• Tu T. Le

SAI Newsletter #21 - December 26, 2018

Updated: Jan 31, 2019



Happy holidays all!


Since most of you are in holiday mode, including myself we are sending out an abridged version of the newsletter this week. We will skip next week and get back to it beginning in 2019.


My name is Tu Le and I am the founder and managing director of Sino Auto Insights.

This weekly newsletter is a collection of articles I feel best reflect the happenings of the week or important trends that have effects on the automotive and mobility sectors here and in the U.S. I also provide a point of view that I hope educates and sparks debate about how I look at the issues.


If you know of anyone who would like to sign up for this newsletter please have them visit: www.sinoautoinsights.com. Thanks for reading.


The Sino Auto Insights team

#SinoAutoInsights #Model3 #Teslakiller #XPeng #NIO #VW #connectedservices #patchworkintegration #Ofo #bankruptcylooming #Tesla #pricereduction #Daimler #$23B #morebatteriesplease

EVStartups

Beginning in 2019, competition in the China EV market will heat up significantly. (www.theverge.com)

Two things I’d like to point out about this article. First, it’s good that the author acknowledges that one or even two China EVStartups will not be ‘Tesla’ killers per se but it will take many products that flood the market in order to really compete and ultimately defeat Tesla.

Second, when the automotive market in China began to grow some 25 years ago the Chinese govt. also tried to put a ‘thumb’ on the scale to help the domestics vs. the foreign OEMs but the Chinese consumer decided on their own that they preferred foreign brands so unless one of these Chinese EVStartups can launch a vehicle that can compete on its own merits, I don’t think it’ll matter if the Chinese govt. intervenes or not.

Finally, ALL these Chinese EVStartups have global ambitions but it would be a mistake to think that they can conquer a foreign market before they’ve carved out a significant place in their own backyard.


Other (AI, tariffs, chips)

VW acquiring its way to relevancy? (www.engadget.com)

VW has been EXTREMELY aggressive in revamping its product portfolio in China with more EVs and SUVs and since the promotion of Diess, that only seems to have accelerated some of their decision-making which I applaud.

I also applaud their risk-taking when it comes to the partnerships and acquisitions for connected services like taking a controlling stake in Volvo’s connected car service. One area I am not certain about is their ability to really turn all these acquisitions into one, cohesive product or service since this is NOT their expertise and up till now, I have not seen anyone hired that would bring that expertise to them. My fear is that they’ll have a lot of toys and tech that is just that, a hodgepodge of cool stuff that they can’t put together. I hope I am wrong about this.


Mobility, Ridesharing, Ridehailing, Bikesharing

Ofo, a deeper look. (www.cnn.com)

Following on from last week’s post, I was interviewed by Sherisse Pham about why Ofo lost its way and this article briefly explains one of the reasons. Will likely see more consolidations & pivots from the mobility and bike-sharing, e-scooter startups in 2019.


OEMs

Tesla must see significant softening in the market. (www.reuters.com)

Just before they begin selling the Model 3 in China, Tesla has decided to reduce pricing by 7.6%. This is likely due to the combination of an overall softening of the China automotive market as well as a competitive assessment of the market in the next 18 months.

At launch, the Model 3 will only sell its higher end version which will start at 499K RMB ($72K USD) which is not going to be a competitive price once VW and the other EVStartups begin to roll out their products next year.

This also means that Tesla is taking the competition very seriously and is preparing for to do some long term battle for China.


Daimler guaranteeing future battery supply to the tune of $23B USD. (www.cnn.com)

Had a brief discussion about the quality and reliability of the battery cells that Daimler plans to invest in since I do NOT believe that the current battery suppliers meet the requirements in the volumes necessary to supply globally if any of the growth forecasts for China, the EU and the U.S. are close to being accurate.

Would like to see more about this specifically and will keep searching and asking for more details so stay tuned.


Sino Auto Insights is a Beijing, China based market research and advisory firm that specializes in assisting companies analyze, strategize, and position themselves to take on the future of mobility and transportation through their products and services.


Members of our team have experience working in Detroit, Silicon Valley as well as here in China across sectors and functions as entrepreneurs as well as working at larger companies like Apple, Google, Amazon, GM and FCA and many others.

China: +86 13 811672141

USA: +1313 290 3880