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The “return” of Yang Rong with Hybrid Kinetic Group: can he achieve his former brilliance?

Another day, another ambitious automobile startup shows up.

This time, it is Hybrid Kinetic Group and its H600 eco-sustainable electric drive concept vehicle, which was unveiled at Italian design house Pininfarina’s stand at this year’s Geneva Motor Show on March 7. Two weeks earlier on February 23, HKG and Pininfarina signed an agreement worth €65 million for the design and development of an EV with duration of 46 months.

The H600 is a range-extended EV powered by HKG’s super battery system and a micro turbine power generator as range extender. It will make its Asian debut at April’s Auto Shanghai 2017 along with two other new energy SUV concepts.

More interestingly perhaps, is the man behind HKG and the H600 – Yang Rong.

 

Yang’s comeback

Yang (who also goes by the name of Benjamin Yeung) is an exiled Chinese tycoon, who is a well-known, highly successful automotive industrialist with over 18 years of experience in the auto industry and was previously the chairman and CEO of Brilliance China Automotive Holdings Ltd., which he founded as the first Chinese government-owned company listed on the New York Stock Exchange in 1992. He is also former chairman and president of Shenyang Jinbei Passenger Vehicle Manufacturing Co., Ltd. and chairman of Shanghai Shenhua Holdings Co., Ltd.

Originally from Anhui Province, Yang was born in Jiangyin, Jiangsu Province in 1957 and has three brothers. After graduating from junior middle school, Yang became a chef, later contracted a small shop, and then went to Jiangyin Foreign Trade Corp. In the early 1980s, he went to Shenzhen and slowly stepped on the way of capital operation after a few twists and turns.

“I have fought in Vietnam and suffered a serious injury in 1988. My leg was broken and my head had been opened. I had been sent to the operating room three times. Miraculously, I survived without disability. After that I began to treasure and despise life,” said Yang once in an interview.

Yang single-handedly created Brilliance and in 1992 brought it to its listing on the NYSE. It was the first time ever that a Chinese mainland company was listed overseas, which set the precedence for other Chinese companies to follow, even for today. Under his leadership, Brilliance had ¥20 billion ($2.91 billion) in assets and had six listed companies under control and it launched in 2002 the Zhonghua sedan, which was jointly developed with Italdesign Giugiaro and was a decade ahead of the competitive Chinese cars. Yang also established strategic cooperation with Toyota, Mitsubishi, GM, Renault, BMW and MG Rover and laid out the road map for the Chinese auto industry at that time. 

CCTV listed him one of the Top 10 persons in economic business in 2001. Forbes ranked him as the third wealthiest entrepreneur in China in the same year.

However, a year later, he successively experienced asset seizure, office discharge and fled to the U.S. in May 2002 following a dispute with the Liaoning provincial government of committing unspecified economic crimes. While overseas, he sued the provincial government and China’s Financial Education Foundation for assets infringement, which is the first case in Chinese history that the local government of China was sued from abroad.

Yang eventually became a U.S. citizen and is living in Los Angeles with his family now. He has been in touch with Chinese government officials about a homecoming and “hopes to return as an innocent person.” According to Wang Hai, Yang’s attorney in Beijing, after 3-1/2 years of investigation, authorities found nothing and it’s his understanding Yang was cleared of the accusations four years ago following a probe, the results of which were never announced.

While he was in the U.S., around 2008, he sensed the trend of new energy vehicles and felt the urge to seize the opportunity. He set up HKG that year, which has been listed on the Hong Kong Stock Exchange for a very long time. Its predecessor was the Wonderful World of Whimsy, which was set up in 1982. In 1999 Yang took over the Wonderful World of Whimsy through stock swapping and renamed the listed entity the Compass Pacific Holdings Ltd. in October 2000. After some restructuring, the company was renamed the Far East Golden Resources Group Ltd. in February 2008. In March 2010, it was finally renamed to HKG as a hybrid vehicle company that aims to become a world leading technological enterprise in the development and manufacturing of hybrid vehicles, and to provide worldwide customers with vehicles and services that are energy efficient, safe, environmentally-friendly, strong in performance, and high in quality.

 

HKG

In September 2009, Yang announced that the new company had selected Baldwin County, Alabama for a new $4.3 billion plant to build natural gas-powered hybrid electric vehicles. It would employ nearly 6,000 people and produce 1 million vehicles a year by 2018. But he still needs to attain $7.9 billion in startup funds to cover the project’s early expenses, including the Alabama plant and nearly $460 million to design and develop the cars.

To access any incentive funds from the Alabama Development Office or other state and local government programs, HKG must first raise $1.5 billion. Yang’s plan is to solicit wealthy Chinese nationals in Mainland China for a minimum $500,000 investment by dangling the promise of permanent U.S. residency in front of them. At the time, the U.S. had a pilot visa program that rewards a minimum investment of $500,000 in a region with high unemployment or specific rural areas (such as southern Alabama, where Yang wished to build his plant) with a permanent residency visa. However, the pilot program is just that – a pilot program that could end suddenly at the whim of the U.S. government. Yang did his best to make sure that wouldn’t happen, and he spent $120,000 in Washington in lobbying fees to make the program permanent. He also paid former president Bill Clinton an undisclosed amount to make a speech about it in Hong Kong.

In the hopes of attracting more investors, Yang assembled a team that includes German alternative-fuel powertrain experts FEV and Italdesign Giugiaro, which worked with Yang when he ran his first hugely successful car company, Brilliance, in the 1990s and produced a prototype vehicle named Quaranta.

In addition, the company was involved into a legal dispute, Yang sued Charles Wang and other executives, who were running HKG at the time absconded with HKG shares and issued them when they weren’t his to sell. Wang, in turn, accused Yang of reneging on a promise to supply $200 million in startup funds for the hybrid car project and effectively abandoning the project. Both sides settled out of court, and Wang started anew under GreenTech Automotive, or GTA, as part of a reported settlement agreement that included a $1.5 million repayment to Yang.

And according to Alabama local officials in June 2011, the production facility planned to start building around a million new cars per year by 2018 in the State never kicked off, and the Alabama government had to market the site in Baldwin County to other companies while HKG was unable to secure financing for the venture. Apparently Yang’s strategy of utilizing European technology, Chinese funding and U.S. labor hasn’t achieved the noble goal he’s set. Though his desire to manufacture in the U.S. did not come to fruition, alternative energy dream and Yang’s long-term goal of HKG to become a leading new energy vehicle developer and manufacturer remains unchanged.

 

China hope

HKG hasn’t stirred any news since. But Yang has purchased a battery manufacturer and other component businesses in subsequent months and in the early 2010s the company expressed interest in several Mainland China production sites and in 2013, it broke ground for a new facility with the capacity of 10,000 sets of battery systems for buses in Lianyungang, Jiangsu Province, which planned to be operational in 2018. Young also has active business activities in China. HKG’s headquarters is in Hong Kong, it has offices in Los Angeles and Shanghai also. The company also has management, R&D, financial leasing and other activities in Shanghai.

In the past years, Yang and his team have already explored different technology paths, visited many key battery, motor and controller manufacturers, established relationship with suppliers and vendors, accumulated rich experience and attracted the best talents. On June 28, 2016, a fully owned U.S. subsidiary of HKG signed with UQM Technologies, a leading U.S. manufacturer of electric motors, generators, power electronic controllers and fuel cell compressors, a definitive agreement to buy its newly issued common shares representing 58 percent of UQM (54 percent on a fully-diluted basis). UQM has developed the world’s leading electric propulsion systems with products second to none in the world motor markets. UQM has a full line of products for vehicles of all sizes, from small cars to heavy trucks. UQM has both direct drive and motor with transmission solutions for different applications. Compared with other companies’ products, UQM products feature high torque, high efficiency, smaller dimensions and lighter weight. UQM control systems can run at high output power to reduce energy loss. The UQM software can maximize its power output and efficiency, reduce energy consumption and increase range of vehicles. UQM motor control systems can be customized based on customer needs. It is also developing non rare earth motors, which will be a great competitive advantage when everybody is making EVs and rare earth permanent magnetic material becomes short of supply.

HKG has successfully developed its pure electric bus, which features German MAN authorized body, the safest and long life LTO batteries, advanced imported motors and controllers. HKG experts have been working on system integration and developing range-extended EVs.

In terms of bus manufacturing, HKG has already been working with some OEM manufacturers in China. On August 23, 2016, HKG entered into a framework agreement with Shenzhen Wuzhoulong Motors Co., Ltd. on collaboration in establishing an EV industry chain for developing and creating a brand of indigenous NEVs, power batteries and systems that integrate advanced technology and offer competitive value and performance. On February 19, Beijing WKW Automotive Parts Co., Ltd. announced that it plans to invest ¥540 million to set up a power battery joint venture worth ¥2.0 billion in Ningbo, Zhejiang Province with HKG. HKG also discussed a possible JV with JAC back in 2010 with an original intent of manufacturing whole vehicles and production base producing parts in China for use in green technology vehicles. But that deal seems to have ended.

HKG is also hoping to launch a whole range of hybrid vehicles and cars powered by natural gas. The firm has announced that it has committed to an eight-year multi-vehicle design agreement worth $538 million with Italian design house Italdesign Giugiaro.

 

Car from stealth mode: H600 luxury sedan  

The front fascia of the new H600 sedan has similarities with the Mercedes-Benz’s EQ concept and even the Maserati Levante. The design is sleek and looks futuristic. The H600 interior has two fully digital screens, one for the instrument panel and one in the center console for the infotainment system.

Some sources fear that the mysterious Yang, who doesn’t have impressive track record raising enough money to manufacture it in the U.S. won’t work out this time. And that brand-new car with zero brand recognition will be selling brand-new models with zero history behind them won’t be able to compete against all the established car companies that, by that time, will have plenty of proven NEVs on the market. But Yang is confident and says his company will have an advantage over the established companies and will reach his goal through adopting and developing world leading technologies: quick charging batteries and advanced micro turbine power generator range extenders. The range extender runs very quietly at the most efficient speed and emits very little pollutants, at 10 percent of the most stringent Euro-VI standards. His company has also been involving more than 100-patented technologies and signed a $250 million contract with FEV, which will lead technical development.

In the meantime, HKG also has been continuing to raise the necessary funds through a patented financing model named YangShi financing invented by Yang. His long-term plan is still to produce 1 million vehicles a year, but the main focus of the project will be shifting from vehicles to financing. 

Is he a car guy or money man? And whether his plan will evolve into a multibillion facility with capacity to produce 1 million vehicles per year, we’ll know more when we see the real car, and maybe even Yang himself, in Shanghai in April.

SIDEBAR
Technical Specifications of the H600

•          Maximum length: …………………………………………………           5,200 mm

•          Maximum width: ……………………………………………….          2,000 mm

•          Maximum height: ……………………………………………………        1,494 mm

•          Luggage compartment: ……………………………………………….           500L

•          Drivetrain configuration: …………………………… All-wheel torque vectoring

•          Powertrain: Independent permanent magnet motors with gear box, micro turbine range extender

•          Package: ………………………………………………………………           4 doors, 4/5 seats

•          Chassis: ………………………………………………………          Aluminum

•          Empty weight: …………………………………………………………..       1,870 kg

•          Top speed: …………………………….……………………………….          250 km/h

•          0-100 km/h acceleration: ……………………………………………..        2.9 sec

•          Maximum power delivery of electric motors: …………………………        Over 600 kW

•          Range in NEDC mixed cycle – extended range mode: …………..    Over 1,000 km

•          Weight distribution: ………………………………………………….               Front 52%/Rear48%

•          Turning circle: ……………………………………………………………       6.1m

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