SAI Weekly 24 - 25: China EV Inc LOVES the OBBB, Elon Not Happy With A STAN, Zeekr X9 Launches
Cui Dongshu, Secretary General of the China Passenger Car Association, in his best Colonel John ‘Hannibal’ Smith voice – I love it when a plan comes together!
That’s what he’s thinking after the 4th of July when the One Big, Beautiful Bill was passed into law by President Trump. Actually, he’s not just thinking it, he said it out loud in an interview.
“…intelligent EV models against the obsolete technology of internal-combustion-engine vehicles.”
We should now separate Stellantis from Ford and GM (let’s call them the D2) from now on since Stellantis is heavily invested in LeapMotor (to the tune of ~21% ownership) so as I’ve said before, expect LeapMotor IP going into Stellantis PHEVs AND BEVs that are going to be built in the EU and the US. Add in the fact that VW Group has a 5% ownership stake in XPeng and their strategy is clear. XPeng IP for the EU and China. Rivian tech for the North American market. That points to them believing that technology roadmaps will bifurcate.
The D2 have NOT partnered with any Chinese EV makers so far. In the current environment, it would be an untenable position for them to defend. Look at how Ford has been flamed for wanting to partner with CATL on batteries.
The crazy thing is – if Trump posted on social tomorrow that he’s negotiated the ‘best deal EVER for the US’ with BYD, Geely, or any other major Chinese automaker or EV player writing a large check to a state, likely in the south to a Governor that supported Trump through thick and thin, MANY of his supporters in Congress AND online would completely abandon their positions against China EV Inc in order to amplify Trump’s message.
And that’s one of my biggest fears for MI and the Midwest. Remember, Trump isn’t a fan of Shawn Fain from the UAW nor Governor Whitmer so pushing jobs away from UAW states, (the irony of) jobs created by Chinese companies, would settle many scores in one fell swoop.
Finally, the D2 already had a formidable challenge in front of them WITH the subsidies and funding from the US (not U.S., but us as in taxpayers), now that Uncle Sam’s thumb has been pulled off the scale, in addition to the more restrictive California regs being cancelled (CA will take it to court), there is ABSOLUTELY no incentive for Legacy Auto to prioritize clean energy over doubling down on ICE.
And with OUR domestic players in the EV space, I am talking Rivian, Lucid, Slate ALL still needing to establish themselves in a significant way – with the exception of Tesla, but I’ll get to their issues separately – who’s going to push the D2 to build incredible, competitive and inexpensive clean energy vehicles other than Hyundai / Kia?
That’s not enough competition, even if we include Tesla in THAT mix. The only way they hope to compete? Copy many of the features that are now standard on many Chinese EVs. That’ll be tough to duplicate too. See the X9 specs I highlight in a post below.
The D2 are in NO MANs LAND right now. They aren’t currently competitive outside of North America and now the incentives to get them competitive are no longer there. In the 60’s, just prior to the Japanese entering the US market, GM had 62% market share. In 2024, that share was 16.5%. Ford was at 14% in 2024.
I am not naïve enough to think that GM’s share would’ve stayed at 62% in perpetuity, what I want to point out is that when the Chinese do come in the next few years, we can expect the D2 to lose even more share as they did when the Japanese entered the market. I think that combined share between Ford and GM could get pushed down to >20% long term. Could we see a merger of the D2 in the intermediate future?
This isn’t hyperbole! I’ve driven these cars and having been back in the US now for almost three years, I can say with confidence that any car that sells in China for ~$30K, if it was to come to the US, sold for $50K here, would do some damage.
We haven’t even talked about foreign markets. So let’s do that.
In 2024, GM’s international automotive revenue was 18% of total revenues. GM’s total adjusted pre-tax profit was $14.9B. Of that, the North American (read: the US) market accounted for $14.5B.
Ford’s 2024 revenue is better at 32% coming from international markets, but they don’t break out profitability by region so my guess is that number is much smaller than the 32% international revenues split.
Next, GM & Ford don’t really seem to be GROWING that share of international revenues either. Next, next, BYD is in virtually EVERY MARKET that GM and Ford compete in outside of the US. Note that I don’t say, North America since they are already in Mexico and unless we can renegotiate a USMCA with Canada, BYD will enter that market as well. We will be surrounded by China EV Inc, not just in the US, but in any market that the D2 operate in outside of the US market.
That’s what they’re up against. Another factor that goes against them? Nowhere else in the world can Tahoes, Suburbans, Expeditions, Navigators, Escalades, F150s or Silverados sell like they do in the US – and the inability of GM / Ford to design, engineer and manufacture profitable small cars / sedans largely keeps them from being players in the international markets.
Even if they could build small, profitable A/B segment crossovers, those vehicles aren’t likely to carry the day for them outside the US because again, BYD, SAIC, Chery and others.
A sobering take, and that’s why I am worried.
Ed spends a good amount of time discussing how tariffs have influenced their vehicle forecasts, what their research shows that US consumers want in their vehicles and his thoughts on Slate.
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INTERVIEWED / QUOTED
I spoke with Breana Noble for her article detailing the latest on the price war in China. It’s been pretty well documented now but I still don’t see and end in sight through the end of this year at least. There’s going to be too much of a frenzy to end the year, especially now with the YU7 launching along with new midsize crossovers from XPeng, Li Auto, NIO and others ALL trying to force the Model Y to bend the knee.
You can read the Det News article here.
BIGGEST NEWS THIS WEEK
Elon’s thin skin. Dan Ives, one of the biggest Tesla STANs out there had some advice for Elon. I’d say that Dan is one of Tesla’s biggest boosters on the Street. No idea why, but he’s built up quite a following since all he does is BOOST Tesla stock. There’s no way he’s going bearish on Tesla, he’ll lose all his followers and standing.
That said, he had a bit of a critique of Elon and how much of a shitshow Tesla has turned into, which upset Elon, who told him to ‘SHUT UP!’ This after Elon decided that he was launching a third political party to challenge the current two party system. Even with this critique, Ives still didn’t downgrade Tesla so, as I’d mentioned, he won’t because he needs Elon as much as Elon needs him. They are married now, for better or for worse. Remember that Elon owns a social media platform and can point that to whoever he feels has wronged him.
Elon is threatening to kill a golden goose that has been very lucrative for a lot of people and he doesn’t seem to care. Maybe he sees the writing on the wall? Meaning that he sees the difficulty keeping up with the Chinese on innovation / product? He sees that that Tesla’s not a clear winner in autonomy either. He must also see that what people care about is Tesla. They have vested interests in Tesla, and directly associate Elon with Tesla. Again, for better or for worse.
Let me separate a couple things here. First, until Tesla can build a credible robotaxi fleet and compete on the same footing as a Waymo in the US and a Pony, WeRide, Baidu and others in China and all of them in the EU / ME and other regions, they still need to sell a lot of cars. In 2025, sales are going to go in the wrong direction. The army that Tesla has established is able to keep their market cap from cratering, but how long can they do that? Not forever.
Let’s say that Tesla builds a credible robotaxi service in the US and in other parts of the world, unless they have the majority of share of the robotaxi market, are they really a multi-trillion company? What if they CAN beat Waymo in the US, but can’t win in China, are they a still a multi-trillion dollar company? Not in my opinion. No matter what Dan Ives, Gene Munster, Adam Jonas or Cathy Wood says. BTW, I am not sure ANY of those people could tell you what Tesla is doing in China, who their competitors are on either the vehicle sales side or the robotaxi side. I don’t know them personally, but for those that do, ask them. If they can’t do that, how are they calculating the share of Tesla’s future valuation to be from the China market? After all, these ARE global companies, right?
Bottom line is that Tesla has ceded their global lead in EVs, robotaxis so they are doing everything in their power to pivot to being a humanoid / AI company. But without Trump putting his thumb on the scale for Elon, can they still win in either of those areas?
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A detailed look of the ‘WHY.’ Friends of Sino Auto Insights, Nick Carey and Nori Shirouzu from Reuters are at it again, this time they outline a specific case where a Chinese OEM was able to make a major engineering change that included overhauling the steering and suspension of a product that was shipping to the EU. The China spec wasn’t suitable for European roads so they needed to update it to create a EU spec.
What would’ve normally taken a legacy automaker an entire model year to make the change was done in six weeks by the folks at Chery. Most legacy automakers can’t qualify a part in six weeks let alone make those types of wholesale changes to a system, an essential one at that for a vehicle.
One statistic they site that jumps out at you:
‘The average age of a Chinese-brand electric or plug-in hybrid model on sale domestically is 1.6 years, versus 5.4 years for foreign brands, consultancy AlixPartners found.’
When product development cycles change this dramatically, there’s no incremental improvements that shave 3-5% that’ll get you close to competitive. This is an instance where you need to burn it all down and start all over.
The factors that make pressing reset so difficult at the legacies include management, culture, skills and training, heck even accounting and finance. That’s because ALL of it needs to be rethought, hence burning the system down.
Or you can look at what the Chinese are doing and copy them. It sounds easier, but you can’t copy culture, that’s already baked in. Unless you have new management or if the current management are willing to lose their jobs in order to remake their teams.
Jim Farley is likely the closest to doing this, but he’s only created ANOTHER team. Mary has hired lieutenants to make the changes, but it doesn’t seem like she has the stomach for leading a wholesale cultural change at the General.
This is a reco’d read, so make sure to click that link.
BY THE NUMBERS
70kWh. Zeekr 9X was revealed in China last night. That’s the battery size offered on it.
Did I mention this is a hybrid?? That’s larger than a Model Y Standard Range battery, which is 60kWh. In a hybrid.
More specs:
· 1,381HP
· 0-100km/h = 3.1 seconds
· >1K km of driving range, for my American readers, that’s 620 miles of range
· It’s about 4” shorter and an inch smaller in width than a Chevy Tahoe
· The top trim is Level 3 intelligent Driving ready with Geely’s own G-Pilot H9 system that uses two Nvidia Thor (Orin’s replacement) with a combined computing power of 1,400 TOPS
Here’s the video they showed during yesterday’s unveil. Remember that during the Shanghai Auto show the windows were blacked out so the interior design hadn’t been frozen yet. That is still the case.
Here’s a bold comparison video against some of its European competitors.
For those interested, the below video is a peek at their broader lineup of vehicles that have been built on their SEA platform. It also underpins the Polestar vehicles as well.
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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