Chinese entertainment giant LeTV says shift to electric cars no joke as rivalry with Xiaomi set to deepen
China’s online video provider provider LeTV is confident about its push into the electric car business despite opposition from domestic carmakers and expected competition from Chinese tech rivals like smartphone maker Xiaomi, which it has been embroiled in a public spat with over smart devices.
LeTV hired banking executive Winston Cheng to head its corporate finance and development in August after announcing at the end of last year that it would start work on an electric car. Similar rumours have been tracking Xiaomi.
“When I first joined LeTV, the [electric car business] was what I was probably the most sceptical of,” Cheng, who is in charge of LeTV’s financing, investment and mergers and acquisitions, said in an interview with the South China Morning Post on Tuesday.
“The capital required is really high, and what advantages do we have to build an electric car?”
“But when I saw what we’ve achieved in less than a year in our car business, it blew me away,” he said.
In December, LeTV CEO Jia Yueting said the company’s electric vehicle project, dubbed SEE for “Super Electric Eco-system” would “redefine” the EV industry.
Although no timeline has been set for the rolling out of its first model, Jia hired Allen Lu, a former managing director at Infiniti China, in January to speed things up.
However, senior industry figures have mocked the ambitions of companies like LeTV and Xiaomi, with Wang Chuanfu, chairman of Chinese carmaker BYD dismissing their entry into this field as “nothing but a joke”.
The Chinese government has set and missed a number of ambitious goals for electric vehicles in the past, such as its plan to have half a million on the road by 2015. Last year, Beijing shrank its original target for 2020 from having five million to one million EVs up and running.
Yet demand for them in the world’s second-largest economy - but top car market - started to boom at the end of 2014 after a long period of disappointing growth. Records show their sales jumped 324 per cent year-on-year with nearly 75,000 sold.
This came in the wake of a series of tax and other incentives for prospective buyers, plus a desire to combat high levels of pollution in the country and make China a leader in electric cars and batteries has helped push sales.
LeTV now has over 200 employees and experts dedicated to project SEE as it aims to bring drivers a new level of “practical functionality” that is not available today,” said Cheng, formerly of Bank of America Merrill Lynch in Asia.
LeTV started out as an online video platform that came to the fore with its smart TV in 2013 before it started diversifying its interests in areas like smart bicycles, automotives and, as of this April, smartphones.
It inked a deal with Aston Martin in April that pundits said could see it provide the vintage British carmaker with in-car entertainment systems for its new models.
One month earlier, LeTV trumpeted a similar partnership with Chinese state-owned BAIC Motor to make user interfaces and internet-connected screens for the automaker's upcoming line of electric and energy efficient vehicles.
As it continues to cast its net wider, the company recently claimed to have set a new record in China by selling over a million of its bezel-less smartphones in less than three months.
Yet it has hit speed bumps along the way. Regulatory obstacles saw it denied a license from the Chinese government to run its internet TV operations.
To overcome this, LeTV is now reportedly hoping to partner with Huawen Media Investment Corp, which is controlled by state broadcaster China Radio International (CRI), according to Chinese media Caixin.
In spite of this setback, the company has been ramping up its plans to expand overseas.
In June, it invested HK$6 billion (US$775 million) to develop its interests in Hong Kong’s video entertainment market over a three-year period. This saw it strike content deals with the BBC and acquire movie rights from Chinese companies like Golden Scene and Pegasus.
It is now believed to be negotiating with Hollywood studios on movie copyrights.
Money does not seem to be an issue for the growing company, which has been spending lavishly on its locally produced TV dramas to court Hong Kong audiences: single-episode budgets reportedly stretch to HK$1 million.
Giving the example of Singapore, Cheng said LeTV is hoping to expand into more markets with a Chinese-speaking user base as its ecosystem already has original and licensed content.
Cheng is the latest in a string of banking executives who have left the sector to join a growing Chinese tech company.
Earlier this month, e-commerce giant Alibaba hired ex-Goldman Sachs banking executive and Olympic gold medallist Michael Evans to oversee the tech giant’s international expansion activities.
In August last year, Chinese ride-hailing app Didi Dache hired Jean Liu, a former managing director at Goldman Sachs, to become its chief operating officer. Liu was appointed president of the company in February.