SAI Weekly 20 - 24: Affordable EVs Coming, EU Can't Fail, China EV Inc is a real threat (but we knew this)!
Busy week as always.
Biggest news this week in Detroit - The official opening of the Michigan Central. It’s been the backdrop for many movies, used as ruin porn of course, but Ford Motor Company and the Ford family decided to make a HUGE bet on the area in Detroit called Corktown, where the old Tiger stadium was located.
We’ve started to see a revival of the area, first with some restaurants, then some tenants and home owners, then Newlab – the innovation lab located next door (see pictures below) and where I happen to work a few days a week myself, to now the old Detroit train station rebranded as Michigan Central.
It culminates tonight in a concert that O-fficially opens the space to the public. It’s big enough that it’s being covered live on the Peacock channel starting at 8:30pm ET and has headliners Diana Ross, Eminem, the White Stripes, Big Sean and many others that have ties to Detroit.
I’ve gotten the opportunity to tour the train station a few times during the course of its renovation including last month as they were prepp’ing all the last minute details. It’s really been quite a sight to see and something Detroiters and Michiganders can be proud of.
It’s a small reminder of Detroit’s past glory and a measuring stick for those of us that are trying to restore at least a small bit of that former glory.
Watch this short video that outlines the restoration (from AP News):
Here are a few snaps that show the progress inside and out:
2018
2022
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February 2023
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As I’d mentioned last week, I have some work travel ahead of me first to CA then to London / Paris.
I’ll be moderating two panels for the MOVE London conference that’ll be held at the ExCel London conference center on June 19th & 20th.
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We will also host a happy hour on Tuesday, June 18th – location TBD but somewhere likely in central London. Those of you that plan to attend the conference or would be interested in sharing a pint on the 18th, please do reach out. I am also looking forward to meeting up with some Lao-Beijing friends who now call London home.
In addition, Sino Auto Insights will be co-hosting an event on June 26th with the gentlemen from Beijing to Britain at the China Exchange in London with the theme being: What should the next UK government’s China strategy be? The event will run from 5:30 – 9pm. Details to follow for those interested in joining the event.
Finally, I am happy to take on any recommendations of places to visit, things to do, where to eat and any pro-tips that will allow me to avoid any unnecessary complications so please do send them over if you think it’ll make my trip more enjoyable. Finally, I am up to visiting any cool startups in London while I am there so if there are any companies are doing some cool stuff – hit me up!
IN THE MEDIA
It's ALWAYS a pleasure chatting with John McElroy since we're both automotive nerds with strong roots in Detroit / Michigan that find what's currently happening globally to the transportation and automotive spaces to be fascinating and absolute MUST-SEE TV! As someone I have a ton of respect for, I also love that he regularly reads the SAI Weekly!
I've been lucky enough to be on his Autoline After Hours (every Thursday from 3-4pm ET) live show a few times so when he invited me recently to talk about my recent trip back to 🇨🇳, I was happy to join him and Gary Vasilash to talk shop.
Whenever we do talk 🇨🇳, it often comes back to 🇺🇸 competitiveness and what Legacy Auto / the 🇺🇸 Three need to do to remain globally competitive. To cap off the show, John asked me a very specific question that you'll see in the posted clip from the show.
Interested in hearing my answer? Here’s a link to the show. And for those that gave the feedback, I will work on what you pointed out.
Asia Matters podcast: Here’s a unique interview I did a few weeks back. I was invited by Asia Matters and joined by friend of Sino Auto Insights, Bill Russo. We spend the better part of 45 minutes chatting about the EV players, the real deal on overcapacity, where exports go, and how China got so far ahead in what seems to most people, in such a short period of time.
Electrify News. I spoke to Bill Pierce on the very affordable Volvo EX30 EV for his article that outlines the importance of this product for Volvo and how it’s affordability could just be the icing on a very decent (EV) cake. As long as it’s not slapped with the 100% tariff that will be enacted later this year by the Biden administration.
Want to know how Volvo may be showing China EV Inc how to get around said tariffs? Click the link to read the entire article.
MORE AFFORDABLE EVs on the WAY
Surprise, surprise. As EV subsidies in the US start to take hold, we’re also seeing more automakers diving into the EV mass market by announcing and / or launching vehicles whose prices start well below the $48K average price of a vehicle in 2023. This is even before the $7.5K rebate.
Companies that are launching vehicles that should attract and grow mainstream buyers for EVs:
- Tesla has a Model 2 that should be unveiled before the end of this year
- Ford CEO Jim Farley has communicated that he has a ‘skunkworks’ team in SoCal working on a small EV that will be able to compete against current US leaders Hyundai / Kia and Tesla
- GM is starting to ship larger quantities of both the Chevy Blazer (starting MSRP $48.8K) and Equinox (starting MSRP $35K).
- Stellantis mentioned that it’s going to launch a $25K Jeep, likely within the next 12 months. It already sells the Poland manufactured, 2023 Car of the Year (at the Brussels Auto Show) Jeep Avenger in many EU markets so it shouldn’t be any problem for them to make a US spec version that’s built locally in the US. Importing from Poland likely wouldn’t allow it to keep that $25K pricepoint, if you’re wondering.
All this adds pressure on the other automakers that aren’t yet in the market with affordable, clean energy vehicles (including hybrids, sales of which we still consider a ‘win’) which creates a virtuous cycle.
Bottom line and what you should keep an eye on is that within the next 30 months, most major US cities should have ample charging infrastructure to dial down range anxiety for most car buyers. Charge time should also trend downwards as more Level 2 chargers are installed.
We should also start to see more western automakers move over to the 800V DC fast-charging as well, which along with L2 chargers will work together to shorten charging times.
The biggest irony – the EV transition will be led by small sedan / crossover / SUVs and not the BIG full-size pickups and SUVs. We’ve said this before.
According to this NY Times article, there will be >100 BEVs available for sale in the US double of what’s available now.
The transition is happening. And it’ll accelerate. And then there will be software and battery issues, then media will say the sky is falling. Then there will be more kick ass EVs and they’ll soon just become Vs.
My guess is that’ll happen in the early 2030’s. US politics will throw some obstacles in the way, but I don’t foresee any ‘showstoppers,’ it’s too important for all automakers to try and keep up with what’s going on in China.
There’s been too much capital committed in the US & EU to re-shoring mineral mining / refining and battery manufacturing. Those horses have left the barn, whether the US govt wants to have a take back or not.
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Mercedes decides to ‘buy’ a key future feature for competitiveness in the China market. Of course, I am referring to intelligent driving where it’ll use Momenta’s HW / SW stack. This shouldn’t be too much of a surprise since they were an early investor in Momenta along with GM.
This should also point to our prediction that a bifurcation is taking place with in-vehicle tech stacks with global automakers having a China solution and a ROW (rest of the world) solution. Mercedes is developing its own system with teams in Sunnyvale and Germany but must feel that their systems need more marination and that in order to be competitive in China, they can’t wait that long.
The first instance of the Momenta stack in a Merc will be next year in the CLA, Mercedes entry level sedan. Mercedes, along with a few other German premium brands, is seeing a drag on sales likely due to the un-competitiveness of their NEV offerings at unattractive price points. Will GM follow suit, our guess is likely.
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Europe can’t compete. That’s according to former politicians based on a combination of their experience and some research they’ve been doing. I still speak fairly often with my European friends and I’d say generally they’d tend to agree.
Where I think Europe will struggle specifically is on the technology SW development side of things, which is likely one of the areas these former politicians plainly see when they compare themselves to the US / China.
Let me pose a simple question to you – Can you name me 4-5 globally relevant German / European technology companies? After that first one, it becomes very difficult …and no, Siemens is NOT a technology company.
If they have no history or culture of consumer tech products or services, how do you suppose they will be competitive when the passenger vehicle becomes effectively a big battery, a handful of screens, hundreds of sensors, an edge computer, the cloud and tens of millions of lines of code?
Don’t believe me? Google ‘Cariad challenges.’ That’s not to say non-European automakers won’t have hiccups making the transition, but in China there is Zhongguancun (Beijing), Wuhan, Chengdu and Shenzhen just to name a few tech hotbeds, while the US has Silicon Valley, Boston, Austin, New York City that churn out coders and tech startups by the hundreds each year.
The best city in Europe for startups & tech innovation isn’t even in the EU!
Recommendations by these ex-politicians is of course, the EU govt taking a more active role in investment and helping subsidize industries that are needed to stay competitive with the US / China. When EVs become more mainstream in the US, let’s say by 2030, we’ll really start to see the disparity between feature sets of these EVs offered in the US / China vs. what’s on offer in the EU. And if there isn’t, you’ll bet that there was a lot of help either from Chinese or US suppliers to get the EU brands there.
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It's starting to stick. I am seeing more and more coverage of China EV Inc and its potential to, in the words of Elon, ‘demolish most competitors without trade barriers.’ We’ve been sounding those alarm bells for years now and although media outlets can be forgiven for just now picking up on this narrative, what about these so-called professional analysts and industry insiders, what’s their excuse for not seeing this before everyone else?
Recently, I’ve seen a big push on social, in their Substack newsletters, and in quotes from articles about how they, as in China EV Inc is ‘for real’ and how US / EU / Japan Legacy Inc is ill prepared to compete with them. I won’t go so far as to say they are taking credit for seeing this >5 years late, but it’s almost as if since they’ve validated this hypothesis, followers should now take heed.
Sorry fellas, and yes it’s ALL men, most of who couldn’t bother to visit China until recently if at all, but while you were not paying attention – the automotive sector went from analog to digital. It’s rich that you’re now posting statistics about sales, highlighting brands that are making waves, pointing out how many EVs you’re starting to see on roads, noting the levels of quality in cars that you’ve recently driven, etc.
But I didn’t see you in Shanghai last year nor Beijing this year, I really only saw Inside EV’s Kevin Williams, drinking through a firehose right after he steps off the plane and writing feverishly about the sensory overload he experienced while spending a week in the city I called home for almost 13 years.
Next thing is they’ll all also suddenly become tech & software experts. They’ll comment more and more on digital features, battery ranges & management systems, the UX inside the vehicle how buggy the software is. And many of their followers will credit them for opening their eyes to what’s happening.
What’s important to remember from here on out. As we take the ‘analog’ off ramp and jump on the ‘digital’ on ramp, traditional automotive experience and knowledge becomes less and less of a factor. In a digital world things move faster. In a digital world that’s being led by China, faster = most can’t keep up.
It’s one of the underlying reasons why trade barriers have been erected in the US and is being considered (and likely) in the EU, but that no one is talking about. These trade barriers are as much about trying to slowing things down as they are about outright protectionism.
And for those that spent time in China a decade or two ago but still think they know China, that China is gone. The new one is very different from the one you left. It’s now the biggest car market in the world. It’s one that effectively controls global EV battery supply. It’s one where the Chinese brands outsell the foreign brands. It’s one where Tesla is holding onto dear life as it tries to launch an affordable EV that it knows won’t likely be able to compete with the XPengs, NIOs, Avatr’s, Zeekr’s, Li Autos and certainly not the BYDs of the world.
But there ARE OGs who’ve been grinding this out since Day 1. We see each other often, talk to each other regularly, and share and compare notes because we appreciate the fact that we’re all out there getting it done.
Finally, it shouldn’t be lost on folks that it’s the West that pushed for free markets and global trade, global trade that would make things more affordable to the masses. Well, be careful what you wish for – because it’s now become a monster trying to demolish those companies in the automotive space that aren’t able to keep up.
Jumping off my soapbox now.
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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 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.
God article, living in Beijing the last 10 years, when I arrived in 2014 I would not touch a Chinese brand car with a stick, they were terrible (design, quality, features, engines etc…) I knew that quality vehicle could be manufactured in China (my 10 year old VW that never had a single fault is testament to that). When I started looking to replace my VW the Tesla Model Y was the obvious choice (but I notice fit and finish is only average), I looked at the VW ID6 (China specific mid size SUV) but it lacked style and performance, the Audi is a upmarket VW that you only get FWD single motor unless you want to donate a kidney. Mercedes overpriced. Then I saw a Nio ET5T on the streets, I thought that looks cool!! Researched NIO and couldn’t find a bad review, test drove an ES6 and bought one. Very satisfied will all aspects, no way I would go back to an ICE.
Nicely said. Per Master Investor Keith Fitz-Gerald: "The Dragon is coming to dinner – the only decision you’ve got to make as an investor is whether you want to be at the table or on the menu. Simple". Same for the legacy manufacturers. After promoting the Bretton Woods "consensus" through the GATT and WTO, the US is reversing course now that it is the weaker industrial partner. I was at the 2024 Beijing Auto Show and Tu Le speaks the absolute truth. BTW, I sent Keith an email and recommended that his analysts read Sino Auto Insights. You guys are great!