SAI Weekly 26 - 24: Pony, WeRide & Windrose - Coming to America, Affordable Batteries - the Future is Now
Moving the newsletter delivery back to Wednesday’s so this’ll be a short one up top.
Tesla had their earnings call yesterday and it wasn’t good. Nothing was unexpected - Their profits were down, sales were down with nothing new in the pipeline. Elon is trying to focus people on Tesla’s autonomous vehicle / robotaxi ambitions and not so much on the challenging environments they currently sell their vehicles in. The biggest takeaway - will they be able to match their 2023 sales number of 1.8M units, this year?
The more I think about how much investment they’ll need to make in order to be successful in the robotaxi space, despite their enormous lead in the number of vehicles out there collecting data on their behalf, the more and more I think the current valuation still includes a premium that assumes that they will also dominate the China market on the robotaxi side – that’s the only way this valuation makes sense.
But that domination is NOT promised – not if Huawei, XPeng, NIO, Li Auto, DeepRoute, Pony, WeRide, Jiyue / Baidu, QCraft and a few others have anything to say about it.
With Biden stepping down – something over the last couple weeks that shifted from sheer speculation to an inevitability – we are in for a roller coaster ride of fun and uncertainty as the US races toward November.
I caught up with an exec friend of mine from Lucid in Ann Arbor on Monday and he just happened to be driving a Lucid Air Sapphire. The one that goes from 0-60 in 1.8 seconds. And goes for $250K. Yep, that one. I didn’t have time to get behind the wheel myself, but he did Uber me to my next meeting a few miles away from where we met up.
And in that 10 minute ride – I experienced what rocketing to 60MPH in less than 2 seconds feels like. Let’s just say, my body moved forward but my stomach did not. For those that have been to Cedar Point or have ridden roller coasters, it felt a bit like a freefall although we were sitting safely inside a car.
When I finally was able to get my bearings, the only thing I kept thinking was – that engineering lead that companies like Porsche, BMW, etc. have has virtually evaporated. What are they going to do now? I’ve stated this in previous newsletters.
Either you like speed or you like the sound and feel of ICE vehicles. Because hands down – if you look at the Model S Plaid, Rimac Nevera, hell even the Taycan – speed on the EV side has been figured out. So that means you should LOVE EVs, right?
One last thing, a major China ‘building in the US’ domino fell this week, maybe. I talk about it a bit down below. I say maybe because it’s only been announced which means lots could still go wrong.
China EVs & More - Episode #171: Legacy Auto Needs a Hug, BYD Manufacturing Footprint expands, AV Companies - What's Next
BIGGEST NEWS THIS WEEK
- Cruise is BACK. But different. They’ve spun up vehicle testing in Dallas, Houston and Phoenix again, this time without riders. Also, the L5 robotaxi that was unveiled on Jan 2020 called the Cruise Origin has been shelved.
No word on when it’ll reach production either. For now, it looks like a bunch of Chevy Bolts will be wandering around those three cities, safety driver at the wheel (just in case), for the foreseeable future.
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- EHang could get the world’s first license for an eVTOL aerial taxi service. The Chinese regulator responsible for aviation – the Civil Aviation Administration of China (CAAC) - has accepted EHang’s application for an air operator certification. This could be HUGE news for the global eVTOL industry.
For those unfamiliar, eVTOL stands for electric vertical takeoff and landing, a catchall term for the personal aviation vehicles that don’t need a runway to take off. In the case of EHang, it’s looking to launch an air transport taxi service that would eventually be autonomous. I’ve been trying to get a test flight in one of these things. In China, these eVTOLs would operate below 1K meters or about 3K feet.
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- Media are finally starting to figure this out. This particular article focuses on VW’s struggles, largely due to their inability to sell their poorly engineered EVs to Chinese consumers. We’ve talked about this for some time and it seems that media are starting to also see what we saw years ago. That the Chinese are serious players that threaten to change the dynamics of the global automotive order.
You can click the link to read the details they outline but I’ll leave you with a few charts that were posted – I think it explains very plainly what has happened to VW. And no the US market and their yet to launch a product, new brand Scout isn’t going to rescue them. The D3 + Rivian will NOT allow that. Which is ironic since they are in a way, related.
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- Whether it’s EVs or shares – the Chinese want in. In to the US market that is. The US market is not very friendly for China EV Inc for now, but that damn will break eventually.
For now Pony and WeRide, two of the original autonomous vehicle startups that have now matured into the elder statesmen of the Chinese AV space are both looking to reward its founders and early investors by IPO’ing in the US sometime this year, likely soon, at least for Pony.
This despite the fact that Pony may end up moving its Silicon Valley office to Europe.
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- Windrose to build in Georgia? Windrose is a Chinese electric semi-truck maker and this week they announced that they’d be building a factory in Georgia to build it’s battery powered semi for it’s mostly US customers. The current schedule has the factory coming online next year.
The vehicle is still being developed though. Whether Windrose will completely assemble the semi in Georgia or ship kits to the US with final assembly being done in Georgia is also still unknown as well as how much they’ll be investing to get the factory up and running.
Biden has been anti-China manufacturing in the US. But that’s been passenger vehicles. Also, the Governor of Georgia is a Republican and would be less likely to follow any of President Biden’s policies.
EVinfo.net asked for my opinion about this news and this is what I told them:
What are your thoughts?
BY THE NUMBERS
- $190M: That’s how much Stellantis was fined for not meeting CAFE requirements for MY2019 & 2020. They are also on the hook for a $459.7M, also for MY 2019 & 2020. Important to note that these were accrued prior to Stellantis forming or more appropriately, during the FCA era of its existence. This is in addition to the already paid $235M that Stellantis paid last year for MY2018 & 2019.
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- $53 / kWh: That’s how much the average price for lithium phosphate batteries (LFP) cells cost in China according to Bloomberg New Energy Finance. It was $95 / kWh this time last year.
Also remember that just a few years back, the target pricing of <$100 / kWh (at the pack level) was when EVs could become profitable. It’s now at $75 / kWh. So that future when there is parity between ICE vehicle manufacturing costs and EV manufacturing is today. But here’s the rub – the EU and US OEMs aren’t getting that pricing, at least not outside of China. But it doesn’t need to, as long as OEMs can build EVs profitably. And the battery prices inside China are dragging pricing down prices outside of China.
Here’s another rub. Even if there were factories in the EU & US churning out cells for domestic manufacturing of EVs, they’d STILL not likely hit that pricing. China has cornered the market on LFP. For this particular commodity, we are living in China’s world. Will their battery pricing be lower and competitive – YES. Will they ever catch up to China – NO.
There are a few factors here at play with overcapacity, lower mineral pricing and an EV slowdown / tariffs being a few of the reasons. Let me explain one point – some of that capacity was meant for shipping abroad, but because of the tariffs, that capacity can’t find a home. For now.
That’s why when governments talk overcapacity, they are barking up the wrong trees. And the overcapacity issue is only going to get worse as the investment being made now in the EU & US leads to factories adding to the global capacity as they come online within the next 18-24 months.
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- 100K EV Chargers: The 2030 goal for Michigan set by Governor Whitmer aka ‘Gretch,’ & 2028 presidential hopeful. It’s estimated to support ~2M EVs. There are currently 3.4K chargers, mostly level 2, in Michigan.
To reach that goal, there needs to be about 50 chargers installed / day. Looks like someone(s) better get to work!
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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
Wondering if you could cover the implications of the flood of EV batteries that eventually will need replacement in all these cars? Seems like lithium batteries are a nightmare to recycle, is there any focus by China on how to effectively re-use the batteries being manufactured today once they are depleted, to avoid dumping them into landfill or the ocean?