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BYD's IRA End Around, India's Built in 90 secs - EV Explosion, Xiaomi is a GO - SAI Newsletter 33



 

Plans are starting to come into focus for Munich and the Detroit Auto show and I am looking very forward to heading over and attending some of the events. For those that plan to also be there, my dates are Sept 2nd – 8th so get in touch. Also, I made a HUGE mistake last week by talking about having a pint, in Germany it should be ein pilz and specifically in Munich, which I’ve never been, should be ein Maß. Thank you, Jeremy, for correcting me. For those that have emailed me with recos, thank you. I will hit up as many as I can (as time permits). The reco I am most excited about: BMW Museum. UAW negotiations update: UAW President Shawn Fain seems to be picking on Stellantis lately since they were the most profitable US legacy this first half of 2023. Tavares has a well-earned reputation as a cost cutter which goes against what the UAW is trying to achieve from negotiations with the Big Three which are record wages, better benefits and job security. It seems like an unstoppable force vs. an immovable object scenario that if allowed to build, could lead to permanent scarring at a time when neither side can afford it. My instinct tells me that the UAW will still strike at all three companies, with the Detroit Auto show as the backdrop, in order to send a message. What that message is I am still not sure, but singling out the most profitable company doesn’t seem like a coincidence. BIGGEST NEWS OF THE WEEK As for news, there’s been a TON of recent Doomsday reports out of China. The country IS struggling to get out of the Zero-COVID with high unemployment for the 16-30 year old’s, a real estate bubble and foreign direct investment (FDI) at what could be considered historic lows. If you’re looking for a link or a particular article, just google ‘China struggling economy’ and there will be plenty that pop up. What’s key to separate is conflating China’s structural issues with its current challenges which some analysts are doing. Others are just lazy and are just piling on since it seems to be consensus across most media outlets and they don’t want to miss out on getting their share of clicks. The 2nd half of this year is going to be VERY TELLING. EV sales (domestic + exports) will point to how the economy is recovering (or not). I have a feeling that by the end of this year, as vehicle exports from China continue to explode, the voices in the EU will get louder wondering how to protect the domestic auto industry from Tesla and China EV Inc. They may also have to finally concede and implement their own version of an Inflation Reduction Act. With 2035 (for the EU) and 2030 (for the UK) looming large and seemingly around the corner, they may have to back off the commitments to rid themselves of petrol and diesel fueled vehicles by those dates or potentially fail miserably. I’ve spoken with old staff and co-workers, and they seem to be head down, working hard as more pressure to keep your job continues to build. With that said, I’ve also learned that the Doomsday forecasts are never as dire as they’re made out to be. This one does feel a bit different though. CHINA EVs & MORE (CEM) This week’s live CEM is scheduled for Friday at 9am EST. Please do join us and bring with you an appetite for knowledge and lots of questions. We’ll talk about July sales and more. If you can 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. BYD - Inflation Reduction Act (IRA) End Around? BYD is in talks with a Korean automaker (Ssangyong) to jointly build cells in S. Korea for domestic demand …and eventually (likely) ship cells to the US that should qualify for IRA subsidies. Is this an attempt to enter the US through a backdoor? You better believe it! This is the risk the Biden administration had to know about. Rather than investing in the US (to create US jobs), some companies would attempt to go around the IRA restrictions and still be able to get the money. With all the funding announcements so far in the US, the current math for investment in the US still significantly outnumbers what’s been missed and invested elsewhere. NEWS THAT GOT OUR ATTENTION THIS WEEK - The basics of eVTOL. This is going to be a thing. Right now, it’s more regulatory and proving the concept. This form of transport makes too much sense. It increases competition with traditional autos and what might’ve been something that would’ve needed to be preplanned could be as easy as waiting to be picked up like you would an Uber or Lyft. The tech is already mostly available but as the article states, determining where to land and the infrastructure to support multiple take off/landing each day / hour will take some investment and a robust thought process that would include city to city, city to suburbs, suburbs to city and suburbs to suburbs. This type of ridehail is going to be right up a company like Uber’s alley since the eVTOL won’t likely drop you off at the exact location you’ve pinned which means you may still need a ride to your final destination. This would create that ‘last mile’ element to the trip so what would be better than to hail a ride that would book a multi-modal trip based on your priorities: shortest time, least expensive, multi-modal, etc. We are still in the very early innings but once there’s been a handful of successfully launched pilots, look for many other global cities to jump on board. I envision that by 2035 eVTOL will be pretty commonplace in a lot of big(ish) cities with perhaps the exception being China, where it’s rumored that the military control >80% of the airspace. The irony would be that Chinese eVTOL companies would be able to operate more freely outside of China than inside. For those new to eVTOL, this WSJ interview with Wisk, an eVTOL startup that’s funded by Boeing is worth the few minutes to read. - 90 seconds. That’s how long it takes for an electric scooter to be built in a factory in Hosur, just outside of Bangalore. As India tries to clean up its skies there’s been a major move into a clean energy phase of mobility with electric mopeds becoming a larger sale of 2 & three wheeled vehicles. India may have become the 3rd largest passenger vehicle market in the world last year (selling about 4.3M units), but that was still less than the >5M scooters sold, a growing share being electric. The EV market is projected to reach $100B by 2030 (2, 3 & 4 wheeled) so as need evolves into opportunity, we will always see people, companies and innovation emerge. We’ve had opportunities to help some of these nascent companies in the early days but we’re now ready to engage a few to help them address the market need and become difference makers for the region. DO NOT SLEEP on the OTHER EV Revolution. - One step forward…. On the heels of the tremendous win for robotaxis in SF, a Cruise robotaxi was involved in a car accident of which the other vehicle was a firetruck. Cruise has agreed to take half, yes half, it’s robotaxis off the road while the accident is investigated. As I’d mentioned before, there will be growing pains as more robotaxis enter service and this is just one of them. It looks like no one was seriously injured and I know exactly where in the Tenderloin the accident happened. The Tenderloin is a bunch of one ways and hills with a lot of people, both homeless and normal pedestrians, fill the sidewalks so for SF, it’s one of the more hectic traffic areas. The fire truck was in the oncoming traffic lane as it was speeding to an emergency so that’s not something that Cruise’s (or any other AV startup’s robotaxis) has confronted previously so not a ton of data on that scenario I bet. But there are NO excuses, especially as Kyle leaned into his robotaxis being safer than human’s driving. Just wait till these robotaxis see a Michigan winter. TRENDING - Xiaomi is a GO. The Xiaomi EV that is. The domain has been secured along with, more importantly, the manufacturing license for China. These things are worth more than gold nowadays since they’re not being handed out very often anymore as concerns of overcapacity loom large during this economic slowdown in China. For those that aren’t familiar with Xiaomi, them building a car is like …Apple building a car. Here is my assumption. Lei Jun, founder and CEO of Xiaomi knows what it’s like to compete vs. Apple. He knows what’s at stake with this HUGE gamble entering the EV space so my belief is that his vehicle will be pretty feature rich and likely want to pick a fight with Tesla when it launches. The first product is a sedan that will go toe-to-toe with the Model 3, which by the time the Xiaomi EV launches will likely be about a year into its refreshed vehicle. I see Xiaomi and Ji Yue as setting the pace for the EV startups with real tech DNA that will be entering the market over the next year or so. Huawei is driving a lot of the features that are being launched in vehicles currently, but I see Xiaomi and Ji Yue (they were Jidu BTW) trying to go NEXT LEVEL on those features. INTRODUCING - Lamborghini Lanzador EV concept. Lambo’s 4th EV concept that likely points to a close to production future vehicle was intro’d at Monterey Car Week (which I should’ve gone to BTW) and the best way for me to describe it is if the Urus and Aventador had a baby. It’s got HUGE tires and high ground clearance. One of the only stats released – One Megawatt of peak power so it’s gonna be heavy and still move. - Other debuts from Monterey. They came from Fisker (Rōnin), Maserati (MCXtrema), Ford (Mustang GTD), Pininfarina (e-LUV) and a few companies you’ve never heard of. The Ford and Maserati were NOT electric but still pretty bad ass. The Fisker Rōnin was Best of Show IMHO. Oh, and I’d take that Rolls Royce Droptail too. BY THE NUMBERS - 650K. That’s the bogey that Zeekr is targeting in sales by 2025. They got to 72K in 2022 and with the launch of the Zeekr X, they’ll more than double that number but 2025 is right around the corner so I am not saying impossible but that would likely have to mean that foreign legacies demand, at least one or two of them, falls off a cliff. This reminds me of Lotus, which sold 576 cars in 2022. Yes, not even 1K but have targeted 150K by 2028. If Lotus anywhere close to that figure, oh boy that would likely mean they have taken from Land Rover and Porsche. A lot. _________________ 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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