Richard Li and the Future of Electric Cars

Karl Muth reports on the positive signals for policy surrounding electric cars.

Much ink (tangible and digital) has been spilled on the issue of Hong Kong’s democracy. However, in the midst of all that, something else happened in Hong Kong: quiet billionaire Richard Li (李泽楷) persistently pursued an Elon-Musk-style bet on a car company you’ve probably never heard of.

Automotive investments aren’t exactly typical in Hong Kong. Investors from Malaysia (Proton, Lotus), Singapore (F1), and Taiwan (dozens of supply chain investments) tend to be more friendly to auto-industry investing than Hong Kong’s investors, possibly due to long memories of Hong Kong investors being asked (some still claim defrauded?) years ago when Vickers was in trouble. Many prominent Rolls-Royce-driving Hong Kong families helped prop up Vickers as it slid into bankruptcy; few got any money back on the failed investment.

Richard Li’s investment is unusual for many reasons (even if we set aside ongoing litigation Li seems to be losing against Wanxiang, which may doom the deal altogether and imperil the underlying assets). First, it involves Fisker, a little-known boutique car manufacturer started by Henrik Fisker, who created beautiful cars when he ran design at Aston Martin (albeit cars that lacked design continuity with Ian Callum’s earlier work for the company). Second, it involves a brand focused on hybrid eco-friendly technology on a continent where (aside from in Japan) consumers have shown very little interest in eco-friendly vehicles (Hong Kong is a major market for Bentley’s 6.75L V8 models, which gulp petrol rather than sipping it).

But what’s fascinating from a policy standpoint is that, through their persistent chasing of deals like this one, investors like Li may be signalling to the market that electric cars are finally economically-viable. Past investments like Chevy’s Volt (a hybrid, but strongly biased toward the electric side of things), the Tesla Model S, and others have relied heavily on government support (Tesla received its factory as a side-effect of the government’s handling of GM’s bankruptcy; prior to this, its cars had been built on contract by Lotus in Hethel). Why is Li’s investment a good signal for the policy surrounding electric cars?

Because until now, electric cars have basically been seen as a cost. Charging stations, new parking arrangements, and economic assistance to electric manufacturers have been seen as a drain on the public purse. But Hong Kong is famously neoliberal in its policy orientations – there is perhaps no less interventionist government, economically, anywhere in the world. On a small island where laissez-faire economic policy is only an inch short of religion, Li must know he will not receive subsidies or bailouts to make Fisker work; to succeed, it must make real economic sense.

I am sceptical of Li’s and Fisker’s (and Wanxiang's) plans. But I am hopeful that this is a first step toward manufacturers, consumers, policymakers, and taxpayers agreeing that electric cars should not be a government frolic or a commercial charity, but rather a group of products that can compete in the marketplace with gasoline and diesel vehicles on their own merits and without government interventionism on – or contra to – their behalf.