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BYD - F Brand launch imminent, Tesla - the New Government Motors, NIO's Big May - SAI Newsletter 22



 

The school year is winding down for my boys and we’ll be into their summer break by end of next week. We will do a few trips this summer, including a couple long road trips, I am thinking about renting an EV for one of them. I’ll map the trip out to see how inconvenient charging will be, how expensive the rental will be and how much I want to lollygag as we try to log 8-9 hours on the road each day. This is the current situation for many EV owners in the US. whether you own or rent. We aren’t that close to where we need to be on the charging side just yet. Let’s revisit this next summer to see if: 1. I’ll have an EV myself yet 2. Whether I’ll need to do the same calculus for major road trips. My gut tells me that certain corridors will have plenty of newly installed (fast) chargers in place but that many will still not. There’s currently a multi-pronged issue with EVs in the US with charging times still being a major hindrance for those exploring an EV as their next vehicle. There is a Chinese startup – Greater Bay Technology - that’s working on reducing charging times to 100% complete w/in 15 minutes for a 500km (310 miles) pack. It also claims that it can heat a battery pack from -4 degrees to 77 degrees F in under 5 minutes to maintain range and fast charge in all weather conditions. I’ve mentioned this before, but it bears repeating. The amount of investment and attention the EV/AV/battery space is getting points to the potential for innovations coming out of each of these sectors in the very near future. I think w/in 10 years range, charging times, battery pricing, L4 ADAS will (mostly) be resolved and we’ll also see new ‘mobility’ business models begin gain traction which will give many people a real option besides vehicle ownership. You'll also notice that I thought that BYD deserved their own heading since they seem to be making news as consistently as their biggest competitor Tesla. CHINA EVs & MORE For those interested in joining the live show, we are back to our normal time / day this week. 3pm EST, Thursday on Twitter Spaces. 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. I’ve just posted episode #110 and we’ll get #111 posted this week as well if not #112. Apologies for getting behind but we’ll make up for it. INTERVEWED/QUOTED - WSJ. I’ve spoken with the Wall Street Journal in both Asia and the US but it’s always been either the Tech or Auto journo that’s contacted me. This time it was Greg Ip, the Chief US Economic journo for the WSJ. He listened to the Sincocism pod and wanted to ask me some questions, many of which the answers to he’s outlined in this article. Another important moment in history for me – I kinda swore in a WSJ article! Click the link to check out what I said. BYD - As people continue to pay attention to Tesla, Wang Chuanfu and his team are just out there getting it done. 53 markets and counting. Coming to Italy. Dethroning VW brand in China. Shipping >200K units each month so predictable you can set your watch to it. If and when Tesla ships its long rumored <$20K Model 1.5/2, it’ll be met in most markets with one or two products from BYD. If you’re wondering about whether their cars are any good? I can tell you that I drove 6 of them (including a Denza) about 2 months ago and the quality, fit and finish, performance and design will match or beat everything in its price segment and many products above it. But you don’t have to believe me - BYD is the number one EV brand in Israel, Thailand, Brazil, Colombia and counting. - F Brand launch imminent. How do I know? They registered their Weibo account as Feng Chang Bao and SF SUV rumored to be launching this month. Man, BYD just aren’t letting anyone get any breathing room. It's always been about social media. TESLA - Tesla recently updated their pricing in the US to now show that ALL versions of their Model 3/Ys will receive the complete $7.5K tax credits from Uncle Sam under the Inflation Reduction Act. The funny thing is, no one I've spoken with, be it analyst, journo or others can tell me how that worked out since some of the batteries on the standard range vehicles will have Chinese cells in them. I am certain there’s a really complicated formula that the CATL / BYD / Tesla folks lobbied Washington for which makes understanding the tax credits more difficult than just +/-. And if Tesla is receiving full credit for their EVs, will that mean that Ford, GM and others selling in the US but using non-US made cells / modules / packs should also receive the entire $7.5K tax credit? Manchin must be apoplectic. If I am wrong or misspeaking because the cells, components, modules and packs are entirely manufactured in the US or by ‘ally’ nations or will be moved in order to receive 100% of the credits, sincerely I apologize. Other than that, I’d love to see a spreadsheet that gets us to $7.5K in any or all of those parts are being shipped from China. - Tesla, the new Government Motors? When GM went bankrupt in 2009, there were jokes that GM stood for Government Motors. Benchmark Minerals forecasts that Tesla will receive $1.8B in production tax credits for building it’s cells, modules and packs in the US. What should we call them? Compare that with GM who should receive about $500M and Ford which is bageled until 2025. In all seriousness, this is what the inflation reduction act (IRA) was meant to do. Reward those that are able to transition quickly or are already doing what’s needed domestically in the support and manufacture of EVs. This also creates a tricky situation for the legacies and gives Tesla a ton of flexibility to keep the pressure on them by continuing to lower costs while maintaining margin. GM and Ford better learn how to move much, much faster if it wants a larger piece of the IRA pie. NEWS THAT GOT OUR ATTENTION THIS WEEK - NIO and Shell trying to make swapping work in Europe. NIO has already launched 16 swap stations in Europe and now it looks like they will work with Shell in both Europe and China to roll out more. They target 100 joint swap stations by 2025 in China and more in Europe. The current scorecard: A not insignificant 1,403 swap stations in China as of May 2023. - Morgan Stanley (MS) downgrades CATL. 800lb gorilla is feeling the heat due to many EV companies moving to a dual sourcing strategy for their cells as well as the 2nd level Chinese battery cell manufacturers cutting price in order to take share from CATL. I’ve mentioned this in previous newsletters but it bears repeating. OEMs don’t like suppliers having the advantage in the relationship and they’ll do what they need to in order to push the power dynamic back in their favor and this is a case in point. Some EV makers believe that they may be too reliant on CATL for their cell needs. At least that’s what MS seems to think. - Could e-fuels become a thing for clean energy vehicles? First of all, are they clean energy? I’ve read enough about electrofuels to be curious to know more but I think like hydrogen fuel cells, it’ll likely be commercialized enough to be a niche fuel that can be used by a small fraction of vehicles in the future. What climate scientists want to do is reduce CO2, which efuels don’t do, they go for status quo which ultimately could be its fatal flaw. I think it could also become a thing, more of one at least, for aviation. Since weight for planes is so important, batteries on big airliners would be impractical. Efuels could be an alternative to electrifying aerospace while not contributing any further to climate change. - Four people killed as VW ID Series vehicle crashes into a barrier in Hangzhou and catches fire. The details are still murky since it’s not clear if they died during the crash or were trapped inside and died because of the fire. They will likely stay pretty murky since it’s a crash in China which doesn’t consistently update details for serious accidents. What is known is that China requires a vehicle battery management system to not catch fire for at least 30 minutes in crashes at less than 30 mph. How the OEM can ensure that doesn’t happen, I have no idea. TRENDING ON SOCIAL MEDIA - NIO finally turning a corner? Morgan Stanley published a note highlighting confirmed orders for the refreshed ES6 made up ~35-40% of new orders in May. The ES6 also happens to be NIO’s least expensive SUV and along with the ET5 would have the best chance to be their 'high runners,' or those products that would make up the lion’s share of their sales volume. One month does not make a trend but it’s pretty positive news for a management team who’ve struggled to grow sales in any significant way over the last 18 months. Let’s revisit in about 30 days. - With EVs, it could be history repeating itself. Niall Ferguson is a Scottish historian, writes this opinion piece about how we can look at transportation history in three phases: Steam, ICE and now EV and how the Chinese perhaps play the role of the Japanese during the ICE phase. He breaks down each of the major factors at play: exports, batteries (and rare earth metals), chips and how things may play out similarly this time as in the past. It’s an interesting take from someone more versed in what’s happened in the past then how the future might play out but worth the read nonetheless. INTRODUCING - The Volvo EX30. The EV for college grads. Starting at $35K. This could be a winner for the Swedes (via China of course). It’ll come with a 69KWh which should get you ~250 miles of range. The top end version scoots, going from 0-60 in ~3.4 secs. I like it. I like the price a lot though. - The Apple Vision Pro (forward to 1h 21m if you want to ssee the intro). As an Apple alum (and fanboy), I ALWAYs try to tune into the keynotes for WWDC and special product events. I was very impressed with that I saw but as an enthusiast, I try to take a day or two to let what was intro’d marinate and reflect on whether it was truly that impressive or not. After now having spent a day to noodle on it and reading a few overviews, this one being one of the best I think it’s pretty damn cool and something that will push the segment forward by a TON. With the eye watering $3.5K pricetag though, it’s not something I’ll add to my repertoire anytime soon but I could totally see in a year or so adding it to my stable of Apple products that allow me to stay productive, entertained and informed. BY THE NUMBERS - >15M units. With global EV sales in 2022 of 10.82M, last year did a great deal for China to reach 15M total NEV owns since – ever. The US is still years away from hitting that milestone if we’re keeping score. _________________ 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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