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Wang Chuanfu's Rally Cry & Warning, China AV Inc Spotlight, MIC M3 Refresh - SAI Newsletter 32



 

We will see you in Munich for IAA. I just booked my ticket; I was able to get direct flights on Delta. Pretty excited, I’ve never been to Munich nor any of the Euro auto shows so for those readers that plan to attend and / or are hosting events, let me know if you’d like to connect for a pint and if you have any pointers on the ‘what to do in Munich…,’ that’s welcome as well.

Visited Our Next Energy (ONE) this week for a technology and roadmap update. Pretty impressed with Mujeeb and his team. They are leaning into grid for now as it’s less volatile than the EV space and it’ll allow time for them to validate their tech – a big part of which is the factory they’re building in Detroit’s backyard. They’ve broken ground so I am hoping to get a tour soon so stay tuned as I try to finagle my way into checking the greenfield site out.

Not to oversimplify, but ONE is focused on LFP chemistry for their current set of products (called Aries) while their next gen battery system called Gemini will be a dual chemistry / hybrid system. The theory is that 1% of the time you’ll need a longer range for your travels so Gemini’s target is to have a range of 600 miles so that in real world instances, which for Americans involves towing and driving BIG SUVs, would get us closer to what a full tank of gas can gives us – range of ~300 miles. When the LFP battery modules get low, that’s when the anode free cells kick in to recharge the LFP side to push you along a bit further.

Right now, ONE is America’s best chance and biggest hope for becoming this side’s CATL. That’s a lot of pressure and we know that pressure either bursts pipes or makes diamonds. They’ve gotten a lot of support and funding from the state of Michigan and anything that creates competition I am all for. They still have a ways to go if they’re to be considered a success but if anyone in the US can do it, it’s Mujeeb’s team.

Right after IAA, I’ll be back in Detroit for the Auto & Battery show the following week. A very busy several weeks ahead of me so for those that are going to be in Detroit for the Auto show, we’ll be hosting our annual auto show happy hour again – details to follow. If you stop by, that first thirst quenching adult beverage will be on us!

We may also have a few surprises up our sleeves so stay tuned for other events that we are trying to sort out.

QUOTED

- MIT Technology Review. Zeyi Yang, the author of this article about ADAS system adoption in China does a very good job highlighting some of the players involved, and how their systems are being launched into Chinese cities and that’s the key here. The use of these systems in cities where the complexity of safe navigation is dialed up quite a few notches vs. highway driving.

For those that have never been to China, imagine bicycles, three-wheeled delivery vehicles, cars, buses, motorbikes, and pedestrians trying to get to the same place ALL AT ONCE. That’s how it was in Beijing the first day I stepped off the plane. It’s gotten SO MUCH better over the last few years with many more people obeying traffic signs and some cities even developing its own traffic etiquette. As we get to the lower tiered cities though, it’s still the wild, wild west where obeying traffic signs and laws is optional.

With everything else in China, in any sector that has intense competition which in China is any that generates billions (if not trillions) of RMB, competitors always need to lead, quickly follow or get pushed out of the way.

Also unique to China, the number of competitors and the intensity of the competition. In this particular case, the support from the Chines govt allows for quick launches of pilots and more startups trying their hand at providing the best solution.

Do I believe that the Chinese players are better than a Waymo or Cruise? Let’s say that I was able to ride in 4 robotaxis from the biggest players that last time I was in China in April in Beijing, Shanghai and Shenzhen and I don’t think they’re that far behind. And if ultimately, it’s the data that makes the biggest difference, the ability to launch more pilots in more cities creates advantage: China AV Inc.

That also means that any of these consultancies that ‘rate’ these AV companies who’ve not recently, if ever, been to China to try out and test what’s on offer there should not be given serious airtime and / or coverage from any media. That also goes for people / consultancies that are China EV experts without the visa pages or passport stamps to show for their expertise.

CHINA EVs & MORE (CEM)

This week’s live CEM is scheduled for Friday at 9am EST. Please do join us and bring with you an appetite for knowledge and lots of questions. We’ll talk about July sales and more.

If you can 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 will make the show better.

BIGGEST NEWS OF THE WEEK

- Vinfast passed its 2nd biggest test for an EV maker. Vietnamese EV maker Vinfast just IPO’d. This is a HUGE milestone for a company that elicits more questions than answers. As someone with roots to Vietnam, I am a bit torn. I think it’s great that a Vietnamese company has been able to make it to the US markets, but the $23B valuation is when I get my objectivity back and wonder what SPAC math was used in order to get to that number.

EVERYONE I’ve spoken to about this IPO & how Vinfast’s value went from the supposed $23B pre-IPO to trading at $85B earlier yesterday is also scratching their heads. Do you all know more than I do about this company and their current capabilities?

The VF8 was universally panned by auto journalists in reviews so there’s a lot of improvement that needs to happen, let alone a factory to be built in the US that’s not supposed to now roll off Job #1 until 2025 if they’re to get any of that IRA largesse. I can only think of one or two people that have been completely effusive about them and that’s likely because they’re getting paid to, whether they admit it or not.

BTW - The two milestones I was referring to is 1. Getting their products on the road. They’ve shipped a total of 2.1K vehicles to both the US and Canada, far more cars than many other EV startups have shipped, especially the US based ones. 2. Next is the IPO. This is being highly celebrated in Vietnam and the founder of Vinfast – Pham Nhat Vuong – almost tripled his net worth as Vinfast reached above Ford, GM and quite a few other legacy and EV maker valuations.

BYD

- Wang Chuanfu wants to dethrone the legacies. In part of his speech commemorating the 5 millionth BYD vehicle rolling off the line, Wang communicated a call to action to his fellow Chinese EV makers that they have the opportunity to become what GM, Volkswagen and others have historically been to the global traditional automotive space, and that’s a worldwide, trusted brand that leads the sector in the 21st century and beyond.

If I were any of the legacy automakers, I’d listen. I wouldn’t mistake any kindness for weakness. This dude wants to beat the sh*t out of each and every competitor that they go against in all the 55 and counting markets BYD currently ships to.

This rally cry was to inspire the other Chinese EV CEOs to do more. It should be taken as a warning to everyone else in the automotive space.

TESLA

- MIC Model 3 refresh launch imminent. SOP is likely within the next couple weeks with delivery shortly thereafter. This should give Tesla another sales boost as customers have been on the sidelines waiting for this refresh. And it’s about time. The MIC Model 3 has remained in the market largely unchanged, except for price cuts of course, for the better part of 3 years.

It’s still unclear what pricing, specs and features will be, but it could be tough sledding for Tesla to get much of the price cuts back if they plan to charge a premium vs. current MIC Model 3 as there are quite a few other very viable choices in the China market should pricing be unattractive.

- A trial that could uncover the truth about FSD? There’s a trial set for October in a Florida family’s lawsuit over a fatal crash that occurred in 2019 while the driver had FSD enabled. There was a similar crash in 2016 and we may find out if there were any significant updates to the system between 2016 and 2019 to better detect people and things that cross traffic in front of FSD enabled Tesla’s since in the cases of those two particular crashes, FSD didn’t detect trucks in front of it before crashing.

There are a couple things going on here that I want to point out. First, there are Tesla owners that are using FSD and touting it as the holy grail of ADAS systems, believing that it’s an L4 system when even Tesla (likely for legal purposes) calls it an L2 system.

Tesla doesn’t really do much themselves to dispel the notion either which is another issue. I am all for the roll out of new technology and was happy about the approval for the use of more robotaxis in SF. But I also don’t feel that comfortable when some Tesla owners abuse a system and put innocent bystanders at risk that have nothing to do with the pilot program. If these drivers are attentive and there are failsafe’s in place to severely limit it’s abuse, I’d feel much better about the FSD system being beta tested on roads that I drive on with my kids.

NEWS THAT GOT OUR ATTENTION THIS WEEK

- The CATL Shenxing battery that loves fast charging is going live early next year. China Battery Inc keeps pushing the envelope of innovation and pricing. In this particular case, CATL’s newly introduced battery boasts a claimed 400km range after charging for 10 minutes.

When we look at how the battery cell space will evolve over the next several years and into the 2030s, we should not only look at new chemistries, complete new technologies but also efficiencies brought about by reconciling modules and pack engineering and how fast charging could make wait times closer to the average of 4.5 minutes it takes to fill up (if you pay outside via credit card).

- How far is the new UAW President willing to go to secure better pay and more security for its members? My father spent 27.5 years working at GM in various factories starting out in Pontiac then moving to a few other locations in metro-Detroit before getting laid off and then shipped to Indianapolis.

If you’re UAW and get laid off back in the day, you had to take the next role that opens up, no matter where it was or lose your spot or your job with the OEM. My dad did and proceeded to drive to Indy every Sunday night (about 5 hours) and drive home almost every Friday night to come back to spend time with us on the weekends. He did that for over 2 years until a millwright position opened up at the truck plant in Pontiac.

Without a union negotiated contract, we’d have no protections like that whatsoever. So I know how impactful and UAW has historically been for the blue collar workers in the US. But this is different. The new union boss Shawn Fain has been instigating a fight, getting his members fired up while pushing back on the people that have traditionally supported strong unions.

There is a study that just published that says a 10-day strike at all plants that would affect ~143K workers with have a negative economic impact of $5B, that’s 10 days. Rather than get into why I think it’s different this time, friend of SAI / CEM John McElroy explains it well in his short YouTube piece here. The bottom line is that it’s hard to negotiate a contract that could benefit both sides if you’re flaming the people across the negotiations table before you even sit down. And not shaking hands? What, are we 5 years old?? I am very concerned that this could set back much of the progress that’s been made so far with investment announcements and the Big Three finally pivoting towards and embracing EV adoption.

INTRODUCING

- Fang Cheng Bao Leopard 5. BYD’s new brand unveiled its midsize PHEV SUV that’ll deliver to customers later this year with an MSRP of ¥400K or ~$55K. from the looks and specs, this has the look of something that could be another hit for BYD not only in the China market but also in many of the foreign markets it’s entered over the last +2 years.

The Leopard 5 will ultimately slot between a smaller (Bao 3) and bigger brother (Bao 8) that will be launched in the future. The Fang Cheng Bao brand finds itself placed above their current BYD and Denza brands and just below it’s also new premium brand YangWang. For reference, it’s a tiny bit larger than a Jeep Wrangler and Ford Bronco.

For the incumbents in the space, namely Great Wall Motor and Jeep, this product could be a potential headache for them while for Ford, who plans to export the Bronco to China, it could steal any momentum from the Bronco before it even enters the market.

Wang Chuanfu believes the brand and product could also take sales from the foreign premium automakers like Merc (G500), Porsche (Macan / Cayenne) and Land Rover (Defender / Range Rover) and there’s definitely an opportunity as those companies still struggle to launch viable clean energy versions of their halo SUVs into the China market.

As I’ve stated in previous newsletter – China EV Inc is coming for the premium brands and they plan on taking NO PRISONERs.

- Ford’s new President for Integrated Services. You know how I keep beating the drum on not taking automakers too seriously unless they really lean into hiring more people with real ‘tech’ experience? Well, Ford made major hire #2 – Peter Stern – who was also consequently poached from Apple.

Why the US legacies are only looking at ex-Apple & ex-Tesla managers seems a bit limiting but it’s a huge move. Farley seems to really want to turn the reins over to the new blood. Recall that Doug Field was hired away from Apple in late 2021 to run the electric vehicle business. Still no guarantees on success but at least Ford is moving in the right direction. Now, will Jim let them loose to do what they need to?

BY THE NUMBERS

- $1,085. That’s how much Ola Electric’s recently unveiled electric scooter – the S1 X – will cost as India tries to turn the corner on its pollution by adopting more clean energy vehicles. India became the 3rd largest passenger vehicle market last year, but the majority of its citizens still use two-wheeled transport to get themselves, their families and their things moved around accounting for 5M sales in 2022, passenger vehicles were around 3.8M units sold last year.

Ola Electric has its sights on becoming the largest electric moped producer in the world. The cheapest petrol powered scooter in India costs around $770 so if they can Ola gets a bit closer on price, they’ll give India a compelling reason to make the switch.

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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 global automotive and mobility sectors. 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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