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New Tesla in 2023, Lordstown gets to Job #1, BMW i3 Needs ¥105K of Help - SAI Newsletter 43


For those wondering, the pic is from a parking lot that had only those two charging stations in the entire lot – looking lonely. Since we had Thanksgiving last week, I decided to roll last week’s newsletter into this one. And to keep it shorter, I self-edited since there is a lot going on as we hit the final stretch of 2022. There has been a huge increase in COVID cases across China. There are currently cases in all 31 provinces. Chongqing, a city and area of about 30M people seems to be in almost complete virtual lockdown while Beijing & Guangzhou aren’t in a much better condition. In addition, there were some major protests across China that seemed to be triggered by the tragedy in Urumqi where 10 people were killed in a fire which was exacerbated by the fire trucks not being able to get into the compound due to the building being locked down. It seems people (adults + students) are about fed up. They really have no outlet to vent any frustration (due to censorship) – but in this case that didn’t stop them from gathering anyway. Days following the protests there have been huge increases in police presence at those very same protest locations so the Chinese govt seems to have had enough of allowing people to gather too now. As I see it, there are NO quick fixes. The most vulnerable group of people - the elderly - have a very low vaccination rate so there will need to be some time spent finding and convincing these people to get vaccinated. It won’t be easy or fast, especially if COVID is running rampant across the country, which at this point it still is and will get more severe as we get further into the winter months. As for auto production, the Volkswagen / FAW factory in Chengdu has had to shut down due to rising COVID cases while it’s Dongbei factory has had to shut a few lines down. Honda too. Let’s assume that there are other manufacturers and factories in a similar position. Chongqing is HQ to Changan Ford so there’s a high likelihood that production has been affected there as well although they’ve not had a very good sales year so far so perhaps it’s a blessing in disguise for them. The other part of that equation is folks not being able to get out to purchase those vehicles. Chongqing + Beijing + Guangzhou ~>60M people so that will put a dent in sales even if the cars are available. That strong NEV sales finish to 2022 we were anticipating looks like it might not come. And with some of the auto subsidies set to expire on Jan 1, 2023, automakers are in a weird spot. My gut tells me that the Chinese government will not extend them so most EV makers, except for BYD, will likely have to raise prices not only to make up for the subsidy but to also reconcile the increase in component pricing. Since we are right around the corner from Dec 1, we will find out how much the COVID spread effected auto sales in November. What got our attention the last two weeks. - BYD’s rumored sodium-ion battery to begin mass production by mid-2023? BYD has officially denied this rumor and it’s important to note that CATL has also talked about launching a sodium-ion battery, but it could be that BYD beats them to market – mass market production that is. For those wondering why sodium-ion? Because sodium (Na) effectively replaces lithium in the battery. Current downside is that it isn’t ready for center stage yet and it’ll get less range and is less durable than li-ion batteries. BUT it’s significantly cheaper and eliminating lithium from even a portion of your supply chain will have benefits in the short term. Qualifying multiple chemistry batteries as well as dual chemistry batteries should create more flexibility for OEMs and decrease pricing pressure on some of the rare earth metals in the short term. - Two chipmaking deals that Chinese companies are the acquirers get got. One deal in the UK was so far along that it actually needs to be unwound while the other is being blocked by the German govt so that the transaction will not move forward. The transactions were being obscured by the fact that the European subsidiaries of these Chinese companies were doing the ‘acquiring,’ but whereas in the past these transactions might have slipped by that’s no longer the case. Expect continued scrutiny on any deals even as companies like Intel, TSMC, Samsung and others invest heavily to increase their fabrication capabilities around the world. - Amazon’s e-cargo bike delivery service expands in the UK. After the expansion, the service is forecasted to make >2M deliveries/year and will take up deliveries normally made by vans to alleviate traffic congestion, improving air quality. BRAVO! For those of us who’ve lived in Asia/China before, these vehicles should be recognizable since they already use electric mini-delivery vehicles all across China. And are normally one of the CAUSES for traffic congestion! - Corvette becomes its own brand in 2025. Think competitor to Porsche. And yes, it’s going to eventually have a Corvette badged SUV. CHINA EVs & MORE We will hosting our live Twitter Spaces this Friday 3pm EST. I know I mentioned that we’d leave it to Thursdays but I have an event I have to attend that I’ll tell you more about in next week’s newsletter. For those that can’t join our live Twitter Spaces room (shame on you!), 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. TESLA - What’s happening in China currently to Tesla is starting to happen in the US. What I am referring to is their stranglehold on the EV market is being eroded by more, competitive EVs being launched by other brands. Tesla in the US still holds a commanding 65% market share in 2022 but that’s down from 79% in 2020, albeit these %ages are built off of small bases so as the sales volume will continue to grow for Tesla in the US and the ROW, those share numbers will undoubtedly decrease further. - Model 3 update in the works? That is the current word – it should roll off production lines in Q4’23 and will begin sales in China first. That means that for the better part of 2023, Tesla will not have any new product to put up against a barrage of new products from competitors and new EV startups that will launch products in 2023. 2023 could be a long year for Tesla, specifically in China. IN THE NEWS - Faraday Future (FF) dumps Carsten only to lose its product head in the following days. Does one have to do with the other – likely. A cash strapped FF decided to get rid of Carsten Breitfeld (of BMW & Byton fame) as the CEO and moved Xuefeng Chen, the former FF China head over to global CEO. The reality is that YT is still running the show, a show that’s running on fumes. More drama likely to come and IF they get a vehicle to market, it’ll likely be a de-contented version that could get built by someone else. In China. A BIG IF. - Lordstown delivers its first 500 vehicles to its (fleet) customers. This is amazing and the Lordstown management team along with their manufacturing partner Foxconn, should be commended for their seemingly herculean efforts to get to Job #1 a milestone that many EV startups have yet to achieve (see above post about FF). Congratulations! Now, let’s see how these first production units do out in the wild! - Indonesia really doesn’t care what the WTO has to say about what it does with it’s own nickel ore. Indonesia has basically stopped shipping raw nickel ore wanting to process it in Indonesia before it gets shipped out. It’s effectively nationalized the nickel ore mines and is pushing companies that want it to manufacture locally in Indonesia or at least invest in having some of the value-added services commence there. Indonesia is the largest nickel producer in the world BTW. TRENDING ON SOCIAL MEDIA - BMW i3 is getting offered with a lot of ‘money on the hood’ in China. BMW dealers are reportedly offering up to ¥105K (~$15K) in hopes of reducing the inventory levels of the vehicles. According to the article, the i3, the electric version of the 3 Series, has sold just ~4.5K since its launch earlier this March. Contrast that with Tesla which sold ~17k units domestically …for the month of October! - Bullitt to be rebooted. The duo of Spielberg and Bradley Cooper will try to do the Steve McQueen classic justice. Can’t wait to see what new Ford will replace the #OG 1968 Mustang GT fastback! - Scout teases with website and sneak peek at its first product. Rumor has it that an electric SUV and/or pickup could hit US streets by 2026. I am curious to how this will play out. I’ve already heard stories about the small team of ninjas working fast to #GSD but can they match #ChinaSpeed or even #JiduSpeed? And will the results satisfy US customers? It all remains to be seen but I am think getting folks engaged early is not a bad thing. My question here is if they are really moving that fast, will VW Group let them be in order to get this brand off the ground ASAP? I have my doubts about it but what I am hearing is that it’s as close to acting like a startup as can be but… GET SMARTER - No robotaxi services in Europe yet, why? From the article: “And now we can see why Europe doesn’t have robotaxis yet: it has a more robust public transport network, tougher regulatory hoops to jump through, and not as much private investment.” Further, the US regulatory environment for AVs managed at the state level not federal whereas with the EU, multiple countries would need to all agree on the policies. This article is worth the click for those who want a deeper understanding of the different robotaxi environment of the EU vs. the US. - The UK, South Korea, EU and Japan are pushing the Biden administration to water down the Inflation Reduction Act requirements for receiving subsidies because they believe they are anti-competitive and targets their country’s companies …as well as the Chinese. It’s because it does – the bottom line here is that currently the language is such that if the electric vehicle isn’t built in the US, it won’t receive the purchase subsidy. Will the Biden administration acquiesce? It’s hard to tell but you have to believe that GM, Ford, Stellantis (at least the Dodge/Chrysler/Ram parts of it) are pushing to also make changes to the deal on the raw materials/components side of the equation. Maybe change isn’t the right word here, perhaps ‘massage’ language is better? QUOTED/INTERVIEWED - A while back, I had a nice chat with Mark Andrews for his deepdive on CATL, the world’s largest battery cell manufacturer that supplies the likes of Tesla, Volkswagen, Honda, BMW and many other notable automotive and EV companies. Well, his article for the Cheung Kong Graduate School of Business, one of China’s top business schools, was finally published and for those that aren’t that familiar with CATL (avid readers of the newsletter and/or listener to the pod should be very familiar with them), then his piece is the perfect primer for getting to know them intimately. INTRODUCING - The Club Car Cru. A 25MPH, electric LSV designed by Bimmer – Yes please! LSV stands for low-speed vehicle and it’s effectively a golf cart on steroids. It’s reinforced to meet US safety standards for LSVs but its capped at 25MPH and is mainly positioned for folks in large neighborhoods and resort like living facilities. This again is much smaller than a truck/SUV and I think we should see many more of these types of vehicles on the streets as we more powertrains switch over to electric. At $27K, I may prefer a Chevy Bolt but I could totally see these tooling around MANY of the neighborhoods my friends live in. BY THE NUMBERS - 800. The number of Chevy Bolts Domino’s Pizza will purchase to help electrify some of its delivery vehicles. Once they’re all delivered over the next several months, Domino’s will have the largest electric food delivery fleet in the US. Trickle. ------------ 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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