China’s 65-year-old FAW ties up with start-up Byton to build electric cars
China’s oldest automaker, set up four years after the People’s Republic was founded in 1949, has tied up with one of its newest carmakers, in a sign of how traditional manufacturers are striving to stay relevant in an industry buffeted by the twin forces of electrification and autonomy.
FAW (short for First Automotive Works) has made an unspecified investment in electric vehicle start-up Byton, with the two companies cooperating in research and development, production, sales and services.
FAW’s investment is part of Byton’s B round of fundraising, according to the company’s co-founder and president Daniel Kirchert, speaking in Beijing on Friday. He declined to reveal further details, other than to say the process has been “very smooth”.
“FAW is the [eldest son] of China’s automobile industry and Byston is a car start-up driven by technology. Our cooperation has profound meaning,” said Liang Guiyou, head of the new energy development institute at FAW.
Byton, which is China-based but run by former executives of European car makers like BMW, has set a target valuation of US$1.2 billion, according to a February report by China Money Network.
Claiming to be first with a “smart intuitive vehicle”, Byton unveiled its concept SUV at the Consumer Electronics Show (CES) in Las Vegas in January. Featuring facial recognition access, assistive driving technologies and hand gesture controls – for a price 40 per cent less than a Tesla Model X – the SUV is scheduled for production and sales in China next year, followed by American and European markets in 2020.
The FAW-Byton alliance comes after China announced it would scrap foreign ownership limits on local auto firms by 2022. Currently, foreign carmakers are required to set up a joint venture with a mainland Chinese firm, with the foreign partner’s investment capped at 50 per cent.
The Byton concept car features a 49-inch, edge-to-edge dashboard display and a smaller one embedded into the steering wheel, which can monitor in real time the health and vital signs of the driver.
Byton’s last round of fundraising was in August, when it reportedly raised US$240 million from Harmony Auto, Auto Investments, League Automotive Technologies, Legend Capital and an industrial investment fund in China’s eastern Jiangsu province, among others.
The company’s first factory is currently under construction in Nanjing, the capital of Jiangsu province.
Byton is one of several dozen electric car start-ups to have emerged in China in recent years after the central government started handing out manufacturing permits to firms that were not traditional car industry players.
To encourage growth in the new market, Beijing offered research and development grants to carmakers and subsidies to consumers. It also exempted new-energy vehicles from ownership quotas in the country’s bigger cities.