NextEV is interested in dominating and exploiting the highly lucrative Chinese EV market
William Li is not a boundlessly optimistic and typical Chinese technology entrepreneur. The startup ‘NextEV’ founder has huge plans to disrupt the Chinese EV market. Venture capital companies ‘Hillhouse Capital’ and ‘Sequoia Capital’ are financially backing the startup. Tesla founder and CEO Elon Musk inspire Li.
Li grades his chance to succeed in the Chinese fast-moving vehicle market at a whopping rate of 5%. He also holds the perspective that many new business models for electric vehicles discussed by technology companies will turn into junk.
Such hard-nosed realism is possibly wise. As international automobile executives join for the Beijing Auto Show next year, a torrent of funds is flowing into the alternative energy automobile market of the nation, which includes fuel-cell cars, plug-in hybrids and electric vehicles.
In a region with very high levels of pollution and a highly urbanized population, the auto-market of the country looks huge to traditional vehicle companies and new technology businesses jumping in.
The government of China is promoting what it views as a strategic sector with huge subsidies for consumers and companies. It is interested in increasing the new EV sales to 3 million units on an annual basis by 2025, which are far more than 330,000 last year. In February, Chinese premier Li Keqiang urged industry players and local government to ramp up building of charging stations to house 5 million EVs by 2020.
Now, a Shenzhen-based car maker ‘Build Your Dreams’ dominates electric car business, 9% owned by Warren Buffett’s Berkshire Hathaway, that has a 18% share of the Chinese new energy automobile market. At the show, Buffett’s company will introduce its new entry-level SUV known as The Yuan, which is the name of the 13th century Chinese dynasty.
Yuan has a starting price of $32,368 (209,800 Yuan) for its hybrid version. In China, Tesla is one of the players too, where it delivers Model X and Model S, though the Pal Alto based vehicle maker would wish to turn into a larger one. For the initial 9 months, the company delivered 3025 automobiles in the Chinese region, which is less than 11,477 units sold by BYD.
BYD also sells its electronics in Japan, Germany and the US and successfully crossed Musk’s organization to turn into the largest manufacturer of new EVs in 2015. This could play to the tech companies’ strengths. The Chinese automobile market could turn into the perfect lab to test new business models and services, according to Chinese auto consultant Gao Feng Advisory’s managing director Bill Russo.
Bill compares vehicles of today with the cellular phones 10 years ago, when apps began to rise in popularity. Tech organizations could award contracts of automobile production to manufacture vehicles, but then generate recurring sales revenue by offering vehicle owners with internet facilities and data products.
It is definitely a vision to gather details. Many tech organizations are participating in the competition. Some of those include Foxconn and Tencent.