Electric-car companies are springing up all over China, with the official tally standing at 487, according to Trefor Moss in The Wall Street Journal. One of the most recent is Singulato Motors. Moss reports that the company, run by a former Internet security executive who had never run a car company, received $535 million in land and capital from officials in the old mining town of Tongling who know little about electric vehicles.
Moss quotes Liu Yi, director of Tongling’s investment bureau, as saying, “Car manufacturing reflects a city’s strength.” She educated herself on EVs, Moss reports, and concluded that Singulato’s concept of an EV that would be easy to personalize sounded like a winner.
Moss points out that electric vehicles constitute one sector of President Xi Jinping’s Made in China 2025 plan. There is a downside. Writes Moss, “Singulato chief executive Shen Haiyin estimates that just 10% of today’s EV startups will survive the next five years. Some auto analysts put the figure nearer to 1%.” Shen believes his company, having raised around $1.2 billion from private investors, has a fighting chance to survive.
Moss quotes Paul Gong, an analyst at UBS, as saying, “A lot of capital is being invested in this industry. A lot of it will be wasted.” However, Moss further quotes Scott Kennedy of the Center for Strategic and International Studies as saying that for some companies, “…simply giving it a shot and receiving government support can be a reasonable business model, even if they never put an electric car on the road.”
The startups will have to compete against established foreign and domestic automakers. For example, Moss reports, Tesla recently signed a deal to build a plant in Shanghai that could build 500,000 vehicles per year. (Of course, Tesla is facing its own problems producing cars in the U.S. as it struggles to ramp up production of its Model 3 to 10,000 units per week, as reported by Fred Lambert at Electrek.)
Moss reports, “Some 777,000 electric vehicles were sold in China last year, nearly half of the global total.”
He adds, “Singulato’s first car, the iS6 sport-utility vehicle, priced at around $43,000, hits showrooms later this year. By 2020, it hopes to sell around 60,000 of them.”
As for Tongling, Moss quotes Liu as saying, “We needed to seize the opportunity. If Tongling hadn’t, other cities in Anhui would definitely have done it instead.”