Aerial photograph shows electric cars for export stacked at the international container terminal of Taicang Port in Suzhou, in China’s eastern Jiangsu Province. The EU and China have reportedly agreed to start talks on the planned imposition of tariffs on Chinese-made EVs.
Str | Afp | Getty Images
China’s commerce ministry said it “does not accept” tariffs imposed by the European Union on Chinese electric vehicles, after the bloc increased tariffs on Chinese EVs to as high as 45.3% on Wednesday.
The extra tariffs will range from 7.8% for Tesla to 35.3% for SAIC Motor, and stack on top of the 10% standard import duty for cars to the EU.
In a statement, the ministry said that “China has repeatedly pointed out that the EU’s anti-subsidy investigation on Chinese electric vehicles has many unreasonable and non-compliant aspects, and is a protectionist practice of ‘unfair competition’,” according to a Google translation.
The EU launched an “anti-subsidy” investigation into Chinese EVs last year, alleging they were illegally subsidized and thereby “causes or threatens to cause economic injury” to the bloc’s EV industry.
China has already filed a lawsuit under the World Trade Organization dispute settlement mechanism. The commerce ministry said “China will continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies.”
China’s commerce ministry also highlighted the EU has indicated it will continue to negotiate with China, adding that both sides are conducting a new round of consultations.
It also expressed hope that the EU will “work with China in a constructive manner…, reach a solution acceptable to both sides as soon as possible, and avoid escalation of trade frictions.”
On Oct. 25, Reuters reported the two sides were looking at possible minimum price commitments from Chinese producers or investments in Europe as an alternative to tariffs.
Shares of Chinese EV makers were mostly lower in morning trading Wednesday, with heavyweight BYD trading close to the flatline while Nio and Xpeng lost 3.07% and 0.11% respectively.
Visitors are looking at a BYD DM-i electric car at the 2024 Beijing International Automotive Exhibition in Beijing, China, on May 3, 2024. (Photo by Costfoto/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
Shares of Chinese electric vehicle makers mostly surged on Thursday after the European Union announced higher tariffs of up to 38% on Chinese EVs a day earlier.
Chinese EV-maker BYD, which was the top gainer on the Hang Seng Index, jumped 8% during morning trade but pared some gains to trade at about 6% in the afternoon. Geely was up about 4% initially, while counterparts Nio and Li Auto saw their shares climb about 1.5%. State-backed SAIC was down 1.5% in later afternoon trade.
Citi analysts said the EU’s additional tariffs were “generally benign,” while one analyst from Morningstar pointed out that the additional duties were “modest” in comparison to U.S. hikes on Chinese EVs last month.
BYD vs Geely
On Wednesday, the EU said it would impose extra tariffs on Chinese EV players with a large footprint in Europe. BYD will be subject to additional tariffs of 17.4%, Geely will get an extra 20% duty. SAIC will have to pay additional duties of 38.1% – the highest among the three. This is on top of the standard 10% duty already imposed on imported EVs.
All three manufacturers were sampled in the EU probe, which is ongoing.
Other Chinese EV firms, which cooperated in the investigation but have not been sampled, would be subjected to 21% in extra tariffs while those which did not cooperate in the investigation would face 38.1% in additional duties, the commission said.
The punitive tariffs could be impactful for the EV sector, but would not derail China’s ongoing recovery.
The EU said in a statement it has provisionally concluded that Chinese EV makers benefits from “unfair subsidization,” which resulted in “threat of economic injury” to EU’s EV industry.
“The move is modest compared with the stiff 100% tariffs on Chinese EV imports into the U.S., hiked from 25% last month, by the Joe Biden administration and the 25% provisional duties are in line with market expectations of 20%-25%, in our view,” said Vincent Sun, equity analyst at Morningstar, in a Wednesday note.
Citi analysts on Thursday said the tariff hike is “generally benign” compared to their estimates of 25% to 30%. “The punitive tariffs could be impactful for the EV sector, but would not derail China’s ongoing recovery,” said Citi.
The additional duties come after the EU launched a probe in October. The duties are currently provisional, but will be introduced from July 4 in the event that discussions with Chinese authorities do not result in a resolution, the commission said in a statement. Definitive measures will be placed within four months of the imposition of provisional duties, the bloc said.
In response to the provisional duties, China said Wednesday the move was “blatant protectionism that will create and escalate trade frictions.” A spokesperson for the Ministry of Commerce said Beijing was “deeply concerned and strongly dissatisfied” with the development as it “disrupts and distorts” the global EV industry.
Joseph Webster, senior fellow at the Atlantic Council’s Global Energy Center, said the EU “seems to be warning” Chinese state-backed SAIC to build a production facility within Europe, or else face tariffs.
“China’s SAIC group received the maximum tariff rate of 38.1 percent. The automaker has a limited footprint on the continent, and it has yet to select a site for its first European production facility, despite nearly a year of consideration,” said Webster in a Wednesday report.
“Both BYD and Geely have substantial investments in Europe,” Webster said.
Setting up local factories could be “the ultimate solution” for China’s original equipment manufacturers in the long run, Nomura analysts said Thursday, adding that these companies have started to seek overseas expansion “in order to better fit into the global auto market.”
China’s reaction is the next thing to look out for, analysts said, with possible retaliation from Beijing.
Citi said China “looks set to retaliate but not escalate,” as the “benign” tariffs could bring “contained retaliation.”
“The key here will be how China reacts to this, and then also how the EU reacts to some of these requests [from] companies like Tesla to reconsider the tariffs,” said Paul Triolo, partner for China and technology policy lead at Albright Stonebridge Group.
“The danger is getting into sort of a tit-for-tat tariff battle here. Nobody seems to want this,” Triolo told CNBC’s “Street Signs Asia” on Thursday, adding that the Commission may “show some flexibility, as they did in making this decision.”
Investment analysts are coalescing around a few potential winners in China’s car market after a 10-day auto show in Beijing put the ferocious competition on full display. The opening morning of China’s biggest auto show of the year — April 25 in this case — is typically a mad rush. But this time, the sheer number of people and car launches meant movement between booths often slowed to a crawl. I found that the second day wasn’t much better, in contrast to an emptying out in prior years. “The number of visitors this year was simply overwhelming,” Nick Lai, head of China equity research and Asia Pacific autos research at JPMorgan said in a late April report, noting an uptick in live-streamers and overseas dealers attending the show. “This year, we notice[d] a meaningful amount of foreign visitors who are Chinese brands’ overseas dealers or importers,” JPMorgan analysts said. They expect overseas markets can contribute about one-fourth of leading producer BYD ‘s car profits this year. Tesla , which gets more than a fifth of its sales in China, hasn’t exhibited at the main auto show since protestors disrupted its booth in 2021 . But more recently, CEO Elon Musk made a surprise visit to Beijing last weekend, the company overcame a data security hurdle for local car sales and inched closer to getting its driver-assist software approved for use in China . “Despite the Chinese car market being ~50% larger than Europe, it has about 170 brands operating in the market vs 80 in Europe, which clearly suggests an oversaturation of the market with poor economies of scale selling about 150k cars per brand vs ~200k in the EU,” JPMorgan European autos analysts said in a separate report last month. “This is leading to irrational competition at a point in time of transition,” from internal combustion engines to battery electric vehicles,”the report said, “which begs the question if International OEMs, including Premium, should be competing in the entry or compact segment respectively over the next 5 years.” Open to the public After two days of restricting access only to business and media, the Beijing auto show opened to the general public. Car companies then competed on attracting consumers — beyond offering coffee and prizes. Porsche and Geely -backed Zeekr both showed Apple Vision Pro experiences. The device isn’t yet available in China. Brands from Japanese automaker Mazda to Chinese EV start-up Nezha hired musicians and dancers to perform, together with a brief fashion show around the cars. Often, a few seconds before the show ended, the organizers would remove the barriers, allowing the crowd to rush up to the cars and performers. Autonomous driving supplier Asensing participated in the auto show to learn about the latest industry trends while showing off its own sensors and chips in a bid to support a global expansion, said senior brand and public relations director Zhang Haizhou, noting “most people’s next car is set to be much smarter.” More than 110 new car models debuted at the auto show in Beijing, according to the organizers. “Auto shows have become a marketing tool for top brands to gain traction via not only their products but vocal management,” Morgan Stanley Asia Pacific autos analysts said in a report last week. “The founders of EV makers, particularly brands like Xiaomi and BYD, stole the show,” they said. Word was, Xiaomi founder Lei Jun was walking around the exhibition center after giving a speech on the morning of April 25 to promote his company’s new SU7 electric sedan. “Xiaomi was one of the surprising standouts, with the most social media hits for SU7 and its chairman Lei Jun,” Jefferies’ auto equity analysts said in a May 1 report. “We learnt that marketing matters and that’s rich in [Xiaomi’s] DNA as the consumer electronics juggernaut.” The smartphone and home appliance company said it delivered 7,058 units of the SU7 in April, when deliveries began. Nio and Zhejiang-based Leapmotor reported better-than-expected deliveries in April, according to Bank of America Merrill Lynch analysts. Nio shares have surged more than 50% since a mid-April low. “We believe that orders will improve [month-over-month] in May, thanks to [a] stimulus policy announced on 26 April,” the BofA analysts said in a separate report. Trade-in policy As part of China’s push this year to encourage trade-ins, the Ministry of Commerce said that through the end of this year, certain purchases of new energy vehicles and some fuel-powered cars may be eligible for subsidies of about $1,000 or more. Jefferies’ analysts estimate the policy could boost China’s passenger vehicle sales by 1 million units this year, evenly split between electric and gas-powered models. The new forecast implies new energy vehicle penetration of 45%, up from 44% previously, the report said. The analysts highlighted their Chinese car stock picks as Leapmotor, Geely and BYD, all rated buy and listed in Hong Kong. As of Friday’s close, Leapmotor had the greatest upside to Jefferies’ price target — implying potential gains of 20%. JPMorgan’s top picks also include BYD and Leapmotor, seeing them as potential beneficiaries of government stimulus. Meanwhile, the analysts expect Geely and Xpeng could “benefit from near-term positive market sentiment.” The focus on Chinese automakers indicates foreign companies are losing out. “During an investor day in Beijing ahead of the Auto Show, [ Volkswagen ] management gave an honest assessment of how VW, along with most foreign OEMs, misjudged the change in consumer demand and missed the emergence of a cost-competitive domestic Chinese industry in better sync with consumer trends,” the Jefferies report said. “Having lost market leadership, VW aims to retain its No. 1 position among foreign OEMs” Jefferies also has buy ratings on Volkswagen and its local electric car partner, Xpeng , but only rates Tesla and Toyota Motor as holds. — CNBC’s Michael Bloom contributed to this report.
The front seats of the Aito M9 SUV can be adjusted to create reclining chairs for the second row. Passengers can watch a movie on the roll-down projector screen while storing drinks in a refrigerator compartment.
CNBC | Evelyn Cheng
BEIJING — Hot competition in China’s electric car market is pushing local automakers to sell vehicles with fancy tech that Tesla doesn’t yet offer in the country — and sometimes at lower prices.
No longer are companies competing primarily on driving range. Instead, as they reveal new models at a rapid pace, they’re piling on a slew of features: in-car projectors, refrigerators and driver-assist, to name a few.
Tesla’s cars don’t come with those accessories, and Elon Musk’s automaker only offers a limited version of its driver-assist tech in China right now.
“Electric vehicles in China becomes a consumer electronics [product]. It’s similar to the cellphone industry,” said Li Yi, chairman and CEO of Appotronics, a Shenzhen-based laser display company that claims to work with major automakers.
“In China, I think it’s more entertain[ment], more gadgets, people really want to buy something with the most advanced tech specs,” he said, adding that in Europe, people focus more on functionality.
Appotronics claims it made the 32-inch projection screen that unfurls inside the newly launched M9 SUV from Huawei’s Aito brand. Huawei did not immediately respond to a request for comment.
As of Jan. 1, Aito said orders for the M9 surpassed 30,000 vehicles, with deliveries set to begin in late February.
The six-seater car comes with a refrigerator, collapsible front seats, and instead of a physical dashboard, tech that projects the information so it appears overlaid on the road ahead. This tech, known as AR HUD, can also display navigation instructions.
The M9 SUV sells for about 470,000 yuan to 570,000 yuan ($66,320 to $80,430).
In comparison, Tesla’s Model Y, a mid-sized SUV, starts at 258,900 yuan while the Model S sedan starts at 698,900 yuan.
Among other well-known competitors, Li Auto‘s L9 SUV starts at 429,900 yuan and comes with AR HUD, a refrigerator and driver-assist tech.
Xpeng‘s G9 SUV, widely considered a leader in China for driver-assist tech on city streets, starts at 289,900 yuan.
That’s just a peek at the swath of cars and the available bells-and-whistles in China. More than 100 new EV models are due to launch in 2024 in China, according to HSBC.
Consumers’ interest in new car models has focused on in-vehicle tech features and driver-assist capabilities — “far more advanced” than prior electric cars or traditional gasoline-powered vehicles, said Yiming Wang, analyst at China Renaissance Securities.
Price and maximizing mileage are two other top considerations for consumers, Wang said.
Appotronics’ Li expects that demand for car tech will help his new business segment generate “a few hundred million” yuan this year in revenue – the equivalent of about $40 million to $100 million, he said. The Shanghai-listed company previously made about $300 million in overall revenue a year, Li said.
When asked about Tesla, Li said he wasn’t authorized to disclose details but said people at the U.S. automaker “want something completely different than Chinese carmakers.”
He also noted that in Appotronics’ experience, Chinese customers are willing to pay a premium for car tech, while U.S. automakers are more focused on reducing costs.
That’s because electric car batteries and other parts aren’t made in the U.S., which means American companies are already paying a premium for core components of the electric car, Li said.
Read more about electric vehicles, batteries and chips from CNBC Pro
Chinese companies dominate the supply chain for electric car batteries.
In fact, the main reason why BYD has succeeded is because of its early work in batteries, where it can now reduce costs, pointed out Zhong Shi, an analyst with the China Automobile Dealers Association.
“I think the German system is coming from the mechanical, the bottom-up. [The] Chinese system is coming digital, top-down,” observed Omer Ganiyusufoglu, a member of German’s National Academy of Science and Engineering.
When designing a car, German engineers think about horsepower first, while Chinese engineers start with the cockpit design and then the interior, he said, citing a Chinese car engineer, when he spoke Monday at a Huawei event on “5G Advanced.”
Tesla’s version for helping with driving on highways — called Autopilot — is available in the country, but the company’s “Full Self Driving” (FSD) feature for city streets is not.
Chinese regulators are gradually allowing passenger cars to use more driver-assist features in cities, such as for smooth braking at traffic lights. Chinese authorities in November also announced a nationwide push for developing driver-assist and self-driving technologies via pilot programs.
However, it remains unclear to what extent consumers are willing to pay for such features.
“Even though customers, specially those in China, always indicate in surveys that they are willing to pay for general safety and navigation [advanced driver assistance system] features, their answers change when they are asked about specific ADAS features and their buying behavior tells are different story,” said Shay Natarajan, a partner at Mobility Impact Partners, a private equity fund that invests in transportation.
“There are over 20 unique ADAS features,” she said, noting blind spot warnings or surround camera view were the most popular items. “Note that FSD is not on top of the list of ADAS features customers are willing to pay for.”
BYD launched the BYD Seal in Europe at the IAA auto show in Munich, Germany. The electric sedan has a starting price of 44,900 euros ($48,479).
Arjun Kharpal | CNBC
BEIJING — BYD said Monday it produced more than 3 million new energy vehicles in 2023, putting the Chinese electric car giant on track to surpass Tesla‘s production for a second straight year.
The U.S. electric car company had yet to release full-year figures as of Tuesday in Asia. Tesla said it produced 1.35 million cars during the first three quarters of 2023.
Most of BYD’s cars sell in a lower price range than Tesla’s, and come in hybrid versions. Elon Musk’s automaker only sells purely battery-powered cars. China accounted for about one-fifth of Tesla’s sales in the quarter ended Sept. 30.
BYD shares fell by more than 2% in Hong Kong trading Tuesday morning.
Li Auto, whose monthly deliveries have surged to record highs, is set to launch its first purely battery-powered vehicle, MEGA, on March 1 and begin deliveries later that month, according to an announcement Sunday. That’s slightly later than initial projections for late February deliveries.
The startup has so far seen success with cars that come with a fuel tank to charge the battery and extend driving range. Li Auto said it delivered more than 50,000 cars in December for a total of 376,030 cars in 2023, a 182% year-on-year increase.
The Chinese EV maker said its overall deliveries of electric cars rose 17% year-on-year to 141,601 cars in 2023, with a record 20,115 vehicles delivered in December.
Huawei’s new energy vehicle brand Aito said Monday that orders for its M9 SUV have surpassed 30,000 in the seven days since its launch. M9 mass deliveries are set to begin in late February.
Aito said it delivered 94,380 cars in 2023, including 24,468 in December alone. For 2022, Aito said it delivered more than 75,000 cars since beginning deliveries in March that year.
Zeekr, backed by Geely, said it started Monday to deliver its latest model, the 007 electric sedan. Zeekr said its overall deliveries rose by 65% in 2023 to 118,685.
That total figure is still lower than Nio’s, which said it delivered 160,038 cars in 2023, up by nearly 31% year-on-year. The company delivered just over 18,000 cars in December.
Among the many other electric car brands in China, Nezha reported deliveries of 127,496 cars in 2023.
Aion, a spin-off of state-owned GAC Motor, said it sold more than 480,000 cars in 2023, up 77% year-on-year.
Several Chinese electric car players including Nio and BYD are also pushing into markets outside China, especially Europe.
BYD’s overseas sales in 2023 exceeded 242,000 new energy passenger vehicles, according to CNBC calculations of public data. The company did not disclose comparable 2022 figures.
The Chinese EV giant announced plans in December to build a new production center in Hungary. The company said it currently sells five models in Europe and plans to launch three more for the region in the next 12 months.
“While the China market is one of the pioneers entering into the era of EVs, we believe moving overseas (building factories in the overseas market rather than just shipping vehicles manufactured in China) is the only way for China’s leading carmakers to achieve success in the global market in the long run,” Nomura China autos analyst Joel Ying and a team said in a Jan. 2 note.
“Given the company already has a bus factory in Hungary, we believe the decision to build the first EU PV factory in Hungary will help BYD to minimize the potential risks in the overseas market,” the report said.
BYD said it sold 36,095 new energy passenger vehicles overseas in December, more than triple the year-ago figure.
— CNBC’s Michael Bloom contributed to this report.
YANTAI, CHINA – SEPTEMBER 8, 2023 – Students conduct an industrial robot training at Yantai Cultural and Tourism Vocational College in Yantai, East China’s Shandong province, Sept 8, 2023. At present, China has built the largest vocational education system in the world, and the middle and higher vocational schools train about 10 million high-quality technical talents every year. (Photo by Costfoto/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
BEIJING — China’s vocational school push is producing workers the country’s electric car and semiconductor industries want to hire.
Despite tech company layoffs and record-high youth unemployment in recent years, public filings analyzed by CNBC show marked headcount growth at key industry giants – who largely depend on technical, advanced manufacturing labor.
Chinese semiconductor company SMIC‘s research and development team grew by nearly 30% since 2021 to 2,283 as of June. While doctorate and master’s degree holders contributed the most to the increase, the number of staff with a junior college or lower background rose by 10% — in contrast to an 8% drop for those with bachelor’s degrees.
China’s efforts to build up its own technological capabilities have intensified since the U.S. started to restrict Chinese companies’ access to critical tech such as advanced semiconductors.
Beijing made two important changes in 2019 to spur vocational education – a nationally recognized skills certification framework and a call for 300 business entities to provide or sponsor training, pointed out Anyi Wang, associate research scholar at Columbia University and co-author of a 2020 paper on vocational education in China.
“Right now, I think the government is trying to put vocational education in a more important place in the whole education system,” he said, noting other policy changes that indicate Beijing’s recognition that high-tech workers need longer training times.
More complex machines and software systems also mean factory workers aren’t just filling labor-intensive roles anymore, but may be overseeing automated production.
The unemployment rate for young people ages 16 to 24 climbed to records above 20% this summer before authorities suspended the data release.
“The supply of [what we call] workers with generalized skills to the market is more than the economy can actually [absorb], so you can find a lot of the graduates, they graduate directly into unemployment,” Wang said.
The number of bachelor’s degree graduates rose by 10% in 2022 to 4.7 million, while higher-level vocational schools saw a 24% surge in graduates to 4.9 million, according to the Ministry of Education.
There’s no official jobless rate breakdown by educational background.
But what’s clear is vocational positions require specific skills, Wang said. “So they are having a shortage of workers or applicants.”
The latest available official tally of nationwide labor shortages for 2022 found that sales people were in greatest demand, followed by automobile manufacturing workers in second place, up from 19th place previously.
Semiconductor-related manufacturing jobs also made the top 100 positions with the greatest need for workers, the report said.
The number of students focusing on the auto sector has increased significantly over the last several years to about two-thirds of the current enrollment at Nanjing Vocational University of Industry Technology’s transportation school, its dean Wang Wenkai said in a phone interview.
“The market has increased demand for this,” he said in Mandarin, translated by CNBC.
In a well-managed vocational education program, a significant benefit for students comes from corporate partners who provide hands-on experience, if not a job after graduation.
Schools CNBC spoke with had existing programs with companies such as CATL, Baidu’s autonomous driving unit and Chinese electric car giant BYD.
Public announcements in the last year also show at least 10 different vocational education schools are in talks for or have launched training institutes with BYD.
Among them, a “BYD Field Engineer College” was launched on Sept. 10 in collaboration with vocational schools in Henan province, whose capital city of Zhengzhou is home to a new BYD factory.
Based on its 2023 strategic plan, BYD will need a large number of field engineers in manufacturing and after-sales service, Liu Junpeng, director of school-enterprise cooperation at BYD’s human resources department, said at the college’s launch event, according to a release by Henan Mechanical and Electrical Vocational College.
BYD did not immediately respond to a CNBC request for comment.
The company does not disclose its workers’ educational background. But public filings reveal its workforce more than tripled over the last six years to 631,500 as of June.
Corporate partnerships also help schools make sure their curriculum is current.
Every summer, teachers at Shaanxi Polytechnic Institute go to work at BYD in the city of Xi’an, according to Xu Jiyang, dean of the institute’s automotive school.
At Shenzhen Polytechnic University, BYD engineers help construct the courses, parts of which also take students to learn on-site at the company, said Zhu Xiaochun, deputy dean of the school of automobiles and transportation.
He claimed junior college students had an employment rate of well over 90%. “In addition to our better students in the bachelor program, [BYD] also needs a large number of workers,” Zhu said in Mandarin, via a CNBC translation. “It’s too easy for our students to find jobs.”
However, one of the biggest challenges for vocational education remains public perception.
“We live in an era of high aspiration. Parents want that for their children,” said Stephen Billett, professor of adult and vocational education at the School of Education and Professional Studies at Griffith University in Australia.
“But often vocational education is being seen as something as far less desirable than those developed through higher education,” he said. “That then leads to this issue of how that can be changed and also how we can have effective vocational education systems.”
Volkswagen’s ID.7 is set for release in Europe and China in the fall of 2023, and in North America in 2024.
CNBC | Evelyn Cheng
BEIJING — Chinese brands are taking the lead in the country’s rapid shift to new energy vehicles, putting Volkswagen on track for its smallest year of China sales since 2012, according to CNBC analysis of public data for the first three quarters of the year.
The German auto giant isn’t alone in its struggles, according to CNBC’s analysis of 10 global car brands.
Nissan is on track for its worst year in the market since 2009, while Hyundai is set for its lowest sales since at least that time, CNBC’s analysis showed.
The declines come as China has rapidly transitioned away from internal combustion engines to new energy vehicles. It’s a rapidly growing market of battery and hybrid-powered cars which Tesla and homegrown brands such as BYD have captured.
In China, the world’s largest auto market, new energy vehicles have accounted for more than one-third of new passenger cars sold in the country so far this year.
That’s according to the China Passenger Car Association, which also predicts the local auto market will grow by 20% in November from a year ago.
While Volkswagen remains by far a giant in China’s car market with around 3 million vehicles sold a year, the German brand hasn’t gained much traction in the electric car space. In July, the company opted to invest about $700 million into Chinese electric car start-up Xpeng to jointly develop two cars for China.
BYD is quickly catching up. The Shenzhen-based company sold more than 1 million cars for the first time in 2022 and is on track for 2.5 million vehicle sales in China this year, CNBC found.
Toyota, which has struggled in the market transition to electric cars, is set for its worst year of overall China sales since 2020 with about 1.8 million vehicle sales, CNBC found.
The Chinese automotive industry is developing faster than the market’s growth rate, said Alvin Liu, an analyst at Canalys’ Shanghai office, responsible for global tracking and analysis of the new energy vehicle market.
He pointed out that at around 2 or 3 million in sales, BYD is set to capture a significant share of China’s 8.5 million-large new energy vehicle market. Liu also noted the potential for original equipment manufacturers, or OEMs, to compete via joint ventures with Chinese companies.
Foreign brands are becoming less popular with Chinese consumers as they consider electric cars. License plate restrictions in big cities such as Beijing incentivize locals to buy electric instead of traditional fuel-powered cars.
A Bernstein survey of more than 1,500 consumers in China in August and September found that BYD was the top brand that Chinese buyers of electric vehicles would consider. Tesla was next, followed by Nio.
When it came to preferences for the next car purchase, “except for Tesla, all foreign brands saw their brand traction scores declined year-on-year, of which Japanese brands’ (e.g. Toyota, Honda, Nissan) dropped most,” the report said.
“The younger population also saw declining interest in traditional non-German premium brands, and to a smaller degree, in German premium brands,” the report said.
The survey indicated some brand loyalty for German car brands. But not necessarily when it came to different sources of energy.
“Tesla is more attractive to current German and other premium brands’ owners as they make their switch to EVs,” the Bernstein report said.
Although China’s new energy market is growing quickly, competition is fierce, even for domestic brands.
BYD in July launched its most direct competitor to Tesla yet, the Denza N7, while also expanding beyond mass market cars into ultra-luxury with a 1 million yuan-plus (more than $138,000) price tag for a giant U8 SUV under its Yangwang brand.
“If this year was competitive, next year will be even more competitive,” An Conghui, head of Geely’s EV brand Zeekr, told reporters on Oct. 27 in Mandarin, translated by CNBC.
He was speaking after Zeekr’s launch of its luxury electric sports car, the 001 FR, with specs clearly meant to rival Tesla’s Model S Plaid — at a lower price.
An claimed that no car company would be able to replicate the 001 FR within five years.
Zeekr, which set a monthly delivery record in October with just over 13,000 cars in China, has aggressive expansion plans to sell in Europe and the Middle East in the next two years.
BYD and other brands are also selling electric cars overseas.
This year, China is on track to become the world’s biggest exporter of cars, surpassing Japan and Germany, Moody’s analysis said in August.
In a sign of how big a force Chinese automakers are becoming abroad, the European Union in September launched an anti-subsidy probe into Chinese electric vehicle companies.
— CNBC’s Michael Bloom contributed to this report.
Xpeng reveals its G6 SUV at a major auto show in Shanghai on April 18, 2023.
Vcg | Visual China Group | Getty Images
BEIJING — Chinese electric car companies Xpeng and Li Auto each delivered a record number of cars in October, according to company releases late Wednesday.
Xpeng said it delivered 20,002 cars last month. That’s a marked pickup from lackluster figures earlier in the year. Just under half of deliveries in October were of Xpeng’s G6 coupe SUV, launched in late June.
The G6 sells in the roughly the 200,000 yuan 250,000 yuan ($27,340 to $34,170) price range, while Li Auto’s SUVs sell for more than 300,000 yuan.
Li Auto’s monthly deliveries remained far ahead of its immediate peers at 40,422 cars in October. The company’s currently available cars are not purely battery-powered since they come with a fuel tank for extending the battery’s driving range.
All three companies are listed in the U.S. and saw shares rise overnight. Xpeng climbed the most, up by 7%.
Other Chinese electric car brands also saw deliveries tick higher in October, amid stiff competition.
Geely’s electric car brand Zeekr said it delivered a record 13,077 cars last month. Zeekr on Friday revealed an ultra-fast model, the 001 FR, which rivals Tesla’s Model S Plaid in specs — at a lower price.
Aito, the Huawei-backed new energy vehicle brand, claimed 12,700 deliveries for last month.
EV stock performance YTD
Aion, an electric car brand from state-owned GAC Motor, said it sold 41,503 vehicles in October.
BYD remained by far the giant in the market. The company said it sold 165,505 pure battery-powered passenger cars in October, and nearly just as many hybrid-powered vehicles.
Telsa figures for October were not yet available as of Thursday morning. Previously released industry data had indicated a decline in sales in China from August to September.
Apple iPhone supplier Foxconn, officially known as Hon Hai, said its semiconductor strategy is to focus on producing “specialty chips” — not competing in cutting-edge chips.
“We do not chase [after] the most advanced technology. Hon Hai will not compete with leading edge players like 4-nanometer or 3-nanometer. We focus more on specialty technology,” Chiang Shang-Yi, chief strategy officer for semiconductor at Hon Hai Technology Group, told CNBC’s Emily Tan on Tuesday.
Specialty chips are known as semiconductors found in sectors such as automotive and internet of things. Chips for automotive uses are typically made using mature technology – 28-nanometer or larger chips.
“Nanometer” in chips refers to the size of individual transistors on a chip. The smaller the size of the transistor, the more powerful and efficient it is, but it also becomes more challenging to develop.
“If we tried to chase 3-nanometer, 2-nanometer, we are way too late. The way we are working on [is to] just try to manage the supply chain. And we call it specialty technology – that is not late at all,” said Chiang.
Our strategy is we attack all.
Jun Seki
Hon Hai’s chief strategy officer for EVs
Hon Hai Technology Group is the world’s largest contract electronics manufacturer that assembles consumer products like Apple’s iPhones. But in the last couple of years, the Taiwanese firm has made its foray into semiconductors and electric vehicles.
When it comes to EVs, Chiang said the focus lies in power devices and silicon carbide chips — increasingly a material of choice among EV-makers, thanks to its higher efficiency at higher voltages common in EVs.
Foxconn first announced EV prototypes in 2021 made by Foxtron, a venture between Foxconn and Taiwanese car maker Yulon Motor.
Foxconn currently only produces a small number of EVs, but has set an initial target of capturing a 5% market share globally by 2025, according to Reuters.
“When we [talk] about EV business, we have a component business. We have a platform business. We have a CDM business: contract, design and manufacturing services,” said Jun Seki, Hon Hai’s chief strategy officer for EVs, told CNBC in a separate interview.
“Our strategy is we attack all. Component module platform makes our cost very competitive. This is an area that makes traditional auto OEMs profitability very poor, he said referring to original equipment manufacturer, which are products sold to other companies as components.
We have a little bit of everything. There’s a good reason for that. If you do a little bit in everything, you know what’s going on in that area.
Chiang Shang-Yi
Chief strategy officer for semiconductor
“Sometimes we may have to build their cars by their drawings. If our customers can give a chance to us, we can build our ideas into their cars, then we can make customers more competitive,” said Jun.
However, the global EV market is only getting more competitive.
China, Europe and the U.S. are major players when it comes to electric cars. From third-quarter 2021 to second-quarter this year, the top three players – Tesla, BYD and Volkswagen – held 42% of the global EV market, according to Counterpoint Research.
Foxconn’s foray into semiconductor has had a tough start, pointing to the difficulty for new players to enter a market dominated by firms with extensive experience and a highly intricate supply chain.
Earlier this year, Foxconn pulled out of a joint venture with Indian metals-to-oil conglomerate Vedanta to set up a semiconductor and display production plant in India as part of a $19.5 billion deal.
“You call it a failure, but I don’t think it’s finalized yet. I think we learnt through the way how we interpret, how we work with the government. So far, the government is still not making a decision yet. So I will not call it a failure at this moment. We are all still trying to work with the government, to find ways so the government will support our proposal,” Young Liu, Hon Hai’s CEO and chairman, told CNBC.
In August, the government of the state of Karnataka in India said Foxconn will pump in more than $600 million to build a phone manufacturing project and a separate semiconductor equipment facility.
India could account for 20% to 30% of Hon Hai’s manufacturing, which is “very similar to China,” Liu said.
“We’ve been working with countries like India, Indonesia and Thailand. They’re all going quite well,” the CEO said. Foxconn is exploring cooperation with Indonesia and Thailand EV-related companies.
He added that Hon Hai “very much focus on the entire supply chain,” he added. “There’s a good reason for that.”
“If you do a little bit in everything, you know what’s going on in that area. Like we all know, two years ago, there’s a big shortage in chips and many cars cannot be shipped because they lack chips. And this case, Hon Hai will have a better idea because we’ll know what’s going on. And we give us more lead time to try to manage them,” said Chiang.
More Chinese companies are becoming global players. BYD and other Chinese electric car brands flocked to a German auto show in the last week to announce plans for the European market . Car exports remain a bright spot in China’s overall trade slump, customs data show. Those overseas sales helped boost China’s auto sector earnings by 46% in the second quarter from a year ago, UBS Securities’ China Equity Strategist Lei Meng said in a note Wednesday. In all, BYD, state-owned SAIC and other Chinese companies gained 9% of the global electric car market in the second quarter, up from 5% in the second quarter, Counterpoint Research said. That’s on top of the companies’ share in the domestic Chinese market — the largest globally for autos. CLSA on Sept. 4 raised its BYD price target by 10 Hong Kong dollars to 310 HKD — 25% upside from BYD’s close for the week. Analyst Xiao Feng and a team expect that this year, BYD will enter the ranks of the world’s ten largest original equipment manufacturers – before climbing into the top 5 in 2026. Toyota ranks first worldwide, with 10.43 million units sold in 2022, the CLSA report said. The analysts expect BYD’s sales will grow by 65% to 3.05 million units this year – including 250,000 to 300,000 vehicle exports. That’s a move in the footsteps of Toyota. About 60 years ago, the Japanese automaker began to increase its overseas exports , and grew over the decades to surpass General Motors in 2008 as the world’s largest automobile manufacturer, according to Britannica. Today, the Japanese car giant is struggling to keep up as strong a presence in the all-electric car market. Beyond EVs Slowing growth in China has also pushed companies, including startups, to look abroad. In the second quarter, mainland Chinese stocks, known as A shares, saw an 8% year-on-year slump in earnings, UBS’s Meng said. But, he said, “another sector that rode on strong exports is machinery: H123 earnings YoY growth turned positive, despite a YoY decline in Q1.” Shenzhen-listed construction machinery company XCMG said in filings in the last two weeks its international revenue rose by 33.5% in the first half of the year to 21 billion yuan ($2.86 billion). That accounted for 41% of total revenue, up 11 percentage points from a year ago, said the company, whose full name is Xuzhou Construction Machinery Group. It claimed revenue from West Asia, North Africa and Central America more than tripled during the first half of the year. That from Europe grew by 150%, while Central Asia and North America saw revenue double, the company said. For the full year, XCMG has an export sales growth target of 50% growth, UBS stock analyst Phyllis Wang and a team said in a Sept. 4 note. The analysts raised their price target to 6.70 yuan from 6.20 yuan based on higher earnings expectations, while maintaining a neutral rating. That’s about where the stock closed on Friday. Chinese companies have been trying to “go global” for years, with tacit encouragement from Beijing. State-owned shipping giant Cosco has vessels all over the world. Shanghai-listed Haier acquired GE’s appliance unit in 2016. Mingyang, also listed in Shanghai, is a global leader in wind power. In medical devices, China’s largest homegrown manufacturer Mindray ranks among the 50 largest in the world, JPMorgan analysts said, citing Omed and S & P Capital IQ. Mindray’s second-quarter overseas sales “accelerated significantly” with a 40% surge from a year ago, JPMorgan’s Helen Zhu and a team said in an Aug. 31 note. Europe sales rose by 20% during the first half of the year from a year ago, they said. The company’s Shenzhen-traded shares have nearly 67% upside to the JPMorgan price target of 433 yuan — even after the analysts lowered their growth expectations due to an ongoing anti-corruption crackdown on China’s health sector. — CNBC’s Michael Bloom contributed to this report.
BYD launched the BYD Seal in Europe at the IAA auto show in Munich, Germany. The electric sedan has a starting price of 44,900 euros ($48,479).
Arjun Kharpal | CNBC
Munich, GERMANY — The IAA in Munich, Germany is one of Europe’s most high-profile auto shows. And it was dominated by Chinese electric car firms looking to expand their presence on the continent and challenge incumbents from BMW to Ford in the new era of battery-powered vehicles.
Chinese start-ups and players had some of the biggest stands at the event with high-profile press conferences and vehicle launches, underscoring their intention to make a splash in the European market.
China, the world’s largest EV market, has seen a tidal wave of electric car companies pop up in the last few years, driven by government subsidies and venture capital funding. But a slowing market at home, due to tepid consumer spending after Covid-19 restrictions were lifted, coupled with an attractive market in Europe, has seen Chinese firms launch cars abroad and expand their footprint.
“Europe is one of the largest (second after China) mass market vehicle markets … If the Chinese EV makers want to secure a growth path beyond their local market, its very logical to look at Europe,” Daniel Roeska, senior research analyst at Bernstein Research, told CNBC via email.
Roeska added that Europe, with its “stringent de-facto” ban on combustion engine cars in 2035, “is pushing the market faster towards EVs at a time when most EU brands … do not have a perfect offering yet, making market share gains easier.”
Many of the European carmakers have been seen lagging in their push into EVs at a time when Chinese players have launched dozens of new vehicles.
The ambitions of Chinese EV firms were on display at the IAA.
On the morning of the first day, Leapmotor, a Chinese firm headquartered in Hangzhou, announced plans to bring its C10 sports utility vehicle, or SUV, to European markets next year. In the next two years, the company said it plans to introduce five “globally-oriented” products across the world.
“All of Leapmotor’s subsequent products will be designed and developed with a global mindset and adhere to global standards,” Leapmotor CEO Zhu Jiangming said at a press conference on Monday.
Chinese EV maker Leapmotor launched its first car for the international markets called the C10.
Arjun Kharpal | CNBC
Meanwhile, BYD, the carmaker backed by Warren Buffett, launched its Seal electric sedan for Europe on Monday, starting at 44,900 euros ($48,479). For comparison, in Germany, Tesla’s Model 3, starts at 42,990 euros.
And there were more announcements about continued expansion into new territories.
Xpeng said Monday it will expand sales of its cars into the German market in 2024. The company currently sells its P7 sedan and G9 SUV in Norway, Sweden, Denmark and the Netherlands. And Brian Gu, president of Xpeng, said the company plans to bring its latest car, the G6, to Europe next year, underscoring the Guangzhou-headquartered firm’s global push.
“We recognise Germany is the most important and the highest standard market for all” carmakers, Gu told CNBC in an interview Monday.
“And to be able to be here and then really made our make our product available to the customers in this market, really will help us further penetrate the continental European market. We have ambitions for broader market coverage internationally.”
The entrance of Chinese firms into Europe is seen as a threat to big automakers who have been perceived to be moving too slow on EVs.
Analysts at Bernstein said in a note published in June that if Chinese carmakers enter the market “as per normal,” then incumbents may concede up to 5% market share by 2030. But these new entrants could grab up to 20% market share if their entrance into Europe is more aggressive than expected, they added.
But the Chinese companies themselves face rising competition from within, but also outside of their home market. Tesla sparked a price war earlier this year which has put pressure on profits and margins of some of China’s smaller players like Xpeng.
Meanwhile, to fend of rising competition and catch up with Tesla, BMW and Mercedes both launched a dedicated electric car platform that will underpin their vehicles for the coming years, adding further potential headwinds that are not lost on these Chinese challengers.
“Well, it is definitely not easy,” Xpeng’s Gu said of the push from traditional carmakers into EVs.
“I think as a young company, we also are trying to learn from … each step that we take, as well as learn from the competition, the partners that we have. But we have confidence in our technology, we have confidence in our product,” Gu added.
Chinese automaker BYD had one of the biggest stands at the IAA show in Munich, Germany in 2023.
Arjun Kharpal | CNBC
Another challenge for the Chinese firms is building brand recognition, an exercise that could stretch marketing budgets and take a long time to do.
“Brand is a sizeable issue, but not insurmountable if they can invest for the long-term,” Peter Richardson, vice president at Counterpoint Technology Research, told CNBC via email.
Richardson said Korean firms Hyundai and Kia were “relatively unknown” in Europe 30 years ago, but “both brands have risen to be significant players.”
A BYD ATTO 3 is displayed during the British Motor Show at Farnborough International Exhibition Centre on August 17, 2023 in Farnborough, England.
John Keeble | Getty Images News | Getty Images
Shares of Chinese automaker BYD listed in China jump more than 5% Tuesday, a day after posting a stellar jump in first half profit.
Thanks to record deliveries, the Chinese electric car maker on Monday posted a 204.68% jump in net profit for the first half of the year — that’s net earnings of 10.95 billion yuan ($1.50 billion) in the January to June period, compared to 3.59 billion yuan a year earlier.
Hong-Kong listed shares of the automaker rose 5.6% while stocks in Shenzhen were up as much as 4.75% on Tuesday.
The strong numbers were mainly attributable to rapid growth in the new energy vehicle business, the firm said in a stock filing.
Revenue in the first six months increased 72.72%, compared to the first half of 2022, according to the stock filing.
“If you look at BYD numbers, clearly the top line growth has been very strong, but we are even more impressed by its margins. BYD’s gross margin in the first half was 18%. That’s Tesla’s gross margin,” according to Jiong Shao, Barclays’ China technology analyst.
China’s top-selling car brand posted its best-ever quarterly sales results. Sales of passenger new energy vehicles in the second quarter were 700,244 units, up about 98% year-on-year, according to the company.
China is the largest auto market in the world by sales and production. It is also the largest EV market in the world, and a key driver in the push toward electric cars.
“BYD is targeting mass market where Tesla cannot reach,” said Vivek Vaidya, associate partner at Frost & Sullivan, on CNBC’s “Street Signs Asia” Tuesday.
“You will see China-made vehicles which will offer significant price advantage over Tesla [with] similar features, stunning looking cars,” said Vaidya.
Earlier this year, BYD and its domestic rivals such as Nio and Xpeng also cut prices.
“The lower price to squeeze out of the weaker players is really a good thing for the health of the industry,” Shao from Barclays told CNBC’s “Squawk Box Asia” on Tuesday.
“BYD’s operating margin was 5% which is a pretty healthy operating margin and many players in the Chinese EV market even have negative gross margin, let alone operating margin,” Shao said.
The price cuts come as consumers remain cautious on spending amid a weaker than expected economic recovery in China after strict Covid restrictions were lifted.
Vaidya of Frost & Sullivan said the brands are lowering prices to get as many of their products into the market as possible.
“EVs are slightly different than internal combustion engine vehicles. EVs also make money for the OEMs who sell them,” said Vaidya, referring to original equipment manufacturers such as Tesla, in this case.
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“When they are running, for example, Tesla has charging points and therefore every mile that is run on Tesla, Tesla gets some money back. So the discounting or the price war that is happening is to get the product out there in the market,” said Vaidya.
An XPeng Inc. G9 electric vehicle at the Shanghai Auto Show in Shanghai, China, on Monday, April 24, 2023.
Qilai Shen | Bloomberg | Getty Images
Global electric vehicle makers are tapping advanced technology to vie with each other and domestic brands in the intensively competitive Chinese market.
“China’s domestic brands are leading the market in the development and implementation of advanced assisted driving systems, capitalizing on their early-entry advantages in the electric and intelligent vehicle sector,” research firm Canalys said in a recent report.
“These brands have an edge over other joint ventures in the planning and execution of smart assisted driving systems.”
BofA Securities in a May report said it expects China to still be the world’s largest EV market in 2025, standing at 40%-45% market share.
“China auto makers are accelerating vehicle platform, technology upgrade or innovation, leading to outstanding user experience. China EV products are much more competitive than before, and China will continue to see EV penetration expanding, in our view,” said the BofA Securities analysts.
But these global players are now stepping up their efforts.
On Friday, BMW China announced that it is accelerating the development of hands-free autonomous driving features, also known as Level 3 or L3 functions. BMW China said it plans to roll those out by end of 2023 or early 2024 and will ensure compliance with local regulations.
L3 autonomous driving has not been widely approved in China, though some companies including domestic EV maker Xpeng has been authorized to test the technology.
The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China.
“We are now accelerating the expansion of our local electric portfolio and at the same time preparing for the next innovation step,” Ralf Brandstätter, Volkswagen AG board member for China, said in a company statement.
Volkswagen and Xpeng will co-develop two new EVs that will incorporate its advanced driver-assist software for the Chinese market and aims to roll them out in 2026.
“The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China,” Tatsuro Ueda, CEO of China for Toyota, said in a company statement.
“By promoting local development … we will attempt to develop and provide competitive products that can satisfy Chinese customers at a fast pace.”
A Nanjing Road pedestrian street on October 1, 2022 in Shanghai, China.
Yan Daming | Visual China Group | Getty Images
Chinese stocks soared Tuesday as Beijing pledged to ramp up measures to bolster China’s sputtering economy.
Hong Kong’s Hang Seng Index surged more than 3%, China’s tech-heavy ChiNext rose 1.8% and the Shanghai Composite Index increased 1.81% on Tuesday morning in Asia.
A day earlier, Chinese real estate stocks tumbled on renewed debt fears. The Chinese government cracked down on the property sector’s debt levels in August 2020.
The stock rebound comes after China’s top leaders pledged on Monday to ramp up policy support to boost domestic consumption as the post Covid rebound has been slower than expected.
China’s top leaders met Monday for the much-anticipated Politburo meeting and hinted at moves to “adjust and optimize” property policy in what the leadership called a “torturous” economic recovery.
State news agency Xinhua quoted the 24-member Politburo as saying “the economy is facing new difficulties and challenges.” That’s mainly due to weak domestic demand, operational challenges for companies as well as “a grim and complex external environment,” it said.
“The meeting emphasized that it is necessary to actively expand domestic demand, give full play to the basic role of consumption in driving economic growth, expand consumption by increasing residents’ income,” according to Xinhua.
“It is necessary to boost the consumption of automobiles, electronic products, and home furnishing, and promote the consumption of services such as sports, leisure, and cultural tourism,” said the report.
Hong Kong-listed shares of internet giants rose on Tuesday. Alibaba shares soared 4.7%, while Tencent was up nearly 4%. Meituan and Baidu shares were higher by 5.7% and 6.8% respectively.
In the electric vehicle space, Xpeng soared 11%, Li Auto was up 4.15% and BYD rose 2%.
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“This is a reconfirmation that the [Chinese] policymakers have heard the market concern on more support needed for the domestic economy,” said Xiaolin Chen, head of international at KraneShares, on CNBC’s “Street Signs Asia” Tuesday.
“They want to achieve the 5% GDP target of this year. The first job they need to do is to create jobs for the labor force in China,” said Chen.
“I do certainly see some encouraging language released from the statement that removed a lot of the concerns of people having a high focus on real estate market, employment, private investment, and so on. So far, the language has been encouraging.”
For the first time in recent years, sales of electric vehicles didn’t grow as fast as market observers expected, creating what Barclays analysts characterized Wednesday as a “step back from EV euphoria” for companies that are not Tesla Inc. or BYD Co.
The analysts, led by Dan Levy, said that in 2020 and 2021, Wall Street was “willing to look past EV losses,” betting that demand was “unlimited.”
“We’ve now seen a market where demand is constrained, capital has been tighter, and there is less tolerance for EV related losses,” the analysts said in a note.
“Moreover, going a layer deeper, we find that while [Tesla TSLA, +0.82%
] and [China’s BYD 002594, -1.38%
BYDDY, +0.50%
] have continued to grow, … growth for the rest of the industry has been less robust in Europe and China,” they wrote.
Global EV penetration volumes have tracked below expectations so far this year, at 13.5% through May, up 50 basis points, or 0.5%, from 2022 and “well below” estimates from BNEF of just under 18%. It is “likely marking the first time in recent years that EV penetration has disappointed,” the Barclays analysts said.
In comparison, penetration topped 16% for several months in the second half of 2022. While the second half of this year is likely to bring some improvement, it is possible that it will still fall short of expectations.
Aside from Tesla and BYD, growth has been modest, the analysts said. For Ford Motor Co. F, -0.07%
and General Motors Co. GM, +1.09%,
there are “shades of softness in EV sales,” the Barclays analysts said.
There are concerns about weak U.S. EV sales and also reports of “sharply rising EV inventory,” the analysts said.
Citing data from Wards, Barclays pointed at EV inventory of 95,000 vehicles by the end of June, the highest ever, with the highest amount of stock for Ford’s electric Mustang Mach-E SUV, at about 16,000 vehicles in inventory, and Volkswagen’s ID.4, also an SUV, at 14,000 vehicles in inventory.
GM is not off the hook, either: Despite the company’s increase in EV sales and “robust” market-share gain, much of that came from its Chevy Bolt models, which are nearing the end of production, the analysts said.
DETROIT – Toyota Motor’s stock is having its best week since 2009 following the company disclosing plans for its next-generation electric vehicles and shareholders voting in favor of its new leadership, including former CEO Akio Toyoda as chairman.
Shares of Toyota on the New York Stock Exchange on Thursday achieved a new 52-week high before closing at $168.18 per share, up 1.6% during intraday trading and roughly 13% this week.
If shares can retain their current momentum, it would be the stock’s best week since April 2009 when they increased 14.5%. It would also mark only the third double-digit weekly gain in more than two decades.
The notable increase in the relatively mundane stock follows additional details about the company’s EV strategy, which has previously been criticized by some for not being aggressive enough.
Ahead of its annual meeting Wednesday, Toyota outlined plans for a new generation of EVs to rival industry leaders Tesla and China-based BYD. The company said it plans to launch its next-generation EVs starting in 2026, including vehicles with highly touted “solid-state batteries” by 2027 or 2028.
Solid-state batteries can be lighter, with greater energy density and provide more range at a lower cost than today’s EVs with lithium-ion batteries.
People arrive to attend an annual shareholders’ meeting for Toyota Motor in the city of Toyota, Aichi Prefecture on June 14, 2023. Toyota is under pressure from large institutional investors for chairman Akio Toyoda to step down over his lukewarm embrace of electric vehicles.
Str | Afp | Getty Images
Takero Kato, president of BEV Factory, said that Toyota is targeting a driving range of 1,000 kilometers (620 miles) for its EVs. BEV Factory aims to produce about 1.7 million vehicles by 2030, he said.
“Proactive disclosure of a new tech strategy featuring next-gen batteries and giga casting delivered a riposte to the view that it is lagging in BEVs. We await quantitative disclosure on BEV profit ahead,” Morgan Stanley analyst Shinji Kakiuchi said Wednesday in an investor note.
Following the announcements, Toyota shareholders Wednesday aligned their voting with company recommendations, including leadership approval and voting down a shareholder proposal requiring Toyota to review its climate-related lobbying activities.
Shareholders also approved the company’s new leadership and board, including the appointment of CEO Koji Sato as a director and Toyoda – grandson of automaker’s founder – as chairman.
Shares of Toyota on the NYSE are up about 23% this year, as the auto industry continues to recover from the coronavirus pandemic and supply chain issues that led to record low vehicle inventory levels.
Toyota’s gains put it in the middle of Japanese automaker stocks, ahead or in-line with the Detroit automakers and behind shares of Tesla, which have more than doubled in 2023.
Here’s how other automaker stocks have performed this year compared to Toyota:
Auto stocks so far this year
*Shares of these companies are traded in the U.S. as American depositary receipts.
BEIJING — Chinese electric car startup Li Auto said it delivered more than twice as many cars in May versus a year ago.
For a third-straight month, Li Auto’s deliveries topped 20,000 with a climb to 28,277 vehicles in May, according to a release Thursday. That’s up by about 146% from a year ago.
In contrast, competitors Nio and Xpeng both reported a year-over-year drop in monthly deliveries.
Li Auto differs from the two startups in that its electric cars come with a fuel tank for charging the battery and extending driving range.
That divergence comes as China’s fast-growing electric car market grows more competitive.
Average selling price is down by about 10% to 15% across brands, Bank of America Securities’ head of Asia Pacific basic materials, Matty Zhao said Friday on CNBC’s “Street Signs Asia.”
She expects China’s electric car market to grow by 27% this year to 8.7 million units, with penetration of overall auto sales set to grow to 32% this year, versus 26% last year.
Xpeng said it delivered 7,506 electric cars in May, up by a few hundred from April. The company said its P7i sedan saw a “substantial increase” in deliveries.
Last week, management said wait times for P7i orders was more than six weeks due to production delays, which they expected would improve in June. The company projected a significant increase in overall deliveries to more than 20,000 vehicles a month in the fourth quarter.
Nio delivered 6,155 cars in May, down from April and a year ago. The company is set to release quarterly earnings on June 9.
Based on Li Auto’s reported and forecast deliveries, the company expects to deliver at least 22,000 vehicles in June.
Those monthly deliveries are still only a fraction of the market compared with industry giants Tesla and BYD.
Three U.S.-listed Chinese electric car startups.
BYD said it sold 239,092 passenger vehicles in May, doubling compared with a year ago. About half were purely battery-powered, while the other half were hybrids.
Tesla sold nearly 40,000 cars to consumers in China in April, according to the latest figures available from the China Passenger Car Association. That’s up from the year-ago period which saw few electric car sales due to Covid controls that locked down Shanghai, where Tesla’s factory in China is located.
Huawei’s co-developed Aito electric car brand is now selling an updated version of the M5 model that comes with new driver-assist tech.
Bloomberg | Bloomberg | Getty Images
BEIJING — Companies in China are playing up assisted driving technology as a way to compete in the hot electric car market.
Around the Shanghai auto show that kicked off last week, electric car startups and Chinese tech companies alike made several announcements about their driver-assist tech.
It’s not clear how powerful any of the announced features are — and whether Chinese consumers want to buy them. Current regulation also limits how much companies can allow tech to control driving.
But McKinsey estimates assisted and fully autonomous driving systems in passenger cars could generate $300 billion to $400 billion in global revenue by 2035. China is the world’s largest car market.
Among the recent announcements, Huawei said it would upgrade its driver assistance system for changing lanes on highways and parking — and expand support for city driving. The company said its new product, called “Huawei ADS 2.0” costs 36,000 yuan ($5,218) on a one-time basis or 7,200 yuan annually.
The tech is slated for initial release on an upgraded Aito M5 — set to begin deliveries in June — with future rollout to the Avatr 11 and Arcfox Alpha S. All three electric vehicles come from brands that already incorporate Huawei’s technology.
Li Auto announced plans to roll out driver-assist tech to customers in 100 cities in China by the end of the year — a feature the company claimed would be “free for life.” That’s according to a CNBC translation of the Chinese.
Those and other announcements follow Xpeng’s rollout in the last few weeks of driver-assist technology to some users Shanghai. The tech claims to require drivers to do little more than keeping their hands on the wheel, while the vehicle travels to a destination in the city on its own, including stopping at traffic lights. Xpeng’s tech was previously only available in Shenzhen and Guangzhou.
Such urban scenarios are becoming an area of differentiation in China.
We recognize that, as a startup, the only path to possibly achieving autonomous driving is to follow Tesla’s path.
Maxwell Zhou
DeepRoute.ai, CEO
Tesla doesn’t offer its driver-assist tech in Chinese cities — a feature marketed overseas as “Full Self Driving.” Only the company’s Autopilot for assisting with driving on highways is available in China.
“If you don’t offer [assisted driving tech] by next year then it’s going to be really impossible to compete,” Maxwell Zhou, CEO of autonomous driving software startup DeepRoute.ai, told a few reporters last week in Mandarin. That’s according to a CNBC translation.
The company’s latest driver-assist software — used together with cameras and other hardware — is set to reach consumers this year, through passenger cars from “an established automotive brand,” the four-year-old startup announced in late March, without sharing a name.
One of DeepRoute’s selling points is doing away with “high-definition maps.” That allows a vehicle to use driver assist tech on roads where those technical parameters haven’t been created.
It’s a trend car brands such as Xpeng and Huawei are pursuing — and Tesla’s strategy for developing autonomous driving.
Elon Musk’s car company has focused on using cameras and artificial intelligence to steer the vehicle, without heavy reliance on HD maps.
Those maps, used by autonomous driving companies such as Alphabet‘s Waymo, give a car a detailed picture of city streets. But they need to be created before a car runs on the road.
That process can drive up costs. DeepRoute’s Zhou estimated each car for gathering data would require $100,000, and an additional $30,000 a year to operate — for a total of about $2 billion or $3 billion, not including the cost of human labor.
“We recognize that, as a startup, the only path to possibly achieving autonomous driving is to follow Tesla’s path,” Zhou said.
“Because as a startup, there’s no way we could spend several billions of U.S. dollars just to buy cars, buy data. Waymo can do that,” he said. Zhou added that since China keeps fixing its roads, it would be difficult to constantly supply cars with accurate enough maps.
Despite overall growth in new energy vehicle sales, it remains unclear whether Chinese consumers care enough about driver-assist tech when most of them haven’t used it yet. The market this year has focused on price cuts to attract buyers.
Xpeng, considered one of the most advanced technologically, saw deliveries plunge in the first quarter ahead of a more widespread rollout of its assisted driving tech. Industry giant BYD has downplayed self-driving tech.
Still, DeepRoute’s Zhou noted the discussion in China is currently dominated by car companies and trade publications, not consumers.
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Most cars with advanced driver-assist tech only operate on highways, while the few that can run on city streets are more expensive, said Zhang Xin, executive editor-in-chief of AutoR, an industry publication with more than 110,000 followers on the Twitter-like Weibo platform.
Consumers who simply buy the most advanced technology may find they don’t end up using it, he said. Zhang added that map-free driver-assist systems are not yet powerful enough to completely do away with maps.
Part of car companies’ wider interest in driver-assist tech comes from lower costs.
Shanghai-based Hesai makes the light detection and ranging (LiDAR) units often used for driver-assist systems. CEO David Li said just a few years ago, those units were priced around $10,000, making them “virtually impossible to be used for passenger cars.”
Now lidar units cost a couple hundred dollars, he said, noting expectations for hundreds of thousands of lidar unit sales this year.
“We see great momentum this year already,” Li told CNBC last week.
Hesai shipped more than 40,000 lidar units in the fourth quarter, up from 87 in the year-ago period, according to the company. Quarterly net revenue grew by nearly 57% year-on-year to 409.2 million yuan, while loss from operations increased by 65% to 140.1 million yuan.
The company’s customers include Li Auto and manufacturers in the U.S. and Germany. This year, Hesai announced deals with Didi-backed autonomous truck company KargoBot and Seres, which manufactures cars for Huawei, among others.
BYD’s Han electric car, pictured here at the 2021 Shanghai auto show, is one of the most popular new energy vehicles in China.
Evelyn Cheng | CNBC
SHENZHEN, China — Electric vehicle giant BYD is banking on new driver-assist technology to smooth out car rides.
BYD, backed by Warren Buffett’s Berkshire Hathaway, announced Monday a new technological system for stabilizing car rides through rugged terrain, sharp turns and even shallow water. The shock absorption tech is set to be a feature of the company’s recently launched premium brand Yangwang.
“Traditionally, luxury cars were determined by brand and history. For luxury new energy vehicles, it’s a matter of what tech and products,” BYD founder Wang Chuanfu said in Mandarin at a launch event Monday, according to a CNBC translation.
He claimed the tech represented a “breakthrough” that “leads and surpasses foreign technological level.”
The update comes ahead of the Shanghai Auto Show, set to kick off next week, where many Chinese car companies are set to make product and model announcements.
Part of the tech system uses the same “lidar” sensors used in assisted driving, according to BYD. Lidar, short for “light detection and ranging,” uses lasers to create detailed maps of the surrounding area.
The automaker said in a release its new “DiSus” system “provides a foundation for the future development of Advanced Driver Assistance Systems (ADAS).”
The company has taken a relatively cautious approach to self-driving tech.
When asked about “smart driving” during a call with investors in late March, BYD management said autonomous driving still faces the challenge of determining liability in the event of an accident. Still, management said, advanced assisted driving tech has the potential to improve overall safety. That’s according to a filing of last month’s call accessed through the Wind Information database.
The industry as a whole has been working to balance ambitious driver-assist options with measured safety protocols. EV leader Tesla in February recalled more than 360,000 cars over assisted-driving software for city streets that it said may cause crashes.
It was not immediately clear how Tesla’s shock absorption capabilities compared with BYD’s, but other car companies in China are looking into similar technology.
In September, Nio’s investment fund Nio Capital led a $39 million financing round into Boston-based ClearMotion, which develops software for active suspension.
BYD’s Wang didn’t address what the company’s new DiSus system would cost to use, or when it would become widely available.
Two of the compatible car models — Yangwang’s forthcoming U8 SUV and the Denza N7 SUV — are not yet available for deliveries. Auto giant Daimler has a small stake in BYD’s Denza brand.
BYD said some of its existing Han, Tang and Denza models are set to receive the new tech through an over-the-air upgrade.
The new system comes in three versions — “damping,” “air,” and “hydraulic” — which are set for individual integration with certain BYD models.
Read more about electric vehicles from CNBC Pro
In the first quarter, BYD said it sold 264,647 all-electric passenger cars, up more than 80% from a year ago. Hybrid passenger vehicle sales doubled from a year ago to 283,270 in the first quarter.
Tesla, for its part, said it delivered more than 422,000 cars worldwide in the first quarter, without sharing a regional breakdown. China typically accounts for well over 20% of Tesla’s revenue.
