Paper can not defend itself when it is printed. Which is why some say that some things are not worth the paper they were printed on. Is the NEVS Reconstruction Plan worth it?
Michèl has already written about it; Here are some thoughts from my point of view. Essentially, there are two options that are under discussion.
OEM Track Plan A - Master Plan
A large OEM joins NEVS as the new major shareholder holding a maximum of 80% of the shares. Kai Johan Jiang's National Modern Energy Holding will hold at least 20%. Together with another manufacturer, NEVS operates a development company in which both companies have a half stake. The new company incorporates the existing research and development facilities and reduces development costs. NEVS plans to bring new models on the Phoenix platform 4, ranging from compact cars to the size of the Saab 9-5.
Complementary plan - plan B
Once the OEM Track, or Plan A, has been completed, NEVS starts its own OEM business under the name NEVS Industrial Services to develop and produce vehicles for other manufacturers. If plan A fails, the reconstruction plan provides that NEVS is able to survive as a pure contract manufacturer and developer. Production for several manufacturers could then be started in 2016-shift operation in 1; the maximum capacity is 200.000 vehicles per year. The plant in Trollhättan is one of the most cost-effective in Europe, and at the same time one of the most flexible.
How close to reality does the plan work?
The sales negotiations drag on from month to month; if you take a closer look, it is clear why. For what reason should a new major shareholder grant the previous owners at least 20% of the shares in order to secure their influence and power? In order to turn what is available in Trollhättan into a flourishing brand, billions are required. Kai Johan Jiang failed to provide double-digit million values. It's tough, but he's not an equal partner.
Mahindra off board?
Since the beginning of the week, people in Trollhättan have been saying that Mahindra has ended the talks or is at least about to disembark. There is of course no confirmation as to whether the NEVS Mahindra Connection was really cut. Just as there was never any official confirmation for negotiations.
However, the probability of failure of the negotiations is higher than the opposite. Since the talks became known, there were obviously irreconcilable differences regarding the value of the investments. And NEVS has hinted in the last few days that things are not going as expected.
And the external impact of NEVS is currently giving a disastrous picture. Gone are the days when you enjoyed “puppy protection”. The GT Expressen, which is not NEVS-friendly, brought the story about a previous employee, who was exceptionally well paid, with a background of 155 employees who were disposed of in a hurry.
2 million in 18 months.
Ex-Volvo man Karl-Erling Trogen did good business with NEVS. For 18 months - until January 2014 - he was a board member and advisor at NEVS. During this time, 18 million Swedish kronor, almost € 2 million, flowed to his company “Elne Consulting AB”.
An unusually high remuneration for a medium-sized company with no recognizable business activity. The question in Sweden is therefore: what for and where did the money come from? Did it come from NEVS or from China? Neither Trogen nor Kai Johan Jiang wanted to comment. In an email to GT Expressen, Jiang announced “eI just do not have time to give interviews and I'm busy with NEVS and its companies in China".
The Trogen story is not well received. Even personalities who have previously campaigned for NEVS are distancing themselves. Fredrik Sidahl from the Association of the Swedish Suppliers Industry considers the 1 million crowns a month to be "not surprising”And representative of the whole NEVS mess.
The plan B.
If the NEVS Mahindra connection fails, Plan B will come. NEVS will survive as a developer and contract manufacturer. With this, the company is competing against the giant Magna. For me, quite frankly, not a viable plan. At least not in the long run. For the next few years, it is possible to raise funds through the marketing of the Phoenix platform. Apparently it is close to being able to deliver a product. And then?
Companies like Karmann have got into trouble because contract manufacturing is tough business with low margins. Also because they were too small to withstand competitive pressure in the long term. Why should NEVS, whose management does not come from the auto industry, be successful?
The reconstruction plan includes 47 pages. Many colorful graphics, no concrete numbers. No names of possible partners, no binding declarations of intent. Nevertheless, lawyer Lars-Eric Gustafsson sees good chances for the survival of NEVS. He recommends the reconstruction to the 29. Continue on November. Presumably, he gets through with the creditors and in court. For me, the plan is just one thing: paper.