Hangzhou, November 27 (Xinhua) -- As 2023 draws to a close, the new energy vehicle industry is once again receiving good news. Zero Run, a new energy vehicle brand from Zhejiang, won an investment of 1.5 billion euros from Stellantis Group, the largest automotive giant in Europe. According to public information, both parties have established a joint venture called "Zero Run International" and will begin exporting business to the outside world in the second half of 2024.
The reason why this cooperation has attracted attention from the outside world is not only because it has created the largest single investment in the history of new energy vehicles, but also because it has created a new model for China's new energy vehicles to go global, that is, a world-class automobile manufacturer group and a new power electric vehicle enterprise from China have cooperated on global electric vehicle projects.
How was such an alliance established? What inspirations can China's new energy vehicles gain from going global? What is the layout, thinking, and empowerment of domestic capital and investors behind it? Recently, Wu Qiang, Co President of Zero Run Automobile, He Ning, Founder and Chairman of Heju Capital, and founding partner Wu Xiaoping were interviewed by China News Service in Hangzhou, Zhejiang.
Strong Alliance
On the morning of October 26th at 8 o'clock, Zhejiang Lingpao Technology Co., Ltd. and Stellantis Group signed an agreement in Hangzhou. Stellantis Group plans to invest approximately 1.5 billion euros to acquire approximately 20% equity in Zero Run, which will make Stellantis Group an important shareholder of Zero Run.
This transaction also confirms that Stellantis Group and Leapmotor International will form a joint venture in a ratio of 51:49. Except for Greater China, the joint venture company has the exclusive right to export and sell to all other markets worldwide, as well as the exclusive right to manufacture Zero Run automotive products locally. It is expected that the joint venture of "Zero Run International" will begin its export business in the second half of 2024.
"We must build a different business model for Zero Run, and it must be a strong alliance." In addition to the influence of Stellantis Group's own strength, Wu Qiang told China News Network that a direct reason for the final decision to cooperate with Stellantis is that Stellantis is the only one willing to sell Zero Run brand cars worldwide with a 20% stake.
Among Chinese new energy vehicle companies, the technological advantages of Zero Run cars have distinct characteristics. Since its establishment in 2015, Zero Run Motors has established a policy of comprehensive self-development, with the main core systems developed by the enterprise itself. Compared to the reliance of most car companies on suppliers, the advantage of Zero Run lies in its ability to respond to market demands with higher efficiency.
As the parent company of Maserati, Stellantis Group's strength in selling cars should not be underestimated. At the beginning of 2021, the former Peugeot Citroen Group and the former Fiat Chrysler Group merged to form Stellantis Group, spanning the two major automotive consumer markets of Europe and North America, becoming the fourth and third ranked automotive group in the world in terms of revenue.
However, although Zero Run makes cars and Stellantis Group sells cars, it meets the cooperation expectations of Wuqiang for a strong alliance. However, we still need to demonstrate real strength to convince the capital market.
Nuclear Capital is a long-term follower and supporter of Zero Run Motors. Before the listing of Zero Run, Heju Capital accumulated over billions of yuan in pre listing financing for Zero Run through several managed funds and joint investment partners, and continued to empower it after the listing.
In the view of Wu Xiaoping, a partner of Nuclear Capital, Zero Run Motors is deeply committed to self research and constantly iterating solutions based on market conditions, which is very cost-effective. However, communication and expression with the market are not the strengths of this company, especially after going public, when it faced a huge challenge of market value bursting. At the end of September 2022, Zero Run Motors went public in Hong Kong, but at that time, the capital market was sluggish and the financing amount did not meet the target, raising less than 6 billion yuan.
With years of experience in overseas investment banking, He Ning, the founder of Heju Capital, who has served as Chairman of Morgan Stanley International Bank (China) and Partner of CITIC Capital's Hong Kong Private Equity Fund, believes that Chinese capital should actively participate in the opportunities for internationalization in China's new energy electric vehicle industry. In the past economic wave, more external technology has transformed China's entire business ecosystem. We believe that in the context of the rise of China's high-end manufacturing industry, there will be a group of enterprises and platforms with their own technological advantages that can help some overseas countries improve their business efficiency. He believes that this opportunity will be enormous.
Based on a deep understanding of China's new energy vehicle industry, the two founders of Heju Capital, He Ning and Wu Xiaoping, both believe that going global and creating new growth points is a suitable breakthrough strategy for Zero Run. Wu Qiang, an international investment banker with rich experience and execution ability in Hong Kong and overseas markets, is the most suitable candidate in their minds, and He Ning's old colleague at Merrill Lynch, Wu Qiang, has become the most suitable candidate. At the end of last year, they recommended Wu Qiang to join Lingpao Automobile, mainly responsible for corporate strategic investment promotion. It was also him who later led and facilitated the cooperation between Lingpao and Stellantis Group.
Borrowing a ship to set sail
In recent years, China's new energy vehicles have been rapidly advancing overseas. According to data released by the China Association of Automobile Manufacturers, from January to September this year, China's automobile exports reached 3.388 million units, a year-on-year increase of 60%. Among them, the export of new energy vehicles reached 825000 units, a year-on-year increase of 1.1 times.
It is reported that at this year's Munich Auto Show, Zero Run International has taken the lead in releasing the C10 model in overseas markets; In addition, the A-class car being developed by Zero Run Motors will also appear in overseas markets, and this car may become Zero Run's flagship model in Europe.
Wu Qiang revealed that in 2024, Zero Run International will first launch 2-3 products overseas. By 2025-2026, the product matrix for overseas sales will reach 10-11, but the specific country or regional market has not yet been determined.
Europe is the birthplace of many major global automotive brands and the second largest new energy vehicle market in the world, with the first proposal to ban the sale of gasoline vehicles by 2035.
While the industry is rapidly expanding overseas, China's new energy vehicles are still facing a series of challenges, including changes in local laws and regulations, as they continue to deepen their presence in the European market.
At the time of signing the agreement, the European Union was conducting a countervailing investigation against Chinese new energy vehicles. Since the EU announced the launch of a countervailing investigation against Chinese electric vehicles in early October, the automotive industry has engaged in heated discussions and active responses to unfair trade protection.
More and more industry insiders are realizing that Chinese cars going global cannot only pursue sales, but must also pursue co creation and win-win outcomes. In terms of market selection, Chinese car companies should learn to diversify risks and adhere to long-term principles. Wu Qiang pointed out that the joint venture with Stellantis Group to establish Zero Run International is actually a matter of borrowing ships to go out to sea, and as a subsidiary company, it can be much more convenient to respond to local government regulations.
According to the agreement, Stellantis Group holds a 51% controlling stake in Zero Run International. Will Zero Run's original team say no to the company's management? Regarding this, Wu Qiang clearly replied to China News Network that the 51:49 division ratio is based on commercial interests, but it requires the agreement of both parties at the decision-making level, which is clearly reflected in the contract.
On the other hand, according to the announcement released by Zero Run, the board of directors of Zero Run has 9 shareholders, while Stellantis Group has only 2 members. In terms of the number of shareholders, the party with greater say is also Zero Run.
R&D transformation
Behind the export of new energy vehicles in China, there are not only the technological accumulation and brand building needs of enterprises themselves, but also policy support and market demand promotion.
In the interview, Wu Xiaoping from Nuclear Capital shared a friend's view on Zero Run going global with China News Service, and he was deeply impressed by this.
More than 600 years ago, Zheng He's voyages to the West marked the pinnacle of the development of the Maritime Silk Road. Silk, tea, and porcelain, representing China's leading technological level in the world at that time, established the path of the intersection of Eurasian civilization. Today, Zero Run Motors is on the path of China's modern and high-quality development, presenting China's new energy vehicles as a business card to the industrial era of Europe, bringing green, low-carbon, and efficient Chinese automotive elements.
According to Wu Xiaoping from Nuclear Capital, in the past, during the era of fuel vehicles, car companies around the world knew that China was a large consumer market. However, as we enter the era of new energy, Chinese cars have gradually shown the potential to become a technology market. Many companies are now considering setting up their major global research and development centers in China, with the core of the automotive industry being research and development centers rather than production.
The rise of new energy vehicles in China is due to policy support and corporate technological innovation. In terms of policy support, the Chinese government vigorously promotes the development of the new energy vehicle industry through measures such as subsidies, tax incentives, and promotion of applications. In terms of technological innovation, Chinese enterprises have continuously increased their R&D investment, improved the performance and quality of key components such as batteries, motors, and electronic controls, and promoted the leapfrog development of new energy vehicle technology in China.
The alliance between Zero Run Motors and Stellantis Group may be an inspiring attempt. In the face of new trends and changes in the global automotive industry, the funds, channels, political and business resources possessed by international giants can complement the first mover advantages in products and technologies of Chinese automotive companies. In the context of a culturally inclusive Eurasian community, the cooperation and win-win path jointly created by Chinese emerging private car companies and large French car groups has clearly set a new benchmark for the industry and has more room for imagination. (End)