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Hongguang Mini EV in the US (?), Apple Car Fast Tracked, Happy Thanksgiving! - SAI Newsletter 46



First off, to my American readers and a two days early - Happy Thanksgiving! This is where we all get to watch my Lions lose ...again. But it's a tradition and I don't think the NFL should take the Thanksgiving game away from us. This week’s newsletter is going to be short and sweet. A normal week in China but for us Americans it’s Thanksgiving! Having lived abroad for so long, it’s sometimes easy to forget about the US holidays & birthdays I loved celebrating when I was younger. One of my favorites was Thanksgiving because EVERY American seems to celebrate it. It was also a good reminder for me that no matter how hard I thought I had things, it’s important to take the time to be thankful for what I do have. Now that I have kids, it’s my responsibility to pass on these traditions & holidays since their only exposure to these American holidays is if mom & dad celebrate them. It’s also a good reminder that it’s the end of the year which means it’s time to business plan for next year. That’s what I started doing a couple of weeks back. Regardless of the uncertainty, it’s always best to have some framework (read: plan) in place so that you have a direction, some high-level goals, and a roadmap for how you think you might get there. Covid has taught us that the best-laid plans can be rendered moot so no matter how much you stray from your original plans, it’s good to be flexible. And resourceful. And level headed …you know what I mean. I also wanted to note a couple of conversations I’ve had over the last couple of weeks with investors and people I trust about Chinese EV/AV companies going public via an IPO or SPAC in the US. That ship has pretty much sailed for most Chinese companies. There have been two notable companies that backed out of going public via SPAC, that being Pony (AI) & Plus (AI). I know there are still US SPACs looking for companies here in China to reverse merger with (because I've been asked to help source them) but I don’t know how many will bite. Not in the current climate, especially with Didi still in the dog house. Things could change in 2022 but I think, for the time being, that well is pretty dry. Now watch a BIG announcement comes out next week! EVs & More will be earlier than usual for the next two weeks. This week we will host the room on 11/24 Tuesday 9pm EST 11/25 Wednesday 10am China 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 - Is Tesla bringing the Model S Plaid to China by March 2022? As my magic 8-ball sometimes says – Outlook good. This is coming from Elon himself in a response tweet earlier this week. The twitterverse got all frothy with forecasts of 10-15K of them being sold in China next year. Let me say, that’s not likely to happen. There’s an appetite for it, but not that large an appetite. My thought is that it could sell just <1.2K in 2022. IN THE NEWS - The back and forth about whether a Hongguang Mini EV would play in the US. Interesting article here, but having googled each person that said ‘No,’ the group seemed decidedly one-note. And definitely NOT the target market of the Hongguang Mini EV. Second, auto analysts can’t get past the ‘auto’ part in their title so they’re going to be much more close-minded than anyone that works in ‘mobility.’ There is definitely a market for the Hongguang Mini EV, it’s just not them. Oh, and that excuse about the Smart not catching on in the US, it might’ve stood a chance had it not been >$20K! - Apple decides to push forward with the Apple Car. Actually, Apple wants to accelerate the timing of the Apple car and it seems have done away with the dual-path solution of both an Apple ADAS car AND an Apple Autonomous car opting to go full autonomous. If this article is accurate. For Apple to be hedging (and flailing) as they have been, it tells me that they’re perplexed with the level of complexity and it’s intimidating them, yes - even for the team that brought you the iPhone, iPad, and iMac. That said, whether the Team Titan lead has auto experience or not, there is enough auto experience in other parts of the team to get through most of the tough challenges as it pertains to automotive design/engineering. As for creating a UX that’s fit to where the Apple badge, that’s a whole ‘nother animal and probably the hardest design challenge they’ve ever faced. Let me take that back, it's assuredly the toughest design challenge Apple has faced. Full stop. What a great project to be on if you’re at Apple. Makes me wanna suit up again TBH. There are for certain to have been and will be many long days/nights and quite a few afternoons spent at BJ’s or whatever the preferred watering hole is at Apple Park. We’ll still have to wait about 4 years before we will be able to see what the team comes up with to compete with all of the other heavyweights that have already shown their hands. - The XPeng G9 was revealed to the public. And it’s a looker. Clean and big, but light on details …and an interior for now. We should see a fully fleshed-out G9 by April’s Beijing Auto show. One that I’ll be in attendance for. TRENDING ON SOCIAL MEDIA - Remember when I said prices would get slashed when demand starts to soften, well SAIC-VW just went straight to DEFCON 2! PANIC button pushed. An EV that was just launched 1 month ago with a price of ~174K RMB (~$27K), the ID.3 can now be had for a 111K RMB (~17K) with a 60-month loan interest-free loan for the balance of 60K RMB! Folks, that’s called FREE MONEY! I’ve not heard about any money being 'put on the hood' of the ID.4 or 6 yet but it seems pretty inevitable that they’d offer some substantial discount as year-end approaches. For those readers in China, that ID.3 deal lasts till the end of this year. I’d think about getting it but VW didn’t stuff enough tech into it for my liking. Finally, the companies that are competing with VW for customers, watch for them to NOT sit around waiting for their potential sales to go to VW. This could be the first shot of a pricing war, at least until 2022 starts and where everyone is optimistic! - Great Wall Motors is MOVING IN! Literally – they just opened their Munich office and are pressing on the gas to gain that foothold into the EU markets. These types of actions ALWAYS elicit reactions from others so internally at some SOEs & Chinese EV startups, they must be monitoring very closely what Great Wall is up to. And are making plans to counter or avoid accordingly. This could also create opportunities in China for their competitors. There's a chance that Great Wall loses focus of their home market as they allocate resources (likely some of their best) to EU market entry. Full invasion of Chinese brands has begun. With many more on their way in 2022 and beyond. - The (current) best electric bicycles. Depending on use case. I’ve posted something similar in past newsletters so for those looking for Xmas gifts if you order it now maybe there’s a chance it’ll arrive before the 25th? I don’t see the Gogoro Eeyo on this list though so it isn’t complete. - Speaking of electric bicycles, they may get more affordable in the US. And electric motorcycles too! As part of the Build Back Better Act purchasing an electric motorcycle or bicycle could get up to 30% cheaper! GET SMARTER - China’s auto supply chain top 100. Get to know their names because many of them are sneaking up on the incumbents we’d expect to see on the US & European Tier 1, 2, and 3 lists of suppliers to the OEMs. These suppliers are broken down into 10 (a few of them peculiar) categories: autonomous driving, intelligent cockpit, software, automotive chip, powertrain electrification, thermal management, body & chassis, interior/exterior, environment-friendly light & new material, service provider. For the startups that I’ve mentored, advised, or otherwise worked with, these are ALL potential partners, investors, or customers. They are much more likely to be open to talking with a startup as well as working with one or having one work for them. They don’t have the hang-ups or arcane policies that prohibit them from working fast and/or with companies light on history and a credit score. If the legacy Tier 1s aren’t paying you the proper respect in the US & EU markets, this could be an even larger opportunity for you. BFD OF THE WEEK - Biden believes the US will surpass China to lead the world in EVs. First, it’s pretty cool that President Biden stopped by DHam, sorry I meant Factory Zero. I spent about three months working there in a prior life and it’ll always be called DHam to me and likely most of the GM old-timers that worked there. Second, I love, LOVE President Joe’s confidence and optimism about the US grabbing global leadership away from China in the EV space but he’s obviously not been keeping up with this newsletter or the pod. China EV Inc is currently miles ahead of everybody else. And we need to catch the EU before we can even think about trying to overtake China. There’s no time to waste either but that’s all the US govt seems to have been doing since before I left the US! I am reminded of the attitudes that will hinder the adoption of EVs reading that article about the Hongguang Mini chances of success in the US. Unless attitudes change about EVs, the legacies are already on board whether you like it or not, it actually won’t be a race at all, it’ll be like this weekend’s Buckeyes taking my MSU Spartans to the woodshed. Finally, we have Tesla so why aren’t we leaning into their capabilities and creating a dramatic competition between them and the legacy autos? The govt isn’t going to get GM, Ford, Stellantis, or the tier 1s to innovate. That’ll come from Tesla eating everyone’s lunch for a prolonged period of time. Whether there’s a subsidy on Tesla vehicles or NOT. After the good to great reviews I’ve seen for the Rivian & Lucid Air, I am more optimistic as well. I also think they need more guys like me over there to hold ‘their’ (the auto sector, govt, and lobbies involved in the sector) hand until they ALL get out of their own ways and start pulling in the same direction. US govt, you know how to get in touch. And we are happy to help. One other glaring omission worth noting. If GM is serious about EVs in the US, why didn’t they bring any to show off in LA? Because they brought the BIG DAWG over to show off in China. INTRODUCING - The EdisonFuture EF1-T & EF1 – V. These recently revealed EVs have a surprise that they share with the top end Fisker Ocean - a solar roof that helps recharge the battery as it drives. Outside of the reveal for both vehicles at the LA Auto show, EdisonFuture is still a bit of a mystery. We do know that it’s a subsidiary of Chinese renewable energy firm SPI Energy and that the company is Chinese. I think the most important aspect of these EVs is that the Chinese startups are going for the jugular here. They know that Americans love their trucks and SUVs and they plan on taking it right to GM, Ford, Rivian, and yes even Tesla’s Cybertruck. The unfortunate outcome of the Cybertruck production delay, at least for Tesla, is that there will likely be quicker to market Cybertruck wannabe’s out on the roads before the actual Cybertrucks hits the pavement. Click the link if you want to check out the concept EF1 – T they brought to LA. And finally, they could’ve done better than aping Faraday’s name… —— 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

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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