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Auto Beijing 2022 - Postponed, BerlinGiga Finally Open, 100K XPeng P7's - SAI Newsletter 11



 

With the restrictions and lockdowns gripping China this was all but inevitable. It is O-fficial – Auto Beijing 2022 is now postponed to June, at least. I am disappointed but would rather have the environment be safer for everyone to enjoy themselves. I know all of my comms/PR friends are scrambling to think through how they’re going to get MAX coverage with what was supposed to be their BIG week of reveals. A quick reminder, we were going to see the NIO ET5/ET7, Li Auto L9, XPeng G9, and many other vehicles for the first time and some in the flesh. The OEMs that were debuting products will have to decide if having a separate event online is best or wait until June, with no guarantee that it’s going to be any better here in Beijing or in China. If we are keeping score, a number of car companies have temporarily shut down production, not only in China but in Europe as well, nickel pricing continues to be sky high which has prompted many EV makers in China to raise prices on their products, all while chip and battery supply continues to be an issue. Am I forgetting anything? This black cloud hanging over the sector globally isn’t going away for most of this year BTW so get used to being uneasy. At the beginning of the year, analysts were optimistic about a global sales rebound for vehicles (both ICE & EVs) but now they’re not so sure. The good thing is that we are very early in the year, so production can still get made up between now and December 31st, but without adequate supply of key parts, that rebound is at real risk. Please join Lei and I for this week’s EVs & More Twitter Spaces room. We will again be on this week 12 hours later than our usual time which means – Friday, 03/25 – 9am EST, Friday, 03/25 – 9pm China local time. We should move back to our normal time after this week. For those that aren’t able to join, the EVs & More podcast is available wherever you grab your podcasts from. Most of our back pods are posted and the descriptions will be able to tell you what we discussed that particular episode. TESLA NEWS - Elon dances his way to the BerlinGiga factory opening. Now we can truly begin the speculation about how much of ShanghaiGiga’s capacity will be shifted back to domestic Chinese consumption and how much will be funneled to OTHER foreign international markets like Japan, Australia, Singapore, and South Korea. My gut tells me that BerlinGiga will not fully ramp until at least Q3 which means that Tesla will still lean heavily on ShanghaiGiga to build exports to Europe for the better part of this year. Remember that there was over 100K units of ShanghaiGiga units shipped to Europe last year. Will the China market bear those additional units or will the other international markets absorb them? Will the challenges in supply and Covid here render those questions moot? Model Ys built at BerlinGiga were officially handed over to their owners in a HUGE ceremony yesterday that even the new Chancellor, Olaf Scholz attended. That should tell you how important this factory is for Germany. Elon was dancing again, although I think his dancing this time was more due to relief than to excitement. This was a long time in the making – a ~2-year journey that culminates in an even more globally competitive Tesla. BerlinGiga will allow Tesla to keep intense pressure on ALL of the European automakers that hope to compete in the EV sector there. This should also shut up a lot of the German executives who just 5-6 years ago thought that Tesla was out of their depth and wouldn’t be able to compete with ABB’s collective engineering supremacy and know-how. To those gentlemen, and trust me it was mostly gentlemen – Denial isn’t just a river in Egypt. Tesla is coming to eat your lunch – You had a chance but now the pressure is on. We know that pressure bursts pipes, but it also makes diamonds so which of the European automakers is going to step up? I have my opinions on this but I’ll keep them to myself for now. - Don’t talk bad about my brother. Only I can talk bad about my brother. With Rivian down and out due to its well-documented marketing and production challenges, the media and FUDsters as expected, started piling on. Elon, via tweet, came to Rivian’s defense reminding everyone how close Tesla was to bankruptcy, how hard ramping production was for them (remember production hell), and how only two American automakers have avoided bankruptcy so far – Ford & Tesla. Perhaps Elon sees a bit of Tesla in Rivian? And let me assure you, Rivian will be just fine as long as they build quality products that are priced appropriately, are prudent with their cash burn, and can eliminate those self-inflicted wounds like the pricing debacle they just endured. IN THE NEWS - Can Cadillac avoid the same mistakes that Ford made with the launch of their Mustang Mach-E in China? The first US-built Cadillac Lyriqs came off of the line in Tennessee earlier this week and are scheduled to begin shipping to customers later in May. This despite all of the well-documented challenges OEMs around the world have had with securing battery, chip, and wiring harness supply. Kudos to Cadillac for staying focused and getting to this point. I know that some OEMs and EV startups here are looking at their original timelines to launch production of their new products, and aren’t feeling so confident. Does the successful product launch in Tennessee portend an uneventful, on-time launch of the China-made Cadillac Lyriq later this year? Well, that depends. In China, the pandemic created some challenges for BYD, the maker of the Mach-E’s battery cells. Specifically, the factory that makes the batteries for the Mach-E is located in Xi’an where there was an almost 2-month lockdown toward the end of 2021. That delayed ramp of the Mach E into this year prompted Ford to call out BYD by name earlier this year in the media when asked why they’re struggling filling Mach E orders. The lack of supply delayed the Mach-E’s production and consequently dampened the excitement and momentum that accumulated when it debuted in April 2021 at Auto Shanghai. I was told that Ford is now getting a handle on battery supply but the threat of another shutdown, of either the plant or a key supplier, still looms but NOT just for Ford. The degree of difficulty is high for Cadillac and the Lyriq suppliers but luckily their 2022 production target is not – I heard they’re targeting about 5K units for this year for the China market. - NIO is looking for a few good men & women. NIO realizes that if it’s going to be China’s Tesla or the world’s NIO for that matter, it needs to recruit the best and the brightest so they created a video ‘Call to Arms’ that highlights major, mostly American (ironically) technology milestones including the invention of the steam engine, light bulb, and the personal computer. The video ends with a statement about how this era will have new energy, automobiles, and artificial intelligence all converging together and that if you join NIO, then you can help shape this era. If it wasn’t already obvious, NIO believes that THEY will be the mobility/technology company to lead the world into this tech convergence era. If I were XPeng, Li Auto, BYD, and even Tesla, I’d take that professional challenge on! I am too old to get all fired up about a hype video like this but if I were a young, smart, and ambitious Chinese college graduate, I would be pretty pumped up about signing on! For those that ARE interested in learning more, I would recommend you check out their jobs page as I am certain they are hiring in all three major regions: China, the US, and Europe. Good luck! THE MOST INTERESTING THINGS THAT HAPPENED THIS WEEK - Leap Motor, which many left for dead (including me) roars back and readies itself to IPO in HK later this year. They will join XPeng, Li Auto, and NIO on the HK Exchange and are continuing to gain momentum as they follow their 43,748 units sold in 2021 with 10,300 units already sold in the first two months of 2022. Notice this week's spotlight pic is the LeapMotor C11 SUV. TRENDING ON SOCIAL MEDIA - One of my favorite beers of ALL-TIME, a beer that represents the start of spring is now available again in Michigan. Bell’s Oberon, something that first quenched my thirst back in my university days, has now been given an official day in Michigan by Governor Whitmer. it's normally only available from March to about September but in other parts of the US it's available all year round. Brewed by Bell’s Brewery, one of the finest craft breweries in the world, Bell’s Oberon is a wheat ale that’s (a bit) on the lighter side and has a spice and fruit flavor making it perfect for those hot summer days when all you want to do is chill. For those who enjoy a thirst-quenching adult beverage made of yeast and barley, I highly recommend you give Bell’s Oberon a go. - Little heard from CALB, China’s 3rd largest battery manufacturer plans to IPO in HK later this year. The plan is to raise $1.5B in capital which should help them keep up with the 800lb gorilla CATL. If you’re wondering who #2 is – it’s BYD of course! GET SMARTER - With the global pandemic well on its way to a third year, a country invasion that many call the worst since World War II, and raw material pricing & battery/chip supply volatility that has forced many automakers to temporarily shut down their factories, the traditional automotive sector has quickly become the poster child for a ‘disrupted’ sector. But disrupted in ways that were impossible to anticipate, let alone plan for. What many companies are realizing is that these issues aren’t one-offs but a troubling trend that is likely to affect their ability to manufacture their products linearly for the foreseeable future. What are they doing about it? Many OEMs have begun to work with their risk management teams to revisit the way they do everything, from manufacturing and sourcing strategies to hedging against raw material pricing increases. All in order to try and add flexibility into their processes in hopes of softening the blow of any future, unforeseen challenges that they will face, and it’s crystal clear, they will face more. The good management teams will always find a way, but what is important here isn’t trying to avoid the next disaster as much as it is trying to react as quickly as possible to it so that operations aren’t negatively affected for very long. - Just watched this 7 min video about the origins of ramen, and I am better for it. You should too. Ramen sustained my roommate and me throughout university as it has countless other college students. It’s one of my favorite foods of ALL-TIME to this day although it's absolutely horrible for you healthwise. INTRODUCING - Electric versions of the Porsche Boxster & Cayman. This week, Porsche confirmed what we already knew all along, that they are going to make electric versions of their high-running sports cars, the Cayman and Boxster. These electric versions should start showing up in or around 2025 and for a brief time period be sold alongside their petrol counterparts. There is no fighting this move; all car companies are going to replace their petrol engine vehicles with electric versions. Most people don’t realize that it’ll happen much faster than they expect too. Once that tipping point has been reached globally, it’ll get harder and harder for the last holdouts to resist. If for no other reason, gas stations will be more difficult to find and petrol will get progressively expensive. BTW, If the replacement Cayman/Boxster looks anything like the Mission R concept that was debuted in LA last year, sign me up! - Introducing the Honda e:NS1. Coming from the JV that Honda has with Dongfeng Motor, the e:NS1 is the first BEV for the China market. This follows on the heels of the introduction of their dedicated electric vehicle sub-brand the e:N (with e = Energize & Electric & N = New & Next) back in October 2021. You can order it now and pricing starts at 180K RMB or ~$29K. It kinda looks like a Ford Edge but the interior is supposed to have a very minimalist feel with few physical buttons. That just means the UX better be top-grade or this thing isn’t gonna work. - The ZEN 50 electric catamaran. ZEN, which stands for Zero Emission Nautic Ltd, was just established in 2021 but they seem to have their first customer for their >50’ catamaran. It should reach its customer sometime in 2023. I've never been a sailing guy, although growing up, there really weren't that many opportunities to try TBH, but this thing looks cool. How will electric motored boats do, your guess is as good as mine. But as a land lover, I'd rather be stranded on a highway if I run out of batteries than in the middle of some ocean. I guess if I could afford to have an amazing boat that could strand me in the middle of the ocean, I'd be asking a whole set of different buying questions. If you have to ask about pricing, you can’t afford it. And besides, I can’t seem to find it so it must not be set yet. BY THE NUMBERS - $2.1B. That’s how much GM paid Softbank to buy them out of their Cruise Automation stake. This raises GM’s stake to 80% with the balance of ownership belonging to Microsoft, T. Rowe Price, Honda, and Walmart. GM also paid $300M for investment in Momenta here late last year so they’ve committed a lot of capital to AV technology companies on both sides of the pond. One seems more strategic, the other risk mitigation but I’ll let you decide which one is which. It gives Softbank a pretty tidy return for just a 4-year investment. If I am not mistaken, they turned $1.2B into $2.1B over that time period. - 100K. The 100,000th XPeng P7 rolled off the line today, the first of the ‘China EV Inc’ group to be able to say this. Congratulations XPeng! We will be seeing many more big number milestones later this year from quite a few others in the group so - Onward and Upward! —— 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 automotive and mobility sectors here and in the US, we also provide a point of view that we hope educates and sparks debate.

The Sino Auto Insights

 

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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