BeyonCa Emerges, TuSimple Could Be in Trouble, Faraday Drama Exposed - SAI Newsletter 41
I am a broken record but a lot going on this week including a brand/vehicle launch from one of the China automotive sectors #OGs, an AV CEO gets got, a deep dive on the drama going on at one of the early EV Inc. and quite a bit more, all of it detailed down below. That brand/vehicle launch I am referring to is none other than BeyonCa by Founder/CEO Weiming Soh. He also happens to be the current Renault China CEO. Renault also happens to be an investor in BeyonCa. Weiming made his bones by moving up the ranks to become an EVP and a Management Board member of Volkswagen Group and the original architect of Mobility Asia which you may better know as Cariad. He was the highest ranking Asian at VW Group and I think one of the reasons he left was that he was passed over for the head China role. If there’s one thing for sure – Weiming is a salesman and he used those skills to recruit some formidable lieutenants from companies like Porsche, Bentley, Audi and Xiaomi to help deliver his dream. The recent unveil this week of the GT Opus 1 is BeyonCa's first try at consolidating and integrating “advanced technologies, and shift from function-driven to scenario-driven methodology. BeyonCa will offer users meaningful products with integrated super-premium user experience where users will enjoy the real value of services in the car, around the car, and beyond the car.” If that wasn’t ambitious enough, BeyonCa is targeting none other than Porsche (Taycan) with its GT Opus 1 – VW Group’s crown jewel brand and one that is keeping VW Group afloat as they struggle in the China market with slowing sales of both ICE & EVs. We’re supposed to see a production version of the Opus 1 by the Shanghai Auto show next April so I am looking very forward to kicking the tires on that. Full disclosure: I was able to visit BeyonCa several times prior to it moving into its permanent home in Lido area of Beijing a few months back and I am impressed with the amount of capital Weiming has been able to raise and the progress that the team has made with the vehicle in such a short period of time – concept at least. Unlike the mass market (<¥300K) segment, the super-premium segment in China isn’t that crowded, especially if you consider the domestic EV brands, so I could see BeyonCa making a splash, but that’s if they can get the features, design, UX, software dev and customer journeys right before they begin delivery in 2024, which in car terms is right around the corner. What got our attention this week. - Britishvolt teetering unless they receive additional funding - £30M from the British govt with a matching £30M to come from a private equity firm. The UK’s hope for having a presence in the battery cell space is about to be insolvent unless it can get more financing. I never understood what Britishvolt’s actual IP was, and it seems many others don’t either. Perhaps that’s why it can’t raise additional capital after burning through its initial £200M - Canada is looking to control its own destiny re: rare earth metals. cc: Mexico & Indonesia. Canada specifically is looking to block Chinese companies from investing in Canadian mining companies which is a ‘hardening’ of Canada’s position from before. If batteries are the new oil, then rare earth metals will be treated like gold by the countries that have them and coveted by countries and companies that don’t. Mexico and Indonesia have also explored nationalizing their rare earth metals deposits. - NIO production challenges forced them to stop production at their Hefei facilities in mid-October but they are now back online. This puts in jeopardy Li Bin’s boast of having a massive 4Q sales number. Anything <20K December will be disappointing for me and likely MANY others. As I’ve said in the past, the best ability is AVAILABILITY – If the cars aren’t built, they can’t be sold. Rumor has it that they lost about 7K units of production and since they reported 10K, that’s a massive number that will be tough to get back before the end of the year. - Evergrande begins delivery of the Hengchi 5. I had my doubts, but they did it. Many of us speculated that Evergrande wasn’t serious about building EVs even after they spent billions to frankenstein a competent team with decent IP together. Job #1 rolled off a couple of months ago and the first 100 deliveries occurred last week. Congratulations to the Hengchi team who have gotten much farther than FF whose sage is still playing itself out – speaking of which… - Shame. Shame. Nikola founder Trevor Milton found guilty of securities fraud. He will likely face prison time but my questions as this case gets closed - There are many others IMHO that pump up their company’s stock prices so why is Trevor the only one being prosecuted/punished here? Also, what happens to all of those ill-gotten gains from his lies? Does he get to keep the spoils of his fraud? - European automakers to lean on the US & China for sales as it’s looking more likely that the European economy will be heading into a recession. If I were the US govt and just saw the field trip that the BMW & VW Group leaders took to kiss the ring in China, I may not be so excited about their reliance on the US to keep them going, especially as they try to tightrope the US – China divide. Mark this down - at a certain point in time, China will make them choose a side. CHINA EVs & MORE After much consternation with the platform we use to record our MAX episodes, we have another queued up and will be posting early next week a MAX episode that we actually recorded back in August. We had the pleasure of speaking with Henry Sanderson of Benchmark Minerals who also consequently wrote a book called Volt Rush, a must read for anyone following the battery sector. It should’ve come out in September but there were some technical issues we were trying to sort through with Riverside. For those that can’t join our live Twitter Spaces room every Thursday 3pm EST (shame on you!), the China 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 - FremontGiga getting some temporary reinforcements. Tesla will be sending about 200 staff from ShanghaiGiga, mostly engineers and production folks, to help them increase capacity at the Fremont location. Tesla has a very strategic, global manufacturing footprint that it’s now trying to get aligned and optimized. Currently, Berlin and AustinGiga are still ramping and are likely ~250-300K units/annum while Fremont is likely ~600K units. ShanghaiGiga which had a lot of help from the Shanghai local govt to get there, is ~1.2M units/capacity. Elon would like to see Fremont closer to that annual volume and who best to help them get there then the folks that got it done in Shanghai. - Tesla closes its first ever retail location in China. Parkview Green (PVG) is one of the highest end malls in the CBD area of Beijing and Tesla’s PVG retail space was opened originally in 2013. I remember vividly the day it was open because I walked over there to check it out. Originally, it was located at the South entrance of the mall. It was moved in 2018 to the center of the mall to a larger space that included a 2nd floor making it a key traffic generator for the mall right around the corner from the Din Tai Fung (DTF) – another traffic generator for the high-end mall. After Tesla moved that space was taken by Saleen and then HiPhi both of which no longer occupy that space. Across from the original space was, as in past tense, a retail location for Polestar as well. I know all of this because my apartment is basically across the street in the CBD area of Beijing and my kids LOVE to eat at DTF. This move follows on their strategy of getting out of high rent retail space and focusing more on the mainstream malls, especially where they can consolidate service depts with the space. IN THE NEWS - BMW plans to sell directly to customers in Germany/Europe. Starting in 2024 with Mini and then 2026 and beyond with BMW. This is where the market is moving. The franchise laws in the United States currently won’t allow OEMs to sell directly to customers so ultimately will that change? Only time will tell but let me just say it’s one of THE most frustrating things about the vehicle sales process in the US. In a US consumer sentiment study in 2021, 44% of all surveyed would rather completely avoid having to deal with a dealer during the car buying process while 60% felt that negotiating with the salesperson and the post-purchase paperwork were their least favorite parts of the vehicle purchase process. Those ridiculously dreadful numbers all point to how broken and un-customer friendly the current car buying process is in the US. With no incentive for the dealer to change, why would they? - TuSimple, the autonomous commercial trucking company that’s part of the China-fornia contingent is under extreme scrutiny by the SEC and FBI for allegedly improperly financing and transferring technology to a Chinese startup, one that was started by its former Chairman, Chen Mo. In part 2 of the saga, the board on Monday fired Xiaodi Hou who was at the time the CEO/Chairman of the Board of TuSimple. No one has been charged and Xiaodi Hou in response to his firing posted a note on LI that seemed to be addressed to the TuSimple employees as well as the public proclaiming his innocence. I’d heard through the grapevine about some of this stuff and thought there might be some troubled waters in TuSimple’s future. Having said that, it does seem like Xiaodi Hou is being scapegoated a bit by the board and my thought is that they purposely turned a blind eye to what was happening. Was there anything nefarious going on – that’s yet to be proven BUT I don’t know how they get out from under this cloud. They’d already had a notable accident back in April with ex-employees accusing management of cutting corners so the recent challenges are stacked on top of that. Besides, Xiaodi Hou was the brains behind the operation and with their share price tanking >50% the last 5 days, it could be tough to get additional financing in this environment and we’ve been warned – Winter is Coming. TRENDING - Gogoro (GGR) goes to India in a BIG way. GGR this week announced a partnership with Zypp Electric, India’s leading EV as a service startup that focuses on the last-mile delivery use case. GGR has already announced a partnership with India’s largest moped company Hero so we are now seeing them tackle the commercial market with this partnership. Speaking of which, it also looks like GGR is also ready to enter the Indian two-wheeled market with its own scooters, formal announcement likely to come in the coming days – Slow and steady win the race? I wish the US would lean into electric mopeds in its major cities, but in order to do that it would mean that legacy auto would need to stop increasing the size of the vehicles they launch every year. - The continuing drama that is Faraday Future (FF). This is another company where I ‘heard’ things and I have to admit that the journo that wrote this deep dive for Bloomberg seemed to get most of it right. There were details I didn’t know about that he’s covered in the piece but the drama is still unfolding. The most important question that needs to be answered - Where does FF get their next bundle of cash? Who will trust them now that they’ve burned through ~$3B in cash AND with the US govt now following them much more closely. I told myself I’d never say never with FF since they seem to have so many lives, but seriously what’s their next play, especially if the economy turns sour? GET SMARTER - China EV Inc wants it ALL. Top 3 export destinations for EV Inc?
Belgium(which then ships to other EU locations)
Surprise! - Thailand
Thailand is determined to maintain its moniker as the Detroit of Asia. Thailand became the first country in Southeast Asia (SEA) to provide EV subsidies and is looking at further providing battery subsidies as well and has a goal of 30% of vehicles sold being BEVs by 2030. That would be about 200K vehicles in 2021 and a fraction of what China sells in a month. This creates a HUGE opportunity for EV Inc since there are so many brands that can ship product to the region RIGHT NOW. Up until now, the SEA ICE sector has been dominated by the Japanese, but their slow move to EVs is the opening that the Chinese brands are looking for in hopes of dethroning ICE Inc. QUOTED/INTERVIEWED The Atlantic: I had the pleasure of speaking with Michael Schuman for his latest piece about Tesla in China. Michael takes a deep dive into how much Tesla and China need each other, at least until China doesn’t need Tesla anymore, which won’t be anytime soon, especially if 2023 turns into a challenging year for the EV automakers there. You can find the article here and it’s worth the click. INTRODUCING - The Zeekr 009 MPV. Yep, Geely did it. They followed up Zeekr’s super sporty coupé with a family trickster. The 009 will have two versions: WE & ME with the ME version being top end. It’ll be the first production vehicle to use CATL’s Qilin battery CATL’s answer to Tesla’s 4680. For those that have NOT seen it – make sure to click the link. That grille. They wanted to make sure to outdo Bimmer enough that they could just drop the mic. And that they did. Maybe it’ll grow on me, but I doubt it. It’s also fairly expensive to it’s older, smaller cousin the 001 and will start at ~$68K and will get to >$80K for the ME version. ----------
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 Team