Cybertruck Sighting, BYD long India, Robotaxis make their case in the US - SAI Newsletter 28

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Sasquatch spotted! Or in this case, the first pre-production Cybertruck off the line. Tesla patted themselves on the back this week when they posted a picture with the AustinGiga team surrounding what looked like the first Pilot Cybertruck to roll off the line. This was 4 years in the making but still highly anticipated. No surprise here – the Tesla STANs all believe it to be a gamechanger while the FUDsters all think it’ll flop but I get more into that in a post below. An aggressive price cut (~$10K) to bring the starting price back down towards $50K for Ford’s F150 Lightning also happened this week, the utilitarian customers looking for function over form will now have a choice when the time comes to buy a new truck. We are seeing more and more of the US waking up to its global EV ambitions. Roll those sleeves up because there’s a ton of work that needs to be done from both the private and public sector if EV adoption is going to happen at the speed we need it to. The ultimate cure is to have much more product from all players involved. Halo products that get people excited but also, and I’d argue more importantly, products that get the job done that are priced <$55K. And I am talking about a range around 300 miles. Notable: GM hired an outsider with experience in the automotive sector to be it’s new CMO. CMO = Chief Marketing Officer. From what I’ve recently heard, Norm de Greve is a stud. Let’s see if he can jumpstart GM’s efforts to digitize their marketing efforts in a major way. How will he work with Mike Abbot? Digital marketing is so much about data, analytics and extracting insights that you’d think they’d need to work very closely together, right? And why aren't more OEMs refreshing their management? To me, it's a losing strategy. The folks that got you into the mess aren't likely going to be able to get you out of it. CHINA EVs & MORE This week’s live show will be Friday, 9am EST. For those interested in joining, look out for the Spaces room Friday morning. For those that want to ask questions, feel free to contact me directly or send them via email and I’ll do my best to answer them during the show. 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. Also, if there are any companies you want our thoughts on, let me know. QUOTED - Wondering about the ‘how’ on China speed? Car News China: This is a fantastic article that explains in great detail how some China EV Inc are so fast at iterating, especially relative to their western counterparts. Even Tesla whose speed is astounding has had troubles keeping up the pace as evidenced by the several price cuts they’ve made for their products there. A MUST READ for those that can’t get their minds around how fast the competition moves in China. BYD - BYD is looking to further expand its manufacturing footprint in India. India has a requirement that countries that touch its border are required to find domestic partners if they want to build cars locally, in this case BYD’s venture partner – Megha Engineering. BYD already has a history with Megha building electric buses with them in India since 2013. At just less than 4M units sold in 2022, India recently overtook Japan to become the third largest passenger vehicle market in the world behind China and the US so it’s a prudent move for BYD, especially because their products and price points are better suited to India where per capita incomes are still lower than in many western countries. BYD is also already shipping kits to India and doing final assembly for a few vehicles as well which gives them quite an advantage over other China EV Inc. And if you’re wondering about this new-ish India law requiring partners for companies from bordering countries, it’s a law targeted directly at China. - Wang Chuanfu, the #1 CEO in China. This, for the 2nd year in a row as ranked by Forbes. Why he’s not recognized by western media as one of the best CEOs in the world is beyond me. It’s getting less & less each day, but those who’ve not heard of Wang Chuanfu or his company BYD will most likely know who they are very soon because they’ll see or experience his products on their roads. TESLA - The Dojo training computer is real and coming online soon. Tesla has begun to produce to the supercomputer it’ll use to train its autonomous driving function – FSD. It’s one of the 4 pillars they say will be key to solving ‘autonomy at scale.’ The four are:

• An extremely large dataset

• Neural net training

• Vehicle hardware

• Vehicle software

A key difference between the before and after. Using Nvidia silicon. The Dojo supercomputer now uses silicon designed by Tesla themselves. If you’re wondering what differentiates Tesla from a lot of Legacy Auto besides it’s market cap, this is one of the major reasons. That market cap is based on Tesla being one of the leaders in autonomous driving in the future. At least that’s what the traders are betting on. - Cybertruck: A hit or a bust? I’ve no idea what the MSRP at launch will be but what I can say with confidence is that it’ll find plenty of buyers in the US if it’s say <$70K. It won’t be a mainstream hit but it wasn’t supposed to be if you look at the design. It’ll be a niche vehicle that reinforces the edginess of the brand while moving it into a new segment, one that is foundational to the US’ Big Three. It’s gotten the attention of Ford, GM & Ram whose F-150, Silverado / Sierra and Ram trucks command share and profitability for the legacy automakers. Here’s the BUT though. It won’t have appeal in Europe and although I think it would also sell well in China, there will be import and regulatory hurdles to get it sold there. Not to mention large trucks are still banned on many of the main roads in the tier 1 cities, where much of that demand would come from. Just like the panel gaps and the overall build quality of their MY & M3, no one is going to care that it took them 4 years to launch. Oh, and BTW, with the manufacturing hell they went through and what Tesla HAD to go through to get the Cybertruck to production, Tesla’s book of ‘lessons learned’ is now massive and will help them as they launch more products, say a Model 2 and push further towards 20M by 2030. NEWS THAT GOT OUR ATTENTION THIS WEEK - Joann does a good job outlining a necessary important step to moving robotaxis closer to commercialization, but there’s something I believe she omitted that I’d like to add - “Robotaxis face their moment of truth …in the U.S” Like EVs, AVs have become a global race with China and the US leading the pack by A LOT. The US doesn’t have as many horses in the race so if they’re not given the opportunity to ‘safely’ test their service, it’ll hold them back. As they are want to do, China is moving forward quickly and not looking back. I had the pleasure of riding in 4 robotaxi services while in China in April: Baidu Apollo, Pony, QCraft and DeepRoute. I’ve previously ridden in a WeRide and AutoX service in China and let me say that there are numerous pilots already launched in several cities across China including in Beijing, Changsha, Guangzhou, Shenzhen and Shanghai with a few of them having no safety driver while also being allowed to charge a fare. I rode the Cruise robotaxi the last time I was in SF. I’d love to ride the Waymo, Motional and Aptiv services here in the US so if there’s anyone that can ‘hook me up’ send me a note! Comparing and contrasting my experiences: My Cruise experience was at night. Each of the China rides were in the day. San Francisco with its hills and many one ways makes for what I believe to be a generally easier time than most if not all cities in China that I tried these services which are Guangzhou, Shanghai and Beijing where at any moment you could share the road with bicycles, delivery people, small cars, people driving on the shoulder and cars that will cut in if they get a sliver of an opening. The Cruise vehicle also did not go faster than 35 MPH. In fact, according to the Tom Tom Traffic Index, SF ranks 3rd in slowest average traffic in the US behind NYC and DC. With that said, I believe the Cruise system and the Waymo systems are VERY impressive. But unlike some consultancies that have the gall to rate services they’ve never ridden, I feel I have some authority on this matter because I have. For those global AV followers. Before quoting or referencing these reports, check the receipts lest you risk the loss of some credibility. - Arkansas, home of Walmart and global lithium hotbed? ExxonMobil is getting into the lithium prospecting business and one of their largest projects potentially is a refinery smack dab in this southern state that was home to the Clinton’s pre-presidency. The plan is to be able to refine 75 – 100K tons of lithium / year, it’s going to be a massive undertaking. That capacity covers a double digit percentage in how much lithium was produced all of last year globally. There’s concern from the local leadership that the area isn’t ready. The project and a couple others being discussed including a mine could employ up to 6K people and 1.6K trucks and with Exxon and the Koch brothers involved – they don’t normally make too many risky bets – the chances of striking seem to be high. I guess lithium is our generations gold rush. And it’s a necessary step for those that are looking to de-risk. And the investment is going to transform that town that used to be bustling due to the oil industry. TRENDING ON SOCIAL MEDIA - China EV Inc at the Festival of Speed. EVs have been coming to the Goodwood Festival for a few years now but it was this year that it seemed to be dominated by Asian brands, specifically those from China, even if they are disguised as British or Swedish brands. These brands are showing off their wares for the right hand drive (RHD) British market but remember that RHD are also suited to Oz, HK, Sing, Thailand and Japan even if they might need some mods to be street legal in those countries. The bottom line is that there’s plenty of demand for EVs in those markets as well which means that MG, Polestar and others wanted to make sure to impress while spending the weekend in the UK. - Most direct opinion of the week. Someone doesn’t like the Cybertruck. It's this week's up top graphic. For the record, I do NOT think that Cybertruck is ugly. But I don't think it's that pretty either. - The UK has an EV pulse. Thanks for a recent commitment from the Tata Group to invest £4B to build a gigafactory that will eventually have a capacity of 40GWh and come online in 2026. This is a significant win for the UK which has struggled to attract FDI from China EV Inc and China Battery Inc. Tata also happens to be the owner of two of the most prestigious UK automotive brands, Jaguar and Land Rover. It could cost taxpayers up to $500M and it’s too early to tell whether this creates a domino effect as others begin to pile in to invest in the region. From what I was told by several Chinese EV companies that are considering building capacity in Europe: The combination of (being a) RHD market, the high labor costs and (most importantly) the uncertainty that’s been caused by Brexit made the UK not as attractive as some EU countries to build their regional beachhead. BY THE NUMBERS - 3x. That’s how much 1st half of 2023 profit could grow for BYD on continued growth in NEV sales in China and the ROW. Is anyone even close to what BYD’s doing? _________________ 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

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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.