Exploring the New Frontier of Electric Vehicles

ℹ️ The article was first published on LinkedIn on 06.02.2024.

Welcome to the captivating ninth edition of "China EV Pulse,"

marking our ninth collaborative exploration. Your zeal and dedication to uncovering the advancements in Chinas electric vehicle sector, particularly in Europe, continue to be a great source of inspiration.

I am wholeheartedly committed to providing you with comprehensive and perceptive coverage of the Chinese EV market, shining a light on the most recent trends, cutting-edge technologies, and the dynamic shifts of this exhilarating sector.

Join me as we embark on this latest journey into the future of electric vehicles with the newest issue of China EV Pulse. Enjoy your read!

The Evergrande New Energy Vehicle Group (Evergrande NEV), an electric vehicle subsidiary of China's Evergrande Group, has faced a significant setback with the detention of its president, Liu Yongzhuo. Announced through the Hong Kong stock exchange, Liu's criminal detention relates to unspecified legal violations. This development led to the suspension of trading of Evergrande NEVs shares in Hong Kong, with a request for resumption of trading later in the day.

Liu Yongzhuo has been a part of Evergrande Group since 2003 and took over as president of Evergrande NEV in 2020. The company, founded in 2019, launched its EV brand, Hengchi, and has since unveiled nine vehicle models, covering classes A to D.

Despite these developments, Evergrande NEV reported a substantial loss of RMB 27.7 billion ($3.8 billion) in 2022, though this was a 51 percent improvement from the previous year's loss. The company's cumulative loss and shareholders' loss were substantial as of the end of 2022.

In a positive turn, Evergrande NEV announced a strategic investment of about $500 million from Dubai-based green energy company NWTN Inc. This investment aimed to bolster Evergrande NEV's efforts in developing new models. The company's manufacturing bases in Tianjin, Shanghai, and Guangzhou have significant annual planning capacities.

However, the recent announcement that NWTNs share subscription agreement became invalid adds another layer of complexity to Evergrande NEVs challenges, highlighting the precarious situation the company navigates in the volatile EV market.

The Chinese automotive market is witnessing a surge in sales, with a total of 21.7 million vehicles sold in 2023, marking a 6% increase from 2022. This growth is driven by domestic automakers like BYD, which surpassed the three million vehicle sales mark for the first time in its history. Notably, BYD has overtaken Volkswagen as the top auto seller in China and even surpassed Tesla in Q4 2023 with around 526,000 electric cars sold compared to Tesla's 485,000.

BYD's success is attributed to a wide range of factors. Its diverse product lineup, with nearly two dozen models priced from about 9,000 to over 100,000 Euros, offers vehicles for almost every budget, unlike Tesla's limited four-model range. BYD also benefits from a high manufacturing depth, making most of its components in-house, which gives it a cost advantage over competitors. The company has evolved from its modest beginnings 20 years ago to a highly professional organization.

Additionally, BYD, like other Chinese manufacturers, has received substantial state support, with the industry benefiting from up to $100 billion in subsidies. This support has helped China surpass the USA, South Korea, and Germany in auto exports and is on track to overtake Japan as the world's largest vehicle supplier.

BYD's expansion is not limited to China; the company has set its sights on Europe. With the EU's push towards electric vehicles and favorable import conditions, BYD aims to become a significant player in the European market.

Looking ahead, analysts predict that BYD will continue to grow, with projections suggesting it might match Tesla in terms of total revenue by 2024. The company is also preparing to launch its third generation of electric cars, expected to offer advanced technology like automated driving.

In December 2023, Chinese electric vehicle manufacturers witnessed mixed sales results. BYD led with 190,754 EVs sold, a significant increase from the previous year. Leapmotor set a record with 18,618 deliveries, up 119% year-over-year, and plans to introduce range extenders to boost future sales. LiAuto also hit a record, delivering over 50,000 vehicles in December, surpassing its annual target.

Nio exceeded forecasts with 18,012 deliveries but fell short of its annual goal. Xpeng maintained steady growth with 20,115 deliveries in December, marking a 78% increase from the previous year. Zeekr, part of Geely Holding Group, delivered 13,476 cars in December, a 19% increase, but slightly missed its annual sales target.

Zeekr has set an ambitious goal to deliver 230,000 vehicles in 2024, aiming to double its output from 2023. This expansion plan was shared by a company spokesperson with CnEVPost, indicating a global reach that includes China, Europe, the Middle East, Asia, and other markets.

The company's vice president, Lin Jinwen, announced that Zeekr is poised to accelerate its growth, planning to complete the next 200,000 vehicle deliveries within just 12 months. This announcement comes on the heels of Zeekr celebrating the delivery of its 200,000th production vehicle, a milestone reached just 26 months after its first production vehicle was delivered.

Xiaomi EV, the automotive branch of Chinese tech giant Xiaomi, is focusing initially on the domestic market with its first model, the Xiaomi SU7, but ultimately aims to have its vehicles on roads worldwide. Announced in March 2021, Xiaomi has committed significant investment towards its automotive venture, with ambitions to become one of the top five global carmakers in the next 15-20 years.

The company's founder, Lei Jun, dedicates substantial time to this venture while still focusing on Xiaomi's core smartphone business. Despite rumors, the pricing of the SU7 remains undisclosed, and there are no current plans to launch vehicles under the Redmi sub-brand.

Nio has introduced an option for its customers in China to purchase previously rented batteries through their Battery-as-a-Service scheme. The cost of buying a standard 70 or 75 kWh battery is about 9,000 Euros, while a larger 100 kWh battery costs around 16,500 Euros. If customers want to replace an existing battery with a new one, an additional fee of approximately 385 Euros is required. This move, however, eliminates the flexibility of swapping batteries at Nios exchange stations. It's unclear if Nio will extend this purchase option to European markets, where the costs would likely be higher.

Chinese automakers, notably BYD, are significantly expanding their presence in the European electric vehicle market. BYD, now the world's largest EV manufacturer, has seen rapid growth, selling around 2.7 million electrified vehicles in the first 11 months of the year, a 65% increase from the previous year. The company plans to build a new EV factory in Szeged, Hungary, expected to be operational by 2026.

Additionally, BYD is developing a fleet of mega-autofreighters, capable of transporting up to 9,000 vehicles each, to facilitate this expansion. This move is part of a broader trend, with China poised to become the world's largest auto exporter, significantly outpacing Japan. The focus on Europe is strategic, aligning with the continent's shift towards EVs and favorable import conditions.

Volkswagen Anhui, a joint venture majority-owned by Volkswagen in China, has started producing its first electric vehicle models, focusing on both the European and Chinese markets. The venture recently began manufacturing the Cupra Tavascan, an electric model for Europe, and plans to release a Volkswagen-branded model for China in 2024. Volkswagen Anhui, established in 2017 with Anhui Jianghuai Automobile Group (JAC), represents Volkswagen's intensified focus on EVs in China. The company is also Volkswagen's first wholly owned battery system plant in China and serves as a global center for new energy vehicle R&D, innovation, and component sourcing outside Germany.

Tesla needs to update 1.6 million vehicles in China due to issues with their automatic steering function. This affects imported and locally produced Model S, X, 3, and Y vehicles from August 2014 to December 2023. The Chinese Market Regulation Authority has confirmed Tesla's plan to resolve the issue with a software update, avoiding the need for physical recalls.

Additionally, 7,500 imported Model S and X vehicles require updates for door lock problems. Despite these challenges, Tesla remains a leading EV manufacturer but faces increasing competition from Chinese rival BYD, which recently outsold Tesla in the global market. Tesla continues to expand, with plans to increase production at its Grünheide plant in Berlin.

Thank you so much for dedicating time to read my newsletter. If you've found it insightful, I'd be truly grateful if you could share it with colleagues, friends, or anyone you believe would benefit from it. Your support means the world to me.

To ensure you don't miss any issues, please whitelist the sender's email address in your email program or move the newsletter to your Primary Inbox.

Feel free to send your feedback to [email protected] or forward this email to friends and colleagues if you found it useful.

Best

Sebastian | China EV Pulse