Saab sees revival through electric cars and China sales image

Although merely a year has passed since it went out of bankruptcy and with just two cars a day rolling off its production line, Saab is betting on a yet to be built electric version of a decade old car to bring the iconic Swedish brand back from the dead.

National Electric Vehicle Sweden (NEVS), Saab’s new owner, is targeting its home market of China, where the government is promoting clean automotive technology with up to 100 billion yuan ($16 billion) in vehicle subsidies, R&D and infrastructure spending, according to research firm Frost & Sullivan.

Even so, the battery version of Saab’s 9-3 model will be up against the likes of BMW, VW and Ford, just to name a few, in one of the most competitive industries in the world. Even fans could be skeptical – the 9-3 is “already out of date” from a new buyer’s point of view, as for the electric version, will it be able to offer the Scandinavian driving pleasure regular Saabs do?

For NEVS President Matthias Bergman, only bold action will resurrect a more than 60-year-old brand, which pioneered such auto innovations as side-impact protection, heated seats and headlight washers, but was hurt by high labor costs and lost its image under GM’s ownership.

“We are nearing a tipping point,” he told Reuters, predicting the market for electric vehicles (EVs) will turn up sharply around 2015. “The big volumes will be in China.”

Saab also has a few aces up its sleeve, such as its state-of-the-art plant in Trollhattan, south Sweden, courtesy of GM’s $4 billion of investment. It will also have cheap batteries supplied by NEVS’ sister company Beijing National Battery Technology, as well as political connections.

Analysts think sales of EV fleets to local governments in China are a huge opportunity, as they own hundreds of thousands of vehicles and are under pressure to cut air pollution.

The challenge for Saab is immense, however. Manufacturing in Sweden will make cars expensive; at least until a plant in China comes on line, while NEVS lacks the financial muscle of rivals.

Via Reuters