Parts of Shanghai are back in lockdown and there’s real fear that most of the city could go back into at least a two-week lockdown in the next few days. What that means for production, specifically Tesla’s remains to be seen. My guess is that Tesla requested to all of their suppliers to build ahead so they could horde parts and the team on the ground is likely working very closely with the local authorities to coordinate any lockdowns so they’re not caught on the wrong side of it. There’s no doubt in my mind that all the attention that BYD has received the last few weeks, first because its valuation overtook VW’s to make them the 3rd most valuable automobile manufacturer in the world and then the controversial outselling of Tesla in the first half of this year has been eating at Elon and his 9 kids. So the last thing he wants is to lose another two weeks of production to BYD. Lot’s going on and hesitancy on my part to take the boys out of BJ for a trip. We are doing our best to help them enjoy their summers but the uncertainty with domestic travel and the constant changes to rules at virtually each and every city we are thinking of visiting makes things frustrating. ALL – WAKE UP TO DETROIT. Time Magazine just named it one of the World’s Greatest Places. Serious. SO for those curious, ping me and I’ll be your tour guide. Even if I am not there. Honorable mention – Pittsburgh. Trust me. The big event of the week for me was my visit to Baidu HQ to check out the Robo-1 concept yesterday. It’s currently on display at Baidu HQ here in Beijing for certain folks on campus but they made an exception for me to check it out. Initial take – There’s a certain maturity to the design because in many EVs nowadays (worldwide), there’s a lot of unnecessary ‘jewelry’ or gaudy plasticky bits to either make the car look tougher or more masculine or just weird designs that scream to the world ‘I am an EV!’ I am not a purple car guy but pictures don’t do the depth of that paint job justice BTW. I am really impressed that the Jidu team was able to put this concept together in such a compressed timeline but it helps that they’re using an existing Geely platform. It’s aimed at the Model Y and will be slotted pricewise just under. If execution can keep the design concept’s promise, this thing should do very well. And since it’s being built by Geely, I don’t see any reason why it wouldn’t. The best part about it? I got to speak with Jidu’s Head of Design - Frank Wu who gave me a cheat sheet for some of the details I should pay attention to. The bonus – he’s our next guest for Episode #8 of China EVs & More MAX that’ll drop later this week or early next so you’ll be able to hear his thoughts on the concept as well. Frank and I have some ties since he also spent a bunch of time in Detroit, first to study at the design school located there - College for Creative Studies (CCS), then after graduation spent 7 years at Cadillac as a designer. He’s got a terrific story to tell so I recommend you all have a listen to the interview when it drops. China EVs & More is scheduled this week for Thursday, 07.14 – 9pm EST, Friday, 07.15 – 9am China local time so meet us in our Twitter Spaces room then to get a download on all that’s happening in the space. Those that can’t join, the China 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. I am excited about what’s on tap for the podcast. We have some cool guests that we’ve scheduled for the MAX series but also the pod is going through changes that’ll give it a bit more reach so stay tuned for more excitement. QUOTED BYD, the OTHER NEV juggernaut – This is a great piece by Ed White and Peter Campbell of the FT that deep dives into BYD and its founder & CEO, Wang Chuanfu. It’s an amazing journey for the ex-Professor who took a huge risk and acquired a failing SOE vehicle brand and transformed it into what we know today as BYD – Build Your Dreams. Part visionary, part amazing salesman – lest we forget he was able to convince Warren Buffet to invest ~$232M in the company back in 2008 and his 8% stake is now worth ~$10B! DO NOT SLEEP on BYD, they will continue to surprise and stay aggressive in the market, and yes that means the European and US markets as well. TESLA - Tesla promotes China’s top dog to the top Asia Pac role. Tom Zhu, who has tirelessly led Tesla China through all kinds of housefires, some self-inflicted, is being rewarded. He now oversees the entire Asia Pac region which consists of …mostly China. Once they’re able to grow sales specifically in Oz, SEA and/or East Asia (Japan & Korea) I bet they’ll reorg again but for now, China sets the tone for the entire region because China builds for the entire region except for the high-end X & S models that still ship from Fremont. Seems like a thankless job - When I saw the news that the Singapore GM left (or perhaps got got), I sent the article over to a friend in Singapore who works in mobility and he wasn’t interested in pursuing it. Guess reporting to Elon may have been a bridge too far for them. - The Model Y: Best-selling SUV in China in June. With (pent-up) sales of 51,150 units the Model Y tops the list for SUVs and it wasn’t even close with the BYD Song taking 2nd place with 31,787 units sold. This can’t be seen as business as usual though so anxious to see the rest of the summer month’s numbers since it should better reflect the current market conditions that also include incentives to purchase ICEs and more EV competitors entering the market, seemingly by the day. IN THE NEWS - NIO ET7 rocketing its way up the charts. Since its debut to customers in late March, the ET7 has been slowly but surely gaining sales and increasing its ranking of sales among sedans >¥300K. In June, NIO delivered 4,349 placing it in 7th place just behind heavyweights from ABB, which are getting the benefit of a reduced sales tax in addition to OEM related discounts. It’s well behind the Audi A4, Benz C-Class, BMW 3 & 5 Series who are all selling 5 digits (between 12K – 19K), but we should also remember that it’s a BEV so not an apples-to-apples comparison. I happened to tweet yesterday that I am starting to see ET7s all over the streets of the capital city. I’d be really concerned if I were a premium mid/large sized sedan maker - regardless of powertrain. - As expected, battery production has grown significantly. What’s a bit scary is that in June, CATL and BYD represented >68% of China’s total capacity. For the 1st half of 2022, a total of (mostly ternary-lithium and lithium iron phosphate) 206.4 GWh were produced in China which is a jump of >176% YoY! In addition, the current cumulative installed capacity for Jan – Jun is 110.1 GWh. If the US and Europe aren’t able to increase local manufacturing capacity STAT, there could be a real issue with 1. Overcapacity in the short/midterm and 2. A chance that China Battery Inc exports their excess capacity squeezing pricing on domestically built batteries in the US & EU. - Mobileye delays IPO. Which means that Intel pushes out their payday. Which could put a crimp on their cap ex spending to add capacity in the US and Europe. This market is going to be challenging for a while so Intel and the Mobileye folks could be waiting a while for that ‘right’ time to come. TRENDING ON SOCIAL MEDIA - Merc and Tencent to collab on …autonomous driving? You heard that right, Tencent, who’s known for its AV team and their stack and L4 capable vehicles (not really) is partnering with Mercedes to work on the technology together. Two things going on here – Mercedes is VERY behind with this technology in China. They’ve launched the L3 package (which I think they worked with Valeo on) for the GLS flagship sedan in the US and Europe which is a good marketing win for them, but I am still a bit fuzzy on their strategy for ADAS/AV rollout. The second thing that’s happening is that clearly, foreign OEMs only alternative in China is to partner with local partners on autonomous driving functions or perhaps they could get the Tesla treatment? Remember that Tesla is being scrutinized for its cameras, etc. How will the US or Europe react to this, if at all, when China EV Inc begins to roam their streets en masse? - NIO & Li Auto debut on China’s Fortune 500. NIO hits the list ranked 344 and Li Auto at 427. I think they’ll get pretty comfortable being on that list and won’t leave it for a long time. - Volkswagen Group’s launch timelines are in trouble because it can’t get the software right? If true, this is completely unacceptable and people need to be fired. This isn’t something that JUST popped up on VW management’s radar and now they’re scrambling to address. VW management has been flailing for a while now and they’re so insular that they can’t/won’t let anyone from the outside take control. The decision to centralize everything into Cariad in hindsight now looks like it risks taking the entire ship down. Not just a brand or two. This is what I tweeted yesterday: Tweet #1 The real challenge is Tesla & China EV/AV Inc aren’t slowing down, they both launch SW updates like Kyrie switches teams! So ‘catch up’ is not likely something @VWGroup will be able to do = they’ll likely need to ‘buy’ which creates an entirely different set of challenges. Tweet #2 That’s the thing, right? Analysis paralysis. Reorg x 1 = What we’re doing is not working Reorg x 2-3 = We don’t know what we’re doing They need to just move faster. And course correct along the way because those timelines (if true) are totally unacceptable. This is really all that needs to be said. - A banker fatfingers a BYD trade mistakenly and causes BYD to plunge almost 12%. It’s still unclear what really happened so I’ll update next week, I don’t think Buffett cleared his position in BYD. I think he still sees upside but if he did, what does he see? INTRODUCING - Radar – Geely made a baby that has the DNA of Rivian, Jeep and Subaru. This outdoor lifestyle vehicle brand will lean into the current Chinese trend of camping but the true intentions are likely to export this brand to other parts of the world including the US. The first vehicle to launch and be delivered to customers later this year is the RD6. It reminds me of an El Camino and a Subaru that had a baby. The one thing that stands out generally is the timing on all of these product launches since in the EV era they seem to come hot and heavy - all of the time. I’d point back to Geely using the SEA platform for Radar which means that they effectively just designed a top-hat and that’s how they’ve been able to iterate so much and so quickly either through their own brands or via partners like Baidu who together launched Jidu Auto. BTW, Americans are likely to call this ‘pickup’ cute. And Aussies will undoubtedly call this a ‘Ute.’ GET SMARTER - What is data-centric AI? It’s the practice of ‘smartsizing’ data so that a successful AI system can be built using the least amount of data possible according to Andrew Ng, longtime AI OG and founder of Landing AI. This in turn can democratize the quality of AI systems coming out of smaller companies because their systems can be trained as effectively as systems from the tech giants that have orders of magnitude more sets of data. One way to create effective but smaller data sets is by clearly setting the parameters so that the data receives the proper classification, labeling or tagging. Finally, AI system training is a constant process that needs to be revisited with updated data in order to keep things fresh and accurate. Sounds simple enough but many companies that are experimenting with AI aren’t doing everything they can to ‘scrub’ the data to ensure its AI system is accurate and that capital isn’t spent on unnecessary data gathering. BY THE NUMBERS - 596K. That’s how many NEVs were sold in June in China. Remember that NEV in China = PHEV + BEV + HCEV so that there isn’t ANY confusion or controversy. This is an all-time best. My glass have empty take - A lot of the growth is incentive induced and pent up demand that was bottled up in April & May. The glass is half full take - As long as there aren’t any major production issues, I could see the monthly sales record being broken several times before the year is out, especially in December. And also remember that in order to get anywhere near 6M units for the year, we need to be tracking at about 500K sales/month at least anyway. - $111M. That’s how much May Mobility closed for their Series C funding round. That’s an enormous number and pushes their total raised to $194M. This funding round cements their place in the majors and with investors like Toyota, Bridgestone and LG there will be plenty of opportunity for those investors to help May commercialize the tech. - 300K/month. That’s how much BYD monthly output is supposed to reach in August to help relieve some of longer lead times for their products. That’s an annual run rate of 3.6M units for those counting. Dwarfing Tesla’s likely 1.2M unit annual capacity in China and likely more than even its global capacity. As I’ve stated before when it comes to EVs, specifically Tesla, NIO, BYD and those struggling to manage their ops efficiently – the best ability is AVAILABILITY. People may get sick of waiting 2 months for a car and they’re likely to go buy your direct competitors if those lead times aren’t managed with care. —— 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.