Wanna Buy an EV Company? China Has Some for Sale

By · January 10, 2013

Images from WonderEV.com

Images from WonderEV.com.

Remember when the China market was the golden child of the pure EV world? When U.S. companies wanted to get a piece of the China EV market because it was going to be HUGE? Well, it seems that bubble has burst.

China’s EV market is growing even more slowly than the electric car market in the U.S. American investors aren’t as enthralled by China EV investments as they once were. China’s central government hasn’t given up on electric vehicles. But it has gotten more particular about what companies it supports. So small Chinese EV companies are looking to the U.S. for investors. I think it is a waste of their time and money.

A few days ago, I got several emails from Jiangsu Wonder Electric Vehicle Group. Wonder EV is the subsidiary of a privately-held automotive supplier company based in Beijing. It isn’t producing EVs, at least not in any volume. But it wants to. The letter of solicitation seeks US $50 million to establish an EV production base to produce a plethora of EVs, from low-speed two-seaters to high-speed small sedans to vans and golf carts.

WD7200E High-Speed EV title=

Among Wonder EV's offerings is the "WD7200E High-Speed EV," with a top speed of 65 miles per hour, and driving range of 90 miles, according to the company.

There is a small catch. Wonder doesn’t have a government license to produce vehicles in China. So it proposes to set up the production base in the Cayman Islands, start selling vehicles in the U.S. and Europe, then obtain the license to produce in China.

Around the same time, I also received an email from a foreign financial firm’s China representative asking me if I knew anyone who was interested in buying a Chinese EV maker. Uh, no, I replied. If a company in China isn’t able to get support from its home country, it probably isn’t worth investing in.

Initially, China’s central government pledged a lot of money to jump-start the EV industry. But it has realized that much of that original investment was wasted. So it is focused on the larger companies that have, or can obtain, good technology. “More and more the (central government) support for all automotive seems to be selective based on a defined, long-term plan,” a friend who is a top executive at an international supplier with major operations in China told me.
He agreed with me that a lot of the investment in producing pure electric vehicles will go to waste. Hybrids—plug-in electric and regular—are where companies in China should be focused in the near to medium term, he said. That is in keeping with the most recent central government EV plan. He also said U.S. private equity firms have stopped funding EV projects in China.

So if you get any emails soliciting investment in a pure EV company in China, best to ask if it also has plug-in hybrid technology. Even then, it might be best to hold on to your cash.

Comments

· · 1 year ago

One more piece of evidence that current price/performance of EV tech hasn't hit as close to the consumer sweet spot as many of us had thought (hoped?). Yes, in the U.S., the tax rebate approach to subsidies has needlessly complicated calculation of bottom-line prices (especially now that December's over and tax credits are a year away again), but even so, if you do take that tax credit into account (which middle income buyers in Nov. and Dec. could do pretty easily), Mitsubishi's been delivering a perfectly reasonable EV for way under $25k, and Nissan's Leaf is comfortably under $30k. Ask me 5 years ago, I'd have said those prices for highway-legal four-passenger electric cars with 50+ miles of range would have unlocked all kinds of demand, but that has not been the case. Comments on forums verge on the ridiculous (as in "Call me when you can build an EV for the price of a regular Corolla that goes 150 mi on a 10 minute charge."), so I'm not sure where this industry is headed.

I tell ya, I'm just happier and happier that I got my i-MiEV while I could. EV fans need to keep an eye on their local Mitsubishi lots - there could be some EV deals there Real Soon Now. I certainly hope EVs will stay in the U.S. market, and if they do I'm sure they'll keep improving, but I'm getting a tad pessimistic as to when we'll next see prices this low. Perhaps the 2013 Leaf in stripped-down "S" trim will prove me wrong - I certainly hope so.

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