Uniti Wants To Focus On Business Plan, Not Just Sales.
“Our global ambition is not to sell heaps of cars. Our business model is very different”
Swedish electric car start-up Uniti is less interested in recording massive sales than inspiring a new business model that will make electric mobility available to all, and that’s just as well because although its first car may be very cute, it is still too expensive for the mass market.
Carmakers serving Europe face a tricky problem. European Union legislation to force seriously improved fuel economy on the automotive industry are really just another way of ordering manufacturers to replace all their internal combustion engines (ICE) by 2030 with battery only or fuel cell vehicles.
EU rules say car and SUV makers must achieve a fleet average of CO2 the equivalent of 57.4 miles per U.S. gallon by 2021. This increases by a step through 2025 to 92 miles per U.S. gallon average by 2030.
European mass market leader Volkswagen has said it will no longer be able to make small ICE cars like the Up and Polo by 2030 because the technology required to meet the new rules is too expensive. So everybody, even at the lower end of the market, will have to buy electric. The problem is that currently even the smallest electric car, like the Renault Zoe, is about twice as expensive as the equivalent ICE version, with not really enough range to inspire confidence. And don’t even talk about ease of charging or residual values. So the race is on to find a cheap, electric city car which doesn’t aspire to be the equivalent of a traditional vehicle. Ideally it would be a 2-seater, with up to 50 miles range and cost less than $10,000.
When Uniti first announced plans to make an electric car, the outline plan was expected to be a much less ambitious two-seater with a range of up to 50 miles. But when the company announced order books were open, earlier in October, the specification called for three-seats with normal car-type performance, costing close to 19,000 pounds ($24,500) and with a range of 190 miles.
“I admire their ambition but there are all kinds of mobility options available for generation Y or Z, like Uber at the end of a smart phone. There’s car sharing; I don’t see much taste for urban city car ownership. Younger people now are not very interested in owning a car or on conventional ownership. I wish them (Uniti) luck but I don’t see how they will fit into the market. At the moment I don’t see a lot of demand for this company’s products,” said IHS Markit analyst Tim Urquhart.
Consultancy WJSchroer defines Generation Y as those born between 1977 and 1994, and Generation Z, 1995 to 2012.
Lewis Horne, CEO of Uniti doesn’t see it that way, not surprisingly.
“Our global ambition is not to sell heaps of cars. Our business model is very different. The first phase will be selling cars, yes, but this is a small part of the business. The objective is mobility as a service,” Horne said in a telephone interview from company headquarters in Lund, southern Sweden.
The Australian entrepreneur declined to give a precise sales forecast but said the intent was to produce in the hundreds of thousands over time. The first cars will be made at a British factory. There are plans to assemble the car in multiple locations across the world.
“The plans are significantly more than what you see today. We want to make this car and subsequent models available to a wide group of people. There is a product portfolio upcoming,” he said, without elaborating.
Horne said, in response to media comments, that safety tests will of course be done before launch, and the plan is to go beyond and above the legal requirements.
Al Bedwell, director, Global Powertrain, at LMC Automotive, agrees that there is an upcoming gap in the market which could be filled by affordable small electric vehicles.
“I’m concerned about the ability of Uniti and others like them to be able to sustainably deliver a car, with the ambitious specification that they mention, for the target price,” Bedwell said.
“The fact that serious activity in the (small car) sector from the major (manufacturers) is limited might indicate that they struggle to see profitability there at the moment, certainly until battery pack prices fall significantly further. Fiat seems to be taking the plunge and is targeting 15,000 pounds ($19,300) for the forthcoming Panda battery electric vehicle (BEV). (Mercedes’) Smart ForTwo (BEV) is about 18,000 pounds which is viewed as a high price for a car of its size and ability. Aside from these, there are few confirmed BEV projects in this sector from major manufacturers at the moment,” Bedwell said.
But the Uniti One, despite the relatively high price, might well succeed. It’s funky to look at and would be aimed at big city buyers and is also a candidate for car sharing and as a small delivery vehicle. Emerging markets in countries like India and Indonesia, eager to electrify, could be the key to Uniti’s future, where ride-hailing is a popular success with outfits like Go-Jeck and Grab. This might attract a take-over bid from a big Asian company.
Uniti’s Horne has emerging markets in his long-term sights.
“India is on our radar but not for the moment, and not at this price and degree of function,” Horne said.
Why did he get involved in the Uniti project?
Inspired by Tesla
“I’m not really an auto guy and initially this was a bit of frustration with our civilization that accepts traffic jams and the health impact of vehicle emissions and turns a blind eye to climate change; and I’m inspired by what Tesla has been doing. There are a lot of people around me and a range of investors large and small – about 3,000 individuals and some institutions. Business model innovation is a great thing for us to focus on. Tesla is both impressive and a very big challenge and directly competing with these guys is not a battle I really want, cars for rich guys. We want to make something more available for the masses,” Horne said.
Millions of ordinary, middle-class (in the U.S. sense) Europeans, shortly to be priced out of the market for new mass market cars, will be cheering him on.