Tu and Lei speak with Dr. Alex Klose who led Aiways into 10 European markets over the last couple of years ...during a pandemic!
They ask Alex about the success factors for selling into the EU, who are Aiways customers, what their retail and charging strategy is, and much, much more.
For those who want to understand what it takes to sell a Chinese EV in Europe, Tu and Lei talk to the guy that's doing it!
Tu and Lei speak with Dr. Alex Klose who led Aiways into 10 European markets over the last couple of years ...during a pandemic!
They ask Alex about the success factors for selling into the EU, who are Aiways customers, what their retail and charging strategy is, and much, much more.
For those who want to understand what it takes to sell a Chinese EV in Europe, Tu and Lei talk to the guy that's doing it!
China EVs & More ME#2: Dr. Alexander Klose, EVP Overseas Operations, AIWAYS
Tu Le:
Hi everyone, Tu Le here, one-half of the China EVs & More duo. Lei and I have been brainstorming about different ways to bring you, our audience, relevant compelling content about the China EV, AV and mobility sectors. Especially now that several companies that we’ve tracked over the last 50 or so China EVs & More episodes have become global phenomenon, or at least that’s their goal. China EVs & More MAX is where we bring you special content, in the form of conversations we have with special guests from those sectors.
So we are excited to bring you Episode #2 of the MAX series. In this episode, we talk to Dr. Alexander Klose, executive vice president of overseas operations based in Munich for Chinese smart EV startup AIWAYS, which has quietly made inroads into 10 major European markets: Belgium, Denmark, France, Germany, Italy, the Netherlands, Portugal, Spain, Sweden and Switzerland.
I think AIWAYS is secretly the envy of Chinese smart EV startups that have yet to cross borders with their wares. Not only has AIWAYS crossed these borders already, but Alex led his team into all of these markets under the stress and pressure of a pandemic. This makes his team battle tested.
Dr. Klose started out his career as a consultant for BCG before taking on roles at Jaguar Land Rover and Ford’s Premier Automotive Group. In the late 2000s, prior to joining AIWAYS, Dr. Klose was CEO of China/Asia Pacific for Volvo Cars. He has a PhD in Business from the Ludwig-Maximilians Universität München and a Masters in Electrical Engineering from the Technische Universität München.
Lei Xing:
This is your co-host Lei Xing.
AIWAYS was founded in 2017 in Shanghai by industry veterans Samuel Fu and Gary Gu and operates a factory in Shangrao, Jiangxi Province, where the U5 electric SUV is produced. Although it doesn’t get nearly as much the limelight as leading smart EV startups like NIO, Xpeng and Li Auto in China, it is the first among these startups to introduce an EV to the European market with the launch of the U5 in 2020. Last year, it sold some 3,000 units on the continent, even more so than it did in China. Its success so far in Europe, all accomplished during the pandemic, has surprised a lot of people.
Tu and I recently caught up with Dr. Klose and asked him about the success factors behind AIWAYS’ European push over the past two years, the U5’s customer base there, its retail and charging strategy, plans for this year and beyond, the recent investor and executive changes at the company, as well as his own personal career journey and perspectives on industry transformation having worked at both traditional legacy automakers and startups.
Here is our conversation with Dr. Klose.
Tu Le:
We've been very anxious to get you on to learn a little bit more about AIWAYS. But first, can we learn a little bit more about Alex? Can you give us your background, what you've been doing prior to your AIWAYS days and into what you're doing now.
Alexander Kose:
Hi everybody, very good to be talking to you today. My name is Alex Klose and presently I’m responsible for the overseas business in AIWAYS. Actually, for me, it's very interesting to be called responsible for overseas business. Because I previously worked with a lot of different manufacturers, amongst them, some British manufacturers and for them, obviously everything that was in Europe was also overseas, everything outside of the island. Now with a Chinese manufacturer, overseas is everything outside of China. So quite an interesting change of perspective. Let me just go back to the reference to Volvo. Before I’ve been with AIWAYS, I’ve been in numerous different positions in various manufacturers. Actually, the whole thing started with BMW after my consulting career. Then went to Ford, Jaguar Land Rover, Volvo. At some point in time, we were responsible for Aston Martin and Lincoln in the U.S. and then left the OEMs, was with car dealers, then with a platform, and finally now I've ended up with AIWAYS.
As usually these things, there must be some personal part in it as well. So I was about to leave China, because we wanted to move back to Europe. Everything was a done deal already. I was actually thinking about doing certain things in Europe. And then suddenly a friend of mine came up to me. A Chinese friend of mine came up to me. We talked about AIWAYS. He actually was an investor in AIWAYS. It was probably at that time where I would have told him not to do investment in the EVs. He converted me and convinced me that it was a good idea. And then we started to discuss, and I liked the team at AIWAYS in particular. It's a team which has an OEM background, has a lot of OEM knowledge, but also lot of new and younger people in there.
And I like their approach, I like their idea of what they wanted to do. That's how I joined. When I left the last OEM I was working for which was Volvo, at that time already, I was going more into sort of a startup environment. Therefore, it was something which combined the two which really attracted me in AIWAYS. That’s how I went over to AIWAYS rather than looking for additional opportunities with the traditional OEMs.
Lei Xing:
I've been following AIWAYS, I guess the memorable events that come up to me is when you did that journey, I think it was 2019 from Xi’an all the way to the Frankfurt Motor Show that was number one. And then two, you started selling a fleet of vehicles in the French island of Corsica, correct? That was during the early part of the pandemic. And then the rest is kind of history. You're now in more than 10 European markets. But along this journey, what do you think are the important success factors that brought to where you are today? Probably the best-selling Chinese brand (in Europe)? Or do you want to even call it a Chinese brand in Europe?
Alexander Klose:
First of all, yes we are a Chinese brand. We have a headquarter in China, but there's a lot of people working in our headquarters which has an international background. So it's a Chinese background rooted on earth. We are not yet heading for mars like some of our competitors, but still we are not a local Chinese manufacturer who just supplies maybe even just one Province. So it was very clear for us very early on that we wanted to become a global car brand.
And that's how this idea was to have the longest test drive ever. We started in Xi’an, like you pointed out, went to Europe, actually went on a tour through Europe. We went from Finland to Norway to, I don't want to go through all of them, coming down to south of France, Switzerland, and then to Germany. And that test drive was really done for two reasons: we wanted to see whether we could do it and whether the car was able to do it. And then obviously grabbing some attention. Because at that time, we had already decided that we didn't want to go to big motor shows anymore, because we thought they were just sort of a bit outdated. Therefore, we didn't participate in the Frankfurt show, but still we arrived at the Frankfurt Motor Show, had our own little show in Frankfurt. That was actually in Frankfurt. But this was the plan and it really worked very well. Unfortunately, then as you know this was the last planned and executed item on our list, because the year after, 2020, we wanted to go to the Geneva Motor Show, as you will remember there was something that happened in between and then there was no Geneva Motor Show.
Lei Xing:
I saw Samuel (Fu)’s little videos that he put up of his journey to Geneva.
Alexander Klose:
It was still fun, him coming, me driving him around in the country and showing him how the poles worked and how charging works in Europe and so on. But obviously, it was the end of the normal life. Since then, we had to adapt every time for new things happening. So after that, we couldn't bring our car to the market as we had intended. We took another route, we decided that we wanted to sort of have an interesting first customer, which was a car rental company on the holiday island of Corsica. And this holiday island is really one of the big destinations for France or for French people, and it also attracts quite a lot of German people. Maybe other countries not so much, but those two countries travel quite a bit. We brought 500 cars to Corsica, got them all set up in a location which we hadn't seen before, but it all worked perfectly. And then unfortunately, so that we still had a bit more Corona than we thought. So actually, we only had French customers during that summer, but it was really sort of the one action that worked out that summer. We finished it just before we had the next lockdown. All in all, I think it was two good activities amongst periods of lock downs. So overall, we are quite happy with that.
Tu Le:
Alex, let me ask you as an industry veteran of two major markets, can you tell us the difference in your opinion between the Chinese consumer and the European consumer? I know that we can't generalize Europe as one big country, but I think Germany is your largest market. So maybe you can kind of give us an example of, I know that they're older, but what other characteristics differ between these two types of customers?
Alexander Klose:
Even if you look at the three large geographies, U.S., Europe and China, people buy cars for fairly similar reasons. They like them to get from A to B and they like them to show off. So the reasons to show off might be slightly different in some of the countries or who you want to present your vehicle to and what makes you bring joy. So that is what differs a lot between those countries.
So we are just now sitting here in Munich. The mountains are close by, there's lots of winding roads. So obviously, you drive around these roads, you have different vehicles than when you drive around the inner city of Shanghai, where cornering isn't really one of the aspects that is so important in a vehicle. I think, in all of those geographies, you have a certain part of rational aspects why you buy a certain car. So you should be able to afford it, you should be able to park it, and so on. And then there's the pleasure part of it. And that might be actually quite different between the geographies. Large engines is something that you have in the U.S., not so much anymore in Europe, but you had it in Europe. China usually is very small engines given by the tax that gets enforced to the two larger engines, but also given by the limitations that you have in terms of maximum speed. So it doesn't really make sense to have a large and powerful engine in China, because you can't really use it at all.
What we also see is that comfort is seen differently in different geographies. In Europe, sort of a much more rigid setting for the vehicle is appreciated. Whereas in the U.S and in China, you have sort of softer settings. I would say the U.S. is even more softer than China, but it's more comfort in the direction of comfort. What's very different in China, which actually we now see that our European customers appreciate is that the second row, the rear seat is something that is not completely neglected, like in most of the European models, but actually you have a fairly big leg room in the back. This is something which a lot of customers here now find surprising to have this large rear seat and really like. The customers also purchase a bit different, but also that is really merging between the geographies. Whereas 10, 15 years ago, you would still have people by a vehicle in China with cash. Now, I think this is something that is rarely seen, and most of it might be either financed or even leased.
So I think what you see is that there is a lot of dissimilarities, but they're getting less. Certain things are actually getting closer than they were 10, 15 years ago.
Lei Xing:
The two things I wanted to ask was the retail strategy and as well as charging. For each of the market you're in now, you have one or two dealer or retail partners. What was the process in selecting who to work with on the retail side? And then the charging side? How was that
set up?
Alexander Klose:
On the retail side first of all, we were very clear that what we want to do is we want to go to a model that allows us more direct contact with our customers. What we have set up in Germany, for example, we have a retail partner who acts as an agent only. As the cars are connected, anyhow, we get in contact with each and every one of our customers. In the other European countries for the sake of speed, of being able to penetrate those markets, we actually work with distributors, but they are setting up a similar kind of a model. We don't have the typical distributor, dealer model, but we have a distributor, then we have agents which are basically retail agents below that. That's actually sort of something which we thought was a good mix to allow us to gain some speed. But at the same time, also be as close as possible to each of those markets.
Tu Le:
Now are these partners, are these vehicles on consignment? Or do they purchase them from you?
Alexander Klose:
They will purchase certain cars, but depending on the country, in some countries actually our importer or our distributor just has the cars on consignment with the dealers. In Germany, actually, it's pure consignment. In some of the other countries, it's mostly consignment, but some of the dealers they will buy at least some of the demonstrator vehicles. What we are trying to do is really trying to find out what is the best way of changing the traditional model to something which makes more sense to customers in the future. We see that some people do want to buy online and some other people don't want to buy online, and want to buy from a real person. So we want to cater for both of those people.
Tu Le:
So COVID must make that really easy for you to figure out all these different countries and all their different needs.
Alexander Klose:
Yeah, makes it really easy. In particular, as a brand who's starting, you need to have or you need to give your customers, your potential customers access to the vehicle for a test drive. As we set this up, suddenly there was a lockdown in several countries and you couldn't even do test drives anymore. It was actually a real nice challenge during this period to have COVID around and various versions of lockdowns or requirements to actually do even a test drive. We couldn't do, at some point in time, we couldn't do a test drive with anybody from the dealership or the retailer in the car. They needed concepts to store, if people go around with the car without somebody in the car. It wasn't the best of times to start this kind of adventure.
Coming back to the charging. Charging in Europe is pretty standardized. You have a lot of operators and a lot of people that actually now sort of offer you some payment methods, but it's pretty standardized. So we decided not to try what some others try to sort of built the one offer that goes with a car. The car can basically charge at any public location anyhow. The reason behind that is that we find a lot of startups or also big companies who are consolidating the market and kind of offer cards or payment methods and so on, that really works throughout most of Europe, and they are much better at doing that than we are. So we leave that to them, to provide the best service to our customers rather than us trying to do something, which in the end wouldn't be as good as what our partners are doing.
Tu Le:
Can you tell us a little bit, introduce us to the U5? It's a CUV, it's battery electric, but can you give us a little more details about that?
Alexander Klose:
It has four wheels.
Tu Le:
And who are the competitors, things like that.
Alexander Klose:
It's an SUV, it's purely electric. It's based on a platform which is purely electric. I was talking about the rear seat, the space in the rear seat. If you have a purely electrical architecture, you have sort of bit more liberties to play around and built in some more space in the interior, rather than waste that to have to compromise for an ICE or plus a battery electric setup.
It's a what you would probably call a mid-size to small SUV. In the U.S. it would probably be a small SUV, in Europe it’s more a mid-size SUV. It’s similar in size to the Audi e-tron with much less weight and much bigger interior space. It's a front wheel drive. It's got 160 kW of power, get a battery which gives about 400 km of range, which we think it is also enough for winter performance. It has ADAS systems as well. You can actually do semi-autonomous driving, which I find one of the great benefits of that when you are in a traffic jam on the motorway, you don't really have to think about at what speed to the crawling behind the car in front of you. So I think for me, that's one of the great benefits. It has all the equipment you would expect of a car of that size. And in Europe it comes with a great price. Because for us, one of the reasons why we were setting off was that we wanted to change the way cars are being bought, are being designed, done, and so on. In particular what we wanted to do, we wanted to bring electric vehicles to a wide audience. To do so you can't do what a lot of the other OEMs are doing: start at a level of 50,000 euros and above. But let's say, including government subsidies, you need to be at 30,000 or below.
Lei Xing:
Do you think the pandemic has actually helped you in some way, maybe pushing some of the ways business are done, is it fair to say that?
Alexander Klose:
I think it has helped us in a very strange way. It has helped us because the European governments, when they decided on helping the industries in Europe, obviously they decided to help the automotive industry as well. But at the same time, they wanted to help in a very green way. They increased the subsidies for EVs, that has helped us, number one. Then what has helped us also is that, all of our major competitors, so the traditional OEMs in Europe, all of them have a shortage in components and therefore sell less cars than what they did before. What we have seen is really an increase in prices, which means there is a space in the market or a demand in the market that isn't fulfilled. And this also I think is helping us as a newcomer to the market. When you think about has it helped in the way how people would actually buy a vehicle? I think yes it helps that people change their perception, but then you have to compound that with the fact that we are a Chinese brand and we are relatively unknown in Europe.
So for that kind of a brand, people still want to see and test drive the vehicle. Albeit I have to say that one of our first customers was a guy who just had seen the car being tested on YouTube, and he said, yes, I’ll buy it. I've seen the guy testing it, I saw what he did with it, and I’m happy, and I'll just buy it. By the way, the guy was, I think, 70 years old.
When you ask sort of who is buying it, we see a lot of shifts in behavior that's not like, it's only young people buying it to switch to an EV and so on. We don't see that at all.
Lei Xing:
So it's a very diversified customer group so far, I guess, instead of only one particular group, young, but now you have the 70 year old, which is very surprising.
Alexander Klose
I think what we see is that a lot of people do want to buy an electric vehicle, but it's across almost all age groups and across all family stages. So what we also see is that it seems that for, let's say, a family, it's a bigger decision, because they jump into something new, and they have to ask the kids. Anyhow. So do they really want to test also an EV, whereas some older people say I have some time, so I’ll just check it out, and hope that it works. And if it doesn't work as well as an ICE, I still have the time to figure it out.
Lei Xing:
The other question I wanted to ask in respect to the customers. The community is a big part of the success factor in a lot of these Chinese smart EV startups, at least in China. Every one of them has their own dedicated App where users they communicate, they do events. For your users, is there such a community? What are you doing? Or is that even a thing?
Alexander Klose:
I think it is a thing. I think soon that will no longer be a thing, because if it gets bigger, obviously it won't be that much of a community feel anymore. We have several super users which also help any of our other customers. If they have a problem with a vehicle, they can help them out and tell them, I’ll just press this button do this and that. So you have this kind of community because a lot of our early customers, they feel themselves being pioneers at something, and they want to share that knowledge with others. What we see is they set up their own groups, their own WhatsApp groups, or Facebook groups, and just communicate amongst themselves. And we don't even need to do anything about it.
Tu Le:
Are you able to do over the air updates across your different markets?
Alexander Klose:
We do over the air updates, but we do them on a very defined set of updates that we can do. So we can't do updates for all the controllers which are in the vehicle. Part of it is technical, part of also has to do with safety. But we are working towards being able to do over the air for everything in the vehicle.
Tu Le:
Now being a pioneer and the first Chinese EV company in Europe effectively, do you think that's going to be a real advantage in 2022 when the 8, 10, 12 brands that have already made announcements entering the European markets will be an advantage for AIWAYS, especially with the U6 coming online in 2022 as well?
Alexander Klose:
We think it will be an advantage because we have a team here who already has learned a lot of things that work or don't work out there.
Tu Le:
Under tremendous fire and stress, too.
Alexander Klose:
And you can imagine there's lots of things which you can pre-plan and which you can actually sort of write plans about and then go out there and everything will work perfectly. But there's lots of things where that won't be the case. And we think that each and every one of our competitors will have a certain learning curve and we have gone through that curve already. So we have a group here of people who have gone through that and who can now sort of with 2022, as we have gone through that last wave of Corona, which once again, obviously is holding us back a bit. After we have gone through that, we can now really expand in 2022 where they have to sort of set up their individual marketing campaigns or whatever else they want to do, find the dealers and so on. We have done all of that already. So I think we have a head start, if not two years, but at least one and a half years, if I discount the half year of lockdowns that we had, but we have a quite a bit of a head start against the other competitors now coming from China.
Tu Le:
And let me assure you Alex, once this pod posts, there will be some of your competitors listening to it, trying to glean some insights from you. I'm sure.
Lei Xing:
I think it's definitely, on the ground, you have a team, you've been doing the work, you've been learning the markets, the consumers, working with the dealers, the retailers, the charging. Yeah, so I guess that's the experience you have.
Alexander Klose:
Also it's not just us, but also our retail partners have learned quite a bit because mind you, a lot of our partners come from fields different to electric vehicles. Traditional dealers, and also internal combustion engine based. In Germany we have a partner who was an electronics retailer. They didn't know much about cars. Now, everybody knows much more than before and they are our partner. So I think that's also quite a bit of an advantage for us.
Lei Xing:
I wanted to ask a question on AIWAYS as a company, because for us looking at the China EV market, AIWAYS is not as, if you look at the rankings purely on sales, people talk about NIO, Xpeng, Li Auto, there's top five or six. But when we look at AIWAYS, at least in China, the view is that it's more toward the smaller end of the pack. But you've done very successful outside of China, I think nobody is in that sort of position. Are you happy with that? Or especially also with the recent change in the investor and management in China? Are you happy where you are? Not only in overseas, but in China, globally as a company.
Alexander Klose:
If you ask me personally, I'm responsible for overseas, so I’m happy. But if you ask the company as a whole, I think what has happened is that as you know we were founded later than the other competitors that you named. So obviously we entered in the market at a later stage. I think we were additionally hampered by Corona, because it just hit us when we were just starting to get to the market in China. And we had to do a complete restart of the going to market. It took us about three quarters of a year at least out of our plan. I was in China just before the pandemic hit. We had a big event about launching into the market. Then the pandemic hit. We had a problem with the supply. And basically, it was almost a year later that we re-launched. Once again I think that that's where the pandemic hit us, and that's why some of the numbers were as they are. What we think is that we will obviously expand as planned, or we continue to expand overseas. With a new investor, we actually want to be able to even go faster in those markets. But at the same time we will also intensify our efforts in China itself. Otherwise, we could almost move our headquarters from Shanghai to Munich, and that's not in the plans yet.
We will balance that, which is definitely an imbalance at present, we will balance that to be a more global company, being in China and in Europe, and we will definitely then also tackle the U.S. market at some point in time. Because as a global brand with our aspirations, basically for EVs, you need to be in the three major geographies. Otherwise, there's no chance to really to get to the success that we envision for ourselves.
Lei Xing:
Yet the sense I get from AIWAYS, it's more European than Chinese because you're so much successful so far in Europe.
Tu Le:
The thick skin that you developed over the last couple years because of COVID is going to suit you, because you've just gotten a large check from the investor. And you have a second product entering the market. So with your lessons learned, how are you going to launch the U6 into Europe? And when do you think it'll actually start hitting the roads in the European markets?
Alexander Klose:
So launching the U6 in Europe, as you say, the thick skin that we developed and the check. The one thing we ourselves are still thinking about how to launch it, because whatever you saw over the last two years since the pandemic hit is that any plan anybody did were completely undermined. We wanted to show the U6 as the show car at the Geneva Motor Show, which then was cancelled. Which motor show will be there? Geneva hasn't happened since. Maybe some other motor show will be there. Paris is planned to be there, but nobody knows whether it will really happen or we get another way and so on. We think things were slowly but surely actually be normalized a bit more. But we are still unsure whether it's a good idea to go to a big motor show. And that would be Paris obviously or then a show in 2023. 2023 would be too late because you were asking me about when would the car hit European roads? It will definitely be this year. It depends a bit on, it’s not very clear which month yet, but it depends a bit on our own further development.
The way we would like to launch it is obviously an event which would be as iconic as our drive from Xi’an to Frankfurt. But that I think it's no longer that possible because crossing any borders is a bit difficult.
Tu Le:
Challenging.
Alexander Kose:
We are currently thinking about what to do, because we'll definitely launch the U6 this year and will continue on our plan that every year we want to launch a new product. Whether we then do it in big shows, will have to be seen. Some of the big competitors now have difficulties, sort of aligning the motor show cadence, and the product they want to launch. We saw that in IAA where some cars were just presented on the first day and then taken away because they weren't really ready yet. But everybody wants to launch them because you didn't know a month later whether you still could show it to anybody, people could still gather. And we saw, even CES was same issue, some cars where not even flown there, but they were shown somewhere else, because nobody knew whether the event would be happening or not.
Yes we have developed this thick skin. I was personally at Geneva together with Fu at that time when we saw our stand being dismantled again, we hope that will never happen again. So we'll be a bit cautious about big events, but I'm certain that you'll find something which is worthwhile visiting then.
Lei Xing:
I think you just move to entirely online, do online event. And then the other thing you could do is involve your users and do a series of follow ups after the launch? I'm just thinking it doesn't have to be an offline event because online is, everything is online now. A lot of the world debuts, from all the (big OEMs) are being done online, pre-recorded. So you might just think about doing something there.
Alexander Klose:
We had this happen in 2020. Actually in the end, we had a press conference, but we had it in Stuttgart. And we had it with Fu there. We were the first one to announce that we would have actually an in person press conference. And we got quite some attention. So I think yes you're right. Everybody is doing it online right now. But maybe for that reason, whilst before we did everything online, this time we will do it offline.
Lei Xing:
That's good as well.
Alexander Klose:
Yeah, because if everybody does it online, it kind of gets boring as well. And people want to get out there. So I think a good mix is something that we should have. We have the same thing with home office or in office. First we found that there are people actually were more comfortable at home and working at home, and they are quite efficient at doing it and others who say, no, I don't want to do that. I want to come to the office and really sort of engage with the other people in the office. So I think even for launches, it's got to be the same, sort of something’s better done online, something better done offline where you actually can see people and not just see people but really interact with people and show them a vehicle, in the vehicle, have them smell and listen to the vehicle and so on. So we just have to get the right balance.
Tu Le:
I still think that's important. And I think that to piggyback off of Lei a little bit is that Alex, you have taken AIWAYS into several markets in Europe. You're the envy of your peers here in china. I'm certain. So you know what, we're already in eight to nine markets. One market, two markets, Norway, that's symbolic, more than anything else to be international. You guys are already in nine so that's something you should lean into as well. And you're a established player in Europe, full stop.
Lei Xing:
You were doing about what 3,000 units that was a target for 2021, and 10,000 this year with the addition of the U6. Where do you want to be by 2025?
Alexander Klose:
Where did you get that number 10,000 from?
Lei Xing:
I read it somewhere.
Alexander Klose:
I've never set a number as low as that.
Lei Xing:
I saw it somewhere, but maybe I’m wrong.
Alexander Klose:
Yeah, maybe you're wrong. We think we have an unique opportunity for this year. We'll absolutely go after it. Nobody knows what's going to happen with the car industry over the next few years, because there's been so many things that change and will continue to change. Let me just mention to you that we are cooperating with a subscription company so where you can actually do really what I would call a very short-term lease, half a year or a year.
Tu Le:
Is that with Finn Auto?
Alexander Klose:
That's Finn Auto. And one of the things was where we were surprised and they were surprised as we put the first cars online and they said, yeah we never know, we'll just test the market a bit. So we just have a few cars with you. The cars were gone within 3 days, and they had to stop any advertising because they didn't have any cars anymore. There will be a lot of changes. The traditional car makers will go through a lot of changes. They will have to switch to electric vehicles, because it seems to be very clear that for Europe, it's electric, not just for subsidies. You look at the U.S. everybody is expecting on electric and will probably soon be there where electric is cheaper than ICE. In total cost it’s already cheaper, and it will be in investment as well.
So I can't predict how quickly the traditional manufacturers will be able to take that change and what kind of problems they will have or not have. For us it's very clear it will lay a different foundation for the car industry of the future. The traditional values of certain power and so on, it's now no longer valid. Certain parts of the car which were previously very decisive of making them different, are no longer the USPs. And the engines will be very similar, but the batteries will be different. Maybe they will be also similar in the future. So something like connectivity, interior design, and so on, will be much more important. We think we are in a pretty good position, particularly now having a new investor, having a new management on board, which has a very interesting background, from NIO, very good understanding of the global car market as well. And we'll really help to drive this company to thrive and gain larger volumes. How big the car market will be in the future we also don't know. If some years autonomous cars will be around I mean how many cars do we still need? Now I think that will take another 10, 15 years or so but still it could have an effect already on the present where you also have a younger generation which doesn't rely on cars that much anymore at least in Europe, where it's much more commonplace now that you use public transport or you use other means of transportation. For us, short term, I see a lot of opportunity. Medium term, I just don't know where the car industry is going. That we want to be amongst the top players is very clear wherever this industry is going.
Tu Le:
Last question here, Alex. As an industry veteran who has worked for ICE companies for a long time and then moved onto AIWAYS, this EV startup, what are some of the new skills that you've developed that you didn't think you needed until you started working at AIWAYS? What are a couple or three new skills that you developed or learned?
Alexander Klose:
First of all, you always need to question what you thought were absolutely clear foundations of your business and thinking in the business. I think psychology of people doesn't change, but you have to understand how it really applies in different situations. So 10 years ago, I would have told you electric cars will never happen in the ways it's happening right now. And we have found ways to make it happen, which I wouldn't have believed a few years ago that would be possible. Coming back to Finn, also, some years ago, I would have told you that's impossible. They are actually quite successful now by having a more humble approach than what we saw, say, 20-25 years ago. A lot of the things that we now see implemented where ideas that have been created quite some time ago already, but a lot of it had been created in the large OEMs. In the 90s, we had this idea at the manufacturer where I worked at that time that you could have this kind of subscription model where you can have different cars and so on. And it got way too complicated, never got off the ground. Likewise, electric vehicles, a lot of them, at least a lot of some of the past were trying to emulate what ICEs are. So they have to achieve 250 km/h, they have to have super long range and so on. And they get to a price level, which is just not affordable to most people. And these are things that questioning those fundamentals of the industry in the right way, this is, I think, the one thing that I’ve really learned over the last few years, and then taking a step by step approach, adjusting some of the models, not going after sort of the brave new world, but to go step by step in changing the industry, changing the approach. We don't need 100 kWh batteries right now, because the range is okay for most people. It's actually super sufficient for most people. Yes it would be better to have a larger battery, but pay twice the price for the vehicle for that? No, not at all, it doesn't make sense at all. Then our top speed is 160, actually, if you push it it’s 170 km/h, but do you need anymore? In Germany, most people would say yah, you need more, but actually no, and they don't use it ever. So you don't need anymore and what we see in the latest sort of cars that have been shown by some of the big competitors in Germany is they have come to the realization that might be the right way forward for a vehicle. Because it can't be that you just take what was an ICE and translate that into an EV, it doesn't work this way.
So I think that has been one of the biggest realization and to be able to criticize that foundation of the industry or really analyze it, not dream about what could be the better world, but sort of see what might be a good next step. That is sort of the most important thing right now.
Tu Le:
I actually think that last few 30 seconds of just not being sure what the future holds, but just being flexible enough to go with it. Because I grew up in Detroit, traditional automakers, they're very inflexible, they have to do things a certain way. And if anything, if the pandemic’s taught companies anything, it's that your best laid plans, you need to have some flexibility, and then you still need to succeed despite all these different challenges.
So, Alex, thank you very much for spending the last hour with us and hope you enjoyed it as well. I learned a ton. I'm a big fan of AIWAYS now because understand your strategy and what you're trying to do over there. We’d love to be in touch!
Alexander Klose:
Thank you very much.
Lei Xing:
Thank you!
Lei Xing:
It’s amazing what AIWAYS has accomplished in Europe so far despite its lesser prominence in China, despite the pandemic and despite competition from the European domestic giants. In fact I think AIWAYS has the distinction of being the only Chinese smart EV startup founded in China that has had more success in Europe than its home market.
My takeaway from our conversation is that having a quality product that exceed customer expectations and the right go-to-market strategy with the right retail partners early on proved to be a boon for AIWAYS’ European push. Dr. Klose’s experience of having worked in China and having worked at legacy automakers, and the relationships that he accumulated over the years proved to be valuable for AIWAYS. Now it’ll be interesting to see if that positive momentum in Europe can carry over to 2022 and beyond as they launch the U6, and whether it can figure things out at home in China.
Tu Le:
Lei and I plan to share more of conversations with the men & women around the world moving the EV/AV mobility sectors forward as part of this China EVs & More MAX series. Some folks will be instantly recognizable, but some will just be people doing amazing in the space that we think deserve to be highlighted.
Don’t worry though, Lei and I will continue to host our live weekly China EVs & More Twitter Spaces room that summarizes that week’s most important news coming out of the China EV, AV and mobility space. For those that can’t catch the live show, you can find the China EVs & More pod on all major platforms or wherever you normally get your podcasts. As EV adoption reaches its global tipping point, it will be even more important to stay updated on everything that’s happening here.
Lei and I are confident that China EVs & More is the best resource to do that. Until next time, as always, thanks for listening!