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Tech Wars, Batteries as a Contact Sport, Geely Chasing a Ghost - SAI Newsletter 14


I had a terrific time visiting Changzhou for the global launch of Niu’s two new products. A kick scooter for the US & EU markets and a smaller electric moped, the GOVA F0 for the China market. I also had the chance to sit down with their CEO Yan Li & Chief Innovation Officer Token Hu to ask questions and more importantly listen. Listen to them not only discuss in detail their company & its products but also listen to where they think the 2-wheeled markets are headed (read: electric) globally. What was fascinating was also learning more about how they think Niu fits into each of the major markets it plays in. I learned a great deal from how they see the world and how they plan on becoming a major player outside of their home market China. It changed how I thought about a few things myself. This week unofficially kicks off Shanghai Auto China. There are signature events from Geely, XPeng, Ford, and others that I’ll unfortunately not be able to attend. I do plan on being down in Shanghai starting Sunday evening so that I can attend media days on April 19 &20TH. It’ll be a crazy week, one that I am totally looking forward to. I am excited to see, listen, touch, and perhaps drive a few of these new products that’ll be intro’d to the world over the next two weeks. Finally, if it’s not crystal clear to everyone yet - I will say it now - We are seeing the initial blooming of a technology buildup to supplement new and future vehicle features from the OEMs, the tier 1s that want to move up the value chain, the EV startups that want to take share from the OEMs, and the tech companies that want a piece of everything. To put it concisely, companies are stuffing more and more technology into their vehicles in an effort to differentiate themselves since it becomes more challenging to do that once they’ve moved to an electric powertrain. Everyone can incorporate multiple electric motors to have 0-60mph times of <4.0 secs. And most can get to >400km of range, so how do they differentiate outside of more convenient charging stations? By providing the latest technology that drives ADAS (advanced driving assist systems) & autonomous features that will give these carmakers the cutting edge technology & safety ‘credibility’ they need in order to stand out. You can also bet that once all that powerful tech is stuffed into the vehicles, they’ll start to offer ‘freemium’ or premium services and charge customers a monthly (aka recurring) fee. For instance, LiDAR is going to be EVERYWHERE! Well, everywhere except Tesla’s that is. The question then becomes, will customers see the value, and more importantly will customers bite? Ultimately, the race needs to open up a bit if carmakers, both young and old, plan to survive let alone thrive. I believe I read (can’t find the article now…) that Tesla, BYD, and Wuling currently make up ~50% of ALL EV sales in China. It seems pretty lonely up there. Which companies are ambitious enough, can back it up with great product and marketing savvy, to reach the top? I have my favorites, but I’d rather hear your opinions and why. For this week, Lei Xing and I have decided to move our weekly Clubhouse room ‘China EVs & More…’ to Thursday, 9pm EST / Friday 9am China local time. As always, we will go over the week’s most impactful EV news which should be heavy on Shanghai Auto show and what we anticipate. For those that would like to join Clubhouse, please DM me. Again, still only on iOS with a non-Chinese mobile number. Finally, it was my pleasure to join the China Institute last week and be a part of the “Getting to Zero: How the US-China Race for Electric Vehicles is Changing the World” panel. There was a great turnout and we, unfortunately, weren’t able to answer as many questions as we’d like. Feedback was generally positive but if you were one of the participants and heard something you didn’t like or agree with, please let me know as I’d be happy to discuss in more detail with you. I enjoy those panels since I learn a great deal and find that there’s a LOT of curiosity about the China / Asia market including dispelling some misconceptions and rumors about what’s real and what’s not. TESLA IN THE NEWS - So we know that Tesla has kicked some beta testers off of its ‘Full Self Driving’ software launch last month due to their inattentive-ness but do we know how they know these people weren’t paying attention? The first way is knowing when drivers ‘check-in’ by applying a bit of force to the steering wheel. The second is via the seat sensor which generally knows when someone is or isn’t in the driver’s seat. The final way, and most controversial, is by monitoring the driver via the camera mounted under the rearview mirror. They use AI to make sure the driver’s eyes are still on the road and / or that they’re not fiddling with their phone. And like any machine learning algo that’s pretty young with relatively few data points, it can be tricked. Have a look at the video if you want to see how. - Panasonic’s battery guru thinks that Tesla’s 4680 battery cell that’s still being developed isn’t going to be ready for quite some time. Yasuaki Takamoto thinks that the 4680 battery could be difficult to manufacture and pretty volatile if it is. Tesla has openly stated that it’s going to be relying on this battery in its future products (including the Cybertruck) in order to reduce battery costs and have aligned with LG Chem to manufacture them for Tesla. Hmmm, it seems that something has to give here. IN THE NEWS - Rivian goes with Samsung to provide batteries to their pickup and SUV, the R1T & R1S. This choice by Rivian was likely a combination of assessing Samsung’s technological capabilities, capacity, price, and who their other customers are. Most OEMs and EV companies have selected their battery dance partners so who’s chosen the most wisely, only time and # of vehicles on the road will tell. BTW, I wonder who their secondary source for batteries is? They can’t be single sourcing something so important, can they? - Didi is getting while the getting is good. Didi looks to be filling its war chest as the markets are still generally favorable to mobility & transportation-related companies, at least the ones that have generated revenue. The article states that they’re trying to raise $1.5B in debt prior to their Q3ish public debut which should have them valued at somewhere between $60-90B. This is probably one of the more exciting IPOs this year as Didi has a significant track record of operations both in and outside of China, although their foreign revenue is much smaller than their domestic business. They also have their autonomous vehicle operations that could be spun off in order to realize it’s true value to the market. - Is Geely chasing a ghost? Here’s a sneak peek at their semi that looks to be trying to compete against Teslas.' Just to show you what I am talking about, here’s a brief list of what’s been announced by Geely over the last quarter or so:

  • Geely creating a new premium / luxury brand called Zeekr

  • Geely working with Baidu on Baidu’s car

  • Geely is working with Foxconn

  • Geely Auto will NOT be merging with Volvo

Can Li Shufu and his team really pull off each of these major projects successfully all while building cars for Lynk & Co, Geely, Geometry, Lotus, and Proton? If they can, Li Shufu will easily cement his status as a global auto legend but if I was a shareholder, I may want him to say no to more things. I know he wants Geely to be valued like the NIO’s and Tesla’s of the world but that’s likely not going to happen so if not that, what’s he really going after? - India’s NIO, Xpeng, Li Auto, & WM Motor. These companies may only manufacture vehicles with 2 or 3 wheels but the potential market in India for their products is enormous. Bookmark names like Ola, Ather, and Tork Motors and let’s revisit in 18-24 months to see where they and the others mentioned in the article stand. I’ll certainly be keeping tabs on them. I know the most about Ola and they seem to be the obvious leader of the pack. Well capitalized + ambitious, previously successful entrepreneur / founder / CEO – CHECK. - Vingroup subsidiary, VinBus Transport Service Co. launches electric bus service in Hanoi. VinBus joins Vietnam’s first domestic automaker Vinfast, which has ambitions to also manufacture electric cars and export them to the US. Phạm Nhật Vượng, Founder and Chairman of Vingroup has some grand ambitions for Vinfast and VinBus. Could we see some real competition for BYD with VinBus in electric bus manufacturing? It’s too soon to tell but with some of the protectionism going on with BYD buses in the US, this could be the opening that they need to become a player. With only a single plant in Hai Phong, VinBus will have limited capacity that should be eaten up mostly by the domestic rollout of the electric bus & passenger vehicle but that could be perhaps why they’ve been rumored to be talking to Foxconn. Further, I don’t think Vingroup would have any problems fundraising although, like Evergrande, they carry a lot of debt. We’ve seen how fast capacity can be added (see Shanghai Giga) if there’s demand for their vehicles though and again, the current relationship challenges between China and the US could be the opening that they’re looking for. I may be pretty skeptical of initial quality though since there’s no long track record of VinBus or Vinfast vehicles being on the road but you admire the ambitiousness of Phạm, Vietnam’s richest man. His ambition is on par with Masa, Elon, and yes, Li Shufu. - The Chinese battery company you’ve likely never heard of is supplying one of the most popular EVs in China. Meet Octillion, they’re a small but growing battery cell manufacturer that currently boasts the Wuling Hongguang Mini EV as their largest customer. Despite the surprising popularity of the Hongguang, Octillion has been able to support demand and is looking to expand into sales and manufacturing outside of China. Keep an eye on them, they also have pretty grand ambitions. TRENDING ON SOCIAL MEDIA - BYD is literally getting aggressive with its battery business. Last week to show off their new Blade Battery’s capabilities BYD demonstrated the battery’s safety and durability by running over it with a ~50-ton truck. If that wasn’t impressive enough, they proceeded to screw it into a BYD Han and drove off as nothing happened! BYD has found at least one believer and that’s FAW, whose Hongqi brand will be using the Blade Batteries in their EVs moving forward. With all the recent, you could even say, outrageous announcements it going to likely take these types of demonstrations, etc. to get your product noticed. Welcome to the China auto sector circa 2021. - You’ve heard of VTOL? Well introducing eSTOL – Short Takeoff & Landing airplanes. I’ve only recently begun to get more into the aviation side of E and V since those modes of transportation are a non-starter in China where airspace is closely protected. Electric engines allow for shorter runways which is opening up opportunities for varying designs that take advantage of landing spots that before weren’t possible. Fascinating! JUST THE NUMBERS - $13.6B, the largest EVER public market listing by a UK company in this case Arrival an electric delivery vehicle startup. - 254 trillion operations / second. That’s how many Nvidia’s Drive Orin SoC (system-on-a-chip) can perform. Faraday Future (FF) has selected Nvidia and that chip to power their intelligent mobility system. Faraday Future has had a brief but history of lots of ups and downs but plans to SPAC later this year in order to raise enough capital to get their FF 91 on the road. If you’ve been following FF over the last several years, you know that whatever they do is NEVER that straightforward so I am keen to see what other challenges they will face …because they will. - $50B is being set aside as part of the Biden administration’s proposed $2.3 Trillion infrastructure plan to bolster the US semiconductor industry and increase capacity in order any future supply constraints like the one that’s currently gripping the sector. That seems like a small amount relative to that gigantic number that my tax dollars are helping to fund. - Grab to SPAC in the US at a $34B valuation. The article states that this year will be a coming-out party for startups that have until recently, stood firmly in the shadows of their US & Chinese counterparts. That’s going to change as SEA alone makes up about 10% of the world’s population and tech companies have been biding their time to step up to the global stage. I pretty much exclusively use Grab when I travel to SEA, it’s convenient and offers the customers many choices and best of all, I can use it fairly seamlessly in multiple countries. Those that haven’t been looking at SEA & South Asia as engines of growth and innovation should take a much longer, harder look. PRODUCT & SERVICE INTRODUCTIONS - So what new vehicles should we see at the Shanghai Auto show? Here’s a brief summary that we’re tracking:

  • Toyota EV

  • MG EV roadster

  • NIO et7

  • WM Motor w6

  • XPeng P5

  • Subaru all-electric SUV

  • VW ID.6

  • Voyah SUV

  • Zeekr

  • Jeep Wrangler 4xe Hybrid

  • Ford Mustang Mach-E

  • Wuling Hongguang Nano (don’t know if we will see this one)

  • GWM – Tank brand

I am also keen to see what the tier 1s will have going for them as I’d stated earlier that EVERYONE sees this reset as a chance to move into the meat of the market and provide valued-added services in the vehicle. For tier 1s that means utilizing their technology to grab the data to try and monetize it themselves. —— 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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