Have you seen the news that the Swedish auto brand Saab isn’t dead? It has been re-born as a Swedish-Chinese company that will produce electric vehicles, mainly for the China market. Sound like a fantasy? It is, sort of. It seems the Saab’s new owner is counting on his connections in China to create a market for not only a gasoline-powered car by a company that has no recognition in China and a brand with little recognition, but also to launch an electric vehicle. Let me be blunt. This strategy will not be successful.
Saab’s assets were purchased by National Electric Vehicle Sweden (AB), whose founder and CEO is a Swedish-Chinese guy named Kai Johan Jiang. The company’s website says its aim is “to be a front-runner in the automotive industry, with a focus on electric vehicles.” NEVS is hedging its bets. It admits that not all consumers are ready to make the move to electric vehicles, so its first Saab vehicle is gasoline-powered.
Of course I don’t know anything about Kai Johan Jiang. He is an entrepreneur, it seems, with an interest in renewable energy. He owns an investment company in Beijing, State Holdings (which despite its name is privately held) that invests in a variety of clean energy companies. To be sure, China is all about clean energy these days. And Jiang may have fabulous guanxi, with the government in Qingdao, for one. It is one of the investors in NEVS.
But China is awash with domestic and foreign producers of gasoline-powered and now also electric vehicles whose brand names enjoy much more recognition and in many cases higher status than Saab. A newcomer such as NEVS has little chance of making it in China.
NEVS, despite its name, is not a dedicated EV producer. Indeed, it has started production of a gasoline-powered Saab 9-3 sedan.
According to the NEVS website (NEVS did not respond to an email request for comment), it is producing a very small volume of gasoline-powered vehicles, known as the Saab 9-3 Aero Sedan 2014, right now in Sweden. The plan is to sell the car in Sweden and China. If NEVS’s real purpose is to sell gasoline-powered mid-sized sedans in China that will be tough. The segment is already crowded with competitors such as the Toyota Camry, Honda Accord, and Buick Regal.
As for EVs, aside from saying that in 2014 it will launch an electric vehicle in China, NEVS has given no specifics about whether or not that will be a full electric, plug-in hybrid electric, or regular hybrid. I’d bet on a plug-in hybrid electric as the Chinese government is pushing PHEVs more strongly than BEVs in the near-term. But just about every domestic automaker in China, as well as foreign brands including Volkswagen and Nissan, plan to launch various types of electric vehicles in the next few years. “I don’t see any reason than an individual customer would spend money to buy a Saab EV,” says Kevin Huang of WAYS Consulting in Guangzhou.
Then there is the Saab brand itself. According to Huang, “the sales of Saab in the China market has always been poor.” From 2007 to 2011 it sold only 2,057 units in China. Sales ceased in the second half of 2011. I won’t even go into the fact NEVS lacks a dealership network. Or that BAIC, a large state-owned automaker, acquired the rights to an older Saab 9-3 model in 2009 and is now producing a gasoline-powered sedan on that technology and platform in China and has said it will produce an EV based on the same platform.
Okay you might say, NEVS could sell to government fleets. But the same competition issues apply. The government of Qingdao—which owns 22 percent of NEVS — has placed an order for 200 NEVS electric vehicles to be tested as taxis in the coastal city in northeastern China. In the future, says NEVS, it will produce both gasoline-powered vehicles and EVs in Qingdao. But Qingdao is not a huge market. And, the latest plan from Beijing to promote electric vehicles attempts to temper local favoritism by calling for local governments to make at least 30% of their new energy vehicle purchases from companies outside the locality.
Jiang seems to have deep pockets, and a real belief in renewable energy as a viable investment. That’s to be applauded. But I don’t see how his investment in Saab will pay off.
Article by Alysha Webb, a freelance automotive journalist and founder of ChinaEV Blog.