Volkswagen Group has reported its sales for the first three quarters of 2023, and the EV segment is showing remarkable growth, with a 45% increase compared to the same period last year. The group has sold 531,500 pure electric vehicles during this time, marking a significant step toward its transition to a zero-carbon, all-electric future.

The global share of EV sales for Volkswagen Group has grown to 7.9%, reaching 9% in the third quarter. If this trend continues, the annual share of pure electric vehicles is expected to fall within the range of 8% to 10% this year, with a stable 10% or more expected next year.

Europe remains the stronghold for Volkswagen’s electric vehicles, with a 61% growth compared to last year, selling a total of 341,000 EVs. In the US market, there has been a 74% growth, with 50,000 pure electric vehicles sold, while the Chinese market has seen a modest 4% growth, with sales totaling 117,000.

However, similar to Tesla, Volkswagen faces challenges with declining profitability despite increasing delivery numbers, primarily due to intense price competition. The operating profit has decreased by 7%, accumulating €16.2 billion, which means that despite an 8% growth in overall vehicle deliveries (regardless of the powertrain), with 6.8 million vehicles sold, profitability has remained nearly unchanged.

Volkswagen’s primary focus for the future is to continuously optimize cost control, emphasize its system adjustment plan, and develop cross-brand collaborative strategies to improve profitability margins.

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(Photo credit: Volkswagen)

In the wake of a semiconductor shortage, Chinese automakers have veered onto the path of self-developed chips over the past two years. Recently, Changan Automobile, in collaboration with the Chongqing High-Tech Industrial Development Zone and the Intelligent Manufacturing Industrial Research Institute, established Chongqing Xinlian Integrated Circuit Co., Ltd. This venture, boasting a considerable registered capital of 8.7 billion yuan, signifies a substantial investment from Chongqing’s state-owned entities and major automobile manufacturers. It is dedicated to advanced production of 12-inch large-scale integrated circuits.

Changan is not alone in this endeavor; companies like Geely, GAC, BAIC, BYD, and others have embarked on self-development plans or have chosen to enter the chip manufacturing domain through partnerships. Emerging forces in the automotive industry like XPeng, NIO, and Li Auto are also opting for self-developed chips.

The Rise of Self-Developed Chips

Tesla stands as the pioneering automaker in developing its self-driving chips. Industry insiders suggest that their decision was fueled by the inadequacy of chip suppliers like NVIDIA and the ample funds generated from Tesla’s surging sales. Their approach has been widely recognized by the market, prompting others to explore this direction.

In the realm of self-developed chips, different car manufacturers adopt diverse strategies. Companies like Tesla, XPeng, and NIO, renowned for their self-developed algorithms, focus on high-performance chips.

An industry source emphasized that car manufacturers prefer to stress full-stack self-development, but off-the-shelf chips cannot fully leverage the advantages of self-developed algorithms. Thus, powerful companies opt for customized chips to align with their proprietary algorithms. This underscores the need for automakers to possess robust capabilities in autonomous driving software and algorithms.

Notably, NIO has assembled a 300-member chip team, focusing on self-driving and LiDAR chips. XPeng’s chip team is developing high-computing power self-driving chips similar to Tesla’s FSD chip. Furthermore, Li Auto expanded its chip team and collaborated with Sanan Optoelectronics to establish a power semiconductor production line in Suzhou.

In contrast, traditional domestic auto manufacturers often commence their self-developed chip ventures with power semiconductors due to their higher onboard usage and relatively lower development complexity. Several carmakers have partnered with chip companies for mass production collaborations. Horizon Robotics, for instance, has signed mass production agreements with mainstream auto manufacturers like BYD, Great Wall, Li Auto, and Changan.

(Photo credit: Changan Automobile)

In response to persistently low sales and failure to meet production targets, Japanese automaker Mitsubishi Motors has announced its exit from local car production in China. The company has also revealed plans to invest up to 200 million euros in Renault’s EV venture, Ampere.

Mitsubishi Motors made this announcement in a press release following a board meeting on the 24th, which includes terminating production of Mitsubishi-branded vehicles in China.

The company cited the rapidly changing market of the Chinese automotive industry over the past 2-3 years, with a swift transition to EVs and significant shifts in consumer brand preferences. Despite launching a new model in December 2022 in an effort to boost sales, Mitsubishi struggled to meet its sales targets. Furthermore, the joint venture, GAC Mitsubishi Motors, has suspended operations at its Changsha plant in Hunan province since March 2023 to adjust inventory.

GAC Mitsubishi Motors is a company jointly established by Mitsubishi Motors, Mitsubishi Corporation, and Guangzhou Automobile Group (GAC Group), operates the Changsha plant, the sole new car production facility in China for Mitsubishi Motors. The company will transfer its entire shareholding in GAC Group, which ends Mitsubishi’s involvement in the local production of Mitsubishi-branded vehicles in China. Following this, GAC Mitsubishi Motors will become a wholly-owned subsidiary of the Guangzhou Automobile Group, and its EV brand, Aion, will continue to utilize the Changsha plant.

Mitsubishi Motors stated that it will maintain cooperation with Mitsubishi Corporation and the GAC Group to provide after-sales service to customers. As for the structural reform measures, the company anticipates recognizing a special loss of 24.3 billion yen in the fiscal year 2023 (April 2023 – March 2024) financial statements. However, this special loss has been partly factored into the previously announced financial forecast for the fiscal year and will not result in any changes at this stage.

Mitsubishi Motors currently estimates that its consolidated revenue for the fiscal year will increase by 13.1% year-on-year to 2.78 trillion yen, while its consolidated operating income will decrease by 10.8% to 170 billion yen and consolidated net income will decrease by 34.8% to 110 billion yen.

Furthermore, on the 24th, Mitsubishi Motors announced its investment in “Ampere,” the EV venture established by the Renault Group. The investment could reach a maximum of 200 million euros. Mitsubishi Motors intends to strengthen its EV research and development and expand its EV product lineup through this partnership. The company will procure EVs developed and produced by Ampere for sale under its Mitsubishi Motors brand, initially targeting the European market.

Ampere is a separate entity formed by Renault for its EV business, with plans to go public in 2024. Besides Mitsubishi Motors, Nissan has also committed to a maximum investment of 600 million euros in Ampere, and semiconductor giant Qualcomm has expressed its intention to invest as well.

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(Image credit: GAC Mitsubishi Outlander 2022)

China’s Ministry of Commerce announced that as of December 1, the export of graphite products will require permits, citing national security concerns. Graphite is a vital anode material in lithium-ion batteries, making it crucial for industries like electric vehicles and energy storage. China is the world’s largest producer of graphite, supplying over 67% of global natural graphite and more than 90% of refined graphite.

This move indicates China’s efforts to control critical mineral supplies, which is part of a broader trend as foreign governments, such as the EU, consider tariffs on Chinese electric vehicles due to perceived unfair subsidies, and the US expands restrictions on Chinese companies acquiring advanced semiconductor technology.

Natural graphite is considered a critical raw material by the EU, Japan, Canada, and the US. China’s major graphite buyers include Japan, the US, India, and South Korea. The International Energy Agency predicts a 20-25 fold increase in graphite demand from 2020 to 2040.

In response to the restrictions, the South Korean Ministry of Trade has held meetings with battery and materials manufacturers to discuss strategies for mitigating potential disruptions in lithium-ion battery production. Japan has expressed its intention to inquire further and consider appropriate measures if China’s actions violate World Trade Organization rules.

Before implementing these graphite export controls, China had imposed restrictions on gallium and germanium, affecting global prices for critical metals, starting on August 1. According to Chinese mainland customs data for September, export restrictions on gallium and germanium continue to impede the supply. In September, the export quantity of rolled germanium was 1 kilogram, while in August, it was zero. For both August and September, the export of rolled gallium was zero.

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(Photo credit: Pixabay)