Plan Insurance Blog

Cabbies Concern as LEVC Cuts Jobs

Leading manufacturer of electric taxis, LEVC is reducing its workforce by 140. The company states it is part of a plan to “improve efficiency” and aid “long-term growth” following substantial trading losses. Many of the departures will be part of a voluntary redundancy program.

A number of firms that have produced the world-famous London taxis have encountered financial difficulty in the past. Eventually, they were either bought out or found themselves in administration. So, it’s understandable that the news of LEVC job losses raises fears amongst black cab drivers. If a similar path is potentially being trodden by LEVC than there could be severe consequences. The impact would be felt personally by LEVC vehicle owners as warranties and ongoing maintenance contracts would likely be compromised. There would also be wider implications for the trade due to a lack of an alternative vehicle.

However there are clear reasons to be confident that history won’t repeat itself.

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LEVC’s Big Bet

Early in 2017, Geely Chairman Li Shufu announced the official opening of the firm’s production state of the art manufacturing plant. Based in Ansty, England, it said to have played a part in generating over a 1,000 new motor trade jobs. These highly trained professionals added to the country’s pool of engineering and design talent.

LEVC demonstrated its commitment with an enormous investment of more than £500 million. Those funds created the purpose-built factory and headquarters. They stand as a sign of the company’s significant belief not only in the potential of EV’s but of trade on these shores.

It was the first new vehicle UK manufacturing plant to be built in over 10 years. And it was also the UK’s first to be dedicated entirely dedicated to the production of electric vehicles. The recently announced restructuring measures are intended to improve “sustainability, profitability and growth.”

The company, like many in the automotive industry, is still recovering from the effects of the coronavirus pandemic. The disruption to supply chains and in particular, the severe shortage of microchips continues to impact production. No company is going to be over the moon with the pre-tax losses of £118 million that were posted last year. In June LEVC announced that Joerg Hofmann would stand down as CEO. He will move to a “new opportunity within the automotive industry”. Alex Nan assumed global responsibility within LEVC.

However, the LEVC sold 1,620 vehicles last year. As of June 2022, there were 5,424 electric LEVC TX taxis licensed in London. This roughly represents a third of the London taxi market. 7,000 units have been shifted globally. The company still has plans to penetrate further markets around the world with the “most advanced electric taxi” available. There will also be hope that their VN5 light commercial vehicle, which uses the same chassis and battery as the TX model, will build momentum in terms of unit numbers.

Geely’s Below Expectation Financial Results

The company, has the backing of its owner, which is the Chinese behemoth, Zhejiang Geely Holding Group Company. Better known as Geely, the firm is China’s most high profile global car manufacturer. Amongst others, its brands include Volvo Cars, Polestar, Lynk & Co, Proton, and Lotus. As recently as this September the group also acquired a 7.6% shareholding of Aston Martin.

Though cabbies may be concerned that Geely posted poor financial results for the first half of 2022. Net profits still reached $228.3 million but were 35% down on the same period the prior year. China’s strict COVID-19 protocols continued to impact sales and affect production in its home territory.

Though Geely did manage to export a fifth of its vehicles to counter reduced domestic demand. Yet, vehicle sales were still below forecasts by 9% in the reporting period. Widespread shortages of semiconductors were also a major contributory factor. Increased market competition and escalating raw material costs, especially in relation to electric battery production also added to their challenges.

However, some comfort can be found in the fact that LEVC’s parent company is set to focus on EVs. All electric cars and plug-in hybrid models saw unit numbers jump by almost 400%. This accounts for one out of five vehicles Geely sold. It will continue to push EV brands Zeekr and Geometry to move than number to towards 1 in 3 sales being electrified vehicles.

LEVC’s Future

LEVC might be loss-making at the moment but many vehicle manufacturers have been since the pandemic. Reassurance can be taken from the fact it is part of a much larger firm with significant backing, not to mention the Chinese state’s role. Geely have already sunk substantial investment into the company’s modern infrastructure. Although the recession may result in a drop of in demand, trading conditions in terms of production should hopefully improve in the near future.

Some might fear for LEVC as its a small subsidiary of an enormous corporate entity. With one change at the top, there might be a management decision within Geely to cut their losses. However electric vehicles are set to be a key element of the firm’s long term approach. LEVC should sit firmly and safely within that approach for the foreseeable future.

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