One thing Lynk & CO and Borgward have in common is a strong focus on Germany, which is Europe's largest car market, accounting for nearly a quarter of the region's sales. Borgward says that it chose to make cars in Bremen for both emotional and economic reasons, which include the northern German city's proximity to the Bremerhaven port, the availability of skilled workers and the region's strong supplier base.
The automaker added that German component makers such as Bosch, Continental and Kuka will "play a major role" in the future assembly of its EVs in Germany. Batteries will be supplied by LG Electronics, it said. Borgward currently builds fuel-powered variants of the BX7 in Miyun, near Beijing. The German plant will be its first factory outside China as well as the European base from which it intends to roll out the BX7 EV and, later, electric and plug-in-hybrid variants of BX6 and BX5 SUVs.
While it doesn't plan production in Germany and doesn't have Borgward's past connection to the country, Lynk & CO still picked Germany's capital, Berlin, for the unveiling of the brand and its first model, the 01, on Oct. 20. Lynk & CO Senior Vice President Alain Visser said Berlin was chose for a reason. "We clearly want to look our German competitors in the eye, showing them that we have the technology and the quality of a German-engineered product," Visser said. "Germany will be one of our first markets and a priority market."
The Geely subsidiary plans to start European sales of the 01 in late 2018. That's the same time it plans to launch in the U.S. Both debuts are scheduled to come a year after Lynk & CO's launch in China. Lynk & CO plans at least five models, including a compact sedan, but the range could expand even further, Visser said. The company's hybrids will be fitted with either a 1.5-liter, three-cylinder or a 2.0-liter, four-cylinder gasoline engine that it will build in China under license from Volvo.
While Lynk & CO aims for annual global sales of 500,000 by 2022, the company would not specify sales targets for Europe or the U.S. IHS Markit estimates Zhejiang Geely's global production in 2020 will be 1.8 million units, with Lynk & CO accounting for 256,000 units, Volvo for 802,000 and the Geely brand for the rest. For Borgward, IHS forecasts global sales at about 73,000 units in 2020, with almost 90 percent of this volume coming from China.
While Borgward has not announced yet how it will distribute its cars in Europe, Lynk & CO said it will place a strong emphasis on Internet sales while also building up a network of more than 500 company-owned dealerships. It will use Volvo's dealer network or independent dealers for servicing and spare parts. Visser said the business model for selling and servicing cars has not changed with the times. "The current car distribution model is broken," he said. In his view, automakers shouldn't "outsource" their sales to dealers because it robs them of margins as well as the opportunity to build up the brand image. "We want to control the entire process because we want to challenge every link in the distribution chain to enrich and simplify car ownership by redefining how cars are bought, owned, connected, serviced and used," he said.
IHS's Chow said that Lynk & CO's plan sounds interesting, "but once again, the model has yet to be launched, either in China or elsewhere and it is only when it is put into practice that we will be able to see how fluid the system is."
Direct sales work for electric carmaker Tesla Motors, said Sanford C. Bernstein's Zhu. But he believes it is because Tesla charges much higher prices than Lynk plans to charge. "As a 10,000 euros to 20,000 euros mass-market brand, I think Lynk & CO ultimately needs a physical presence to convince consumers that they are for real and will be around if things go wrong," he said. This will mean having stores in expensive megacities such as London and Paris as well as Europe's large metropolitan areas, he said.
It will take years to see whether Lynk & CO and Borgward will succeed in Europe, ending a long streak of failures by the Chinese automakers that came before them. To do so, Sanford C. Bernstein's Zhu said it will be "very tough, much more difficult and much more expensive" than the brands could imagine.
Zhejiang Geely's Li, however, remains positive. "I don’t see competition in a very complicated way," he said. "If we can reach or exceed the expectations of our customers, I think we can be successful."
Douglas A. Bolduc, David Jolley and Nick Gibbs contributed to this report