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September Sales Crushes, China's Own AV Guidelines, Jony Ives Remembers Steve - SAI Newsletter 39



Will be short and sweet this week since it’s Golden Week and we are technically off. Last week I had the pleasure of being a guest on John McElroy's 'Autoline this Week' to discuss some of the current challenges and opportunities for the China EV sector and highlight some of the brands competing here and in the EU. As a fellow Michigander, I have been familiar with John and his coverage of the auto sector for as long as I can remember. I, along with many others that closely follow the sector have a TON of respect for how knowledgeable and fair-minded he is in his (international) coverage. He knows and has interviewed MOST of the heaviest of heavyweights in the space across a number of different platforms so for me to be able to join his show, get wonky, and just generally talk 'shop' with him is a real professional highlight for me! Thank you for having me on John, let's do it again real soon. Lei & I would also love to have you on our ‘China EVs & More’ pod! Finally, I misspoke on a couple of things (that I know aren't correct) that I'll take the time to correct here for those that end up watching the show. First, Tesla's ShanghaiGiga does not exclusively sole source battery cells from Contemporary Amperex Technology Ltd. (CATL) but also buys batteries from LG Chem & Panasonic for their Made in China (MIC) Model 3 & Y. Second, there are >35 cities in Europe that have >1M population. September sales were released for most of the major Chinese EV makers and boy oh boy were there some surprises! Congratulations to XPeng, NIO, and Volkswagen brand as they ALL managed to join the 10K Club for monthly sales! WM Motor also crossed the 5K barrier for sales. But it was BYD that crushed EVERYONE’s souls by exceeding 70K for BEVs & hybrids combined. Also worth noting is that even without hybrids, BYD is now a member of the very exclusive 35K Club! As we round the corner towards the end of 2021, we should see more fireworks. Chip & power shortages willing. And you know that I’ll unpack it here and deep dive results with Lei on the pod so stay tuned. This morning I presented to Cohort #9 for GoingVC. For the VC fund/trainer of aspiring VCs, I gave a general overview of the global mobility space that included 2 & 4 wheels. Thank you to Rachel for inviting me to present and Krish for making the intro. I hope that Sino Auto Insights & GoingVC will be able to work more closely in the future! The China Institute Executive Summit 2021 – ‘The View from China’ online conference is coming. This will be a 2-day online conference on October 13-14 from 8-10:30am EST with an in-person reception scheduled for October 14, 5:30pm EST in NYC. I will be a panelist specifically for the ‘On Investing in China: Who will be the next tech Unicorns?’ panel on October 14th, 9:30am EST but I encourage all of you who are curious about China to virtually attend any other panel that seems interesting, and there are quite a few IMHO. For those interested in checking out the agenda or signing up for the event, you can click here. EVs & More will be hosted on Twitter Spaces as per the usual on Thursday – 9pm EST. We will post the topics later this week on Twitter so if you’re free please drop in or better yet, come with some questions or comments. TESLA NEWS - Tesla smashes Q3 with deliveries for the quarter exceeding 241K. That’s over 100K more than what they delivered CQ3’20. Impressive any way you slice it. It also means that they should have no problem getting to >750K total sales for CY’21. But with all of that said, the Tesla China numbers bear further scrutiny since it's still unclear how many were exported vs. delivered domestically. Will update as more details emerge. IN THE NEWS - The Chinese govt. has just come out with its own set of autonomous driving standards. What’s notable about the Chinese version vs. the Society of Automotive Engineers (SAE) guidelines that were rolled out in 2014 and which have been tweaked (here and there) since is that the 6 levels in the Chinese version, in general, more clearly set responsibilities. For instance, L2 of the Chinese version ‘requires the driver and the automated system to work together’ whereas SAE doesn’t have ANY forceful language close to that. We may be arguing semantics but as we’ve seen, especially if we’ve spoken to any lawyers lately, this matters. - We already know that electric bicycle sales are growing substantially in the EU & US. Well, that’s not the half of it. Since Covid hit, the growth rate for the prior 12 months was 240%! And in a vacuum, this would be impressive enough, but this is on top of the growth we’d already started seeing in 2019. For those that thought this was a fad, you are clearly mistaken. This is a thing. And it’ll remain a thing. I think in the broadest sense, this is a great ‘thing.’ As long as laws and bike etiquette are followed. Which could be more challenging in some parts of the US more than in others. - Spotlight on WM Motor and Freeman Shen. For those wanting to learn about what’s going on with WM, this is a pretty good piece that hits (mostly) all of the high notes. There’s also a short post about WM in the ‘Numbers’ section so maybe WM Motor has just been playing possum and are ready to pounce in 2022? - The streets of Paris are flooded with bicycles, but is this too much of a good thing? This shouldn’t be surprising for anyone that’s been used to living in a city of cars quickly that quickly evolves into a city of cars and bicycles. While reading this story, it felt eerily like what I deal with here on a daily basis. Cars and bikes have learned to cohabitate but it’s still really a car world here in China. Perhaps trying to enforce current laws with bicyclers and drivers alike in order to know whether the current framework is sufficient? But first, unless cities are willing to invest the time, resources, and capital necessary to rethink how their cities should flow and prioritize pedestrians & cyclers above drivers and buses, places like Paris will likely remain dominantly a car culture. TRENDING ON SOCIAL MEDIA - Jony Ives looks back at 10 years since Steve’s passing. There have been some horrendous stories about how Steve treated some people in the past so we won’t get into that but Jony, who was probably the closest person to Steve besides Tim Cook and his wife, spends a few moments to share what he misses most about Steve and their relationship. This duo created some of the most amazing products on the planet with a few of them most assuredly heading into the Hall of Fame. My all-time favorite product from Apple has to be the original iPod launched in 2001. Steve famously said once that ‘Design is not just what it looks and feels like. Design is how it works.’ I couldn’t agree more and this iPod just made sense. It made so much sense that when you picked it up with everything in its ‘right place,’ it made you wonder why hadn’t someone thought of doing it that way before? The answer of course is that – It's really, really hard to get right. And for Steve and Jony, there are SO many products that they got right. My final thought on this as I saw some tweets about ‘what if’ Steve was still alive as Tesla began getting pulled into the mainstream? IMHO, Steve probably wouldn’t have liked Elon. He’d be a bit (inwardly) jealous and would outwardly confident, touting how his team would be able to build something better. And with Jony’s help, I think he’d be right. JUST THE NUMBERS - $500M. WM, still surprisingly a private company has announced they've raised Series D in the amount of $500M. Whether they plan on IPO'ing soon or not, it looks like they'll be able to stay private now for the foreseeable future. - Over 1K. That’s how many autonomous delivery vehicles will join the ranks of their human counterparts before the end of next year as demand for online orders continues to increase in China. They’re able to also do this due to reductions in the cost of these ‘robots.’ It is coming folks, we will be walking, riding, and commuting next to these autonomous vehicles before you know it. And yes, they WILL be blamed for everything whether it’s their fault or not! - $137M. Not a good look for Tesla. They have been ordered to pay that amount by a federal jury over a racism issue at their Fremont factory. I’d be shocked if they actually pay anywhere close to that amount. Racism at an auto factory unfortunately isn’t unusual unfortunately, even still today. —— 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

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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