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.
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.
Chinese smartphone company Xiaomi revealed on Dec. 28, 2023, its forthcoming electric car, the SU7 sedan.
CNBC | Evelyn Cheng
BEIJING — Chinese consumer electronics company Xiaomi on Thursday detailed plans to enter China’s oversaturated electric vehicle market and compete with automaker giants Tesla and Porsche with a car model it says it spent more than 10 billion yuan ($1.4 billion) to develop.
The company’s car model, known as Xiaomi SU7, “is in trial production and it will hit the domestic market in a few months,” CEO Lei Jun said in a Tuesday post on the X social media platform, formerly known as Twitter. “The price has not been finalized yet.”
Pronounced “Sue Qi” in Mandarin, the Xiaomi SU7 beats Porsche’s Taycan and Tesla’s Model S on acceleration and other metrics, Lei said during a three-hour presentation on Thursday.
He laid out bold ambitions to become an industry leader, including in autonomous driving and noted that the SU7 design team previously worked at BMW and Mercedes Benz.
Sales are due to begin in 2024, after more than three years of development— during which electric vehicles have taken off in China’s highly competitive market, and domestic automakers have begun to differentiate their products through ambitious offerings of car-compatible tech.
This is an area of potential advantage for Xiaomi, which is best known for its smartphones and home appliances and previously said it wants to create a “‘Human x Car x Home’ smart ecosystem.”
The SU7 is integrated with Xiaomi’s smartphones and internet-connected home appliances, Lei announced Thursday. He emphasized the company’s efforts to ensure data privacy among the devices and create a car that surpasses U.S. safety standards for rear-end collisions.
Lei said the vehicle will also be compatible with Apple’s iPhone, iPad, CarPlay and AirPlay. The U.S. giant has yet to release a car despite widespread speculation of such plans.
The document described the cars as purely battery powered, with driving range of 628 kilometers (390 miles) to 800 kilometers. The ministry listed a subsidiary of state-owned BAIC Group as the manufacturer for the Xiaomi SU7.
While the car isn’t yet available, Xiaomi has started selling its flagship smartphone and smart watch in the “aqua blue” and “olive oil green” colors of the SU7 sedan.
A price for the SU7 has yet to be revealed, but Lei hinted the purchase would not be cheap and dismissed rumors of a 99,000 yuan or 140,000 yuan price tag.
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The Xiaomi car tech event comes as several domestic EV players have recently revealed new electric vehicles.
Nio on Saturday debuted its 800,000 yuan ($113,090) ET9, set to begin deliveries in the first quarter of 2025.
Huawei’s Aito brand on Tuesday unveiled its M9 SUV — starting at 469,800 yuan and due to begin mass deliveries in late February 2024.
Zeekr, backed by Geely, on Wednesday announced its 007 sedan would start at 209,000 yuan with deliveries beginning on Jan. 1.
Xiaomi shares closed 0.25% lower in Hong Kong trading on Thursday. The company’s Hong Kong-traded shares are up by more than 40% so far this year. The business claimed record sales of more than $3 billion across various e-commerce platforms during this year’s Singles Day shopping festival.
Check out the companies making headlines in midday trading. Etsy — The online merchandise platform saw shares rebound 3% after a steep sell-off last week. Etsy announced last Wednesday that it is cutting 11% of its workforce , or approximately 225 employees, as the company looks to restructure its business and streamline costs against a “very challenging” macro and competitive environment. Netflix — The stock added 3% after Morgan Stanley raised its price target on Netflix to $550 from $475 per share. The bank cited renewed confidence in the streaming giant’s return to content spending and “execution on growth initiatives including paid sharing and advertising.” Oil stocks — Oil companies broadly rose as crude prices jumped more than 2% on concerns of supply disruptions. Valero Energy added 3%, while Marathon Petroleum and Diamondback Energy gained more than 2%. U.S. Steel — The steelmaker jumped 26.5% after Japan’s Nippon Steel beat out rivals to buy the company for $14.9 billion in cash. The $55-per-share deal price is 142% above U.S. Steel’s price on Aug 11, the last trading day before Cleveland-Cliffs offered $35 per share for the company. SolarEdge — Shares tumbled more than 5% after Goldman Sachs downgraded the company to sell from neutral. The firm cited further downside risk to earnings and margin uncertainty. SunPower — The solar company plunged more than 33% after filing a delayed 10-Q form for the third quarter on Monday. The company disclosed liquidity concerns and “substantial doubt about the company’s ability to continue.” Goldman Sachs had already downgraded the firm to sell from neutral in a Sunday note. Adobe — Adobe shares rose about 1% as the company called off its plan to buy cloud-based design tool Figma for $20 billion due to regulatory pushback. Adobe said in a regulatory filing that it will pay Figma a $1 billion breakup fee. VF Corporation — Shares lost nearly 8% after the apparel company disclosed a cyber incident from Dec. 13 in an 8-K filing. The company said the incident would likely result in a material impact on its business. Coupang — The South Korea-based e-commerce platform fell 3.7% after it announced plans to acquire online luxury platform Farfetch. The deal will give Farfetch access to $500 million in capital and turn the company private. Shares of Farfetch fell nearly 35% before trading was halted. Liberty Media Formula One — The racing series dropped more than 1% after a Morgan Stanley downgrade to equal weight from overweight, calling the stock a ” victim of its own success .” Structure Therapeutics — The U.S. listed shares of Structure Therapeutics plunged 34% even as the clinical stage biopharmaceutical company said its obesity drug can reduce weight and blood sugar. Snap — Shares added 1.6% after Guggenheim upgraded them to buy from neutral. The firm also raised its price target to $23 from $9, suggesting 35% upside potential from Fridays’ close. Analyst Michael Morris is forecasting revenue growth to outperform in 2024 as digital ad trends strengthen. Nio — Shares jumped more than 6% after the company entered a $2.2 billion share subscription agreement with Abu Dhabi-based CYVN Holdings, expanding its ownership in Nio to 20.1%. — CNBC’s Lisa Kailai Han, Samantha Subin, Yun Li and Michelle Fox contributed reporting
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.
The Xiaomi HyperOS logo is displayed on a smartphone.
Sopa Images | Lightrocket | Getty Images
BEIJING — Chinese smartphone and appliance maker Xiaomi announced late Thursday a new operating system — as it seeks to develop its ecosystem with the imminent release of its own car.
Xiaomi shares rose more than 1% in Hong Kong trade Friday morning, building on gains of more than 20% for the year so far.
The new system, called HyperOS, is set to reach consumers Oct. 31 when Xiaomi’s latest phones, wearables and TV sets begin sales in China.
“The system marks a pivotal move forward in Xiaomi’s strategic vision of delivering the ‘Human x Car x Home’ smart ecosystem,” the company said in a release.
Tech companies have long sought to build customer loyalty with operating systems, such as Apple‘s iOS and Google‘s Android.
Chinese telecommunications giant Huawei developed its own operating system, called HarmonyOS, in a bid to replace Android. The company makes its own suite of smartphones, laptops, tablets and television sets, while selling the software for electric cars manufactured by partners.
In late September, Huawei claimed its operating system had surpassed 60 million users.
Chinese electric car company Nio this fall also released its own smartphone, based on Android but customized for greater integration with its vehicles.
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Xiaomi rose to fame for its affordable smartphones and MIUI user interface, based on open source Android.
The company said the core of its new HyperOS system is “formed by Linux and Xiaomi’s self-developed Xiaomi Vela system.” The press release’s only mention of Android was that HyperOS allows for “more stable frame rate and lower power consumption” compared to the stock version of Android.
Xiaomi also touted HyperOS’s processing speed and security, and listed a number of ways in which a smartphone, car and laptop could easily share content and access each other’s cameras on the new system.
In recent years, Xiaomi has grown its appliance and consumer electronics business to account for about 22% of overall revenue in the second quarter, versus just under 37% for smartphones.
On Thursday, the company released a 3,999 yuan ($546) smartphone as well as a 1,999 yuan washing machine and a 2,999 yuan refrigerator. Xiaomi has an app for letting customers remotely control appliance settings.
The artificial intelligence behind ChatGPT-like products and autonomous driving is driving enormous demand for Nvidia’s chips in China. In the past week, however, analysts cut their Nvidia price targets after news the U.S. plans to ban the sale of more high-end semiconductors to China. The country accounts for at least one-fifth of Nvidia’s big data center business . Chinese companies also dominate the burgeoning electric car market , where Nvidia has had a fast-growing business of selling chips for assisted and fully autonomous driving. When it comes to such chips for cars, Nomura analysts said there’s little reason to worry. Their analysis of U.S. rules found regulators are focused on two technical specifications — which the Nvidia Drive AGX Orin chip meets in part. But the chip still isn’t powerful enough to cross a key performance metric, and it isn’t used in data centers, the report said. “Therefore, Orin X chips remain safe and are not impacted by the new regulation, indicating the rest of the existing auto chips should not be impacted by the new rule as well,” Nomura China Technology analyst Joel Ying and a team wrote Thursday. Auto chip market BYD, Nio , Li Auto and Xpeng are among the China-based electric automakers using the Orin chip. Xpeng, which currently offers the closest equivalent to Tesla’s Full Self-Driving in China, is set to hold a tech day on Oct. 24. Meanwhile, other companies are launching alternatives to Nvidia’s products for AI computing. U.S.-based Kneron is using a different approach to AI chips that the company’s CEO Albert Liu claims is based on neuroscience — instead of the graphics processing that Nvidia uses. He told me at CNBC’s East Tech West conference last week that Kneron’s revenue for the fourth quarter is forecast to grow by double-digit percentage points from the third quarter, and “multiple times” from the fourth quarter last year. The company is working with Apple supplier Foxconn for the development of automotive AI , according to an announcement in late September. Weeks earlier, Kneron had unveiled its KL730 chip and claimed it is 150% to 200% times more energy efficient than peers. Its applications include advanced driving assistance systems. Other customers include Quanta Cloud Technology, South Korean search giant Naver, and Japanese and German auto giants, Liu said. He didn’t name the automakers, but claimed that overall Kneron is shipping “millions of chips” annually. “Everyone noticed that GPU is not the perfect solution for AI so it’s more easy to convince people to use our solution,” he said. Kneron raised $49 million in late September. Simply testing AI models also requires significant processing power, which can get expensive to operate amid a shortage of chips. “Charging by GPU per hour is a common global industry practice with global cloud players charging USD1-3 per GPU hour for use of NVIDIA’s A100 80G chip,” HSBC analysts said in an Oct. 17 report. Nvidia said in an SEC filing the new U.S. restrictions would affect sales of its A100 chips and many other products to China, but did not mention Orin. The new U.S. rules are set to take effect in about a month. Homegrown chip companies While Nvidia may get a pass on automotive chips in China for now, the new measures do indicate more advanced ones in the future may require a license from the U.S. government if they are shipped to China, the Nomura analysts said. In the automotive chip category, they noted Nvidia’s Thor chip and Qualcomm’s Snapdragon Ride Flex chip both fall into that more advanced category. Chinese companies have meanwhile been building homegrown alternatives. Autonomous truck driving company Inceptio CEO Julian Ma told me in August the company is using a chip from Chinese startup Horizon Robotics. Ma said Inceptio has enough computing power to support it for the next three years. The startup currently sells trucks with assisted-driving software to logistics companies in China. Other kinds of automation in China today that stock analysts are watching do not even need such advanced computing power. In the past week, Nomura and HSBC analysts both raised their price targets for mainland China-traded Inovance, which HSBC describes as “the largest domestic factory automation solution supplier in China in terms of 2022 revenue.” HSBC has a price target of 83 yuan, up from 76 yuan previously. That marks upside of more than 30% from Inovance’s close on Thursday. Nomura, which like HSBC has a buy rating on Inovance, raised its price target to 76 yuan, up from 74 yuan previously. “Management attributed the healthy revenue growth to the solid growth of its [new energy vehicle] and automation businesses, offset by demand weakness in its elevator business during the quarter,” Nomura analysts wrote in an Oct. 17 report. The analysts noted Inovance has grown its market share this year for motor controllers and powertrain systems in China. “We believe Inovance’s market share gain in the domestic [new energy market was mainly fuelled by wallet share expansion in key customers such as GAC,” the Nomura report said, noting the firm also has a buy rating on the Hong Kong-listed automaker.
Chinese electric vehicle maker Nio launches a smartphone at an event in Shanghai on Sept. 21, 2023.
Evelyn Cheng | CNBC
SHANGHAI — Chinese electric car brand Nio on Thursday released an Android smartphone, which the company expects at least half its users to buy, CEO William Li told CNBC in an exclusive interview ahead of the launch.
The phone, priced from around $900 to $1,000, is an Android device that’s about $150 cheaper versus a comparable Huawei phone, Li said in Mandarin.
He told CNBC that among Nio users from which the company makes a profit, more than half are iPhone users, while the other half uses flagship Android phones from Huawei and other brands.
“I believe this portion of users are very likely to use this new form [of device] when they are changing their phones,” Li said according to a CNBC translation, citing the phone’s overall performance and car connectivity.
Nio is the first high-end Chinese electric car brand to release its own smartphone, which Li said the company developed in about a year. Electric car companies in China have sought to make in-car entertainment and mobile phone connectivity a selling point for their vehicles.
Delivery starts on Sept. 28, with orders starting immediately.
Nio shares
Swedish electric car maker Polestar, which counts China as a major market, told CNBC earlier this month it plans to launch a phone in December.
Smartphone companies Apple and Xiaomi have long been reportedly working on their own cars.
Less than two years ago, Huawei released the Aito brand, which sells electric cars in China that are integrated with the smartphone company’s operating system. Huawei also sells its in-car software to other electric car companies such as Avatr and BAIC’s Arcfox.
That connectivity allows drivers to sync their personal device settings — such as for music — with the car. Nio also has a standalone mobile app.
While the new Nio device resembles a typical smartphone, it comes with a special button that acts as a key for the car, Li told CNBC on Wednesday.
The Nio smartphone also allows users to connect more seamlessly with the car, such as when transitioning between the phone and the vehicle during online meetings, he said.
What we are pursuing is the car experience and the emotional experience we can provide to our users.
The new device is an opportunity for Nio to make more money per user.
“We pay more attention to the value that each user brings to our entire brand, and it is more convenient to connect users. It is also more efficient than before,” Li said. “What we are pursuing is the car experience and the emotional experience we can provide to our users.”
The phone is available to all consumers in China, not just those who own Nio cars, Li added.
He pointed out that the Nio phone app has 600,000 active users a day, about 1.5-times the number of car users.
Nio holds a product event in Shanghai on Sept. 21, 2023.
Evelyn Cheng | CNBC
Nio’s monthly deliveries rose to around 20,000 in August and July, after a decline in delivery volume the prior three months.
In the second quarter ended June 30, Nio reported that revenue from the “other sales” category was mainly driven by a boost in the sales of used cars, accessories and power services, which more than doubled from a year ago to 1.59 billion yuan ($217.86 million) despite a decline in total revenue.
The company attributed the year-on-year and quarter-on-quarter increase in other sales to “continued growth of our users.”
However, Nio doesn’t have plans to release the smartphone in Europe — at least not until the market grows larger, Li said.
Nio is in five countries in Europe, including Germany, and the company needs time to focus on developing local car services, Li said, noting those are important for auto products.
In China, the penetration of new energy vehicles has expanded quickly, but an overall slowdown in economic growth has weighed on the market.
Competition in the domestic electric car market is “fierce,” Li said, noting challenges for industry peers as well.
But he expects business investments will help Nio create barriers to entry. “We believe time is still on Nio’s side,” Li said.
He noted the company spends about $500 million on research and development every quarter. Other major areas of investment for the company, he said, are battery charging and development of a mass market brand.
Read more about China from CNBC Pro
Nio previously said it plans to release a vehicle in the second half of next year under the mass market brand “Alps.”
The company has faced financing challenges more than once since its founding in late 2014. Earlier this year, Nio said it was delaying some spending plans due to lackluster deliveries.
Amazon was among a number of technology companies at the IAA motor show in Munich. The presence of Amazon, Qualcomm, Samsung and other tech giants underscores how traditional automakers are looking to bolster the tech in their cars.
Arjun Kharpal | CNBC
MUNICH — You’d be forgiven for thinking that the IAA, one of the world’s biggest motor shows, is actually a technology conference, after tech giants like Amazon, Qualcomm and Samsung all showed up for this year’s event.
Their presence underscores demand for traditional automakers to boost the technology in their vehicles, from software to hardware, as they look to catch up with Tesla in the electric car future. Ramping up technology features is also essential to meet buyer expectations in China.
“Tesla and the Chinese start-ups. This is the two-way force they [traditional automakers] are experiencing, driving them to have more user experience in the car,” Mohit Sharma, automotive research analyst at CCS Insight, told CNBC.
They can’t do it alone. Carmakers are looking at tech firms for help, while also trying to work on items like software in house.
Part of Tesla’s global success has come down to its technology in a number of areas, from batteries to Autopilot — its advanced driver assistance system (ADAS), which uses semi-autonomous driving features. The screen within Tesla cars is also akin to that of a smartphone.
Those features are what rival automakers are trying to build and get ahead on.
There are two major operating systems in the smartphone sphere — Google’s Android and Apple’s iOS. That’s not the case in the car world, when it comes to the ever popular infotainment systems and screens.
Auto firms are now focusing on developing their own operating systems, so that using car screens more closely resembles working with the apps of a smartphone.
To that end, Mercedes-Benz revealed further details at the IAA about its self-developed operating system called MB.OS, which will help power various features from the giant screen across the dashboard to the voice assistant in its upcoming EVs.
Swedish EV player Polestar this year created a joint venture with Xingji Meizu — a smartphone maker owned by Chinese auto giant Geely — and plans to launch its own smartphone in December, when the Polestar 4 car begins delivery to customers. Meizu is making an operating system for Polestar cars based on its own product, called FlyMe. The idea is that users would be able to have a seamless experience between the smartphone and Polestar’s operating system in the company’s cars.
U.S. chipmaker Qualcomm was also in attendance at IAA. The company is making a big push into the automotive space, where its chips can be used to help power artificial intelligence applications within vehicles. One example it showed was a car assistant that could find a recipe for chicken enchiladas and add the ingredients to a shopping list.
It’s not just about the screen — automakers are also looking into using all parts of the car to display information. BMW said the Neue Klasse EV models it unveiled on Saturday will have what it calls Panoramic Vision, a heads-up display which projects information on the windscreen at the driver’s eyeline.
To make the drive as comfortable as possible, U.S. EV maker Lucid showed off the massage feature of the seats in its Air Midnight Dream Edition car.
A big part of the focus of Tesla technology has surrounded its Autopilot ADAS. No car can operate autonomously — at least from a legal perspective — but automakers are ramping up the driverless features and capabilities.
Tesla is perhaps one of the furthest ahead with its ADAS features, followed by young Chinese players like Xpeng and Nio.
Many automakers aspire to become major players in the world’s biggest and highly competitive electric vehicle market, China. In a bid to differentiate themselves from rivals, Chinese firms have talked up the tech features of their vehicles, from software to ADAS capabilities — and Chinese customers expect the latest tech perks.
“It’s not just good enough to bring a great European design to China, you have to be very, very special about what you offer to the market when it comes to software,” Polestar CEO Thomas Ingenlath, told CNBC in an interview Tuesday.
Heeding that sentiment, foreign companies from BMW to Mercedes are looking to invest heavily in tech development, as they aim to boost EV sales in China.
Volkswagen CEO Oliver Blume on Wednesday said that the company is ramping up its number of software engineers in China.
“We want to operate with China speed in China,” Blume said at the IAA conference.
A Polestar 4 electric SUV is on display during the 20th Shanghai International Automobile Industry Exhibition at the National Exhibition and Convention Center (Shanghai) on April 18, 2023 in Shanghai, China.
Meizu is not a major smartphone player in China with companies like Apple and Oppo among the biggest. And the Polestar smartphone would not be an attempt to grow market share.
Instead, the unusual step of an EV company launching a smartphone comes from a desire from automakers to make the car like a mobile phone on wheels.
“Where you have an opportunity to link these two worlds, without any border … then you can really have a seamless transition,” Ingenlath said.
You can imagine a world where you’re using an app on your phone and you enter the car and that same app is displayed on the car’s dashboard screen, for example.
“I still have problems to get, you know, an SMS displayed,” Ingenlath said of the frustrations with current technology.
Ingenlath added that the phone will be a “premium” device. Meizu is known in China for more mid-tier devices. This will help Meizu push into the high-end device market for handsets too, Ingenlath said.
While it is still unusual for car companies to launch phones, the idea is gaining some traction. Chinese EV start-up Nio plans to launch its first self-developed mobile phone in September.
There are lots of reasons this could make sense specifically in the world’s second largest economy.
It’s not just good enough to bring a great European design to China, you have to be very, very special about what you offer to the market when it comes to software.
Thomas Ingenlath
CEO of Polestar
Firstly, there is no Google Android mobile operating system. This means that automakers can customize the operating system on their phone and the car to sync up. For example, Meizu has its own operating system called FlyMe. And the company is making an operating system for Polestar cars based on this.
The smartphone that Polestar releases is also likely to have a similar OS which will make integration seamless.
“It’s not just good enough to bring a great European design to China, you have to be very, very special about what you offer to the market when it comes to software,” Ingenlath said.
“Many OEMs are following Geely and potentially other future players such as Apple if they come up with their own car with their smartphone to provide a holistic and tighter connected experience in every aspect of mobility,” Neil Shah, vice president of research at Counterpoint Research, told CNBC.
An OEM is an original equipment manufacturer and refers to car manufacturers.
Shah said the smartphone would also allow Polestar to bundle software, apps, services and features such as remotely controlling or turning on the car with a phone.
Launching a phone could also help carmakers learn more about their customers’ habits, Shah added.
The Polestar 4 is on sale in China for 349,800 Chinese yuan ($47,890) — that’s more expensive than Tesla’s Model Y which starts at 263,900 yuan.
The Polestar 4 is being positioned as “more premium, more luxurious” than the Model Y, Ingenlath said.
The CEO said Polestar’s customers come from German carmakers BMW and Mercedes-Benz and that the car is being positioned more as a competitor to cars like the Porsche Macan.
A hiring sign is pictured at a McDonald’s restaurant in Garden Grove, California on July 8, 2022.
Robyn Beck | Afp | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
More jobs but higher unemployment U.S. nonfarm payrolls for August increased by 187,000, above the 170,000 estimate. However, the unemployment rate jumped from 3.5% last month to 3.8%, the highest since February 2022. Average hourly earnings increased 4.3% year on year, below the forecast of 4.4%. Combined with the downwardly revised figures for June and July, those are clear signs the U.S. jobs market is slowing.
Electric vehicle moves Tesla shares slid 5% Friday after the company cut prices on its electric vehicles in both the U.S. and China. Meanwhile in Germany, BMW and Mercedes revealed EV concepts, representing their biggest push yet into the EV market. But that might not be enough to stop China’s dominance. Chinese EV companies all delivered enough vehicles in August to keep pace with their third-quarter guidance.
JPMorgan Chase and Jeffrey Epstein JPMorgan Chase notified the U.S. Treasury Department of more than $1 billion in transactions related to “human trafficking” by Jeffrey Epstein, a lawyer for the U.S. Virgin Islands told a federal judge. Those transactions dated back 16 years and were only reported after Epstein was arrested and killed himself in jail in 2019, said Mimi Liu, an attorney for the Virgin Islands.
[PRO]Slow start to September U.S. markets are closed Monday for Labor Day and economic data coming out this week is on the light side. The heavy hitters, like the consumer and producer price indexes, will only be released later in the month. So keep an eye out for these signs that will indicate whether stocks will fall prey to the September seasonality — the month’s historically been the weakest for stocks.
The U.S. economy added more jobs than expected in August, but the overall unemployment rate rose. This may sound counterintuitive since it’s natural to assume an increase in the number of jobs will lead unemployment going down. But there’s a simple explanation for that.
By definition, the unemployment rate is the number of unemployed people (people without a job but are actively looking for one), divided by the labor force (the sum of people both employed and unemployed), expressed as a percentage.
If the unemployment rate goes up, that means the proportion of people looking for a job compared with the total labor force has grown. That’s straightforward enough. For the unemployment rate to go up even as there were 187,000 more jobs in August means there were more people who started looking for a job than people who secured one. The implication: The total labor force grew in August. Indeed, 597,000 people without work experience sought employment last month, according to the report.
A growing labor force is a looser jobs market. That probably contributed to the lower-than-expected wage growth last month. As Bank of America U.S. economist Stephen Juneau wrote, “The broad message here seems to be that we are nearing full employment, with supply and demand coming more into balance.”
That will come as a relief to Federal Reserve officials worried about a hot jobs market contributing to inflation. Investors, too, cheered the jobs report. They think there’s a 93% chance the Fed will keep rates unchanged at its September meeting and a 65.3% chance at its November meeting, according to the CME FedWatch Tool. That’s up from 80% and 44.5% a week ago, respectively.
Major indexes rose in response to the jobs report as well. The S&P 500 climbed 0.18% Friday, giving it a 2.5% increase for the week — its best weekly performance since June. The Dow Jones Industrial Average added 0.33% to close 1.4% higher for the week. The Nasdaq Composite was essentially flat, but ended the week up 3.3%. That was both indexes’ best showing since July.
U.S. markets are closed today, so we’ll have to wait to see if they can sustain this momentum and defy September’s reputation as the worst month for stocks.
Check out the companies making headlines in midday trading.
Best Buy — Shares popped nearly 6% after the retailer’s fiscal second-quarter earnings beat on both the top and bottom lines. Adjusted earnings per share came in at $1.22, versus the $1.06 expected from analysts polled by Refintiv. Revenue was $9.58 billion, topping the consensus estimate of $9.52 billion. However, Best Buy lowered the top end of its revenue outlook for the year.
Big Lots — The discount retailer surged 26.7% after its earnings report came in better than analysts expected. Big Lots lost $3.24 per share, on an adjusted basis, less than the $4.11 forecasted by analysts surveyed by FactSet. Revenue exceeded the consensus estimate of $1.1 billion, coming in at $1.14 billion.
Coinbase, Marathon Digital, Riot Platforms — Stocks tied to the cryptocurrency industry soared after a court ruled against the Securities and Exchange Commission in a lawsuit about spot bitcoin ETFs. Shares of Coinbase, which is named as a custodial partner in several proposed bitcoin ETFs, jumped 13%. Bitcoin mining stocks also rose, with Marathon Digital surging 24% and Riot Platforms climbing 15%.
3M — Shares gained 2.6% after the company agreed to settle lawsuits regarding potentially defective U.S. military earplugs for $6.01 billion. The deal had grown into the largest mass tort litigation in U.S. history.
Heico — The engine and aircraft part maker retreated 3.1%. Despite beating expectations for revenue in the quarter, the company said its operating margin fell when compared with the same quarter a year ago.
Nvidia — The artificial intelligence stock rallied 4%, part of a broader ascent among technology stocks in Tuesday’s session. Morgan Stanley reiterated its overweight rating on the stock, noting its strong earnings report last week can be a positive signal for the AI supply chain.
PDD Holdings — U.S.-listed shares jumped 17.8%. The Chinese e-commerce company beat Wall Street expectations when reporting second-quarter earnings. It noted a positive shift in consumer sentiment during the quarter.
Oracle — Software giant Oracle climbed 2.9% following an upgrade from UBS to buy from neutral. UBS said the stock could have upside ahead due to tailwinds tied to artificial intelligence.
AT&T, Verizon — The telecommunication giants each added 2.3% on the back of a Citi upgrade to buy. The firm cited stabilization in the wireless environment and said the stocks’ valuations may be over-discounting potential costs tied to mitigating lead-covered cables.
Alphabet, General Motors — Google Cloud and General Motors said Tuesday they’re working together to explore artificial intelligence opportunities across the automaker’s business. Following the announcement, shares of Google Cloud’s parent company Alphabet and General Motors rose 3.5% and 0.6%, respectively, during midday trading.
Catalent — Catalent jumped more than 5% after the biotech company issued a solid revenue outlook and announced a deal with activist investor Elliott Investment Management. For fiscal 2024, Catalent forecasted revenue in the range of $4.30 billion to 4.50 billion, far above the $4.19 billion expected by analysts polled by FactSet. Additionally, Catalent agreed to name four new independent directors to its board, two of whom will be nominated by Elliott. It also agreed to a review of its business and strategy.
Ginkgo Bioworks — The biotechnology company’s stock popped more than 18% after announcing a five-year cloud and AI partnership with Google Cloud. As part of the deal, Ginkgo Bioworks will work to create new large language models for biology and biosecurity uses. Alphabet shares were last up more than 3%.
Rockwell Automation — The industrial stock gained nearly 2% after Wells Fargo upgraded the stock to equal weight from underweight. The Wall Street firm said it’s bullish on Rockwell’s earnings growth potential.
Airbnb — The vacation booking platform climbed 4.8%. Bernstein reiterated its outperform rating and said investors should buy the stock after a recent pullback in share prices.
Palantir – The software stock surged more than 5%. Bank of America reiterated its buy rating on Palantir, calling the company a “key player” in implementing secure AI despite the recent share pullback.
Splunk — Shares of the software company added 1.8% on Tuesday after Jefferies named the company a top pick in a Tuesday note. Jefferies said Splunk is now in position to deliver “mid-teens” increases in annual revenue after a management overhaul that began 18 months ago.
Futu Holdings — The Asian wealth management stock popped 10% following a double-upgrade to buy from underperform by Bank of America. The Wall Street bank said to expect more growth in overseas markets.
NextEra Energy Partners — The energy stock advanced 3.7% on the back of an upgrade from Raymond James to outperform from market perform. Raymond James said investors should buy the dip on the stock.
— CNBC’s Sarah Min, Samantha Subin, Yun Li, Hakyung Kim, Michelle Fox, Pia Singh and Jesse Pound contributed reporting
A XPeng Inc. G6 electric sport utility vehicle (SUV). The company is hoping the release of the new car will boost sales which plunged in the first quarter.
Qilai Shen | Bloomberg | Getty Images
Shares of Xpeng surged in pre-market trade in the U.S. after the Chinese electric vehicle maker reported a quarterly return to growth for car deliveries, following more than a year of declines.
Xpeng on Saturday said it delivered 23,205 cars in the second quarter of 2023, logging a 27% quarter-on-quarter rise. This surpassed the company’s own delivery forecast of between 21,000 and 22,000 units. That was still lower than the 34,422 cars delivered in the second quarter of last year.
U.S.-listed shares of Xpeng surged more than 11% in pre-market trade before paring some of those gains.
Deliveries have been declining each quarter since the first quarter of 2022 for Xpeng, as it struggled with a tough macroeconomic environment in China and heightened competition from domestic rivals and from Tesla, which has been cutting prices in China to spur demand. That has also hurt Xpeng’s competitiveness.
Tesla’s strategy seems to be working with the company reporting global vehicles deliveries of 466,140 in the second quarter, beating analysts expectations.
Xpeng said deliveries in June alone totalled 8,620 cars, marking a 15% increase over May and the highest monthly delivery figure this year.
The Guangzhou, China-headquartered company said deliveries of its flagship P7 sedan rose 17% in June from May, but did not give a specific unit figure.
Xpeng’s latest car — the G6 Ultra Smart Coupe SUV — was launched at the end of the second quarter, with deliveries beginning this month. Xpeng is hoping this will boost sales in the coming quarters.
Xpeng’s losses continue to widen and competition is getting fiercer. Last month, Chinese EV start-up Nio made big price cuts to its cars.
Xpeng has been reorganizing its management structure and overhauling the company over the past few months in the hope of unlocking growth.
Some of the company’s rivals have fared better. Li Auto delivered 32,575 vehicles in June while its second quarter figures totaled 86,533. Nio meanwhile delivered 10,707 vehicles in June and 23,520 cars in the second quarter, not far ahead of Xpeng.
Meanwhile, Warren Buffett-backed automaker BYD delivered 253,046 new energy vehicles — which includes battery and plug-in hybrids — in June alone, representing a 96% year-on-year rise.
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.
Read more about electric vehicles from CNBC Pro
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.
Chinese electric car startup Li Auto saw deliveries surge by nearly 66% in the first quarter from a year ago.
Zhang Peng | Lightrocket | Getty Images
BEIJING — Chinese electric car brand Li Auto delivered more cars in March than Xpeng did in the first quarter, according to company releases.
Li Auto delivered 20,823 vehicles in March — for a total of 52,584 deliveries in the first three months of the year. That’s up by nearly 66% from the first quarter of 2022.
In contrast, Xpeng only delivered 18,230 cars in the first quarter — down by about 47% from the same period a year ago.
Xpeng delivered 7,002 vehicles in March, above the monthly average for the first quarter. Nearly half of the deliveries last month were of the company’s new P7i sports sedan that launched in March.
Nio reported first-quarter deliveries of 31,041, up 20.5% from a year ago. The company delivered 10,378 vehicles in March.
Li Auto’s vehicles — all SUVs — each come with a fuel tank to charge the battery and extend driving range.
The company claimed in a release it now has nearly 20% of the market for SUVs in the 300,000 yuan ($43,674) to 500,000 yuan price range in China.
For comparison, Tesla’s mid-size SUV, the Model Y, sells in a price range of 261,900 yuan to 361,900 yuan.
Xpeng’s G9 SUV starts at 309,900 yuan. The company’s new P7i sedan starts at 249,900 yuan — and costs 269,900 yuan if drivers want to use Xpeng’s assisted driving tech for cities. Tesla’s version of the tech, called Full Self Driving, isn’t available in China.
However, so far Xpeng’s assisted driving tech for cities is only available in Shenzhen, Guangzhou and Shanghai — where rollout began Friday.
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The Chinese electric car startups’ delivery figures pale in comparison with BYD, whose numerous models sell at a range of prices.
BYD said it sold 264,647 purely battery-powered passenger cars in the first three months of the year, 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 said Sunday it delivered more than 422,000 cars worldwide in the first quarter. The company did not break out figures for China, which typically accounts for well over 20% of Tesla’s revenue.
Electric vehicle charging stations from Tata Power can be found on 350 of the 600 highways in India.
Puneet Vikram Singh, Nature And Concept Photographer, | Moment | Getty Images
When most people think about electric vehicles, they think cars.
From brands like Tesla and Rivian in the United States, to Nio and XPeng in China, global sales of electric vehicles have surged. Two million EVs were sold in just the first quarter of 2022 — that’s a significant jump from a decade ago when sales hit only 120,000 cars worldwide, the International Energy Agency reported.
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India’s different. The United States and China have focused on the adoption of EV cars. But in India, the world’s fifth-largest economy, two-wheel vehicles such as scooters, mopeds and motorbikes, dominate the market.
James Hong, head of mobility research at Macquarie Group, said two-wheel vehicles are in higher demand than cars in India, and that shouldn’t come as a surprise.
Underdeveloped road infrastructure and lower personal incomes make it more convenient and affordable for people to own scooters, motorbikes or mopeds, rather than cars, Hong said.
Still, adoption remains low.
EVs make up only around 2% of total automobile sales, but the Indian government has ambitious targets to increase EV adoption in the next decade, focusing on raising purchases of two-wheel vehicles.
Sales in India are expected to rise by between 40% and 45% by 2030, at which point 13 million new vehicles will be sold annually, according to projections from Bain & Company published in December.
India’s four-wheel vehicle sector is poised to grow by only 15% to 20% by 2030, with 1 million new vehicles sold annually, the consulting firm said.
Growth of India’s four-wheel EV segment is expected to be smaller because the cars are mostly owned only by drivers who travel out of the city on longer routes, said Arun Agarwal, deputy vice president of equity research at Kotak Securities.
Bain & Co. predicts that total revenue across the full supply chain of India’s EV industry will generate $76 billion to $100 billion by 2030.
People in India have long preferred two wheels to four, and the country is home to more than 10 startups serving the market, Agarwal said.
For India to increase purchases of two-wheel vehicles, they need to be cheaper, and more charging infrastructure needs to be in place, Jinesh Gandhi, equity research analyst at Motilal Oswal Securities, told CNBC.
Gandhi said that 90% of two-wheel vehicles with internal combustion engines cost between 70,000 rupees ($845) and 140,000 rupees ($1,690). The starting price of electric two-wheel vehicles can be as high as 160,000 rupees.
Read more about electric vehicles from CNBC Pro
The cost of EVs will come down if battery prices drop, Kotak’s Agarwal said.
High inflation and disrupted supply chains have driven batter prices higher in 2022, Bain & Co. said. The cost would have to fall by an additional 20% to 30% for EVs to compete with internal combustion engine vehicles.
Arun Kumar, chief financial officer of two-wheel EV manufacturer Ola Electric, said it’s a “myth” that EVs are more expensive than internal combustion vehicles because the “lifecycle cost of ownership of an EV is lower” than a two- or four-wheel vehicle that runs on fuel.
Ola Electric’s two-wheel scooters, and upcoming motorbike and four-wheel passenger car, all range between $1,000 and $50,000.
Ola Electric
That means the amount of money EV owners can save in fuel and maintenance costs can offset the higher initial purchase price, he said.
Ola’s two-wheel scooters, an upcoming motorbike, and four-wheel passenger car range between $1,000 and $50,000, he said.
“There’s no coming back to [internal combustion engine] vehicles. It’s a single direction,” Kumar added.
Central and state governments in India have been providing incentives to encourage consumers in India to make the switch to EVs, Kotak’s Agarwal said.
According to the International Energy Agency, government programs have provided funding to ramp up production of EV public buses and taxis, as well as increase charging stations around India.
Including taxes, owners of two-wheel internal combustion engine vehicles in India typically pay 3,000 rupees a month for their vehicle, Kumar said. Government initiatives coupled with money saved on petrol would therefore mean that the monthly installment on a vehicle becomes largely free to a customer, he said.
As the adoption of electric vehicles is set to increase, so will charging infrastructures around the country. That remains a factor deterring people from making the switch away from carbon-intensive vehicles, Kotak’s Agarwal said.
“If you are stranded on the road, you don’t have any option but to get the vehicle towed to the nearest charging station, which is time- as well as a cost-consuming,” Gandhi said.
India’s charging infrastructure will need to significantly expand to support the number of EV companies that are set to come on the roads, the Bain & Co. report said, noting that several companies have made early investments and are committed to increasing the availability of chargers.
Tata Power claimed that it has built about 2,500 charging stations over 300 cities and towns in India.
Tata Power
One of them is Tata Power, India’s largest privately owned power generation company.
Tata Power claimed it has built about 2,500 charging stations in 300 cities and towns in India. They can be found on 350 of 600 highways in the country, said Virendra Goyal, the firm’s head of business development.
Many EV owners suffer from “range anxiety” when the distance between charging stations is too far, and bridging the gap would encourage more drivers to migrate to e-mobility, he said.
The company aims to have 25,000 chargers across India by 2028, Goyal said.
Correction: This article has been updated to accurately report where India ranks among the world’s biggest economies. An earlier version misstated its ranking.
Stocks that traded heavily or had substantial price changes Tuesday: Tesla, Southwest, Peloton fall; Las Vegas Sands, Hess rise
NEW YORK — Stocks that traded heavily or had substantial price changes Tuesday:
Southwest Airlines Co., down $2.15 to $33.94.
The airline had to cancel roughly two-thirds of its flights over the last couple of days, which it blamed on problems related to staffing and weather.
Las Vegas Sands Corp., up $1.94 to $48.46.
Macau casino operators got a boost after China said it will drop nearly all COVID-19 travel restrictions next month.
Redfin Corp., down 40 cents to $3.90.
New data showing U.S. home prices fell in October for the fourth straight month weighed on real estate industry stocks.
NIO Inc., down 91 cents to $10.06.
The Chinese electric vehicle maker cut its fourth-quarter guidance for deliveries, citing production issues, supply chain constraints and other challenges.
Peloton Interactive Inc., down 75 cents to $8.14.
The maker of high-end exercise equipment said it will offer refurbished bikes in the U.S. and Canada at a sharp discount relative to new models.
Tesla Inc., down $14.05 to $109.10.
The electric vehicle maker temporarily suspended production at a factory in Shanghai, according to published reports.
Coherus Biosciences Inc., down 76 cents to $5.69.
The biotechnology company’s application for approval of a cancer drug remains under review by the FDA pending a manufacturing facility inspection.
Hess Corp., up $1.73 to $143.41.
Energy company stocks rose broadly as crude oil and natural gas prices headed higher.
