NEVS CEO Mattias Bergman in an interview with EFN, a subsidiary company to Swedish bank commercial banks.
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 Trollhattan. This is where 1,000 people are working right now, but they are not actually building cars. Mattias Bergman, CEO for NEVS, can you summarize who NEVS are?
Mattias Bergman (MB): As you said, we are building a Saab and the assets we acquired. But we are focused on electric vehicles and we are making the step to deliver mobility services.
EB: EV NEVS 9-3 in Shanghai next month, but this car is not made in Trollhättan. What are the 1,000 people in Trollhättan actually working on?
MB: About 700 of this 1,000 people are engineers. Which means the big part of the development of cars. Now we are going from development to industrialization. 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 start production up now. So we're preparing an industrialization of the cars that will come out during summer next year. The frame and different subsystems will be built by Trollhättan, but final assembly will happen in China.
EB: Iconiq, and you want to share your platform -that has a lot to develop- with them, what does this entail?
MB: There is a lot of money needed to develop a new platform and to make the necessary tools to make new car systems. This means we can both start earlier and share costs. Iconiq's car wants to be manufactured in our factory in China, which means this is a good business case for us. But they also contribute with a lot of partnership and innovation.
EB: NEVS is therefore working with contract manufacturing. Can you talk any more about this, as you are not getting the NEVS logo attached to it. Can you share what the situation looks like?
MB: Our foundation 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 Trollhattan from 200K cars. So we 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 so good 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 can not make any cars in China if we do not have a production license. If you want to sell cars in China, they should avoid paying high import taxes. So if the Chinese government picks NEVS from about 200 start-ups as one of the 12 possible licensees, it means that they are in our business plan and our technology, and we're 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 have been a few Chinese companies that have abused the subsidies. They cash in the subsidies, but did not deliver the cars to customers. Now the rules have 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 wants to take some years before there will be overcapacity for EV's, which is therefore connected to key components like batteries.
EB: How much are you dependent on these subsidies, especially when they are about to be phased out, as I already read 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 can lower our costs and through that. But this is first, for the first two years, really important to us.
EB: You just referred to the availability of batteries. You have recently signed a contract with a battery factory in Tianjin. What is the situation in Sweden, as there is a battery factory located near Trollhattan?
MB: No, there is not, but initially we'll be having one supplier. This supplier is located in the south of China and their name is CATL. The cars that we want to have in Sweden want 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.
EB: So it's a problem to paint a battery factory in Trollhättan?
MB: It's important to realize that the battery pack must be assembled close to the car production site. And this is the case for the next level, the modules, but the battery cells do not need to be produced locally. It's fine to ship. But on the longer term, that is to say, the two parts of the car and the other parts of the car are being used battery and component supplier between Sweden, China and USA. We'll need to see that later.
EB: When thinking about NEVS, many people want to identify you with Panda New Energy. What does this order actually look like? There were a few people who would like to be 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, so this is a strong company. China is important. If in Europe it's called Uber, then in China it's called Didi Taxi. So they are the market they want to address, together with our cars and services.
EB: So this is a huge order. How many of these cars have you delivered?
MB: This is a framework agreement for 250K cars. Of these 250K, 150K are 9-3's and we will start delivering next summer. However, we have started the delivery of small commercial electric vehicles from our factory in Longyan. 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's own 5% is also state-owned. There is a very big part in the hands of the Chinese state and municipalities; why is there a factory and a development center in Trollhättan? Do not you want to relocate everything to China?
MB: It is important to realize that most of the Chinese companies currently do not have the competence and knowledge to develop 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 Chinese market wants to take place in China. The production for the European market wants to remain in Sweden. Our main owner is a private player and the other are state-owned players, either on a central or on a municipal level. That's the way the Chinese government supports the direction, but more and more private investors.
EB: We're talking EVs, we're talking about the environment, but there's a lot of talk about autonomous driving cars. How much are you focusing on this?
MB: The platform we want to develop together with Iconiq wants to be prepared to be fully autonomous. There is level 1 through 5, and with 5 level you do not even have a wheelchair anymore. So we're preparing to be fully autonomous, but the required legal frameworks are not supportive, we'll go down one or two levels. 2020 and 2023 will be out on the streets.
EB: And finally: when will we be able to see NEVS cars out on the road in Sweden?
MB: We are having a number of tests with different types of customers. But hopefully by the end of 2018.
EB: But can an ordinary consumer buy one?
MB: You will not buy it as a car, but you'll be buying it as a service. And if you're lucky you can participate in the first fleets tests we're planning for 2018.
EB: Thank you.