According to the article written by Tony Chen, Head of Investment Research at UBS Asset Management, the European Commission initiated an investigation in October into Chinese electric car manufacturers suspected of receiving national subsidies. The EU believes that Chinese state subsidies will create an “unfair trade competition environment” for EU electric car manufacturers.

If the EU’s investigation uncovers “subsidy evidence,” it will result in the calculation of corresponding “average anti-subsidy taxes,” which will apply to all electric vehicles imported from China, including prominent models produced in China such as Volkswagen, Tesla, BMW, and others.

The UBS research team suggests that, in the worst-case scenario, the EU may impose additional tariffs on Chinese electric cars imported into the EU.

What led to the trade conflict between China and the EU in electric vehicles? Firstly, the disparity in tariffs plays a crucial role.

Currently, Chinese cars entering the European market face a 10% import tariff, while in China, the situation is reversed, with a 15% tariff imposed on cars imported from Europe. This significant gap indicates potential room for negotiation.

Additionally, a report from the European Commission reveals that China’s market share for electric vehicles in Europe has risen to 8%, with expectations to reach 15% by 2025.

However, this figure includes cars manufactured in China for international brands, not exclusively domestically produced Chinese electric vehicles. According to JATO, an automotive industry research organization, the market share of “pure” Chinese brand electric vehicles in Europe was still below 1% as of the first half of this year. Nevertheless, overall, it underscores the strong presence of Chinese-manufactured electric vehicles in Europe.

From a practical standpoint, initiating a trade war in the electric vehicle sector involves consideration of various complex background factors. China is not only a primary supplier of raw materials to Europe but also a crucial market for European brands. In fact, China is already the world’s largest sales market for electric vehicles.

Chinese Electric Cars Enjoy High Margins, Positioned for Price Wars

The research team at UBS believes that, given the potential to boost sales through lower pricing, the competitive pricing of electric vehicles between Chinese and European brands will be crucial. Taking Tesla as an example, the company has adopted an aggressive pricing strategy for its EVs. In April, Tesla lowered the selling prices in the European region, with the retail price for the popular Model Y around €46,000. According to JATO, the Model Y is currently the best-selling EV in the European Union this year, showcasing the positive impact of a competitive pricing strategy on sales.

Following this argument, another set of data from JATO reveals that the selling prices of Chinese brand EVs in Europe range from €50,000 to €60,000, approximately in line with the European average.

In comparison, the average selling price of Chinese EVs domestically in China is only around €30,000. This indicates that Chinese EV manufacturers exporting to the European market enjoy relatively higher margins, providing them with the capability to engage in price wars. One major reason for the cost advantage of Chinese electric cars lies in battery manufacturing.

According to a previous report by TrendForce, Chinese battery manufacturers command a global market share exceeding 60%, allowing them to cover the entire battery production chain, share production costs, and continually advance new technologies. Since batteries represent approximately 40% of the total vehicle cost, Chinese electric cars offer superior cost-effectiveness.

On the other hand, the space for European car manufacturers to gain a competitive advantage through subsidies has gradually diminished. As the EV market expands, government subsidies in Europe are losing momentum. Germany has already reduced EV subsidies from €5,000 per vehicle to €3,000 this year.

Similarly, subsidies in the Netherlands, of a similar scale, are subject to quota limitations and were even exhausted by mid-2022. This implies that entering a price war could place European EVs at a relative disadvantage.

Overall, the EV market exhibits high price sensitivity, and European automakers face challenges in terms of cost competitiveness. In contrast, Chinese EV manufacturers have a cost advantage. Consequently, there is a growing possibility of a trade conflict in the European electric vehicle market.

(Photo credit: Pixabay)

According to IJIWEI’s news, during the Huawei Smart Mobility Conference held on November 9, Huawei, in collaboration with Chery, unveiled its first smart electric sedan, the Luxeed S7. Priced at a starting pre-sale cost of 258,000 RMB. Huawei had previewed the release of Luxeed S7 during a product launch event held on September 25th. “It will be superior to Tesla’s Model S in various aspects,” said Richard Yu, the CEO of Huawei.

The vehicle is produced on a new platform using Huawei’s smart automotive solution. It features the Huawei’s turing intelligent chassis, HarmonyOS 4 smart cockpit, and the advanced Huawei ADS 2.0 intelligent driving assistance system.

The Huawei ADS 2.0 advanced intelligent driving system is highlighted for its cutting-edge perception capabilities, obstacle recognition and processing abilities, and advanced features in intelligent driving and smart parking. The ADS 2.0 achieves a leading experience with nationwide map-agnostic driving, intelligent parking assistance, and continuous improvement over time, making it a top-tier intelligent driving system.

In terms of appearance, the Luxeed S7 incorporates an entirely new OneBox design to maximize the interior space, achieving a cabin space utilization rate of 88%. Richard Yu mentioned that after numerous internal discussions about pricing, it was found that all four versions of this car would incur losses. The hope lies in later substantial shipments of the car to offset these losses.

According to the introduction, the Luxeed S7 offers an impressive 800 kilometers of range, and a quick 15-minute charge can cover 400 kilometers. Richard Yu stated that in terms of energy consumption, the Luxeed S7 once again leads the industry with an energy consumption of 12.4 kWh per 100 kilometers.

Yu further mentioned that Huawei supports its partners in achieving commercial success through three cooperation modes: component supply mode, solution mode, and Huawei Smart Car mode. Currently, Huawei’s Smart Car model has four partner companies, including Seres, Chery, JAC Motors, and BAIC Group.

Currently, the Aito Series, including the M5, has seen cumulative deliveries surpass 120,000 vehicles, with the newly introduced M7 series achieving a cumulative sales total of 86,000 units. Even before its official release, the upcoming Aito Series M9 has received more than 25,000 pre-orders.

According to the introduction, Huawei’s Smart Travel Solution represents a strategic advancement in the Huawei Smart Choice Car model. It aims to leverage Huawei’s over 30 years of intelligent incremental component products in the ICT domain, technological solutions, and Huawei’s quality control, sales service, and brand marketing experiences accumulated over more than ten years in consumer businesses, deeply empowering partners to pioneer a new era of smart vehicles.

(Photo credit: Flickr)

According to Yahoo’s report, recent developments in China’s automotive industry, particularly the electric vehicle sector, have been a mixed bag. While some companies have reported impressive export performance and surging delivery volumes, the overall market has faced challenges due to weak consumer demand and intense price wars.

Even NIO, which had previously pledged to enhance efficiency without layoffs, recently announced a workforce reduction of approximately 10%, affecting around 3,000 employees. This unexpected move has sent shockwaves through the industry and suggests that a layoff storm may be approaching the Chinese automotive sector.

Amidst numerous recent developments in the Chinese auto market, the most widely discussed topic is the announcement by NIO’s Chairman, William Li, regarding a workforce reduction of approximately 10%, with specific adjustments to be completed by November.

NIO, known as a market favorite and listed in both the U.S. and Hong Kong, has been considered one of the leading players in China’s new force of automotive companies. However, it now finds itself in the challenging position of staff downsizing, signaling a potentially tough year-end for China’s automotive industry.

While NIO, XPeng, and Li Auto, often hailed as representatives of the new forces in China’s automobile industry, had been at the forefront, NIO’s performance in 2023 seems to be lagging behind its peers.

In contrast to Li Auto, which has seen ten consecutive months of rising sales figures this year, and XPeng, which achieved a 292% year-on-year increase in October and set its record for single-month deliveries, NIO’s performance has been more volatile. Since reaching a peak delivery volume of 20,462 vehicles in July, NIO has struggled to maintain a consistent delivery rate of 20,000 vehicles per month.

Additionally, NIO’s losses have continued to grow quarter by quarter, with the company posting over ¥20 billion in net losses over the past year. In the same period, Li Auto recorded nearly ¥2 billion in profits, while XPeng faced losses of nearly ¥10 billion. Consequently, NIO holds the distinction of being the leader in losses among the new energy vehicle manufacturers. NIO’s layoffs serve as a cautionary signal, highlighting the pressing need to cut costs and enhance efficiency.

Amid China’s economic slowdown and intensified market competition, NIO’s challenges represent just a microcosm of the broader Chinese automotive industry. It’s not just NIO; in 2023, several automotive companies have already begun layoffs or faced closures. Examples include Levdeo, which filed for bankruptcy; WM Motor, which already closed its doors; and Enovate, which announced a suspension of operations.

Furthermore, the chill in the market is also affecting automotive supply chain companies. An industry insider candidly revealed that except for BYD and Li Auto, most car manufacturers are in the process of downsizing, indicating that the Chinese automotive industry is currently experiencing a major shake-up and a fierce battle for survival.

(Photo credit: Pixabay)

According to TechNews’ report, Delta Electronics has held its third-quarter earnings conference yesterday, announcing at the beginning that it will spin off its EV business next year.

In the future, the company’s business will be divided into four major categories: power electronics, transportation, automation, and infrastructure, highlighting its commitment to the EV sector. Delta’s Chairman, Yancey Hai, pointed out that although the electric vehicle industry is currently facing some headwinds, the overall trend is still positive.

Delta Electronics reported consolidated revenues of NT$107.795 billion for the third quarter, representing a 7.2% increase from the previous quarter and a 1.45% increase year-on-year, marking a historic high for a single quarter. The accumulated consolidated revenues for the first three quarters reached NT$301.206 billion, an 8% year-on-year growth, setting a new high for the same period in previous years.

Delta Electronics’ gross margin for the third quarter was 29.57%, a slight decrease from the 30.29% of the same period last year, which had a high base effect. The average gross margin for the first three quarters was 28.8%, slightly lower than the 29.1% of the same period last year.

Looking ahead to the fourth quarter, there is considerable attention on AI and EV developments, especially in light of recent events such as the strikes by the United Auto Workers (UAW) in the United States and concerns from American EV manufacturer Tesla and battery maker Panasonic about EV sales.

However, Delta Electronics’ Chairman Yancey Hai mentioned that while there is currently a lot of noise in the EV market, with Tesla experiencing slower sales and price reductions and the UAW strikes, the long-term outlook for EVs remains positive. Most countries have set schedules for phasing out traditional fossil-fuel vehicles, indicating a consistent trend for the future.

Yancey Hai mentioned that the primary reason for slower EV sales is the higher price of EVs compared to traditional fossil-fuel vehicles. EVs also cannot rely solely on government subsidies to boost sales. Additionally, there is still room for price reductions in the EV market. EVs have simpler construction compared to traditional vehicles, but the current high cost of batteries is a limiting factor.

In terms of orders, there will still be many new vehicle models introduced in the future. The strikes by American car manufacturers will have minimal impact on Delta Electronics. While the company may not double its growth this year, it is expected to see at least an 80% growth.

Looking ahead to the future and considering fourth-quarter revenue, CEO Ping Cheng stated that the fourth quarter will be similar to the third quarter, with improvements expected in various aspects next year compared to this year. However, there are no significant signs of a rebound in consumer electronics products and Chinese automation this year. Changes will be limited.

Consumer electronics products are awaiting the depletion of customer inventory, and next year is expected to be better than this year. As for Chinese automation, it has been impacted by the US-China trade tensions, reduced manufacturing investments, and China’s economic development. Industrial automation business also hasn’t shown growth this year.

Regarding the booming AI sector, Ping Cheng pointed out that there is currently a global arms race in AI, with the development of large AI data centers. Delta has already witnessed a significant demand in this area.

However, since AI-related processes are different from traditional servers, there is still work to be done in terms of setup. Regarding cooling, Delta has been developing air cooling, water cooling, and immersion cooling solutions. As the power density of AI continues to increase in the future, the demand for cooling will also rise.

Hai stated that the current revenue contribution from EVs is around 12%, and they expect it to increase further next year. They’re expecting the EV growth to maintain 40% to 50% momentum in the coming year. As for AI servers, it currently accounts for about 15% of the power segment, and they expect its growth to be faster in the future.

(Photo credit: Delta’s Facebook)

Xiaomi’s subsidiary, Shanghai Xiaomi Jingming Technology Co., Ltd., was established recently with a registered capital of 10 million yuan (RMB). The company’s scope of operations includes car sales, car wash services, vehicle repair and maintenance, small and micro passenger car rental services, chauffeur services, and internet sales.

The establishment of this new company is closely tied to Xiaomi’s foray into the electric vehicle (EV) industry.

On March 30, 2021, during a Xiaomi product launch event, the company’s founder, Lei Jun, announced Xiaomi’s entry into the smart electric vehicle sector. Following this announcement, Xiaomi formally approved the EV project and committed to setting up a wholly-owned subsidiary to oversee its EV business. Xiaomi allocated an initial investment of 10 billion RMB for this venture, with a projected investment of 10 billion USD over the next decade.

In a recent development, Xiaomi’s Chairman, Lei Jun, expressed his optimism about Xiaomi’s electric vehicle project on October 25, stating that the project is progressing smoothly.

Sources familiar with the matter disclosed that Xiaomi’s electric vehicle project has multiple platform generations in development, with the first platform set for release in 2024 and the second in 2025.

Read more

•  [News] Xiaomi EV Reportedly Finalizes Battery Supplier List, CALB and CATL Chosen
• [News] Xiaomi Begins Trial Production of 50 Prototype Cars per Week

(Photo credit: Xiaomi’s Facebook)