SAI Weekly 22 - 24: London Calling, Pork Tax, Leapmotor - Made in the EU

In London this week and boy has the weather been just about perfect. It reminds me of SF, without the fog. It’s definitely all about layering. Mornings are cool (not cold), then the sun hits and it’s short sleeve weather till about 6ish before it chills a bit.

I am reminded that we are in the middle of June when the sun is out till late, making for long days. Had my first proper Sunday roast with good friend and co-founder of 京A. I also had a chance to meet up with a few other friends while I explored the Whitechapel / Shoreditch areas of London.

Been doing a fair bit of walking and it’s been great. It’s great exercise that allows me to check out the neighborhoods I stay in. It’s just not the same in the burbs. Lot’s to miss about living in a city including not having to feel like you need to own a car.

Even in London though, saw some reminders of Detroit.

Moderated the first of two panel discussions for the MOVE London Conference yesterday. Very good crowd, (likely) largely due to having ex-Aston Martin CEO Andy Palmer sit in on the discussion. He’s a great advocate for clean energy vehicles and one of his current roles is Chairman of a charging provider in the UK – Pod Point.

For those in London and going to MOVE today, I’ll moderate discussion #2 so please join us. Two other good friends I was able to catch up wtith Claudio Afonso and Daniel Kirchert also happen to be sitting on today’s panel so it’ll be a can’t miss!

There were quite a number of people who approached me to say Hi and talk a bit about the podcast and newsletter so it’s great that we seem to be reaching a pretty broad, international audience.

CHINA EVs & MORE

Episode #167 - Huawei will SMASH FSD, Hyrbid Highlights, Detroit Is Open for Innovation just dropped and you can hear it here:

EVENTS

Excited to collab with the boys at Beijing to Britain for this event next Wednesday in London. It’s going to be a thoughtful discussion on what the UK strategy for engagement with China should be and in particular, I will sit down with Benchmark Mineral’s Henry Sanderson and the Economist’s Simon Wright to talk about EVs, the UK and China. Very much looking forward to this.

To register, click this link.

BIGGEST NEWS THIS WEEK

Tariff fight just getting started. China has initiated an investigation into EU pork prices in retaliation to the announced EU tariffs on Chinese electric vehicles. The Chinese Commerce Ministry also had a meeting with the domestic and foreign automakers effectively browbeating the foreign automakers while getting the domestic ones fired up, all in an effort to push the European automakers to lobby alongside the Chinese automakers and govt to eliminate / reduce the recently announced tariffs.

We knew they were going to retaliate. We know that EU Legacy Auto has significant exposure due to its reliance on the China market for sales and profits, specifically the German automakers which derive about 30% of their global sales from China.

The question is now – Does the EU stand pat? Von der Leyen had to know that it was ultimately going to end up being a stare down. If I was an oddsmaker, I’d say that the EU has a bit more leverage in this particular duel and that’s likely the first time in forever.

With China frozen out of the US market, the only other viable market with the volume to significantly take on China’s imports is the EU / UK. Further, the EU tariffs aren’t very equal opportunity so the SOEs are likely yelling the loudest and pushing the hardest for retaliatory measures.

The EU CAN’T be too happy with the US for this particular situation, but the EU already had a number of China EV Inc enter its markets, so the Biden administration was determined to get in front of it before too many brands made their way to the US.

There are whispers that the EU to encourage the European automakers, turning the tables on China by also trying to coax JVs with Chinese brands so that they share their IP. Oh, how times have changed! Why this isn’t something that being openly talked about on the US or EU side is likely because they complained SO MUCH about forced tech transfer when the Chinese made those requirements for entry into their market, which now happens to be the largest passenger vehicle market in the world.

Here's the rub, it’s already happening:

Volkswagen Group + XPeng

Stellantis + LeapMotor

JLR + Chery (a weird one)

Audi + SAIC

And not just for the European automakers:

GM + Momenta

Ford + CATL

Here’s another dimension that’s worth noting. It incentivizes the Chinese JV partners in the EU and US to root for their counterparts in China. Let’s say the Volkswagen + XPeng partnership works VERY well for XPeng in the European and other markets, the last thing they want is Volkswagen to continue their nosedive in the China market. They want a strong VW in order to take advantage of their reach outside of China. If they can’t make money inside it, that reach is threatened.

Big assumption here is that these partnerships will bear fruit. How many of you remember the Daimler Benz / Chrysler merger? Stellantis seems to be working out so far but this is a marathon and not a sprint.

Another battery swapping standard for China. CATL and BAIC (Beijing Auto) are collab’ing on a skateboard for its next gen EVs. NIO is currently the dominant player in battery swapping for passenger vehicles with 2.4K in China currently. They’ve also agreed in principle with large OEMs Changan and Geely to share that technology and likely swapping stations.

For swapping to work and be optimal, there needs to be commonality in the battery and chassis which is the biggest hangup for OEMs who have to use another OEM’s IP since it may limit their engineering and design capabilities.

Does the China market have capacity to accommodate another standard? Hmm…

Leapmotor is already building in the EU. Shortly after the EU announced its import tariffs, Job #1 of the Leapmotor T03 model rolls off the line in a factory in Poland with ramp scheduled for September. It looks like Leapmotor are shipping kits, which are partially assembled vehicles commonly known as CKD with final assembly being done in Poland. Wow – Stellantis has inherited some China speed from its partner!

For those wondering how China EV Inc would get around these tariffs - Where there’s a will, there’s a way …especially is there are billions of €€€€ to be made.

Credit given for trying? Fisker is filing for bankruptcy …again. Stories have been popping up documenting some of the shenanigans and mismanagement from Team Fisker which is primarily made up of Henrik and his wife.

Great designer, not so great a business owner. He tried owning and making and he’s now tried designing and managing others to do the work. Is there a ‘just right’ business model in his future? I am pretty certain he’s not going to give up…

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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

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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.

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