In China’s EV Boom, It’s Too Early to Write Off Old Guard

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While all the hype of China's electric-car boom is focused on shiny new upstarts like Xpeng, Nio and the fluctuating fortunes of Elon Musk's Tesla, it would be premature to write off the old guard just yet.

SAIC Motor, which traces it roots back to the early days of China's auto industry in the 1940s, is working to make sure its 15-year reign atop the country's sales charts doesn't end anytime soon.

Just this year, it has rolled out two new EV brands (including one to take on Tesla and Nio at the top end of the market), announced plans for an IPO of its hydrogen-car development unit, tipped money into Chinese self-driving startup Momenta and is looking to buy two ships to almost double its export capacity. It's also looking to beef up its Xiangdao Chuxing ride-hailing unit to offer a broader suite of services.

More recently, it's lodged about 100 applications to register brand names containing the Chinese characters for “Metaverse” for everything from bed sheets to kitchenware – jumping on the interest created in the virtual reality sci-fi world that Facebook founder Mark Zuckerberg has staked his company's future on.

It's a remarkable transformation for state-controlled SAIC, and one that was unthinkable just a few years ago when it was solely a car manufacturer.

But you could say the same for all legacy automakers, from GM to Volkswagen (SAIC's two foreign partners in China), to Toyota, Nissan and Mercedes — all of which are pouring tens of billions of dollars into an electric future.

And SAIC is no EV neophyte. It produced China's first intelligent SUV, the Roewe RX5, in collaboration with tech giant Alibaba, in 2016. Its cutesy Hongguang Mini, the product of a joint venture with GM and Guangxi Auto, has become the nation's top-selling EV thanks to its consumer-friendly $4,500 price tag. The company has an ambitious goal to lift sales of the pint-sized car to 1.2 million next year, almost equal to the number of EVs China's automakers churned out in 2020 combined.

Still, despite its dominance in its home market, SAIC has little profile outside China. It's probably best known as the savior of the British marque MG. Indeed, for a long time coverage of SAIC tended to be seen through the prism of how its performance affected the fortunes of its bigger, better known global partners.

The narrative started to change in the past few years as Chinese carmakers became more independent of their foreign partners and moved faster in the push to go electric as domestic demand soared.

Chairman Chen Hong hopes the transformation will help revive a moribund share price. SAIC has fallen 16% this year, making it the worst performer in the 24-member Bloomberg World Auto Index.

And with a market cap of $37.6 billion, it's valued at about the same as Xpeng, even though it outsells its seven-year-old rival by a factor of around 50 to 1.

“In the eyes of investors, SAIC is still a traditional manufacturing company, but in fact, we are already changing,” Chen told the annual shareholder meeting in June. “As the proportion of the new business rises, I believe our stock price will rise, but this process does take time.”

©2021 Bloomberg L.P.

With assistance from Bloomberg