Execs with the innovation bug find that traditional car companies are not fully committed to the new technologies. And thus a match in supply and demand is created. JL
Mike Colias reports in the Wall Street Journal:
Investors looking to create the next Tesla are turning to seasoned auto executives for help making sense of the complicated and capital-intensive car business.Tesla has struggled to launch vehicles on time, meet price targets and maintain quality levels. Conventional auto makers aren’t entirely committed to a wholesale transition because battery power will siphon sales from the high-margin fossil-fuel-powered cars they’ve sold for more than a century.“It’s very hard to disrupt yourselves.”
Deep-pocketed investors looking to create the next Tesla are turning to seasoned automotive executives for help making sense of the complicated and capital-intensive car business.
A little-known Los Angeles electric-vehicle startup, EVelozcity , is the latest firm to lure big-name talent. The company, attracting commitments for $1 billion in funding since December, has hired Karl-Thomas Neumann, the former head of General Motors Co. ’s European division, along with several former BMW AG executives.
Like many of the EV startups cropping up in California in recent years, EVelozcity has Chinese backers to thank for its large war chest. While investors from China have helped along several battery-powered vehicle companies—including Wanxiang Group’s rescue of the high-publicity Fisker project—other ventures have struggled to get off the ground due to lofty goals or insufficient capital.
EVelozcity declined to disclose its investors, saying they come from Germany and Taiwan in addition to China. Mr. Neumann, 57, said in an interview he believes conventional auto makers aren’t entirely committed to a wholesale transition for the industry because battery power will siphon sales from the high-margin fossil-fuel-powered cars they’ve sold for more than a century.
“It’s very hard to disrupt yourselves,” Mr. Neumann said. His former employer, GM, and other auto makers say they’re committed to electrics, with more than $70 billion pledged toward development of new electric models industrywide since early 2017.
Mr. Neumann’s job search was a result of GM’s sale of its European operation, including Opel, to Peugeot maker PSA. GM, Peugeot and most other multinational car companies have projects under way aimed at developing EVs, driverless cars and shared-transportation programs designed to challenge Tesla Inc., Alphabet Inc.’s Waymo and Uber Technologies Inc.
Mr. Neumann also worked at Volkswagen AG and German parts supplier Continental AG .
Newcomer companies that lure veterans in attempt to replicate Tesla Chief Executive Elon Musk’s success face a long list of challenges. Mr. Musk has defied industry expectations, but struggled to launch vehicles on time, meet price targets and maintain quality levels.
Faraday Future , started four years ago by Chinese billionaire Jia Yueting, attracted veterans including product chief Peter Savagian, who spent nearly 20 years at GM, mainly working on electrics and hybrid vehicles. Dag Reckhorn, with a background at automotive suppliers, oversees manufacturing.
Faraday Future, recently abandoning a plan to build a $1 billion Nevada factory to produce high-end vehicles, has taken several actions just to keep the lights on. Many of the seasoned recruits have moved on.
The company recently got a $1.5 billion investor commitment and aims to produce a car by year-end, a spokesman said.
EVelozcity wants to make more-affordable electrics that will be used for ride-sharing, commuting and commercial delivery in big cities. The strategy is similar to Nissan Motor Co.’s approach, steering away from the rich but fickle crowd that would buy premium models.
Many EV startups are developing exotic sports cars with acceleration that can rival a Ferrari.
Among the other companies looking to edge in on Tesla is Byton, also backed by Chinese investors. Its chief executive, Carsten Breitfeld, spent 20 years as an engineer and executive at BMW, and its president, Daniel Kirchert, ran the premium Infiniti brand in China.
Lucid Motors, an electric-car company based in Silicon Valley, in 2015 hired Derek Jenkins, who was Mazda ’s head designer. China-backed EV startup SF Motors Inc., which bought a plant in Indiana last year, hired former Volkswagen executive Jim Finn to oversee production.
Stefan Krause, a former chief financial officer at Deutsche Bank and BMW, recruited Mr. Neumann to EVelozcity. The firm also includes engineer Ulrich Kranz and designer Richard Kim, who helped develop BMW’s i3 and i8.Mr. Krause joined Faraday last year to help it raise capital but left in October after six months. He has since been sued by Faraday, which alleges he left with trade secrets. Mr. Krause and a Faraday spokesman declined to comment.
While electric-vehicle startups generally have the ability to raise more capital than many other young companies, they are going up against traditional car companies preparing dozens of new models.
Mr. Krause said Tesla’s success shows there are plenty of consumers who would rather not buy electrics from traditional auto makers that only dabble in EVs.
“We think there is a younger generation that really wants to drive a true EV brand,” he said.
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