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SAI Weekly #5 - 24: GM Now Long Hybrids, Didi & CATL Join Forces, Japan Still #1



 

The Lions completely tightened up in the 2nd half of the NFC Championship game so we will not be going to our first Super Bowl EVER. We came out STRONG but couldn’t match the 49ers counterpunch starting in the 2nd half. We lost a 17 point lead and many Lions fans had flashbacks from the Same ‘ol Lions days. I think Dan and his culture is different, but we’ll only know that around this time next year. Great, great season, disappointing ending.

 

January sales numbers are coming in for China and they are disappointing for many. We should always remember that Q1 is historically a slow quarter since we just got out of a gangbusters Q4 where automakers were all trying to pad their final year sales numbers which normally means that they pull Q1 sales into the Q4 timeframe, this past Q4 is no different. Also, and this is even more important, Lunar New Year is almost upon us on February 10th this year so few people are thinking about what bargain vehicle purchase they should make.

 

It is worth noting that January sales gives you a flavor of what MAY lie ahead for the rest of the year, but we also know that Tesla just over a year ago tipped over the first price cut domino echoed throughout the NEV sector in China throughout 2023 and guess what, they’ve been at it again, again. See below.

 

We are also seeing perhaps an even further hardening of US trade restrictions on some key industries as we move closer to November and there is no clear indication of whether Biden will be re-elected or if Trump, who is the current Republican front runner, will get a second shot at the presidency.

 

Also, even as TuSimple is exiting the US market, they still can’t pull themselves out of the crosshairs of the US govt.

 

We will get to some of the news that caught my eye down below though so let’s get after it!

 

 

CHINA EVs & MORE (CEM)

Join us every Friday, 9am ET on the X platform. To join the live show, follow me on X: @sinoautoinsight and at 9am at the top where the Spaces rooms show up, you should see our show. You can any questions you have.

 

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

-   CNBC. In this video interview, I spoke with Will Koulouris for my take on BYD earnings and the Tesla Model 2 / Cybertruck and how I think things could shake out for both automakers in 2024. Let me know what you think!

 

 

TESLA

-   Tesla launches a Spring Festival Edition OTA update. There are key safety features that will be added and since many folks will hit the roads for Chinese New Year to visit their families likely away from the tier one cities, it also adds features that alert / update you on Service areas and being able to unlock superchargers as you approach them to make the charging experience more seamless.

 

Tesla is also leaning into the entertainment aspects that Chinese consumers are keen to have in their connect vehicles updating iQiyi (think Amazon Prime / YouTube) and QQ Music (think Spotify / Apple Music).



-   Another ¥8K knocked off stock MIC Model Ys. That is just after a discount of ¥7.5K on January 12th. Will there be any takers? It’s hard to tell but let’s just say they seem to be getting desperate.



NO WORDS 




BIGGEST NEWS OF THE WEEK GET SMARTER

-   GM backstrokes on PHEVs. Now, they are in on PHEVs. I think there will be a lot of reconciling of product strategies by Legacy Auto. Why Mary cancelled the Volt & Bolt is a headscratcher but just points to GM being out front with products / services and then retreating.

 

Think EV1, Maven, OnStar to name just a few. These were money losers but gamechangers. The product guys lost ALL their internal fights with the finance folks. At least this time, Mary took a page out of Tavares book and decided that swallowing pride to help give GM a fighting chance was better than trying to execute on a losing strategy.

 

If they don’t move faster and get A LOT better at software, these types of mea culpas won’t matter. Not for GM, Ford or anyone else.

 

-   Volvo decides it wants Geely to deal with Polestar’s significant growing pains.  Here’s some statistics that create context for why. Volvo has never been more successful, selling 708,716 vehicles in 2023 of which 16% were NEVs. Polestar sold 54,600 EVs in 2023. TOTAL. That’s 6% YoY growth. The China NEV market grew >30% so to be kind, let’s just say Polestar sales were flat. The Polestar 2, it’s only product since it launched in 2020 is not popular in China or the US.

 

The good news is that reinforcements are on the way and Polestar will triple its global lineup later this year with the China built Polestar 3 and the China & US built Polestar 4. Will these new products allow Thomas Ingenlath to right the ship? I think he’ll get 2024 to prove it will, otherwise look for Geely to insist on some changes.

 

I do see Geely more aggressively marketing the two new vehicles (the Polestar 3 begin delivery in December 2023) in China in 2024.

 

-   Ampere IPO gets shelved. Renault and Luca de Meo decided that there isn’t a market for it now as EV sales soften al over the world, including in China. This points to a challenging year for most automakers that wanted to grow their sales of BEVs & PHEVs (with the exception of one company anyway).

 

-   One major roadblock cleared for the Ford CATL battery cell factory in MI, will there be others? This factory is forecasted to create 1,700 jobs. It would’ve created more but the ambitions of the factory were dialed down due to reduced demand forecasts by Ford and likely also a bit of political considerations.

 

That said, this factory paves the way for Ford to have a consistent, quality battery cell for its eventually launched EVs in 2025 and beyond. Stellantis also happens to be sourcing cells from CATl but GM has been mum, who will they source them from?

 

-   One of the duo that created Motional is pulling the plug. At least from a funding standpoint. And they’re the one with the technology. It is now recognized by most that robotaxis, at least from the profitable service standpoint, is likely at least a decade out.

 

Aptiv must’ve updated its assumptions on their return on invested capital spreadsheet and decided that the numbers now don’t make sense for them to continue to fund this much longer timeframe endeavor without seeing any tangible returns in the short-term.

 

By my count, that leaves Waymo the ONLY real US AV startup focused specifically on robotaxis, while they have a mess of China AV Inc companies to compete against for global domination. Noticed I didn’t say US or China domination.

 

-   US govt doesn’t want Chinese EV companies collecting data of US drivers of Chinese EVs. We aren’t there yet and the Inflation Reduction Act has made it even more unattractive for the Chinese auto brands to enter, but we should look at this as an inevitability and although we may push out the inevitable, they will eventually make their way, I’d argue in a big way to the US.

 

I’d also argue that without the push they’ve give the US Three, we’ll be driving inferior EVs relative to the rest of the world, for quite some time.

 

Now, how the US govt will play the data issue (re: China EV Inc) has still not been decided from what I hear. It may mean that good portions of SW / HW stacks need to be swapped out for equivalent US versions. Think maps, data centers, cloud services to begin with. And will there be equivalent restrictions on Chinese EVs on US military bases?

 

 

GET SMARTER

-   Didi and CATL tie up officially makes swapping a thing in China …and likely abroad. I’ve said before that commercial application of battery swapping ALWAYS made sense. Look at Stellantis giving it a go in Spain with Ample.

 

With the world’s largest battery cell manufacturer partnering with China’s largest ridehailing service to roll out more swapping stations for more vehicles that will be able to have their batteries swapped, this should eliminate a lot of doubt about whether swapping is viable. It looks like Didi and CATL want to make it so.

 

Some quick Didi stats for you:


  • Average # of daily rides (Q3’23): 29M

  • Annual active users (2023): 587M

  • # of Didi drivers (2021): 15M active annual drivers


These are just some of the monster numbers that Didi racks up each year. If drivers don’t have to stop for periods of time to charge, the same number of drivers can increase their utilization so that’s what’s in it for Didi.

 

Also, remember that they were in the Chinese govt’s doghouse for quite some time for their IPO fiasco so this should help them maintain their good relations since swapping was endorsed recently by the Ministry of Industry and Information Technology to help improve charging infrastructure in China.

 

How can the two throw their weight around? Well, they could go to an automaker and tell them that if they make their cars battery swappable, we can put in a multi-year order for XXX,XXX / year. That’ll get the attention of quite a few automakers, both foreign and SOE.

 

This is where the ‘and likely abroad’ comes in. If a foreign automaker decides it needs that XXX,XXX sales in China it would make sense that they’d then export that same technology / vehicle. And with CATL’s support, they could reduce even eliminate the costliest part of an electric vehicle, making it immediately competitive pricewise.

 

This announcement probably made the Ample folks happy and the Uber / Lyft folks go ‘Hmmm.’

 

-   Is using indium in batteries the eureka moment to fast 5-minute charging? It’s too early to tell but where there’s a will, there’s a way. We need to continue to push innovation in order to solve the dependency issues we have with other countries stuff. There are drawbacks to using indium and where this will go, not sure but it’s something I’ll try to learn more about and when I do, I’ll report out.

 

 

BYD

-   36,174. That’s how many vehicles BYD exported in January. Expect that number to not only creep up for ALL vehicle exports, but on the NEV side with BYD driving that growth.

 

BYD had exported 36,095 vehicles in December 2023 so let’s call this MoM growth flat, but when you make it relative to what they sold in December 2023 (341,043) vs. January 2024 (201,493) that % total is BIG at (11%) for December vs. (18%) for January.

 

 

BY THE NUMBERS

-   Japan still #1? Hold your horses! According to the Japanese customs data, Japan is still the #1 exporter of vehicles with China #2. This number is including commercial and other types of vehicles (I think?). What is undisputed – China out exported Japan in passenger vehicles 4.14M to 3.98M. Big destinations for Chinese passenger vehicles? Mexico and Russia.

 

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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

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