National Electric Vehicle stops Saab 9-3 production amidst financing woesTue, 20 May 2014 15:59:00 EST
It seems that quirky, Swedish automaker Saab might be on life support yet again. Its owner, National Electric Vehicle Sweden, has announced that it's reducing its workforce and temporarily halting production of the 9-3 due to financial problems. NEVS was only building six cars a day, anyway.
The company put out a press release admitting its economic woes, but it still appeared hopeful. NEVS claims it's developing "a new platform on the Phoenix architecture," and it has a frame agreement with an international automotive OEM. It didn't give any specific details about either one of these assertions though. According to The Wall Street Journal, NEVS needs the partnership to lower development costs in order to stay afloat. Saab spokesperson Mikael Ostlund told Autoblog in an email that the stop in production of the 9-3 in Trollhättan would last four weeks.
NEVS says it's in negotiation to sell a portion of the company to an automotive company. Its current monetary woes are caused by shareholder Qingbo Investment Company not financing the company as agreed. "We plan to have the results of the discussions at latest during June," said Ostlund.
The path of Saab since the sale to NEVS has been full of bumps along the way. It was sold in 2012 to a joint venture between a Chinese company and a Japanese investment firm. Production restarted in Trollhätten last year, but it has taken a long time for its promised electric 9-3 to come along. Initially, Saab built a turbocharged, gasoline-fueled version of the sedan, but assembly of the EV finally began recently. However, the electric models are still prototypes, according to Ostlund.
For a relatively small automaker, Saab has weathered its rocky recent history well. We shouldn't count it out, yet. Autoblog reached out to the company to comment on when it planned to resume assembly. We'll update this story, if it replies. Scroll down to read the full press release from NEVS.
Status update from Nevs
National Electric Vehicle Sweden (Nevs) is preparing an extensive investment to develop a new platform on the Phoenix architecture, which will be the base for future car models. This development will be done in cooperation with other global OEMs. These collaborations involve sharing cost of development and reduced costs of components through significantly higher volumes.
Nevs has recently signed a frame agreement with a major international automotive OEM regarding the cooperation in product development of the future platform. A negotiation with another major automotive OEM is also taking place regarding part ownership. The objective is to add significant resources to the development of Saab as a global premium car brand name. The partnerships will contribute to secure Nevs with the right financial and technical support to develop new products and distribution of cars on a global basis.
Even if the long term perspective of Nevs remains very exciting and promising it is a short term cash problem.
The root cause of the current situation is that Nevs' shareholder, Qingbo Investment Co. Ltd, has not fulfilled their contractual obligation to finance the operations.
As a consequence Nevs' main owner National Modern energy Holdings Ltd. (NME) has since the beginning of the year decided to enter into the position as the sole financier of the company. Recently NME had to conclude that despite enormous efforts it has not been possible to capitalize its assets in China as fast as needed to support Nevs. This has resulted in a time lag between the financing from China and the need of cash to pay suppliers. As of today NME has transferred over 3 Billion SEK to Nevs and made additionally large investments in China, i.e. in the new battery factory and the technology development center.
It is important to state that the assets are significantly higher than the debt but Nevs is planning to use short term credits to cover all outstanding and near term obligations until the long term financing is secured. This is bridge solution is planned to be realized within a near future.
To further support the situation financially and give Nevs time to align the strategy with the new OEM partners Nevs will also take short term measures to reduce cost. Among the measures to be taken are a short term stop of production, which today is six cars per day, and a reduction of hired consultants.
By Chris Bruce
See also: Saab to reintroduce 9-3 SportCombi as Phoenix development continues, Saab begins 9-3 EV pilot production, Petrolicious keeps our love of the Saab Sonett aflame.