SAI Weekly 43 - 24: Nissan Courting Foxconn & Honda - It's Complicated, Where GM's China Volume Comes From
Starting to reflect a bit now on 2024. So many things have happened. Personally. Professionally.
First, after a couple weeks with my Ioniq 5, some initial thoughts - it drives really well. There’s a lot of legroom for semi-adults in the back so overall VERY pleased. The intelligent driving kinda works (but not really).
Areas to improve. The range is NOT great at all. I knew that coming in somewhat, but when charged close to 100%, it barely gets me to 200 miles.
Next, interior design of the front console is a bit clunky. I have to go 2-3 layers deep when I need to find the things I need to find. There are physical hot buttons that are supposed to be for the most used features (I think?) but here’s what I see half the time I am in the car trying to change something.
Yeah, can’t see what the button is for – that should’ve been flagged before heading to a beta build. Or at the first / second design reviews.
I am starting to get a better grasp of this newsletter’s reach, my reach as well. Will be building on that in the 2-5 so stay tuned for some cool stuff I have planned. Some will be local to Detroit, but accessible to the world. And relevant as well.
This newsletter will be quick and dirty, will focus on the Year-in-Review newsletter that will come two weeks from now, gonna take a week off to focus on family and being thankful. I hope you’re all able to do the same.
With all that said, I am booked for CES so for those that would like to catchup in-person, send me a DM – I am there from Mon till Thursday and then straight back to Detroit to hit the Auto show Friday AM, the 10th.
My first time at CES so looking forward to it. It’ll be warmer and I’ll get a lot of exercise I am told.
To my friend Paul Lienert. Sincere condolences from the Le family for your loss. I knew your sister; Jean Jennings was also an automotive journalist but didn’t realize she was such a PIONEER and OG for the space and if the tributes and stories on LI are any indication, Jean touched everyone in such a positive way that her legacy will be everlasting. Ford even posted a press release about her passing.
I didn’t have the pleasure of meeting her personally unfortunately but have read many of her articles in the past. When I was a kid, I’d spend most of any money I could scrape up to buy the holy trinity for any kid growing up in Detroit LOVING cars – Motor Trend, Road & Track and Automobile magazine.
When it came to school, it would take me a bit of time to remember what I needed to know for tests and homework, but I could pick up one of those magazines just one time and remember ALL the stats from the cars being reviewed. I credit Jean and others like her for making me the car nerd I am to this day.
Lastly, the current plan is for me to be a guest on John McElroy’s Autoline After Hours tomorrow starting at 3pm ET. Make sure to tune-in live on YouTube!
QUOTED / INTERVIEWED
Talked with Sun Yu from the Financial Times for his piece on Pony’s IPO a few weeks back. For all the EV stuff that many focus on, I am much more interested in what’s ahead on the AV / UAV (drone + boat) side in 2025. For example, tracking more things like this.
We know EVs will be brutal so you know I’ll have something to say each week about that but am going to move some of my thoughts over to that side as well.
BIGGEST NEWS OF THE WEEK
Honda and Nissan. Are they being forced into an arranged marriage? From the conversations I’ve had, Honda may be a reluctant participant in this transaction if it pushes the relationship past the ‘partnership’ status.
Nissan is in a mess of trouble, Honda not so much. So why would Honda want to dance with Nissan? First the WHY – Yes.
They are both Japanese so culturally it isn’t as crazy as a Renault Nissan alliance, you know the one that involves the French govt and has gone south ever since Carlos Ghosn left Japan in an instrument case.
The transaction would make the new company the 3rd largest OEM in the world behind Toyota and VW Group. VW Group is about to lose its crown in a BIG way so they could ultimately become #2 by default in coming years. Creating synergies from combining although extremely difficult, could be a way for the combined entity to save on costs and build up some capital to do battle with the leaders and some up and comers over the next several years.
It’s going to be costly to basically learn new skills that will allow you to compete for your place in the future of transportation. No one’s place is secure as I see it right now, well except for BYD and Tesla’s anyway.
WHY – No.
Honda is a very conservative company. Nissan is a basketcase of a company right now. Neither has any real IP on the EV/battery side that they could bring to the table where the combined entity could amplify those advantages and take share from others. Nissan effectively doesn’t exist in any significant way in China or the US. Honda is good in the US and barely there in China. A lot of overlap that says that the combined entity may have the same market related challenges post-merger.
I wouldn’t touch Nissan unless the relationship between they, Renault and the French govt. can be clearly resolved without any strings. Finally, with this potential transaction falling within the Japanese border – could we ever see a GM / Ford merger in our future? I believe it’s more probably than most would ever imagine.
One wild card for Honda/Nissan transaction we explore below.
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Foxconn kicking the tires on Nissan. Those of you that have read this newsletter or listened to the podcast for some time know that this was a distinct possibility, I’d argue that I made it a probability and that I believed that Foxconn all along wanted to move upstream and not ONLY be a contract manufacturer to the OEMs.
Most OEMs don’t need more capacity, in fact they’re trying to shed it in the EU and China at least. #2, they would feel threatened by Foxconn if they ever decided to move upstream. Well that’s something they’ve been looking at for some time now. See the purchase of Lordstown factory as Exhibit #1.
I also said that deep down, they feel they can do it better than the OEMs. Here’s the kicker – they have (well) over $100B in assets, so the purchase of a failing OEM, let’s just say <$10B would be peanuts in the grand scheme of things for their balance sheet.
And I assure you that they’d gut the management team and either start over or pepper the team with trusted Foxconn lieutenants. And since we know the automotive space is a FOMO sector, this could create a domino effect on the rest of the sector.
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Standardizing pack sizes, that’ll accelerate swapping transactions …in China at least. CATL’s weight > NIO’s so when CATL decides it wants to make this a reality, bet that they can strong arm a few of their smaller, weaker customers to jump on board.
Throw in some influence by the Chinese govt and we may see a good percentage of Chinese developed EVs swapping batteries in China …and other countries before the end of the decade, I truly believe that.
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Here’s a sneak peek of NIO’s Firefly brand logo alongside it’s sister brands. I really like it!
CHINA EVs & MORE
Below is Episode #191 where we spend the bulk of our time discussing the Jiyue situation and the shuttering of Cruise by GM. Help us grow this channel by Liking, Subscribing, Commenting or all the above!
We will host our live show as mostly on Friday, 9am ET for those that want more interaction. You can also message me directly with questions if you’re not able to attend the live recording – I will try to answer it during the last part of the show.
We are live on these platforms: YouTube, Linkedin and X. See you there!
BY THE NUMBERS
400K. For those wondering where GM’s sales numbers are coming from since Chevy, Buick and Cadillac have been struggling, look no further than Wuling.
And Baojun. In this case, the Bingo has sold 400K units in just over a year. This vehicle, in 4 variants, costs between $8K - $12K so don’t expect much profit, but it’s keeping factories running which is important as they restructure their China operations. This has to be seen as one of the bright spots for GM in China.
Picture courtesy of CarNewsChina
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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