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What happened to BYTON's late?

From:Internet Info Agency 2019-09-18 14:01:38

"The news of the C-round of financing will be announced at the end of June", this sentence has been deeply imprinted in the memory of many media. However, it seems that time has made a joke with everyone. Since the communication between Dr. Daniel Kirchert and the mainstream media on April 19, and after the roll-off of the first M-Byte body-in-white in early June, BYTON has not revealed any positive news for a long time. On the contrary, BYTON was surrounded by a series of negative news such as “financial chain problems” and “layoff”.

On the evening of August 23, BYTON finally announced that the M-Byte production model will be unveiled at the IAA International Motor Show in Frankfurt on September 10, 2019. Strictly speaking, this is not a big good news, because this result is expected. Of course, this is undoubtedly a test of BYTON's development in the near future. And the results were ideal, so the nerve that has been paying attention to BYTON's movements has been temporarily calmed down.

However, while everyone breathed a sigh of relief, the author still wants to ask: What is going on in the end of this late news? At the Frankfurt Auto Show on September 10th, IIA met with BYTON CEO Dr. Daniel Kirchert.

Dr. Daniel Kirchert, CEO

Q: Is there a delay in mass production?

A: It was originally planned to be put into production at the end of this year and be delivered in next March. Now we have decided to adjust the delivery time slightly later, probably in mid-2020.

Q: Were there many things can’t keep up with plans?

A: Our goal has always been to put into production at the end of the year, and our factory will start trial production next month. I know, many people think that BYTON is not the first and second batch of emerging mass production automaker, but we are not worried about the time. Although it is good to build a car as soon as possible, you can't make any compromises on product quality. Over the past year or so, it has also given us a very important reminder. The planned mass production time was urgent. In the process, we thought it would be a better choice to spend more than a few months polishing the product. I don't think that a few months earlier or later is a big deal. If the product is not good, it will be in vain for coming out a few months earlier. As long as we have our core competitiveness, especially in the interior design, BYTON is still unique, and I think that these two or three years will be a window period for us.

Q: What changes have been made to the funds now?

A: Our C-round financing is coming to an end. The investors currently identified include FAW Group and Nanjing City's industrial investment funds. The estimated size is 400-500 million US dollars. This money is enough for us to fully realize mass production.

Everyone knows that due to many factors, the overall market environment is not very satisfactory this year. But the market is still optimistic about the new forces. The future development of new forces is unchanged, and they can also subvert some traditional things. Under this circumstance, we also completed the C-round financing a little later than originally planned, and the original shareholders continued to strongly support us. Of course, there were some new shareholders. Sometimes startups encounter some interfering factors that are outside their control, therefore, at this time, startups must be supported by particularly strong shareholders. This is an important difference between BYTON and other new forces.

FAW Group has established cooperation teams with us in various fields since last year, and has made significant progress. They realized that BYTON is an independent startup, so they require no participation in our daily operations, but supports us in many ways. Since most of the time a new startup does not have any bargaining space with the supplier, FAW recognize our technology, therefore, cooperation in the supply chain is also valuable to us. In the next step, we will release the specific content of the cooperation, which represents the trust of FAW. Of course, the cooperation between BYTON and Nanjing, the capital of Jiangsu Province, is also significant. The locality has a very good idea of the future development of this field and has also released a series of support policies.

Q: What is the share ratio of FAW’s share of BYTON?

A: It ranges between 10% and 15%. FAW is our important strategic shareholder, but they will not control us. We are strategic cooperative partners.

Q: Hongqi also came to the exhibition this time, just next to you. It was previously reported that FAW's cooperation with BYTON is to hope that BYTON can assist in the development of Hongqi's BEV. Do you think there is a possibility of cooperation in this regard?

A: We have some strategic cooperation besides financial investment. In the future, we will jointly release relevant news. It is inconvenient to disclose it now. I hope you can kindly understand it.

Q: Now, the planning of the mass production vehicles may not change rapidly paralleled with that in the Chinese market as a whole. Now, in order to seize opportunities, many emerging automakers have released their cars in advance, while those fell behind may miss the good timing, such as supporting policies and other benefits, and the difficulties they encountered will be greater. What’s you comments on this situation? Was the strategy at the time too conservative? Have you made any adjustments since then? How do you plan to catch up with the follow-up plan?

A: Fortunately, we are not the first batch of automakers to launch products. The challenges and problems they have encountered are the lessons of the past, which provide us the opportunity to adjust. We have set three goals since this January: First, we launched products, and we plan to start production at the end of this year. The second is financing, helping us achieve mass production. The third is the cost control. The emerging automakers in the past few years have created a bubble. Many people have not made it clear that how to make a company truly healthy. They just want to tell the story, tell the concept, and then get the money, regardless of whether the company is likely to create profits within a reasonable time. This is unhealthy and definitely unsustainable. Therefore, we must be pragmatic and must control the cost. At the beginning of this year, the number of our employees has been 1,600, and there has been no expansion. Only some teams have adjusted some positions.

Q: Do these 1,600 people include factory workers?

A: Yes, of course, some more workers will be recruited later. Since the automobile industry chain is long, it is difficult to control the overall production process, but we always think that it must be done. Given that there is no profit yet, we must control the cost. It will bring great pressure to us. Anyway, startups must be pragmatic, and everything we do before we make profit is to keep the company alive. Therefore, we have reorganized the team concept since the beginning of this year. We must let everyone understand that we are not a big company. Each cent that investor gives us is valuable. If this culture is not built well, it will be particularly difficult for companies to become bigger and stronger. There have been some unsatisfactory situations in the past, but we feel that we still have time to make adjustments.

The cost of manufacturing a car is also crucial. Therefore, in terms of profit, we have cooperated with a experienced working group of FAW. There has been some progress and the profit margin has been expanded. And now it is completely different from the original investor's concerns. Now the focus is on whether the product can actually be sold and reach a certain sales volume.

The second focus of investors is when can we make profits? It cannot be a virtual, unrealizable plan. We hope to set a goal that is not so easy to achieve, and we can break even in one year after mass production. We plan to improve sales next year and reach a flat target in 2021. This is the next step for the company to do after launching the product. Only in this way can the company survive.

Q: Will it be too optimistic to break even in 2021? Or what is the amount of breakeven you would like to achieve? What is the goal of breakeven for BYTON's first new car in 2021?

A: I think if BYTON is based on the current investment, the sales volume of the product can reach 100,000 units. What's different about us is that there is demand for our products in China, Europe and the US, so we will definitely enter the European and American markets. This time we also invited some retail partners from Europe and the United States. Although the global market environment was not decent last year, many countries have begun to transform and fully embrace electrification, including Southeast Asia, the Middle East, Africa, Eastern Europe and South America. Many people took the initiative to contact us and asked if we could sell the products to them. I think this is a good thing.

We also intend to launch the second product in 2021. What we must do now is to think about whether there is a product that allows consumers to feel that the new forces have actually launched a completely different, brand new product. I think this is the most crucial. Differentiating is a must, so that everyone feels that this is a feature that traditional luxury car brands do not have. Of course this is not easy. Therefore, the core question is whether your product can truly satisfy consumers and truly differentiate.

Q: How many orders have you received now? I heard the number is 50,000.

A: Yes, more than 50,000 reservations.

Q: What is the production capacity of the factory?

A: The planned production capacity is 300,000 units, 100,000 units of them in the first phase.

Q: There is another question I want to ask you, but I don't know if you would like to disclose more information. This question is related to Carsten Breitfeld. We all have known that he had switched to Faraday Future (FF), which surprised everyone. So what changes have he made to the shareholder structure in BYTON?

A: It is not convenient to talk about his personal situation, but I can tell you that his leaving basically has no effect on us. Indeed, his job-hopping astonished all the people in our company, including shareholders. I can only say that veterans of our founding team have been working at BYTON, especially Benoit Jacob, senior vice president of design, Jeff Chung, vice president of digital engineering, Mark Duchesne, senior vice president of production operations, and David Twohig, chief technology officer. They are all very capable. We must build a culture now, let the company be more down-to-earth. We cannot consider that that we are a powerful company. On the contrary, we are startups, we must fight, we are striving to survive. Our core teams are all standing together.

Q: After the Frankfurt Motor Show, the electric vehicles of Mercedes-Benz, BMW, Audi, Volkswagen and other automakers were introduced into the Chinese market in large quantities. Is there any pressure on BYTON?

A: There must be pressure, and the pressure of competition in the entire industry is huge and will be even greater in the future. The global electrification will be very fast, but we have the advantage of differentiation. BYTON's smart cockpit and interior design is difficult for traditional car companies to surpass in a short time.


At the Frankfurt Motor Show, Dr. Daniel Kirchert said, “The debut of M-Byte was a key milestone for us. Many people questioned whether we could make this car. When people first saw the concept car, they don't believe that we can make it. Although there is still a period of time from now to the actual delivery to the customer, the core research and development work has been completed. Now 100% of the data that can be seen is the date of mass production model, and our Nanjing factory will start trial production in October. What makes me particularly happy is that this time I can finally let everyone have an experience in the car. Of course, there are still many places to improve, but, in general, we want to bring you a new and convenient experience."

People often say that "business is easy to start but difficult to keep." Currently, every automaker is experiencing a period of hard time. This is especially true reflect in the emerging automakers and the ones in NEV sector. There is a bitter history behind every entrepreneurial story. Only those who are in it know the difficulties to be recognized and understood.

Editor:Huo Hongwei