The Swedish revival

NEVS President Mattias Bergman sits down with Alex Kreetzer to discuss automotive trends, rebuilding Saab Automobiles and the demand for EV support. 

At first, the idea of reinventing the Saab brand as an electric vehicle company looked like an overwhelming challenge for National Electric Vehicle Sweden (NEVS), who took over the iconic brand in 2011 following the automaker’s bankruptcy. However, with the level of backing and investment from such partners as the city of Tianjin and the Chinese State Research Information Technology, NEVS has become a likely front-runner in the evolving EV sector.

The launch of the NEVS badge has taken a colossal amount of time and money, with the ‘official’ revival finally ready for this summer. In 2014, NEVS unveiled its new EV sedan based on the last generation 9-3, but with many updates including the chassis, interior and body work. The vehicle is being manufactured in Trollhättan, Sweden, for the local market, and will also be built within one of its Chinese facilities situated in Tianjin. The 9-3 has undergone extensive research, with NEVS engineers testing the capabilities of electric powertrain production through an assembly line that has been out of action for a while. The EV will help the company generate the capital it needs to introduce four new additions to the market; in the long-term, the product line-up will include a compact SUV, a midsize SUV, a midsize crossover and a fastback sedan, with all models riding on a new all-electric drivetrain called the Phoenix Architecture platform. In short, the main focus for NEVS right now is to gain enough capital to comfortably and effectively introduce its range into the global market. I speak with NEVS President Mattias Bergman, the man responsible for the revival of the iconic Swedish car, to understand what one must do in order to succeed as a new player in the challenging modern automotive industry.

Following the trends

Bergman says that, at this time, there are three mega trends that will shape what he calls the “disruptive industry.” The first, he tells me, is the change in powertrains from fossil fuels to electric, predicting that more traditional - and dirty - fuels will end somewhere between 2050 and 2070. “The technology is ready and the environmental challenges mean that we cannot wait to run out of fossil fuels - the change must come now,” he says. The next disruptive change will be brought on by connectivity, which will see connected car technology gradually developing from passive safety to active safety and eventually towards autonomous technology. This will have a huge impact on how we will use cars over the next few years, so automakers must adapt to this new mobility-driven era. The third mega trend concerns business models, with manufacturers having to take a more innovative approach to how they operate. Fewer people will actually own a car, utilising such innovations as car sharing and cheap transportation services such as Uber. “The shared economy will mean that customers will have a car that is optimised for each transport need at any given time. For example, you may use a smaller car if in a city like London, possibly commuting with other people and, in some cases, not even need a vehicle,” says Bergman. This means that cars will start to play their part in the entire transportation system, showing the progression of developing infrastructures around the world. “These are the three main trends in the industry, which will change the way people live and how OEMs operate, with customers only paying and using a car when they need it.” Times are changing; it is important that leading players evolve and adapt quickly, otherwise someone else will swoop in and take over.

Although they have the resources to adapt to this change, OEMs have invested so much into existing technologies and infrastructures that they are failing to transition quickly. “It is not easy for them to stop producing the conventional platforms that their whole industrial footprint is built on,” Bergman explains. “They will eventually change, however they risk cannibalising their existing investments if they do it too quickly.” This is a major problem for global automakers, especially after the flood of startups and software companies entering the now technology-focused automotive industry. These companies are capitalising on modern business structures, such as connected services and mobility technology, and have a fresh approach throughout their operations. However, these companies do not have the infrastructure and technical competence to operate full-scale and are inexperienced in manufacturing their own vehicles. This is where NEVS takes full advantage, as the business has the experience and infrastructure of both industries, thanks to the Saab Automobile acquisition. “We have the full legacy of Saab cars, not only the production plant in Sweden, but two production plants in China and the technical know-how to industrialise it,” Bergman tells me. “This means that it is quicker for us to go fully-electric and utilise these mega trends that optimise our vehicles for these new transport needs.”

Rebuilding the former Saab Automobile

It is a strange time for the automotive industry, with OEMs racing to get new technologies and innovations out to compete with startups from around the world who now pose a threat to them. However, as mentioned before, these startups do not have the manufacturing infrastructure to cope, so there needs to be some form of collaboration between them and manufacturers. NEVS benefits by having Saab’s automotive assets and experience. There are not many companies in the same position as NEVS, which has a significant amount of manufacturing resources which will propel the brand in the open EV race. This was not an easy task for NEVS, which had to overcome many restrictions from previous owners and, fundamentally, had to introduce an entire new business framework into Saab’s outdated operations.

Bergman was responsible for taking over the Saab Automobile bankruptcy act and was introduced into the process when the brand was already under reorganisation. This meant that he had time to prepare for the shutdown and strategise the revival. “The amount of debt totaled around ten billion SEK (approximately €1 billion), so we took the decision to prepare for the inevitable bankruptcy,” he tells me. “We had a business plan and we had industrial partners ready for it; there were 14 different international companies competing to take over Saab, but some of those companies were only interested in taking over some physical assets or technologies from the brand. We put in the highest cash bid and won the acquisition, taking over the factories and the IP (intellectual property) for the Saab 9-3.” Unfortunately, General Motors refused to sell the 9-4 and 9-5 models to NEVS and even refused the licensing of some systems that were found within the 9-3. This meant that all GM IP was left behind, so NEVS could only work with the single IP it was granted from the Saab brand.

This created significant challenges for Bergman and NEVS engineers, who needed to develop the original platform to incorporate an EV powertrain and modern technology. “We started to convert the 9-3 to an electric powertrain on the Phoenix Architecture platform. However, at the time, this was only prepared for conventional or hybrid powertrains, so we had to modify the platform to be 100% electric and operate within the existing 9-3 body,” Bergman tells me. The company went to great lengths to adapt the 9-3, such as redesigning the floor so that it could hold a battery weighing over 400 kg, developing a completely new electrical system to support connected car software and making a range of stylistic changes to modernise its appearance.

Knowing the ropes

NEVS partnered with software specialists to accelerate the company’s EV production goals, which again helped the automaker accelerate the development of the new generation 9-3. It formed a cooperation with Hewlett-Packard (HP), which has been a partner since NEVS got things up and running, helping to replace the GM IT infrastructure, and has helped the company leapfrog the competition by leveraging its experience.

New players are also looking to poach experienced automotive executives from distinguished OEMs and software specialists, in order to gain vital knowledge in the sector. Most startups do not have the experience needed to compete with rivals whose executives have been involved within the automotive industry for decades. This is the same case for the OEMs, who have the manufacturing experience but want software specialists to help develop automotive technology. Bergman explains that, “if you have the money, it is really easy for anyone to buy the resources to build a factory, although the success is in the people who design the cars and optimise the systems to produce and sell it. Without the people at Saab, who have been developing iconic cars and shaping the automotive industry with over 30 years of experience, it would be impossible for us.” Although it had the manufacturing experience, NEVS has had to introduce expertise into areas that Saab was lacking, such as battery technology and smart connectivity. Now, the company has become an attractive employer based on its innovation and vision of going all-electric. “Yes, there are very successful OEMs who are leading the industry today, but they will not have a full-chance to be focused like this and make the transition,” Bergman explains. “You could say that we act like a startup, just with a lot more resources.” With 2,500 employees in Trollhättan and China, NEVS is significantly greater than your typical startup, but still retains the flexibility of one.

Building the infrastructure: an industry effort

The main hurdle for EV manufacturers like NEVS is the lack of infrastructure that surrounds them. OEMs are building and developing EVs but governments are not investing in the infrastructure at the same rate, creating a lack of support that has halted progression. NEVS has a close relationship with the State Grid in China, its core market, which controls 88% of the electricity distribution in the country. Not many rivals can boast government partnerships on this scale, however NEVS must continue to create similar relationships with authorities in different markets in order to develop the infrastructure and, above all, sell vehicles.

“People who have previously been anxious about the range of EVs are starting to change their minds as vehicles are now producing very attractive performance figures; it is more important to look at how people are driving the car,” says Bergman. “90% of people do not drive more than 100 km per day, which means the typical EV that can travel 300 km on one charge can easily handle day-to-day tasks. The biggest problem you face is the infrastructure around the vehicle. If you live in your own house, you would charge the car whilst you sleep and when you arrive at your office. But when you live in a big city with apartment complexes, there are not enough charging points for everyone.” In addition to this, consumers will need to be able to fast-charge when traveling between distant cities or countries, which is almost impossible in most places at present. Until this is resolved, customers will simply not buy EVs.

This creates a catch 22, as companies will not build enough charge stations until there are more EVs on the road and consumers will not buy them until sufficient infrastructure is built. This is one reason why NEVS has put its initial focus on China, because it has been building the infrastructure from day one, supporting EVs with a large roll-out of charging points. “We will work together with the cities in which we are launching the brand as they play an important role in the technology-shift,” says Bergman. “This is especially important with technologies that governments want to implement into their societies - to lower emissions for example - who will subsidise the investments in the infrastructure through the initial phases.” However, as Bergman tells me, “some governments are extremely good at this, but some are very poor,” which illustrates how important collaboration is between carmakers and governments.

It is true that battery technology is rapidly improving EV efficiency, increased competition is driving down new car prices and we are finally starting to see some signs of an EV infrastructure forming in some countries. But, fundamentally, in order to eliminate range anxiety and electrify the market, we must create a standardised charging network. There are three main technologies for charging, which means each OEM needs to prepare its cars for three charging attachments, whilst those who are producing them have to build three different charging points. Bergman draws similarities from the telecom industry, stating that “if Europe did not utilise the Global System for Mobile Communication (GSM), we would not have the standardised infrastructure to support the mobile phone phenomenon we see today. This is the same case for EV charging.” Collaboration is key and, with the support of governments and OEMs, the industry can work towards an industry standard. “It is important that we as OEMs are not sitting on the sideline and letting everyone else decide on the infrastructure. We need to help form this standardisation and find the right solution,” he assures me.

The future looks promising for NEVS, which will utilise the megatrends in the industry in order to achieve its global vision. Once kicking off in China, Bergman will help gradually roll the brand out on a global scale, going head to head with global OEMs hoping to take the top spot in the EV segment. “We are a company driven by vision, to shape mobility for a more sustainable future. We will aim to provide our customers with an opportunity to move themselves without having the negative impact of emissions whilst adapting business models so that they can use a vehicle in a completely new way,” Bergman concludes.

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