Is there room for yet another Chinese electric vehicle (EV) start-up? Wen Wei, the co-founder and chairman of TuanChe, thinks so.
In mid-January, the Nasdaq-listed car sales marketplace announced plans to launch two models of its own within three years.
Wen said that TuanChe has assembled a core team of 100 experts with experience spanning R&D to manufacturing. The group’s first milestone will be selling 100,000 EVs, he added.
Wen claims a key advantage over other start-ups in the sector, who may have raised plenty of cash to build their first models but lack the sales network outside of tier 1 cities that TuanChe enjoys. That reach will be crucial when demand starts to boom, the company thinks, with claims that there is “still a two-year window for new players to jump on the bandwagon”.
Li Xiang, the founder of fellow Nasdaq-listed EV brand Li Auto disagrees, however.
In mid-January he published a Sina Weibo post slamming the claims from Wen and warning that “entrepreneurs who declare they’re an industry’s saviour are liars”.
“The bottom line should be to avoid lying, but Wen Wei has even broken that. The true nature of entrepreneurship is rhythm and patient long-term growth,” Li added of the new entrant in a derisory tone.
Wen responded within hours. “I didn’t expect the first shot along the Long March to come from you Li Xiang. Have you forgotten about vision and judgement – in addition to rhythm and patience?” he asked.
He went on to flag Li’s ongoing row with Volkswagen China CEO Stephan Wöllenstein. “Best not to consider yourself a prophet,” he concluded. “Don’t be the person that everyone hates the most.”
Back in September 2020 Wöllenstein annoyed Li by arguing that Li Auto’s extended-range EVs weren’t environmentally-friendly (largely because the LI One model has a 1.2 litre petrol engine turbocharging its 40.5 kWh battery). Li shot back that he was happy to test his cars against VW’s in terms of energy efficiency and environmental standards. Last month he posted figures for their respective sales in November as well: 13,438 new registrations for Li Auto’s mid-sized SUVs, compared to 12,445 for VW in a similar category.
“Thanks for the prodding,” Li added. “We’ll keep going.”
The new row with Wen is giving TuanChe’s EV strategy terrific publicity, something that Wen has tried to exploit further. “The one constant in life is change,” he commented in another weibo post.
“Our power comes from the knowledge accumulated by our predecessors and our fearlessness in facing the future. It would be great if Li Xiang could find the time to attend our first product launch,” he goaded.
Others also need more convincing about TuanChe’s ambitions in EVs, however. News website 36kr points out that the company’s roster of about 100 staff doesn’t stack up well against the 2,224-team employed in Li Auto’s research and development division alone, for instance. XPENG has 3,091 people working in its R&D team, it also reported (XPENG, an Alibaba-backed Chinese automaker, is also US-listed).
The founder of NIO, another of China’s leading domestic brands in the EV sector, has claimed previously that it requires at least Rmb40 billion ($6.32 billion) of investment to get an EV company into a competitive position. According to S&P Global Market Intelligence data, TuanChe had cash and equivalents of just Rmb100 million on its balance sheet at the time of its third quarter results. Third quarter revenues came in at Rmb61.1 million and the car sales platform has yet to report a net profit since it listed in late 2018. During the most recent quarter, it lost Rmb36.8 million, slightly better than the same quarter the previous year.
TuanChe’s share price has also collapsed since hitting the $30 mark shortly after its IPO. It’s now trading at around $2.
However, stranger things have happened in the world of Chinese EV start-ups. At their low point in 2019, NIO’s shares slid to just below $1.50, with investors betting that the new EV brand would go bankrupt. After some judiciously timed investment, it used the cash boost to fuel a sales-driven recovery and its shares are back at the $30 mark again.
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