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Ford Keeps Talking, China EVs & More is 2 Years Old, Tesla in India - SAI Newsletter 20



 

Ford’s Capital Markets day was this week and GM couldn’t let them get all the attention, so they dropped an electric Escalade bread crumb on us during Ford’s event. I write a bit about it below. Things are starting to heat up again in the US between the Big Two and I think it’s pretty cool – any competition between them should mean that we as the consumer get better products with more features at a lower price. If Stellantis wants to get involved with RAM and Jeep brands, we welcome that too. GM and Ford both see this moment in the space as a real opportunity to define who they are for the next 100 years. In the US, their strategies seem very clear. The only problems? Companies named Tesla & Hyundai / Kia. Unfortunately, the US EV startups that were supposed to push them: Lucid, Rivian, Lordstown, Faraday Future, Indi Motors, Fisker, Canoo, Vinfast, Lightyear, Arrival, Aptera all have tremendous challenges they each still need to address, with capital or more accurately a lack thereof being the most pressing. Most of these companies haven’t even gotten to Job #1 yet. For those wondering, Job #1 = auto speak for the first, saleable production unit that rolls off the assembly line. It’s the culmination of a ton of hard work usually from a few thousand people and it’s THE key milestone that helps validate your product and in the case of these startups – your business. GM & Ford have a lot on their plates outside of just launching their new EVs. They are spending billions in order to secure lithium and other rare earth metals they’ll need that aren’t sourced by Chinese mining companies or refined by Chinese refineries. GM did that earlier with its massive investment in Lithium Americas and Ford followed suit this week inking deals with a few mining companies. The other major news of the week was the Chinese govt ban on Micron silicon being used in critical infrastructure due to national security concerns. This ban only technically limits large firms from sourcing Micron memory but its effectively a systemwide ban since most Chinese domestic companies likely won’t touch Micron silicon or face possible backlash. We were waiting for a response and here it is. This is the initial response from the Chinese govt, but they’ve likely scripted out other responses based on different scenarios for a US response. A reminder to folks that the Micron ban is in response to the US govt’s increased pressure on boxing China out of the fabrication and purchase of high-end silicon that China isn’t yet able to design and fab themselves. According to the WSJ article, Micron’s share of revs from China is only 10% so this is more symbolic than anything – but it’s definitely a shot across the bow letting the Biden administration know that it’ll be tit for tat moving forward. Nvidia CEO Jensen Huang is trying to lower the temperature all around and is warning the US govt that any further escalations in the current chip war will do damage to US tech companies. And his net worth. Nvidia’s market cap has grown > 2x since the beginning of this year, so Nvidia ALSO has a lot to lose if they can’t sell their most innovative silicon to Chinese customers. He raises some good points but there’s a TON self-interest in his statements as well obviously. Lastly, I have spoken with some EU friends who say that policy makers are still missing the EV boat and think that since the current set of China EV Inc aren’t profitable, they aren’t a long-term threat to the European brands viability – boy oh boy they would be wrong. Pride, ignorance, arrogance, naivety and likely a bit of racism is the why. And unless there is some version of the Inflation Reduction Act for the EU put in place in the next 20-30 months, the EU policymakers are going to steer European Legacy Auto into a f’ckin’ ditch, a deep and wide one that many historic European brands will not be able to pull themselves out of. On to this week’s news. CHINA EVs & MORE If I may take a moment to humblebrag about the podcast. On May 20th, it celebrated its 2nd anniversary! I am so in the weeds with most of my other work that I don’t often get a chance to reflect on the impact of some of the content I/we produce. Luckily co-host Lei Xing did and here’s some of the numbers from the two years we’ve been kicking knowledge:

  • 120 episodes total

  • 16 MAX episodes

  • 22K downloads

  • 120 hours (7.2K minutes) of total content, that’s not including the hundreds of hours we interacted with listeners during our live show

  • Downloaded in 100 countries

  • 1.9K cities

Not HUGE numbers but these stats are just mindboggling to me - that we can reach such a diverse audience which has grown significantly since the first live episode on clubhouse. This is one of the truly global podcasts about the EV / AV / battery / chip / mobility sectors because who are we kidding, if you want to know about any of those, it’s starts and ends with what China, the US and Europe are doing in the space. We pride ourselves on being the two best resources for all of the above and it seems like a lot of the world agrees. Thanks to our loyal listeners, and there are many. We are back in the lab looking for now MAX episode guests as well as new ways to present you this content so stay tuned for bigger and better things from us! The China EVs & More live show will be hosted on Twitter Spaces at 3pm EST on Thursday. 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 - I was contacted a ton by folks / journos and other media outlets right after the Shanghai auto show and some of the content is still trickling out. Here’s a brief interview I had with BBC podcast host Leanna Byrne re: China EV market and specifically – what happened? You can find that brief audio interview here. TESLA - Tesla is headed to India? It seems India’s hard line with holding firm on passenger vehicle import duties may have paid off. Tesla has yet to import any vehicles into India due to the tariffs and have been negotiating with India to enter for at least a year plus. It seems now that negotiations have progressed far enough that we may see a MumbaiGiga in the near future. They'll need about 3-4 more if they want to sniff anywhere near the ambitious production volumes Elon keeps kicking around. If we look at this from strictly a volume standpoint, it’ll be much harder (read: impossible) for Tesla to get close to the stated 20M by 2030 goal without a significant number of Tesla’s sold in India which became the 4th largest passenger vehicle market in the world last year at 3.8M units, overtaking Germany in the process and just behind China, the US and Japan. If we look at this through our geopolitical lens, which is what this newsletter is very good at doing, we see that Tesla may see a more challenging business environment (via politics but also competition) in China in the future so in order to mitigate that and perhaps why India knew to hold firm, Tesla’s calculus on MumbaiGiga likely changed over the last several months because of their re-evaluation of the domestic competition and the continuing deterioration of the US / China relationship. Just so we’re clear – without the China market, Tesla is never going to reach 20M units globally. Not by 2030 and not likely by 2040 and beyond. But let’s just say Elon’s global domination plans rely heavily on both India and China – think linchpin. But whereever else they decide to enter, they'll have to deal with an equally ambitious and capable BYD. And that means India too where BYD ships kits and does final assembly there currently. NEWS THAT GOT OUR ATTENTION THIS WEEK - Ford capital markets day. What did we learn from Ford’s Wall Street event this week? We learned that they are self admittedly operating much fatter than their counterparts. -$7B / year fatter. This is NOT an insignificant number. Ford also forecasts they’ll lose $3B from Ford Model e division in 2023. Another BIG number. CFO Lawlor also pointed to being able to get it done as opposed to just talking about doing it. Some of the most interesting parts of the event were Doug Field’s comments below: Field said that Ford’s approach to creating EVs is radically different from its traditional strategy for vehicle development, emphasizing that software will define and control many new features – including features Ford hasn’t yet developed, but will add to existing vehicles in the future via updates. “The products we make are not living rooms,” Field said. “They are moving, working robots. And our software ambition goes way beyond deep into how our products move, how they collect data, and how they support people who are going to use them for real work. “We call them unimaginably great products, because the best things we will make are the ones we haven’t thought of yet.” He’s saying the right things here – if they are to boost subscriptions revs in any significant ways the current ideas aren’t going to push the needle forward on that stuff. Cc. to Mercedes who thinks people will be happy to pay a subscription fee to unlock the governor on their vehicle so it can go faster. Recycling existing features in hopes of generating new rev streams is just going to create animus among your customers, especially once others don’t follow suit. Positively engaging a customer is how you gain their loyalty and stickiness, what Merc is doing is the exact opposite. How I read Doug’s comments, he would like to push the team farther and harder than they’ve been pushed in quite some time, if ever. Will Jim give him that much autonomy? TRENDING ON SOCIAL MEDIA - Hyundai has its sights set on Tesla, in the US at least. I’ve been in the US just less than a year now and am still pretty impressed with how Hyundai / Kia moved up the value chain with their Genesis brand (with very striking designs BTW) that have eye catching vehicles that stand out among the angular Japanese designs, oversized German designs and the ostentatious American designs. On the mass market side, Kia and Hyundai have also done a tremendous job with their products – I was very close to buying a Telluride but there was a >2-month wait so I took a pass. It reminds of when I was a kid growing up and seeing more and more Hondas and Toyotas in and around the metro-Detroit area. It wasn’t until I traveled outside the Midwest the first few times that I realized that the rest of the US isn’t as obsessed with trucks and American brands as the Midwest and Texas. Hyundai Group (includes Kia) is moving much faster though and are poised to continue to push the limits, this time on EVs. They see Tesla really as their own formidable competition currently in the US – they sit 3rd behind Toyota and Volkswagen group as world’s largest automaker and with VW Group’s China troubles – they could conceivably move ahead of them w/in 10 years. That’s if they can turn around their fortunes in China while also elbowing out BYD who is likely to rocket up those charts over the same time period. They also sit 3rd in the US for EVs behind you know who. The momentum they’ve built is hard to stop and from what I’ve heard, and which has now been verified via this article, they are embracing risk, moving fast and are trying to break things. Bravo. Not only because they’re trying to shake off the stodgy, conservative reputation that legacy OEMs have but because it’s actually working. And it’s being reflected in their products, the reviews and most importantly the bottom line. - Why still using AM radio, Ford? We can read about all the reasons they did this but one of them that can be found in between the lines – Ford didn’t want to alienate a set of customers that will still purchase ICEs from them well after EVs get to 50% take rate in the US. There are obviously other ways to receive emergency information but a certain segment of the US population like no love listening to AM radio. It doesn’t sound that challenging re-activate it so it’s a win-win for them. No harm no foul. - Detroit: EV charging capital of the …Midwest? That’s what is a goal being outlined by the Chief Mobility Officer for the city of Detroit. Not too ambitious but moreso than where we stood last week. If the thought of EVs still needs some marinating in many Detroit Legacy Auto execs minds, then you can imagine that the Motor City may also need some convincing. In my short time here, I can say definitively that it’s starting to change. I'd like to take SOME credit for that but ...it helps that GM and Ford are fully committed to EVs and it shows when their leadership is interviewed, in the investment commitments they're both making (see lithium investments) and from a product plan standpoint. But this is only going to work if Legacy Auto builds EVs that people want …and can afford. And therein lies the rub. Ford wants capacity by 2026 to build 2M EVs and battery packs. They sold 1.8M cars and (mostly) trucks in the US in 2022. Do they have enough diverse, affordably priced product in the pipeline to hit that number? Flat out – NO. But they're also likely waiting it out to see if there's clear demand and will pull up products as needed. How much of that capacity is earmarked to be exported outside of the US is also unclear. But back to EV charging. We’re not likely to do better than CA anytime soon on per capita charging but if Detroit and the state of Michigan aren’t leading the Midwest in EV sales by 2026, what are we doing? That makes that EV charger goal for Detroit a no-brainer unless we don’t achieve it anyway but that points to an entirely different set of problems. GET SMARTER - Uber and Waymo have decided to hug it out and partner on autonomous ridehailing. Let that marinate in the air for a bit because you may be thinking – well adding a small pilot in Phoenix really doesn’t move the needle for either party. And you be right – it doesn’t, at least not yet. But it opens the possibility of launching more pilots more easily and in other countries in the likely very near future. Uber is a massively global mobility company that delivers people and things in over 71 countries and 10K cities. Waymo now has access to that reach. When it needs it in the future. And now rather than Waymo lobby as an individual tech company in those cities/countries when it wants to launch a pilot, it’ll have a partner that likely has influenced baked into their relations with each of the places it operates. The folks that had to double-take on this news. GM & Cruise since this has to pull up plans for their inevitable move into the mobility platform space. Let’s not forget they have Brightdrop and will likely partner with a food / grocery delivery company in order to round out it’s mobility services platform. Another couple of companies paying attention? Didi, Baidu. WeRide and Pony who ALL have ambitions of moving their pilots (or already have) abroad along with Cruise. If you think about it more strategically, eVTOL and L4 autonomous robotaxis could be their signature services on the platform as both are likely to be major sources of income for the platform, maybe in 15 years or so? And that’s why it made sense for Uber to add them to the platform now. INTRODUCING Cadillac Escalade IQ. We knew this was coming and they haven’t revealed what it’ll look like, but GM is building an all-electric Escalade. If it’s as big as the current version (which I don’t think it will be), it’ll need at least as large as the Hummer EVs which comes in at 246KWh! ___________________ 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

 

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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