Insightful Explorations into Chinese EV Innovations

ℹ️ The article was first published on LinkedIn on 26.12.2023.

Welcome to the exhilarating eighth edition of "ChinaEV Pulse" our continued journey together.

Your passion and commitment to delving into Chinas electric vehicle advancements, especially within Europe, are incredibly motivating. I am devoted to bringing you comprehensive and insightful coverage of the Chinese EV market, with a focus on the most recent trends, groundbreaking technologies, and the constantly shifting dynamics of this vibrant sector.

Join me as we venture further into the future of electric vehicles with this latest issue of ChinaEV Pulse. Enjoy your read.

Industry Leaders

Polestar, originally Volvo's tuning division, was transformed into an independent brand by Chinese manufacturer Geely in 2017 with the aim of producing electric cars with European design. Despite missing its sales target this year and experiencing a significant drop in stock value, Polestar CEO Thomas Ingenlath discusses the brand's current situation and its ambition to compete with German premium manufacturers like BMW and Mercedes. Polestar's distinct European and Scandinavian design sets it apart from other Chinese electric car brands, emphasizing European engineering excellence.

The brand has ambitious plans, including a joint venture with Meizu to develop its own phone and operating system for its vehicles, showcasing the rapid development pace in China. Despite lowering its global sales forecast from 80,000 to 60,000 vehicles due to delays and market challenges, Polestar prioritizes maintaining the value of its vehicles and healthy business practices over margins. Ingenlath remains confident in Polestar's strong product portfolio and financial backing, aiming for cash flow break-even by 2025.

Polestar's entry into the SUV segment with the Polestar 3 and the upcoming Polestar 4 highlights its growth strategy, despite the industry's downturn and recent cuts in government subsidies for electric vehicles. Ingenlath sees a future where Polestar continues to innovate and expand, with plans for a climate-neutral car by 2030 and a growing portfolio of electric performance cars.

EV Insider

Volkswagen's launch of the VW ID.6 CROZZ and ID.6 X in southern China marks a significant step towards its goal of electrifying 50% of its sales in China by 2030. Despite being designed as versatile models accommodating up to seven passengers, these vehicles are not intended for the European market.

This policy led to a legal confrontation when German auto dealer Gregory Brudny acquired 22 ID.6 cars with the intent to sell them in Germany. Volkswagen intervened, aiming to destroy the imported vehicles to prevent sales outside China, citing an agreement with its Shanghai VW-FAW joint venture partner.

The dispute escalated to the Hamburg courts, where Volkswagen secured an injunction and an order for the potential destruction of the cars, arguing that their sale violated brand rights and regulations. Brudnys attempt to challenge this move, claiming it's a strategy to bankrupt his business and deter others, has led to a temporary halt in proceedings due to his lawyers accusing the judges of bias.

While Volkswagen insists the ID.6 isn't suitable for the European market and warns dealers against its import and sale, Brudny sees the model as profitable and accuses VW of fearing competition. The ongoing legal battle in Hamburg will ultimately determine the outcome of this conflict, which currently leaves no clear winners.

Market Momentum

Deepal Sets Ambitious Global Sales Target of 450,000 Vehicles for 2024

Deepal, a subsidiary of Chinas Changan Automobile Group, has set ambitious sales targets for 2024, aiming to sell 450,000 vehicles globally. CEO Deng Chenghao recently announced this goal, along with plans to launch two new models next year.

Currently, Deepal offers the SL03 sedan series and the S7 SUV series, both available as Electric Range Extender Vehicles (EREV) and pure Battery Electric Vehicles (BEV).

Deepal is now focusing on globalization, developing models for international markets and aiming for rapid entry into ASEAN and European markets. Launched in 2022 by Changan, Deepal has quickly made a name for itself. The SL03, a competitor to Teslas Model 3, was introduced in July last year and began deliveries in September as a pure electric, range extender, and fuel cell vehicle. The S7 model, a competitor to Tesla's Model Y, launched in China in June.

Nio Unveils ET9: A New Era of Ultra-Luxury Electric Sedans

On December 23, 2023, the Chinese company Nio unveiled its latest electric vehicle, the ET9, a model that represents a significant leap forward by combining advanced technologies and luxury features to compete with rivals like Mercedes Maybach.

The ET9, an ultra-luxury sedan, distinguishes itself with its 900V electric architecture, surpassing typical industry standards and setting a new benchmark for electric drive efficiency and performance. It's powered by an all-wheel-drive system consisting of a 340 kW permanent magnet motor in the rear and a 180 kW induction motor in the front, offering a total system power of 520 kW.

The ET9 also features a swappable 150 kWh semi-solid battery based on Nios NT3 platform, promising improved range, performance, and ultra-fast charging capabilities. This battery is expected to enter mass production in April 2024 and is capable of charging up to 255 kilometers in just 5 minutes, with an even quicker battery swap option available in about 3 minutes.

Xpeng Predicts Continued Price War in Chinas EV Market

Xpeng anticipates the price war in Chinas electric car market will persist until traditional combustion engine manufacturers can no longer profit, leaving no room for further price reductions.

The company believes that gaining a larger market share quickly is crucial in the current market climate and that reducing the manufacturing costs of electric vehicles is essential to achieving this. This includes lowering upstream costs like vehicle battery purchases and passing the savings to customers, as well as leveraging technological innovations and expertise where Xpeng feels it has an advantage over traditional automakers.

Xpeng is focused on reducing costs for its Advanced Driver Assistance System (ADAS) by using fewer Lidar and millimeter-wave radar sensors. Currently, Xpengs ADAS costs about 25,000 Yuan (approximately 3,200 Euro) per vehicle, aiming to become one of the most affordable ADAS providers. The company's cost-cutting measures are already showing positive effects, with the revised version of the G9 costing significantly less than the original but yielding higher margins. Xpeng expects a 25 percent cost reduction in new models in the second half of 2024 due to technological innovations, leading to significantly higher margins despite lower vehicle prices

Tech Innovations

Chinas Battery Overcapacity: A Challenge for European Competitors

Chinese companies are significantly expanding their production capacities for electromobility, including vehicles and batteries, with the global market for batteries expected to grow by over 30 percent by 2030. According to a study by Roland Berger and RWTH Aachen, nearly 80 percent of these lithium-ion batteries, which can also be used for energy storage systems, will likely be used for electric cars in the coming years. China is currently building overcapacities in battery production, which could impact the European and global markets.

European companies in the battery sector will need to compete in price and quality, producing at lower costs and better quality to remain competitive against Asian market leaders. Wolfgang Bernhart, from Roland Berger, believes Europe can produce independently of Chinese manufacturers and suppliers at sufficiently low prices, considering all costs, including transport and tariffs.

Starting in early 2024, new regulations within the EU will affect all batteries sold in the EU. These regulations are already effective and extend beyond the EU, with Asian cell manufacturers paying much more attention to their CO2 emissions due to customer demand, especially in Western Europe. Sustainability, alongside costs, is a crucial criterion for selecting suppliers.

Nio breaks 1000 km Barrier on a Single Charge with ET7

Nios CEO William Li has completed a groundbreaking journey of over 1000 km in the Nio ET7 electric car on a single charge, showcasing the vehicle's impressive 150-kWh ultra-long-range battery. Starting in Shanghai and ending in the suburbs of Xiamen, the trip lasted more than 14 hours and consumed 97% of the battery's capacity. The ET7's battery, the first of its kind globally, utilizes cell-to-pack technology and boasts a high energy density of 360Wh/kg, setting a record for production car battery packs in China.

This milestone journey, where 957 km were autonomously driven using Nios Autopilot, ended with 36 km of remaining range, highlighting the batterys efficiency with an energy consumption of 13.2 kWh/100 km. The average speed was 83.9 km/h over 12.4 hours of driving.

Xiaomi EV Prepares for Groundbreaking Tech Launch in Automotive Foray

Xiaomi EV is gearing up for its first significant tech launch since announcing its venture into the car-making industry in early 2021. The upcoming event on December 28 will showcase a series of technical breakthroughs from Xiaomis engineering team, followed by Lei discussing the companys philosophy and approach to car-making.

Xiaomi aims to further this evolution by creating a "mobile smart space," redefining the automobile as more than just a "mobile computing terminal." Lei promises that Xiaomi EV will redefine the automotive industry's technology stack, signaling a significant leap forward in the sector's technological evolution.

BYD to Create Thousands of Jobs with New Hungarian Facility

BYD has announced its plans to establish a new production facility in Hungary, marking its first such venture in Europe. This move, anticipated by prior rumors, aims to intensify BYDs presence in the European market by focusing on the production of electric cars and plug-in hybrids. The new factory is expected to generate thousands of jobs and produce innovative vehicles, enhancing BYDs commitment to the region.

The choice of Hungary comes shortly after discussions in Brussels about scrutinizing state aid for Chinese car manufacturers, suggesting BYD's strategic move to potentially circumvent future import tariffs. Already having a footprint in Hungary with its electric bus production in Komarom, BYD is set to expand its operations to Szeged, the country's third-largest city, where it plans to manufacture both cars and batteries.

Policy Pulse

New Horizons, New Hurdles: Chinese Automakers Navigate European Market

As Chinese electric car manufacturers eye Europes lucrative market, they face a complex landscape marked by both opportunity and challenge. The anticipation of affordable Chinese models in Europe is creating concern for European automakers. However, these Chinese companies are encountering unexpected hurdles, primarily the high costs of sea transport due to strong maritime headwinds and increased charter prices for Pure Car And Truck Carriers (PCTC).

Despite these challenges, China is increasingly becoming a major car exporter, with nearly 0.6 million new cars expected to be shipped to Western Europe this year. Chinese vehicle quality and margins are now competitive with European manufacturers, thanks to joint ventures with Western firms and government support.

The challenges are multi-faceted, with some Chinese manufacturers reporting issues like overstocking. The integration of Chinese models into European rental fleets indicates hesitancy among private markets to fully embrace these new brands. Finally, potential tariffs from a European Commission investigation into subsidies for Chinese electric cars could further complicate the landscape, providing a temporary buffer for European manufacturers to enhance their efficiency and automation.

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Sebastian | China EV Pulse