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.

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(Photo credit: Xiaomi’s Facebook)

After a grueling six-week standoff, the United Auto Workers (UAW) has reached a groundbreaking labor agreement with General Motors (GM). This news comes after resolving disputes with Ford and Stellantis, the parent company of Chrysler, signaling a turning point in the largest auto industry strike in recent history.

According to reports from Reuters and The Wall Street Journal, the UAW and General Motors reached a preliminary agreement on October 30, officially putting an end to the six-week-long strike. It is reported that the UAW has successfully secured wage increases from General Motors similar to those obtained from Ford and Stellantis.

Over a four-year period, the average wage increase reaches 25%, and retirement benefits receive additional enhancements. When including other allowances, the maximum wage increase reaches 33%. The details are subject to approval by union members’ vote.

In response to the agreement, GM’s CEO, Barbara, stated that the new terms would enable the company to continue investing while offering well-compensated employment. She eagerly anticipates the return of all employees to their workstations.

The UAW initiated localized strikes against the three automotive giants – GM, Ford, and Stellantis – starting on September 15. These strikes grew in scale over time, primarily targeting larger and more profitable factories to exert pressure on the management. At Its Peak, Nearly 50,000 People Joined the Strike, with President Biden Personally Expressing Support by Visiting the Strike Sites.

The lengthy strike has finally concluded, bringing a sigh of relief to automakers. However, it has had a significant financial impact, with both General Motors and Ford canceling their annual earnings forecasts. General Motors estimates the strike resulted in approximately $200 million in losses each week.

Analysts anticipate that the new labor agreement will substantially increase production costs for the big three automakers, potentially undermining their competitiveness against union-free electric vehicle manufacturers like Tesla and foreign brands such as Toyota.

Notably, the union has secured greater influence over capital decisions during negotiations, including the power to initiate strikes when a manufacturer contemplates plant closures.

While the three major automakers currently express their intent to keep existing factories operational during their transition towards electric vehicles, contractual constraints may force them to continue running unprofitable facilities in times of economic downturn or declining sales.

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(Photo credit: GM’s facebook)

Once considered a driving force behind economic growth, the electric vehicle (EV) market is facing a reality check as consumers are becoming more practical about their needs due to rising inflation and high-interest rates. Automakers acknowledge that in times of inflation, electric vehicles won’t be on consumers’ radar in the coming years unless their prices are lowered.

In the third quarter, the U.S. saw a surge in EV sales, breaking the 313,000 mark, almost a 50% increase from the same period the previous year. The EV market share reached an all-time high of 7.9%.

However, this growth may be reaching its peak as major automakers are now either postponing their electric vehicle sales targets and production plans or resorting to price reductions.

For instance, Ford has extended the annual production target for electric vehicles to 600,000 units by one year, abandoned the goal of producing 2 million electric vehicles by 2026, and temporarily halted a $12 billion investment in EV projects.

General Motors has also abandoned its sales targets, and Honda has given up on its plans to jointly develop electric vehicles priced below $30,000 with General Motors. Tesla has postponed its super factory project in Mexico.

More manufacturers are resorting to price reductions, including Mercedes-Benz, Tesla, and Ford’s electric trucks, all of which are offering significant discounts.

Price vs. Affordability

Consumers are primarily concerned with the price difference between EVs and gasoline vehicles. In the U.S., most compact electric SUVs are priced at around $52,000, while similar gasoline SUVs cost only about $34,000.

According to Ford’s CEO, in the EV industry, exceptional products alone are no longer sufficient; they must also be cost-competitive. Elon Musk also noted that the high-interest-rate environment is unfavorable for market demand, and making products more affordable is essential to encourage people to make purchases.

However, even with price reductions and discounts, it seems that buyers remain unimpressed. U.S. dealers have observed that the next wave of buyers, unlike those who made impulsive purchases in the past couple of years, are now more focused on practical factors such as cost, infrastructure challenges, and lifestyle impediments.

Practical Considerations

Market analysts suggest that over the past decade of low-interest rates, consumers have increased their spending. However, as interest rates rise, consumers now find the need to be more frugal.

The price of EVs has gone beyond the affordability range of many consumers. The current high-interest-rate environment is also unfavorable for convincing consumers to explore immature automotive technologies.

A survey found that aside from price, consumers still worry about range anxiety and the lack of charging infrastructure. Up to 77% of respondents said these were the most pressing issues when considering EVs. Consumers are less likely to consider immature products when their budgets are tight.

The U.S. government aims to have half of all new vehicles sold be zero-emission vehicles by 2030. Just a few years ago, policymakers believed that Americans would adopt EVs without needing much persuasion. However, this optimism now appears to be overly idealistic.

For now, General Motors, Ford, and even Tesla are deciding to hold onto their cash reserves and redeploy them when the economic situation stabilizes. Toyota Chairman Akio Toyoda, who has consistently argued that pure EVs are not the only solution, should be feeling vindicated as he stated at the recent Tokyo Motor Show, saying that “People are finally seeing reality.”

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(Photo credit: Pixabay)

The Tokyo Motor Show, which recently opened in Japan, has garnered global attention from the automotive industry, particularly regarding EV technology, seen as the future of the automotive sector. Just like Toyota, a leader in the Japanese automotive industry, Nissan has showcased its ongoing development of Advanced Solid-State Battery (ASSB) technology at the event.

According to Nissan, the ASSB technology promises to provide double the energy density when compared to conventional liquid lithium-ion batteries, representing a significant milestone in battery innovation. Additionally, it is estimated that vehicles equipped with ASSB will experience a substantial reduction in charging times, taking only one-third of the current duration.

This development aims to address one of the fundamental challenges faced by EV users, making longer trips more convenient and practical while enhancing their overall confidence and enjoyment in electric vehicle ownership.

Kazuhiro Doi, Vice President of Nissan’s research division, believes that this technology could propel Nissan’s next generation of electric vehicles to a new level.

What’s particularly intriguing is that sports cars or supercars can utilize smaller and lighter battery packs, thereby improving handling, braking, and acceleration. Furthermore, according to Mydrivers, since ASSB batteries can operate normally in the range of room temperature to 100°C, they do not require a dedicated cooling system.

Currently, the ASSB technology is progressing according to Nissan’s previously announced plan. The first experimental production facility is still scheduled to commence operations next year, and the first mass-produced vehicle model utilizing ASSB technology is still expected to be launched in 2028.

(Photo credit: Nissan’s Facebook)

Foxconn Technology Group held its Tech Day on October 18, 2023, focusing on three key areas: AI Smart Factories, CDMS (Contract Design and Manufacturing Services), and Model N.

TrendForce’s insights:

1. Increasing EV Adoption Crucial for Sustained Growth

According to an intention survey by Gallup in April 2023, only 4% of respondents in the United States currently use electric vehicles, with an additional 12% considering a purchase. The majority of potential buyers in this category belong to households with an annual income exceeding $100,000. As per the salary survey by the New York Federal Reserve in July 2023, the average annual income for full-time employees in the United States stands at approximately $69,475.

Apart from concerns about driving range, the primary obstacle to the widespread adoption of electric vehicles is their relatively higher cost compared to traditional gasoline-powered vehicles. This pricing differential limits the consumer base for electric vehicles. The growth rate in electric vehicle adoption, which nearly doubled from 2020 to 2023, now faces a “30% plateau” challenge.

With the deadlines for banning gasoline cars in 2025 in Norway and 2035 in the European Union approaching, reducing manufacturing costs to reach a broader consumer demographic will be a critical factor in the successful transition of traditional automakers.

2. Foxconn’s CDMS Model Offers Cost Savings and Addresses Key EV Challenges

Take Volkswagen, the world’s second-largest automaker, for example. The investment in creating the MEB platform for their EVs amounted to approximately $7 billion. For many small or startup automakers, this figure is astronomical.

Furthermore, in recent years, automakers have made substantial investments to ensure the stability of crucial components like batteries and semiconductor chips. These costs are inevitably spread across the overall vehicle cost, which, in turn, affects the growth rate of electric vehicles.

The CDMS  model leverages Foxconn’s Model series of complete vehicle platform production lines. It combines modular component assembly and supply chain resources to offer car manufacturers a comprehensive development service, reducing their upfront development time and costs. This enables manufacturers to concentrate on brand marketing.

Foxconn’s active push into CDMS may prompt many traditional automakers to reevaluate the core value of in-house manufacturing, reduce costs, and expand their customer base, offering a solution to the current challenges faced by the industry.

3. While Automakers Predominantly Continue to Independently Develop Platforms, Foxconn Must Expedite Its Efforts to Compete for Next-Generation Platform Manufacturing Opportunities

Despite the considerable costs associated with platform development, many automakers have already invested resources in creating their initial NEP (New Electric Platform). In the early stages of new energy vehicle development, it attracted various capital investments, with ample development funding and a relatively high fault tolerance.

Consequently, many automakers boldly invested in building their dedicated platforms. However, as market competition intensifies, automakers are likely to exercise greater caution in various investments.

For some automakers, the timing to reintroduce the CDMS model for the next-generation platform planning could be optimal for Foxconn to make its entry. However, outsourcing the production of new energy vehicles may entail sacrificing their uniqueness, which can influence the types and quantities of vehicles that automakers are willing to outsource.

Moreover, automakers tend to be more conservative compared to the electronics industry, and they might have concerns that outsourcing to Foxconn could inadvertently nurture potential competitors.

Furthermore, if automakers only view outsourcing as a financial adjustment or a temporary strategy, the sustainability of such orders becomes uncertain.

While the Luxgen N7, built on the Model C platform under the CDMS approach, has achieved promising results in its presale, marking a successful initial step, expanding the economies of scale for CDMS will require Foxconn to seize the right timing to secure more outsourcing orders from international automakers.

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