The investment roulette: APAC OEMs
It’s been a while since OEMs have been looking outside of their core business of vehicle manufacturing, to safeguard revenues; the market has witnessed car manufacturers venturing in mobility, data, platform sharing, subscription models and other tangent business lines. Slowly, a new ecosystem is being built up.
Asian OEMs are doing the same and compete with, especially, the big tech companies such as Tencent, Alibaba, Sony and Softbank for a spot in this new ecosystem. Recently, a few new examples have been announced.
Terra Motors is an unknown player for most Fleet & Mobility Managers; nonetheless, their product and business model suits the APAC market like a glove. Terra builds electric three-wheelers capable of carrying 4 passengers and a driver. If the form factor comes across as unsuitable for the EU/US market, it’s spot on for the overcrowded Asian metropolis. The vehicle is cheap, has a small footprint and is sustainable, therefore having the potential of becoming the vehicle of choice for people who are not in a position to acquire a traditional car.
Terra has now kicked of Terra Finance, a micro-credit provider that supports the consumers in their effort to purchase a vehicle. Focused on the Indian market first, where almost half of the households earns less than USD 5000 per year, the microfinance solution helps covering for the USD 1800 MSRP.
Caocao Chuxing is a Chinese ride-hailer, active since 2015 and now covering 62 Chinese cities. From a performance perspective, the number of Caocao rides and app downloads increases constantly. Obviously, the company is benefiting from the investigation into Didi’s operations, during which growth of the ride-hailing leader is halted.
Geely, one of China’s leading OEMs and owner of, amongst other brands, Volvo Cars is the principal shareholder of the ride hailer, through its technology branch “Geely Technology Group.” Geely has recently reinforced its investment in Caocao, confirming the OEMs strategy to play a role beyond producing cars.
End of automotive silos
These are only 2 examples of a long list of investments made by manufacturers to expand their business models, delivering a complex web of interconnections between different businesses. Most of the investments are part of a Round A or B, implying that the companies that receive the funding, have not yet reached full maturity and potential.
OEMs are throwing the net wide, splitting investments in different new solutions and technologies, almost as a roulette player going for black or red, in the hope that some might take off and become successful. Nonetheless, it demonstrates that consolidation of the mobility, techfin and other recent proposals is coming closer, as the game is no longer played on solution level, but on funding level instead.