Michael J. Dunne
Faraday Future is leading the charge of Chinese electric vehicle firms into California.
How big, how fast, how dangerous?
Five highly ambitious Chinese automakers are building stealthy, strategic bases in California. Their objective: Hunt down technology and talented engineers to produce the world’s most advanced electric vehicles.
Unusually, only one of the five is state-backed, with four bankrolled by Chinese billionaires.
So young are these Chinese upstarts that establishing who they are and what they do is something like describing newborns in the hospital nursery. Sometimes all you can do is note the most prominent features.
Here we go:
Faraday Future. Formed in 2014. Based in Gardena, California. Nevada factory coming in 2018. Leadership team all ex-Tesla executives. Funded by Le Eco, China’s Netflix NFLX -1.59%. Ties to Aston Martin.
BYD . Stands for Build Your Dreams. China’s leading electric vehicle maker. Funded by billionaire Wang Chuanfu. Berkshire Hathaway BRK.B +% a 9% shareholder.
NextEV. Started with 10 people in 2015, now nearing 1,000. Bases in Shanghai, Munich and San Jose. Founded by Chinese Internet billionaire, Bitauto creator, William Li. Sequoia Capital and Hillhouse Capital money, too. Hired Cisco phenom Padmasree Warrior to lead U.S. operations.
Karma Automotive. Re-incarnated Fisker Automotive. Bought out of bankruptcy in 2014 for $149 million by China’s Wanxiang Group. Operates from Costa Mesa. Coming soon: Plant in Moreno Valley.
Atieva. Beijing Automotive, partners with Mercedes and Hyundai in China, holds 25%. Faraday owner Jia Yueting owns shares, too. Engineers recruited from Stanford are writing world-class Atieva offices in Menlo Park. Website header: “To re-imagine the future, we’re re-writing the rules.”
And, wait, here comes a brand new entrant called Future Mobility. Announced just this week, initial capital comes from Ten Cent and Foxconn, China’s Internet and manufacturing powerhouses. How many weeks before Future Mobility sets up its own California lair, too?
Young? Yes. A little naïve? Maybe. But zealously active. Teams of engineers right now are hustling to beat tight workplan deadlines at new facilities in Costa Mesa, Gardena, Los Angeles, San Jose and Palo Alto. Already they’ve hired top talent away from Tesla, Google, and BMW.
Auto industry incumbents, vaguely aware of the Chinese intruders, feel a mixture of curiosity and trepidation. How serious are these companies and what are their intentions? Five years out, will they still be around?
“We wo’t be coming to America with exports the way the Japanese and Koreans did it,” an engineer from NextEV told me at an autonomous driving conference in San Jose last month. “Too much China brand baggage.”
Actively avoiding a made-in-China tag carries all the way through to their very un-Chinese company names. Faraday Future is a nod to Michael Faraday a 19th British electromagnetic scientist. Atieva simply a made up word to sound modern, global.
Global is the vision. Products will be designed and engineered in California (think Apple), and manufactured in both the U.S. and China.
Walk through the bustling open plan offices of Faraday Future (now calling themselves FF) and you’ll quickly note the startlingly rich mix of professionals from Europe, the US and Asia. By look and feel alone, you’d swear you’re in a Silicon Valley start-up.
And we’re not talking just workhorse engineers. NextEV hired Padmasree Warrior, the highly regarded Indian-American former Cisco executive in late 2015. Recruiting an Indian woman, however gifted, to lead a Chinese company runs completely outside the boundaries of Chinese cultural and business conventions.
What makes these Chinese automakers feel they can compete where so many other electric vehicle start-ups have perished? For Chinese tech giants the automobile is essentially a large mobile urban device, a digital screen, a bankable chute to Internet-based services. At the Beijing Auto Show last week, Faradays’ parent, Le Eco, presented the Le SEE (Super Electric Eco-System) concept model that’s designed to be a kind of wired living room on wheels.
Further fueling their enthusiasm: China now leads the world in both luxury and electric vehicle sales. Chinese are on track to buy 600,000 EVs and plug-in hybrids in 2016, up from a record 331,000 in 2015. BYD expects profits to triple in the homeland this year.
It is true that you ca’t teach tall in basketball and you ca’t fake scale in the automotive arena. Head counts at Atieva, NextEV, Karma and Faraday today are still only in the hundreds compared to more than 15,000 at Tesla. And aside from Karma’s newly-named Revero model, we wo’t see finished products from these Chinese upstarts before 2018.
They will also need time and money to build their brands, especially in China where the wealthy overwhelmingly buy a exclusive brand to show and tell other people they bought an exclusive brand. Today, BMW vs Atieva is a walkover.
Skeptics might say: “Look at the scoreboard – where are the car sales?” And they would not be wrong – for now. But woe to those who underestimate Chinese determination. “The thing to know about the Chinese is that they never, ever give up,” former GM China CEO Philip Murtaugh reminded me over dinner in Shanghai years back. Keep in mind, too, that Chinese never wander far from their history.
As Chairman Mao once declared: “A revolution is not a tea party. It cannot be so refined, so leisurely, so gentle. A revolution is an insurrection, an act of violence by which one class overthrows another.”
This vanguard of Chinese electric vehicle makers with global ambitions senses a once-in-a-hundred-years shot at epic disruption. Like insurgent fighters, they feel quicker and less fixed in their ways than traditional car makers. Bucks to acquire the best technologies and people – they have that, too.
So, whether these purposeful Chinese entrepreneurs eventually triumph or fail is history still to be written. But here’s a friendly heads up to established automakers: Tea will not be served. (Reprinted from Forbes.com)
(Michael J. Dunne is CEO of Dunne Automotive Ltd. a strategic advisory firm with expertise in China, electric and autonomous vehicles. He is also author of American Wheels, Chinese Roads.)