BY KATRINA HAMLIN

China’s WM Motor will start pulling ahead of Tesla wannabes. The Shanghai-based upstart chose a different path to Elon Musk and compatriots such as Nio and Xpeng, opting to list at home instead of New York, and choosing the mass market over luxury. As a result, WM Motor will be close to gross profitability by the time it lists early in 2021.

Although its last funding round raised a record 10 billion yuan ($1.5 billion), the company’s family-friendly models have not generated the hype that drove Nio shares to a quadruple-digit rally in 2020. That outfit reported a 1 billion yuan net loss in the third quarter but still trades at a price-to-sales multiple higher than Tesla’s, itself already worth over $570 billion in mid-December.

Founder Freeman Shen is no less daring than Musk or Nio’s William Li, however. Tesla started out targeting the premium sector before building more affordable mass-produced models, as Musk explained in his 2006 strategy. Nio followed him, rolling out fancy sports cars to generate headlines and establish engineering and design cred. But WM is going straight to the mass market. If it works, it could end up ahead of its more exuberantly valued peers.

Shen believes Chinese consumers are ready for battery-powered rides that are not status symbols. Its flagship plug-in sports utility vehicle, the EX5-Z, retails for about half the Tesla Model 3’s price. WM sales were close to 20,000 in the first 11 months of 2020, putting it on track for a 30% increase in deliveries compared to a year earlier. At that rate annual unit sales will be higher than Nio, Li Auto or Xpeng’s respective total sales at the time of their listings.

It is also better able to control costs via economies of scale. Nio and Xpeng have outsourced much of their manufacturing to contractors. WM has in-house research and production in place, including factories with a current capacity of 250,000 units per year, and space to double output. With the potential to rev up margins, the newest electric-vehicle stock on the block could one day outshine flashier peers and compete with giants such as Nissan and Geely Automobile.

First published December 2020