Electric startups strive to accelerate production efforts

Electric car startups in China are ratcheting up their efforts to develop and roll out models as new energy vehicles are gradually becoming more and more accepted across China.

One-year-old Future Mobility Corp has inked a deal with an industry fund to receive investment of $200 million, one of its shareholders Harmony Group said in a document filed to the Hong Kong Stock Exchange last week.

Analysts say the move shows investors’ confidence in the startup and the potential of the Chinese market, which is already the world’s largest new energy market.

Two million such vehicles are expected to be sold annually by 2020.

The China Association of Automobile Manufacturers predicts around 700,000 new energy cars will be sold this year.

Construction started on FMC’s $1.66 billion plant earlier this year in Nanjing, Jiangsu province.

The plant will launch production in 2019 on its first model, a mid-size premium electric SUV.

FMC’s first concept car will make its debut later this year.

The electric carmaker has developed all the product’s core parts itself, including the powertrain and the software controlling unit, said CEO Carsten Breitfeld, who was head of BMW’s electric car i8, in a previous interview.

Some startups are going even faster. The first two models of Beijing CHJ Automotive Technology, a two-seat electric car and a larger SUV, will hit the market in 2018, according to its public relations director Liu Jing.

“We do not have a concept car, as it is costly and time-consuming,” she said.

Nio, which is formerly known as NextEV, is to start production of its massmarket electric SUVs later this year, according to the startup backed by Tencent Holdings and investment firm Hillhouse Capital.

Nio has reached car production deals with JAC Motors and Changan Automobile, both of which are traditional carmakers.

Yudo is probably one of the earliest startups to get its cars to market, with its first model, an SUV, having won the approval from the Ministry of Industry and Information Technology — a must before any car can be sold in the Chinese market.

This shows startups need to work together to face competition from traditional automakers.”

co-founder and CEO of electric startup WM Motor

The SUV has three variants and a maximum range on one charge of 200 kilometers to 330 km.

Some electric startups are planning to pool their resources to accelerate their development and cut costs.

Shen Haiyin, CEO of Singulato Motors, said in late July that his company and several other electric car startups have been discussing an alliance for months. He told Reuters the startups aim to finalize the move by end-September, aiming to start establishing a common platform by the end of this year.

“Just like smartphones, with the same Android operating system innards across many brands, smart electric vehicles should compete more on ownership experience and services,” said Shen.

He said combining resources would allow alliance members to develop far more advanced vehicle technology, and for less money.

“Let’s say each player planned to spend 200 million yuan ($30 million) to develop a next-generation platform; if four players each threw in 100 million yuan, we’d all save money but end up with a 400 million yuan platform rather than a 200 million yuan platform,” he said. “The benefits are clear.”

Freeman Shen, co-founder and CEO of electric startup WM Motor, reckons the prospect of tougher new technical requirements is a big factor spurring startups to consider an alliance to develop basic vehicle technology.

“This shows startups need to work together to face competition from traditional automakers.”

Many traditional carmakers, including MercedesBenz, Volkswagen and Ford, have made new energy vehicles a priority in their respective development campaigns, with a special eye on the Chinese market.