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China Ridehailing Victim of Common Prosperity, BYD & Momenta Mashup - SAI Newsletter 47



My family had a terrific Thanksgiving weekend! I was invited over to a friend's for a feast of turkey and prime rib and the company of some great friends. My wife and I decided to let the kids play hooky on Friday so we could go to Universal one more time before it really started to get cold here in the Jing. Then on Saturday, we had a few folks over ourselves. I did NOT cook the bird (I plan to next year) but there was a TON of food for everyone and I ate so much meat that I got the meat sweats so will try to wean myself off for the next week or so. We are in the home stretch of 2021! There’s a mad rush for sales and it looks like businesses are all impressing on their customers the need to buy early lest they get left without presents in time for the holidays. It could be that way as well for EVs as parts remain elusive to some OEMs, pushing wait times further out. 2022 is shaping up to be a key year where EVs across all market segments & pricepoints will become the ‘main course’ for most car buyers in China. With the foreign automakers playing catchup, we should see a lot of great purchase options with the abundance of choices acting as a price ceiling for most EVs. We will also begin to experience the next evolution of customer engagement in order to ensure ‘your’ brand is front of mind when it comes time for your ‘potential’ mark to make that auto purchase. COVID is clearly here to stay although how it’s managed is as varied as Baskin Robbins 31 flavors which makes international travel dicey at best and extremely limiting, especially if you live in China, at worst. The ante has been raised multiple times this year on how many LiDAR is enough. From 2 earlier this year by a couple of EV companies including XPeng and their P5 to the just recently unveiled Neta S with a WHOPPING 6 (you read that right) LiDAR! That seems like 2-3 too many IMHO. It does indicate that costs are shrinking tremendously for hardware that supports L2-3 ADAS which should mean that w/in the next 4-7 years basic ADAS & safety systems will trickle down to even the most basic, low-priced vehicles. And I am talking globally. This should also mean that V2X will become more ubiquitous as cities look to explore ways to manage safety and traffic flow better in and around their cities. 2022 will expose to us the companies that have the ‘Emperor’s New Clothing’ syndrome as they struggle to get Job #1 on the road either because of the lack of/misuse of funding, bad management, or both. There’s still a lot of investment into the space but not so much on EV companies unless your name is Xiaomi, Apple, or another high-profile brand. We will also see new brands launch, as I’ve been told there could be one launching even before the end of this year by a very notable automaker in the ultra-luxury segment. I was interviewed for an article about Lotus and what they’ve been up to. Well, we know that Geely has acquired them and Geely plans to invest a bit into Lotus and expand its portfolio to include China-built SUVs. That’s a non-starter for many Lotus loyalists but it’s also partly why Lotus has always struggled as a company, not enough customers. Geely plans to change that. For those interested in reading the article, you can click here. I plan to spend the last few weeks discussing in a bit more detail some of the more memorable moments to 2021 and what I expect should happen in 2022. Since China EVs have now crossed borders, we’ll have a more global view as well. And it’ll likely bleed into the pod. Speaking of which… EVs & More will back at our normal time this week – 12/2 Thursday, 9pm EST/12/3 Friday, 10am China local time. To join the room, you can follow me at: @sinoautoinsight and/or Lei at: @leixing77 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. TESLA NEWS - An MIC MY Performance just launched in China. The ‘Performance’ nomenclature means more than just a boost in acceleration although that’s there. It also means an upgraded Ryzen graphics chip from AMD that should make the infotainment system more powerful, laminated glass for noise insulation, and an NCMA battery vs. the LFP battery in the standard range. The chip upgrade is important because there were complaints about how the infotainment system interacted with local Chinese apps. The rich keep getting richer. IN THE NEWS - The NIO ET7 takes one step closer to Job #1. From the sound of this article, the ET7 is going through EVT or DVT (which stands for Engineering/Design Validation Testing). The final step will be PVT (Production Validation Testing). NIO will run some pilot vehicles (still not saleable to the public) to ensure that they can begin to fill the supply chain with parts that (also have to) come from production tooling and are good to go when they send the first production vehicle AKA Job #1 down the line. Exciting stuff for NIO since this is their flagship sedan to accompany their ES8 SUV and now that they’re shipping internationally, lots of eyeballs around the world are watching. If the ET7 gets the same or better reception as a production vehicle as it has since its reveal, then it could very well compete toe-to-toe with ABB on their home turf - Germany. I, for one, will be lining up to get my hands behind the wheel starting in Feb/Mar 2022. - Is China going to cripple the ride-hailing sector by (over)regulating it? If there’s no chance to be a monopoly, caps are placed on potential profits while driver benefits increase, is ride-hailing still attractive to the major players here in China? This sounds more and more like taxis for the digital world. If part of a platform, ride-hailing is still an attractive business to accumulate an install base, if only to break-even and cross-sell other mobility products to said install base. That means Didi is still the 800lb gorilla due to its footprint in the tier 1 cities, but it means that the sector could really fragment from that point on. - Alibaba’s version of a slow-moving autonomous delivery vehicle. Yes, Alibaba has one too to compete against Neolix, Meituan, and JD’s versions. They started pilots on university campuses and for Singles Day, 22 delivery drones delivered 50K packages across 27 dorm buildings at Zhejiang University, eliminating the need for students to head to designated delivery depots to pick them up themselves. If you’re wondering if the market is big enough for multiple winners, here are some basic stats: 4-5K universities, 300K large-scale neighborhoods, 100K parks in China. I’d say the answer is a resounding YES. TRENDING ON SOCIAL MEDIA - A potentially MEGA mashup. BYD & Momenta join forces in hopes of creating an AV juggernaut to compete against AutoX, WeRide, Pony, XPeng, NIO, and others. It’s the same Momenta that GM invested $300M in this past September. BYD was eerily quiet on the AV front and now it seems they believe that pool to be too crowded and have decided that they’ll tie their robotaxi fortunes to the same AV startup that GM did. This is a big coup for Momenta since GM & BYD are two of the OEMs in China with significant (and growing) sales. BYD also plays hard in the fleet vehicle world with its electric buses and taxis. This deal pushes Momenta toward the front of the line with regard to how many vehicles their HW/SW stack could occupy. And all else being equal, it’s the data that puts you out front, right? - Speaking of Auto AV mashups. WeRide just keeps shaking those hands and signing those contracts. This time, they’ve inked a partnership with SOE GAC’s Aion brand. GAC’s OnTime ride-hailing service will use the WeRide equipped Aion S to begin testing and collecting data. They plan to use this partnership as a jumping-off point for GAC’s robotaxi service in the future. Gasgoo does a good job of deep-diving WeRide in this article so click the link if you’d like to learn more about them. - Faraday denies that it’s delisting or that it’s going to have any problems providing a compliance plan to NASDAQ about filing its delinquent 10-Q. That report from J Capital alleging financial fraud sent Faraday for a bit of a loop. Would you expect anything less than controversy leading all the way up to Job 1? GET SMARTER - Remember when I said that a chip shortage that lasts longer than a few months isn’t actually a shortage, but a capacity issue? Well, THIS. The Chips Act. So it ISN’T a shortage? $52B to subsidize the increase in manufacturing capacity in the US. See… - An MIT professor is short solid-state batteries. But he’s also working on an alternate battery technology so, why should we believe him? I don’t think there’s anyone who thinks that solid-state battery commercialization is around the corner but to say that mass production and the cost downs needed for solid-state batteries to make EVs affordable for all won’t happen until well after 2030 is a bit of a stretch. Companies like QuantumScape and BrightVolt are working on commercializing them. But if QuantumScape isn’t currently forecasting revenues from battery sales until 2027, should we be looking to solid-state batteries as THE key technology that puts EV adoption over the top? I talk mobility every week with all types of people. Scientists, industry folks, sales folks, engineers, and other consultants, and when we get to EVs, it’s always followed by a discussion on batteries. With batteries, for the foreseeable future, LFP will be bolted on to most EVs around the world. Many of those supplied by CATL. But what’s next after LFP? Will there be another competing technology that will ape solid-state’s anointed status? We have to remember when talking about batteries, there are other dimensions that influence convenience, cost, and ultimately adoption. There is also R&D spending going into wireless charging, fast charging, and battery swapping. If each one of those things gets a lot better in the next 9 years will solid-state batteries even be a ‘thing?’ I am not so sure – mark me as one of the skeptics though. With all that said, many of the people I respect wouldn’t have forecasted 3M EV sales in 2021 here in China had you asked them in 2018 but here we are. Solid-state batteries could be THE gamechanger. There are companies like Toyota, Volkswagen, and now Nissan that are betting on it. BFD OF THE WEEK - BMW getting out in front of GigaBerlin. BMW has started delivery of the i4, what it hopes will be a Tesla killer or more specifically, a GigaBerlin Tesla killer. Effectively, it’s a 4 series with the engine ripped out and a battery pack bolted onto the floor based on the 5 minute google search I just did. I’ve reached out to some folks that should know more about it and will update next week if I am wrong. It seems to me that BMW heard some footsteps from Berlin and thought it prudent to get their product into German hands before the Berlin-made Model 3 ate its lunch. The i4 is significantly more expensive and I already see the potential for it to be bug infested seeing is that it’s three months premature. Bugs that likely won’t be able to be fixed OTA either. I applaud Bimmer for seeming to have some urgency now but will it matter? The Model 3 is selling like gangbusters in Germany, reaching the #1 spot for plug-ins in October and 26K total through three quarters. If you’re wondering, 1 in 4 Telsa’s sold in Europe are delivered to customers in Germany. Just saying… INTRODUCING - Alpha Motors shows off another EV at the LA Auto show. There’s still not a lot known about Alpha Motors and whether or not they’ll actually bring any of the vehicles they’ve showed off including this new SUPERSAGA performance sedan, to market but they sure make ‘em pretty. All of their designs seem to have the right amount of retro and new tech. WANT. JUST THE NUMBERS - 100. <