The fact that NEVS has been very active since they are exited reorganization and became debt-free earlier this year can hardly be called a secret anymore. News about new partnerships, additional shareholders, a new factory, added board members and aggressive recruiting of new staff has been hitting the press with a steady pace. While NEVS 'president Mattias Bergman has consistently been sharing their vision and outlines of their plans, details were relatively scarce. At Stockholm's largest annual automotive conference "Stora Bildagen" in Stockholm this week, Bergman unveiled key elements of their new and eagerly awaited business plan. The first (SAAB 9-3 based, but heavily upgraded) EV Sedan wants to hit the Chinese and Swedish markets in the first half of 2017. Mobility services wants to be a truly important role and they have not been able to do so.
Sweden and China first
This “new and improved” electric 9-3 Sedan will be built in Trollhättan and assembled in Tianjin and will hit both the new and current home markets (China and Sweden) in a little more than a year from now. NEVS however is positioning this model more than a pilot (Bergman used the name “Mobility Lab” in this context), to further prove the concept in preparation for the launch of the four brand new and Phoenix platform based models in 2018. The new line -up will consist of a sports and a family SUV, a so-called “fast-back” and a cross-over; all in the compact (C) and midsize (D) segments and all with an electric powertrain.
The brand name question
Apart from details about the product and services strategy, Bergman thus revealed the foundation for their new brand proposition. While the whole SAAB trademark question is still ongoing (yet Swedish daily SVD is suggesting today that NEVS wants to use the SAAB name ie for the new EVs), brand pillars like distinctiveness, individuality and sustainability are becoming clearer.
Largest industrial project in Sweden
The journey NEVS is on a signifier. Bergman is describing their efforts as "currently one of Sweden's largest industrial projects".
The translation of the full transcript of Mattias Bergman's (MB) presentation including the interview by Håkan Matson (HM), journalist at business newspaper Dagens Industri can be found below:
MB: Thanks, Håkan.
HM: We're getting a press release every week nowadays, but you're not producing any cars!
MB: No, there's a lot going on. We're recruiting about 50 people per month at the moment and are working to get into delivery mode. To deliver what we have been doing for the past year.
HM: So when you want to be building cars again?
MB: I want to come back to that later. We're now reconfiguring our body shop in Trollhattan and this work is coming to a close. During the summer we'll be recruiting more production staff. The body parts wants to be shipped to China. During the first half of 2017, we'll be launching both Chinese and Swedish markets.
HM: So now you've pretty much answered my question already. I now want to go back in time a little: you bought SAAB Automobile's main assets from the bankruptcy estate in the summer of 2012 and you stopped production on May 2014. How did that feel, to have to close down the production again after that very Shaky Victor Muller period?
MB: I was a part of that earlier phase. We were 14 companies competing to buy SAAB Automobile's assets. To go around in Trollhättan in this incredibly beautiful factory and to have so many very capable workers. It took 458 days to rebuild a supply chain with 400 suppliers and 800 factories. We had a business plan and we had started on our mission. Unfortunately, one of our shareholders (the city of Qingdao) did not follow through on their financial commitment. And when this happened we just had to break the brakes and very quickly reduce our costs while we had to get new owners, new funding and a new business plan together.
HM: That process took quite a while. How close were you to just give up?
MB: We did not give up, but it was really hard especially when we were in a certain period. But we had a very committed owner during the whole period: he invested over SEK 4 Billion in Trollhättan. If we have not been able to keep our staff and keep the passion among them, we would never have been able to get new investors on board. Why we could in fact keep our staff, could get new investors and now engage in new partnerships.
HM: You lost SEK 1.2 Billion last year. What is the size of the accumulated losses to date? That wants to include the SEK 1.7 Billion you paid to the bankruptcy estate.
SEK 4 Billion and we actually paid SEK 1.8 Billion for the SAAB Automobile assets. One should consider this as the foundation for our current business plan. So it's not necessarily all a loss, it is certainly an investment in IP that we'll be using.
HM: Thank you Mattias, let's now listen to your presentation so you can talk more about this exciting future!
MB: The previous speaker closed the presentation on the devastating air pollution in China and this is where I want to start mine with. This picture is from China, but could have been from any of the major cities around the world. It is important to note that the car industry is suffering from a car accident. That means we have the OEM have a responsibility. A responsibility to address this.
When we bought SAAB Automobile's assets, it became clear that there was no interest in the business plan from the Spyker period and no intention to implement it. This strategy to go heads-up with BMW and Audi in a premium segment. We did not believe in it. Instead, we felt we had to choose a direction that was in line with how we see the future. And this is not just the choice of powertrains but the choice of business models and markets.
50 people per month -even if we could possibly use more than 100 people / month) so we can deliver on the commitments we have made to our owners-.
But I want to tell the story of who we are. I want then so to see details of the new business plan that many have been waiting for.
If you want to make life extraordinary, it is not possible to accept compromises. You have to have a challenge things. Looking at the background we have: SAAB cars have always been performing and fun to drive. We now want to use electric vehicles (EVs). That actually does not mean that we have to compromise. They want to be at least as much fun to drive. We are however not going to compromise by developing non-environmentally friendly powerlines or architecture that is not optimized for EVs. So the we have to challenge the challenges we have.
We are inspired by our legacy, our culture and nature. Legacy in the sense that many iconic premium cars have been built in Trollhättan where also countless innovations have been developed that have shaped the global car industry. We are really proud to be Swedish. What does it mean to be Swedish with culture and values we adopt?
We do not just design cars. We design mobility experiences. These are not only simple, engaging and distinctive, so they create a brighter and cleaner future. So we're taking a big step by expanding the focus beyond the car itself. Services just as a function inside the car, but rather as an area of business.
For those individuals who are curious and passionate about the world we offer them a chance to express themselves and leave a positive mark behind.
It is best for all. What we mean when you take your passion seriously and do not compromise when it comes to environmental challenges and at the same time have a car that gives you the joy to drive, you'll actually be doing good for everyone. This is really the basis.
When we look forward to and consider the megatrends in the automotive industry, we'll be seeing a faster transition from conventional to electric cars and possibly fuel cell-driven vehicles in the further future. What is currently happening at Volkswagen is possibly triggering even faster transition.
That cars want to be connected, that you're taking the services from your mobile phone into the car plus many, many more services.
Another key trend is the sharing economy. We are not the best in everything. Anyone who thinks that one company can do it all, simply is wrong. We strongly believe that we need to engage our customers. Engage our suppliers, have a sound technology vision and do not be in Trollhättan.
So what's happening at the moment? These megatrends are known by all car manufacturers. Many of the conventional players -and I just now showing a few of them- will not survive the transition the industry is going through. Especially some of the players in China, but even a few of the automotive players in the Western part of the world. There is a big shift happening. It's not about moving metal, it's much bigger.
Among the newer players, Tesla is doing a fabulous job to prove to the world that EV's can both have great range and performance. There are many other people who are looking for a job. Our 20-year old son who just got his driver's license, does he want to own a car himself? Not necessarily. He wants access to the service to be able to transport himself. And when you actually do it, you may want to get it out in the evenings when you're not using it yourself. The step with connected cars is really challenging for many players in the industry.
Here we have a unique position. We do not have 10 existing factories that are fully booked to deliver vehicles with conventional powerlines. 10 billion in an engine factory or our Phoenix platform completely ready for hybrid powerlines. We can not focus on what we believe is right. So this means a laser focus and in fact a focus on EV's.
Håkan was saying that earlier we were sending out press releases every week or every month since we exited our reconstruction phase in April. We've been able to do so as much as we could. Our view is that we do not need to do anything ourselves. We benefit from partnering with others. Let me take you quickly through why we did this.
We chose to work with Dongfeng Motors, once of China's largest car manufacturers with 3.7 million cars. We're currently performing a pre-study on developing cars for you. This means we'll be able to share the architecture and share development costs. Dongfeng is owning 14% of the PSA group and thus has access to other technologies. We want to benefit from this. 3.7 million cars means that through them we'll be able to reach levels that would otherwise never be able to reach.
We've taken on an assignment from the Turkish government. Turkey wants to celebrate its 100 year anniversary as a nation in 2023. Turkey's president Erdogan has proclaimed that the country needs its own car industry. Turkey went to the global automotive sector to find a partner to assist them in building up their national industry, and how many players do they want to help them? We have another view. We can obviously get paid for our services, but we want to be able to benefit in our own portfolio. Bigger volumes and we'll be sharing costs again.
To start a journey to connectivity and be credible in the field is key. Of all the engineers in the car industry today, only 2% of them develop software. In 10 years from now, 60% of the value add in a car will come from software. Do we have any IT engineers that can deliver on all of this? Shall we hire all of Ericsson's staff to be able to deliver this? No, that's simply impossible. So we have found two new shareholders.
The first one is teamsum, a company listed on both the Hong Kong and Shanghai stock exchanges and has 5.000 software engineers. The other one is SRIT, directly owned by the Chinese State Council and China Unicom, so with some 5.000 software engineers. This is a great foundation, but we are working with other companies. As an example, so we have enjoyed a very good cooperation with HP so we want to be able to integrate our two factories.
It's obvious that all of this will be costing money. Sweden is at the moment, and that's pretty capital-intensive. So we have two Chinese banks. The first one is Bank of China with about SEK 13 billion and the other China Development Bank with about USD 585 today. This is a basis to follow through on the business plan.
We have found a new shareholder in the form of the city of Tianjin. Tianjin is only slightly larger than Trollhättan. Trollhättan has 60.000 inhabitants while Tianjin has 16 million. Tianjin is a total of 100 million people.
China is building Tianjin as a model city for sustainable development. Tianjin of course wants to build a factory in China, which is something I want to come back to in a minute. So we are both a market, a financier and partner in production and development.
Our main owner, Karl Johan Jiang, has been in the future and has been working for NEVS with over the years.
So the foundation is premium cars and a sole focus on EV's. Add to this what we call Mobility Services. Not a function like the car is going to make phone calls, but as an area of business. And then we are building a city. How do we help the city of Tianjin to become a model city for sustainable mobility, with all the information that can be found in the cars. This method can be used to develop sustainable and sustainable transport methods.
Now we're launching what we believe is broader product portfolio than what SAAB Automobile has ever had. We will be starting in the summer of 2017, when our first EV based on 9-3 technology will come to market. But this will be a significantly upgraded car. Not just a battery solution that ensures you have a long range or different enhancements to meet legal requirements like pedestrian protection, but also different integrated consumer requirements to ensure that the car is connected. This is what we are calling the “Mobility Lab”. This is where we'll be starting our journey to realize our vision with.
Following this, we'll be launching four models based on our new architecture. An architecture designed for electric powertrains. The sedan will continue to be big, but we believe that SUV's will gain in importance, but we're selecting a customer segment we call “green independent”. A customer that wants to be out in nature and actually connects well with the crossover and SUV body styles. Add to this our mobility services and there we have one of Sweden's largest industrial projects at the moment.
The First Piles are now in the Ground for our New Factory in Tianjin, a facility which will be in assembly phase. We are getting full-fledged as we are getting our new product portfolio to market. All four new models will be produced both in Trollhättan and in Tianjin. First in Trollhattan for the European market, in Tianjin for the Chinese and Asian markets and at a later stage, when we've launched several models for the North American market.
We are looking for new suppliers of these cars. Trollhättan and Europe are just waiting to meet the demands of our customers, so we are assembling them in China. There is an extensive purchasing project ongoing at the moment.
So a strong story, much driven by the vision. What benefits one will benefit all. This builds also on the resource we have. We have one of Europe's highest productivity production plants. The fact that it has such a high productivity isn't driven by the fact that we have better tools as such, but rather very connected to the people. The very experienced car builders we've been able to keep in Trollhättan. This competence will also help us tremendously as we are starting up in China, that we can transfer this knowledge. The experience to develop premium cars, not just to do the R&D but also securing that the car maintains its quality for not just 3 years, but 5 or 15 to 20 years.
The global market is being redrawn currently and that means when others are locked into their existing structures.
We do not just deliver a product, we rather combine the product with the services and even the work we do to co-develop the city to meet customer needs.
We'll be leading in the areas where we choose to lead. Much around battery technology and selected connectivity services At the same time we are going to fast-followers in other areas and not try and lead everything. This means we'll be outsourcing quite a bit to other partners. So all in a very exciting journey! Thank you!
HM: NEVS, Mattias. I have to say that there are several other journalists in the audience. All these models! But you said so before. What's different now and why should we believe you this time around?
MB: I think I explained this earlier. EV's from the very start. We chose to build a car. The fact that we did this was not true. We've learned from this. We were much stronger today with the shareholders and partners we have been to 3 years ago.
HM: Will you be building a traditional dealer network?
MB: We chose -even when we were selling our conventional cars to them through the internet. At the same time we have been using SAAB dealers as agents. We're not locked into an existing reseller network. We rather want to meet our customers where and how they want to be met.
HM: When will you be producing 180.000 cars in Trollhattan?
MB: We do not want to share any sales, profitability or investment forecasts. Instead we'll be sharing details as soon as we've got accomplished things.
HM: But this is the capacity you're still working with, right?
MB: That's correct. Trollhättan can build 180.000 cars per year. The Tianjin factory wants to build 200.000 cars. The target for Trollhättan is not 180.000, but rather 120.000 cars. Which in fact means a capacity of 60.000 to another car manufacturer. We are in negotiations about contract manufacturing. We want to make better use of our resources and want to lower our cost of operations. We'll be earning money in many other ways.
HM: When do you think this contract will be signed?
MB: When it's signed, I'll be informing you!
HM: The picture of this "corporate sedan" you saw earlier features a very distinct SAAB logo. What does the new cars say when they leave the factories in 2017?
MB: We want to be as clear as possible. We do not want to share these details today.
HM: How are things going with SAAB AB?
MB: We are having a dialogue and we have not concluded it.
HM: But it is continuing?
MB: Correct, it is continuing.
HM: Is the target that will be called SAAB?
MB: Let me come back to this in connection with our launch!
Mattias Bergman's presentation can be downloaded in PDF format here.