(Bloomberg) -- GLM Co., a Japanese automaker backed by former Sony Corp. Chief Executive Officer Nobuyuki Idei, said it’s close to winning its first deals to supply customized vehicle frames to companies seeking to produce electric cars.
The Kyoto-based automaker is close to signing deals to supply vehicle platforms for about 10 carmakers, including some in China, founder and CEO Hiroyasu Koma said in an interview, without naming them. The company is in discussions with other manufacturers, including those in Japan and Malaysia.
Government support for EVs in China has triggered a wave of startups and venture-capital money seeking to back the next Tesla Motors Inc. About 200 companies are developing an estimated 4,000 models under ambitious government sales goals, and GLM is trying to supply the frames that can be adapted for use in expensive sports cars or mass-market compacts -- saving the carmakers time and money.
“China is our focus because the government is most supportive toward electric vehicles,” Koma, 39, said in an interview this month in Osaka. “For electric cars to become popular, we count on markets like China, where the government has the power to change the infrastructure, to take a lead. Then other markets may follow.”
Revenue from supplying the frames should make up the bulk of the company’s sales in the long term, surpassing that from selling its own vehicles, Koma said, without being more specific.
Among its first customers may be Youzu Interactive Co., a Chinese mobile games developer that invested in a 2.5 percent stake in GLM. Youzu said in April that it plans to partner with an electric vehicle maker to produce a sport utility vehicle for sale in 2018, based on GLM’s technologies. By investing in cars, Youzu is paving its way toward providing the online games, videos and other content that occupants of increasingly autonomous vehicles will want in the future.
Zhiche Auto, a Beijing-based startup that aims to introduce an electric vehicle featuring Internet connectivity next year, is looking to invest in GLM and adopt its technologies, Shen Haiyin, the company’s 42-year-old founder and CEO, said in an interview. Koma confirmed Zhiche Auto’s interest in GLM.
GLM has so far raised about 2.1 billion yen ($21 million) in two rounds and is close to completing a third round, attracting investors including Chinese EV startups and Japan’s Globis Capital Partners, according to Koma, who declined to give a valuation for the automaker.
The company may raise “several billion yen” in a fourth round of fundraising to develop a new generation of chassis platform, Koma said. GLM wants to hold off an IPO, originally planned for 2017 in Japan, until the market “better understands” the value of the company, he said. The automaker will also consider listing overseas in the future and has hired SMBC Nikko Securities Inc. as its adviser, Koma said.
To be sure, GLM’s business model of supplying EV technology to Chinese companies may run into obstacles because the Chinese government wants its domestic automakers to own the technology in core areas such as batteries and chassis, according to Yale Zhang, a Shanghai-based analyst at Autoforesight Shanghai Co.
“It’s fine to use others’ technologies as a start,” Zhang said. “But at the end of the day you need to have your own core competitiveness.”
Started from a Kyoto University project to develop compact cars, GLM was founded in 2010, with seven former engineers from major Japanese automakers including Toyota Motor Corp. The first model GLM designed was the Tommykaira ZZ, a lightweight two-door sports car that went on sale in Japan in August 2014 at about 8 million yen before tax. Koma wanted the model to showcase GLM’s technology, especially the chassis platforms that it plans to sell to other aspiring electric car makers.
GLM will showcase a second model, an “edgy” supercar more expensive than the Tommykaira ZZ, at this year’s Paris Motor Show in October, Koma said, declining to give more details. It plans to sell a few thousand units throughout the car’s model cycle, targeting mainly Europe and China. That will be followed by the introduction of a cheaper model, he said.
“The old automotive industry is coming to an end,” Koma said. “In the future no one is going to buy a car because it has a Toyota, Nissan or GM badge. They will buy a car that best customizes for the service they want to have.”