Automotive News Europe - November 2019 - 11

AUTOMOTIVE NEWS EUROPE

Q&A

QA Transformed

LEVC CEO counts on products, new markets to lift UK-based Geely unit

ince LEVC's successful introduction
of the plug-in hybrid TX Taxi in 2017,
the UK-based unit of Zhejiang Geely
Holding has struggled with costs. As a
result, the money-losing producer of the
iconic London black cab brought in longtime Audi executive Joerg Hofmann as
its new CEO in February. Hofmann's first
job was to stabilize the company. Now
he is leading a product push that he told
Automotive News Europe Correspondent
Nick Gibbs will make the Chinese-owned
brand profitable within two years.
What has been your main focus since
you joined LEVC in February?
Implementing a turnaround strategy
in two phases. One is stabilization and
consolidation, which we just finished.
We cut costs to a reasonable level and
put a lot of emphasis on getting processes right. The basics of the business
weren't where they should have been.
Phase two, which we have just kicked
off, is growth based on the new van [the
TX LCV] and exporting into new markets.
LEVC is a very young company to have
a consolidation plan.
You have to consider the challenge. Since
2014 the whole business model changed
from producing a classic diesel taxi to a
new electric taxi with new manufacturing
techniques. This caused some turbulence,
and maybe the turbulence wasn't addressed in the right way. That is what we
are doing now. A lesson has been learned.
How did you address the turbulence?
We looked in all areas -- purchasing, supply chain, manufacturing process, sales
process, in our dealer network, our import
structure, and dealer margin system. Every
area had some room for improvement. The
sum of all that is paying off significantly.
Are you profitable yet?
No. This is something we clearly have
to deliver. Geely invested 500 million
pounds (561 million euros) in the brand in
2014, which is a big sign of trust. My job
is to pay that back and, sooner or later, to
deliver a sustainable, reasonable amount

NOVEMBER 2019

of profit. We will certainly be profitable
two years from now at the latest.
Will LEVC's future profitability come
down to new models?
The core is our TX Taxi. Now we have the
TX Shuttle -- a variant of our taxi with no
taxi sign that is a people mover for mobility companies. We expect 90 percent
of this product will be exported to Germany, Netherlands, France or wherever.
Right now we are 10 percent export,
90 percent UK. In the future we will be
70 percent export, 30 percent UK. The
third model is our TX LCV. We plan to
start production of the van at the end of
the third quarter next year.
Does the TX LCV use the same plug-in
hybrid drivetrain as the TX Taxi?
Sixty percent of the van parts will be the
same as the taxi. The whole front will be
the same, the platform will be the same,
so we can create some synergies.
The battery must be the biggest cost.
Can that come down?
The battery is biggest cost. It is still too
expensive.
The battery currently comes from LG
Chem in Poland, have you looked at
getting it from elsewhere?
We have a contract with LG Chem together with Geely that we can't walk
away from. But, we are in close discussions with LG Chem engineers to define
our specifications and ask for cost improvements, which we have already gotten. Long term, there are other options
[for suppliers] out there.
There has been talk about the UK getting a battery plant. Would LEVC be
interested in this?
We are involved in this as a project.
There are some advanced battery cell
companies that are trying to build some
momentum. We are looking at all options inside the UK for battery cells and
battery assemblies. The project probably should have started earlier because
it's a bit late, but it's better than nothing.

Meet the boss
❚ NAME: Joerg Hofmann
❚ TITLE: LEVC CEO
❚ AGE: 52
❚ MAIN CHALLENGE: Scaling up

production of the plug-in
London taxi by boosting exports
and launching a van variant.

The TX Taxi is costly at around 53,000
pounds excluding VAT after subsidies
in the UK. What will the van cost?
The van has to be cheaper and will be
cheaper. You save the whole passenger
compartment, but you need other stuff
such as applications for the sliding door.
What is LEVC's annual volume and
what is the future target?
This year we will sell about 2,500 TX
Taxis. Now that we are starting exports to Europe and we expect significant volumes, I believe the combined
volume of the taxi and Shuttle will be
about 4,000 to 4,500 next year. With
the addition of the van, we should
reach 12,000 by 2021. The van has the
potential to grow to 8,000 to 12,000 a
year, easily. That's when we will start
to become profitable. ANE

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Automotive News Europe - November 2019

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