Exclusive Interview with U Power Tech's Li Peng: How to Reduce the Breakeven Point from 100,000 Vehicles Per Year to 10,000 at Automaker

Li Peng, founder and CEO of U Power Tech

LAS VEGAS, January 16 (TMTPost) -- "The chassis is the barrier to entry for automakers and the 'soul' of a car. Will anyone be willing to use the chassis made your firm?"

This is the most frequently asked question to Li Peng since he founded U Power Tech.

In April 2021, three months after leaving Great Wall Motors, Li emerged as an entrepreneur after years of being a professional manager. He set up U Power Tech, focusing on the development of electric vehicle (EV) skateboard chassis.

Unlike benchmark companies in the industry like Rivian, which manufactures its own cars, U Power Tech does not cater to the personal consumer market. Instead, it aspires to be a company serving enterprise clients. Therefore, gaining the trust of automakers is crucial.

On the eve of the 2024 International Consumer Electronics Show (CES), TMTPost h had an exclusive interview with Li. Faced with the doubts, his answers were more straightforward than ever." Discussing the skateboard chassis industry and model now is actually meaningless,” he said.

The confidence lies in the fact that U Power Tech is no longer confined to PowerPoint presentations and concept cars but has tangible complete vehicle products.

On March 7, 2023, U Power Tech launched its UP super board, a mass-producible skateboard chassis-by-wire, and in September, it unveiled the first engineering prototype product based on the board—UP VAN. In addition to showcasing its own products, U Power Tech officially delivered the first batch of skateboard chassis products—the UP super board—to the U.S. electric vehicle newcomer, Olympian Motors at the CES.

Headquartered in New York, Olympian Motors, an EV company, will deliver its Model O1 in 2024, and plans to expand product sales to 100,000 units by 2027.

A tangible product is far more practical and convincing than discussions on paper. "If you want to develop the operating system for smart electric vehicles, customers will have no idea what you're talking about without a finished product, the network approval, and the specific functions." Li said.

Two months after the launch of the UP super board, the company announced a round of financing led by Hefei Industry Investment Group. Li revealed that another round of financing, also led by the Group, has not been officially announced yet, with an amount of several hundred million yuan, and "most of the funds have already been received."

This comes a year after U Power Tech secured rounds of financing in quick succession. In its first year, U Power Tech completed three rounds of financing, involving individual angel investors such as Yu Kai, the founder of Horizon Robotics, Wang Lipu, the president of Fosun, as well as top-tier investment institutions like Matrix Partners China and ZhenFund, and capital from Bosch's venture capital arm.

U Power Tech has once again gained the solid support of investors. Meanwhile, the entire skateboard chassis industry seems to be emerging from the rugged path of disbelief. U Power Tech is not the only player, suppliers like CATL and Schaeffler are also doing it.

Traditional automakers like Great Wall, BYD, General Motors, Hyundai, and new forces like BAIC Bluepark New Energy Technology, NETA, are planning substantial investments in skateboard chassis R&D. In October 2022, Schaeffler has acquired the remaining 10% stake in Schaeffler Paravan, achieving full ownership of the company's Space Drive steer-by-wire technology. In January 2023, CATL officially invested in skateboard chassis technology supplier Bihu Tech.

The skateboard chassis, once underrated, is now making its mark in the market. However, does this mean more intense competition for U Power Tech? Li said: " You just need to do better to win the competition, that's all."

How to win? The key lies in the product.

The first competitiveness of the product comes from "insight." The original vehicle development process is basically centered around the factory, while the user is at the end of the process, which in Li Peng's view, is a typical Nokia cell phone thinking. He believes that the future of electric vehicles will have two directions: one is the tool attribute, and the other is the toy attribute. Tool cars need to achieve cost-effectiveness under the condition of meeting all functions. Toy cars need to satisfy users' emotional value, such as more extreme richness in performance configurations.

Li hopes that in the future, through U Power Tech's efforts, the breakeven point for car manufacturing can be reduced from 100,000 units per year to 50,000 units and then to 10,000 units.

However, he also admits that this process will involve difficulties. But he always believed that to tread an uncommon path, one must be able to bear the pressure. "If you only want to do something that others highly approve of, just be a follower."

Not a follower but a skipper, this is Li's definition of himself. From the beginning of U Power Tech, he set up two offices simultaneously in Shanghai and Silicon Valley. During the pandemic, although Li had not visited the office in Silicon Valley, he never stopped the company's overseas expansion.

At this CES exhibition, besides achieving overseas delivery of skateboard chassis, U Power Tech also signed cooperation agreements with Japan's G Three Holdings, the Philippines' Energy Industry Group ALACO, the U.S.-based LUMOS electric vehicle, and Singapore's FEST electric logistics vehicle, which focuses on the European market.

In the context of escalating global economic trade frictions, anxiety and concerns are understandable, but Li believed that whether it's calm or stormy weather, the only thing a sailor should focus on is how to sail his ship well, because storms are the same for everyone.

How to sail the ship well? In his view, there are three things to be done: first, achieving localization according to the region's characteristics while globalizing. Second, localizing products and customers according to local needs. Finally, localizing ecological partners and supply chains.

These are still far from being completed, and the "space is very large." It is why Li does not agree with the view that "China's new energy vehicle industry is about to enter the Warring States period". In his opinion, "this industry will continue for another 5-10 years."

In the upcoming 2024, he is both rational and optimistic, believing that the external environment may still be very bumping, but "when we are ready, we will sail smoothly."

Below is a tran of the dialogue between TMTPost and Li about the costs of manufacturing skateboards, edited for brevity:

TMTPost: U Power Tech is not just making a skateboard chassis, but rather, changing the mindset to help automakers build cars better. Right?

Li: Yes. Because the space is very large in the global EV market.

Many electric cars now just convert the internal combustion engine of traditional cars into batteries. But what we are doing is subtraction based on extreme scenarios, getting rid of unnecessary things, and then allowing users to freely configure like a smartphone. Although I cannot disclose the price now, when it is released, you will know that the cost of U Power is the lowest in the industry in terms of per square quantity and tonnage of each payload.

TMTPost: Why can it be the lowest?

Li: Because of the skateboard chassis and the high integration of the three electric systems. Integration definitely saves, not only saving the electronic control unit (ECU) but also saving wiring harnesses, brackets, etc. However, the quality is actually better, and the cost falls.

Of course, it's not just because of the high integration of the skateboard chassis. Another very important factor is the high standardization of the skateboard chassis, which can achieve extreme customization in every scenario.

TMTPost: Many complete vehicle manufacturers are developing their own chassis, and autonomous driving companies are also talking about chassis-related things. Where do we differ from them?

Li: We believe that a more focused technology company can provide the board when it comes to different vehicle types and manufacturers, which can achieve cost and performance, and even the final quality, to be more extreme.

(This article was first published on TMTPost, Author | Han Jingxian, Editor | Zhang Min)