Crazy week without much breathing room so let’s get right to it.
I need to keep this note in every newsletter. There may be a quite a few of you that have signed up for the newsletter that haven’t received it. If that’s the case, please check your spam folders. We add subscribers each week but depending on your spam filters you still may not receive it. I know it’s weird that I am writing this since if this note is in your spam folder you won’t ever read it but anyways…
CHINA EVs & MORE (CEM)
This week’s live CEM is scheduled for tomorrow 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.
QUOTED
- NYTimes. I had the pleasure of speaking with Beijing Bureau Chief Keith Bradsher about the Chinese govt’s move to make it easier to purchase used cars and how that may go against their one important economic priority to push new NEV sales. It’s a broader article more about the Chinese economy and less about the passenger vehicle but worth the read, nonetheless.
BLOCKBUSTER NEWS OF THE WEEK
- Wu Xinzhou, the head of XPeng’s Autonomous Driving division has decided to step aside. This comes at a peculiar time and the news was met with the XPeng share price falling by ~5%. He received his PhD from Illinois Urbana-Champaign and that’s likely when he became a US citizen. He’s been working in China while his family likely stayed in the US which is one of the triggers for the move.
There are a few other rumors that I’ve heard regarding that situation that Lei and I may or may not discuss during tomorrow’s CEM (@ 9am EST – DON” T miss it!) depending on whether I can gather more solid intel but either way, should we assume that VW knew about this prior to shaking hands on the 5% investment in XPeng?
And how much will Xinzhou leaving matter in the end? I have been told he was key to the XNGP system, so it’ll sting, at least early on as the organization absorbs any changes and differing styles of Liyun Li, the new leader. For all their challenges on the sales and product planning side, they’re definitely one of the leaders in the China EV Inc ADAS contest and I’d even broaden that out to say that they are also in the top quarter vs. China AV Inc.
Leadership moves and changes are part and parcel of working at a startup but the timing def takes grabs some of the wind out of the XPeng sales from their big VW win.
- The Frankenstein-ization continues with rumors that VW’s Jetta brand in talks with LeapMotor to acquire an EV platform from the mass market Chinese NEV maker. For those keeping score, that’s 3 transactions announced in as many weeks.
I tweeted earlier this week that the internal review must’ve pointed to a much, much more dire future in China if VW Group were to continue the previous trajectory prior to the big moves.
A few items of note: ALL these transactions point to the lack of speed in delivery across multiple departments. They also point to a skill deficit that these Chinese companies have, and that VW does not. VW must also believe most of the brands with products on sale in China are worth saving, with the exception being Skoda. Finally, are they just swapping engineering and technical problems for leadership, organizational and cultural ones?
Porsche could now become the most vulnerable brand for VW Group in China over the next few years as premium EV SUVs begin to jockey for position and customers so what will they do to ensure that the gravy train that’s been built on the hoods of the Macan and Cayenne continues well into the future without disturbance? I guess we have to stay tuned. And no, Porsche is NOT immune to the move to NEVs or the price war, as much as they would like to tell you that they are.
BYD
- The numbers don’t lie. BYD has leaped from 436 to 212 on the 2023 Global Fortune 500 list with total revenues of $64B in 2022. They will climb even further up the chart in 2023, how far is still not certain but it could be another leap.
TESLA
- Q2 revs are up over 50% YoY and still climbing. Q3 & Q4 are traditional their strongest quarters in China so this could be another banner year for them there, especially if the rumored to be refreshed Model 3 launches in the near future and has a flawless, steep ramp.
With clarity and conviction, I can say – ‘This is TRULY BYD’s and Tesla’s world.’ How long they will dominate the market inside China is going to be up to the other China EV Inc while the legacies play a small role in the near term.
Outside of China, Tesla will have no real competition in the US and a bit more in Europe, but the Model Y will likely continue to be a mainstay in the ‘Top EVs’ lists around the world. In many of the developing world, BYD will do them one better by being the #1 EV brand in those markets.
GET SMARTER
- California set to audit automakers to figure out – What exactly do you do with all my data? California is trying to get out in front of what will become a global challenge as more ‘connected’ vehicles hit the roads in 2023 and beyond. If you were to ask anyone from the US and EU govts, I bet they wouldn’t have a clue what happens to driver’s data once it collected by the automakers. Some reports have indicated that there is at least 1-2 terabytes of data collected from a vehicle EACH day.
We know what they want to do with the data – they want to analyze it in order to extract insights that they can use to roll out paid services they want to convince us we want or need. It’s why Mary said that GM would generate $20-25B in revenues from services by 2030.
But the privacy pendulum has swung back from where it was several years ago and now people want more data privacy. States like California has listened and has ratcheted up their data protection laws but are automakers compliant? Your guess is as good as mine. But I doubt it. I doubt they really know how to protect it, at least not in the way where it’s completely sheltered from hackers. Also, is the data they’re collecting really being anonymized? All questions that, at a minimum, need answers to and in other cases need stronger regs to protect our privacy.
If you’re wondering if govts know how powerful the data from a vehicle can be, look no further than Tesla vehicles being banned recently from parts of Chengdu where President Xi will be. Chengdu is hosting the World University Games and Xi is set to attend the opening ceremonies.
NEWS THAT GOT OUR ATTENTION THIS WEEK
- The Chinese govt restricting some high-performance drones from being exported to foreign countries. DJI needs a hug – they’re the 800lb gorilla when it comes to drones, and I can’t think of any real competitor they have with as strong a product lineup as they do.
This continues a bit of the tit-for-tat US China challenges and could create an opening for a well-funded drone startup that resides in the US or Europe to fill that high-end void that’ll be left by DJI’s absence in the global market.
- XPeng taking a page out of BYD’s book and enter dozens of countries in 2024. Founder He Xiaopeng wants to pack his most technologically advanced, mass market smart car position in China with him to other foreign countries.
In other words, he wants to represent the best of China with the products HW / SW integration. Will it resonate in places like Europe and dare I say, the US? That remains to be seen, but what will sell him a ton of vehicles is competitively priced, high quality, reliable EVs.
TRENDING ON SOCIAL MEDIA
- The BYD Atto 3 is the #1 EV sold for July, the first time ever in a European market. This is much more symbolic than anything else since it’s Sweden and BYD sold just 721 Atto 3s which was <1% of TOTAL BYD July sales, but it should concern European automakers on their home turf A LOT, nonetheless. I don’t think they’re aiming to be 2nd or 3rd in any market, at least not the people I spoke with there.
BYD has been kicking down A LOT of first times in the past 12-18 months and it’s an amazing thing to see.
BY THE NUMBERS
- 20,462. NIO surpassed that number in vehicle sales for the first time – EVER. Are the moves they’ve made the last few months added together to push them post their challenges? Two times is a trend, right? So let’s wait 30 days to see what August numbers shake out to be.
Nonetheless, this was a literal and psychological ceiling they needed to break through which SHOULD make achieving bigger and better things easier. Or at least more attainable. HUGE goal achieved so congratulations to the global NIO team!
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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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