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Tesla Q1 Numbers Impress, Genesis Lights Up Shanghai, BYD Quietly Kicking Butt - SAI Newsletter 13



Going over some of the news this week about the new automotive brands that are being launched and all of this technology being stuffed into EVs now, I can’t help but think that the level of competition in the past in the auto sector is not going to come close to the fierce competition we’ll begin to see towards the later part of this year into 2022 and beyond. A big reason for this is because up until EVs started gaining popularity recently, the market was still immature and growth among many automakers that had serviceable products and just average marketing strategies was still possible. Now though, as the market slows and the confidence levels of the domestic players are at an all-time high, as reflected in the boldness of design of their vehicles as well as their new products being stuffed with the latest technology, I can’t help but think that this Shanghai auto show, likely the only traditional major auto show this year globally, will mark the beginning of a new era for the transportation & mobility sector. One that blurs the lines of what we would call a company competing in the sector. Are they a tech company? Are they a legacy automaker? Are they an SOE? Are they a data company? A service company? A platform? All of the above? Further, traditional business models will be abandoned and new ways of generating revenue have already begun to emerge along with how these companies attract, differentiate themselves, and keep their customers excited about their brand and its products. I consume a lot of information about this sector and I am starting to see more and more of the same analysis which tells me most people still don’t get it. They want to paint what’s happening to the sector as a natural evolution. It’s not. It’s not a disruption either as many analysts have called it. It’s a reset. And the new entrants that are resetting the sector are playing an entirely different game. A game that’s dominated by software and where changes are numerous and come fast and getting faster. Where bigger doesn’t mean better. Where strategies AND technologies may differ by region but results need to be the same. Buckle up because we are barely out of the first inning in a game that’s bound to go extra innings and the oddsmakers still don’t know who the winner(s) will be. I went to Kunshan last week to check out the new WM Motor W6 but the highlight besides getting a real-life look at the new SUV was listening to WM CFO Ran Zhang & VP Thomas Lin discuss how the company has been able to survive and get to this point and the technology that powers the W6 that will be the foundation for future WM vehicles. Frankly, it was just nice to get back out on the road talking, listening, networking, and geeking out on cars and tech with others in real life! I am currently in Changzhou to attend the global product launch of a new product from Niu (the electric moped company) and coming in two weeks will be back on the road checking out all the new cars being launched just before and at the Shanghai Auto show. Last week I was also able to catch up with Paul Krake from the US-China series. Aside from some technical difficulties we touched on everything from BYD, to Tesla to how I think the next few years will shake out. Thank you for those that were able to Zoom in but for those that couldn’t, we should be posting a link to the video in the next week or two so I’ll share that link via this newsletter once it’s posted. The other housekeeping items: Join Lei Xing and me as we host our ‘China EVs & More…’ Clubhouse room and go over the week’s most impactful EV news on Thursday 9am EST. For those that would like to join Clubhouse, please DM me and I will sort you out. Again, still only on iOS with a non-Chinese mobile number. I am also pretty excited about being invited by the China Institute to sit on a panel “Getting to Zero: How the US-China Race for Electric Vehicles is Changing the World” scheduled for Tuesday, April 6th (tomorrow), 7:30 – 8:30pm EST. More details and sign up are here: https://www.chinainstitute.org/event/getting-zero-us-china-race-electric-vehicles-changing-world/ TESLA IN THE NEWS - Tesla (un)surprisingly has its best quarter ever in Q1’21. Let’s remember that this is notoriously a slow quarter and that CNY fell into this quarter as well in China. There were also some production constraints that all but prohibited any Model X and S’s to be manufactured. Finally, Model Y production hasn’t completely ramped in China so there’s a decent chance that Tesla left sales on the table! You’d think with those types of odds against them they’d have a soft quarter. Well, they delivered over 184K vehicles in Q1’21 surprising most. This was their best quarter ever and HAS to be demoralizing to competitors that are launching vehicles into the market this year as it seems despite all these challenges, specifically in China where Tesla has seen increased complaints about quality and service (more on this later), about 1/3 of the 184K were sold in China. This will for certain lead to unachievable sales and share price forecasts in the future but for now, we can marvel at how Tesla has run away from the world’s EV competition and will likely continue to throughout 2021. IN THE NEWS - Krafcik decides to step away from Waymo. This seemed to be the biggest news of the week and people have been speculating since on the possible reasons for John stepping away. I have a few ideas myself. First, getting robotaxis on the road is really hard. And although Krafcik made some significant progress while at the head of Waymo, there’s still a ton to be done. As someone who grew up a Pistons fan, I remember that we never had any problems beating the Doug Collins coached, Michael Jordan led Bulls. It wasn’t until Phil Jackson took over as coach that Air Jordan became 6-time champion – Air Jordan. Krafcik should be given a ton of credit for where Waymo currently sits but maybe Waymo needs their own Phil Jackson to get them over the hump? Let’s not forget this business didn’t exist years ago so John was making up the rules as he went along which now many other AV startups follow, both here in China and the US. I can’t wait till he writes a book about his adventures. I am betting there will be some pretty entertaining stories and some crazy challenges we have no idea about. I don’t see his departure reflecting poorly on his accomplishments but let’s see what Waymo can do over the next few years, maybe my opinion will change. - Even Bentley is going green for the Shanghai Auto show. Bentley will be launching a hybrid at the Shanghai auto show in two weeks. A brief summary of the specs. The petrol engine will be a 3-liter V6 w/ 443bhp, 0-60mph – 5.2 secs. Oh, the luxuriousness will still be there in spades including over 330’ of white stitching that takes more than 44 hours to do by hand. - Why GM could be better built vs. other legacy automakers to take full advantage of the future of transportation. The bottom line is that Mary has been able to make some really tough decisions like exiting unprofitable markets & businesses and not accepting the ‘that’s how we’ve always done it’ answer from her managers. There haven’t been many other OEM leaders you can point to that have confronted those tough questions with bold decisions. Cruise is also making waves with its progress and valuation. All that in addition to the announcements made in January about further investment to ‘digitalize’ operations and launch new more mobility-friendly businesses has GM poised to be a major mobility and transportation player. - While other carmakers do what they can to steal attention away from Tesla, BYD seems to be content to just quietly keep kicking butt. Did you know: BYD makes its own batteries? Makes mobile phones? Is one of the largest electric bus manufacturers in the world? Design many of their own chips? Is the world’s largest face mask manufacturer? Oh, and they also make electric passenger vehicles. They do all of that and more. During my weekly Clubhouse room, Lei Xing and I spoke with a few guests about all the things that BYD does but that might not be known to many. BYD is currently valued at $72B and it’s the quietest $72B in the EV sector. NIO is currently valued at $61B in case you are wondering. Oh, and Berkshire Hathaway (read: Warren Buffet) owns over 8% of BYD which he paid$232M for 13 years ago. That stake is now worth just under $6B. - Maybe it’s easier to talk about who’s NOT going to build their own car. Didi is in. China’s Tesla, which will likely be IPO’ing later this year at >$60B valuation is now also rumored to be poaching talent from other car companies in order to get their own vehicle on the road. The opportunity is too big to pass on I suppose but at least Didi foray into the sector seems logical and not done out of #FOMO or hubris. TRENDING ON SOCIAL MEDIA - Genesis lights up the Shanghai sky with a world record-breaking drone light show. For those wondering, Genesis is Hyundai’s luxury brand and competes with Lexus, Acura, and the ABBs (Audi, Benz, BMW). Genesis used 3,281 drones to display its logo and a few other shapes to introduce its G80 & GV80 luxury sedan and SUV to China. The combination of the Shanghai skyline and the drone show made for a VERY memorable evening. One that’s worth taking the 50 secs to watch the highlight video here. I am in a WeChat group with the Genesis China CEO and he admitted that he was quite nervous as the show was beginning. And for those outside of China, it’s doubly impressive that he was given the permits to even out on the show. - With its surprise leadership in global EV sales, Europe follows up its strong 2020 by looking to bolster its battery-making capabilities in order to rely less on Asian suppliers. Currently, 27 plants are planned to be set up in France, Germany, Italy, Norway, and England. The total output = 500 GWh / annum. 6 alone have been planned by VW Group as evidenced from their ‘Power Day.’ With virtually no chance of catching China, the EU has its eyes on becoming #2 in the world in cell production (at ~30% to China’s ~60%). That type of capacity would mean that most of their battery demand could be supplied domestically creating competencies, competitiveness, and most importantly jobs on its shores. US, where are you at? - China Evergrande New Energy Vehicle Group (CENEV) will begin delivering vehicles via their brand Hengchi at the beginning of 2022. They’ve also claimed that they’ve built 10 factories globally and that a few of them are almost ready to trial production runs. They will be showcasing some of those vehicles at the Shanghai auto show so I shall see for my own eyes how close they are to beginning production next year. PRODUCT & SERVICE INTRODUCTIONS - What new vehicles should we see at the Shanghai Auto show? Here’s a brief summary that we’re tracking (I know I am missing others but will add them to the list next week.):

  • Toyota EV

  • MG EV roadster

  • NIO et7

  • WM Motor w6

  • XPeng P5

  • Subaru all-electric SUV

  • VW ID.6

  • Voyah SUV

  • Zeekr

—— 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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