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Tesla's Tangled China Web, GM Playing Catchup with Ford, Year of the Tiger - SAI Newsletter 4



 

We will take a 1-week break with the newsletter for Chinese New Year (CNY). As most of you loyal readers know, China will effectively shut down for about two weeks. This year is different due to the Olympics in my town so I am a bit anxious since we are still a few days away from the Opening Ceremonies and athletes are still arriving which leaves a bit of Covid uncertainty here. Was just informed that our entire complex needs to take a Covid test so that’s what I’ll be doing for part of my day tomorrow.

As I understand it, there are effectively 3 Olympic bubbles in Beijing, the athlete bubble, media bubble, and an ‘everyone else’ bubble. Tickets for the events will be very limited, so it’s going to have a similar vibe to the Tokyo summer Olympics. A bummer because in 2008, I went to ~30 events here which was a pretty awesome experience.

Since we are on the eve of CNY the news cycle has slowed a bit so this newsletter will be a short one but it gives me a chance to update you all on a couple of BIG things I’ve been working on that I think are pretty exciting.

I’d mentioned that we have been working on something BIG for February and I am ready to reveal what’s been keeping us busy back in the lab. I’d hinted at it last week but now that the site is up and registration is open, let me tell you more about the event.

We’re calling it - Mobilit/e - A Two Week Immersion into the Future of Mobility

It’s a fully virtual two-week, global conference (from Feb 14 – 25th) that’ll take you through all facets of the EV. It’s being co-organized by our friends at Climate Transformed and it’s going to be MEGA. There will be over 30 hours of content and we’re anticipating that >3K people from all over the world will have participated by the time Feb 25th rolls around.

Each day we will dedicate to one subject like batteries, connected, policy, raw materials, autonomous - If it has anything to do with future mobility and/or electric vehicles, we’ll likely talk about it.

We couldn't be happier that the Head of Global E-Mobility from Stellantis, Anne-Lise Richard as well as Chief Evangelist for Amazon Alexa Auto, Arianne Walker will be joining the conference. That’s not all though, for those folks in the US, we will have Founder / CEO of battery startup ONE – Mujeeb Ijaz, who recently drove a Model S from the lower peninsula to the UP and back down in MI using his battery tech – a total of 752 miles …on one charge! Levi Tillemann from Silicon Valley battery swapping startup Ample will also educate us on the state of battery swapping in the US.

There are waaay too many rockstars joining the conference to name them here so I invite you to click the link. For anyone who wants to learn about all or ANY part of the EV & clean transportation, I am confident that there will be a few panels you’ll want to sit in on. You’ll easily recognize some of the names and faces. We also wanted to highlight some up-and-coming startups so we will have them sprinkled throughout the two-week event as well.

Next – Lei and I believe that it’s our job to inform, make aware, and ultimately educate the world on all of the mobility stuff that’s going on here since we are confident that it’ll hit your shores sooner rather than later. Part of that education is our MAX series and we are leaning into bringing more folks on to talk about what they’re up to. We set the bar pretty high with Henrik Fisker being our first guest but I think we’ve followed that up with a pretty heavy hitter.

I’ve talked for a while now about how China EV Inc has their work cut out for them as they enter the European market so it made a ton of sense for Lei and me to have Dr. Alexander Klose, the EVP of Overseas Operations at Aiways as guest #2. For those who are NOT familiar with Aiways, they currently sell their only smart EV, the U5 in 10 European markets!

In 2021, Aiways actually sold more of their China built U5s in Europe than they did in China. They’ve recently raised another round of investment and will be launching their 2nd product, the U6 later this year in both the China and European markets which sets them up well and ahead of their domestic competitors who will follow them into Europe in 2022.

Alex was very open and candid about all of the challenges, wins, learnings, and opportunities he sees for Aiways in Europe so click the link here to have a listen, it’ll be an educational hour, I promise! Sometimes it takes a foundational understanding of what needed to be overcome by people and companies in order to truly appreciate the journey – not the outcome. Everything that his team went through the last two years is what many more have yet to, so lessons to be learned through his storytelling.

Lei and I are still on for this week’s EVs & More Twitter Spaces room – 01/27/22 Thursday, 9pm EST/01/28 Friday, 10am China local time although we also may 休息 before jumping head first into 2022!

To join the room, you can follow me at: @sinoautoinsight and/or Lei at: @leixing77

For those that aren’t able to join, the EVs & More podcast is available wherever you grab your podcasts from. Most of our back pods are posted and the descriptions will be able to tell you what we discussed that particular episode.

TESLA

- Tesla and the tangled web that is China. Those of you who’ve followed this newsletter likely know that Tesla acts like Jekyll & Hyde when speaking with China vs. ROW. Linette Lopez details all of the gritty details about the arrangement that they have with the Shanghainese/Chinese govt that allowed them to get ShanghaiGiga up and running so quickly.

You also likely know how I feel about the so-called expert western ‘analysts,’ most of who are so bullish on Tesla but don’t really have a clue about any of the China ‘fine print.’ And I am mostly talking about the much more intense levels of competition in China that are NOT, nor will they likely ever be, as intense in Europe or the US.

If China accounted for 51% of Tesla’s global production, why haven’t any of these analysts taken the time to deep dive into the EV sector here? That’s OK, you guys have me for that but the importance of China to Tesla can NOT be overstated. You can say that their valuation is predicated on their FSD and that’s partly accurate but without China, they can’t get to 20M by 2030. Full stop.

And THIS is partly why Elon seems more compliant here than he does anywhere else. Because he knows his compliance gives him the best chance of getting to 20M units sold. He also knows that to go all-in on China without some ‘outs’ leaves him very exposed, hence exporting out of ShanghaiGiga to Japan, SEA, Oz, and New Zealand. He’s trying to mitigate that risk.

But the challenge is that they both need each other right now. And I don’t see that changing anytime soon. I had a nice conversation with Linette about this and she’s captured a lot of my thoughts in this piece for the Business Insider. Juicy stuff, so click away if you’re keen to know what ‘tangled’ looks like.

IN THE NEWS

- GM wants to mash on the accelerator to catch up to Ford, can it? So all of the traditional OEMs are saying all of the ‘right things,’ but can they really go faster? Think about it, EVs to the legacies is like walking and chewing gum at the same time, but doing BOTH for the first time. NONE of the legacies have really ever done EVs & they’ve never done software.

They’ve ALL ‘dabbled’ in each, but companies like Tesla, NIO, XPeng, BYD, they ‘live’ in it. It’s a part of them and WHO they are. For the legacies anyway, something’s gotta give. It’s either going to be cost, speed, quality, product, or all of the above. Each company needs to look at those different aspects and do a cost/benefit analysis. And remember throwing money at the problem doesn’t solve it. Because you ultimately need to ‘live’ in it as well.

For a few of the legacies, it means blowing everything up and starting over, while you’re on a moving train. But that’s how you’re ultimately going to catch up. By admitting that EVERYTHING can’t be prioritized as #1. So, Toyota, GM, Ford, Stellantis, Volkswagen Group, BMW, Merc, Nissan Renault – What’s it gonna be?

GET SMARTER

- APTIV, technology provider to mobility companies has written a nice, succinct piece about EV charging. It summarizes very neatly charger types, levels, and modes. This will likely all change as technology advances and more standards are (maybe?) adopted but think of this as your Cliff Notes that get you to how the charging world works today, very simply BTW.

- Single piece die-casting coming to XPeng & NIO? For those not familiar with die-casting, think Matchbox and Hot Wheels cars from your childhood but in this case, for humungous passenger vehicles. Die casting is liquid alloy (like aluminum) forced into a pressurized mold to create one large piece or part. Tesla currently uses the process to build entire sections of their vehicle that would’ve in the past taken dozens of parts welded, screwed, and / or glued together.

There are MANY reasons for making the switch. It lowers complexity and cost because there are less parts, less processing, less engineering, and the result is normally a higher quality, more reliable product since it’s not a bunch of parts welded together. A weld is almost always going to be weaker than a consistently die-casted single part.

This reminds me of Apple. Many of their products are designed as such that there is no tooling, processes, molds, or all of the above to get their products built (at a high rate). And that’s the key, doing something slowly by hand costs a lot and doesn’t get your product into the hands of multi-millions each year. So Apple has to develop its own tooling and manufacturing processes to get those mass production quantities manufactured in the quality, cost, and timing that they require.

This tells me that XPeng and NIO are pushing into how to simplify (read: lower costs) the manufacturing process while also making a higher quality and reliable vehicle. Seems like something a mature company would do.

TRENDING ON SOCIAL MEDIA

- DIY an electric bicycle. Here are the instructions. Great idea and identifies all of the particulars but I don’t really want to retrofit a bike that wasn’t designed to have a motor into one that has one. Too many variables that could go wrong and cause an accident.

I’ll just pick an e-bike that comes ready to roll! But for those of you who already love your bikes, you should try this on for size.

- Has a Silicon Heartland just been born? A $20B announced investment by Intel in two greenfield fabs in Ohio make for a lot of hope and MANY possibilities, that’s for certain. It’s a HUGE win for Ohio and for Michigan, they have to be wondering – What about us?? It also shows you the opportunities being created by the move to EVs that we’ve been seeing (and talking about) in this newsletter since day #1.

Re-shoring some of the chip manufacturing should go a long way towards not having to rely on a company that’s already being relied on by entire countries for fab’ing ASICs and reduces the leverage that they have over you. It’s also a HUGE PR coup for Intel. Win’s all the way around.

And we’re not talking fab’ing the ‘dumb’ chips either, Gelsinger (the Intel CEO) is talking about the <2nm chips there when the facility comes online at 2025. You bet he’s hoping that it’s more like late 2024 for the first piece of silicon to come out of one of those clean rooms.

If you’re wondering why this is so important, currently manufacturers/OEMs have < 5 days of chip inventory on hand at their facilities. That means ANY slight hiccup shuts the machine down.

- Biden is changing the student visa policy to make it easier to work in the US after graduation. The big changes are increasing the number of disciplines that qualify for a visa and the other is changing from 1 to 3 years how long the work visa will last under all of those qualifying disciplines. The Biden administration can’t actually increase the number of student visas though, since that’s something only Congress can do. Which in the current environment is NOT likely.

BY THE NUMBERS

$400M – Baidu’s entry into the smart EV space Jidu just announced a capital raise of $400M coming exclusively from Geely and Baidu. Keeping it in the family. Another $1B or so will likely get them to production. Maybe. I think the going rate now is closer to >$2B although they’re partnering on a lot of the heavy lifting to make up for lost time so that could reduce overall funding needed to Job #1 on the road.

INTRODUCING

- The XTurismo Limited Edition Hoverbike. Yes, please! This beast comes from Japanese A.L.I Technologies and is currently in limited production (200 units). It’s not electric = It's powered by a 228hp Kawasaki motorcycle engine.

It’ll be limited to riding on racetracks for now but for those that can afford the $777K pricetag, that’s probably OK.

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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 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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