China's Byton hopes to sell electric SUVs in the U.S.
SANTA CLARA, Calif. -- Silicon Valley has become the de facto launch pad for Chinese startups hoping to sell connected electric vehicles in the United States.
The latest addition to the high-tech group is Byton. Headquartered in Nanjing, the brand opened its North American headquarters here on Dec. 1, and will unveil its first vehicle this month at the Consumer Electronics Show in Las Vegas.
Byton, a unit of Future Mobility Corp., wants to redesign the cockpit as a personalized digital experience for human and autonomous driving.
To do so, the company is building up a manufacturing base in China and forming partnerships with suppliers to launch sales of its first electric SUV by the end of 2019.
"You have to focus at the beginning,¡± Byton CEO Carsten Breitfeld told Automotive News. ¡°You cannot do everything at the same time. Many people completely underestimate what it means to engineer and produce and industrialize a car."
Breitfeld, a German native, led development of the BMW i8 plug-in hybrid sports car during his 20-year career with the German automaker.
Last year he founded Byton with Daniel Kirchert, a fellow German who led Infiniti's China operations and now is the startup's president. The two seek to merge low-cost Chinese manufacturing, German engineering and Silicon Valley tech expertise into what the company describes as an affordable "iPhone on wheels."
Breitfeld and Kirchert raised $240 million (1.5 billion yuan) from four Chinese investors and Byton's management team. The company now has begun a second round of funding, which it hopes to raise from U.S.-based and other global investors.
When it unveils its vehicle this month in Las Vegas, Byton will join an increasingly crowded field of Chinese startups who hope to find a niche in the U.S.
The startup is counting on major partnerships and Silicon Valley talent.
"We don't do fancy things, but the first product we bring to the market will hit the sweet spot in the market that you really can have volume and make money," Breitfeld said.
Though headquartered in China and funded mainly by Chinese investors, Byton markets itself as a global company, with a design office in Munich and its new North American headquarters in Silicon Valley.
"We are a company that's deeply rooted in China and deeply integrated in China, but at the same time we have a global mindset and are a global player," Kirchert said.
Byton will manufacture its product line in Nanjing.
Its first batch of products will include an electric SUV in 2019, an electric sedan in 2021 and a compact electric SUV in 2022. All will be built on the same platform.
The plant is under construction with plans to begin production in 2019 with an initial capacity of 100,000. If demand proves to be robust, the company expects to boost production to 300,000 units annually by 2023 or 2024.
Byton hopes to sell half of its vehicles in China, 30 percent in the United States and 20 percent in Europe. Kirchert said the startup has no plans to manufacture in the U.S., but would consider a U.S. assembly plant if sales prove to be strong.
The company also boasts a diverse staff, with employees coming from Tesla, BMW, Ford, Toyota, Delphi, Apple and Google.
Byton is looking outside China for supplier partners as well. It is working with Robert Bosch GmbH to develop electric powertrains, and French supplier Faurecia to design seats and interiors.
The company is also partnering with an unnamed company, which will be announced at CES, to design self-driving vehicles.
While Byton's proposed vehicles are similar to cars on the market today, the cockpit is where the startup seeks to innovate.
"The name Byton comes from 'bytes on wheels,' so it reflects our idea to make a computer on four wheels," Kirchert said. "The focus of the brand will be much more on the experience of the passenger on the inside."
The startup offered a look at the interior of its upcoming SUV at its office opening, with a 49-inch display spanning the dashboard, an 8-inch touch screen on the steering wheel and front seats that can rotate 12 degrees inward.
In a concept video, the car can recognize passengers and their preferences, and communicate seamlessly with other mobile devices such as smartphones and smartwatches.
Jeff Chung, chief of Byton's intelligent car experience, said the expanded display can be adjusted to show as much or as little information as the driver and passengers prefer. He added that Byton is working with consumer electronics suppliers to integrate personal devices with the vehicle.
Breitfeld said the personalized digital experience for any passenger makes the vehicle attractive for ride hailing and car sharing.
"This is a product that is prepared for shared mobility, and if you combine this with the logistics of companies like Didi or Uber or Lyft, then you can come up with an operation service for mobility which will fit even premium customers' needs," he said. "This will be big business in the future."
With only $240 million in outside investments secured thus far, Byton has little wiggle room to meet its deadlines and turn a profit before it runs out of funding. The company hopes to avoid the cash-flow crises endured by other Chinese startups such as Faraday Future and LeEco.
Breitfeld said Byton plans to sell its first vehicle for half the price of the Tesla Model X, which starts at $79,500. This strategy relies on launching its Chinese assembly plant by the end of 2019, with worldwide sales beginning shortly after.
Byton has yet to secure a production permit in China. Kirchert said the company is obtaining the license to meet its production deadlines.
To ramp up production quickly, Breitfeld said Byton will bypass the soft-tooling stage, in which automakers use temporary manufacturing equipment to test what will be needed for full-scale production.
Tesla took a similar approach with the Model 3 and was forced to delay delivery deadlines by three months. Breitfeld said Byton will avoid similar problems by designing an easy-to-assemble vehicle.
"Problems in production aren't from a lack of production know-how," he said. "They're from problems present at the very beginning."
Breitfeld, who said he launched the BMW i8 in 38 months, said the short deadlines and funding limits have kept the company focused on its near-term goals.
As a result, it has not overspent early in development.
"We have to fight for our money to get it from the capital market,¡± he said. ¡°This means we have to convince the capital market. This can only be done based on achievements."
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