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Jon LeSage

Jon LeSage

Jon LeSage is a California-based journalist covering clean vehicles, alternative energy, and economic and regulatory trends shaping the automotive, transportation, and mobility sectors.

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China, U.S. Join Forces In EV Race

Why would U.S.-based electric truck maker Via Motors collaborate with Chinese auto giant Zhejiang Geely to jointly manufacture a medium-duty plug-in hybrid truck?

In recent years, Via Motors has faced the crisis that several electric vehicle makers have experienced: finding the necessary capital and market demand to successfully manufacture and market the costly trucks. Several other companies have faced near or actual bankruptcy, but were salvaged and revived by these new backers, with some of them based in China.

Via’s chairman of the board, Bob Lutz, is pleased to see the deal take place. Lutz, considered to be the champion of the Chevrolet Volt while serving as vice chairman at General Motors (NYSE:GM), sees the deal combining the technical know-how of Via with Geely’s lucrative market potential. 

“Geely is the ideal strategic partner for Via Motors, as the fastest growing global vehicle company, with a demonstrated commitment to the electrification of their portfolio of award winning vehicles,” Lutz said in a statement. “The alliance between Geely and Via Motors combines technology, access to their industry leading suppliers, and a mutual entrepreneurial spirit dedicated to accelerating the global adoption of extended range electric commercial vehicles.”

Related: Qatar LNG Booms Despite Embargo

Like many EV makers, Via Motors had been sidelined by weak demand in the U.S. market from a skeptical and fluctuating audience of fleet operators. A competitor, Workhorse Group, stole some of the thunder by securing impressive fleet sales agreements. Of course, there’s also Tesla’s heavy-duty electric truck, the Semi.

Beyond Geely, other Chinese companies and capital investors see huge potential through crossing over the Pacific — bringing much of the innovation and experience from America over to China’s fast-growing EV market. Now the biggest EV market in the world and fueled by the government’s generous “new energy vehicle” incentives for plug-in vehicles, major Chinese companies don’t want to miss out on the action.

One event that grabbed much attention for these international alliances goes back to 2008, when Warren Buffett's Berkshire Hathaway invested about $230 million into Chinese automaker BYD. Since then, the Chinese company has gained the largest EV market share in the world.

Chinese backers want to bring technology from U.S. and European vehicle manufacturers to become highly competitive and thrive in the Chinese government-backed new energy vehicle market. Government incentives have been extended for a few more years, making China even more appealing for global automakers. Like its overall new vehicle market, electrified vehicles are considered by automakers as a necessity to have a strong presence in light-duty passenger vehicles and electric trucks and buses.

One of the companies seeing the huge potential has is Wanxiang Group, a major automotive parts supplier. Wanxiang placed winning bids on two bankrupt companies, acquiring Fisker Automotive and A123 Systems.

Fisker, an electric carmaker, gained a wave of interest from veteran car designer Henrik Fisker showing off the Fisker Karma plug-in hybrid sports car. Like many other startups in the car business, the needed capital investment became overwhelming. This was exacerbated after 338 of the Karmas were destroyed at a New Jersey port during Hurricane Sandy’s wrath in November 2012.

A123 Systems, a lithium battery maker, felt the pinch from the heavy investments needed for the battery packs, with slow demand coming from the infantile EV market.

Since the buyout, Fisker Automotive was converted to Karma Automotive as it prepares for a more conservative, long-term approach to building a loyal audience for its electric sports cars. As for A123 Systems, the company is seeing better results coming from branching out its battery offerings beyond EV battery packs.

It helps to have deep pockets coming from Wanxiang. Related: JP Morgan: Oil Could Hit $78 Within Months

The Chinese-U.S. relationships haven’t always gone well. Not long ago, Faraday Future was generating a lot of enthusiasm for its FF 91 concept electric sports car. Owned by Jia Yueting, founder of the LeEco conglomerate known for LeTV and consumer electronics, the company looked poised to compete with Tesla. Jia also started up a new branch of his company to bring LeEco high-performance electric cars to market.

All of it began falling apart last year. In July, Faraday Future scrapped its plans build a $1 billion factory in Nevada. A week earlier, a Chinese court froze $182 million of Jia’s assets following a round of financial woes. More recently, Jia moved to the U.S. to raise more funds for Faraday, but still faced quite a bit of unfinished business back home in China.

The China Association of Automobile Manufacturers reported that its country saw 770,000 all-electric and plug-in hybrid vehicles delivered in 2017 — a 53 percent leap over 2016. 

Commercial vehicles make up a larger share of EVs in China than in the U.S. and Europe. That presents great opportunity for companies like Via Motors, Workforce Group, and Tesla Semi.

By Jon LeSage for Oilprice.com

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