Battery Tech Progress - Slow & Steady, NIO Swapping Partner, China AV Levels - SAI Newsletter 8
February sales numbers have started to trickle out and most of them are disappointing which would be expected due to CNY effectively taking two weeks out of the month. Will give you all an update next week when they should all be out. We are starting to turn the CNY & Olympics corner now as more companies begin to focus on Auto Beijing 2022 and we see more significant announcements and product launches leading up to the event during the last week in April. Finally, got a (small) bit of rest over the weekend after that marathon MOBILIT/E Conference ended for me at 2am Saturday AM China time. What a great experience! I had a blast, learned a ton and met some amazing, intelligent, and passionate folks that I hope to keep in touch with. Upon reflection, it was a great success and is going to be one of the largest mobility events of the year for sure. The quality of panelists was high/very high and there’s no doubt that the Pareto rule was in effect as a subset of Zooms drove interest in the entire event but each and every panel was important and had an important place in the conference. The plan is to continue to co-lab with the Climate Transformed team on more content and make this MOBILIT/E Conference a must-attend event on the annual mobility calendar moving forward. For those of you that were able to join in for one or more discussions, please do feel free to contact me with your feedback – good, bad, indifferent. For those that were NOT, you can head to climatetransformed.com to catch the recordings. We did miss a couple of subjects that I will focus on in the future, likely via a dedicated but much smaller day conference. We missed out completely on the two-wheeled electric mopeds and bicycles. We also didn’t cover eVTOL or anything aviation so those will take precedent in future events. There were panelists from each of those verticals that were ready to join but alas, we couldn’t get the dates right for them to participate. Next time. Since the availability of chips and batteries will play a huge role in the success of the EV sector this year, we may circle back and do more content on those subjects as well. Please join Lei and me for this week’s EVs & More Twitter Spaces room – Thursday, 03/03 – 9pm EST, Friday, 03/04 - 10am China local time. 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 in that particular episode. TESLA NEWS - BerlinGiga to begin manufacturing to customers later this month? That’s the current word on the street. If that is indeed the case, look for ShanghaiGiga to still support the European market well into the summer as BerlinGiga works all of the kinks out and ramps to full production. With the chip and battery shortage hanging over OEMs’ heads, ShanghaiGiga could be more shielded, due to its proximity to supply (of chips and batteries), than its sister plant BerlinGiga. IN THE NEWS - Will there be any real breakthroughs in battery tech in the coming years? If you consider a 7-8% YoY increase in battery capacity a ‘breakthrough’ then we have them every year. But believing that anything other than incremental efficiency gains in the foreseeable future for battery tech could be a naïve train of thought. And I think that’s OK. Current battery range, studies show, seems to be sufficient for most drivers on the planet. Although listening to Mujeeb Ijaz and Isobel Sheldon during the Battery Tech panel in Week 1 of the MOBILIT/E Conference, I was pretty inspired and convinced that it could happen. But until then, EV adoption needs to be more about educating people and changing their habits. EVs involve changing one major habit already so why wouldn’t we just try to wrap our minds around not needing a car with a range of >300 miles when we only commute, on average, 16 miles one way to/from work. Covid also changes this calculus as more and more companies offer at least partial WFH opportunities. Charging infrastructure in Europe and the US still needs substantial investment, redesign, and innovation but that should happen over the next several years in both regions. Range is an issue already mostly solved it just needs to be positioned differently. As Mike Granoff stated last week during the ‘Future of Mobility’ fireside chat I had with him – If Tesla built a 130-mile range Model 3, it would likely be ~$25K, making it affordable to many more consumers putting EVs on the road faster. - Battery supply constraints are real and creating tons of uncertainty with the EV makers. The article states that unless capacity is increased THIS YEAR, we could see China NEV sales limited to 4.4M units. We are two months into the year with one of the months affected by CNY so there’s no need to reset forecasts just yet but these battery issues are real and OEMs are having to ‘beg, borrow, and steal’ in order to get their supply. Like with the chip shortage, the materials, logistics, and sourcing teams at the OEMs are earning their keep, that’s for sure. Speaking of battery shortages, see the first post in the ‘Trending on Social Media’ section. - 4680 batteries right around the corner? Panasonic has just announced that they’ll build another factory next to their current Wakayama factory to manufacture the 4680 battery cells. If you’re wondering why that number sounds familiar – it’s because it’s what Tesla has been working to get into mass production ever since they announced the battery tech during their Battery Day in September 2020. I’ve been told by numerous trusted sources that 4680 batteries won’t make it into mass production until at least the start of 2023 so this seems to align with that timing. If these batteries are available to other automotive manufacturers and nets the efficiencies that have been speculated, I’d imagine many OEMs would want to utilize them – which could push the pricing up, at least in the short term. First thing’s first though, and that’s figuring out how to get these batteries mass produced. - NIO, following XPeng and Li Auto kinda, listing on the HK exchange. I say kinda because XPeng and Li Auto issued new shares whereas NIO will not. This should help blunt the impact of any or all of them getting kicked off US exchanges should they decide, or more appropriately, the Chinese govt decides that these companies should not open their books up any further to US regulators. NIO shares begin trading on the HKSE on March 10 under the under ‘9866.’ Get ‘em while they’re hot and share price is down… - Meituan reduces the fees that it charges restaurants that use its delivery service at the ‘suggestion’ of the Chinese govt. As I stated in past newsletters. This effectively caps the profits these technology companies, especially the ones operating in the mobility space can make. THE MOST INTERESTING THINGS THAT HAPPENED THIS WEEK MS taking a significant role in combating cyberattacks in order to help Ukraine. The 21st century version of Ford Motor company switching auto assembly lines in order to build tanks for WWII. It’s taking a concerted effort through public and private (Microsoft, Google, others) cooperation in real-time to combat and contain these cyberattacks. And the expectation is that it’s only going to get worse as Russia gets more desperate. - NIO has found a partner to help fund its swapping station rollout abroad. An SOE at that! Will they have deep enough pockets to pepper these swapping stations along all of the major thoroughfares in Europe and the US? And fill them up with batteries too? If so, it’ll give EV buyers a really compelling reason to go with NIO. Also, will this allow NIO to go it alone on the battery swapping, building a moat around this unique feature to them or will they still need to recruit other brands to license its swapping technology in order for the utilization rates to be high enough to make sense for these capital investments? GET SMARTER - China’s definition of L0-L5 autonomous driving levels. In summary, they are as follows but click the link for more thorough definitions in Chinese (& English):
L0: Emergency Assistance
L1: Partial Driver Assistance
L2: Combined Driver Assistance
L3: Conditionally Automated Driving
L4: Highly Automated Driving
L5: Fully Automated Driving
TRENDING ON SOCIAL MEDIA - Ford calling out BYD by name for shorting them on battery supply. Xian had been on lockdown for the better part of a month so BYD wasn’t able to produce batteries for much of that lockdown which seemingly created a HUGE backlog for Mach E’s. Still, it’s pretty unusual for an OEM to call out another supplier for their woes although perhaps we should get used to this new world where finger-pointing is just another way of doing business? Ford single sources the Mach E battery so they play a part in this drama as well. I bet you right now they’re looking at qualifying a second source! - Baidu Apollo Go becomes the world’s largest provider of self-driving mobility services. It looks like Baidu Apollo’s aggressiveness is paying off. In Q4’21, Apollo Go provided over 213K manned robotaxi rides in China from 8 cities: Beijing, Shanghai, Guangzhou, Shenzhen, Chongqing, Changsha, Cangzhou, and Yangguan. Everyone in China AV Inc is going to really need to step up the fundraising and pilots so look for more investment announcements later this year from the likes of AutoX, Momenta, Pony, DeepRoute, QCraft, and others in order to not get too behind the global leader Baidu. INTRODUCING - Lotus’ first, fully electric SUV codenamed the Type 132. The vehicle won’t actually be revealed until March 29th but I know a few folks who’ve already seen it and they told me it’s ‘nice.’ Two of them were Brits and I think that’s about as excited as the Queen allows them to get. A friendly reminder to those that forgot. Geely acquired Lotus in 2017 and rather than let Lotus die on the vine by only selling a handful of really fun, small-displacement sports cars, Geely decided that Lotus needed an SUV. An electric one at that. And that it should be built in China. So many non-starters for Lotus loyalists but this strategy just follows in the footsteps of Bentley, Rolls Royce, Lamborghini, Aston Martin, and yes Ferrari. It should push Lotus into the volume game depending on how well received and well built this initial entry is. BY THE NUMBERS $65M – That’s how much the Our Next Energy team just raised in additional capital to further develop their hybrid cathode battery technology. I think they’ll be a battery company to follow… - 17 & 20%: That’s how much Rivian is increasing the prices of their two products, the R1T & R1S by. The increase will also affect current reservation holders who’ve already put their orders in! This is absolute craziness and is NOT going to endear Rivian to any future customers let alone the first-mover customers that trusted them when they didn’t have to and ultimately took a chance by being first in line to purchase their products. What I’ve been told is that they missed their supply requirements for batteries due to the manufacturing delays and were hit with a huge penalty payment. In addition to this penalty charge, it also broke some guarantees for supply moving forward. In normal times, many suppliers may overlook forecasting errors, so the miss must’ve been substantial. Next, this isn’t normal times so for a battery cell manufacturer to hold capacity for a customer, there’s a ton of opportunity cost involved there so then there’s that. Why it’s >17% lift just tells me that either their sourcing, manufacturing, pricing team OR all of them screwed up! As the F150 gets closer to production, Rivian CAN NOT make any more significant missteps like this if they’re to carve out a niche for themselves. —— 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.