SF Motors prepares to pounce on U.S. EV market

Editor's note: An earlier version of this story listed the wrong year for when SF Motors' parent company, Sokon, began making cars. Production began in 2005. The story also incorrectly described the relationship between affiliated companies LeEco and Faraday Future.

SAN FRANCISCO — SF Motors has been quietly setting up shop in the U.S., establishing a manufacturing presence and acquiring talent as its fellow Chinese competitors struggle with funding challenges following flashy product launches.

SF Motors is a nearly 2-year-old subsidiary of Chinese automaker Chongqing Sokon Industry Group of Chongqing, China. With corporate headquarters in Santa Clara, Calif., a factory in Indiana and a research facility 45 minutes outside Detroit, the company is gearing up to introduce plans for its first premium EVs to the U.S. — a historically tough market for Chinese automakers — this spring.

Recent attempts by Chinese EV makers started with flashy press events and quickly crashed and burned. In May, LeEco announced it was laying off the majority of its U.S. work force. LeEco is affiliated with Faraday Future, which also makes EVs, as they are both funded by Chinese billionaire Jia Yueting. Faraday has seen an exodus of executives, is low on cash and is facing multiple lawsuits.

SF Motors, which employs some former LeEco and Faraday Future workers, said it has learned from its competitors' mistakes, shying away from over-the-top press events until it has the product and infrastructure to back up its announcements, an SF Motors spokeswoman said.

But with the October acquisition of Inevit, a battery and electric powertrain startup founded by Tesla Inc. co-founder Martin Eberhard, and the completed acquisition of the former AM General plant in Mishawaka, Ind., SF Motors has been attracting more attention and could pose as a legitimate competitor in the U.S. EV market.

"It's a company of highly capable, globally minded people who know how to quickly get things done in terms of securing technology," said Michael Dunne, president of Dunne Automotive, a Hong Kong investment advisory company, and an expert on the Chinese auto industry. "They're moving very fast, with a worldly view."

Sokon, SF Motors' parent company, is also a relative newcomer to the auto industry. Founded as a privately funded motorcycle spring manufacturer in 1986, Solon began making cars in 2005, when it entered into a joint venture with state-owned automaker Dongfeng to produce microvans and low-cost passenger vehicles. It joined the Shanghai stock exchange in 2015.

Sokon has grown quickly, selling 380,000 cars in China in 2016 and, in January, winning one of 15 government licenses to produce EVs in China — which will be increasingly valuable as the country moves to ban internal combustion engines to curb smog.

Other Chinese ventures in the U.S. have relied on the deep pockets of billionaires and other investors. LeEco, which was angling to produce a variety of consumer electronics and mobility devices, including an EV, put its Silicon Valley headquarters up for sale in March, and Faraday Future may be near bankruptcy.

Lucid Motors, an EV startup formerly known as Atieva and founded by a former Tesla executive, has received funding from LeEco and Chinese carmaker BAIC and is reported to be in search of more money to launch its flagship sedan, the Lucid Air. Nio, formerly known as NextEV, is set to launch its first vehicle, the ES8 electric SUV, in mid-December after receiving $1 billion in a funding round led by Chinese tech giant Tencent Holdings.

As part of a company with a manufacturing presence in China, Dunne said, SF Motors may have less to lose than its venture-capital-funded competitors if its U.S. enterprise fails. And with a U.S. production facility secured, it could lease space to other Chinese companies if its own products aren't successful. "The real market's back in China," he said.

SF Motors' headquarters, which houses about 150 employees, are smack in the middle of automaker offices and major automotive tech suppliers, such as Nvidia, in Silicon Valley. The company also operates a research site in Ann Arbor, Mich., and uses autonomous vehicle test site MCity on the University of Michigan's campus. On Nov. 2, it closed its acquisition of the AM General plant in Indiana, where Mercedes-Benz and Hummer used to manufacture vehicles. In a release announcing the deal, SF Motors said it would retain all of the plant's workers.

It also acquired Inevit in October. The three-person battery startup led by Eberhard has been developing a battery module that could slide into a variety of vehicle designs. The agreement gives SF Motors access to invaluable powertrain expertise.

"Martin is avisionary about battery pack technology, motor technology, power electronics and electric drivetrains," wrote Mark Platshon, managing director of Icebreaker Ventures, in an email to Automotive News. "I think he has some good ideas on how to make EVs more manufacturable and cost-effective."

The extent of its development of self-driving technology also will be an indicator of its success, as the rest of the industry races toward hands-free driving and autonomous features become a differentiator among established luxury brands, Platshon said.

And SF Motors won't be competing against the legacy auto industry alone.

"New Chinese EV makers are flying everywhere," Dunne said. "But they have an idea with smart people behind it, local government support, access to technology in Michigan and California. They're putting the pieces together and moving fast."