The dark clouds over bankrupt Swedish car maker Saab have finally cleared.
On June 13, Saab Automobile's liquidator signed an agreement with National Electric Vehicle Sweden (NEVS) to sell the company's main assets to the Sino-Japanese investment group. Jiang Dalong, president of NEVS, said Saab would no longer be a traditional automaker, but produce electric vehicles. NEVS was formed in May in Sweden specifically to acquire Saab.
The transformation of Saab will be backed by its new owners' experience in new energy development. NEVS is 51 percent owned by National Modern Energy, a Hong Kong-based company that operates biomass power plants in China. Japanese investment company Sun Investment owns 49 percent.
Jiang, who controls National Modern Energy, said "eventually we will hold NEVS' full stake."
A Second Chance
In early 2009, due to the financial difficulty of its parent company, General Motors , Saab was put up for sale. In February 2010, GM sold Saab to Dutch supercar maker Spyker and still holds a small stake in the company. After struggling to avoid insolvency throughout 2011, the company petitioned the Swedish court for bankruptcy. In December 2011, Saab was declared insolvent.
A dozen bidders have tried buying Saab. Several Chinese companies were involved, including Pangda Automobile , Zhejiang Youngman Lotus Automobile and BAIC Group. GM's main objection to these firms involved intellectual property rights.
"GM doesn't want to foster a new competitor in the traditional auto sector," an industry source said.
Jiang said he was not sure his offer was accepted until the last moment. "Our bidding price was not high, nor did we have car industry experience. At the peak there were as many as 13 big multinationals in the competition."
But NEVS' background in clean energy distinguished the company from the others. "Our operation in the field of biomass power generation is well-recognized," he said.
The acquisition coincides with a boom in the new energy industry, an industry source said. Jiang is bidding to build a green industrial chain that spans power generation to end use. Electric vehicles represent the downstream end of the chain.
Jiang's willingness to negotiate the rights to use the Saab brand name may also have helped him win the deal. The brand name is owned by Saab Automobile, Swedish truck maker Scania and Swedish defense group Saab AB. "I'm sure all parties will eventually find the right solution," he said.
An industry source said that if the trademark was not included in the acquisition, NEVS would probably have to pay tens of millions of dollars each year to use the Saab name.
No financial details on the deal were made public. There were media reports that the price was US$250 million. The purchase covers Saab's major assets, including Saab Automobile AB; its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB; and the Saab factory in Trollhattan, Sweden.
NEVS also bought the rights to Saab's 9-3 model and technology for the new Phoenix model. It did not get Saab Automobile Parts AB and the rights to the 9-5 and 9-4x models, which General Motors owns.
An Electric Future?
Jiang, a native of China and a Swedish national, has lived in Sweden for 23 years. He recalled a story from March. On his way to downtown Stockholm, he said he chatted with a cab driver about Saab's future, and the Swedish driver said the company should take a special path to reviving its fortunes.
This coincided with Jiang's ambition for an electric future in the China market for Saab. He cited a report by management consulting firm McKinsey & Co. that said that by 2020 there will be over 200 million cars in China, which would require fuel equivalent to global oil production to run for a year.
"Traditional cars are certainly not going to be sustainable," Jiang said. "So we bought Saab and we will transition from its current 9-3 version to an electric version.
"Saab's origin as an airplane manufacturer means it's very specialized in the technology of lightweight construction and security. Thus is precisely what the future electric car needs."
But there are skeptics. Experts say that neither the technology nor the market for electric cars were mature. They point out that no car manufacturer has been able to mass produce an electric vehicle and resolve safety, range and charging issues.
However, Jiang is confident. "Ten years ago, many people also questioned and opposed the idea of biomass power generation, but we made it."
Jiang's business covers biomass power generation, boiler and exhaust fan manufacturing, and energy storage. He founded National Modern Energy Holdings in 2004. It controls Beijing-based State Power Group, which operates 28 biomass power plants in China.
But there are questions over the profitability of the industry. Cao Yin, director of energy and power businesses with U.S. consulting firm Martec Group, said biomass power generation companies in China "basically can't make money" due to high costs and low sales. In 2010, Jiang admitted his company has relied a lot on government subsidies.
Jiang's companies haven't seen satisfactory profits in the energy sector, Cao said, and the Saab electric car project still required huge investment.
But Jiang said Saab's electric car business will be profitable within 10 years. "If you do the responsible thing," he said, "profit will come sooner or later."