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Does the industry need a company like NextEV?

The following is a recent interview with William Li, founder & CEO of electric car startup NextEV, by He Fang, senior editor of 21 Shiji Jingji Baodao (21st Century Business Herald). It tells the difference between NextEV and Tesla, LeTV and how the startup chooses partners when approaching its project of making cars. – Editor

The difference between NextEV and Tesla

He: Is Tesla the initial inspiration for the idea of making a car?

Li: Not exactly. I think that automakers should evolve into a “3.0” phase when I raised the concept of internet era in 2012, but later I realized that none of the existing automakers is able to enter such a phase. Wal-Mart will never become Amazon.

I decided to build a user enterprise then. Only when electric car integrates the mobile internet, can we redefine the driver experience, rebuild automotive industry chain and change relationship with our users. Tesla, which was already famous at that time, actually encouraged me in my decision to build a user enterprise.

In my opinion, a new carmaker has no opportunity if it is unable to go longer than Tesla, which has been in the industry for a decade. The foundation of building a new enterprise is integration between mobile internet and electric car.

He: Will NextEV become the second Tesla?

Li: NextEV will go longer than Tesla. Tesla is based on internet thinking, but NextEV relies on mobile internet thinking. We care about people who have bought our products or made connections with us before purchasing our cars. NextEV will not have sales department, but only a customer service center. In the internet era, we can make communications with users at any time.

It is hard for other automakers to imagine that the foundation of our existence is providing services for the people who buy our cars. We have a chance of building a new auto brand and change the user experience in the internet age.

NextEV is designed to create a pleasant and comfortable life for customers, rather than becoming a carmaker. We will make R&D and products related to user experience independently, but find a qualified partner to manufacture our vehicles.

The difference between NextEV and LeTV

He: What is NextEV’s global footprint?

Li: We will build R&D centers globally, but assemble cars in China initially. This is a more practical development route which will enable us to meet our goal.

It is not reasonable to build electric vehicles overseas before achieving success in the Chinese EV market, which is the largest globally and has received the most government support. We do not need to make a show in foreign countries. As a Chinese startup, NextEV aims to gain success in China first.

We respect other startups because we hope to make the EV market more attractive and stronger hand in hand, although we have different paths.

He: Can you update the progress of your global activities?

Li: NextEV has built an R&D team of about 700 people, including former BMW’s i-series team, such as interior and exterior trim director and senior designer. We have established an R&D center covering several thousand square meters in Munich, Germany, attracting many talents in automotive engineering, R&D and materials. We chose a company site in Silicon Valley, which is home to talents in software, smart cars, telematics and autonomous driving, in June 2015 and started building a U.S. team in July 2015.

He: What is the duty of the R&D center in Shanghai?

Li: Actually, we conduct R&D based on global cooperation. The Shanghai R&D center is responsible for automotive engineering, battery, electric motor and electronic control of the first mass production car, which is designed and manufactured in Europe. Powertrain system R&D is conducted by teams in the U.S., Europe and China, but the system integration is in Shanghai.

He: Will NextEV produce batteries independently?

Li: We will produce electric motors and battery packs independently, but battery cells will be manufactured in collaboration with our partners.

Opportunity for high-end EVs

He: Many people question whether the industry needs Qoros. Do you think the industry needs NextEV? What are NextEV’s advantages compared with traditional automakers, other startups and Tesla?

Li: Qoros is a traditional carmaker. It needs opportunities as it enters in the red sea market. Qoros is facing difficulties because competition exists in not only vehicle quality, but also reputation, service and brand premium.

Traditional automakers, which have started development of electric vehicles, will not threaten us at all. They do not have advantages in user relationship as they cannot communicate with users directly. As a new startup, NextEV is closer to users and more rapid to act after a decision is made.

Producing electric vehicles is NextEV’s opportunity. People in tier-1and tier-2 cities are waiting for high-performance electric cars.

He: Is this NextEV’s opportunity?

Li: Foreign brands may not gain a considerable share in China’s EV market until 2020. This is an opportunity for all high-end Chinese EV brands in the next five years.

He: How do you define NextEV?

Li: We hope to be a company capable of creating a joyful lifestyle for users through providing a high-performance smart EV.

He: What do you think the biggest challenge for an electric car is?

Li: Battery. High price and heavy weight of batteries is now the biggest problem.

He: How does NextEV solve the charging problem?

Li: We will build our own charging network. Our ultimate goal is to provide better user experiences than combustion engine vehicles.

How to choose partners

He: How will NextEV cooperate with traditional automakers?

Li: Manufacturing cooperation means that partners should all be involved in production line design, quality control and process improvement. This is very different to contract production.

He: Why does NextEV decide to manufacture vehicles through outsourcing?

Li: I do not believe that a startup will do a better job in manufacturing vehicles than traditional automakers. I respect manufacturing industry. I will not do everything, but do what I am good at. As a new startup, NextEV would face intense financial pressure if it builds a vehicle plant on its own. We conduct manufacturing cooperation, not simple outsourcing.

He: Can you tell us NextEV’s partners?

Li: We will announce them at a proper time. We have chosen two partners among five companies.

He: An expert said earlier that it is impossible to produce EVs if a company does not have ¥10 billion ($1.5 billion) of capital reserve. Do you agree? Where does NextEV’s money come from?

Li: Yes. I agree. Automotive industry is a capital intensive industry. An electric car startup cannot succeed if it is not strong in financing.

We do not worry about capital because we have eight investors, including me, Li Xiang (co-founder of Autohome), Liu Qiangdong (founder of jd.com), Tencent, Hillhouse Capital, Sequoia Capital and Joy Capital. In the first round financing, I even told them to invest less money.

(Rewritten by Katrina Dong based on author’s partial interview published on China Automobile 30 Think-Tank)

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