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GM & Ford's Bold Move, NIO's Bolder Move, BYD #6 Automotive brand - SAI Newsletter 23



 

After stating that NIO would not participate in the price war, Li Bin broke down and did it. In the end their belief that NIO was above the fray just wasn’t enough so they’ve decided to cut prices on their entire product line by ¥30K (~$4.2K) and charge for their battery swapping service. I applaud Li Bin and team for doing the right thing here. The reasons likely had something to do with one or more of these things: continued softness in demand, lower foot traffic in its NIO retail locations / Houses, and after studying pricing / features / range / sales of their contemporaries and determining that their products just weren’t competitive at the current pricing. And with more competitors on the way, getting this sorted earlier rather than later was so important. I’d also point to Li Auto’s success as another factor. They do NOT want to get too far behind Li Auto in the China market. Here’s more detail on the recent NIO moves. Let’s all remember though that price reductions are temporary fixes. Assume the price reductions will boost demand only for the next several months. Launching derivative models like the ET5 Touring should also help NIO pump up their sales but they still need to work behind the scenes and figure out where the disconnect is between their products (too many, too similar, too expensive, too cool, too conservative?) and ultimately breaking through the 25K sales / month barrier. It’ll take more than just a price adjustment so let’s see what other chess moves Li Bin has as we head into the meat of the sales season after summer. The Chinese economy hasn’t recovered the way that the government wanted it to in Q1 so there will likely be moves to further stimulate it which makes additional purchase incentives on passenger vehicles (and EVs) a big possibility. It’s gonna take a concerted effort to get the Chinese economy completely back on its feet so we might see some pretty drastic moves over the next quarter or so. If the Chinese consumers aren’t confident about the economy, they’re going to keep those rambo’s in their pockets which means big item purchases like cars and houses will wait. CHINA EVs & MORE Join us today at 3pm EST, Thursday on Twitter Spaces. Also, I just posted our latest MAX episode, this one with Founder & CEO of carwow – James Hind. James brings a perspective we don’t normally take and his insights about the UK market are relevant for anyone in the automotive space, another great guest having another great convo so I invite you all to have a listen. 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. INTERVEWED/QUOTED - CNN Marketplace Asia. XPeng gets highlighted in this video piece by CNN. I was interviewed for the segment as well and make a cameo towards the end of the video. Brian Gu gets into the merits of XPeng getting into the eVTOL space as well as what it’ll take to be a global leader in the EV space in the future. Worth your 4 minutes. - Washington Post. A great piece that pits Tesla vs. BYD directly. It’s also another US media outlet that’s writing about the China market or a Chinese EV company, in this case BYD. People are starting to wake up and eyes are starting to be startled open. And this is JUST the beginning. BYD - BYD climbs to #6 on the Kantar Brandz Most Valuable Automotive Brands List for 2023. That is all. TESLA - Both GM & Ford wave the white flag. They both announced that they’ll adopt the North American Charging Standard (NACS) plug that’s been till now exclusively used by Tesla in North America. The Combined Charging System (CCS) plug has been used by just about everybody else. This ‘can’t beat ‘em join ‘em’ moment by the Big Two is a HUGE win for Tesla but more importantly a big win for EV adoption in the US. It’s a net negative for Tesla owners since now they won’t be as special and may even have to wait for ‘their own’ chargers as more EVs hit the roads. Reason for Tesla to do this. Money. Revs from more EVs using its charging. Licensing revs for the plug. Other automaker customers get the Tesla experience and could convert over for their next EV. Psychological win for Elon over the legacy automakers. Tesla knew the other EV providers would eventually get it right and if the legacies got a year or two into providing the other plugs to their customers they would be too committed to intro another plug. Shrewd move by Tesla and Elon here. This should make it a no brainer to use the NACS plug as the ‘O-FFICIAL’ standard for North America, since it’s the defacto standard. I actually don’t know how that happens from a policy standpoint but because we’re the US there will likely be some pushback from some vested interests, likely those that have a lot to lose because they backed the wrong horse or in this case, the wrong plug. I pull what’s left of my hair out most weeks when I see the mistakes being made that hinder EV adoption but this is one of those moments where I thought, people swallowed pride and made the space better. One step forward today. NEWS THAT GOT OUR ATTENTION THIS WEEK - XPeng rolls out City Navigation Guided Pilot aka NGP in Beijing. BIG (and needed) win for XPeng here. To be first in BJ is a coup for them since they’re a GZ based company. Someone called in some big favors for this one and it stretches NGP’s reach to Guangzhou, Shanghai, Beijing and Shenzhen. It took them some time to get the right approvals but it looks like XPeng may be hitting their stride when it comes to ADAS. Now, let’s hope that there are no major hiccups as more XPeng drivers try the service out. On another note – if Tesla’s FSD launch is delayed significantly or they aren’t able to launch FSD at all in the China market, that should create a distinct disadvantage for them there, right? This makes me think there was at least one specific reason to visit Beijing first. - Legacies are making a run at working directly with their buyers. In Europe there are less onerous laws that will allow them to work collaboratively with their dealer network and with that there can be a lot of innovation & customer engagement with the ultimate goal -> having a satisfied customer, let’s say a net promoter. In the US, the ridiculousness of franchise laws has given the dealer the upper hand and with the exception of Tesla, Rivian and Lucid (for the most part), the legacies are stuck with not ever really dealing directly with the people that buy their products. Why or how that ever made sense is lost on me. If I sold someone something that costs them 5-7 years to pay off, I’d want to make sure they were satisfied with the product, our service, how they were treated throughout the process in summary – the brand. Along the way to generating trillions of dollars in revs over the years, the OEMs forgot all about that and the dealers never really seemed to care either. Since I’ve been of age and financial means, the car buying experience has always ranked just below a root canal for most people in terms of wanting to do something. Again, remember that dealers are supposed to represent your company and your brand. Yet OEMs allowed the purchase process turn into something people HATE. The good news is that the OEMs seem to now want to own more of the process. In the US at least, they’ll likely be fought tooth and nail by the dealer lobby to determine who will ultimately control the sales process. A HUGE missed opportunity for the OEMs and it has always been that way. Like most else during this current disruption, it took Tesla to show them a different way, a better way. Now the question is whether they can wrestle away who engages with the customer. This is a hill I’d die on if I were an OEM since, until now, the dealers haven’t done a very good job of being their representative touchpoint. And according to the article, going DTC or D2C (direct to consumer) could save them up to $2K so it makes waaay too much sense not to re-engineer this and along with having happy customers because those two things combined – priceless. - Toyota – finally pressing the accelerator pedal on its move to cleantech. Let’s summarize, they have new tech for lithium phosphate batteries, but are also researching a way to get solid state batteries to market sooner (by 2028). They are also developing a dedicated EV platform for easier manufacturability, automated assembly lines and are incorporating a gigapress process into the manufacture of EVs. If Toyota, one of the most thoughtful automotive brands on the planet are looking to move much more aggressively into the EV space, can we finally put to bed whether it’s the time of EVs? Anything that Toyota wants to get into or is looking to get into automatically legitimizes it, right? - CFIUS doesn’t have the proper jurisdiction to review the Gotion factory that’s going to be built in Southwest Michigan. As I read this, the $2.4B investment for a battery component factory is moving forward. This factory has become very political so it’s difficult for me to see where the real concerns are vs. posturing by politicians in order to gain favor from their constituents. TRENDING ON SOCIAL MEDIA - Li Auto going after ABB. And are confident they’ll win more fights than not against them in 2024 so much so that they’ve openly stated that they’ll outsell them. The product lineup in calendar year 2024 should be, at a minimum, the L9, L8, L7, L6 EV SUV and an EV MPV. And for reference, that means they plan to be around 650K units 2024 if we’re looking at BMW sales in China for 2022. - A great showing by the Yanks at LeMans. This was LeMans 100th anniversary and a great time for GM whose Corvette won the GTE Am class race after starting at the pole, getting behind and then catching up to win the checkered flag. Cadillac also had a 3rd place overall podium finish. The Americans will be back in full force next year as Ford will ship a Mustang over to go head to head against the Corvette. INTRODUCING - Denza (BYD) D7. It doesn’t officially launch until the end of this month but its made its way to a dealer and the buzz its created since being unveiled at #AutoShanghai2023 has created some demand in the form of 20K orders. It’s not a bad looking rig either so I think this could be one of the newer models that immediately take attention …and sales away from the older product in the market. And when I write ‘older’ I specifically mean older than 10 months in the market. - Say Hi to the ROX EREV SUV. It’s roots are in vacuum cleaners? The vacuum cleaning company happens to have Xiaomi as an investor and they also happen to be launching their own EV in 2024. As I’d mentioned in previous newsletters, there is an assault on the premium SUV segments and the ROX is aimed squarely at ABB – it’s a full-size SUV so think G-Wagon and X7 even though it’s priced much lower. - A self-driving ferry. The ferry is based out of Stockholm and the company who launched it hopes to ultimately ferry people to and fro completely autonomously, currently there is a backup driver. Autonomy and Generative AI is beginning to be EVERYWHERE. - The Porsche Mission X. A beautiful rig from the folks in Stuttgart with a chip on its shoulder. It’s main goal in life is to be the fastest vehicle ever to take on the Nürburgring Nordschleife or North Loop. Specifically, it wants to take back the title of fastest EV the company that threw up that number below. BY THE NUMBERS - 7 minutes 25.231 seconds. The Tesla Model S Plaid w/ Track Package set the record for fastest EV around the Nürburgring a just less than two weeks ago and it didn’t go over well to some, especially the folks that hang their hats on performance. Maybe, just maybe making performance cars that are great at the track isn’t so hard after all? (...as record player in Germany scratches itself to an abrupt stop.) _________________ 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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