Can Lu Guanqiu’s Wanxiang really become China’s Tesla?

Can Wanxiang really become China’s Tesla?

Staff Reporter

2014-04-15

Lu Guanqiu, second left, briefs visitors on the company’s development of electric cars, Nov. 24, 2013. (Photo/Xinhua)

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Lu Guanqiu, 69, the founder of Hangzhou-based Wanxiang Group, a leading Chinese auto parts maker, seems to have moved a step closer towards his dream of building complete cars, after his enterprise bought American plug-in hybrid sports carmaker Fisker Automotive earlier this year.

The electric automobiles Wanxiang has built have sparked quality disputes in the Chinese market over the past few years, however, and people have started questioning whether or not Wanxiang can really become “China’s Tesla” as previous media reports have implied, the Guangzhou-based Southern Weekly reports.

The Wanxiang Group, which started its business with farming machine assembly and repairing services 45 years ago, was described as “China’s Tesla” soon after the US bankruptcy court approved its application to buy Fisker’s assets on Feb. 18.

According to a report from China-based Guotai Junan Securities on the deal, owning one of the world’s advanced makers of batteries for electric automobiles — referred to as the A123 System — and Fisker, Wanxiang Qianchao, the subsidiary of Wanxiang Group that produces and markets automobile parts, could possibly become another Tesla along with Fisker and A123.

After it was reported on Feb. 17 that Wanxiang was planning to buy Fisker, Wanxiang Qianchao’s stocks rose for three consecutive trading days.

Wanxiang Qianchao later declared that it wouldn’t launch any investment in the electric car manufacturing sector, unless the business group’s electric vehicles production branch, Wanxiang EV, began generating stable profits.

While Fisker is focused on the manufacture of an extended range of electric vehicles, as opposed to Wanxiang’s battery-powered electric vehicles, the purchase of Fisker will not affect Wanxiang EV’s development, the company stated.

A source familiar with the Fisker deal told the Southern Weekly that Beijing Automotive Group was in fact the company that purchased Fisker, terming Wanxiang a “go-between.”

Wanxiang’s next step will be to transfer Fisker’s assets to Beijing Automotive, the source revealed.

Lu told the Chinese-language Zhejiang Daily after the purchase deal that Fisker would manufacture cars on the mainland. “As to when Wanxiang will start producing its own automobiles, it’s still hard to say,” he said.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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