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.
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.
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.
Read more about China from CNBC Pro
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.
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 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.
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.
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.
A XPeng Inc. G6 electric sport utility vehicle (SUV).
Qilai Shen | Bloomberg | Getty Images
Xpeng expects cost cuts and its Volkswagen partnership to narrow the firm’s losses, the Chinese EV maker told CNBC in an exclusive interview on Monday.
On Friday, the firm logged its biggest quarterly loss since its U.S. listing in August 2020. Its second-quarter net loss was 2.8 billion yuan, larger than the 2.13 billion yuan loss expected according to a Refinitiv consensus estimate. Its U.S.-listed shares closed 4.28% lower on Friday. On Monday afternoon, Xpeng’s Hong Kong-listed shares were trading more than 2% higher.
On Friday, CEO He Xiaopeng said the company is cutting costs across the business and that should “substantially drive gross margin improvement in 2024.”
In April, Bloomberg reported the company was planning to trim manufacturing costs, including saving 50% on intelligent driving features by the end of 2024.
“From an expense perspective, we went through a very significant business reorganization as well as changes that we have made. We start to see the regaining of the growth momentum that we have in our business,” Brian Gu, vice chairman and co-president of Xpeng, told CNBC’s “Street Signs Asia” on Monday.
Xpeng is attempting to revive its business this year, after its share price sank by more than 80% in 2022. The firm struggled with a tough macroeconomic environment in China and a price war among domestic rivals and Tesla, which slashed the prices of its Model Y and Model S last week.
“The demand side actually remains pretty robust. I think it continues to grow despite the economic backdrop. But the same time, the competition has intensified in the first half, with more players launching more new models and being very aggressive on price competition,” said Gu.
“In order to gain better profitability, we also have endeavor to spend a lot of time on cost cutting. Later next year, we expect our total vehicle BOM [bill of materials] costs to be reduced by up to 25%. That will give us a big tool to increase profitability as well,” said Gu.
In automotive manufacturing, BOMs list all the parts required to build a vehicle, such as an engine, brakes, seats and dashboards.
BofA Securities said in a report Monday that it expects Xpeng’s cooperation with Volkswagen to “improve its financial position and likely enhance its supply chain management.”
BofA upgraded Xpeng from “neutral” to “buy” at $22 per share, up from its previous price target of $16.30 per share.
The partnership will see both companies co-developing two new EVs that will incorporate Xpeng’s advanced driver-assist software for the Chinese market with a rollout target for 2026.
“With the Volkswagen agreement, we also anticipate meaningful contribution to our bottom line starting next year. So that’s also another tool we can use to increase our profitability,” said Gu.
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In addition to planned new models, Xpeng has “updated versions of current models” set to be launched next year, said Gu.
“We anticipate those new models will carry more favorable gross margins which also will help our profitability and product mix,” said Gu.
The firm expects its latest model — the G6 Ultra Smart Coupe SUV, which was launched at the end of the second quarter — to boost margins.
“We see an improving product mix and a stronger cost control improving its gross profit margin in 2024-2025E. We expect its new model pipeline in second half of 2023 to 2025 to improve its sales volume growth,” said BofA Securities.
— CNBC’s Michael Bloom contributed to this report.
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.”
Signage outside Intel headquarters in Santa Clara, California, on Monday, Jan. 30, 2023.
David Paul Morris | Bloomberg | Getty Images
Check out the companies making headlines before the bell.
Intel — Shares popped 6.7% after the chipmaker posted better-than-expected second-quarter results and a return to profitability after two consecutive losing periods. Intel’s forecast for the third quarter also came in above analyst expectations. The company reported adjusted earnings of 13 cents a share on revenues of $12.95 billion.
Roku — The streaming stock rallied nearly 10% after reporting a narrower-than-expected loss for the second quarter. Roku reported a loss of 76 cents a share and revenues of $847 million. Analysts polled by Refinitiv had anticipated a loss of $1.26 per share and $775 million in revenue.
Biogen — Biogen shares moved slightly lower after the biotechnology company said it’s acquiring Reata Pharmaceuticals for $172.50 per share, in a cash deal valued at about $7.3 billion. Shares of Reata soared more than 51% on the news.
Procter & Gamble — The consumer giant saw shares rise more than 1% in premarket trading after the company reported quarterly earnings and revenue that beat analysts’ expectations. However, P&G released a gloomy outlook for its fiscal 2024 sales that fell short of Wall Street’s estimates.
Exxon Mobil — Shares moved slightly lower after the oil stock posted mixed second-quarter results. The company reported earnings of $1.94 a share, excluding items, that fell short of the $2.01 expected by analysts, per Refinitiv. Revenues came in at $82.91 billion, above the expected $80.19 billion.
Chevron — The oil stock lost nearly 1% even after reporting a beat on the top and bottom lines for the second quarter. Earnings fell from a year ago due to a drop in oil prices.
First Solar – Shares soared 12% after the solar company posted earnings per share of $1.59 on revenue of $811 million for the second quarter. Those results beat Wall Street expectations of 96 cents per share on revenue of $721 million, according to Refinitiv. The company also announced plans to invest up to $1.1 billion to build a fifth manufacturing facility in the United States.
Enphase Energy – Shares of Enphase dropped more than 15% after the company posted second-quarter revenue Thursday of $711 million that fell short of analyst estimates of $722 million, according to Refinitiv. The stock also faced a wave of downgrades Friday morning from Deutsche Bank, Wells Fargo and Roth MKM.
Sweetgreen – Shares of the salad chain slid more than 13% after the company posted weak sales that missed Wall Street expectations in the second quarter and a net loss of $27.3 million, or 24 cents per share. Sweetgreen did say it’s aiming to turn a profit for the first time by 2024.
Ford Motor – The automaker said adoption of electric vehicles is going more slowly than the company forecast and that it expects to lose $4.5 billion on the EV business this year, widening losses from roughly $3 billion a year earlier. Otherwise, Ford posted strong quarterly earnings that beat Wall Street expectations and raised its full-year guidance. Shares were flat in premarket trading.
Juniper Networks — Shares of the technology company fell 8% after Juniper’s third-quarter guidance came in lighter than expected. The company said it expects earnings per share between 49 cents and 59 cents, with revenue between $1.34 billion and $1.44 billion. Analysts had penciled in 62 cents per share and $1.48 billion of revenue. The company’s second-quarter results did come in slightly above expectations.
AstraZeneca — U.S. listed shares of the drugmaker added more than 5% before the bell. The U.K.-based company reported second-quarter earnings of $2.15 per share on $11.42 billion in revenue. That surpassed the EPS of $1.95 expected by analysts polled by Refinitiv on revenues of $11.03 billion. AstraZeneca also said it would buy a portfolio of preclinical rare disease gene therapies from Pfizer for up to $1 billion.
Xpeng — The Chinese electric vehicle stock jumped more than 6% in the premarket. Jefferies upgraded shares to a buy from a hold, citing Xpeng’s joint development plan with Volkswagen
New York Community Bancorp — The regional bank stock rose about 2% before the bell after JPMorgan upgraded New York Community Bancorp to an overweight rating from neutral. The Wall Street firm called the company a “massive market share taker” in its upgrade.
Mondelez International — Mondelez International added 2.7% before the bell on strong second-quarter results. The snack maker on Thursday reported earnings of 76 cents a share, excluding items, on $8.51 billion in revenue. Analysts polled by Refinitiv had estimated EPS of 69 cents and revenues of $8.21 billion.
— CNBC’s Tanaya Macheel, Yun Li and Jesse Pound contributed reporting
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.”
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.
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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.
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.
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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.
