Rimac founder pushes hypercar maker to become a Tier 1 supplier

Croatian entrepreneur Mate Rimac is often compared to Tesla founder and CEO Elon Musk. The Rimac Automobili boss admires Musk, but becoming a large-scale electric automaker is not his plan, despite proving his expertise with his debut vehicle, the 1224-hp Concept One electric hypercar. He will stay out of the mass market because he believes the automotive industry will change drastically in the future and because he does not want to compete with his growing list of global customers, which includes Rimac investors Porsche and Hyundai. Instead, he told Automotive News Europe Correspondent Nick Gibbs he wants to help them build faster, better electric cars.

Do you collaborate with car companies because you want to carry on making hypercars? Or are hypercars your way of advertising?

We started collaborating out of necessity to keep the company alive. But now I enjoy playing a role in shaping the future of the car industry. I was born a car guy. When I walked through the Geneva auto show before setting up Rimac, I had no idea what was going on behind the curtain. Now I know. It's cool to build your own car, but we can have a bigger impact by collaborating with these big companies and helping them make electric and hybrid cars.

Which automotive entrepreneurs do you have the most affinity with?

Just Elon Musk. I looked up to [electric supply pioneer] Nikola Tesla when I started. I'm from Croatia, like he was. When I started, I also looked up to [supercar company founders] Christian von Koenigsegg and Horacio Pagani. They were my big heroes. Today we are friends and we do things together, but what we at Rimac are trying to do now is something that goes beyond building a supercar company.

So far you have succeeded. Why have others failed?

We have been on the brink constantly. Our odds of survival were probably in the single-digit zone most of the time. And what are they now, 30 percent to 40 percent? For the first six years I never had enough money to pay our guys their next salaries. I was late paying suppliers and the electricity company. The electricity company came to shut off the power. It's incredible we are still here.

Why have you succeeded?
Maybe because I didn't do anything else. I was 19 when I started. If you ask a guy from BMW he will tell you it takes 50 million euros to develop a light. I went to Hella and asked if they could make a light for my car and they laughed at me. So, we had to do things in a different way, because I knew I couldn't pay anybody to do it for us. As a result, we created the value ourselves so we could sell the components and know-how to other car companies.

Do you have more electrification expertise than the global automakers?

No, we are just focused on a specific area, which is high-performance powertrains. They have to worry about other things. They have to worry about unions and giving their staff work. These are different problems than the ones we have. We are not smarter.

Could you build your own range of cars?

We don't want to go to a higher volume with our cars for several reasons. One of them is that we don't want to compete with our customers. As long as we are below 100 cars a year, they don't care. Second, I truly believe mobility will change completely. It doesn't make sense today to start a company to sell mass-produced vehicles because I'm convinced people will not own cars and people will not drive cars in the future. Yes, we are developing batteries and powertrains for higher volumes, and allowing automakers to make their own electric and hybrid cars. But we are thinking of ways to go beyond that.

Porsche now has a 15.5 percent stake in Rimac. It has a lot of experience of its own in high-performance batteries from its LMP1 racing program. What could you offer that they didn't have?

That was a question that a lot of people inside Porsche were asking as well. Why do we need a little Croatian company? We are Porsche. When they went through the supplier quality audit, they asked: "Do you do this? Do you do that?" I was like, "Guys, if we had all of this, we would be exactly the same as you. So why would you invest in us?" A small, young company like us doesn't have all of the processes of a big car company. We are different because we do things differently.

How did you change minds at Porsche?

They gave us a challenge at the beginning: "This is a new car that we are developing. Make it better. You have three months." Basically, they gave us an impossible task.

Was that car the Taycan?
No. I can't say what it was. However, we managed to surprise them with the timing and the performance of what we did. We are not necessarily better than them, we are different. We are helping each other. It is such a huge challenge to transition from combustion to hybrid and electric because there is so much to do. They can't do it on their own. They will take any help they can get. Also, we are focused on pushing the limits of performance. They are a premium brand, but they are still more focused on cost effectiveness and other areas like that.

And what will you get from Porsche?

We hope they will help us go from being this little company specializing in technology, prototyping and small-volume manufacturing to a serious manufacturer of components. A Tier 1 supplier, basically. 

Do you have a factory that can build components at the volumes that Porsche or Hyundai want?

We have that for prototypes and we are on the brink of having it for production cars. But it is a huge step. I don't think there is another company that started in a garage and within 10 years became a supplier to the big car companies of one of the most important components. We are not talking about a plastic cover or something. We are talking about the safety critical things such as batteries and powertrains, which have the highest value in the car, which give the car its DNA. Companies almost always built the engines on their own. Now, with EVs, it's the motor, inverter, gearbox and the battery. And they give it away to a company that didn't exist 10 years ago run by a guy who is 31 years old. That didn't happen before. It's a precedent.   
 
What is the breakdown of ownership of Rimac?

Hyundai has 14 percent, Porsche is at 15.5 percent, Camel Group, a battery company from China, has 19 percent. I have 43 percent and we have other smaller investors.

Do you need more investors?

You always need more money.

Are you open to selling more of your own stake?

We are considering it. Maybe not to other car companies because we have a sufficient number of strategic relationships, so we are talking with some financial investors at the moment. We are quite good in terms of money right now, but we have big plans for a big new factory and for stuff we want to do.

When will we see the first of the two cars from Hyundai you're working on?

Definitely in 2020.

Will they be concept vehicles or the real thing?

We are in the prototype phase. The great thing with Hyundai is that they have a leader, Chung Mong-koo, who makes a decision and that is it. So, the process is super short. We are developing and producing prototypes to show different stakeholders. If the feedback is positive, then we go into production.

Will Rimac or Hyundai build the cars?

Hyundai will make the vehicle -- the body, chassis, the traditional stuff. We will make the components. Hyundai will make the fuel cell for the fuel cell car. We will make the battery and powertrain for that fuel cell car and the full-electric car.

Will it be priced at 1 million euros or closer to 100,000 euros?

More in the lower range than a million. I don't know it myself because we are trying to get our expensive components down to a really acceptable level. But, I don't know how far we will get. You wouldn't believe how difficult it is to answer that question -- even for us internally.

What makes your fuel cell vehicle high performance?

When you drive a fuel cell car, there's a small energy buffer, a battery or capacitor. As you accelerate, the fuel cell needs to produce more energy, and when you let off the throttle, it has to stop producing energy. By using a bigger battery, you can have the fuel cell topping up the battery all the time. It becomes a high-performance fuel cell just by using it in a different way.

But it will be a sports car, right?

Yes.

You work with lithium ion batteries. What do you think of solid-state batteries and how close are we to seeing them in production cars?

I have my little booklet that I used to write down everything when I started, when I did my initial calculations 12 years ago. I printed out the battery-cell technologies at a time: the chemistry, the power densities, the energy densities and the new technology that's about to come. For the cell -- the energy density and power density -- from 2007-08 until now nothing has changed. Nothing.

Nothing has changed?

Just the prices went down. I have received hundreds of emails from my friends saying, "Have you seen this article about the lithium air battery; about the solid state battery; about this or that battery? Wow this battery recharges in 1 minute!" I telling them the same thing: "It's not going to happen." I have been reading about the same thing for 12 years. There is always a new battery. Again, what has really changed is the price, which has fallen a lot, but the fundamental technology behind it is the same. The battery pack has improved a lot, but the cell itself hasn't.

When do you think cells will start to change?

We are at a moment in time when it doesn't need to change. You can make a viable electric car with decent performance and range, meaning it's not compromised and the vehicle package is at a decent price. The tipping point where it makes sense to build an electric car has happened. What I think needs to happen now is to determine how you use these cars, which are on the road just 3 percent of the time. That's going to be the intelligence.

Do you think we will move to a car-sharing model?

You are talking to a guy who lives for and has built a company based on electrification. But I don't think that's a big deal. And I'm telling this to the car executives. They think they are in this huge transformation toward electrification. Fundamentally, I don't think much has changed. A hundred years ago you had suppliers building parts for the Ford Model T. Ford assembled those pieces into a car and sold the car to a dealer and the dealer sold it to the end customer. Today you have suppliers building batteries instead of carburetor or whatever and the automaker builds the car from those parts. Nothing has changed. Nothing. The real change is going to be when the players are the AI [artificial intelligence] providers. Automakers will be like Foxconn, just white goods manufacturers. You will have the ride-hailing provider and you will have the user, not the owner or driver.

Do you want to get involved in this shift?

Of course.

Do you have a plan?

Of course.

What needs to happen to get customers to change the way they think?

First of all, it's hard. Having ideas is easy. Every year in Geneva a new company appears and then you never hear about them again. It's a marathon [to survive in the auto industry]. It's about having a strategy and executing it. Execution is everything. Startups excel at having good ideas, but executing is another thing. Big car companies are good at executing, but they have too much on their plate. They have a history. They have a legacy. So in the end it's legislation, customer acceptance ... lots of things have to align.

Why make sports cars? Don't ordinary EVs interest you?

Ten years ago we wanted to show that electric cars could be exciting and fun. And, since we needed to make a living, we looked at where we could be competitive. That is why we went into the high-performance segment.

Will Rimac remain a low-volume brand?
We produce vehicles in small volumes but the components we are working on for the bigger brands will be higher volumes, in the thousands, tens of thousands even the hundreds of thousands, but not in the millions. That's our niche. That is where we want to live.

Which components specifically do you want to make?

For high-performance electric cars we want to make cells, batteries, electronics, electric motors, inverters, transmissions, torque vectoring systems, ECUs and infotainment systems. We also want to do this for hybrids. We already supply the hybrid battery pack for the Aston Martin Valkyrie hypercar.

What is your long-term goal?

We want to be the leader in high-performance electrical components. That means the manufacturers producing premium high-performance vehicles -- the Porsches, Mercedes AMGs, Audis, Aston Martins, Lamborghinis and Ferraris of this world -- would have our components in their cars.

Who you are working with?

I can reveal the ones we have announced: Porsche, Hyundai, Aston Martin, Koenigsegg, Renault and Pininfarina. But, we work with pretty much everybody.

Renault?

It's public we worked together, but not on what.

The battery cells for the Aston Martin Valkyrie come from Chinese supplier A123. When it comes to battery cell choice, do you go with cell supplies you know? Who do you have contracts with?

We work with all cell supplies, depending on which project. It could be A132, Sony, Murata, LG, Samsung. Sometimes there are commercially available cells that are good enough. Sometimes we have to develop a cell together with a supplier. We are considering partnering up with a cell manufacturer to have joint manufacturing in Europe.

Are you finding that your requirements are going beyond what cell manufacturers can manage?

Definitely, especially for performance. We are pushing cells well beyond their design limits. Sometimes it's difficult to convince the cell manufacturers that it's possible to do what we're doing with the cells in a safe manner.

Your new car, the C_Two, has more than 1900hp. Who needs that?

Nobody needs that. Who needs an SUV? If it was about what people needed, everybody would drive a Skoda Octavia. Why would you need anything else?

Will drivers be able to control all that power?

Yeah, it's easy to drive. And even if you can't, it has autonomous features.

You mention the C_Two's autonomous capabilities. Is that an area you want to get involved in?

Definitely. It's something we will talk more about in the future.

How many will you build and when will we see it?

It will be at Geneva in March. It's limited to 150 units. We will start shipping the car at the end of 2020. The production rate will be 40 to 50 cars a year, so, one a week. The Pininfarina Battista is based on the same platform and is built in the same factory. So, it's basically two cars a week. One for us, one for them.

How big are you in Croatia?

We are such a strange story for Croatia. There is nothing close to us. I have raised more money than all Croatian tech companies in history. Several times more. But, we still have a long way to go. There is a reason why Croatia doesn't have a car industry. Car companies went to Hungary, Slovenia, Slovakia, Poland because Croatia is not favorable in terms of investment, in terms of talent. We are working very hard with the universities to make the government understand what it takes to win investment.

What do you make of Formula E? Is it the pinnacle of electric performance?

No. I was involved in Formula E from the beginning. Our car was the race director's car. I was trying to push them all the time, saying, "Let's do something more: battery swaps, torque vectoring, two motors in the rear. Let's make this exciting. Let's make it technologically challenging." But they probably made the right choice to make it simpler, reliable and safe. I was not expecting it to be so reliable. In terms in technology, however, they could have been a lot bolder. I'm not involved any more. I have to build a business and racing is not so great for business.