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Beijing on Edge, NIO Hits 200K, CATL 1st Battery Swap Partner - SAI Newsletter 16



 

Here we GO. It looks like Beijing now also has a new, unwelcome visitor that’s causing some panic buying, a spike in the demand for freezers, and mass testing of ALL 北京人. With the Shanghai outbreak management being such a disaster there doesn’t seem to be a ton of trust, even though this is BJ, that any serious outbreak will be managed better here. Some neighborhoods have been locked down, some schools have gone online and we are being told to get tested – 3x’s this week. All of this while in the background, Shanghai and >45 other cities that have >350M people (about the population of the US) are still in some form of restriction or lockdown. If BJ & SH are in both severe lockdowns, the country could come to a screeching halt. There are about 21M people in BJ if you’re wondering. Feels like Groundhog Day as my family did something similar 2 years ago March when a three-week visit to the US turned into a three-month extended stay. On that occasion, we were able to get back to China a day before the border closed but not before we enrolled our boys in school only to have that go online 1 week after they enrolled. We couch surfed at my sister’s house and I found out that rental cars can be rented a max of 90 days before needing to be returned. If you thought that something BIG was supposed to be happening this week but can’t put your finger on what it is, this was the week that Auto Beijing 2022 was supposed to be happening. Last week some legacy OEMs showed off their EV & EV concepts including Lincoln, Audi, Lexus, and BMW. These were likely to be part of the auto show excitement. Some EV launches have been delayed while others are likely still getting sorted out behind the scenes. Pretty bummed myself since this year it’s in Beijing so no need to travel and deal with all of that fuss. Alas, it wasn’t meant to be at least in April. That being said, there is a possibility of me physically attending the Detroit auto show in September so for those that I need to catch up with, please stay tuned! I had the pleasure a couple of weeks ago to be a guest on John McElroy’s 'Autoline This Week' YouTube show along with Michael Dunne that posted late last week. John and Michael are BOTH industry veterans so it was great to be able to spend a few minutes chatting about the foreign automaker’s challenges in the China market. Many of you readers have a pretty good idea about the types of challenges I believe the legacy OEMs have here but in a discussion format, it’s better to sometimes react to others' comments so a lot of good insights were being thrown around so I encourage you all to spend the ~27 mins and enjoy the three of us talking cars and China, particularly cars IN China. You can watch that show here. Please join Lei and me for this week’s EVs & More Twitter Spaces room on Thursday, 04.28 – 9pm EST, Friday, 04.29 – 9am China local time. For getting a download on all that’s happening in the space. 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. QUOTED - South China Morning Post. Had a catchup with Che Pan who wanted my thoughts on the current production challenges being posed by the Shanghai (and other parts of China) lockdown. I explained that it’s multi-layered and that as long as Covid lingers anywhere in China – expect manufacturing across sectors to have fits and starts. Che does a great job of outlining the importance of production to the Shanghai economy and the rest of China for that matter. Read the article here. TESLA - Tesla boss buys Twitter. The Twitterverse goes NUTS. I won’t get too much into this since I have no idea which direction Elon is going to take Twitter but if I were a Tesla/Space X investor, Twitter could really become a time suck that forces Elon to lose focus. That’s because Twitter is complicated. And any major decisions he makes is going to make a certain group of people VERY happy and a certain group of people very UNHAPPY. Or they could ALL just be unhappy no matter what he does. There are certainly potential conflicts that were noted by some media outlets about the outsize importance of the China market for Tesla and how that might create a pressure point for the Chinese govt. THE MOST INTERESTING THINGS THAT HAPPENED THIS WEEK - Notable ‘Delist-ers’ from the 2022 Forbes Billionaires List. Two folks that made this list, which means they lost their Billionaire status, who should be familiar with everyone that reads this newsletter are RJ Scaringe & Cheng Wei (Will) founders of Rivian & Didi. According to Forbes, RJ went from $3.4B to <$700M in net worth. Cheng Wei from $1.2B to <$300M. These gentlemen need a hug! Another notable stat: Of the 329 people that fell off the list, 45% are from China! Caveat Emptor. IN THE NEWS - Pony.ai is launching 100 driverless taxis in Nansha. This will be a paid service and the 1st license granted to an AV startup in China. The competition in China is heating up with no letup in sight. Poorly capitalized companies that aren’t able to partner with either ride-hailing or auto OEMs will be left as the Odd Man Out for this market. Many like AutoX, Momenta, WeRide, and (Baidu) Apollo have all previously made announcements about partnerships with OEMs and city pilot programs. Being first, in this case, is more for marketing than anything else since there will likely be other announcements from Pony competitors also being granted this license in other parts of China. Recall that Pony is operating a food delivery service in Irvine, CA in partnership with e-commerce platform Yamibuy. I give these China-fornia companies 24-30 months before they have to make a final decision about which market – US vs. China – they will focus on. Not sure they’ll be able to do both (see TuSimple). - Behind the scenes: How the Ford F150 Lightning got ‘greenlighted.’ I normally love these types of articles that take you to where things changed – the decision, the team, the direction, the challenges, the progress, the launch. Great story since I do remember being in Detroit a few times and grabbing lunch at my buddy Mike Ransom’s Ima Noodles and seeing some Team Edison employees dining on said amazing noodles as well. We knew it was kinda a skunkworks team that was out in the open but what I didn’t know at the time was THAT team was working on the Lightning – COOL STUFF. One thing about this article. Credit is given to Darren Palmer for getting the Lightning from thought to today - Job#1 coming off that line at the Rouge factory. But I thought it was Linda Zhang who was the Chief Engineer for the F150 Lightning? Unfortunately, she’s not mentioned once in this article so not sure what’s up with that??! - How GM plans to take on Tesla and according to Mary – BEAT THEM! Gotta love Mary’s enthusiasm and confidence about GM being able to make the massive turn, and we’re talking one that even the Titanic couldn’t make, in order to take on Tesla’s goal of 20M EVs sold / year by 2030. Yep, that’s the bogey they’re shooting if ‘beating’ means sales volume. GM does have a track record of selling as many as 10M as recently as 2016 vs. about 6.3M in 2021. This article outlines the product plan that GM believes will jumpstart that chase to being the global leader in EVs. They’ll need to sell millions of many vehicles to reach 20M. Like Tesla. Or they’ll need to sell millions of fleet AVs. I could see BOTH of them doing the latter more than the former. But to get to 20M, they’ll likely need to do BOTH. In multiple regions. 20M is a MONSTER number. Toyota and VW Group sell about 10M in their BEST years. For those needing a reminder – Tesla sold just under 1M cars in 2021. Their best year ever. Elon says he sees Tesla growing 50% YoY for the next several years. That needs to come true if Tesla is to get to 20M. Can you say strettttccch targets!? - CATL finds its first EV partner for its EVOGO battery swapping service. Aiways, an EV startup based in Shanghai who was the first to aggressively export their EVs to Europe has just inked a deal with CATL to be their first OEM partner to utilize the EVOGO swapping system. Aiways will modify an existing product, the U5, and begin selling the swap-capable version before the end of this year. Could this be CATL’s ticket to launching their EVOGO swapping stations in Europe? Aiways does already sell in over 12 markets there. For those that want to learn more about Aiways, Lei and I had Alex Klose – Aiways VP of International Markets on our China EVs & More MAX podcast a couple of months back. You can check that podcast out here. TRENDING ON SOCIAL MEDIA - A bad UX will make people not want to buy an EV. I promise. EVERY person I know who has an EV in the US not branded Tesla has told me about the challenges they have with trying to charge their car. Yes – ‘EVERY’ and ‘challenges’ with an ‘s.’ Ultimately, it’s up to the charging infrastructure folks to design a system that works the same way throughout the US whether you’re in FL, CA, or Wyoming. With battery and raw materials pricing expected to increase in the short-term, we can’t rely on EVs getting cheaper so we have to find other ways to allay prospective buyers' concerns and attract them to switch. Remember, when someone purchases a car, they’ll hold onto it for at least 8 years typically. If more people become jaded with the lack of charging infrastructure or the bad experience they have when trying to charge their EV outside of their home, then adoption just gets pushed out for them by another 8 years. Time we do not have if we are going to sniff anywhere close to that Biden administration goal of 40% of all vehicles sold by 2030. - The Ukraine invasion by Russia is forcing imports from the German automakers to be re-routed. They would normally arrive via rail but it seems that there’s no guarantee that the vehicles if shipped now via rail, would make their final destination. Confiscated in Russia perhaps? It looks like they’re going by boat now instead which takes longer and is worse for the environment. And remember, there’s quite a mess in Shanghai as there are hundreds of ships at the Shanghai port, one of China’s largest, waiting to be offloaded. - Mercedes needed to sharpen its pencil because demand for their EVs doesn’t really exist in China. OK, I kid. It exists but there’s not much of a pulse. How else can you explain the move to introduce a lower-priced version - the EQA 200, a small SUV/crossover at 322K RMB - when they JUST launched the EQA 300 & 350 4MATIC models back in November 2021? The original lowest price was the EQA 300 at 365K RMB. That’s a ~$7K reduction in price. Of course, this is a bait and switch that I think Chinese consumers are too smart to be fooled by. The lower-priced 200 I believe is single-motor vs. the dual-motor 300. C’mon Merc you gotta do better than that! BY THE NUMBERS - 200K. That’s how many vehicles NIO has produced as of April 26th. Well, technically JAC produced them - NIO designed and sold them but small details. It took them 3 years to hit 100K and about 1 year to hit the 200K milestone. With the ET7, ET5, and ES7 on their way, it won’t be long before they get to 500K. Congratulations NIO! - 200K. That’s the increase in production capacity that Ford announced for the Mustang Mach E to take on US & European demand. They sold 969 of them in March here in China. But there were complications in ramping manufacturing and supply issues with the batteries sourced from BYD. Can Ford get Mach E sales >10K/month in China before the end of the year? I guess that’ll depend on how long the lockdowns across China linger but my guess is that they could if the sector reverts back to normal soon. But that’s a completely different topic that I am NOT as confident about. - 1B RMB. That’s how much OnTime, a ride-hailing startup launched by Chinese SOE GAC raised in its latest Series A funding round. The most interesting part about it? OnTime was able to get two AV rivals to join forces and both invest in them. Those rivals? None other than WeRide, which GAC has a known partnership with, and Pony.ai whose major OEM backer is Toyota. Diversification seems to be the word of the day here. —— 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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