Search

Tesla Back on Track, No Chip Shortage for NIO, Apple Talking Batteries - SAI Newsletter 22



I am currently in Shanghai for some meetings and also sat on a mobility panel with Bill Russo of Automobility & Steve Dyer from Alix Partners last night. The panel was themed ‘How China is Reshaping the Auto Industry’ and was sponsored by the Shanghai Foreign Correspondents Club (FCC). It was a live event with about ~45ish people in attendance. The audience seemed to be quite engaged and I think we panelists did pretty well to answer the moderators’ & audience questions, even if we did get wonky here and there. Thank you to the FCC for inviting me to sit on the panel, with a special shout-out to CK Tan. It was nice to attend a live event and interact before during and after the panel discussion. For those countries starting to get out of the lockdowns caused by the pandemic, please do enjoy your summers! TESLA NEWS - News of Tesla’s imminent demise in China was premature and quite inaccurate as their May sales were strong, despite speculation last week that they had fallen off a cliff. Tesla delivered 21,936 vehicles for the China market with 12,728 of those being MIC Model Ys. They also exported 11,527 vehicles so the rumor about <9K unit sales was waaay off. In the coming months, we should start to see Model Y sales pull away from Model 3 sales even more and the overall monthly sales number increase as the year goes on. That’s if the challenges that Tesla has faced since January are truly behind them. Most industry folks don’t use orders as a valid statistic since orders can be accumulated over multiple periods. It seems that ‘The Information’ was trying to get out in front of something to try and scoop the rest of the industry and give the site some extra clicks. IN THE NEWS - The EV gold rush is underway and fledgling startups and young companies across various sectors are jockeying for position to be first in line to receive govt. funding to help their companies take leadership positions in sectors like EV charging, battery manufacturing, chip design & manufacturing. The Biden administration is looking to provide ~$18B to support EV infrastructure buildout across the US which will be needed if EV adoption is going to take off. The Biden administration is desperate to catch up to China & the EU on EV adoption so the faster EV charging infrastructure can be put in place, the faster the switch over to EVs by US customers. 80% of Americans still charge their vehicles at home so although charging infrastructure is necessary for certain locations, it isn’t as essential in the volumes and saturation rates as some would think, specifically along the coasts as one might think. The take rates vs. China should be smaller as well since most Chinese in the urban areas do not either have their own parking space and / or can’t charge their vehicle at home. - NIO May sales were 5.5% short of April sales. The original explanation was that the chip shortage affected the supply chain causing the small pullback on MoM sales but now NIO says that it wasn’t the chip shortage that caused their small dip in sales. The explanation that they gave isn’t that important in the grand scheme of things but this is a cautionary tale for those that follow the sector closely. There are MANY OEMs using the chip shortage as a ‘smoke screen’ to likely hide softening demand of their products. I’d alluded to this last week during our Clubhouse room. Make no mistake, there is a capacity issue globally for chip fabrication that will take time to resolve (as in years) but the current shortage IS NOT affecting EVERY single automaker in the same way. Some are likely not really affected much, the chip shortage is just a convenient excuse for their inability to maintain sales in an intensely competitive market. - Is Apple having discussions with two Chinese battery suppliers to supply their Apple car? That seems to be the scoop from Reuters. Let me add more context to this though. Apple could very well be ‘talking’ with suppliers for their potential Apple car. In fact, since the battery is so important to the success of any EV, Apple is likely going to go the ‘directed’ buy route and pre-negotiate terms with the battery supplier and instruct whoever the CM who will build their Apple car to use this ‘preferred’ battery partner rather than have the supplier go out and source the battery on Apple’s behalf. The sourcing and PO will still be cut by the CM but in directed buy scenarios, Apple ‘sets’ the table for the CM so that all they have to do is set up the contracts and logistics. One thing though, Apple has LOTs of meetings. With many ‘potential’ partners. Most of those meetings bear no fruit. I am not saying that’s the case here but I am saying that a meeting is just that. Apple has killed products just before production start. It needs to be right or they’ll wait. That takes nerves of steel and a ton of discipline. - NIO moving upmarket to create a luxury brand. The project’s codename is Gemini and should slot above the current ‘NIO’ brand which would put it in the luxury segment. I’d heard that they were looking to build a mass-market brand to match the rumor that Tesla was in the process of designing and manufacturing a Model 2 for China. I was even told that the brand’s name is Artemis. An odd name since Audi’s software dev company is also called Artemis. They both can’t be true …can they?? - By now, most of us know about the Wuling Hongguang Mini EV that’s blowing the competition away in sales. It’s such a terrific story since they are just cute little cars that would be completely dwarfed when parked next to a Ford F-150 or Cadillac Escalade. One thing to note is that the Wuling Hongguang brand name has been around for quite some time and the original ICE is bulletproof so there’s already built-in trust and recognition with the name. You see them ALL over China and they are one of the most utilitarian vehicles China has. Think of it as the F-150 of China, except they’re tiny and cost a fraction of what an F-150 does. They’re completely annoying when they’re on the road since they’re slow as molasses and many of the drivers pay little mind to obeying traffic laws. How it went from a ‘shop’ truck to an EV that’s main buyer is young women is something that each major OEM should study, study, and then study some more. Unless there are restrictions placed on them, which some cities are considering, I don’t see sales of this vehicle losing any momentum. JUST THE NUMBERS - $300M. The size of Hesai’s $300M Series D round of funding that just closed. Investors that led this round include Hillhouse Capital, Xiaomi, and Meituan. If we are keeping score, Hesai has raised a total of ~$530M, quite a warchest for a company that only booked >$60M in revenue for 2020. A pretty decent consolation prize after scrapping their planned IPO later this year on the Shanghai StarBoard. - 10K units. That’s how many EVs the GAC brand Aion sold in May 2021 between 4 models. It’s the first month that Aion has exceeded 10K unit sales in any month since it began selling EVs in April 2019. - 100 units. That’s how many BYD Tang’s were shipped to Norway this week. Those units are likely to be shipped to Norwegian customers by August. Let’s add that to the other Chinese EV companies that plan to sell vehicles in Norway this year: NIO, XPeng, now BYD. - 2.4M units. That’s what the China Passenger Car Association has raised their 2021 TOTAL NEV wholesale sales to. My good friend and co-host of China EVs & More Lei Xing is likely smiling as he reads this since he famously stated in a previous Clubhouse room that he predicts that sales should reach 2.5M units this year. I was slightly less bullish with my prediction of around 2M units. I do have to admit that if things keep humming along the way they are, the actual will fall closer to his prediction than mine. —— 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.

44 views0 comments