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BYTON CEO Dr. Daniel Kirchert: we have only one chance

FRANKFURT – BYTON finally has something to cheer about.

The Chinese smart EV startup known for its German founders and the unique yet controversial 48-inch curved display – the world’s largest in a production vehicle – on the M-Byte smart electric SUV, has secured its first ever overseas investor.

The company entered into a strategic cooperation with South Korea’s Myongshin Co., a subsidiary of parts supplier MS Autotech, on September 25. Besides becoming a strategic investor and partner in BYTON’s C-Series financing round, Myongshin will also work with BYTON in manufacturing, supply chain and distribution, and jointly explore the South Korean electric vehicle market.

Both MS Autotech and Myongshin are subsidiaries of MS Myongshin Group, established in 1982 and now one of five largest thermoforming manufacturers in South Korea producing mainly body components, counting Daimler, Hyundai Kia, Renault Nissan and Tesla as customers with factories in the U.S., India, China and Brazil in addition to South Korea.

Reuters report indicated that MS Autotech, which has close ties with Hyundai, will contract manufacture the M-Byte through Myongshin at a former General Motors factory in the city of Gunsan from 2021, according to a Jeonbuk provincial government official. Initial production capacity is about 50,000 units per year, possibly rising to 150,000 units annually by 2025. Myongshin bought GM’s production facility in June for about 113 billion Korean Won (around €86 million), just over a year after the U.S. automaker closed the facility in May 2018 due to low capacity utilization and pressure to cut costs. Vehicles produced there are to be sold in South Korea and overseas and BYTON could benefit from the country’s free trade agreement with the U.S. and Europe as well as established EV supply chain, according to the Reuters report.

The series of developments came on the heels of BYTON’s first ever appearance at the IAA 2019, or the biennial Frankfurt Motor Show, where it finally unveiled the production version of the M-Byte and announced that it was about to close its $500 million C-round fundraising led by FAW Group, which recently signed a C-Round investment agreement with BYTON. Other investors include the industrial investment fund Nanjing municipal government.

In June 2018, BYTON completed its $500 million B-round, with FAW Group as the lead investor and investment also coming from leading Chinese battery supplier CATL.

The M-Bye production vehicle unveiling and the C-Series financing round update in Frankfurt comes almost exactly two years after the BYTON brand was unveiled on September 7, 2017 and 3.5 years after its former entity – Future Mobility Corp. (FMC), was established. For the previous six months leading up to Frankfurt, BYTON had been rather quiet following the abrupt departure of former CEO Dr. Carsten Breitfeld (now CEO of Faraday Future after a brief stint as CEO of ICONIQ Motors) earlier this year, absence from Auto Shanghai 2019 in April, CES Asia 2019 in June and a delay in the C-round funding that was supposed to be completed earlier in the year.

BYTON finally seems to have solved its money issues, a “growing pain” that has plagued it and other Chinese smart EV startups as they continue to burn cash and march ahead with their product launch plans while weathering an overall slumping market that fell for the 15thconsecutive month in September.

The caveat, however, is that BYTON has delayed yet again start of production of the M-Byte at its own production facility in Nanjing, Jiangsu Province: by another three months to mid-2020. Pre-orders in Europe and North America start in 2020, followed by market entry in 2021.

It had previously been sticking to its yearend 2019 SOP schedule since its brand launch two years ago.

“We have only one chance,” said Dr. Daniel Kirchert, founder and CEO of BYTON, making the comment in an interview with CBU/CAR on September 10 while explaining reasons for the delay.

“Our previous plan was to start production in March 2020. The primary reason we are pushing production back another three months is because we want to have ample time to make sure that quality meets expectations right from the beginning.”

He described the unveiling of the M-Byte production vehicle as an exciting moment and key milestone in BYTON’s three-and-a-half year existence, as well as proof that it would be able to produce the vehicle as promised to those still in doubt.

It was sort of a homecoming for Dr. Kirchert, who speaks fluent Chinese, in addition to his native language of German and English, and has spent more than two decades in China.

“As one of the most important motor shows in the world, the IAA is a yardstick for us. We are on the verge of starting series production and the feedback from media and especially from our future customers, is of great relevance to us,” said Dr. Kirchert at BYTON’s press conference on September 10. “Today’s unveiling of the BYTON M-Byte also shows the effort paying off for the team, which has worked relentlessly on the car for over two years. Within that short amount of time, together we have taken a smart electric car from an initial idea on a white sheet of paper to series production readiness, while also building a coherent infrastructure with locations on three continents and an efficient Industry 4.0 production facility in China. We can rightfully be proud of this.”

Located in the Nanjing Economic and Technological Development Zone in Jiangsu Province, BYTON’s intelligent manufacturing base covers an area of 800,000 m², with a total investment of over $1.5 billion and a planned capacity of 300,000 units. The plant is built to industry 4.0 standards, using cutting-edge manufacturing equipment and technology, as well as an innovative intelligent management system.

Construction of the five major workshops – stamping, welding, painting, assembly and battery – has been completed with equipment currently being installed and commissioning underway. BYTON’s China R&D center in Nanjing was put into operation in September to offer state-of-the-art technical support and quality assurance for subsequent product testing. It boasts first-class R&D and testing capabilities, which can support traditional R&D tests used by other advanced automakers, including environmental wind tunnel, shower and tightness, as well as tests related to the core technologies of smart EVs.

BYTON has started trial operation of the stamping, welding and painting workshops in September and will begin pre-production and trial operation of the general assembly workshop in October, according to Dr. Kirchert. Certification work for the Ministry of Industry and Information Technology (MIIT) will begin in October as well as BYTON completes the remaining steps toward mid-2020 SOP.

“Our entire supply chain was 100 percent finalized about six months ago and now the most difficult part is to put the M-Byte into production,” Dr. Kirchert told CBU/CAR. “We will produce our first batch of pre-production vehicles in October, followed by PTO1, PTO2, etc. and we will invite potential customers to experience the vehicles toward the end of that process. We are confident of the quality of our vehicles. More than a hundred engineering prototypes have completed collision, durability and extreme temperature testing.”

BYTON’s complete vehicle testing program for the M-Byte began in mid-2018. The Attribute Prototype (AP) testing that Dr. Kirchert referred to took place around the globe. It has passed several intensive tests not mandatory by national standards in China, including the North American IIHS 25 percent small offset crash test and Euro NCAP side pole impact test in China with results exceeding all expectations. The IIHS 25 percent small offset crash test is considered the world’s most stringent frontal impact test.

The chassis design and technical layout of the M-Byte is designed to meet or exceed the comfort and maneuverability of premium class leaders, with a focus on a properly developed suspension, progressive brakes and more. The testing will continue, with results and milestones released as the M-Byte advances towards SOP.

The M-Byte’s innovative cockpit centered on the controversial 48-inch curved Display, which fulfills BYTON’s promise of integrating pioneering user-centric technology that changes the way people spend time in vehicles, has an anti-shatter coating that minimizes risk to passengers in a collision. The driver airbag is located just below the Driver Tablet in the center of the steering wheel, and in order to ensure that the driver’s view is not obstructed, the Display is located under the front hood extension cord, so that driver can see the screen content without looking away.

Users can interact with the Display via both the 7-inch Driver Tablet and an 8-inch Co-Driver Tablet.

The 7-inch Driver Tablet for key driver information and controls, which was pioneered by BYTON, will be at the center of the steering wheel just above the full-size driver airbag. It serves as one of the main interfaces for the driver to personalize the vehicle and interact with the Display. The 8-inch Co-Driver Tablet can be found between the driver and the front passenger seats, enabling the front passenger to control the Display and enjoy an interactive experience. Multiple interaction modes with the vehicle will be offered including touch gesture, voice and air gesture control, driver’s face recognition, as well as physical buttons.

On the electric performance side, the M-Byte is available in an entry-level version with a 72-kWh battery and a rear-mounted electric motor that gives it an average range of 360 km or 224 miles (WLTP) and peak power output of 200 kW. The 4WD high-level configuration comes with a 95-kWh battery and an additional 150-kW front e-motor that provides it with an average range of 435 km or 270 miles (WLTP) and peak power output of 300 kW. Both versions are powered by CATL batteries. AC charging is between 3.7 kW and 22 kW, while DC fast charging is up to 150 kW, which allows recharging to 100 km of range in about 10 minutes and 80 percent full in roughly 35 minutes. The M-Byte will comply with local charging and plug standards according to region and feature GBT / CCS1 or CCS2 charging interface.

Dr. Kirchert said that BYTON has so far received over 50,000 reservations for the €45,000 M-Byte (without VAT and subsidies) worldwide with about 20,000 coming from Europe, demonstrating the high interest of the European drivers adapting to electric powertrains. Reservation holders will have priority in placing preorders, which will open in the first half of 2020. That will require a down payment in order to hold an early position in the production queue, which will result in an early delivery.

BYTON plans to open about 30 showrooms in China by the time it begins to deliver the M-Byte in mid-2020 and expand that number to 100 in the mid-term in what Dr. Kirchert described as a “hybrid direct sales” model, in addition to utilizing its brand APP.
“These showrooms are not too big, but must be in good locations and each one must be profitable and offer aftersales service,” said Dr. Kirchert. “We are going to look for the best partners and form a strategic cooperative relationship with them. They will be responsible for operating the showrooms and aftersales and we are not going to give them inventory burden. The customers will still directly interact with BYTON, which will be responsible for the brand experience.”

Convenient services that BYTON plans to offer include vehicle pickup & delivery and mobile service units to solve smaller repairs when the vehicle is not in use, e.g. while at work.

Looking back at BYTON’s development over the last 3.5 years, Dr. Kirchert said it had certainly made a lot of mistakes but the right decision was the product positioning for the M-Byte as a smartphone on wheels and especially sticking to the 48-inch curved Display and a steering wheel with a tablet.

Going forward, a huge priority is to control cost.

“We are a startup. Until we are profitable, we will be in a survival mode,” he said. “Everyone must have this in mind because every penny we spend comes from our investors. We have to be very careful. We are trying to control our staff count to around 1,600 people. It’s a lot of pressure but we have done a lot of work together with FAW to control per-vehicle cost and are confident that we not only have a good product but also reasonable margins.”

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