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The Interview

In the footsteps of Nikola Tesla: driving the electrification of the auto industry

15 August 2023 • by Didier Bonnet in The InterviewPodcast availablePodcast available

Inspired by electrical engineer and inventor Nikola Tesla, Mate Rimac, CEO of the electric supercar company Rimac Automobili, is helping to drive a revolution in the automotive sector. ...

Inspired by electrical engineer Nikola Tesla, Mate Rimac, CEO of electric supercar company Rimac Automobili, is helping to drive a revolution in the automotive sector.

Growing up, Mate Rimac, a high school electronics star from Croatia with a passion for cars, had three heroes: Christian von Koenigsegg and Horacio Pagani, both automotive engineers who founded their own supercar companies, and Nikola Tesla, the Croatian-born inventor of the electric AC motor.

All three have served as inspiration for Rimac who now, at the age of 35, is at the forefront of the automotive industry’s push towards electrification.

Yet turning his passion into a career hasn’t always been easy. “Ideas are worthless,” said Rimac during an I by IMD interview. “It’s easy to have the idea to make a car, but the process to get there over the last 15 years has, at many times, been hell.”

As the saying goes, necessity is the mother of invention. Rimac started racing cars aged 18 when he bought a battered 1984 BMW E30 3 Series. Shortly afterwards, the combustion engine blew up. It was too expensive to replace, so he decided to invest his money doing something special: turning it into an electric race car.

“I was always fascinated by the electric motor and why nobody was making electric cars that were exciting because at that time, 15 years ago, electric cars were boring, ugly and slow,” he said.

‘A washing machine on a racetrack’

His first version was very rudimentary. Due to the lack of electric parts, Rimac sourced the motor from a forklift truck. He now sees this as a blessing in disguise. “The only reason why my company exists today is because I started pretty early focusing on high-performance electric stuff.”

At races, he was teased for bringing a “washing machine onto a racetrack.” Unfazed, Rimac did what every successful startup founder does. He iterated, iterated, and iterated.

I was always fascinated by the electric motor and why nobody was making electric cars that were exciting because at that time, 15 years ago, electric cars were boring, ugly and slow
- Mate Rimac, CEO of Rimac Automobili

“I was constantly rebuilding in my garage to make the car better and faster,” he said. “That was the best time for me because I was working on the car and then going racing. If I had an accident, or the car went up in flames, I would bring it back to the garage and improve it for the next race,. Then people started paying attention.”

One of those people was a member of the Abu Dhabi Royal Family, who approached Rimac and asked him to build an electric hypercar. Yet with no background in business, and no venture capital infrastructure in Croatia, Rimac had little idea about how to start a company. Together with designer Adriano Mudri, who had worked at General Motors in Germany, Rimac realized that trying to put an electric powertrain into a traditional combustion engine car was the wrong approach, so he decided to build his own car from scratch.

He admits to being completely naïve about the scale of the challenge. “Thinking back today, if I had worked, even for just a few months, at BMW as an engineer, I would have known how impossible it was to do what I wanted to do.”

Working evenings and weekends, Rimac and his friends managed to build a hypercar in time for the 2011 Frankfurt Auto Show. This kickstarted the growth of Rimac Automobili, a company that now employs 2,500 people. A decade later, Volkswagen’s luxury sports car unit Porsche agreed to a joint venture and handed Rimac majority control of the 114-year-old Bugatti brand.

Rimac describes the Bugatti Rimac business as a “beautiful niche.” This year, they plan to produce around 120 hypercars, generating revenues of €400mn. Yet with only the super-rich having pockets deep enough to splurge $2mn on a car, opportunities for expansion are limited.

The intel of the automotive industry

The bigger potential is in the Rimac Technology business, which supplies electric parts to traditional manufacturers of mainstream cars that are ditching combustion engines to meet emissions targets. In many respects, Rimac’s technology has the potential to remake cars in the same way that Intel’s processing technology drove the rise of the modern digital age.

“That business has unlimited scale, basically because you can make batteries for cars, you can make batteries for many different things, including stationary storage for solar, wind, and so on,” he said.

Rimac describes the Bugatti Rimac business as a “beautiful niche.” This year, they plan to produce around 120 hypercars, generating revenues of €400mn.

Beyond electrification, Rimac foresees a further shift towards declining car ownership. This is where the third business, P3Mobility, a developer of robotaxis, comes into play.

“Of course, we all love our cars. We want to leave our stuff in them, but they’re underutilized; we use it just 5% of the time,” he said. “In the future, most people will not want that big an asset to stand around. They will use it as a service. And then the utilization of cars will go from 5% to 70-80%”

Rimac is tight-lipped on the project, which received a €200mn grant from the European Union in 2021, preferring to stay under the radar rather than be scrutinized for making promises on which he fails to deliver. Yet he remains bullish. “I truly believe in it because it makes sense,” he said. Rather than “trains on rubber wheels”, Rimac thinks consumers will favor individual private taxis that can be integrated into the public transport network.

An ecosystem for Croatia

Rimac Group is one of two technology unicorns in Croatia – the term that refers to a privately-held startup company with a valuation of over $1bn – alongside Infobip, which offers a variety of cloud communications services to telecoms providers all over the world. It may seem surprising that a country with fewer than four million people and better known for its beaches is emerging as a technology hotbed.

Rimac says he is proud of building a company in Croatia even though it made his life “10 times harder.” “There were no investors, no suppliers, no talent pool, no customers. It was like doing it in the desert,” he recalled.

Having blazed the trail, Rimac hopes the success of his company can boost Croatia in the same way that Skype helped the Estonian economy.

“After it was sold, there were many people who, because of stock options, suddenly had capital, plus they had experience in building a global company. We have already had a lot of people who left to do their own thing, and I try to support them and help them. And I hope there will be many more becoming really rich and doing interesting things with that once we list the company,” he said. All Rimac staff members remain co-owners of the company.

That business has unlimited scale, basically because you can make batteries for cars, you can make batteries for many different things, including stationary storage for solar, wind, and so on
- Mate Rimac, CEO of Rimac Automobili

One of his learnings over the past 15 years is that a company needs different people for different stages of the journey. “Some people who are amazing for the early stages of the company. They’re great at improvising and doing something quickly and getting it to 70%, but they’re not necessarily the right people to take it from there to 100%,” he said.

Rimac himself has no plans to step down, saying he will stay on for as long as he has the support of his shareholders and the company. After 15 years of challenges and crises, he believes they now have a strong foundation that can be leveraged.

“They say you lead a different company every time it doubles,” he said. “So I led probably more than 10 completely different companies.”

Expert

Mate Rimac

Founder of Rimac Automobili, CEO Rimac Group

Mate Rimac is the founder of Rimac Automobili and CEO of Rimac Group. Rimac Automobili started in 2011 with just a handful of people, Mate has grown the company from a specialist component manufacturer to a series production hypercar and technology powerhouse, which employs over 1300 dedicated employees.

Authors

Didier Bonnet

Professor of Strategy and Digital Transformation

Didier Bonnet is Professor of Strategy and Digital Transformation at IMD and program co-director for Digital Transformation in Practice (DTIP) and Leading Customer Centric Strategies (LCCS). He also teaches strategy and digital transformation in several open programs such as Leading Digital Business Transformation (LDBT), Digital Execution (DE) and Digital Transformation for Boards (DTB). He has more than 30 years’ experience in strategy development and business transformation for a range of global clients.

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