Electric vehicles (EV) are changing the ecosystems of the carmaking industry. Many companies with different backgrounds, such as in ICT or even the smartphone industry, are entering this market. More and more startups are also expected to join this game in the future. MIH Alliance, a Foxconn (Hon Hai)-led initiative for developing EVs, has built an open platform to connect the carmaking companies and components suppliers. MIH even aims to electrify all buses in Taiwan in the next five years, according to Jack Cheng, CEO of MIH Alliance.
Cheng shared his visions of the future of the EV industry in a recent interview by DIGITIMES, ahead of his upcoming fireside talk with Monika Mikac, CBO at QEV Technologies and former COO of Croatian EV startup Rimac Automobili, in "Asia Venturing (II): Tech-Driven Mobility," slated for August 10, 2021.
Q: Mikac used to work for Rimac and is now working for QEV. These two companies are closely involved with electric car racing Formula E. Formula E had a race in Beijing before. NIO, which you co-founded in China, had a race team in Formula E. Can you share with us the story behind it, and why these startups like to start with racing?
A: I didn't know Mikac had been at the track (in Beijing) that day, until she mentioned it to me. It was our first race at Formula E, in October 2015, near Beijing's National Stadium. Rimac makes electric supercars, too. So she and I have a lot in common that we can talk about.
Why is there Formula E? The story should be tracked back to Formula 1. You know, branding isn't easy. If you want to build an iconic brand like Ferrari in such a niche market, you have to start at the racetrack.
If your car can race at such high speeds, endure intense challenges and drives, it means your company will be able to make better cars than others for daily life.
NIO's goals were very clear at that time - to win the championship in 2015, launch a supercar in 2016, have its first volume-production-ready car in 2017, and go public in the US in 2018. We had these specific goals, and what mattered then was speed.
Car racing is the fastest and the most intense sport. In 2015, we won the Formula E driver championship; the next year, we launched EP9 in London, which was based on our electric racing car with 1,350 horsepower and it took only 2.5 seconds to go from zero to 100kmph. And there we successfully built our brand image.
Only those who are passionate about cars would work in the racing business. They are all very sensitive to speed - car speed, work speed, reaction speed. Speed is all about passion and about a higher value.
Just because we did the right thing, our car was able to start mass production afterward.
Many drivers in Formula E used to race in F1. Our champion driver Nelson Piquet Jr is the son of former F1 champion Nelson Piquet.
I worked for Fiat when Ferrari was one of its brands. Many Ferrari drivers now race in Formula E. Mercedes' Lewis Hamilton has said he would not join electric car racing, because racing drivers like hearing the engine roaring and feeling the impact from the engine. But many young racing drivers have turned to electric car racing, as the world now has a different view on environmental sustainability and brand image.
Q: Having worked for Ford, Fiat, and a startup like NIO, what can you bring to MIH, which is connected to a company (Foxconn) known for its strict discipline?
A: Foxconn is a respectable company that seems to be run by military-style management. It focuses on cost control and standard procedures. Any company is supposed to be run in such a way. Startups usually give a general impression of being more casual and flexible. Employees don't need to dress formally to work.
After all, it all depends on the company's culture and its basic discipline. On top of Foxconn's cost control, punctuality and strict procedures, we want to revitalize the company and show our strength and beliefs to make people feel our passion.
How to revitalize a company? We can make the company more colorful, more musical and artistic. Employees won't feel that they are just completing a task but living it out. Working then becomes a lifestyle to express the love of life, the pursuit of art, and the concern for the environment, which allows our next generation to have a new starting point. If we care about our environment and sustainable development, we can have a broader vision to imagine what this company will be like in five years.
We are thinking about how to reduce pollutions with our own ideas and technologies. I love what we are doing. We will start with both government- and privately-run buses in Taiwan. I hope in five years we can replace all 16,000 buses in Taiwan with zero-emission electric buses. After that, we will turn to scooters and cars.
Cars powered by fossil fuel have long been a major source of noise and air pollutions. My vision is to create a comfortable environment with a better transportation system to give our children a better future.
Q: Although the EV industry is growing fast, it's still relatively small. When do you think the sweet spot will come in the EV industry? Why?
A: Some say the EV industry is likely to reach its golden cross in 2025. I am not sure about 2025, but I'm sure it will happen. Once car batteries can run 700-800km on a single charge, exceeding the endurance distance of 600km after one fill-up for ICE cars, we are close to that golden cross. If we continue to solve the problem of insufficient infrastructure and get rid of the anxiety over battery endurance, the golden cross will occur. After that, the EV industry will see sharp growth.
The battery's energy density increases 8-10% every year. It will become much higher whenever solid-state batteries with higher levels of energy density are developed. By 2025-2026, an electric car can easily run 900km on one charge. For now, it's about 400-500km.
Traditional carmakers know they have to change and embrace electric cars. We can see that GM has bought Cruise; Ford has bought Argo; Volkswagen is investing EUR30 billion (US$ 35.6 billion) in enhancing its software capability.
Newer companies, like Tesla and NIO, entered the market with ICT and IoT technologies. What MIH aspires to do is to help traditional carmakers change and lower the threshold for startups. Car manufacturing isn't a simple business. It requires a high amount of capital to build a new platform.
Now, Xiaomi and Oppo both want to build their own cars. In the future, Armani and Ferragamo might as well want to play a role in the car industry. But it will not be simply a car manufacturing industry, but rather a mobility industry embellished with concepts of fashion and lifestyle. It will be completely different from Tesla, NIO, Toyota or GM. We also expect to see more ICT companies join this game, such as Amazon and Microsoft.
We aim to build a dynamic ecosystem where new players could stand a chance in the mobility industry. The players in the carmaking industry will keep changing. Every few years, traditional car companies would merge or regroup, just like the mobile phone industry. There are always new players entering the market too.
These changes can bring both challenges and opportunities to everyone. It's the driving force behind everything.
(Editor's note: Asia Venturing is a series of monthly roundtables with roadmaps to the future focusing on the hype v.s. the reality of Asia's supply chain-boosted innovation ecosystem, jointly powered by DIGITIMES and Anchor Taiwan. We bring together leading industry luminaries, corporate strategists, experienced investors, and entrepreneurs to expand your network and redefine the possibilities of cross-border opportunities.)
Jack Cheng, CEO for the MIH Alliance