Tech Giants: Starting from Bankrupt Companies

229: Chapter 229 The ”Financial Nuclear Bomb” of 86 Billion Yuan in Authorization Fees8:00 PM sharp, Hall 2 of the Shenzhen Convention and Exhibition Center.

Although the press conference had ended earlier in the day, the press room was still packed with people. Journalists from major global media outlets hadn’t left—they were waiting for Spark Power to announce the final cooperation data.

When CEO Gu stepped onto the podium, his face was weary, but his eyes were bright. He had been working continuously for sixteen hours, having eaten only two slices of pizza in between.

”Friends of the media, thank you for waiting,” he said, getting straight to the point. ”I know everyone is waiting for one number: how much cooperation has Spark Power actually achieved today? Now, I will announce it.”

The big screen lit up, displaying a long infographic with a simple design but dense information:

[Announcement of Spark Power Technology Licensing and Cooperation]

The table used a deep blue background with white text, and key figures were highlighted in gold:

Licensing Level: A-level. Signing Enterprises: CATL, BYD, BMW. Licensing Fee (rmb): 12 Billion/Company. Sales Commission: 10%. Total Licensing Fee: 36 Billion.

Licensing Level: B-level. Signing Enterprises: CALB, LG Energy Solution, Guoxuan High-Tech, Panasonic, EVE Energy. Licensing Fee (rmb): 6 Billion/Company. Sales Commission: 5%. Total Licensing Fee: 30 Billion.

Licensing Level: C-level. Signing Enterprises: 10 Global Enterprises (List Omitted). Licensing Fee (rmb): 2 Billion/Company. Sales Commission: 2%. Total Licensing Fee: 20 Billion.

Total: 17 Enterprises, 86 Billion, Contract duration is 3 years.

Below was the second table:

[List of Automotive Companies Cooperating in Procurement of Three-Electric Systems (Top 30 Global Sales in 2017)]

The list is in alphabetical order:

Audi, BMW, Buick, BYD, Changan, Great Wall, Volkswagen, Ford, Honda, Hyundai, Geely, JAC, Jaguar Land Rover, Kia, Lexus, Li Auto, Mercedes-Benz, Nissan, Chery, Roewe, SAIC-GM-Wuling, Tesla, Toyota, Volvo, Xpeng, NIO, Chevrolet, Citroen, FAW, Peugeot.

”These 30 car companies,” CEO Gu raised his voice, ”have reached a procurement agreement with Spark Power for the Three-Electric Systems, covering the complete solution of batteries, electric motors, and electric controls.”

Third line of data:

”Total order amount for Three-Electric Systems + Technology Licensing Fees: 739.8 Billion rmb”

Last line in bold red font:

”Total advance payment received for the above cooperation: 120 Billion rmb.”

The scene was silent for three seconds.

Then, the sound of shutters went off like a torrential rain, and the camera flashes turned CEO Gu’s face stark white.

The reporters went crazy.

”CEO Gu! Is 739.8 billion an annual order or a multi-year order?”

”When did the 120 billion in advance payments arrive?”

”The 30 car companies include all mainstream brands; does this mean a monopoly?”

CEO Gu raised his hand to signal for quiet: ”One by one.”

He answered the first question first: ”739.8 billion is the total of the long-term agreements already signed, covering supply for the next 2-3 years. About 70% of this is battery procurement, and 20% is electric drive systems.”

”Regarding the 120 billion in advance payments, 60 billion has already been received this afternoon, and the remainder will be paid within three days.”

”As for a monopoly...” He paused, ”Spark Power welcomes all companies to use our technology. Licensing is open, as long as it meets technical standards and pays reasonable fees. We don’t do exclusive; we build an ecosystem.”

But no one believed this.

Because everyone saw that terrifying list—the top 30 car companies in global sales were all on it.

What did this mean?

It meant that from today on, for every 10 electric vehicles sold globally, at least 9 would use Spark Power’s technology.

At 8:30 PM, CCTV Finance Channel urgently interrupted with a special program.

Opposite the host sat three guests: Professor Wang, a new energy vehicle expert from the MIIT; Academician Li, Chairman of the China Society of Automotive Engineers; and well-known financial commentator Zhang Ming.

”Dear viewers, we are now interrupting with an urgent broadcast.” The host looked serious, ”Just half an hour ago, Spark Power announced today’s cooperation data. Let’s first look at the big screen—”

The data table appeared on the screen.

”86 billion in licensing fees, 739.8 billion in orders, 30 mainstream global car companies...” The host read the numbers, his hands trembling slightly, ”Professor Wang, how do you evaluate these numbers?”

Professor Wang, sixty years old, adjusted his glasses: ”Let me first state some background data: In 2017, the total global sales of new energy vehicles were about 2 million, corresponding to a power battery demand of about 200GWh. The orders announced by Spark Power today correspond to about 300GWh—which is 1.5 times last year’s global demand.”

He paused, emphasizing his tone: ”Even according to the most optimistic forecast, if global new energy vehicle sales double to 4 million this year, these orders would still take a year and a half to digest. This means—”

Eight golden characters appeared on the big screen:

”The future is set, the landscape is locked.”

Academician Li continued: ”What’s more critical is the list of car companies. Everyone look—” He pointed to the list, ”German, Japanese, American, Chinese—all mainstream car companies have joined. This is no longer the victory of a single company, but a global victory for a technical standard.”

Zhang Ming analyzed from a financial perspective: ”Let’s do the math. 86 billion in licensing fees, calculated at a 5% annualized return, is 4.3 billion in annual interest income. But this is just a fraction—the real profit is in the commission. Assuming these car companies sell a total of 50 million electric vehicles in the next five years, calculated at an average 2% commission, Spark Power’s annual commission income will exceed 20 billion.”

He paused: ”And this is pure profit, with almost no costs. Because the investment in technical research and development has already been completed.”

The host asked: ”Then what is the impact on the industry?”

”A reshuffle.” Zhang Ming said bluntly, ”Battery companies that have not obtained authorization will exit the market within three years. Companies that have obtained authorization will become part of the Spark Power ecosystem. The entire power battery industry will change from ’letting a hundred flowers bloom’ to ’one superpower and many strong’—Spark Power is the ’superpower,’ and the others are the ’strong’.”

At the end of the program, the sentence CEO Gu said at the press conference was played in an amplified manner:

”Based on existing orders and production capacity planning, Spark Power’s market share in the global power battery market will exceed 80% by 2019.”

Academician Li looked at this sentence and said softly: ”This is not a goal, it’s a forecast. Just like the weather forecast saying ’it will rain tomorrow,’ it is a fact that has already happened, is happening, and is bound to happen.”

The 30 car companies on the list were all holding emergency meetings at this moment.

Wolfsburg, Germany, Volkswagen Group headquarters.

CEO Herbert Diess looked at his own name appearing on the ”Cooperation List” on the big screen and let out a long sigh of relief.

”We bet right.” He told the board of directors, ”The agreement signed this afternoon, with an 8 billion advance payment. Now it seems, this is the most cost-effective investment of the year.”

The CFO asked: ”But the 120 billion total advance payment... how much do we account for?”

”About 12 billion,” Diess said, ”Including battery procurement and electric drive systems. But compared to the 300 billion in goods we will procure in the next five years, this is just a down payment.”

He pulled up internal projections: ”If we don’t use Spark Power batteries, the cost of our ID series electric vehicles will be 40% higher, and the range will be 30% less. Consumers won’t pay for it. So this 12 billion buys the future of Volkswagen’s electrification.”

”Then the pressure from America...”

”Let the Americans solve it themselves.” Diess sneered, ”They have Tesla, they can choose not to cooperate with Spark Power. We have no choice; we either use Spark Power or withdraw from the electric vehicle market.”

Toyota City, Japan, Toyota headquarters.

The atmosphere was completely different.

Akio Toyoda looked at the words ”Toyota” on the list, his face ashen.

”We were forced to sign.” He said to the executives, ”In the afternoon, the other 29 had already signed. If we didn’t sign, our electric vehicles would become market outcasts next year.”

The Chief Technology Officer said cautiously: ”But President, we signed a C-level authorization, only getting lithium iron phosphate and sodium-ion technology, no semi-solid-state batteries.”

”I know.” Akio Toyoda rubbed his temples, ”First get the admission ticket, then find a way to upgrade. Contact Spark Power and ask about the conditions for A-level authorization. We are willing to pay more.”

”But the finance department...”

”Use the reserve funds.” Akio Toyoda was decisive, ”Toyota has 300 billion yen in technology reserves; take out half. The hydrogen energy route... slow it down for now. In the face of reality, we must bow our heads.”

This was a rare moment of compromise in Toyota’s history.

But everyone knew that not compromising meant death.

Detroit, America, Ford Motor headquarters.

CEO Jim Farley was on the phone with Washington.

”Yes, we signed. We had to sign... Senator, I know the sanctions are still in place, but if we don’t use Spark Power batteries, Ford’s electric vehicles will be 50% more expensive than competitors, with half the range. Do you want to let Ford factory workers lose their jobs?”

The other end of the phone was silent.

”There are 80,000 Ford workers in Michigan; if electric vehicles don’t sell, they will all lose their jobs.” Farley emphasized, ”You choose: insist on sanctions and let workers lose their jobs, or handle it flexibly and save jobs.”

This was a naked political threat.

But it was very effective.

Three minutes later, Farley hung up the phone and said to his assistant: ”Got one. Keep contacting other congressmen. Tell them: either modify the sanctions or prepare for large-scale layoffs in the automotive industry.”

Shenzhen, China, BYD headquarters.

Wang Chuanfu was smiling instead.

He looked at the word ”BYD” after ”A-level authorization” and said to his team: ”2 years ago, when Spark Power first took over Red Flag, Su Chen came to me to cooperate on the OEM for the Red Flag H9. At that time, many people laughed at me: why cooperate with an industry newcomer? Today, those who laughed at us are begging Spark Power for a C-level authorization.”

The Vice President asked: ”CEO Wang, we paid 12 billion in licensing fees; is it worth it?”

”It’s worth it.” Wang Chuanfu confirmed, ”12 billion to buy semi-solid-state battery technology, to buy a 10% sales commission right, to buy priority for technology in the next five years. More importantly—”

He pointed to the list: ”We are on par with CATL and BMW at the A-level. This means that in the Spark Power ecosystem, we are a core partner, not an ordinary customer. This status is worth 50 billion.”

He walked to the window, looking at the night view of Shenzhen: ”The Chinese automotive industry has waited thirty years for this day. From trading market for technology to exporting technology to the world. Spark Power has done what we couldn’t. But it doesn’t matter, we are partners; if they win, we win too.”