SAI Weekly #10 - 24: BYD Goes Low(er), EU Leans Protect, By 2027 - Cheaper to Manufacture a BEV

---

Had the chance to moderate a panel on EV batteries with Ilaria Mazzocco, Steve Levine and Henry Sanderson yesterday for Reuters and received some immediate feedback that we did a pretty good job. I see way too many binary ‘good vs bad’ takes out there, so I did my best as moderator to move the discussion towards adding a bit of color to the black and white.

There’s a lot more nuance on the entire EV discussion than most 2-3 paragraph articles can provide, so bringing together objective parties that check their bias and emotions at the door helps educate about what the real issues are.

Remember that the US & EU are investing a TON of our money to try to recreate what China is doing in the battery / EV space on their home turfs, so unless that capital is deployed efficiently, we won’t be ‘catching up’ to anything.

And in order to roll your sleeves up and begin to dig yourself out of a hole, it’s important to know how deep that hole is in the first place. For those interested in watching the recording, you can click this link.

This recent Bloomberg article gets you a bit of the way there if you’re still wondering how far behind the ROW is to China re: EVs. It hits many highlights, but we go in much greater depth on the battery side, so you can prep by reading the article and then grab a pen and pad to take some notes while you watch our discussion.

The Geneva Auto show came and left without much of a sound so let’s see what type of fireworks we get in Beijing. If you plan on attending, send me a message. The notable booths from Geneva seemed to be BYD (they are like the Beatles now), Dacia, Renault and Lucid.

CHINA EVs & MORE (CEM)

Join us 9am ET on Friday for the live show. For those that can join, bring any questions or topics you want us to chat about.

If you can can’t join the live show, I invite you to listen to our recorded China EVs & More episodes at this site. And as always, we appreciate any feedback that will make the show better.

INTERVIEWED / QUOTED

-   Crain’s Detroit. They reached out to interview me about my thoughts on Detroit, the global EV space and what the US Three (and global automakers for that matter) need to do to get themselves back in the game. It’s not going to be easy, that’s for certain. Click the link if you want to read up on my life and my thoughts on all the above.

-   The Ojo-Yoshida Report. Reinforcing the battery education portion of the newsletter, here’s part of what I told Bola, Junko and George for their article that posted earlier this week.

‘Indeed, the majority of Chinese EVs come equipped with LFP batteries, further extending CATL’s dominance. One reason is that “not all batteries are created equal,” says Tu Le, managing director of Sino Auto Insights.’

SPIED

NIO has long been rumored to be launching two brands that will allow them to move down market, increasing factory utilization (in theory). Alps is one of them and this week’s cover photo is of what’s supposed to be Alps first product being tested in China.

If you’re wondering who Alps is targeting (and will most assuredly undercut in pricing) with its first product – 比毛豆Y棒 – translating what’s posted on the rear window – ‘Better than a Model Y.’

NO WORDS

BYD

-   They went there. A sub-$10K BEV, the Seagull. For those Wuling Hongguang Mini EV buyers, this is the perfect alternative when / if they decide to upgrade. It’s got 4 airbags!

It’s about as perfect a city car as you can get. I’d get one if I lived in a big city but still needed to drive to places enough that ubering everywhere wouldn’t be the cost-effective way of getting around.

BIGGEST NEWS OF THE WEEK

-   Did someone say hybrid? I think Americans said it, pretty loud and clear too. According to Consumer Reports, 6 of the top 10 in vehicle rankings across different segments were hybrids. A 7th was the Model Y. So, 7 clean energy vehicles are considered the tops in their class by at least one reputable media outlet here in good ol’ Murrica.

The US Three, except for the Ford Maverick, don’t have many horses in this PHEV race either. Even if they’re able to keep the Chinese EVs at bay, the growing popularity of the hybrid still puts them in a pickle.

GM is probably ~2 years away from having a legit hybrid on the road. We are talking Model 2 timeframe now, and if it comes close to the claimed $25K price tag, wouldn’t that be game over for a GM hybrid? One that would move the needle on volume, at least?

-   Will the EU follow the US lead of protectionism? It appears so. And it looks like it could be retroactive meaning that they could fine companies for vehicles already in-country! Volkswagen and Stellantis have to be working frantically to make the tariff small while Renault is likely on the phones looking to pressure for more protectionism. VW Group and Stellantis win this one probably, but to be sure, we’ll need to wait till we see what the punishments actually are. Final word is due in July so there is still time to soften the blow via diplomacy and negotiations, but I can’t see the EU doing nothing.

-   2027. That’s when research firm Gartner forecasts that production of EVs will be cheaper to build than ICE vehicles. That’s not saying that battery costs will go down as well to be clear. It’s ONLY talking about the manufacturing costs for BEVs.

It’ll also track with an increase in accident repair costs on the back end though so Caveat Emptor. This has A LOT to do with more OEMs moving to a single piece gigacasting for the front and rear of the vehicle which I’ve heard can take out as many as 400 parts and dozens of welds. Good news is that factories can be smaller since there should be fewer welding robots and smaller ‘supermarkets’ aka where parts are stored on the factory floor.

Bad news: If this is anywhere close to being accurate, the supply base for the US three here in the rust belt are going to need a big hug and an enormous amount of retraining STAT!  

BY THE NUMBERS

-   Not #1. How Wang Chuanfu is NOT #1 on Motortrend’s Power List tells me that the automotive industry still doesn’t ‘get it.’ How Elon is 50 reinforces that thought.

The two companies they run are forcing EVERY OEM in the world to jump thru hoops as they slash prices and continue to expand their sales and manufacturing bases. They are the only two companies that have the scale needed to bring costs down, are designing their own chips and have a hand in the battery technology that goes into their products.

Think about that. Each OEM wishes they had the capabilities of these two companies, but the amount of time and investment needed to get that good, well its likely too much and too long for quite a number of brands we’re so used to seeing on the streets of Paris, Detroit, San Francisco, Beijing, Wolfsburg, London, Tokyo, Seoul, LA and all the other cities around the world. Let THAT sink in.

-   $6B. Stellantis follows GM, Toyota, VW Group, Hyundai among others who all earlier this year announced big investments in the South American country. Stellantis is a big player in Brazil which sold about 1.75M cars last year with a market share of about 31.4% according to the Bloomberg article. Wondering who the biggest brand in the South American region is, well I am glad you asked. I’'s Fiat, with a 14.5% share and an even larger share in Brazil – 21.8%.

What makes the South American market different than other regions in their move towards clean energy is that South American vehicles more and more use biofuel, produced using sugar cane, to replace gasoline.

Important reasons for the OEM’s move to Brazil: 1. Brazil has launched a ‘Mover’ program that uses carrots (tax incentives) and sticks (increased sustainability requirements) to decarbonize. 2. China is not the growth market that it was due to competition and the abrupt move to EVs. 3. Great Wall Motors and BYD have made announcements on manufacturing locally.

_________________

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 global automotive and mobility sectors. 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.