Georgia’s capital is suffering from environmental and traffic problems. High tech and business can help, but need investments and government support. AiGroup aims to produce Georgia’s first electric cars for its own car-sharing system, based on its own network of charging stations. Is this revolutionary concept too good to be true?
14.06.2019 (Caucasian Journal). Caucasian Journal talks with Akaki MAMALADZE, director of AiProduction.
14.06.2019 (Caucasian Journal). Caucasian Journal talks with Akaki MAMALADZE, director of AiProduction.
Alexander KAFFKA, editor-in-chief of Caucasian Journal: When I was a schoolboy, we were sure that in 21st century a gasoline engine would be completely forgotten, and people would use electric vehicles to drive and even fly around. So, we are well into new millennium and still massively use the same petrol car as invented in 19th century. Do you feel you are putting to life a dream cherished by several generations?
Akaki MAMALADZE: Yes, I guess it is right time to desire that our childhood dreams come true. Nowadays electric vehicles (EV) have advanced well, and the global tendency brings more and more EV models to global market. There is a growing competition in car industry, as all prominent companies are making huge investments in research and development aiming at innovative solutions for the customers of electric vehicles. So we think it is right time to act, and take our part in this development process.
AK: People who live in Tbilisi, including myself, know that quality of life has been vividly deteriorating because of heavy air pollution, outdated vehicle fleet, low-grade petrol, constant traffic jams, and unsafe driving. These are serious challenges, which have been neglected for a long time. But your company seems to address all these problems at once. Why did it take such a long time for business and government to take serious modernization steps to improve environmental situation?
AM: Yes, indeed the pollution rate is getting high, CO as well as SO2 emission are taking our attention; they are changing the entire environment. We all feel the environmental impact, which is mainly caused by the gas-powered cars. Luckily there are many success stories from USA, China, Japan, Canada, Norway and other countries with already have shaped infrastructures and supportive policies, promoting electric vehicles in their countries. The government of Georgia already supports these actions and takes steps towards green policy development, and that’s where the business have joined in. I understand that it is hard to believe, and some people still doubt the project's reality. But because of its complexity, it took some time for clear vision. Nowadays we are loaded with new puzzles, but I believe we are on the right track and soon we will prove that.
AK: Your company's concept is very innovative and comprehensive: You are planning not just to produce electric vehicles in Georgia, but to use them for your own car sharing system, based on your own smart charging network. A very ambitious project, my congratulations! Whose idea is this?
AM: Before we produce the vehicles, we want to demonstrate to our nation what our concept is about. Driving electric vehicles is a lot more comfortable than traditional ones, and the company AiCar with its car sharing system delivers this comfort to Georgians, so they can feel difference and make the right choice. Another challenge is to prepare the infrastructural part for EV's. According to standard, the ratio per car to charger has to be 1 to 1. Therefore, one of our companies, AiEnergy, is installing 30 000 charger stations throughout Georgia. In addition to standard charger stations, we are installing fast charger stations, which, depending on the models, can fill the car's battery within 15-40 minutes. For the power generation we are installing solar panels, and the company AiPower is aiming to generate 10 gigawatt of power. At the moment, AiProduction is at "unpacking stage": We are building EV plant in Kutaisi, and the planned launch of production line is December 2019. By that deadline we will start producing electric vehicles. All these companies I just described are united under the AiGroup umbrella. Also, other companies for car services, leasing and in other supplementary fields will emerge here gradually.
AK: We are especially interested in cases of business-government cooperation, especially in socially important areas such as environment protection or urban transport. As Georgia’s Prime Minister Mamuka Bakhtadze personally introduced your project, it seems your case is very positive. Can you share the experience you had with the Georgian authorities? What’s the involvement of government in your project? And how much time did it take to get state support?
AM: Our project is dealing with ecologic and economic issues. We are developing eco-friendly production plant as well as an eco-product itself. On the other hand, we will create more than thousand new jobs, will educate and train personnel, and and provide them with good living conditions. These actions promise to bring the city of Kutaisi back to prosperity. We will enable local supplier networks, and local startups will be supported a lot. Our main goal is to export Georgian products to strategic markets. Therefore, the project will seriously affect the Georgia’s GDP growth. I provided only few factors to illustrate why the government pays attention to our project. However there is no government participation, and it is AiGroup's investments only. Government is only supporting our development process, and working on green policy.
AM: Chinese electric vehicle market races ahead, and more than half of global EV’s are produced in China. We have Chinese partner with 153 years of car production history. Changan is among top 4 Chinese auto producers. Only in 2018 Changan sold 2,14 million units and its revenue reached 26 billion USD. It is also the leader at Chinese R&D investment. The company has joint ventures with other industry giants such as Groupe PSA, Ford, Mazda, Suzuki and others. Nowadays they have prioritized electric vehicles production, and they have top quality models. AiProduction has recently signed a technological license agreement with Changan. This agreement enabled us to bring new technologies and produce cars locally.
AK: There are controversial opinions about Georgia’s attractiveness to foreign companies, who seek a place for new production facilities. How did AiGroup find its foreign partner? What’s the story behind your cooperation with Changan? Are they investing in AiGroup’s car production, or is Changan’s plant in Kutaisi a completely Chinese venture?
AM: We established contact with Changan a while ago. In the beginning we could not reach an agreement, as the Chinese company was not sure in our success. We had a lot of effort to convince them and bring their attention to Georgia. The Chinese give us technologies and licenses; all the rest - such as plant construction as well as infrastructural and policy development - is Georgia’s responsibility. Therefore, the plant in Kutaisi will be built only by us.
AK: As we touched upon AiGroup’s car production, I must stress our guest is in fact responsible for the group’s production arm, being the director AiProduction. The company states that AiProduction will produce Georgian electric vehicles not just for local market, but also for the whole South Caucasus, Central Asia, and even for European markets. Could you tell a bit about your job, and about yourself?
AM: Yes, we plan to export to above-mentioned markets, and the agreements reached by Georgian government gives us good trading opportunities in this regard. For the next stage, we want to increase the localization level and export Georgian vehicles under “Made in Georgia” naming. But firstly, we are going to start with local market. We plan to change Georgian fleet from petrol/diesel cars to electric ones. In this case we are doing our best to lower the price and enable local population to purchase the desired models. In addition, we will enable civil leasing system that will enable customers to get the desired models and pay monthly service fee for it. If the lease customers wish to update their models to new ones, they will get new agreement and the existing cars will be swapped with the desired models. We also will provide insurance, factory guarantees and other services to fulfill the customer experience.
AK: We have read that at first Changan in Georgia would produce its Eado sedan. In China it has a gasoline engine; will it become electric in Georgia? Do you plan Eado as the base for your Tbilisi car sharing system? We noted that Changan plans to produce also a more compact car called Benni EV360 at a later stage.
AM: For the beginning we are interested in five types of EV’s: Eado; Eado Hatchback; Benni-EV360 Hatchback; CS55 EV Jeep and CS15 EV Jeep. They are well known in Chinese market, and we already have brought the Eado sedans in Georgia. We plan to enable test drive of these cars for interested clients.
AK: Does AiProduction have its own design team, or planning to have one in future?
AM: Yes, we already plan our own designed cars and we already have one of the best designers for this. We will announce this project with more details shortly.
AK: Let’s get back to Georgian government. Last year Mr. Bakhtadze made quite a sensation with his plan to replace 90% of the country’s automobile park with electric cars in ten years’ time. Can you comment on feasibility of this plan, and your involvement in it?
AM: We are preparing to gradually alter the country’s automobile park and there will be not only us in this market. The state plans to enable green policy, stretch benefits for EV consumers, and also support producers and importers of eco-friendly products. Freeing EV’s from taxes and giving free parking space is good start towards this plan. As we see, nowadays Georgia is full of second-hand petrol/diesel cars. However, electric and hybrid cars are very popular, and you can check the import statistics that is demonstrating their rapid growth.
AK: Last year Mr. Bakhtadze also announced the government was in talks with “two well-known automobile producers” on building electric car plant in Georgia. Mass media also named a Swedish company Uniti AB as potential producer of EVs in Georgia. Will you be the only EV producer in Georgia? Are you expecting competition from other makers?
AM: As far as I know there is only us at the moment with the plans to produce EV’s in Georgia, and the rivalry among competitors is low. At the moment there are no EV factories throughout the region. However, the threat of new entrants is very low as well, making possible to expect other groups do the same in future. We are not afraid of this competition, as we will keep our strategic niche and the ambition to dominate the market with best price and best quality.
AK: Many thanks, Aki. Here is my last and traditional question: if you could change anything in Georgia, what would be your 3 priorities?
AM: Thanks for question, 1st I would care more about ecology and I put my hopes in green policy, this is something we all need; 2nd I would attract more foreign investment and support export development, as country has huge potential for this; and 3rd - as we don’t have any much resources but we have the best nature - I would try my best to bring people back to regions and make Georgian villages rich again.