In March of this year, Jiang Dalong was chatting with a Swedish cab driver all the way to downtown Stockholm from the airport. He asked the driver: Which car do you consider to be the worlds best? The driver paused and answered: The Saab. But the company has gone bankrupt. Every time I think about it, I feel so sad.
And then without being able to control his emotion, the driver asked to stop the car at the roadside. Choked up, he declared that Swedes like him would be grateful to whoever could bring Saab back to life.
Jiang asked what the cabbie thought was the best road to that rebirth.
Not a car that uses gasoline," he said. "It has to take a special path.
It was just a few days before this conversation that Jiang had submitted his bid to acquire the Swedish company. I thought, were I ever given the chance, Id never let them down, he recalled in a recent interview with Caixin.
Jiang Dalong is the president of National Electric Vehicle Sweden AB (NEVS) a company formed in May in Sweden with the specific intention of acquiring SAAB Automobile AB from its bankrupt holding.
On June 13, the deal was signed between Saabs liquidator and NEVS. NEV Sweden is owned by National Modern Energy (51%), a Hong Kong-based energy company with operations in China, and Sun Investment (49%), a Japanese investment firm.
At the press conference following the announcement of the takeover, Jiang told reporters that his plan is to build only pure electric vehicles.
Another chance for Saab
In early 2009, due to the financial deterioration of its parent company, General Motors, Saab was placed on the road of no return. It was sold twice before it embarked on insolvency proceedures. During this process, several Chinese companies lacking certain core technologies in car manufacturing competed for Saab, and all failed. They were not alone, as offers from other car companies from various countries were rejected because General Motors, the major supplier of Saabs parts and owners of its major intellectual properties, opposed the sales, an industry source told Caixin.
The reason why GM opposed the other Chinese deals is very clearly known. It does not want to foster a new competitor in China. The NEVs clean energy background therefore makes it distinctly different from the others.
I was still not sure of making it until the last moment. Our bidding price was not high, nor did we have car industry experience. At the peak there were as many as 13 big multinationals in the competition, Jiang said.
We are very careful with every penny we spend. No business class, no luxurious hotels, no brand-name lawyers, Jiang went on, pointing out that he didnt even hire a mergers and acquisitions adviser.
The success of his bid obviously surprised a lot of people in the automobile industry. So how did Jiang make it? In his own words: Because our operation in the field of biomass power generation is highly esteemed. Our approach has been recognized.
An industry source analyzed that Jiangs acquisition coincides with a new energy boom at home and abroad. He is trying to build up a green industrial chain that runs through power generation, electricity transmission, and the use of electricity. The electric vehicle is downstream in this chain. The transition of the Saab is basically a traditional shell coupled with a new energy source.
Jiang didnt deny that the Saab transaction amounted to $250 million dollars, as rumored, merely saying that he had agreed not to reveal this information. The scope of the purchase covers Saabs major assets including Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB, as well as the Saab factory.
Nevertheless, the rights to use the name Saab, a key point, has not yet been granted. Not insisting on this actually contributed to striking the deal, although negotiations continue. Im sure all parties will eventually find the right solution, says Jiang.
An industry source pointed out that the fact that the trademark is not included in the acquisition, even though NEV wants to use the name, means it will probably have to pay tens of millions of dollars each year.
An electric future?
The majority of people who have been engaged in electric car development are not so optimistic about Jiangs move. The clean energy companies, such as biomass power generation and energy storage, in which Jiang invests have shown poor profitability up to now. At the same time, he will need to make huge investments in research and development for the electric car.
Because of GM's refusal to license the technology in the Saab 9-5 and 9-4X models, NEV has bought only the 9-3 model. Saab Automobile Parts AB is not included in the acquisition either since GM possesses most of its intellectual property.
However, Jiang is confident about the future prospects of the electric car market. He showed Caixin reporters a McKinsey industry research report that says that by 2020 there will be over 200 million cars in China. This means the fuel they will need is equal to the total global oil production. Traditional cars are certainly not going to be sustainable. So we bought Saab and we will transit from its current 9-3 version to an electric version, then we will develop the Chinese market where the huge potential lies, Jiang stated.
In Jiangs viewpoint, Saabs origin as an airplane manufacturer means its very specialized in the technology of lightweight construction and security. Thus is precisely what the future electric car needs.
But automobile professionals believe that neither the technology nor the market for electric cars are mature yet. The typical proof is that up to today none of the worlds car manufacturers have been able to mass produce an electric vehicle, unable to resolve issues around safety, driving range and charging convenience.
However, Jiang is confident. Ten years ago, many people also questioned and opposed the idea of biomass power generation, but we made it. He said that since late 2006 National Bio Energy, over which he presides, has benefited tens of millions of farmers, and has accumulated more than 6 billion RMB ($944 million) of cash by producing grid power.
Jiang, who believes that electric cars will start turning profits within 10 years, emphasized the social responsibility of an entrepreneur. If you do the responsible thing," he said, "profit will come sooner or later.
Read the original article in Chinese.
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