Happy Holidays! 2021 Year in Review - SAI Newsletter 50

So Xmas week and I’ve not gotten all of my gift shopping done yet! I am also leaning towards giving the newsletter a rest next week so this could be 2021’s last newsletter. And it’s one of the more important ones, my ‘Biggest of the Year’ list! So many things have happened this year globally that I could easily make a Top 25 list but to keep it concise and to force myself to narrow the list we’ll end it at 12.

  1. BYD, the quietest EV juggernaut out there

  2. Tesla’s wild ride

  3. China EV Inc gets their passport stamps

  4. The China NEV market hits ~ 3.5M sales …while the ICE market falls off a cliff.

  5. No data is going to be crossing any borders

  6. Didi smackdown

  7. The SEC’s Holding Foreign Companies Accountable Act

  8. Pony & Baidu driverless AV permits

  9. Common prosperity means less prosperity for

  10. Lucid Wins Motor Trend’s Car of the Year

  11. Global supply chain pain

  12. The launch of China EVs & More

I reserve the right to amend or add to this list as I think of other important happenings in 2021 that I think are notable. I think that’s a pretty good list though for now. EVs & More will be at our normal time this week – 12/23 Thursday, 9pm EST/12/24 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. Finally, for those of you in BJ that are free tonight, Sino Auto Insights is hosting a Holiday Happy Hour at 京A CBD at the Kerry Center. Apologies for the short notice but most folks in BJ that read this I’ve already contacted via WeChat I believe. YEAR IN REVIEW

1. BYD, the quietest EV juggernaut out there

There’s a lot to like about BYD. They are killing their home market (better than their more glamourous counterparts) and are gonna hit 100K unit sales of NEVs, which includes hybrids & battery electric vehicles, for the month of December according to analyst/expert Lei Xing. They design and fab their own chips, and manufacture their own batteries – batteries that have been greenlit by companies like Ford Motor, and their EVs are moving into the European markets as we speak. Oh, and did I mention they’ll be launching a premium brand next year as well? Too much all at once though? The company that Warren Buffett made a $232M bet on back in 2008 (that’s now valued at >$10B!) seems to be firing on all cylinders so what could trip them up? Doing too much. Management has a ton on their plates but could push themselves ahead of their competitors since they own so much of their own supply chain – IF they can maintain focus. It’ll be a balancing act between growth of their EVs, battery business to outside customers, and expansion outside of China. Management seems battle-tested, unlike their competition which should give them a big advantage when dealing with adversity in multiple languages.

2. Tesla’s wild ride

If it wasn’t yet last year, Tesla is now a global phenomenon. It’s building in Shanghai, Berlin, Austin, and Fremont now and has entered dozens of markets. They will SMASH their 2020 sales record of 499,550 this year – they’ve already shipped ~402K just out of the Shanghai facility just through November. With GigaBerlin coming online, where will GigaShanghai export to if demand softens in China, which I predict it will for at least the MIC M3? Let’s keep a close eye on S. Korea, Japan, Singapore, Australia, and a few other SEA countries. With no new products scheduled to launch in 2022, will Elon be able to keep up that excitement for the company – I don’t think that’ll be a problem. The share price started the year at $730 dipping to as low as $563 and as high as >$1,243 before settling in at $1,009 yesterday, that’s 38% growth. Controversies have followed Tesla as well, starting and ending with its Full Self Driving (FSD) rollout in the US. Controversy will continue to follow Tesla even as it continues to mint more millionaires out of its shareholders.

3. China EV Inc gets their passport stamps

Here’s a list of Chinese EV companies that have either already shipped product to Europe/Scandinavia or plan to in 2022:

  • NIO

  • XPeng

  • BYD

  • Aiways

  • Geely

  • Maxus

  • Li Auto

  • LeapMotor

  • Hongqi

  • Wey

  • Voyah

  • Lotus (owned by Geely)

  • Lynk & Co

  • Great Wall

With all of these brands entering various countries throughout Europe and Scandinavia, there shouldn’t be any issues with the lack of products to choose from. With the European legacies, the available products that would compete with China EV Inc will still be lacking, creating said opportunity to easily grab share if you’re a Chinese EV player. That’s if they can quickly understand the market, determine who their customers are, and get them excited about their products. All within a 20-30 month window. Key question is will the European consumer trust these brands and/or will there be some protectionism put in place? My guess is that it’ll take time & investment from China EV Inc to build up enough awareness and trust so they’ll move slowly until they feel really confident about their brand in the market. I could also see some protectionism being thrown up in key markets like Italy, France, and Germany which most of these guys are likely to avoid initially anyway. Game on!

4. The China NEV market hits ~ 3.3M sales …while the ICE market falls off a cliff.

Forecasts started out at the beginning of the year at around ~2M units then got revised up several times including by Lei & I throughout the year as we saw continued momentum. It’s likely to hit 3.5M units if the December numbers come in where I think they will. That’s an ASTOUNDING number that was achieved despite the battery & chip issues that many major OEMs, as well as EV startups, have reported throughout the year. In the early 2010s, the subsidies and incentives brought incremental growth to the sector but over the last few years, it was Covid & the domestic EV makers that really brought the heat with the flood of products at all price points that have led to China becoming market-driven. And none too soon either since, in 2022, the subsidies are set to expire. As for overall passenger vehicle sales, the last 7 consecutive months sales have shrunk YoY. Some of that can be blamed on the supply chain challenges but not all of that drop. And when combined with the (+) EV sales data, it has to mean that Chinese consumers are at the beginning of the full embrace of EVs. Can China keep up this momentum into 2022 and beyond? As long as there is supply I don’t see demand tapering off. That means different challenges for the legacies vs. the EV first companies. How they address their specific challenges will be the key to their success …or failure, but the best part about it is that I have a front-row seat to watch it all unfold! Even better – we may actually help a few dominate the market. 5. No data is going to be crossing any borders.

There were two new Chinese laws that came into effect in 2021 here in China, the Data Security & Personal Information Protection Laws that could have far-reaching influence on the EV/AV/mobi