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4 More Years (of subsidies)!, NIO's New Investor, Innovating on Battery Tech - SAI Newsletter 24



 

Going to be short and sweet with this one since I am traveling and on semi-vacation. It looks more and more like NACS will be the one. Let me rephrase that, NACS IS the one. The de-facto standard plug for charging your car in the US, if not North America. Rivian was the latest to join Ford and GM to commit to that standard and allow its vehicles to access Tesla’s Supercharging network, or at least a substantial set of them (~12K). Now we just need to get into the details of how it will O-FFICIALLY be the one. With Tesla, the rich get richer since the OEMs & collective charging providers couldn’t put the customer first and the make the charging process any better than the car buying experience. CHINA EVs & MORE Since Lei is currently in Beijing, we are moving Twitter Spaces to 9am ET on Friday for the next few weeks. I will be the host of the Space as well so please look out for a room being hosted by @sinoautoinsight on Friday AM. For those that can’t join the live show, I invite you to listen to our recorded China EVs & More episodes at this site. And as always, we appreciate any feedback that will make the show better. Also, if there are any companies you want our thoughts on, let me know. INTERVIEWED/QUOTED - Joe Lowry: The Global Lithium Podcast. I had the pleasure of being on Joe Lowry’s podcast last week and had a blast chatting with him. We had our Asia / China / Beijing experience to bond over so I feel like I’ve known him for-ever… For those that aren’t familiar with Joe, he’s basically the leading voice on lithium around the world. He knows the history, been part of the initial deals that were foundational to how the space evolved the way it has and has great stories to share so I invite you to have a listen when you get a chance and give him a follow since where EVs go, lithium does too. - The Wire China. For those looking for a unique perspective on the BYD story, you should check out this article and not just because I was interviewed for it (because you all know that every one of those is worth the click). I really enjoy the deeper dive articles that are given enough words or digital real estate to do a company, situation or subject justice and this is one of them. Eliot does a bang up job getting into a lot of different areas including the history and where BYD could be headed in the future. BYD - What do we have here, BYD? A business for the US? We see you. TESLA - BofA analyst says Tesla will be the #1 EV brand in the US by sales in 2026. More breaking news, water is wet. Ghost peppers are spicy. There are A LOT of people in India and China. This dude also said that GM and Ford would outsell Tesla by 2025 in his last report BTW. Homeboy is just guessing at this point. But trust him to tell you where to put your money. NEWS THAT GOT OUR ATTENTION THIS WEEK - Subsidies continue for another 4 years in China. The package totals ~$72B and will exempt purchase tax on New Energy Vehicles (NEVs), for those not familiar with the term it’s a China ONLY term for clean energy vehicles and includes Battery Electric Vehicles (BEVs) + Plug-in Hybrid Vehicles (PHEVs) + Fuel-cell Electric Vehicles (FCEVs). The lion’s share of that equation are BEVs but BYD contributes many vehicles to the PHEV side and will continue to for the foreseeable future. The tax exemption is capped at ¥30K (~$4.1K) for 2024-25 and then halved and capped at ¥15K ($2K) in 2026-27. This is going to be one of the signature stimulus measures the Chinese govt will use to try to push the economy back into (higher) growth mode. - Secretary Pete seems to be serious about building out the US EV capabilities …beyond Tesla. He’s specifically pointing to the rare earth metals mining rights and refining of said rare earths. He doesn’t think the refining gap (more like chasm right now) is ‘addressable.’ What he didn’t say out loud is the part that comes after that - …’if we invest heavily starting today in capacity, innovation and eliminate or massage current laws and environmental policies that would hinder speed. And that we have to accept more risk on some of these investments. AND we should look to partner w/ countries that have similar priorities. ‘Catching up’ is a nonsensical term that shouldn’t be used any further. China has been the leader in passenger vehicle sales since 2009. They have 1.4B people vs the US at 350M. We have 831 cars / 1K people. China has 226 / 1K people. We will NEVER ‘catch up.’China will own the capacity title in ANY sector they want to IF they want to. The US must focus on the quality of innovation and building enough capacity so that our costs can get as close as possible to China’s ‘true’ costs. If an American company can bring true, revolutionary innovation to the battery or charging space, demand moves from old technology to the new technology and sufficient capacity quickly becomes excess. And China is already in danger of having excess in both EV and battery cell production. Lastly, and most importantly the next administration (if it's NOT Biden) has to keep the IRA in place - it's the US' ONLY chance at 'catching up.' - VW is creating its own battery cell IP. By using dry coating during the cell fabricating process, a manufacturer can eliminate significant costs. Currently, a wet ‘slurry’ is used on the electrodes as a binder (both anode & cathode) that increases the electrochemical properties of the electrode, but the drying process takes up a ton of manufacturing floor space at the factory and consumes significant energy drying the slurry. Dry coating would eliminate big steps in the manufacturing process, reduce factory size significantly reducing overall manufacturing costs. Not sure when this will be commercialized but what we do know is Tesla is also working on a dry coating with its 4680 battery cell but is having problems with the cathode side of the dry coating process. For all intents and purposes, this is true ‘gamechanging’ innovation but since we also know Tesla has been talking about this since 2020 but still haven’t gotten it into mass production, I’ll need more proof that VW is bringing this to market in the next 12-18 months before I get too excited. - Since we’re on the topic, Gotion is touting a new chemistry for its battery cells. LFMP cells? Yes, Gotion is adding manganese to a battery chemistry touting range that’ll match NCM / NCA battery cells while being more stable with lower manufacturing costs (not including the savings from innovating out the nickel and lithium). If this technology is right around the corner, Gotion says it could enter production mid-next year, and can begin to be mass produced within the next 2-3 years, this could be a real ‘gamechanger’ for Gotion, its investors (like VW) and its customers. BUT the proof is in the pudding and we know that everyone and their mother is working to reduce cost while increasing range so we SHOULD expect innovations to come out of this sector from American, European, Japanese, Korean and Chinese companies over the next several years. If Gotion can get this into a significant number of vehicles, will it be in vehicles destined for China ONLY vehicles? I could see this as something the Chinese govt would have a hard time allowing to be manufactured in a facility like the one that Gotion is building in Southwest Michigan. TRENDING ON SOCIAL MEDIA - Toyota is using AI to help design its next gen EVs. Should we consider that cheating? And do they have to pay for the IP rights? Toyota should use it to name their next set of vehicles – it wouldn’t be any worse than bZ4X. INTRODUCING - The new Robert Downey, Jr. show that’ll piss some people off. He’s a classic car collector and has good taste in them too. But he’s trying to do his part as an advocate for clean energy too. How to square that circle? By retrofitting classic cars that started as gas guzzlers into vehicles that don’t emit CO2 and making a show about it, enter Downey’s Dream Cars. And by that I mean in one episode he retrofitted a 1962 Mercedes 280 SE to use biofuels to get up and go. Here’s the thing – if I had his money, I’d have a few garages full of cool cars too. Most of them would be ICE classics. Love many of them. But for those that think electric vehicles are an inferior technology and can’t compete with classic cars on speed, handling, etc. Tesla has already popped that balloon. For those that throw out all kinds of 'what about-ism,' just admit that you like vintage and don’t like progress. You’d like things the way they were and not how they will be. And do that without pulling your iPhone out of your pant pocket so you can find out when your next meeting is. To me it’s not an ‘either or’ but it is for them. But if you like speed you should LOVE EVs, right? BY THE NUMBERS - $738M. That’s how much an Abu Dhabi investment vehicle that focuses on mobility companies has invested in NIO. That gives them a 7% stake in NIO. Let's see if and how much that grows by within the next few years. And will there be any pushback from said larger stakes in NIO. Did NIO convince them last week with the price cuts that they’ll not only be around in 10 years but also that they’ll be doing some major damage around the world? Apparently. _________________ This weekly newsletter is a collection of articles we feel best reflect the happenings of the week or important trends that have effects on the global automotive and mobility sectors. We also provide a point of view that we hope educates and sparks debate. The Sino Auto Insights team



 

Sino Auto Insights is a Beijing, China-based market research and advisory firm that specializes in assisting companies analyze, strategize, and develop products and services that will shape the future of mobility and transportation.


Members of our team have experience working in Detroit, Silicon Valley as well as here in China across multiple sectors and functions as entrepreneurs as well as working at larger companies like Apple, Google, Amazon, GM and FCA, and many others.

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