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The Li Auto L9 unveiled, Tesla vehicles banned, and BYD Down Under - SAI Newsletter 24



 

The headline picture is one I took this past weekend while on a bike ride with the family. It’s of the West entrance of the Solana mall in Beijing just northwest of Chaoyang Park, Beijing’s equivalent of NYC's Central Park. I thought it was striking because of the size of the NIO House that’s going to open next to the smallish VW & Kia retail stores. I sarcastically tweeted this pic with the caption ‘Does this portend VW's future in China? #sizematters Both brands at the moment aren’t doing well vs. NIO which just launched its newest SUV and is about to enter some European markets. Can Hyundai/Kia and VW make comebacks, I have my reservations but it’s more about the domestic competition than anything else. The saga continues. To carry on this theme of whack-a-mole, if you’ve been to a location in BJ (and I assume its similar in Shanghai) at or around the time when there’s been a known case of COVID, the health authorities will contact you (maybe) and either have you stay home or send you to a quarantine hotel. My wife had lunch a full week before she was contacted and told to stay home for three days which meant she couldn’t go anywhere for those three days (health code was red), but I, who is living with her had no such request. Yes, I don’t know how to square that circle but that’s what we’re dealing with. On top of that, her health code turned green after the first day, so she didn’t actually have to stay home for those three days. Another headscratcher. The big news this week was yesterday’s Li Auto L9 launch event. There were quite a few breadcrumbs that were dropped prior to the official unveiling so not a ton of surprises from yesterday but it’s competitively priced at ¥459K (~$69K), which is ¥110K (~$16K) higher than its older brother the Li One. It’s BIG, measuring 5.2M long and will initially only come in three colors. A forest green, light blue and an eggplant purple. During the livestream, Li Xiang directly targeted the BMW X7 and Merc GLS so it’s no coincidence that the L9’s footprint matches up almost perfectly with both. Bold statement of the night was when Li Xiang made the claim that it was the best SUV on the market for <5M RMB so poking at its much more premium and expensive competitors from Aston, Bentley, Rolls, and even NIO. Li Auto really leaned into it being perfect for a family and the biggest use cases were for going on roadtrips and while on those roadtrips watching movies, playing games and resting comfortably. It’ll come with a premium Dolby Atmos sound system and have reclining captain’s chairs for the middle row so that reinforces all of those use cases. It also has a small refrigerator that’s accessible by the 2nd row passengers.That’s a nice touch for roadtrips! Although there’s a decent amount of room in pricing between the Li One and the L9, since they are targeting Merc and Bimmer customers who likely could afford that extra bit, I can see some Li One sales being cannibalized by L9 so let’s see how the numbers end out by the end of this year. Li Xiang also said they could see 20K/month being sold by the end of this year. Another big number considering sales is hovering right around 10K/month right now. Some pics from the media team.

China EVs & More is scheduled this week for Thursday, 06.23 – 9pm EST, Friday, 06.24 – 9am China local time so meet us in our Twitter Spaces room then to get a download on all that’s happening in the space. For those that can’t join, the China 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. QUOTED - This isn’t a quote per se but it is a summary of the presentation I gave for the Nomura Investment Forum 2022 a few weeks back. I’ve received a lot of positive feedback from it so if you’ve missed it but were part of the conference, you should be able to access the recording by clicking on the link in the article. TESLA - Tesla banned due to cameras and a lack of trust. Beidaihe is a resort area outside of Beijing and the location every summer of an important central government meeting. This year it was decided that just before (starting July 1) and after the meetings, ALL Tesla vehicles would be banned from the resort town. Folks I know who frequent Beidaihe that I spoke with that own Teslas said it’ll be interesting to see how they deal with it from a practical standpoint because there are a lot of Teslas driving around the area right now. This is just following Teslas being banned in parts of Chengdu, where China’s president also happened to be. Let’s be clear here – this isn’t a Tesla problem, it’s a smart EV problem that China EV Inc is more than likely to run into as more of their vehicles ship to Europe and finally to the US. Let’s see if the EU & US are asleep at the wheel on this one. - The real reason Tesla is not (yet) building a factory in India. According to the author it’s not for the reason Elon gave when he tweeted ‘Tesla will not put a manufacturing plant in any location where we are not allowed to first to sell & service cars’ but because Elon wanted to import MIC Model 3 & Ys first into the Indian market. I’d written about this in a previous newsletter last year, assuming that importing specifically from China would be a non-starter and it sounds like that’s the case. It seems he wanted to push a certain narrative to his Tesla STANs and position he and Tesla were being bullied and forced into a position it didn’t want to be in by India. Do I think he’ll eventually manufacture in South or Southeast Asia – Yes, I do. Whether that’s Indo or India will likely depend on how the public pressure campaign that he’s launched works as I am certain he’d rather build eventually in India where the market is much, much larger. We shall see. THE MOST INTERESTING THINGS THAT HAPPENED THIS WEEK - It’s O-fficial. Foxconn is now building cars for Lordstown Motors at its facility in Ohio. The Lordstown Ohio factory is now an asset that sits on Foxconn’s books and many of Lordstown Motors employees have swapped Lordstown badges for ones with the Foxconn logo. For those interested in learning more about what’s going on with Lordstown, I recommend watching this John McElroy interview with current Lordstown President Edward Hightower. There were a few wrinkles that Edward added that I didn’t know about and he also gave some color as to how the factory would run once the Fisker Pear comes online (scheduled for mid-2024). Currently, the plan is to have every product, regardless of brand, to go through the same stamping, paint and body shop. This also likely means that there will be just one huge assembly line rather than smaller ones separated by brand. This makes me wonder how many parts will be shared by each of the OEMs that decide to use Foxconn as their CM. There will already be some sharing due to Foxconn’s MIH (Mobility in Harmony) platform. If not careful, the OEMs that Foxconn will CM for may have a hard time differentiating their products in the market. At 6M sq ft (vs. 5.3M sq ft for FremontGiga), the factory is massive so unless the (Fisker) Pear and the (Lordstown Motor) Endurance can sell a ton, they’ll likely need to recruit one or two more startups to fill the assembly line. IN THE NEWS - The ID series is having problems finding love outside of China too. Although the ID Series vehicles would not resonate with Chinese consumers who crave connectivity and more of the digital features associated with China EV Inc, I thought they would perhaps find a decent-sized audience in Europe and the US. This review by the UK's Car Magazine seems to dispel my theory that the ID Series vehicles would have a market, at least in the UK. This ID.5 which is supposed to be a competitor to the Model Y, Ioniq 5, and Mustang Mach-E doesn’t seem to bring the goods. The reviewer effectively says the car is serviceable trying to avoid calling it boring to drive but spells out that there is no driver enjoyment. In the US, the ID.5 will have the same competitors so if it can’t compete with them in the UK on performance there, it’s likely going to struggle to compete in the US. Let’s not even bring up China since there are waaay more competitors in that segment than in any other country. Did I mention that it’s £50K? That’s $61K with today’s FX conversion. Ouch. The VW team is likely back in the lab figuring out how to pull ahead what they’d planned as products & features for MY (model year) 2027 into the MY 2025, if not it could get a lot uglier then it already has for them. And if you’re wondering how ugly it is – VW brand is down 29% in China YTD and 26% YTD globally. Double ouch. - The SAIC & Alibaba backed IM Motors begins delivery of its first model, the L7. If it’s getting hard for you to keep up with all the brands and products that are launching in China, you’re not the only one! The reason this is important is that it’s another brand in which a tech company has a major stake, in this case, Alibaba. And just for context, this large sedan is going after the same market that the NIO ET7 is, they virtually have the same footprint, so we could see fireworks as SAIC isn’t playing games and neither is Alibaba. The L7 is cheaper - ¥409K (~$61K) vs. ¥458K (~$68K) – but there aren’t that many competitors in this segment so these two vehicles go head-to-head a fair amount. With battery swapping a perk in favor of the ET7, let’s see if that $7K delta is a difference-maker for the L7. - Apple is looking for automotive software engineers. It seems that V2.0 of CarPlay is something they’d like to integrate into more Chinese vehicles. If that’s the case, the EV first companies aren’t likely to be affected materially by this as much as the legacies, specifically the ones that are still all thumbs when it comes to their OS, infotainment, diagnostic and embedded systems. - DeepRoute moves into commercial delivery with its latest partnership. It’s the first deployment of L4 capable autonomous driving tech for medium-duty trucks. Basically short-haul trucking. Maxwell Zhou, who we interviewed for our China EVs & More MAX series mentioned that he’d like to get his HW/SW stack onto more vehicles and now we know he meant both passenger and commercial. DeepRoute is aggressively trying to lower the Total Cost of Ownership (TCO) on the L4 systems so that they can be added to even more vehicles so I anticipate even more announcements from them in the near future. - Are BYD vehicles ready to hit the roads down under? According to my sources, they are not but the importer of record is not letting on to that effect. Homologation for Aussie roads is some of the toughest in the world. It takes months and a Brinks truck worth of dollars (<$10M in some cases). And with the Australian + NZ markets buying <1.2M cars/year, making the necessary investments to sell properly there is a hard sell, especially when there are European and American markets to conquer first! I’d be surprised if we see any BYD’s roaming Australian roads before the beginning of Q4’22 and that's me being optimistic. INTRODUCING - The Lightyear 0. Lightyear, a Dutch startup that was founded in 2016 has announced the production of its first product, the Lightyear 0. There will only be 946 of them made and they’ll run you ~$263K (not cheap), but a key differentiator between the 0 and other EVs already on the road is that it can squeeze 44 miles out of solar power, making the estimated total range = 388 miles. Top speed tops = 100MPH so I’d say this is more of a POC than anything but it’ll likely find its way into a few rich people’s garages. The 44 miles on solar power is being marketed as a way to not have to charge for months since most people won’t travel that distance in a day. BY THE NUMBERS - 200K. That’s how many vehicles XPeng has delivered since its first delivery back in December 2018. A huge milestone for them and I know I have a few readers from the XPeng team so congrats to you all! - 19 of 20. That’s how many of the fastest-growing chip companies over the last 4 quarters reside in China. The US sanctions on Huawei pushed the Chinese government to focus on investment and for domestic Chinese companies to shift sourcing away from foreign fabs and designers. —— 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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