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Stellantis Leapmotor Tieup, Cruise Gets Clipped, Ford and UAW Hug It Out - SAI Weekly #40



 

Some blockbuster news this week but before I get to it all I am going to jump on my soapbox for a minute. Recently, there have been a number of articles with some pretty damning headlines about EVs ‘not working’ and US automakers pulling back blah blah blah.


Let me start by asking, who is going to buy a 9K lb. Hummer for $120K? Also, handbuliding battery cells, modules and packs doesn’t make for an efficient manufacturing process. Next, EVs seem to be working just fine in China, so much so that two of the largest European automakers bought stakes in two Chinese EV companies so what are they doing right or maybe the question needs to be, what are WE doing wrong?


If you talk to the people who actually follow the sector closely, you’ll know that most of the legacies, save Toyota and even Tesla had bigger eyes than their stomachs could bear. Forecasts about transitioning tomorrow, building XXX many EVs were never right or accurate, but folks ate that shit up.


Will there be rough patches, of course there will be - Mary Barra said as much this week - "As we get further into the transformation to EV, it's a bit bumpy," We still don’t have enough charging infrastructure and the ones that are in the wild don’t work half the time. Further, no legacy automaker learned anything from Tesla when Elon said they went through ‘manufacturing hell’ and dove right in thinking, ‘How hard can this be?’


But it’s the automotive execs that created this unrealistic expectation to begin with. The F-150 Lightning was supposed to launch at $40K, it now has a $50K starting price, a 25% lift. How many EVs are actually affordable enough for ‘normal’ hardworking American, I can think of the Chevy Bolt off the top of my head and a few Tesla’s, that’s it.


I could talk about this for a few more paragraphs but I’ll leave you with the simple fact that the door’s already been open, so with some clarity from the US govt, the legacies need to quit complaining and go out there and get it done. It’s going to be painful for the next 10 years (and more for some) as legacy automakers shift their products over to connected / smart clean energy vehicles, but I can assure you the ones that are early to launch small, feature rich, aggressively priced EVs that focus on catering to the mass market will be the clear winners. These CEOs get paid the big bucks, they need to figure out that ‘how.’ They can also give us a call, we’d definitely be up to helping them make those tough but necessary decisions, the rest is just noise.



CHINA EVs & MORE (CEM)

Back to our normally scheduled programming – 9am ET on Friday. Join us if you’re free.


If you’d like 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. It’s an opportunity to ask any questions and have discussions with Lei and I so if are itching to know more about something, join us tomorrow morning!


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.


BIGGEST NEWS OF THE WEEK

- Ford and UAW tentatively agree on a contract. This, after 41 days (and counting) of a strike that has some estimates of Ford losing $880M so far. Here are some particulars to what’s been agreed to:


o Hourly rates will have increased by at least 25% by the end of this 4-year contract, for instance the highest current hourly rate of $32.32 grows to >$40 / hr by 2028. The lowest wage now will have a floor of $28 / hr.


o COLA is back. COLA = Cost of Living Adjustment - UAW workers will also receive inflation adjustments for their wages.


This is just hourly pay increases. A good rule of thumb for calculating fully burdened costs will include fringe benefits like healthcare, 401K matching, etc. A safe estimate for that is ~25%, so in essence the highest UAW earners will make ~$50 / hr.


Well done by Fain and company, but the devil is in the details and we’ll find out more about the fine print and whether or not Ford has offered up to be unionized its battery cell factories and whether there will be a big stink about Ford moving forward with its licensing deal with CATL.


Once the contract is signed, the 45K or so Ford employees currently on strike will get back to work the next day and before Xmas we will have forgotten about the work stoppage and additional costs from this new 4-year contract.


What normally happens now is that the UAW would forcefeed the terms that Ford agreed to to GM and Stellantis but this negotiation cycle has been pretty unpredictable, so all bets are off for now.


Between the US Three. Ford was in the worst position with the most UAW workers when compared to GM and Stellantis so they had to get a deal done. This further highlights the importance of the US market to Ford vs. their crosstown rivals or another way to look at this, their vulnerability due to their single market (North America), single product (F-150) focus.


- Breaking down the Stellantis LeapMotor deal. I am still trying to process this transaction so my thoughts about this may evolve but here’s what I think.


LeapMotor, they have 3 vehicles (a sedan, SUV and a tiny city car) currently for sale in the China market with two of the three offered as either an EREV or a BEV ranging from ¥60K - ¥210K. Their initial vehicle was a small coupe that sold not many so I am not sure it’s still on sale TBH.


This means they live in the mass market segments where the price war has really wreaked havoc on companies. Even Leapmotor was not immune as they cut prices on two of their vehicles by up to ¥20K just this past August.


Leapmotor isn’t really a strong player in the China market. For example, although they had record sales in September, it only sold 15.8K units. Compare that with BYD: 287K (including international sales) & Tesla: 74K which was a 19% YoY decline from 2022.


Two obvious things that benefit Leapmotor. Much cleaner, easier access to international markets, specifically the EU where mass market EV products are still lacking. The next is the instant injection of capital.


Stellantis, the $1.1B investment buys them a horse in the China race. Just over a year ago, they’d effectively decided to leave the market but Tavares had a change of heart or there was some external pressure to maintain that 4th place global ranking of automakers which would’ve been impossible to do without the China market.


I also see a real opportunity for Stellantis to lean into not only Leapmotor branded vehicles but also the underpinning technology to be shared by other Stellantis brands. There will be fallout from this transaction. And it could be lasting.


Tavares is already backstroking like Michael Phelps on his earlier comments about a ‘terrible fight’ against 🇨🇳 EV Inc & the 🇪🇺 market. Stellantis was effectively being pushed out of 🇨🇳 market so kudos to Tavares swallowing his pride & making this deal.


But THIS was really his only play. If you think there were others, please send me a note to talk about it.


I anticipate cultural and control challenges as they roll their sleeves and get down to the business of actually working together. Can they? If things are going well in 2028, it means that Stellantis stepped back and let Leapmotor lead in the areas where they are the clear expert.


Otherwise, this is going to be a trainwreck that’ll likely bear no fruit for either party.


- BP is buying $100M worth of chargers from Tesla. They will deploy them at their own service centers since Tesla’s chargers are proven and they will natively use the NACs heads for charging. This throws a huge monkey wrench into charging hardware companies since they now have to compete directly with Tesla for sales. That wasn’t the case yesterday before this was announced.


Don’t know the per unit price of a supercharger but I am certain there’s a premium margin added and that they will be more expensive than other chargers out there. Whether Tesla wants to wipe out their Level 3 charging competitors by getting their charger price at or close to the average price, we’ll have to see.


Tesla gets data and the ubiquity of supplying power to many non-Tesla owners now, even at a non-Tesla Supercharging station now and that’s powerful.


- Cruise gets its driverless license suspended by the State of California. To be clear, they can still operate robotaxis but they must have safety drivers. Cruise has had a ton of unfortunate occurences throughout this year with the most serious happening last month when a one of its driverless robotaxis ran over a pedestrian that was thrown into its lane by a hit and run. If that wasn’t enough, the robotaxi, unsure of what to do then proceeded to drag the pedestrian along Market Street for about 20 feet.


We’ve not heard much about Waymo robotaxis and any accidents they’ve had since they also operate driverless pilots in SF, but they don’t seem as aggressive as Cruise with much of their rhetoric, perhaps trying to keep a lower profile.


- GM says it’ll use LFP battery cells in its next gen Bolt. The current edition of the Bolt does not use the Ultium platform but this next-gen battery will. No word on who they’ll use to source it but there’s a good chance the supplier will be Chinese.


Since they’ll have an LFP / Ultium platform pairing, expect many if not most other ‘affordable’ EVs from GM to use this combo to drive down costs. BTW, this was a clear message to the US govt. that ‘you need to sort out the trade policy so we can get to work.’



QUOTED

Asia Nikkei. I had a few hot takes picked up on some media outlets CK Tan being the first to ping me. There are many questions that need to be answered with this transaction like the VW & XPeng investment before it but the one that sticks out to me – What will the reax be if LeapMotor is exported to the EU and undercuts Stellantis brands like Peugeot, Citroën, Lancia and others?


Taiwan Plus. Though not well covered in western media but an important event for the 🌍 EV space nonetheless was Foxconn's Tech Day last week. I spoke with Louise Watt for a video interview about Foxconn's still significant challenges that need to be overcome if they are to repeat their contract manufacturing success in the EV sector.


Despite recent challenges (two of their original four contract manufacturing customers; Lordstown Motors and INDI EV both declared bankruptcy) to its stated goal of producing 300K EVs out of its Lordstown factory - Foxconn is not giving up on EVs & unveiled its latest EV offerings during the event. It also surprised some with Jensen Huang & Foxconn Chairman Young Liu sharing the stage to announce an AI partnership between Nvidia & Foxconn. An electric cargo van à la GM’s BrightDrop & Rivian's Amazon electric delivery vans was unveiled as well so those two better be paying close attention as Foxconn's strategy slowly comes into focus.


TESLA

- BP is buying $100M worth of chargers from Tesla. They will deploy them at their own service centers since Tesla’s chargers are proven and they will natively use the NACs heads for charging. This throws a huge monkey wrench into charging hardware companies since they now have to compete directly with Tesla for sales. That wasn’t the case yesterday before this was announced.


Don’t know the per unit price of a supercharger but I am certain there’s a premium margin added and that they will be more expensive than other chargers out there. Whether Tesla wants to wipe out their Level 3 charging competitors by getting their charger price at or close to the average price, we’ll have to see.


Tesla gets data and the ubiquity of supplying power to many non-Tesla owners now, even at a non-Tesla Supercharging station now and that’s powerful.



BY THE NUMBERS

- 2K. That’s how many swap stations NIO has in China as of October 26th. Their goal for the year is 2.3K so still a ways to go but for those wondering if swapping works, it does in China. Whether it’s a moneymaker or not is a completely different question but it provides a convenient service for NIO owners.



INTRODUCING

- The XPeng X9. Enter another electric MPV into an already crowded segment. This one from the team down in Guangzhou. By the numbers: It’s over 15’ long. Seats 6-7. Largest battery size: 101.5kWh battery pack that has a range of up to 702km. Here’s the kicker, it’ll have the equivalent of 496 bhp. It’s gonna fly!


No pricing was announced but it’s rumored to have pricing around ¥400K.


- The Li Auto Mega. Not to be outdone by XPeng, Denza, Zeekr or others who’ve launched electric MPVs Li Auto introduces the Mega. Great name. It’s Li Auto’s first electric vehicle, as in BEV, not EREV. Pricing will be around ¥500K. Cd = .21 which is better than many sports coupes.


Not many other specs announced just yet but count on the interior carrying over much of the L7, L8 and L9 themes. One very important feature that differentiates it from its competitors (for now anyway), is its 800V DC fast charging capabilities which means 500km (~311 miles for my American readers) charge within 12 minutes. I like it. I tweeted last week that it looks like a supersized Prius.


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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


 

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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