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Tesla Crashes, CATL Discounts Supply Because They Can, Zoox O-fficial L4 Pilot - SAI Newsletter 8


I’ve been pretty terrible about getting the newsletter out consistently at the same time for the last few months and that’s a reflection of my inconsistent schedule and my inability to control parts of it. It’s going to continue to be pretty hectic but I’ve now started a bit of a routine and part of that routine is moving delivery of the newsletter to Tuesdays. I’ve been told habits take 21 days to form so let’s see if we can’t keep this up for the rest of the year. I am a PROUD Michigan State alum so what happened last week in East Lansing was heartbreaking to see. Even scarier, my niece is currently a freshman along with a few of my friend’s kids being students there. Having two younger ones of my own, I can’t even imagine the helplessness they must’ve felt most of last Monday evening. We cannot allow ourselves to normalize these tragedies. I should also applaud the folks in A2 who set aside the rivalry to give the Spartan community the equivalent of a big hug. Bravo to you. Go Green! CHINA EVs & MORE Lei and I will have our live show this Friday – 10am ET via Twitter Spaces. For those wondering, every Thursday, 3pm ET is still when we’ll normally target hosting the live show so bear with us as we get through a few anomalies in our schedules and battle back to our normally scheduled timing. We’ll try to be back at our normal hour in the next couple of weeks. Promise. For those that 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 you think will make the show better. Also, if there are any companies you’d like us to talk about or questions you have, you can let us know. TESLA - 4680 production to move from BerlinGiga to AustinGiga due in no small part to the local requirements of the Inflation Reduction Act (IRA)? Because of the local requirements that need to be fulfilled in order for US car buyers to receive the $7.5K tax credit, Tesla (and other non-US legacy automakers) are contemplating moving production to the US. Whether this is a bluff or staredown between the automakers and the EU, we will have to wait and see, but I’ve been told that the EU would not likely draft their own IRA for Europe. But if more than a few OEMs and battery cell manufacturers pull the ripcord on building in the EU, can they afford NOT to set up some of their own protectionism? - One of Tesla’s largest investors is pushing for succession planning, but who could/would succeed Elon? This is a very logical request from a very supportive investor but so far, its fallen on deaf ears. Elon currently runs three major companies: Twitter, SpaceX and of course Tesla. Whether you like him or not, that’s a lot of stress for one person to take on a daily basis. And who would want to take on that thankless role of following up running Tesla right after Elon? I firmly believe that a decent % of Tesla’s valuation is attributed to Elon so the second he announces he is stepping down, the share price would get a pretty good haircut. Not only that, but the next CEO would likely have to be given the seal of approval of the Chinese govt. Let that one sink in for a moment. - Another Tesla crashes into a parked vehicle. This is a problem for Tesla and NHTSA has not really articulated how many of the accidents are due to driver error and how many, including the latest, involved the driver having Autopilot/FSD activated. They need to sort this out. The public has a right to know and there should be new regs put in place so that innocent bystanders aren’t unknowingly part of Tesla’s FSD beta testing. - Tesla has a high-profile accident that resulted in a fatality …in China. This accident involved a Model 3 racing through a lower tiered city before finally crashing into a car and bus. Video of the crash is posted in the article for those that would like to see how fast the M3 was moving. No indication this involved Autopilot or FSD but it seems that anytime a Tesla is involved in a crash, it’ll get spotlighted – no matter where it happens in the world. - Tesla recalls 362,800 vehicles due to a crash risk. See above. NHTSA should do a better job of articulating what’s going on with Tesla and whether or not Autopilot is indeed safer than a driver. Are the accidents that are occurring a part of an acceptable %age of accidents for the software, if so, what is that acceptable rate? If NHTSA can’t determine this then why is Tesla still allowed to market Autopilot and FSD the way they do? How is it that you can’t tell us if Autopilot/FSD was activated on the accident that happened a couple of days ago? Pedestrians and other drivers deserve to know this. Also, they DO need to update the word ‘recall’ to something more appropriate. INTERVEWED/QUOTED - MIT Technology Review. I had a chance to speak with Zeyi Yang for his deep dive into how China became the #1 market & manufacturer of EVs globally. To summarize, they became an overnight sensation over the course of 20 years. In the article he talks about the many different factors, that when added together created the monster that is now collectively China ‘EV’ & ‘Battery’ Inc. A must read for those who don’t know the entire history. - Bloomberg. Ford’s long, 2-year dance with CATL that may end with a Ford battery factory in Marshall, MI. For those who hadn’t been following but are now really interested in ‘how the deal’ came about, this article highlights all of the major twists and turns like Ford originally leaning towards MX for the site, how the IRA blew up their cost spreadsheets and how Ford is taking a necessary leap of faith in order to try to compete with GM, Tesla, Kia/Hyundai and unnamed others for EV sales in the US. This isn’t an ‘optional’ outcome for Ford. This HAS to happen and it HAS to get all of the bennies for the US car buyer and the battery manufacturer. That’s the ONLY way Ford can compete. See Farley and their 25% cost disadvantage vs. other legacy auto. NEWS THAT GOT OUR ATTENTION THIS WEEK - In order to solidify its order book, CATL offers a deep discount for those customers who will commit to sourcing from them for the next three years. As I’d said before a number of times, if China Battery Inc is allowed unfettered access to the US market the risk to the smaller players, namely those non-Chinese battery startups trying to establish a client list in the US, is that they will NEVER be able to meet the pricing of a CATL or a BYD and they’ll be frozen out of the market which would also mean that CATL & BYD would be LFP battery suppliers for like …ever. It's not happened yet but let what they’ve offered to automakers in China be a warning to those involved and in discussions with China Battery Inc currently for US supply of battery cells. The only players that really have that capability to move markets at this point in time for LFP – CATL & BYD. For CATL, it becomes existential, so they offer this to push others out of the market. I say existential because that’s the ONLY thing they do, fab and sell battery cells. For BYD, they could conceivably supply themselves and their growth the next few years and not lose too much. TRENDING ON SOCIAL MEDIA - President of Kyocera saying the quiet part out loud. A Cliff Notes version of what Hideo Tanimoto, President of Kyocera said – China has gotten very expensive as a place to manufacture products. Combine that with the challenges of acquiring cutting edge equipment to manufacture ASICs there and of exporting some of those Chinese manufactured products to parts of the world that currently aren’t getting along very well with China and you have an location that’s become very unattractive for being the manufacturer to the world. It only makes sense to manufacture there if you’re selling into the domestic market. Hmm, that sounds really familiar to something we alluded to a while back. - Well done is always better than well said. Zoox – a job well done. Zoox became the first company in the world (that I know of) that was able to road test it’s robotaxi. One that doesn’t have any steering wheel or acceleration / brake pedals around a 2-mile loop in Foster City, CA. The main differences between previous ‘drives’ with similarly designed robotaxis is that it complies with federal safety standards, can drive faster than 25 MPH and is designed to be mass produced. For comparison, below are the other L4 robotaxis from Baidu (Apollo), Cruise and Waymo that are all scheduled to begin pilots in the next 12-18 months.

BY THE NUMBERS - 2,781. That’s how many VF8 EVs Vinfast recalled last week in Vietnam. Vinfast has shipped 999 Haiphong manufactured EVs to the US that I believe are sitting at some port waiting to be delivered to US customers. It sounds like this bolt that comes loose isn’t the reason they’ve not delivered any units to their American customers but it’s lucky they didn’t because they have the same issue as the recalled vehicles in Vietnam. Mark this down. Plan for more hiccups out of Vinfast. - ~100K. That’s how many tech sector people have been laid off just this year. Tech was a glamorous sector and gave many folks big heads as they uttered the words, ‘I work in Silicon Valley/SF for XXX tech startup.’ Tech management largely bet incorrectly that COVID would permanently change the way we work and now the over hired staff are paying that price. That veneer has now been stripped away and tech jobs, like others will have its ups and down and there are a lot of people that I know that were just waiting for an opportunity to leave – this is their chance. The difference here is that the traditional auto sector REALLY needs the skills, many of which were laid off in those 100K jobs! Since we know the car companies need them and many of them would be open to working – full stop, why wouldn’t the car companies do everything in their power to recruit them? Therein lies the rub. For those in Silicon Valley interested in mobility, let me assure you many of the companies I speak with on a weekly basis need your skills so if you’re interested in learning more about the companies and the opportunities, ping me and I’ll connect you with the right people. - 1,000. That’s how many swap stations NIO plans to add in 2023 in China. That means they’ll have >2.3K in China by the end of 2023, some located off highways, some located in city centers. This also points to their bullishness in sales for 2023. Could this be at the expense of ABB as I’d postulated in an LI post this week? Will swapping work outside of China like it has in China for NIO? I have my reservations on that, mainly due to the size of cities in Europe and the US (read: much smaller) but its most certainly an additional convenience for their Chinese customers. ___________________ 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 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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