China’s WM Motor Technology, an electric car start-up founded by the former China head of Volvo Car Corporation, plans a 4.3 billion yuan (US$685 million) expansion of its factory near Shanghai as it aims to deliver affordable vehicles and get ahead of local competition. The company, set up in 2015, plans to double the annual capacity at the recently commissioned factory in Wenzhou to 200,000 units, according to founder and chairman Freeman Shen Hui. “We believe we will be the first among our peers to deliver a higher end EV product on a mass scale, by that I mean at least 10,000 units,” Shen said in an interview on the sidelines of the Boao Forum for Asia last week. The company has already spent 6.7 billion yuan at the plant to build a 100,000 unit-a-year first-phase production facility, which features “smart manufacturing” technology provided by German industrial hardware and software giant Siemens. Shen said the technology integrates WM’s sales, materials procurement and production to improve operational efficiency and better meet customer needs. WM plans to launch its EX5 pure electric SUV on April 20 at a price of less than 200,000 yuan, Shen said, adding it also plans to offer at least one new model annually – each selling at less than 300,000 yuan – from this year. That pricing, however, will pitch WM into one of the most crowded and competitive segments of China’s electric vehicle market, the space between the lower end dominated by Beijing New Energy, Geely Automobile Holdings and BYD, and the premium segment where Tesla leads. Tesla's Model X starts from about US$118,000 in mainland China, or over 740,000 yuan, three times the price of WM’s planned entry model. The Chinese government has set a goal to have 5 million new-energy vehicles on the roads by 2020. One of WM’s challengers will be Xiaopeng Motor, also known as Xpeng, which is backed by Alibaba Group Holding – the owner of the South China Morning Post – and which recently raised 2.2 billion yuan in its latest funding round. He Xiaopeng, its chairman, said in a separate interview at the conference that his company would accept pre-orders for its first all-electric G3 SUV product late this month. It aims to begin deliveries in the second half of the year. The vehicles are priced at between 200,000 and 300,000 yuan. Xpeng aims to complete construction of its own plant in Zhaoqing, Guangdong province, by the end of the year. It will have an annual capacity of 200,000 units. Other Chinese competitors include Nio and Byton, which are offering slightly higher priced models at around the 400,000 yuan mark in an effort to offer an alternative to Tesla, while Iconiq Motors plans to start production in 2019 of a few thousand of its seven-seater Iconiq 7 car. Chinese-backed electric car start-up Byton woos CES with model 40pc cheaper than a Tesla “The emerging new energy vehicles players such as WM Motor, Xpeng and Nio need to adopt an aggressive pricing strategy to break into the market,” said Guotai Junan International analyst Toliver Ma, adding that the 200,000 to 300,000 yuan range would be the most acceptable to the market – after taking into account government subsidies for buyers of green vehicles – vis-à-vis internal combustion engine vehicles. However, while their products seem quite good value for money, their profitability is still questionable since their production scale is small, and they will face various challenges in manufacturing to ensure product reliability and consistency, Ma said. Xpeng raises US$348 million as Chinese electric car start-ups battle for attention Shen, who played a key role in Geely’s acquisition of Sweden’s Volvo, said WM has no concrete plan to go public. It has raised 20 billion yuan of debt and equity financing from investors including state-owned metals giant China Minmetals Corporation, Envision Energy, internet giants Tencent and Baidu and financial investors such as China Structural Reform Fund Corporation and Sequoia Capital China. WM has also locked in its supplies of nickel, cobalt and manganese for batteries to be made at its plant, Shen said. The materials will be supplied by Minmetals. WM will also cooperate with Envision Energy, China’s second-largest wind turbine maker, to recycle spent electric car batteries. They can be used to raise efficiency of wind farms by storing excess power generated for dispatch to the power grid when demand is high. Asked if Chinese President Xi Jinping’s plan to lower China’s 25 per cent import tariffs on imported cars would pose a threat to WM, Shen said he was not worried as the firm would still have a significant cost advantage over Tesla.