NEVS Plan A and Plan B

The news Yesterday of NEVS approaching third parties although they are still in Talks with the two Assian car manufacturers.

The OEM track
The OEM track

Well later yesterday they sent a preliminary reorganisation plan to their creditors, and helped us understand what this Plan B means.

According to their press release:

As a complement to the main track prepares Nevs an action that has the potential to become a leading contract manufacturers and development partners in the other vehicle producers, as the two carmakers Nevs negotiating with are positive. This means putting the company’s assets in the work by taking advantage of the facility also to produce for external customers.

In other words, they are moving in the same direction as SWAN was trying to do on their last days. At that time SAAB Automobile AB created an engineering consultancy to create an added source of income.

The Complementary Plan
The Complementary Plan

Is there a market for that? I work in such an engineering consultancy, and yes the is a big market for that, but only if you can offer solutions to the questions of the car manufacturers. Other people say, you have to convince the OEM that they have a question to the answer you offer them, but this is another story.

Many people may say that doing this, you will sell your USP to other people making your products less unique, but nowadays almost no car manufacturer have a real USP. This is the reason why for example Volvo is not advertising their cars as being more secure than others, but they put the brand and their Swedish roots in the foreground. You see similar effects with other brands.

Will this Plan B really help NEVS survive as a car manufacturer? Time will tell, and according to their reorganisation plan it is only a complementary plan. If Plan A succeeds they would habe an added source of income with Plan B, if Plan A doesn’t succeed they say that the income of Plan B would suffice them to stay afloat.

My personal view on this is that NEVS was not contemplating Plan B till the administrator came on board. He must present a backup plan to the creditors on October 8, otherwise the creditors will not support him a let the reorganisation continue till November 29.

The 29th of November is no special date but the end of a 3 month period since they were granted reorganisation. I don’t know if they can ask then for a further continuation of the reorganisation, or if this is the end, but according to their reorganisation plan they are willing to have an outcome to plan a and plan b till then.

Steps from November 9
Steps from November 9

Rough translation of the text.

  • Negotiations are underway with OEMs regarding JV / TDC
  • Work and discussions with financiers under way regarding NEVS Industrial Services
  • Agreement on a new issue in NEVS
  • Reorganisation period of 3-month expires on November 29

You can find here the complete reorganisation plan. Although most is written in Swedish, the information on the plans is in English.

46 thoughts on “NEVS Plan A and Plan B”

    • My interpretation of it is that the first Phoenix cars are hitting the streets then and the current 9-3 will be dropped (except maybe for some low volume specialty production which would fit to keep the factory maintained), otherwise a restart would come earlier.

      Let’s hope for a Phoenix car launch in 2016.

      • We’re a few months away from 2015. I don’t see any way they can have any Phoenix derived car ready for launch in 2016. It took NEVS almost two years to produce 9-3s again (more than a decade old car of which thousands have already been stamped out) and took them even longer to show a 9-3 with off the shelf bolt-on equipment as their “electric concept vehicle.” That’s the sort of stuff gear heads/wrench heads/shade tree mechanics do with their buddies over six packs of beer and a year of weekends. I understand the NEVS 9-3 EV was more sophisticated, with batteries tucked under the chassis, etc., but the point remains that with the resources they had, a living/breathing/working factory, engineers, presumably money, etc.—-if this was the best they could do in two years, how is it possible they’ll be out with Phoenix in less than two years from now?

        • Don’t be so pessimistic…

          I do agree that a 2016, especially early 2016, launch most likely is wishful thinking, however, the Phoenix haven’t had a normal design cycle, it’s been revised in mid-flight and, from my own design experience, is thus likely to be more mature than most as that gives better opportunities to correct early bad design decisions, so the completion may be more smooth than usual from a technical standpoint. Also, there is another factor, the production will most likely to start with (very) small volumes if, for nothing else market conditions, which means far simpler logistics. It does require some perfect storm requisites, though.

  1. Lot of my everyday work is to review and comment lots of documentation so let me give my comment on this :-):

    1. Maybe formal, but anyway important: The Power Point matherial that is included in the document still contains SAAB logo! Didin’t NEVS loose that right few weeks ago? This shows me this: Either SAAB AB is changing their minds these days as a result of ongoing negotiations or the material is assembled using the old company template in hurry!
    2. Maybe I don’t know the reconstruction process and what is needed but I don’t see any plan(s) here except a list of wishes. No numbers to support either of the plans. Application for a home loan contains more info then this “master plan”. Maybe more is needed maybe not. I don’t know. I guess there are people very well paid to write these documents.
    3. Plan B is not really a plan, it is more like “Hey guys, the reconstructor told us that we need to have a Plan B, lets make him one but quickly!” The plan to be a mini-Magna/Lotus Engineering doesn’t sound so realistic to me.

    • I had the same reaction initially, why on earth would an OEM decide to assemble its cars in Sweden ? Surely there’s is overcapacity everywhere and Sweden isn’t really a cheap country.

      But then Mitsubishi sold its plant in the Netherlands a couple of years ago and a third party now assembles Mini’s there – and NL isn’t exactly cheap labor either.

      The other thing is time-to-market. Some Asian manufacturer might want to produce their cars in Europe rather than have them spend two/three months on a ship. Speed of time to market can be a significant competitive advantage, perhaps outweighing labor cost.

      • On one of the slides in the Reconstruction plan it’s written that the factory in Trollhattan is one of the lowest cost manufacturing facilities in Western Europe, so it probably possesses some competitiveness.

      • Also consider the coming distance taxes on products in Europe, all items shipped from a greater distance will have an environmental footprint tax which size is measured in how far it has been shipped. Shipping a car from Taiwan for example will get a carbon tax Euro per km traveled until reaching the customer so shipping cars to Europe will be a costly business. So asian manufacturers who are really interested in selling their products within the EU might have to consider producing them in Europe in order to compete with the other already established European low-cost brands.

        • Very interesting! This excellent move for the environment will have profound impacts on manufacturing sites. A major card in NEVS’ deck I would think.

        • My be a taiwanes saab, luxgen. I would think it would be a lot easier to deal with tiawan than china. And i sure luxgen would love to sell car in europa

      • The Valmet plant in Finland, the old Saab plant, is churning out the Mercedes A class these days. Production is looking to hit 100 000 units annually. Took a couple of dozen millions worth of investments but the cars are coming along now. Labour costs are roughly the same as in Sweden. Merc A is a hit right now and they needed a subcontractor to meet the demand. Something like that could well work for Trollhättan, although if they are about to subcontract an electric car, I doubt they need to prepare for similar demand.

        • Being a Valmet subcontractor, well, why not. I say that idea may very well work, there is likely to be people that have been working together, and fond memories, in both places from the time when Saab used Valmet as partner/subcontractor.

  2. I hope it is a good plan. If you look at the other slides in the document you will find quite an extensive model plan. I guess it will take some time time to develop all these models. So even with new owners Saab may need to use the production capacity and have some income during product development.

    • I read it too. They are looking to get a 3rd party client onboard during q4, develop a vehicle for that client in 2015 and produce it in 2016.

      That to me sounds as if they are looking to finish the 9-3 E for some other automaker than themselves or Mahindra, but that’s just my interpretation of it. Maybe they can develop a whole new model in a year.

      In their plan a they are looking, simultaneously to plan b, to continue with the 9-3 ice facelift and the 9-3E as well while developing the phoenix into four premium models.

      That’s ambitious. Reads to me as if plan a is slipping out of reach and they are looking to take their business elsewhere. That’s a lot of stuff they are putting on their plate, and I really doubt they are continuing with the ice 9-3. Seems more like throwing a bunch of their older powerpoints in their new plans to sweeten the deal. Eats away the credibility of their plan IMHO.

  3. So if I’ve read this correctly, NEVS want to manufacture cars, but they also want to become a subcontractor for other OEMs? Well it makes sense in the short term at least. Rather than having a high tech manufacturing facility sitting idle, collecting dust and burning energy for little or no purpose for the next two years, you can produce cars with it for other manufacturers. Quite a smart plan if how I’ve perceived it is correct. Sad however that we won’t see any SAAB cars (if it’s still SAAB by that point) roll out until 2016. But if the development for the phoenix isn’t ready, then it isn’t ready. And no point churning out the old 9-3 which sadly nobody seems to want. It’s a shame they didn’t try sell it here in the UK, I think it would’ve sold in reasonable numbers here!

    • KT: It would have sold reasonably well in the U.S. too—-especially if they ramped up convertible and combi models. Of course, if they were pigs with the price, the cars would sit on dealer lots. I don’t think NEVS is even close to producing cars in that factory by 2016—-it would take a small miracle for that, unless it is the 9-3 we’re talking about. And honestly, I’m having difficulty imagining another car maker who wants to and can afford to assemble their cars in that plant—unless there are political/EU reasons why it would be advantageous.

    • I am quite sure the old generation 9-3 could sell in respectable numbers even in Sweden… The problem for the Swedish market (and I guess for a lot of european markets in general) is that NEVS started with the gasoline version. Not many people here consider buying a gasoline car, and definitely not a thirsty one with 220 HP…That is a car for real SAAB enthusiasts, with a lot of cash as well…

      Many here at Saabsunited argue that the 9-3 is outdated, based on the fact that the gasoline version don’t sell well… I think that if NEVS re-launched the Sportcombi-version with an efficient diesel engine and a new infotainment system, the situation would be completely different. I know a lot of swedes willing to buy that configuration if its reasonable priced…

      • There’s a health enough niche market in the U.S.A. that would absolutely, positively buy a Saab 9-3 diesel in sedan and combi models. There’s a small but large enough legion of diesel enthusiasts here, who for too long, haven’t had enough choices. Make it a decontented (read, cut back on the electronic crap and frivolous luxury features) car, with a diesel engine, and Saab would find buyers here if it was priced right. Add a convertible 9-3 with the traditional turbo gas engine and those would still sell in respectable numbers too. It’s not going to happen I guess, but it could have—-it just wasn’t attempted by the current owner.

    • The 9-3 didn’t sell well enough in its heyday and even then there were substantial discounts. It is not going to sell well enough now. The cost to build this old design in low numbers is at best about the same as or more likely even greater than the cost to build something more up to date. There may be interested buyers, but because of the competitive shortcomings associated with its age those buyers will expect it to be “priced right” (translation: sold at a loss).

      • It’s true that this car is more expensive to build than a new design would be (I’m not an expert, but Tim is knowledgeable on car production and this model specifically, and he’s said that several times.). Still, when you consider the gargantuan cost associated with designing a new model—-and when you amortize that mammoth cost over a typical Saab production run—-my guess is that as s stop-gap, the 9-3 could be sold for thousands and thousands less than a new model. Recovering the investment in a new model would mean adding a lot to the cost of the new cars. That’s in the future—but in a “future is now” world, the 9-3 would have worked if it was rolled out in a sensible way. Alas, common sense was in no supply at NEVS.

        • More likely the low production volume would have offset any savings in deveopment costs requiring a price at least as high as that of more modern designs. Either that or sell at a loss – a good strategy for an owner who wants to get SAABs on the road with no regard to what it costs to accomplish those sales. This was evident in the petrol cars produced by NEVS, The concensus on these cars was that they were decent enough but not worth the asking price when compared to other products.. Some of us may have bought one of these 9-3s (if it was available) but not enough of us.

  4. They want to become Valmet, or Magna Steyr ?

    Which, if there is someone willing to use the factory to build *a vehicle*, then makes sense in the interim, rather than leaving it idle. With demand rising – perhaps there is more of a chance for this now, than there was when Muller tried to consider it a few years back.

  5. It does look very good in Powerpoint. But how will it be in reality?
    Lots of former Saab workers left their permanent jobs to start working at Nevs, which btw promissed them milk and honey just to come back (ie. in case it went to hell they would recive 6 months payment cos Nevs would take their employment time at Saab in consideration – now people found out they have gotten “wrong information by mistake”). Burned twice at same working place, they are feeling used and thrown away (i talked to one of, now former, workers). Angry and dissapointed are some of words they describe their feelings with.
    Some of them quited 2 months prio to layoff, they realised where all of that was heading. According to him, only 8 are still at work in assembling factory, inclusive managers. He says it is last time for him (meaning – to work at Stallbacka). He will go back to his work in Norway as truck driver, so he can pay his bills until he finds somthig clser to home. A question: How many of those who now got layed off will be back to work at Stallbacka in future, given how they were recently treated?
    Even if both Plan A and B are in place, how long will it last before next f*** up happens ie. we are moving productin to a low cost country, or subcontractor deal runs out and there is no more subcontracting at Stallbacka? How many of former workers, ,that actually have expirience and knowledge but still got layed off, are willing to risk their own and families´s future once again? One is getting older, either we like it or not, and needs to take in considaration that is not so easy to find a new job nowdays. And there is absolutey no guarantees they will work at Nevs (or whtever it might be called in future) untill they hit retirement age. What if they waste another 3-5 years (even less) at Stallbacka and lose their jobs once again? The bills are not waiting for anyone.
    I have worked as team leader on door-line until bankruptcy back in december 2011. I have applied to Nevs for employment wave in november-december 2013. Did super good interview, she who interviewed me sent my name to human resources department, but Nevs menagement decided to hire young unempolyed people cos they would receive economical benefits from job office, so they would cost less. Allready back then it should be a warning sign of how deep pockets they actually had when they chased costs instead of expirience and knowledge that could restart factory in no time. But not in my brain…until may 20th 2014, the day they stopped production.
    On my current job im earning more money then i would at Nevs (started with 25.500:- as i would have at Nevs and got raised before vaccation) for less work and not for one second followng crossed my mind:”Will i have a job next month, next year? Will the wage come in time this month?” I’m speakning from heart, i have nothing to hide.
    So what is that Nevs can offer to their future workers that will secure food on table for them and their families for many years to come? What can Nevs can do so workers dont think about what will happen next moth or next year and can focus on the work and make plans about vaccation?
    Sorry if im a party pooper, but situation is how it is….
    New people in mayor office in Quingdao (they have got exchanged due to explosion accident back in november 2013) and when Nevs made contact with those new ones the answer was like “And who are you exactly?”. They even visited Nevs to see “what was that they have bought”.
    Personaly, i wish good luck to all who in future apply to Nevs, i will stay at my curent job unless Nevs can give me written guarantees that i will work there untl retirement, and if shit somehow hits the fan once again they would pay my wage to me and social fees until i hit retirement age. But who can guarantee something like this nowdays, especially in car business…
    What ive seen/read/expirienced so far about Nevs, doesnt make me feel secured about future at all…
    Once again, sorry for the post, but it seems to be brutal reality…

    • Heartfelt post and whether or not people like reading it—-it needed to be said Adde. Look—-I don’t know if it’s fair to expect an employer to guarantee that if you accept a job with them, you’ll retire from that job. That’s a very difficult thing for any business owner to say for sure. But I think we’ve seen what these people are capable of—-and it’s nothing, or very little. At this point, I can’t imagine, for the life of me—-any employee with talent, skills and other options, accepting a job with this group. They’ve been exposed and the wheel now needs to spin to someone else to have a shot at it. The word “incompetence” seems to come up quite a bit when discussing them—-and now I’ll add “lack of trust” to the dialogue. Broken promises, originating in China, might be one big reason why NEVS came unglued. But I honestly don’t really know if that’s true. Someone else alluded to this a long time ago—-did NEVS come unraveled because Qingdao pulled out funding? Or, did Qingdao pull out funding because it was clear to them that NEVS was coming unraveled (or that NEVS was not going to deliver on THEIR promises?)? And does it matter? The bottom line is that a Chinese businessman and a Chinese province slugged it out a little—-and now hundreds of people in Sweden will get pink slips…again. The lesson here is not “Don’t trust the Chinese” or “Don’t trust an owner from outside Sweden.” It’s not that broad. The lesson is, “NEVS can’t do it. Don’t trust NEVS.” If this reorganization is accomplished with the same man at the top of the food chain, NEVS still calling all shots—-there’s no reason for anyone who loves Saab to feel good about that outcome. The outcome we need is fresh blood—fresh talent—-fresh perspective—-fresh business plan—-crumble up and throw away those things related to the NEVS era, because there’s very little there that’s going to be even a sliver of help in getting this venture off the ground. Mahindra or someone else needs to come in with a radically different outlook than NEVS had. Anything less is simply more failure and misery. And if this all means Saab has to rest in peace, as much as I hate the thought of that—it’s something that will have to be accepted. Because NEVS will never resuscitate Saab—-at least not in my opinion.

      • Hey, Angelo!
        Ofc, there are no such guarantees nowdays, no matter of business you are in. I wanted to say, that basically that’s the only thing that can make me come back to Stallbacka, regardless of who ownes it. The trust in factory as a solid work place is gone due to all that happened in last 5 years. It is simply not worth being cannon fodder once again. Why should I and for whos sake?
        That factory is for youngsters who want to work a bit after secondary school (a year or two – and trust me i have seen lots of people like that pass through factory), earn some money and than move onto university studies. Those ones, without ties and families on their own, can afford to be cannon fodder.
        The friend of mine that i mentioned in my previous post was on vaccation on Rhodes (Greece) when he got phone call from his manager (same person that interviewed me) who told him that wages would be delayed. And now given what we endured prior and during VM time, that roller coaster of hope and despair, imagine how he felt when he got the news from his manager. So, what’s worth expiriencing that feeling on vaccation where we are supposed to relax and enjoy it with wife and kids?
        The time when i volunteered lika a moron to stay at work after working time, when all employees went home for celebration of midsummer, just to change some window moldings on NG9-5 that would be demo cars in USA and needed to be shipped away the same day is long gone. The reward for that came in shape of a “certain organ” stuck deep in my “rear part” in december 2011.
        So, sorry for my lack of trust and confidence in job stability at Stallbacka, no matter who own/will own the factory, after everything what happened so far.
        Maybe, just maybe, things would be different if someone else bought Saab assetss after bakruptcy, we will never know that. What happened has happened and we need to embrace the suck…

      • The lesson SHOULD be “China is a dead end” – which I’ve said repeatedly for years, ever since Muller pulled Youngman and Pang Da out of his hat, and which unsurprisingly has turned out to be true.

  6. So if I read (and understand) all this reconstruction plan correctly, it simply (?) concerns NEVS’ plans and how its future partners will be involved, in the big picture. However *unless* the SAAB marque is maintained in some way, shape or form (how that will be done we have no idea …..), all this NEVS news is totally moot to me. As far as I’m concerned, unless the SAAB marque is maintained, NEVS is just its undertaker now and I don’t give a rat’s ass about the future of NEVS. Unless noted otherwise, NEVS essentially killed SAAB once and for all and I really have no interest in their future endeavors.

    Call me Negative Nancy today, but I’m so tired of reading about NEVS and their incompetencies.

    • Ken: I’m equally frustrated with NEVS. Without the Saab name, you’re exactly right—they’re not worthy of a second look by people who loved Saab. Without the Saab name, they’re utterly meaningless.

    • Saabken Can’t agree more as of today Saab is dead no matter what Nevs does.. The name has been taken away,.. therefore Saab is dead. That said Nevs is trying anything and everything they can to survive,, and future business moves may have nothing to do with Saabs future,,, Sadly they may keep the plant for two years longer…

      I think this maybe the end… Reading between the lines I see a bunch of BS from one desperate company.. Sorry just what I feel.

  7. Any plan that involves the usual Chinese “saviour” should be scrapped immediately without being given any consideration whatsoever. If that means that there are no plans left, then NEVS should close up shop for good.

  8. First, it is sad to hear of the layoff of the NEVS employees. They have got to be some of the most loyal employees around, but one wonders how many can be retained going forward given the protracted negotiations for restructuring. I am not sure how unemployment benefits work in Sweden, but at some point a good number of these folks will likely decide to find employment elsewhere, which will make reestablishing the workforce, if and when production is re-started, difficult.

    I thought I had read that SAAB AB had decided to not extend the license of the SAAB name? Is that correct?

    Also, it seems like the various plans put forward are a “we will do whatever” approach: build our own car, build someone else’s, do R&D work, focus on electric vehicle components, whatever, to make use of the plant. Makes sense at this stage since the published financials look pretty dire. But the question that Tim posed is a good one—what would make a car a “real” Saab at this point? Some have said, “No GM parts” but that ignores the history of SAAB when their cars used components and parts from a multitude of suppliers, including the old Classic 900s. What seems to me to be a SAAB is a Scandinavian bent on clever engineering and design that results in a unique driving experience that is both fun and competent, a car that truly marches to the beat of its own drum. With a couple of exceptions, SAABs have never been confused with other cars and have not followed the path of other car makers that has lead to the “I can’t find my car in the parking lot because they all look the same” syndrome. There are lots of ways to achieve that, and I hope that NEVS can somehow find that for the future.

  9. 1) I guess OEM A would be a holding company, financing only ; MNEH would leave 80 % of its Nevs shares, That’s a lot, it means KJJ will no longer be Nevs CEO. Hum… it sounds like KJJ is trying to sell Nevs (Phoenix patents included ?) without honestly admitting it.

    2) I guess OEM B would be a car manufacturer (linked to the 80 % holding company) ; sharing 50/50 R&D means MNEH would only be 10 % involved in. Joint technical development centre with 10 % involvement only. What would that mean in terms of role for MNEH, batteries supplier ?

    3) Plan B without Plan A = Nevs reduced to an engineering consulting firm which would be able to propose complete car development solutions (great, just as Swan and Electro Engine !) to a mysterious OEM B. Two more years of development to go (no any phoenix project studies since 2012 ?), then production starting in 2016 (who knows, perhaps 2018…). All of it, I suppose, under the brand name of this mysterious OEM B : no more Nevs or Saab badges on cars.

    I am affraid this is the end of Saab automobile, in any case. Boohooo…. so sad 🙁

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