting the NEVS-logo attached to it. Can you share what the situation looks like?
MB: Our fundament is to produce EV’s under our own brand, as a part of a mobility service. We will initially focus on China, later Sweden and following this the global market. But in addition we’re saying that we want to put our assets to work. We have a production capacity in Trollhättan of 200K cars. We also have a big capacity in China, so we can do contract development and contract manufacturing for both existing car companies and start-ups. And for start-ups we’re also able to offer to share our platform.
EB: You were recently granted a production license for EV’s in China. What does this mean for you?
MB: This means a great deal. We cannot manufacture any cars in China if we don’t have a production license. If you want to sell cars in China, they should have been made there to avoid high import taxes and to be able to reach large volumes. So if the Chinese government picks NEVS from about 200 start-ups as one of the 12 possible licensees, it means that they believe in our business plan and our technology, and we’re obviously really happy about that.
EB: There have been issues earlier with companies that have received subsidies in China and that there is an over-heated EV market. How do you see that risk?
MB: That’s right. In China there have been big subsidies available. And when you have big subsidies and big profits, ‘everyone’ gets attracted to it. There been quite a few Chinese companies that have abused the subsidies. They cashed in the subsidies, but didn’t deliver the cars to customers. Now the rules haven been tightened, so this is now disappearing from the market. So the fact that there is a government in China that is really lowering the bar for new technology is important. It will take quite some years before there will be overcapacity for EV’s, which is also connected to access to key components like batteries, before there will be capacity to go to big volumes.
EB: How much are you dependent on these subsidies, especially when considering that they will be phased out, as I understood already as early as in 2020?
MB: New technology often requires subsidies to break through. But after that we must stand on our own, without subsidies. And in that phase we are planning to have higher volumes so that we can lower our costs and through that an unchanged good profitability. But this is initially, for the first two years, really important to us.
EB: You just referred to the availability of batteries. You quite recently signed a contract with a battery factory in Tianjin. What is the situation in Sweden, as there isn’t really a battery factory located near Trollhättan?
MB: No, there isn’t, but initially we’ll be having one supplier. And this supplier is located in the south of China and their name is CATL. The cars that we will have in Sweden will have the same batteries. We are however positive to multiple suppliers in the future, with our new platforms. But right now we are having one Chinese battery manufacturer for all our cars, independently of where we are producing and selling them.
EB: So it’s not a problem to lack a battery factory close to where you’re planning to manufacture the cars, for example in Trollhättan?
MB: It’s important to realize that the battery packs must be assembled close to the car production site. And this also the case for the next level, the modules, but the battery cells don’t need to be produced locally. It’s fine to ship these. But on the longer term, also to reduce the environmental impact, we believe that both the cars and the components need to be sourced locally in the part of the world where the car will be sold. Then it’s another question if it will be the same battery- and component supplier between Sweden, China and USA. We’ll need to see about that later.
EB: When thinking about NEVS, many people will identify you with Panda New Energy, where you received a huge order from. What does this order actually look like? There a quite a few people who will remember that there were journalists who were unable to track down the company.
MB: Panda New Energy is a newly started company. At the time we signed the contract and the journalist started their research, the company had a registered address at a shared office space. Yet there is a company behind Panda, which is called Hasun Investment. They invest in European companies, they own 500K apartment buildings, they own hotels, so this is a strong company. Strong companies often are drawn to growth sectors and they see that mobility services in China are important. If in Europa it’s called Uber, then in China it’s called Didi Taxi. So that’s the market they want to address, together with our cars and services.
EB: So this was a huge order. How many of these cars have you already delivered?
MB: This was a framework agreement for 250K cars. Of these 250K, 150K are 9-3’s and these we will start delivering next summer. However, we have started the delivery of small commercial electric vehicles from our factory in Longyan. I believe that we have delivered around 20K of these cars to them.
EB: Let’s have a look at who owns NEVS. We have a graph on this:
First this is National Modern Energy Holdings, which is the Swedish-Chinese Kai Johan Jiang. Then it’s the city of Tianjin, the location of the new factory. Then Qingbo Investment, which is a state-owned investment fund and China Unicom, and then the company owning 5% is also state-owned. There is a very big part in the hands of the Chinese state and municipalities; why is there still a factory and a development centre in Trollhättan? Don’t they want to relocate everything to China?
MB: It’s important to realize that most Chinese companies currently don’t have the competence and knowledge to develop and to industrialise high quality cars. This is why Geely acquired Volvo and Dongfeng bought parts of PSA. So there is an expertise they have respect for. Having said that, the production for the Chinese market will take place in China. The production for the European market will remain in Sweden. Our main owner is a private player and the others are state-owned players, either on central or on municipal level. That shows very clearly that the Chinese government support the direction, but gradually there will be new investors from outside of China and also more private investors.
EB: We’re talking EV’s, we’re talking the environment, but there is also a lot of talk about autonomous driving cars. How much are you focusing on this?
MB: The platform we’ll be starting to develop together with Iconiq will be prepared to be fully autonomous. There is level 1 through 5, and with level 5 you don’t even have a steering wheel anymore. So we’re preparing to be fully autonomous, but should the required legal frameworks not support it, we’ll go down one or two levels. But this is a technology we’re working with now and somewhere between 2020 and 2023 we’ll be seeing this out on the streets.
EB: And finally: when will we be able to see NEVS cars out on the road in Sweden?
MB: We’ll be having a number of tests with different types of customers. But hopefully by the end of 2018.
EB: But when can an ordinary consumer buy one?
MB: You won’t be buying it as a car, but you’ll be buying it as a service. And if you’re lucky you can be participating in the first fleets tests we’re planning for 2018.
EB: Thank you.