Chinese automakers SAIC and Geely have “never” had private tariff negotiations with the European Commission over the prices of their China-made electric vehicles sold in the region, according to statements provided by the companies to Chinese media outlets on Thursday. Rather, they have “always” been working on the matter with the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), a government-backed industry group authorized by multiple automakers to proceed with negotiations (quotes translated by TechNode).

The news comes after China’s Ministry of Commerce on Oct. 12 publicly criticized (in Chinese) the European Union for conducting separate price commitment negotiations with some companies, warning that this could “shake the foundations” of bilateral tariff negotiations. According to a document published by the European Commission on Tuesday, SAIC, Smart (an EV brand jointly owned by Mercedes-Benz and Geely), and Geely-owned Volvo submitted alternative price commitment proposals in case an overall plan offered by CCCME was not accepted in Europe.

State-owned SAIC, a long-time partner of Volkswagen and General Motors, also announced that it was filing a lawsuit at the European Union’s Court of Justice after the additional EU tariffs ranging from 7.8% for Tesla to 35.3% for SAIC took effect on Wednesday, Reuters has reported. China stated it does not agree with or accept the ruling, saying it will continue the ongoing negotiations with its European counterpart to establish a price floor on Chinese EVs. The consultations started in mid-September after China’s commerce minister Wang Wentao and EU trade commissioner Valdis Dombrovskis held talks in Brussels.

Xpeng Motors is shifting towards a  camera-based sensor system and away from expensive lidar, on Thursday providing a handful of new details on its assisted driving technology. A new electric sedan also made its debut at an event, bringing the company into direct competition with popular models including the Tesla Model 3, BYD’s Han, and the Xiaomi SU7.

Why it matters: The P7+, a completely new model following in the footsteps of its first sedan P7 launched four years ago, is expected to go on sale at a competitive price point and replicate the initial success of its cheaper-than-expected and technologically advanced MONA M03.

• Xpeng reduced the cost of making its vehicles by 25% with this B-class model “through technological advancements,” expecting it to become a top-seller in the second half of this year, chief executive He Xiaopeng told investors during an earnings call in May.

New image sensors: CEO He called Xpeng’s new lidar-less, vision-based approach, “the Eagle Eye,” saying it will be the first in the industry to harness the capabilities of the so-called lateral overflow integration capacitors (LOFIC), which allow its vehicle’s cameras to capture scenes with a large brightness discrepancy.

• Image sensors usually have a limited dynamic range of brightness that can be photographed, creating overexposed or underexposed images in difficult lighting conditions such as nightscapes and backlight. However, those with a LOFIC structure have a wider dynamic range, meaning objects could be captured with a more balanced exposure.
• This makes it possible to avoid blowing out the front vehicle when the cameras on an Xpeng’s car try to recognize it at points of extreme illumination such as at the exit of a tunnel, according to a slide presentation seen on Thursday by TechNode. Xpeng said the P7+ will integrate 26 sensors, mainly cameras, as well as dual NVIDIA’s DRIVE Orin chips, but no lidar units.
• The technology is being adopted in more premium and newer consumer electronics devices due to the sophistication of the circuit’s structure, with Sony and Samsung among the major suppliers, while Chinese firms are making their replacements. Smartphone maker Honor in March announced its Magic 6 Ultimate would feature a main camera using image sensors with a LOFIC structure from Omnivision.

A sporty sedan: The P7+ is a sporty hatchback-style sedan with a gently sloping rear roofline, and a spacious interior with an impressive headroom of 973 millimeters for passengers in the rear row. With a wheelbase of three meters, it has a boot capacity of 725 liters which can rise to 2,221 liters with the rear seats down.

• All the variants come with an electric motor mounted on the rear wheel with 180 kW or 230 kW of peak output. It is powered by an affordable iron-based battery pack featuring 60.7 or 76.3 kilowatt-hour (kWh) capacity, achieving a driving range of 602 kilometers and 710 km, respectively.
• The fives-seater boasts premium comfort for both driver and passengers, as all the seats can be heated and ventilated with massage options as standard. It also provides a folding table and an eight-inch infotainment screen for rear passengers.
• The P7+ competes with rivals’ models such as the Tesla Model 3, Xiaomi’s SU7, and the BYD Han, which are priced from RMB 231,900 ($32,764), RMB 215,900 and RMB 165,800, respectively. Xpeng will reveal the pre-sale price of the car at the Paris Motor Show next Monday. A redesigned P7 went on sale last March at a price range between RMB 249,900 and RMB 339,900.

Context: Xpeng is among the Chinese EV makers pivoting to self-driving technology that uses low-cost cameras, following the lead of Tesla, over the past two years. Its advanced driver assistance system (ADAS) will be able to work on all Chinese roadways in the fourth quarter of this year, providing users with “door-to-door” automated driving across the country, the company said in July.

NIO has signed an agreement for a combined RMB 3.3 billion ($471 million) investment in its China unit with three existing state-owned investors, the latest show of strong ties between the electric vehicle maker and the Chinese authorities, and local authority support for the industry.

The three investors, namely Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment Co., Ltd., and CS Capital Co., Ltd. will collectively invest over RMB 3 billion into NIO Holding Co., Ltd. Meanwhile, the US-listed EV maker, with a production base in the eastern Chinese city of Hefei, is set to pump RMB 10 billion in fresh capital into the business through the purchase of new shares in its Chinese entity, according to an announcement.

“As China approaches its 75th anniversary, NIO China has once again received support from shareholders for increased capital. Four years ago, Anhui and Hefei rescued NIO from the intensive care unit,” William Li, NIO’s founder, chairman, and chief executive, said on Sunday in a public post on WeChat, China’s ubiquitous messaging app (our translation). “NIO has transformed from a small seedling into a little tree capable of withstanding some storms. As this little tree grows into a big tree, and eventually into a forest, Hefei and Anhui continue to nurture and cultivate it.”

Hefei Jianheng is a subsidiary of state-owned Hefei City Construction and Investment Holding (Group) Co., Ltd., while Anhui Provincial Emerging Industry Investment is fully owned by the regional bureau of the State-owned Assets Supervision and Administration Commission of the State Council. CS Capital is largely controlled by the State Development and Investment Corporation (SDIC), public records show. The new investment demonstrates the strategic investors’ strong recognition of NIO’s industry leadership, as well as firm support for the high-quality development of the EV industry, the company said in the announcement.

Upon completion of the deal, expected by the end of this year, NIO’s stake in its Chinese entity will be diluted to 88.3% from 92.1% as of last year, with the three investors and others holding the other 11.7%. The deal comes four years after the Chinese EV maker raised RMB 7 billion from the three investors, among others, offering the cash-strapped company a crucial lifeline, TechNode reported.

NIO delivered 128,100 vehicles from January to August, a 35.8% growth from a year earlier, and launched the first model under the mainstream sub-brand Onvo on Sept.19.

Chinese automakers are escalating their battle with Tesla for a bigger share in the country’s electric vehicle market. As SAIC and Changan said on Thursday, they have benchmarked their new sports utility vehicles against the US automaker’s Model Y crossover.

Changan’s premium EV brand Avatr launched (in Chinese) its first model with both full battery electric and extended-range hybrid (EREV) options in a move to expand its lineup and improve sales against the backdrop of slowing demand for pure EVs. The EREV version of the Avatr 07 has a starting price of RMB 219,900 ($31,358) and a 38 kilowatt-hour (kWh) battery pack that can charge from 10% to 80% in 15 minutes. Meanwhile, the entry-level, all-electric variant costs RMB 10,000 higher and travels 650 kilometers (404 miles) on a full charge.

Avatr, jointly developed by state-owned Changan, battery maker CATL, and Huawei, offers Huawei’s Advanced Driving System (ADS) and the HarmonyOS, the tech giant’s alternative to Google’s Android operating system, as standard features on the mid-size SUV, as it has done with previous models. The EV maker, a major investor in Huawei’s automotive business unit, delivered only about 36,400 vehicles in the first eight months of this year with two models on offer, the large SUV Avatr 11 and the 12 sedan.

Also on Thursday, IM Motors introduced a redesigned LS6 all-electric crossover, which the SAIC-controlled luxury EV maker said was the first model in its class to feature a four-wheel, steer-by-wire system that produces more exact steering ratios than a traditional mechanical steering system. This technology, something Tesla has been keen on, offers enhanced comfort and driving dynamics. All the LS6 variants feature an advanced driver assistance system (ADAS) that enables functions such as lane switching on city streets without relying on high-definition maps, similar to Tesla’s Full Self-Driving software (FSD).

The cheapest LS6 now costs RMB 216,900, representing a 6% cut from its predecessor, while the driving range has been boosted by 12% to 625 km. The top-end, dual-motor five-seater travels 750 km on a single charge and can sprint from 0 to 100 km/m (62 mph) in 3.5 seconds, with a sticker price of RMB 279,900. IM Motors, a partner to Volkswagen’s Audi brand, has four models on sale and delivered 34,719 vehicles from January to August.

READ MORE: Huawei’s answer to the Tesla Model Y is coming

Huawei is coming after the Tesla Model Y with its second EV model under the Luxeed brand in a partnership with Chinese automaker Chery, featuring its advanced driver assistance system (ADAS), a longer driving range, and a roomier interior, all at a similar price. 

The entry-level Luxeed R7 travels 667 kilometers (415 miles) on a single charge, powered by an 82 kilowatt-hour (kWh) battery pack from Chinese supplier CALB at a price tag of RMB 259,800 ($37,022), which is RMB 9,900 more than Tesla’s Model Y. It drives autonomously on Chinese expressways using the basic version of Huawei’s Advanced Driving System (ADS) without a lidar unit for remote sensing.

The higher-end versions of the compact crossover have a maximum driving range of 802 km and can navigate Chinese urban roads, for a cost of between RMB 299,800 and RMB 339,800. Customers pay RMB 10,000 on top to access the more premium Huawei ADS 3.0 software. By comparison, Tesla sells the top-end Model Y at a sticker price of RMB 348,000 and is looking to roll out its so-called “Full Self-Driving” software in the country in the first quarter of 2025, TechNode reported.

The five-seater vehicle is said to have more head and leg room than the Model Y and a boot capacity of 837 liters which rises to 2,130 liters with the rear seats folded. Still, it faces strong competition not only from the US automaker but also from local rivals, including NIO’s sub-brand Onvo and Geely-controlled Zeekr which launched similar offerings for less money last week. 

Huawei and Chery delivered only 18,091 units of the Luxeed S7 sedan from January to August, compared with more than 254,045 Aito-branded EVs sold by Huawei and partner Seres. Tesla shipped 354,693 Model Y vehicles from its Shanghai Gigafactory over the same period, according to figures released by the China Passenger Car Association, and sales of the world’s top-selling EV model totaled 1.22 million units last year, said market research firm JATO Dynamics.

READ MORE: Huawei, Chery introduce second joint model following setback

NIO on Thursday announced its foray into the Chinese ultra-competitive mainstream vehicle segment with the launch of the first model under its family-oriented lineup Onvo, featuring class-leading utility at nearly half the price of Tesla’s Model Y by leveraging its unique battery leasing program.

The cheapest Onvo L60 crossover costs only RMB 149,500 ($21,154) under the NIO’s Battery-as-a-Service (BaaS) leasing program, which allows customers to buy the EV without ownership of the battery pack, versus RMB 206,900 including the pack. Priced at RMB 100,400 cheaper than a China-made Tesla Model Y, the car aims to be a meaningful competitor not only to the world’s top-selling model, but also to popular gas-powered vehicles such as Volkswagen’s Tiguan L and the Toyota RAV4.

The management is witnessing “a surge” in order intake following the launch, as dozens of millions of Chinese netizens watched the livestream, William Li, founder, chairman, and chief executive, told reporters in the eastern Chinese city of Hefei on Friday (our translation). More than 60% of the customers choosing the Onvo L60 consider battery-swapping technology, part of NIO’s broader BaaS strategy, as the most desirable attribute, according to Li.

BaaS becomes the key

Boasting significant ownership cost savings and fast battery swapping, the Onvo L60 is the first serious contender from NIO to challenge the Tesla Model Y, and could be different from the previous Chinese SUVs trying to win over families from the global EV crown.

Stuffed with an autonomous driving stack of 30 sensors, Qualcomm’s latest processor for infotainment applications, and attractive extras such as a huge, 52-liter car refrigerator, the affordable, functional compact sports utility vehicle offers more than RMB 100,000 worth of specifications than the Model Y. That’s according to Ai Tiecheng, president of the Onvo brand, speaking at the launch event on Thursday.

Moreover, the management expects NIO’s battery swap service, with each time taking around three minutes from an ever-expanding power infrastructure network, to mitigate the range anxiety from Chinese consumers and even remove the real obstacle of insufficient chargers away from EV driving. Onvo owners can replace their empty battery packs for a charged one in over 1,000 NIO battery swap stations nationwide by December, and more than 2,500 such facilities will be available by the end of next year, said Ai.

The standard range version of the L60 went on sale on Thursday with the impressive starting price plus a leasing fee of RMB 599 per month for the use of a 60 kilowatt-hour (kWh) battery pack that offers a 555 kilometer (345 miles) driving range. The long-range version costs the same amount with a monthly rental fee of RMB 899, claiming a driving range of 730 km with an 85 kWh battery pack, versus RMB 235,900 including the pack. A typical Onvo owner would pay an additional RMB 100-200 each month in electricity costs, according to Ai’s estimates.

“Overall it costs you roughly a tank of gas per month,” Ai added (our translation). NIO said the total energy consumption of the car is 12.1 kWh per 100 km, compared with the 12.5 kWh achieved by the Model Y.

A turning point

The success of the L60 is of vital importance to whether or not 10-year-old, loss-making NIO would become a stronger and profitable player in a bruising battle where even some of the bigger rivals are already feeling the heat. Global auto giants from Detroit’s big three to Japan’s leaders have been hurt in China, and NIO is joining an expanding group of local players in bringing their better-equipped EVs at relatively affordable prices into the market.

Against the backdrop of a slowing economy, Onvo’s first model was precisely developed to meet the real demands of Chinese families who take space, safety, comfort, and affordability in the first place, rather than performance features like extra torque or horsepower, according to NIO.

NIO said the five-seater crossover could comfortably accommodate passengers in a carefully designed cabin, providing larger headroom and legroom across both rows than the Tesla Model Y. Owners could also access popular high-tech features such as an AI voice assistant from an in-house developed operating system, as well as perform autonomous driving functions in more than 700 Chinese cities and 2,700 counties, powered by advanced chips and AI algorithms.

Li said the company is now ready for a production ramp-up with parts suppliers, with a timeline of October to make 5,000 units of the car and increase the monthly output to 16,000 in January. Another 20,000-unit milestone could follow next March, Li added, again promising a “decent” gross margin for the model. NIO’s CEO earlier this month had briefed investors about the outlook of delivering 20,000 Onvo EVs sometime next year and setting a 15% margin goal for the Onvo brand in the long term. 

Having not had a distinct hit product in recent years, NIO and peer Xpeng Motors are showing signs of making a turnaround with their multi-brand strategies.

READ MORE: NIO CEO details thinking on first Onvo EV, battery swap alliance

​US-listed shares of Xpeng Motors climbed 6.5% after the Chinese electric vehicle maker received more than 10,000 non-refundable orders for the first model under its new budget brand MONA in the first hour after it was unveiled on Tuesday. 

The company’s cheapest model, featuring an assisted driving system similar to Tesla’s Full Self-Driving (FSD) software at a price that’s half that of the popular Model 3, is expected to capture market share from top-selling offerings including the BYD Qin and Nissan’s Sylphy.

Camera-based vision: Xpeng eliminated laser sensor units from the MONA M03 in a move to accelerate the adoption of a camera-only approach to vehicle autonomy. Lidar is more often used to capture three-dimensional information for autonomous navigation on more luxurious Chinese EV models priced mostly from RMB 200,000 ($28,060) and above. 

• Instead, the entry-level M03, with a price tag of RMB 119,800 ($16,808), integrates 20 or so more affordable sensors, including a dozen ultrasonic sensors and seven exterior cameras, to enable safety-based driver assistance functions such as lane keeping assist, which enables the EV to follow the preceding vehicle. Xpeng’s Xpilot system would also maneuver the car in and out of challenging situations such as dead-end roads.
• The top-end version of the MONA M03, priced at RMB 155,800 ($21,859), will be able to function by itself on all Chinese roadways using the same hardware stack as well as more complex algorithms next spring when delivery is set to begin. This makes the car the only model available to the market that offers advanced driver assistance capabilities within the RMB 200,000 price range, said chief executive He Xiaopeng. 
• Xpeng also provided more details about its plan to make EVs with highly autonomous capabilities as part of the launch. The XNGP advanced driver assistance system (ADAS), an FSD-style technology, should require drivers to take over the wheel and steer manually less than once per 100 kilometers (62 miles) by the end of next year. The company added its cars could be completely driverless in low-speed traffic scenarios in 2026. 

READ MORE: Chinese companies take on Tesla’s Full Self-Driving with non-lidar approach, end-to-end AI 

Aiming for the youth market: Xpeng on Tuesday reported a better performance than some rivals’ offerings in terms of order intake for the MONA M03, saying the car racked up more than 10,000 pre-orders with non-refundable deposits of RMB 5,000 in roughly the first hour after it was released. 

• Positioned to be “the first car for China’s young generation,” the all-electric compact sedan boasts a large interior space, efficient energy consumption, and yet a relatively simple interior in order to attract the country’s tech-savvy but budget-conscious customers, such as fresh graduates.
• Measuring 4.8 meters in length and spanning a 2,815-millimeter-long wheelbase, the car was designed based on aerodynamic principles with sleek coupe-style body lines. This contributes to a drag coefficient of 0.194 and energy consumption of 11.5 kilowatt-hours per 100 kilometers (7.15 kWh per mile). 
• The single-motor M03 offers a decent range of up to 620 km (385 miles) on a single charge, powered by an affordable lithium iron phosphate (LFP) battery pack from BYD, and can accelerate from 0 to 100 km/h (62 mph) in 7.4 seconds. It also gives an additional 200 km of range after 15 minutes of charge. 
• Still, the car’s well-built but simple interior features may leave some drivers wanting more. An M03 buyer would have to pay an additional RMB 599 to equip their car with a conventional dashboard screen as an add-on component, for example. Xpeng stated that the car would function properly with a 15.6-inch centre screen. 

Context: Xpeng is expecting a strong sales recovery with the launch of the MONA M03 at a lower-than-expected price tag, as CEO He in April said he hoped that the car would sell better than the Xiaomi SU7 in the second half of this year, Reuters reported. The smartphone maker has been delivering more than 10,000 units per month of the $30,000 sports sedan since June. 

• He also anticipated annual sales of the car could reach 100,000 units when Xpeng revealed last year that it would acquire the EV business of ride-hailing giant Didi, including the MONA project, which stands for “Made of New AI.” He added on Tuesday that the two companies spent RMB 4 billion on the project over four years. 
• The gross margin of the M03 could be at a low single-digit level initially, however, as the Volkswagen-backed EV maker ramps up production and looks to keep its price as low as possible, Jefferies analysts wrote in a note on Aug. 20. 
• BYD’s Qin Plus was the top-selling model in the price segment of between RMB 120,000 and RMB 180,000 in China over the past six months with roughly 154,000 units sold, figures compiled by Chinese auto service platform Dongchedi showed.

Audi’s new A5 sedan and all-electric Q6 e-tron crossover will be the company’s first models to use Huawei’s advanced driver assistance system (ADAS), enabling the cars to change lanes and overtake autonomously in Chinese cities, local media has reported.

Why it matters: The news marks the latest development in a six-year collaboration between Audi and Huawei. The companies announced in mid-2018 that they had signed an agreement to develop a level 4 autonomous driving system that could take complete control of a vehicle without human intervention in Chinese urban traffic environments.

• Audi had been planning to incorporate Huawei’s autonomous driving technologies in future China-made models scheduled for launch in 2025 and had been asked to buy small stakes in Huawei’s intelligent vehicle software and components firm, Reuters reported in December.

Details: The new A5 sedan, the first model that utilizes Audi’s last new internal-combustion architecture called Premium Platform Combustion (PPC), is expected to make its China debut at this year’s Guangzhou Auto Show in the capital of Guangdong province in November. That’s according to people familiar with the matter who spoke to Chinese media outlet iYiou.

• Sources added that the hatchback-style sedan, which replaces the A4 model in the German firm’s vehicle lineup, will also incorporate Huawei components such as electronic control units, and is intended to be launched at the Auto Shanghai Show 2025 next April. The A5 will be manufactured by Audi and FAW Group, one of its Chinese partners.
• Meanwhile, there has been speculation that the Q6 e-tron, Audi’s first car to use Volkswagen’s advanced premium platform electric (PPE) platform, will also use Huawei’s ADAS. Meanwhile, Audi is working with Chinese self-driving car startup Momenta on automated driving for a separate new series which has been under development with SAIC, the German firm’s other local manufacturing partner, the report said.

Context: Volkswagen’s Audi is not the only international car major open to teaming up with Huawei. Toyota has reportedly agreed to buy Huawei’s autonomous driving stack for its China-made electric vehicles, while a growing number of Chinese car manufacturers are expanding their collaborations with the tech giant. Huawei has estimated that around 500,000 cars equipped with its tech will be on the roads by year-end, Reuters reported.

• Huawei is gaining traction thanks to growing customer demand for intelligent driving functionalities in the world’s largest auto market. One company executive said last week that the latest Advanced Driving System (ADS) offers Chinese users better safety in a point-to-point autonomous experience than Tesla’s Full Self-Driving (FSD) system, as TechNode reported.
• Audi reported sales of more than 320,000 luxury cars in China for the first half of this year, falling slightly by 1.9% from the previous year and lower than the total sales of BMW and Mercedes-Benz. The German luxury carmaker has been planning a series of measures to defend its market share as domestic rivals such as Li Auto and NIO are on the rise, including buying EV technologies from SAIC and designing a new logo for future vehicles, reported Reuters.

China’s CATL on Aug 10 opened its first ever bricks-and-mortar store, with an enormous site in Chengdu showcasing nearly 100 electric vehicle models from dozens of automakers, in a move intended to beef up its brand image as a leading EV battery maker.

Why it matters: Entitled NING Space, the store is the latest brand-building initiative by the world’s largest battery maker by volume, which not only wants its automobile clients to be familiar with its products but hopes to influence end customers’ preferences, as smaller competitors chase market share by cutting prices.

Details: CATL’s first major physical location accounts for approximately 13,800 square meters (148,542 square feet) of Chengdu, the capital of China’s populous southwestern province of Sichuan.

• The facility has nearly 100 EV models on display, including top-sellers such as the Tesla Model 3, Li Auto’s L7, and the Aito M7, all powered by CATL’s lithium-ion batteries.
• It does not serve as a sales location but focuses on brand building and customer education. As Vice President Li Ping emphasized to participants at the site’s opening ceremony, CATL does not make or sell cars, Caixin reported (in Chinese).
• CATL said the NING Space will play an educational role, with its employees there to provide customers with tailored recommendations and to hold regular marketing events to tell users the EV story from a battery-maker’s perspective.
• Meanwhile, the battery giant is establishing an independent after-sales service network to provide personal buyers with maintenance and repairs for EV batteries. It boasts 112 such service centers nationwide, versus more than 600 business-to-business locations.

Context: CATL on July 26 reported mixed results for the first half of this year while its net profit jumped 10.4% from a year earlier to RMB 22.9 billion ($3.2 billion). Yet revenue dropped 11.9% year-on-year to RMB 167 billion over the same period, which the company attributed to a significant drop in the cost of raw materials needed to produce EVs.

• The battery supplier, headquartered in the eastern Chinese city of Ningde, remains the world’s top player in the industry, recording 137.7 gigawatt-hours (GWh) worth of batteries and securing a market share of 37.8% from January to June, according to figures published by South Korean market research agency SNE Research.
• The company has been launching advertising campaigns and attending marketing events over the past year to share its founder’s vision for green energy and showcase its signature products such as the Shenxing battery.
  

Correction: An earlier version of the article miscalculated the floor area of CATL’s first store which is 13,800 square meters (148,542 square feet), rather than 13,800 square kilometers (5,328 square miles) as mentioned.

Huawei on Tuesday released the latest version of its advanced driver assistance system (ADAS), saying  it would enable vehicles to carry out most driving functions automatically from garage to garage while delivering a better safety performance than Tesla’s most advanced Full Self-Driving (FSD) system.

The Chinese technology giant also launched the Stelato S9, the first model under its new luxury brand with manufacturing partner BAIC, at a lower-than-expected price range of RMB 399,800 to RMB 449,800 ($55,664-$62,625). The five-meter-long full-size luxury sedan is targeted at consumers of premium offerings such as the Mercedes-Benz S-Class and BMW’s 7 Series.

Huawei’s self-driving approach: Huawei’s latest Advanced Driving System (ADS) now allows cars to navigate complex urban environments nationwide automatically, with features such as lane switching, said Richard Yu, chairman of the board of directors of Huawei’s Intelligent Automotive Solution business unit, at a press conference in Beijing. Yu added that the ADAS will enable drivers to pass toll gates on Chinese expressways and at public parking lots without manual engagement. 

• In a demonstration video, Huawei boasts of a point-to-point autonomous experience with no human input at all, as the Stelato S9 navigates from one garage to another, autonomously piloting itself on Chinese city streets, and through a series of roundabouts and intersections. The female driver in the video is shown drinking a coffee and applying make-up behind the wheel as the car drives into and out of the garages.
• Huawei said it is transitioning to an “end-to-end” autonomous driving method, defined by Tesla’s Elon Musk as a state whereby each functionality of the ADAS is carried out by a single gigantic neural network rather than by predefined, explicitly coded rules. However, Huawei’s slides showed that the company uses separate neural networks for multiple tasks such as visual perception and path planning, in a move similar to that of rivals Li Auto and Xpeng.
• Yu said users would see an improvement in decision-making speed and more human-like behavior from the ADS 3.0 version, as well as a more agile automatic emergency braking feature in a joint effort with the company’s unnamed German supplier. Huawei claimed the system would even apply brakes automatically when a collision was imminent with a lead or rear vehicle, as well as if the system detects that drivers intend to jam the brakes but mistakenly slam on the accelerator.
• In addition, Yu spoke publicly about Tesla’s FSD after his employer tested the rival’s system in multiple cities in the US and Canada, saying the smartphone maker has a better strategy for dealing with rare or complex road scenarios, known as corner cases. “Tesla has made big progress with its FSD, but it has to raise the lower limit of the system’s performance as we encountered several incidents where a Tesla almost crashed into stationary objects such as trucks,” Yu added (our translation).

Stelato’s first model: Huawei on Tuesday stepped up its offensive against international luxury carmakers as the first Stelato model went on sale at a starting price of RMB 398,000, roughly RMB 50,000 lower than the pre-sale price and below market expectations. Yu said the S9 executive sedan was “fully ahead of” rivals’ offerings, such as the Mercedes-Benz S450L and Maybach S480, with a more efficient interior space, improved aerodynamic properties, a longer driving range, and faster acceleration.

• The first full-size luxury sedan under Huawei’s Harmony Intelligent Mobility Alliance (HIMA), a joint EV effort between Huawei and its multiple manufacturing partners, is powered by a 100 kilowatt-hour (kWh) battery pack for a driving range of up to 816 kilometers (507 miles). The battery, jointly made by CATL and Huawei, also adds 200 km on a five minute charge, when the car is used with an 800-volt capable fast charger.
• The Stelato S9 boasts a faster acceleration to 100km/h (62 mph) than existing offerings – in 3.9 seconds – as well as a drag coefficient (Cd) of 0.193, said to be the lowest among production sedans in its segment. It also integrates a lidar unit to measure and map the surrounding environment, in addition to cameras and radar, which the tech giant believes could provide extra input to its ADAS system, compared with Tesla’s pure-vision approach.
• Delivery is scheduled to begin immediately on Wednesday, demonstrating BAIC’s pledge to ”go all-in“ in its partnership with Huawei and treat the new model as its “top priority,” as chairman Zhang Jianyong told the conference. A major partner of Mercedes-Benz in China, BAIC recently established a new plant capable of making 120,000 EVs annually with Huawei and plans to expand that capacity to 300,000 EVs, Zhang confirmed on Tuesday.

READ MORE: Chinese companies take on Tesla’s Full Self-Driving with non-lidar approach, end-to-end AI

Chinese electric vehicle makers BYD and Li Auto set new records for deliveries in July, usually a low season for auto sales, following the strong momentum built in the previous month and likely extending their lead over rivals as competition in China’s EV sector remains intense.

Why it matters: The numbers come against a stormy backdrop with a growing number of Chinese automakers taking aim at each other in the press, as a cutthroat price war has been running for more than a year and a half, deepening losses of most players.

• Li Auto was put in the dock of public opinion recently for publishing weekly sales figures including those of its major rivals such as Huawei-backed Aito, Geely-affiliated Zeekr, and Xiaomi, pushing most of the rest of the industry to complain. On July 30, Ma Lin, an assistant vice president of brand and communication at NIO, quoted China’s top leadership on social media and called on Li Auto founder Li Xiang to stop the “low-level competitive behavior” that has gone on since last April (our translation).
• On the same day, Xpeng chief executive He Xiaopeng openly criticized some rivals competing over sales volumes on a weekly basis rather than leading technologies such as end-to-end neural networks, without mentioning Li Auto by name. Victor Yang, a senior vice president at Geely, also publicly endorsed their opinions on the Chinese microblogging platform Weibo. The comments came immediately after China’s top decision-making body the Politburo pledged to prevent “the vicious competition of involution” in domestic industries, Caixin reported.
• Top Chinese auto business leaders overall appear split on the issue of competition. At this year’s China Auto Chongqing Summit in June, BYD chairman Wang Chuanfu said he advocated for businesses to embrace the competitive spirit and strive for excellence, while other counterparts, such GAC’s Zeng Qinghong and Geely’s Eric Li, said disorderly competition could result in inferior quality and shrinking profits. Richard Yu, chairman of Huawei’s Intelligent Automotive Solution business unit, playfully called BYD “the king of Juan,” which in Chinese means the top player amid fierce market competition.

Details: BYD announced on Thursday (in Chinese) that it sold 340,799 EVs in July, the company’s best-ever monthly result this year and just 244 units fewer than its all-time high in December. Still, the Chinese EV giant saw a lackluster performance in its premium lineups. Fangchengbao’s sales plunged 31.3% to 1,842 units from a month earlier, while Yangwang’s sales of 439 units remained flat compared to June.

• Li Auto posted its best-ever monthly result, delivering 51,000 plug-in hybrid and fully electric vehicles in July, bringing its total delivery count for the year to almost 240,000 units. This was attributed to the strong sales of the L6, its most affordable crossover, which accounted for roughly 40% of its deliveries last month. The $34,500 extended-range hybrid crossover travels up to 1,390 kilometers (864 miles) on a full charge and tank.
• Stellantis-backed Leapmotor surpassed the threshold of 20,000 units for the second month in a row, as sales of its C16 sports utility vehicle gained momentum. The company has positioned the vehicle as a cheaper alternative to Li Auto’s L9 with a similar appearance, range, and practicality. The Hong Kong-listed EV startup said on July 22 it had more than 10,000 non-refundable orders for the six-seater crossover at a starting price of RMB 155,800 ($21,610).
• Meanwhile, sales of Geely, Great Wall Motor, NIO, and Huawei-backed EV makers were down slightly. NIO delivered 20,498 units in July, only 711 less than a month earlier, and passed the 20,000 unit milestone for a third consecutive month, though the company has been providing fewer cash incentives to buyers since July 22.
• Huawei’s Harmony Intelligent Mobility Alliance (HIMA), which for now includes Aito and Luxeed brands only, delivered 44,090 units last month, representing a 4% decline from June, in the face of competition from players such as Li Auto. The new energy vehicle (NEV) sales of Geely and Great Wall Motor, which include all-electrics and plug-in hybrids, decreased 10.5% and 7.5% month-on-month in July, respectively.
• Xiaomi, Xpeng Motors, and CATL-backed Hozon Auto each delivered more than 10,000 units last month. China’s smartphone giant is aiming for an annual delivery of 120,000 units of its first model, an all-electric sports sedan with styling similar to the Porsche Taycan and priced at less than $30,000. Xpeng’s July deliveries increased 4% from June and the company expects to improve the performance of its assisted driving technology later this year.

Context: China’s sales of new energy passenger vehicles increased 31% year-on-year but declined 5% month-on-month to roughly 722,000 units from July 1-28, according to figures released by the China Passenger Car Association. Increased promotions boosted sales in the April-June quarter, including some advance buying from customers looking to nab deep discounts, said the industry group.

Chinese carmakers Geely, NIO, and Huawei-backed Aito on Monday reported record deliveries of electric vehicles for June as the country’s EV segment recovery gathers momentum. Meanwhile, Huawei and Li Auto are emerging as the leaders among the newer players, despite BYD and Tesla still enjoying a near-duopoly position in the world’s largest EV market.

Why it matters: The rally, which contrasts with overall flat sales in the market, comes amid a temporary cooling-off period for the industry-wide price war on electric autos in the country. It also reflects companies’ sprints to make deliveries by the end of the first half of 2024. A new wave of consolidation and some reshuffling is also speeding up within the sector, with fewer smaller players staying in the game and some legacy giants falling behind.

Details: Li Auto topped the ranking among young EV makers by delivering 47,774 cars to customers in June, up 36.4% from a month earlier, as sales of its most affordable extended-range hybrid crossover the L6 started to ramp up after its April launch. Chief executive Li Xiang also attributed the sales recovery to improved efficiency, as the company restructured its sales and delivery teams recently following a failed launch of its first all-electric model, the Mega, in March.

• Huawei continues to put pressure on Li Auto despite delivering 1,633 fewer vehicles than the Nasdaq-listed EV startup in June. The Chinese technology giant said its Harmony Intelligent Mobility Alliance (HIMA), which for now includes Aito and Luxeed brands only, delivered 194,207 vehicles from January to June, which is more than the 188,981 units posted by Li Auto. Huawei will launch a new premium brand called Stelato with partner BAIC next month after it began taking orders for the first model, the S9, on May 31.
• Among traditional competitors, Geely set a new record for EV sales of 65,959 units in June. In particular, deliveries of its mainstream luxury brand Zeekr surpassed the threshold of 20,000 units for the first time since its inception. Geely management on Tuesday announced it was raising this year’s sales goal by 5% to 2 million units, while Zeekr’s annual outlook of selling 230,000 units remains on track. Lynk & Co sold 24,439 cars last month, 62% of which were EVs, a record high percentage for the Geely-Volvo joint brand.
• Changan’s EV sales rose 61% year-on-year and 14.7% month-on-month last month to roughly ​​64,000 units, of which 16,659 were Deepal-branded EVs. The automaker said it received more than 15,000 refundable orders for its first off-road sports utility vehicle, the Deepal G318, priced from RMB 175,900 ($24,186), five days after it was launched on June 13. Chery’s EV sales surged 181.5% to 180,947 units during the first half of this year, thanks to strong overseas demand for its budget cars, such as the QQ Ice Cream and Little Ant.
• Both NIO and Leapmotor reached the 20,000-unit milestone in June. NIO has sustained the growth momentum that it’s seen since April and is demonstrating the potential to deliver 30,000 cars a month once its first mainstream car goes on sale in September. Leapmotor reached the milestone for the first time last month, as the Hong Kong-listed firm now positions itself as a cheaper alternative to Li Auto. Smartphone giant Xiaomi handed over more than 10,000 SU7 sedans to customers in its third delivery month.
• Meanwhile, Tesla is feeling the heat. Sales of its China-made vehicles declined 10.5% year-on-year to 426,623 units during the first half of this year, including exports, according to figures released by the China Passenger Car Association (CPCA). The US automaker said on Tuesday it delivered 443,956 vehicles in the three months to June 30, a smaller-than-expected 5% drop from a year earlier and up 14.8% from the previous quarter, sending shares up more than 10%, Reuters reported.

Context: China’s retail passenger EV sales volume is expected to reach 864,000 units in June, representing a 30% growth from the same month last year and a 6% rise from May, while overall car sales declined 8% year-on-year, the CPCA estimated on Wednesday.

READ MORE: China’s EV sales recovery picks up pace in May, helped by promotions

As Tesla’s most advanced driver assistance software (ADAS) is becoming an immediate threat due to its impending arrival in China, major Chinese electric vehicle makers and auto tech companies are hurrying to pivot their strategies towards a more pragmatic yet challenging approach to developing similar offerings. Although Tesla’s rivals have for years been looking to cut out expensive components and master the newest artificial intelligence models, the game seems to be different this time.

Both NIO and Xpeng Motors are now embracing the so-called computer vision approach, championed by Tesla, hoping their upcoming models will achieve human-like downtown driving in cities via the use of fitted cameras and radar, rather than more expensive laser sensor units. Sinpro.ai, a supplier to NIO of ultra-high-resolution four-dimensional (4D) imaging radar, said it is prepared for delivery later this year with an annual capacity of 800,000 units. Tesla has reportedly replaced radar sensors on some models after years of attempting to remove them.

“It will be a difficult task for Tesla’s Full Self-Driving (FSD) software to deal with scenarios in China where it is common that a large number of electric scooters are usually ahead in the same lane with motor vehicles,” Li Liyun, vice president of autonomous driving at Xpeng, wrote on June 27 on Chinese Twitter-like microblogging platform Weibo. Xpeng is planning to remove lidar from its upcoming sedan, scheduled for launch later this year, local media has reported.

Xpeng and NIO are also following Tesla’s suit by transitioning to an “end-to-end” autonomous driving method after using modular-based neural networks that are heavily reliant on explicit coding. Meanwhile, more traditional automakers are turning to domestic tech companies for help, such as Huawei and DJI, to catch up with the latest AI trend. Despite big challenges pressuring the industry, some early movers have the potential to compete with the US pioneer, Liu Guanghao, partner at Shanghai-based venture capital firm Befor Capital, told TechNode.

READ MORE: China opens door wider to Tesla as local giants disrupt the EV sector with AI-defined vehicles

Vision-based approach

A break from previous strategies of using expensive chips and sensors to enable ADAS capabilities, the latest approach centers on reducing the cost of components in hopes of making more room for further price cuts. Many now have their eyes on the use of radar, ditched by Tesla in 2021 due to limitations in identifying stationary objects with low image resolution, as some parts makers now said it is coming close to lidar in terms of performance – but at a lower price tag.

“There is more overlap between lidar and our sixth-generation radar systems as we significantly improve the resolution,” Juergen Brandl, Head of Market China, Business Area Autonomous Mobility at Continental Group, told TechNode. “Radar could soon see through [objects] but lidar has some problems with the distance especially in difficult situations like fog and rain.” The German firm’s newest front-facing radar boasts a detection distance of 280 and 140 meters (174 and 87 miles) for vehicles and slow-walking pedestrians, respectively.

Advanced radar solutions like this also create three-dimensional point cloud datasets like lidars, helping automakers and developers move towards fully end-to-end models with raw data collection from multiple sensors to train their self-driving systems. “We can play a big role in the development of Level 2 plus ADAS systems in China,” Brandl said, adding that the company’s product is below the price of a lidar unit with “very good“ output in terms of point cloud data.

Some disagree however, saying the technology is still at an early stage. Production of Continental’s latest-gen radar started early this year and the company began delivering the world’s first 4D radar in 2021, which detects an object’s vertical information in addition to distance, direction, and relative velocity, generating more dense point clouds than a contentional radar. Meanwhile, major Chinese lidar makers have consistently enhanced the performance of their products and lowered the prices to just over RMB 1,000 ($137.6) per unit in recent years.

The key is whether 3D/4D radar could prove to be a more “cost competitive” option compared with lidar, said Liu. “I believe both [radar and lidar] have their special advantages and disadvantages,” Brandl said. ”I think time or the market will tell whether we need both of them or one solution only.”

Either way, prospects for early players are bright. Momenta, a self-driving car company backed by General Motors and Toyota, expects the bill of materials, or total cost of components, for the City NOA (Navigation on ADAS) function to be slashed to RMB 4,000-5,000 from the current RMB 7,000-10,000 in the next two years. The intent is to survive an unprecedented price war in China that has been ongoing for more than a year.

End-to-end AI

Chinese carmakers used to brag about their coverage of cities where their assisted driving software is said to enable cars to handle on-ramp to off-ramp driving, automatic highway lane changing, and congested streets. However, many are now pivoting their focus to provide a more human-like driving experience and a full end-to-end AI model is now seen as key to winning the battle.

Described by Tesla chief executive Elon Musk as “basically photons in and controls out,” such end-to-end neural networks play an integral role in a vehicle’s decision-making process, taking raw sensor data as input and producing control actions as output. This contrasts with the conventional approaches that see each functionality, from perception to planning and action, developed individually using rule-based designs, which are often inadequate  in addressing the vast number of scenarios that occur on the road, a team of researchers said in a recent report.

The result is that people still feel their cars pilot themselves inhumanly even when kitted out with some of the most cutting-edge ADAS on the market, partly because human driving behavior tends to be consistent rather than discrete. It is very difficult for the current AV (autonomous vehicle) stack to make coherent, long-term decisions, said Wu Xinzhou, Nvidia’s vice president of automotive at its annual developer conference GTC in March.

Recent surveys have shown automakers that customers are generally dissatisfied with existing ADAS functions. Nearly half of respondents take the controls 1-2 times per 100 kilometers (62 miles) as the city NOA functions do not react appropriately, while others make more frequent interventions, according to a recent survey compiled by China’s Gaogong Industry Institute. “When the driver has to interfere pretty often, then you cannot say this is autonomous driving,” said Brandl.

Xpeng is aiming for less than one intervention per 1,000 kilometers in major traffic areas in China, CEO He Xiaopeng announced early this year, without giving a timeframe. This was followed by a new software update for its XNGP ADAS in May enhanced by the first end-to-end AI model for production vehicles in China, according to the EV maker. NIO reshuffled its autonomous driving department recently, rolling up its perception as well as planning and control teams into a single group with a focus on new AI models, Chinese media outlet LatePost reported on June 19.

It requires huge amounts of data, for example, millions of video clips, to train AI systems, as well as deep pockets and access to AI chips. Musk told investors in April that his company will increase the number of Nvidia’s flagship AI processors it uses from 35,000 to 85,000 by the end of this year. He wrote in a post on X earlier that month that the investment in training computers, gigantic data pipelines, and video storage will be well over $10 billion cumulatively this year.

Such major investment and effort is not something all companies can handle however. “It would be so hard for most traditional automakers to do this by themselves. The best way is to pick a supplier,” Liu said.

The entry of Tesla’s FSD into China may feel like a new challenge therefore, but it may also coincide with a new era of partnerships around self-driving technologies.

Chinese automaker Dongfeng Motor will introduce the first global model from its premium electric vehicle brand Voyah as early as the third quarter of this year, in what will be a direct challenge to Tesla’s best-selling crossover the Model Y, local media has reported.

The 100% electric compact sports utility vehicle (SUV) will feature Huawei’s vision-based approach to automated driving functions on urban streets. It will also be produced in a joint plant set up with Nissan, as fierce competition has put downward pressure on the Japanese firm, a regulatory filing has shown.

Why it matters: Stellantis and Nissan’s Chinese manufacturing partner expects the model to appeal to young families and drive sales in the country’s already crowded mainstream luxury EV segment, company sources told National Business Daily (in Chinese) on Tuesday.

Details: Sources added only full-electric variants will be on offer for the Zhiyin (知音), which loosely translates as “bosom buddies” in Chinese. This is in line with a filing that was published last month by China’s top industry regulator, which shows the car has six variants with battery options using two types of cathodes – more energy-dense nickel cobalt manganese (NCM) and cheaper lithium iron phosphate (LFP).

• The five-seater SUV measures 4.7 meters in length and 1.6 meters in height with a wheelbase of 2.9 meters, according to the registration filings released by China’s Ministry of Industry and Information Technology (MIIT). This is roughly the same size as the Tesla Model Y and smaller than the first model under the Voyah brand, the Free SUV.
• The all-wheel drive version will have a dual electric motor setup with both motors providing a power output of 160 kW, while other variants will be offered with either a 215 kW or 230 kW electric motor. All the variants have no lidar components, which are normally packaged on the car roof or near the bumpers to help the vehicle sense and interpret its surroundings.
• This means the new car will utilize the so-called “pure vision” approach, a strategy championed by Tesla, relying on cameras and artificial intelligence, rather than the more visible but more expensive laser sensor units, to achieve automated driving. Voyah announced in April at this year’s Beijing Auto Show its first global model would feature Huawei’s intelligent driving software and operating system HarmonyOS.
• Dongfeng will manufacture the car at its latest joint plant with Nissan, which opened last year in the central Chinese city of Wuhan with an annual capacity of 300,000 units. Nissan has been making several electric models including the Ariya with Dongfeng at this plant to date, although it sold less than 2,000 units of its second EV-only model in the country over the past six months, figures compiled by auto service platform Dongchedi showed.

Context: Nissan’s China joint venture with state-owned Dongfeng reported sales of 723,139 cars in the country last year, representing a 21.5% plunge from a year ago. The companies last November announced plans to export vehicles from China in 2025. The Japanese carmaker was also reportedly considering a 30% cut of its annual car output in China, along with peer Honda.

• Dongfeng’s Voyah in January announced a collaboration with Huawei to develop smart EVs. The brand has three models on sale and delivered 24,869 EVs, including all-electrics and plug-in hybrids, from January to May. The automaker’s off-road vehicle lineup Mengshi also works with Huawei.

Li Auto is on track to offer its new level 3 automated driving system within the next 12 months, which would enable hands-free, eyes-off driving under certain conditions, as it transitions towards “end-to-end neural network” architecture, according to chief executive Li Xiang.

Why it matters: The comments mark an increase in competition between Tesla and Chinese automakers over the adoption of autonomous driving. The US automaker is reportedly looking to roll out the latest version of its “Full Self-driving-Driving” software in China, its second-largest market.

• The news also comes as Li Auto started calling back some former staff late last month having previously dismissed roughly 30% of its 1,100-person Autonomous Driving Group in a setback to the company’s launch of its first battery electric model, the Mega. 
• Most employees rehired by the electric vehicle maker work on the NOA (Navigation on ADAS — advanced driver assistance system) function for urban driving scenarios. Vice President Lang Xianpeng on June 7 promised surviving employees from his team that the layoff was now over, sources familiar with the matter told the 21st Century Business Herald (in Chinese).

READ MORE: China opens door wider to Tesla as local giants disrupt the EV sector with AI-defined vehicles

Details: Li Auto will roll out a new version of its NOA software in the third quarter of 2024. This version still requires the driver to be in full control but will not rely on a high-definition map. The company announced that it will launch its city NOA function to users in 100 major Chinese cities in November.

• This will be followed by a wide release of its Level 3 autonomous driving system later this year, or in early 2025, Li told the audience at the China Auto Chongqing Summit on June 8, according to short videos posted on the social media platform WeChat.
• Li said the company has been working on an end-to-end artificial intelligence approach since late 2023. The approach is using video clips from real driving situations as well as machine learning algorithms to handle the vehicles’ control. It is also exploring Visual-Language Models (VLMs), which could better learn patterns and correlate between visual data and natural language than existing offerings.
• Li Auto’s L3 conditional autonomous system will use both approaches, Li said, allowing the human driver not to monitor the vehicle constantly but to be ready to take control, according to the definitions set by the Society of Automotive Engineers (SAE). It could further evolve to a level 4 highly autonomous driving system over the next three years, Li added, without elaborating further.

Context: Automakers in China, including Li Auto, have either been applying for mapping licenses or working with map services in order to collect large amounts of highly detailed geographical data, which helps autonomous vehicles (AVs) make better decisions when performing driving tasks. However, many of them, such as Huawei and Xpeng Motors, are now looking for alternatives due to cost and complexity reasons.

• It is unknown whether Li Auto will take legal responsibility for its upcoming level 3 technology. Last year, Mercedes-Benz became the first automaker allowed to sell cars with its L3 Drive Pilot system in California and Nevada, Reuters reported. China is pushing for similar regulatory initiatives with assistance from automakers including BYD, SAIC, and NIO.
• Li Auto has been working on layoffs since May to cut 18% of the company’s workforce, which stood at roughly 5,600 as of last year, while that percentage for the Autonomous Driving Group was more than 30%, according to the 21st Century report. President Ma Donghui told investors in November the company planned to have 2,000 employees for AVs by the end of 2024. 

READ MORE: Li Auto accelerates assisted driving tech competition amid launch of first battery EV

Major Chinese automakers reported higher electric vehicle sales for May than in April, boosted by new government subsidies and the continued use of discounts to lure cost-conscious shoppers. Notably, NIO and Geely’s Zeekr were among the top-performing companies in the market, reporting their best-ever monthly deliveries.

Why it matters: The latest sales figures marked a swift turnaround for Chinese auto majors as they have been mostly grappling with weak consumer sentiment and intensifying competition in recent months.

• Demand was mainly boosted by China’s new subsidies encouraging consumers to trade in their old, less eco-friendly vehicles for new more energy-efficient ones. Meanwhile, several regional trade events have garnered more consumer attention than usual and boosted the appetite for new models, such as the recent Beijing Auto Show, wrote the China Passenger Car Association (CPCA) on May 29.

Details: Both NIO and Zeekr witnessed triple-digit growth year-on-year in May, with monthly deliveries reaching a record high.

• NIO said on June 1 that it surpassed the 20,000 vehicle sales limit last month for the second time since its inception, with its delivery numbers up 31.5% from April. The growth was driven by additional cash rebates totaling RMB 1 billion ($138 million), offered by the company in the name of car trade-ins since April 1, as well as a more than 25% price cut on its battery leasing program in March.
• Zeekr’s May deliveries reached 18,616, up 16% in a month, thanks to strong demand for its redesigned 001 shooting brake, of which sales surpassed 10,000 units for two months since delivery began on March 1. The Geely affiliate on May 10 became the fourth Chinese EV maker to go public in the US. Sales at its parent company also picked up momentum to 58,673 units over the month.
• Meanwhile, Li Auto saw its best-ever monthly sales this year in May, buoyed by a recent price reduction of up to RMB 30,000 on its existing vehicle lineup and the strong demand for the L6, which went on sale in mid-April. The company said the L6 accounted for more than 15,000 units out of its total deliveries in May and that it expected the number to surpass 20,000 units in June.
• Sales of Huawei-backed EVs took a slight hit in May while the Chinese tech giant was busy launching the redesigned versions of its existing Aito cars with partner Seres. Huawei’s Harmony Intelligent Mobility Alliance (HIMA), which currently consists of Aito and Luxeed series models, reported combined deliveries of 30,578 units last month, up 3.2% from April, with no breakdown.
• State-owned manufacturers Chery and GAC’s Aion also reported strong May sales, as both companies introduced big discounts in a move to respond to Beijing’s call to boost consumption. Chery on May 9 began selling the Sterra ET crossover at a competitive starting price of RMB 189,800.
• Xiaomi reported a 22.3% improvement in deliveries from April and aims to deliver more than 10,000 units starting in June.

Context: Retail sales of new energy passenger vehicles, which include all-electrics and plug-in hybrids, increased 27% year-on-year and 2% month-on-month to roughly 574,000 units during May 1-26 in China, when passenger car sales fell slightly to 1.2 million units, the CPCA figures showed.

• BYD, by far the dominant player in the market, on May 4 began offering subsidies of up to RMB 8,000 to consumers trading in their old cars. The auto giant on May 28 rolled out two new models with a driving range of 2,100 kilometers (1,305 miles), enabled by its latest plug-in hybrid technology.

BYD on Tuesday unveiled its latest-generation plug-in hybrid platform DM-i 5.0. The company said the technology gives its newest models a driving range of 2,100 kilometers (1,305 miles) at a starting price of only RMB 99,800 ($13,772), an advance that will likely accelerate China’s transition from fossil fuels to green vehicles.

Why it matters: The launch comes after figures from the China Passenger Car Association (CPCA) show that new energy vehicles (NEVs), most of which are battery electric vehicles (BEVs) and plug-in hybrids, represented more than half of China’s personal vehicle market in the first half of April.

• The surpassing of the 50% mark in vehicle registrations in China came for the first time in the week of May 13-19 in a historic moment. The milestone means that NEVs are now mainstream in the country, BYD Chairman Wang Chuanfu claimed on Tuesday, citing official figures (our translation).

Details: BYD said its fifth-gen dual-mode (DM) hybrid technology features an integrated system that covers all aspects of thermal and energy management, comprising cooling modules for front-end body parts, batteries, and in-car infotainment software.

• China’s biggest EV manufacturer also announced a breakthrough among production vehicles for their gasoline engines worldwide, as its new PHEVs can potentially convert 46.06% of the thermal energy they produce during combustion into mechanical energy, indicating a more efficient performance than rivals’ offerings.
• The company said it has also managed to reduce the excessive energy consumed in extreme weather conditions and achieved fuel consumption of 2.9L/100 km with an empty battery on the new platform. This gives its Qin L and Seal 06 compact sedans a driving range of 2,100 km on a full tank and full charge.
• The Qin L sedan, first unveiled at this year’s Beijing Auto Show, measures 4.8 meters in length and spans a 2,790-millimeter-long wheelbase. It comes as a mid-range offering between the Qin Plus and the more premium Han under the Dynasty family that accounted for nearly half of BYD’s sales last year.
• The Qin L has a similar-sized sibling, the Seal 06 DM-I, which is characterized by a more sleek and sporty design to attract younger customers. Both models have five variants respectively, providing an all-electric driving range between 80 km and 120 km and are priced between RMB 99,800 and RMB 139,800.

Context: A growing number of automakers in China are pivoting their efforts to develop PHEV models, as BEVs remain on a slow growth trajectory. Sales of PHEVs, which include extended-range hybrids (EREVs) in China, surged 64.2% year-on-year in April, compared with the 12.1% growth rate achieved by BEVs, CPCA figures showed.

• A week earlier, Chery launched the Fulwin T9, a plug-in hybrid crossover with a similar price range to BYD’s Song Plus, while Dongfeng unveiled its latest answer to the popular crossover, the Aeolus L7, with an estimated 1,500 km of driving range.
• Geely and Changan sell PHEVs under their Galaxy and Deepal lineups, respectively, while international majors from Volkswagen to Toyota are reportedly accelerating their steps to introduce such offerings in China.

READ MORE: Chinese officials reaffirm commitment to EV ambitions and promise raft of support measures amid industry doubts

The first electric vehicle model of NIO’s lower-priced, family-oriented sub-brand Onvo finally made its debut in Shanghai on Wednesday, the International Day of Families, after three years of development. The coupe-style sports utility vehicle was surrounded at its unveiling by not only hundreds of journalists but also Chinese parents who took their children to the event, and who the company hopes will form the very first owners of the long-anticipated car.

The Chinese EV maker on Wednesday began taking reservations for the Onvo L60 at a pre-sale price tag of RMB 219,900 ($30,471), cheaper by RMB 30,000 than the entry-level Tesla Model Y but with a longer driving range and a roomier interior space, among other advantages. The SUV, scheduled for launch in September, is expected to be priced at under RMB 200,000, and come with NIO’s Battery-as-a-Service (BaaS) program, in which customers buy a car and pay for a battery rental service, similar to the company’s scheme for NIO branded cars.

Confident in the strong competitiveness of its offering and a large customer base in China, NIO management said it has “high expectations” for Onvo, which is short for “on voyage” in English. Its Chinese name Ledao translates as “path to happiness.” Speaking to reporters after the debut on Thursday, William Li, founder, chairman, and chief executive of NIO, shared additional details about NIO’s ongoing partnerships for battery swapping with some of China’s most established car manufacturers, including Geely, Changan, and GAC. 

First Onvo EV

NIO’s first mainstream crossover, with a similar shape to its more premium siblings, competes with Tesla’s Model Y, the world’s top-selling electric SUV, from nearly every perspective. The entry-level L60 comes with a driving range of 555 kilometers (345 miles), a bit longer than that of the rear-wheel-drive Model Y (554 km), while the other two variants travel more than 730 km and 1,000 km on a single charge, respectively. 

The company also said that the L60’s outstanding wind resistance, measured by a drag coefficient of 0.229, increases its effective range, while a 900-volt electrical system reduces energy loss to heat, giving it a longer range. The total energy consumption of the car is 12.1 kilowatt-hours (kWh) per 100 kilometers, compared with the 12.5 kWh achieved by the Model Y, according to NIO. 

Li said that NIO will make a “pretty decent” gross margin from the L60, by focusing on core values that matter to Chinese families, rather than producing a vehicle with a dazzling array of unnecessary specs, a move that keeps the car’s overall costs under control. Cost savings also come from NIO and Onvo sharing research and development costs, among other synergies.

The Onvo L60 embraces the vision-based approach advocated by Tesla, which uses cameras and artificial intelligence and gets rid of lidar sensors for autonomous driving. It also uses a smaller and more affordable lithium iron phosphate (LFP) battery pack from BYD, according to Reuters.

Battery swaps

NIO also provided details about its extensive power infrastructure network, which is claimed to be the largest of its kind in China with more than 2,415 battery swapping stations as of Wednesday. It has long been a loss-making effort for the company but is now emerging as an attractive option for charging availability and cost reduction for a growing list of Chinese auto giants. 

Onvo owners will only be able to use the company’s newer swap stations (the third- and fourth-generation ones) and will share the facilities with NIO’s partners. Each of the newer swap stations, which can hold more than 20 battery packs of different sizes, can offer more than 400 swaps per day, with each pack being used roughly up to 20 times. Li mentioned the company’s plan to charge partners a service fee of roughly RMB 20-30 per swap. NIO itself completed nearly 70,000 battery swaps per day as of May 8. 

Meanwhile, NIO owners can “refuel” their vehicles at any swap shop, giving them more charging availability and a premium user experience. The company said it is on track to build 1,000 battery swap facilities on its own this year and expand the network for NIO and Onvo from the 2,316 stations available as of the end of last year, while its partners are also set to provide additional resources. 

Li added that he envisaged there being six to seven EV battery sizes at most over the long term, with partners set to use batteries of the same kind as Onvo. NIO currently uses batteries in four sizes with an energy density ranging from 70 to 150 kWh.

READ MORE: Drive I/O | Big bets on battery swaps

Sales of Chinese electric vehicle makers Li Auto and Huawei-backed Aito dropped sharply in April as rivals Zeekr and NIO managed to post major improvements, in the latest indication of how competition in the country could be impacted by price cuts and new model launches. 

Why it matters: The latest sales figures in April showed the world’s largest EV market is slowly recovering from a sales slump due to an economic downturn and inclement weather early this year. Some potential EV buyers are still waiting on the sidelines for possible stimulus measures and for new cars shown at this year’s Beijing Auto Show to make it to market, experts say. 

READ MORE: Global carmakers take on Chinese giants in EV showdown at Beijing Auto Show 2024

Details: GAC’s Aion, Li Auto, and Huawei-backed Aito – which are among the biggest Chinese EV makers – all reported double-digit declines in EV deliveries in April from a month earlier. Huawei saw sales of Aito-branded EVs fall 21% last month, with monthly deliveries of the redesigned M7 falling to 10,896 units from its peak of nearly 30,000 units. Aion and Li Auto delivered 28,113 and 25,787 EVs in April, 13.6% and 11% fewer than a month earlier, respectively. 

• All three EV makers have launched new cars and ushered in steep price cuts for their existing models in order to maintain demand throughout 2024. Huawei said on Monday it had secured 11,000 reservations with non-refundable deposits for the Aito and Luxeed lineups over the recent five-day Labor Day holiday, while there were more than 41,000 pre-orders for Li Auto’s L6 range-extended hybrids between April 18 and May 5. GAC is currently putting the redesigned versions of its Aion V and Hyper HT battery crossovers on display in its showrooms nationwide. 
• In the meantime, Zeekr achieved record deliveries of 16,089 vehicles in April, up 24% month-on-month and 99% from a year earlier, mostly driven by a strong performance for its revamped 001 shooting brakes. NIO also saw sales hitting 15,620 vehicles, up from 11,866 a month earlier, as the company’s multiple sales pushes started to pay off. The EV startup has been offering a RMB 10,000 ($1,386) price reduction for those who trade in their old, gas-powered vehicles for a NIO car since the beginning of April. 
• While bringing attention to its rivals such as Zeekr and NIO for their similar offerings, Xiaomi posted impressive April sales to officially start its career as an electric car maker. The smartphone giant handed over 7,058 SU7 battery sedans to customers in its first delivery month and secured nearly 89,000 reservations with non-refundable deposits as of April 30. Chief executive Lei Jun expects the company to achieve an annual delivery target of 100,000 cars this year, with its production ramp-up already underway at its Beijing factory. 
• Xpeng Motors saw a slight recovery in April sales, delivering nearly 2,000 units of its first multi-purpose vehicle and bringing the total deliveries of the RMB 359,800 van to almost 10,000 units in the four months since its launch. The Volkswagen-backed EV maker has been under pressure from larger rivals, and declined to give detailed figures for the rest of its models. Sales of its G9, G6, and P7 models dipped to less than 1,700 units in March, figures compiled by Chinese auto service platform Dongchedi showed.

Context: China’s new energy vehicle sales in April are expected to be on par with March at roughly 720,000 units, partly because wait-and-see sentiment has grown among Chinese customers, the China Passenger Car Association said in an April 25 post.

READ MORE: ​ Explainer: How a new round of price cuts are reshaping China’s EV market ​

Tesla claimed on its Chinese app on Monday that it would be rolling out its full self-driving (FSD) system “very soon” rather than the previously stated “a bit later” (our translation). The development comes as the US automaker reportedly received tentative approval from Chinese authorities to deploy its advanced driver assistance systems (ADAS) in the world’s most competitive electric vehicle market following a surprise visit to Beijing by chief executive Elon Musk. 

Local customers have expressed mixed views about the potentially game-changing technology finally coming to their country, although many Tesla owners and loyal fans welcomed the long-overdue launch on social media. The technology may not yet work well in Chinese urban driving scenarios, despite costing RMB 64,000 ($8,838); most competitors such as Xiaomi promise to offer similar functions free of charge, Li Yang, a Model 3 owner in Shanghai, told TechNode on Tuesday.

Major Chinese EV players Huawei and Xpeng Motors, who specialize in autonomous driving, have responded in a relaxed way to what is seen by many as a major win for their US rival. 

“We are confident that Huawei’s intelligent driving system is the best in the world,” Richard Yu, Chief Executive of Huawei’s Consumer Business Group, said at a press event last week as the company introduced the redesigned Aito M5 crossover. Aware of Tesla’s release last month of the no-longer-in-beta FSD software, Yu said the company has closely studied its competitor’s technology by taking test rides in San Francisco, among other US cities. 

A long-awaited battle: Experts told TechNode that the US and China have been in a neck-and-neck race to develop “end-to-end neural network” technology, seen by experts as the biggest difference between Tesla’s FSD v12 software and earlier versions.

• Tesla chief executive Elon Musk stated publicly in November that its most updated, end-to-end FSD uses machine learning rather than rules crafted by programmers to absorb driving behaviors from large datasets. The approach reduces the carmaker’s reliance on coding, expensive sensors, and high-precision maps for exact road information.
• “It is more of a 1,000 flowers blooming type of situation here in China, while the US market is guarded by a sole player,” Paul Gong, head of China autos research at UBS, told reporters on Monday in Beijing, referencing a Chinese idiom. Both the US and China are at the forefront of the technological trend, followed by Europe and the rest of Asia, Gong added.
• Although Tesla has huge amounts of data, Chinese firms have the potential to quickly catch up by ramping up their test fleets, according to Song Chaozhong, CEO of Chinese self-driving car startup eCHIEV. Song cautioned that real, “human-like” autonomous cars are still far away, despite the technology likely being a positive driver for vehicle sales. 

A booming segment: Analysts expect Tesla’s imminent launch of the FSD software in China to not only help restore Beijing’s image among foreign investors in general, but also help China extend its lead in the adoption of driver-assist technologies worldwide, and enhance its reputation as a rising powerhouse of next generation cars. 

• China has become a source of innovative engineering for global automakers, as they are now leveraging the capabilities of Chinese companies to design global vehicle offerings, Gong said when asked his view of this year’s Beijing Auto Show. He added China’s push to open its industries to greater foreign investment and competition has been “underestimated.”
• Tech-literate Chinese EV makers are poised for explosive growth thanks to growing interest from Chinese consumers in intelligent driving features, as Elon Musk earlier predicted a “ChatGPT moment” was coming for his company. Huawei on April 24 estimated that more than 500,000 cars on Chinese roads will feature its advanced driving system by year-end. 
• Xpeng is scheduled to launch its affordable brand MONA in June with the first model expected to feature an autonomous driving system without the integration of lidar and aiming for annual sales of 100,000 units. Global shipments of vehicles with ADAS features, known as Level 2 plus autonomy, could more than double to 4.5 million units this year, with China leading the game, research firm Canalys wrote in December.

Context: Tesla’s China breakthrough comes after US Secretary of State Anthony Blinken on April 25 called on China to provide a level playing field for American businesses during his second visit to China in less than a year, Reuters reported. 

• The US automaker has reached a deal with Baidu to localize its driver assistance solution with map and geographical information from the Chinese tech giant, according to Bloomberg.

Global carmakers from Volkswagen to Toyota are introducing new models at the Beijing Auto Show 2024 with the help of Chinese tech companies in an effort to defend market share amid a major shift to electric vehicles led by local car giants. 

The biannual trade event, which on Thursday witnessed a return to pre-pandemic attendance levels after a brief pause in 2022, also represents another landmark moment for the Chinese EV sector where domestic players are once again on the offensive with an array of new models. A similar event in Shanghai a year ago reportedly prompted the industry’s legacy players to either increase their efforts or rethink their brands in order to adapt to the changes.

Below, TechNode provides a summary of some of the biggest releases from both international and Chinese automakers, including BYD, GAC, Geely, Honda, Toyota, and Volkswagen. There are also some notable updates from younger players such as Xiaomi, NIO, and Xpeng, which might give a clue as to where the most competitive EV market in the world is heading. 

BYD

China’s biggest EV maker on Thursday unveiled a higher-end variant of its Qin vehicle, the top-selling compact sedan in the country last year. The new car is scheduled for launch in the second quarter with an expected price tag of RMB 120,000 ($16,560). The Qin L measures 4.8 meters in length and spans a 2,790-millimeter-long wheelbase, placing it between the Qin Plus and the Han in terms of size. It features the company’s next-generation plug-in hybrid platform DM-i 5.0, which could suggest an improvement in range and fuel efficiency. The company also introduced the Seal 06, a plug-in hybrid EV under the Ocean lineup which is about the same size as the Qin L but loaded with more stylish design language to attract younger customers. 

GAC

Aion, the third best-selling EV brand in China last year after BYD and Tesla, showcased its first global model, replete with modern technologies and angular styling, as its state-owned parent beefs up its strategy to woo customers worldwide. GAC said its all-new Aion V, scheduled for launch in July, will maintain a driving range of over 750 kilometers (466 miles) even when the mercury dips to -30 degrees Celsius, and offers a large interior space comparable to the likes of the BMW X5. The all-electric sports utility vehicle, which incorporates traditional Chinese dragons into its design, can navigate varied urban environments worldwide with features such as lane switching by utilizing advanced artificial intelligence algorithms to process sensor data instead of high-precision maps, the company said.

Geely

Volvo’s parent showed its ambition to become a disruptive force in the global automotive industry with the debut of what it described as the world’s first production model with two sliding doors and front swivel seats. Geely has taken a radical approach to how EVs are put together, giving the 4.7 meter-long Zeekr Mix an extended wheelbase of three meters achieved through a more compact electric motor, shorter front overhangs, and repositioning of the air conditioning system, among other components. This, along with the front seats that can rotate 270 degrees, would allow kids to play or families to dine together in a 1.5 square meter interior flat space. The five-seater multi-purpose vehicle, offering a 1.5 meter width opening area for passengers, targets three-generation Chinese families, especially those with elders and pregnant mothers.

Honda

Japan’s Honda on Thursday began selling its second all-electric model with time-limited discounts in China in the company’s latest effort to boost sales. The move comes after entrenched rivals such as BYD and Tesla recently rolled out more price cuts amid slowing growth. The e:NP2 SUV has a driving range of 545 km at a price tag of RMB 159,800, providing buyers with a RMB 30,000 reduction compared to its original plan, according to Li Jin, a deputy general manager of Honda’s China joint venture with GAC. Honda also debuted the Ye, a new series of all-electrics with technologies sourced from Huawei and iFlyTek among other Chinese tech firms, as part of its plan to sell only EVs in China by 2035.

Toyota

Toyota said on Thursday it will integrate lidar sensors into its two upcoming models under the “Beyond Zero” (bZ) all-electric series, as the world’s top-selling automaker looks to provide consumers with the same level of assisted driving technology as Huawei and Xiaomi. The bZ3x and the bZ3c compact crossovers will be able to automatically change lanes, and enter and exit Chinese highways when they go on sale within the next 12 months. Toyota also announced it is exploring the uses of generative AI in collaboration with Tencent, as Chinese consumers expect their future vehicles to be more capable and personalized. This follows reports that the Japanese giant is using Huawei components to enable autonomous driving functions on its China-made EVs. 

Volkswagen 

Germany’s biggest carmaker participated in Auto Beijing 2024 with major global debuts including the ID.Code concept – which offers a glimpse into its upcoming, China-specific all-electric lineup ID.UX – as well as the Audi Q6L e-tron, the first production model based on its PPE electric platform. The coupe-styled ID.Code will be equipped for highly autonomous driving and come with a sophisticated AI assistant with contributions from local designers, as Volkswagen plans to introduce the first model under the new series later this year. In addition to partnerships with Xpeng and Horizon Robotics, the automaker confirmed it is working with Chinese tech giants including DJI, as its latest Tiguan L SUV now features an advanced driver assistance system (ADAS) sourced from the drone maker.  

Xiaomi, NIO, and Xpeng

Xiaomi was the center of attention on Thursday when the Chinese smartphone giant said it had secured 75,723 reservations with non-refundable deposits for the SU7, its first EV, with a competitive price range between RMB 215,900 and RMB 299,900. Chief executive Lei Jun expects monthly delivery to exceed 10,000 units in June and the company is set to reach a milestone with 100,000 EV deliveries by this year, which would be a record speed for any Chinese EV brand. The 55-year-old entrepreneur is an icon in the Chinese tech and auto industries, with his visits to rivals’ booths becoming one of the hottest topics at this year’s Beijing Auto show.

Xpeng Motors could take on its major frenemy with the mainstream brand MONA, short for ‘Made of New AI,’ CEO He Xiaopeng told reporters during a press conference. 

Meanwhile, one of NIO‘s new affordable brands, called ONVO, is scheduled for launch in the second quarter of this year. The luxury EV maker on Thursday launched a redesigned version of its ET7 sedan with a starting price of RMB 428,000, which is RMB 20,000 lower than its original version launched three years ago.

READ MORE: Huawei, Xiaomi, and Geely’s new EVs have details leaked on Chinese government site

Chinese electric vehicle brand Zeekr has grabbed the spotlight again after unveiling one of the finest luxury vans Chinese consumers can buy. The company says it is seeking to end the dominance of multinationals in the Chinese market, where dealers charge significant markups for similar offerings.

“This is among our top missions,” said Andy An, chairman of Geely Auto Group and chief executive of Zeekr, at a press event on April 19, calling the status quo “irrational” (our translation). An added that Chinese car brands now offer best-in-class luxury and safety as the market makes a transition to smart EVs. Dubbed “a royal suite” on wheels and a fully-electric answer to the Rolls-Royce Cullinan, the Zeekr 009 Grand costs only a fraction of the models that comprise BMW’s luxury lineup and costs less than the Toyota Alphard, one of its key competitors, at a price tag of only RMB 789,000 ($108,961).

The launch comes as Geely’s EV unit sees strong and continuous demand for its products on its home turf and is set to embark on a major push into global markets. The latest sales figures show that the Zeekr 001 has overtaken Tesla’s Model 3 as the best-selling battery-powered sedan in the Chinese premium car segment, as the company maintains its annual delivery target of 230,000 units for this year.

China’s answer to the Rolls-Royce Cullinan

The Zeekr 009 Grand boasts a combination of sophisticated craftsmanship and cutting-edge technologies and is geared towards the demands of Chinese celebrities and business leaders. Among the mesmerizing features include “curtain” glass that presents as pitch-black in less than two seconds and a single-click mode that deletes users’ travel history and contact data, designed to provide security and privacy. 

Zeekr is also upgrading its “giga-casting” technology, a technical term from Tesla that describes a process to diecast almost all vehicle underbody parts as one to improve car body stiffness. With the two rear seats coupled with die-cast vehicle frames in a C-shape formation, safety tests have concluded that the van’s interior remains intact following a rear-end collision by a 2.3-ton trailer at 50 kilometers per hour (31 mph), according to a video clip presented by the company. 

With only one variant, the 009 Grand has a driving range of 702 kilometers (436 miles) based on City Light Test Cycle (CLTC) standards, despite having more powerful motors than its original version.

The Chinese automaker says its four-seater outperforms the Rolls-Royce Cullinan in on-road performance with the adoption of artificial intelligence algorithms and adaptive dampers and air springs to smooth the ride, technology also embraced by BYD and Huawei. While Chinese carmakers from Li Auto to Great Wall Motor are carving out this increasingly important niche market, Zeekr said its special-edition 009 is winning customers over with its craftsmanship and quality materials, rather than with a more superficial luxurious design. 

Quest for growth amid slower EV uptake

Zeekr is emerging as one of the few Chinese EV makers bucking the trend of turning to plug-in hybrids in the middle of a bumpy transition to new energy vehicles (NEV), while aiming for strong growth despite an overall sluggish EV demand sentiment. The company just delivered more than 4,900 Zeekr 001 shooting brakes in the first two weeks of April, compared with roughly 2,100 units of Tesla’s Model 3 during the same period, according to figures compiled by Sun Shaojun, founder of Chinese consumer behavior research agency CarFans. 

Earlier figures also indicated sustained growth momentum as the revamped 001 pocketed roughly 30,000 non-refundable orders within 30 days of its launch on Feb. 27. BYD, Huawei-backed Aito, and Zeekr outperformed other brands in terms of new orders in the last week of March, Jefferies analysts said in an April 9 note. The companies have benefited from a spillover effect, as Xiaomi’s Porsche-alike sedan becomes a phenomenon, garnering huge attention for the smartphone giant as well as more established rivals. 

An told reporters during an interview that the long-term picture of the ongoing EV transition remains positive, with Zeekr maintaining a delivery target of 230,000 vehicles for 2024, almost double the nearly 119,000 units it achieved last year. It plans to enter dozens of countries in the Middle East, Latin America, and Southeast Asia this year, having started exports to Europe, the Gulf Bay area, and parts of Asia late last year. “In our view, Geely is at full steam for the EV race and overseas expansion with competitive NEV product offerings and an established global footprint,” Jefferies analysts said on March 27.

READ MORE:Interview: Zeekr executives on the 001 FR supercar, autonomous driving, and overseas plans

China’s commerce minister Wang Wentao talked with the heads of major car manufacturers including BYD and Geely on April 7 in Paris, as the companies scramble for solutions to an ongoing probe by the European Commission that could result in substantial tariffs on their imports of electric vehicles into the EU. 

Why it matters: The meeting comes as the EU prepares to publish its findings on whether Chinese automakers have benefited unfairly from state subsidies. Brussels could raise tariffs from the current 10% to at least 25% according to an estimate by European environmental lobby group Transport & Environment (T&E). 

• Chinese automakers have called for government support to push for a reduced tariff hike and to counter increased international political involvement in the industry, sources with knowledge of the matter told financial media outlet Caixin (in Chinese). Representatives of BYD, SAIC, and Geely were said to have accompanied Wang during his trip.

Details: At a roundtable discussion with the business leaders, Wang stressed the importance of Chinese automakers expanding overseas markets “in an orderly fashion” and embracing competition, according to a Twitter post by the China Chamber of Commerce to the EU (CCCEU)

• China also expects its manufacturers to bolster the integrated development of investment and trade, and maintain their commitment to technological innovation, Wang said. He added that claims that China’s EV competitiveness stems from state subsidies and comes with overcapacity issues in China are false and baseless. 
• During the April 7-9 trip, Wang also met with Franck Riester, France’s foreign trade minister, state broadcaster CGTN reported, as well as Renault chief executive Luca de Meo, acting chairman of the European Automobile Manufacturers’ Association. De Meo suggested that Chinese automakers establish their supply chain locally, sources told Reuters.

Context: France has backed the Commission investigation, according to Reuters, and has recently changed subsidy rules in a way that effectively excludes Chinese EV models. 

• China has in return requested French cosmetics giants including L’Oreal and LVMH comply with its data security rules by reporting details related to manufacturing processes and ingredients. It also launched an anti-dumping investigation into EU brandy exports in January. 
• Wang’s trip comes ahead of Chinese President Xi Jinping’s expected visit to Paris and discussions on trade tensions with French counterpart Emmanuel Macron, scheduled for May. This will be Xi’s first trip to Europe in five years, as tensions grow between China and the EU.
• The Commission reportedly carried out visits to BYD, SAIC, and Geely for verification work early this year, followed by the launch of a special custom registration process for China-made EVs, as imports rose by 14% year-on-year since formal investigations began last October. 
• Major Chinese automakers, including BYD, SAIC, and Chery, are also planning to construct their own car factories in Europe while also building vessels for shipments, as they look to capture a significant market share in the region with their affordable EVs.

Major Chinese car manufacturers, including SAIC and BAIC, saw double-digit declines in annual profits as the industry was hurt by slowing growth in new fossil fuel car sales and aggressive price cuts for their electric vehicles amid rising competition from the likes of BYD and Tesla. 

Why it matters: The latest financial results coincide with the rising momentum of plug-in hybrid electric vehicle (PHEV) sales in China. BYD, Geely, and Li Auto, all with a broad PHEV lineup, are among the few that reported both revenue growth and margin improvements, while traditional automakers and battery electric vehicle startups have been put under pressure to sacrifice profits for growth. 

• The figures also signaled potential growing challenges for international carmakers as Chinese EV manufacturers take a stronger position at home. The market share of their joint venture brands with Chinese partners will fall from 40% to 10% over the next three to five years, BYD chairman Wang Chuanfu forecast at an investor meeting on March 27, reported Reuters. 

Details: China’s biggest car manufacturer SAIC reported revenue of RMB 744.7 billion ($102.9 billion) in 2023, an increase of just 0.1% from the same period last year, with net profit declining 12.5% year-over-year. Sales of its joint ventures with Volkswagen and General Motors last year fell 8% and 14.5% to roughly 1.2 million and 1 million units, respectively. 

• BAIC Motor, a Hong Kong-listed unit of BAIC Group, also disappointed investors with a slower pace of revenue growth of just 3.9% in 2023, marking a slowdown from the brisk 8.3% rate notched a year earlier. Mercedes-Benz Group kept China sales flat with its joint venture partner last year, having slashed car prices by as much as a third over the last three months of 2023. 
• Revenue of GAC Group grew at a solid clip last year partly thanks to strong sales of its Aion EVs. However, Toyota and Honda’s main China partner revealed a 45.1% nosedive in net profit to RMB 4.4 billion, which it blamed on an RMB 2.9 billion one-time loss due to charges tied to restructuring, as well as shrinking revenue at its joint venture with Mitsubishi.
• Great Wall Motor’s annual results also offered a mixed picture as it struggles to ramp up EV sales profitably. Revenue grew a more robust 26.1% year-on-year to RMB 173.2 billion, but its profits fell 15.1% to RMB 7 billion. Some of its PHEV models such as Lanshan and Gaoshan fell short of expectations, Bernstein analysts wrote in a March 28 note. 
• Dongfeng Motor Group posted a loss of nearly RMB 4 billion for 2023, compared with a profit of almost RMB 10.3 billion, marking its first annual loss in nearly two decades since going public in Hong Kong in 2005. Sales of its two joint ventures with Nissan plunged 21.5% and 10.2%, while deliveries of its proprietary passenger EVs declined 5.1% to roughly 303,900 units.

Context: Beijing is planning to unveil new measures to boost the performance of FAW, Dongfeng, and Changan, three automakers directly under the leadership of China’s State-owned Assets Supervision and Administration Commission (SASAC), by giving them more leeway and independence in EV operations. Local government-owned businesses, including SAIC, BAIC, and GAC, are also expected to benefit from the policy in the coming months.

READ MORE: Chinese officials reaffirm commitment to EV ambitions and promise raft of support measures amid industry doubts

US sports camera firm GoPro has filed a complaint against Chinese camera maker Shenzhen Arashi Vision (Insta360) with the United States International Trade Commission (USITC) under Section 337 of the Tariff Act of 1930, according to information obtained by Chinese media outlet Jiemian. GoPro is claiming patent infringement and asking USITC to investigate the matter and halt the US sale of certain Insta360 cameras, software, and accessories.

Why it matters: GoPro is seeking intervention from USITC to investigate and prevent the sale of the disputed products in the US.

Details: GoPro has submitted evidence of patent infringements to the commission covering nearly all the consumer products sold by Insta360 in the US.

• The products mentioned by GoPro are Insta360’s ONE X, ONE R, ONE R1-inch, ONR X2, ONE RS, ONE RS 1-inch 360, X3, GO3, Ace, and ACE Pro, according to the Jiemian report.
• The Section 337 investigation initiated by GoPro, also known as an “unfair import” investigation, is an administrative inquiry conducted by USITC under the provisions of the Tariff Act of 1930 and its amendments. It targets intellectual property infringement and other unfair competitive practices by goods importers.
• Compared to normal patent litigation in the US, which can last over two years, 337 investigations generally resolve faster. However, they require companies to swiftly gather evidence, hire lawyers, and bear costs that can total millions of dollars.
• The Jiemian report suggests that GoPro’s market share has declined due to the rise of Insta360, which was founded in 2015. By the end of 2021, Insta360 held a leading market share of 41% in the global market for panoramic cameras, followed by Japan’s Ricoh at 22%, while GoPro ranked third with 19%, according to consulting firm Frost & Sullivan.
• Established in 2002, GoPro’s latest market value is $331 million, over 97% lower than its peak market value of $13 billion in June 2014, when GoPro listed on the NASDAQ. Insta360’s overseas markets account for nearly 70% of its overall revenue, which were around $280 million in 2022.

Context: In 2023, USITC undertook investigations into 72 Chinese companies, of which 48 chose to respond, the Jiemian report said.

• California-based GoPro manufactures action cameras and develops its own mobile apps and video-editing software. The company focuses on the connected sports genre, developing action cameras and video editing software for outdoor activities. 
• Arashi Vision, better known as Insta360, is a camera company headquartered in Shenzhen, with offices in Los Angeles, Tokyo, and Berlin. It makes action cameras, 360-degree cameras, editing software for mobile and desktop and 180-3D cameras.

Major Chinese automakers, including Geely and Changan, have strategically introduced big discounts to their car prices or new variants of existing models despite posting a pickup in March deliveries, in a defensive move after Xiaomi’s first car reached nearly 90,000 pre-orders in just 24 hours. 

Xiaomi’s smash hit: The initial success of Xiaomi’s first EV, rolled out on March 28 with a lower-than-expected price tag, is having a knock-on effect on most other automakers which are being forced to take immediate action in order to hold on to their market shares. 

• The reservation-to-order conversion rate of the electronics brand’s SU7 has currently reached more than 35%, according to Sun Shaojun, founder of consumer behavior research agency CarFans. 
• Around 40% of Xiaomi customers canceled their pre-orders partly due to an expected long waiting time for vehicle delivery, Sun said in a Tuesday post on WeChat. Some were also frustrated by awkward sales-service interactions at overcrowded Xiaomi stores in major cities, Sun added, as the Chinese smartphone giant is gradually expanding its sales network for car retail. 
• Nevertheless, this is equal to a volume of at least 31,000 non-refundable orders in just four days, still an impressive performance for a new entrant and one that sees it surpass the early sales figures of Aito, a rising player launched by Xiaomi’s long-time rival Huawei.

March sales, discounts: Sales of Geely’s new energy vehicles (NEVs) rose 65% year-on-year and 34% month-on-month to 44,791 units in March, of which roughly 13,000 were Zeekr-branded battery EVs, partly driven by the strong sales of its refreshed 001 sports wagons, delivery of which began on March 1. 

• Geely on Monday launched a new rear-drive Zeekr 007 sedan, turning a bundle of add-ons into standard features including a large head-up display unit and heated and ventilated seats, at a price tag that is RMB 6,000 ($829) cheaper than Xiaomi’s SU7. 
• This comes after a similar move by Changan which two days earlier introduced a new entry-level variant of its Avatr 12, lowering the starting price of the premium sedan by 12% to RMB 265,800. Avatr’s deliveries more than doubled to 5,016 units last month. 
• Meanwhile, Huawei-backed Aito, which sells both battery EVs (BEVs) and plug-in hybrid EVs (PHEVs), edged out rival Li Auto for a third month in March with 31,727 deliveries compared to Li Auto’s 28,984, buoyed by strong demand for both the M7 and M9 crossover. 
• Aito claimed the M9 was the top-seller in the RMB 500,000-plus price segment in China last month, a title Li Auto had previously aimed for (and failed to reach) with its Mega van. Still, the EV brand, co-launched by Huawei and Seres, on Monday slashed the starting price of its best-selling five-seater by 8% to RMB 229,800. 
• NIO and Xpeng Motors deliveries also jumped significantly through March, and yet both are either slashing prices or using other promotions to lure customers. NIO’s ET5 and Xpeng’s P7i sedans compete in the same price segment as the Xiaomi SU7. 
• NIO said on Monday it will offer a reduction of RMB 10,000 for those who replaced their gasoline cars with a new EV. Xpeng’s G9 crossover now costs RMB 20,000 cheaper than its original list price, following a more than RMB 10,000 price reduction across its lineups a month earlier. 

READ MORE: Explainer: How a new round of price cuts are reshaping China’s EV market

Context: The March sales figures – which showed a rebound from the annual Chinese New Year holiday slump – also indicated a stronger growth momentum for PHEVs than BEVs with a growing number of carmakers pivoting to more affordable PHEVs as they look to expand NEV sales in China’s vast majority of underdeveloped regions.

• PHEVs accounted for more than half of BYD’s sales and enjoyed a higher growth rate than BEVs over the first three months of this year, according to a regulatory filing posted on Monday (in Chinese). The country’s biggest EV maker was followed by the likes of Geely, Aito, and Li Auto, all preferring a broader product portfolio to purely BEVs.
• Ouyang Minggao, an academic at the Chinese Academy of Science, said last month that PHEVs could grab substantial market share from internal combustion engine cars in the coming years, especially in the entry-level price segment, and expected more widespread adoption of BEVs over the next decade.
• EV adoption in China’s lower-tier cities and rural regions is slower than in the country’s more developed areas. A growing number of EV owners from lower-tier cities said they will go back to conventional automobiles for their next purchase due to a lack of charging infrastructure, according to an annual report by consultancy McKinsey released on March 12. 

READ MORE: Chinese officials reaffirm commitment to EV ambitions and promise raft of support measures amid industry doubts

Hundreds of people flocked to a Xiaomi store in the southern Chinese city of Guangzhou in the late hours of Thursday evening to be among the first to take a look at what many deem to be the electronics brand’s more affordable alternative to a Porsche, as the brand announced a lower than expected starting price for its debut electric vehicle. That’s what TechNode observed during a livestream broadcast by a Chinese electric car blogger on social media app WeChat that attracted more than 200,000 viewers within an hour. 

Xiaomi has already enjoyed a debut win after securing a record 50,000 pre-orders in just a few minutes following its SU7 EV launch event. The official livestream racked up nearly 43 million views on microblogging platform Weibo, underscoring the overwhelming interest among tech-savvy Chinese consumers in the company’s first car. Those making a reservation were asked to pay a RMB 5,000 ($692) deposit as part of the process, with the tech giant expressing its thanks to customers who did so in a brief statement on the microblogging platform Weibo (in Chinese). 

The all-electric sports sedan is selling at a lower than expected starting price of RMB 215,900 ($29,881), roughly $4,100 cheaper than the popular Tesla Model 3, while touting better performance from driving range to acceleration. The dual-motor all-wheel drive version competes with the Porsche Taycan with a top speed of 265 kilometers (165 miles) per hour at a price tag of only RMB 299,900.

Xiaomi’s car launch contrasts markedly with Apple’s surprise retreat from the EV landscape, after the iPhone maker reportedly scrapped its decade-long effort to make a car recently. “We will provide every user, including those with Apple devices, a smart and connected life experience everywhere, creating seamless integration in their homes, cars, and beyond,” Xiaomi chief executive Lei Jun said during the press conference (our translation). 

“A trump card”

Lei, the 55-year-old serial entrepreneur dubbed “China’s Steve Jobs”, tried to lure users away from traditional carmakers during the two-hour event by showcasing how Xiaomi’s ecosystem would provide universal connection and integration between different devices, including phones, cars, and gadgets at home. 

Xiaomi essentially promised potential buyers that their devices would be all tied together with a click, swipe, or a simple voice command. The car’s air conditioning will cool the interior down on a hot summer’s day once the owner tells a home speaker what temperature they want before even leaving the house, according to one example given. In another, the car’s dashboard could become a centralized command station for home accessories which will be activated as the driver approaches home. 

Although rival Huawei has touted similar efforts with its EV partners, Xiaomi claimed last November that more than 655 million devices have been connected to its IoT (Internet of Things) platform, from televisions to fitness bands, making it the biggest network of its kind worldwide. “This is a trump card from Xiaomi,” said Lei when discussing the linking of the brand’s new EV with its IoT network. 

“Better than Tesla”

Meanwhile, Lei mentioned Xiaomi’s plans to be “among the top-tier players” in autonomous driving, a field where Tesla already stands out as a pioneer globally and Huawei is establishing its name at home. The company said its EVs are already capable of traveling more than 300 km on average autonomously on Chinese highways before human drivers take over and will be able to complete most trips by themselves on urban streets across China by August. 

Xiaomi is moving towards two distinct approaches by working on both a camera-based computer vision system and another advanced driver assistance system (ADAS) that relies on more sensors including lidar. The company said it will exclusively employ Nvidia’s cutting-edge chips for both systems and bring the software development completely in-house to ensure timely over-the-air updates across all its car variants. 

“In China, Tesla vehicles will not be as good as the SU7 when it comes to intelligent driving capabilities,” said Lei, adding that customers who placed their orders before the end of this year will get the software free of charge. Tesla currently charges Chinese buyers RMB 64,000 for future access to its full self-driving (FSD) package, despite it remaining unavailable in the country. Still, it is faced with competitors from BYD to Geely which also look to offer customers highly automated features with their premium EVs.

READ MORE: Key takeaways from Xiaomi’s EV pre-launch: A top offering facing a tough test

China will stick to its plan of becoming an electric vehicle powerhouse on the world stage despite recent signs of weakness in the industry, and will fine-tune policies to deal with challenges including slowdowns and overcapacity, government officials said over the weekend. 

EV skepticism: The comments came after a slew of international carmakers, including Volkswagen, Mercedes-Benz, and Ford, moved to either cut production of electric models or delay their electrification goals as global demand growth fell short of their lofty expectations. Meanwhile, 2024 kicked off with a new round of price cuts in the Chinese auto market, putting loss-making EV makers under further pressure. 

• “It is untrue to claim vehicle electrification is a trap set by the West,” Ouyang Minggao, an academician at the Chinese Academy of Science, commented in response to doubts raised in the industry about the affordability and practicality of EVs at an annual forum organized by the EV100 think tank on March 16 (our translation). 
• Ouyang, also a vice chair leading the think tank and a standing committee member of the Chinese People’s Political Consultative Conference (CPPCC), said China‘s pursuit of new energy vehicles (NEVs) came after “great deliberation with due concern for oil security, air pollution, and industrial transformation,” according to a video clip seen by TechNode. 
• China could consider being more open to foreign companies, according to Ouyang, who proposed that the government should remove tariffs on EV imports, which could also help to offset geopolitical tensions. “We missed the opportunity to excel in making fossil-fuel cars, but I am confident about China becoming a powerhouse in the era of NEVs,” Ouyang added.

New measures: China will announce comprehensive measures in the coming days to boost domestic demand, facilitate consolidation in the industry, and broaden mass adoption for battery cars, according to several vice ministers who attended the forum. 

• China will enforce stricter oversight on the requirements pertaining to investments for manufacturing NEVs, curb blind expansion in NEV projects, and release specific guidance and regulation for merger and reorganization activities, said Shan Zhongde, a Deputy Minister of Industry and Information Technology. 
• The Commerce Ministry will look into the possibility of reducing insurance premiums on NEVs to help improve maintenance services and alleviate customers’ concerns, according to Vice Minister Sheng Qiuping. Meanwhile, Beijing will introduce new incentives to encourage buyers to trade in their old vehicles for greener ones, especially NEVs and hybrid vehicles. 
• The central government is also aiming to renovate 50,000 old urban residential communities this year, which will include the installation of public chargers for EVs, said Qin Haixiang, a Deputy Minister of Housing and Urban-Rural Development. The National Energy Administration will concurrently push for the sufficient availability of charging points in the country’s vast majority of rural areas, said director Du Zhongming. 

READ MORE: EV charging problems deepen as Chinese consumer confidence wavers: McKinsey

Rising PHEV usage: China expects the rising adoption of plug-in hybrid vehicles (PHEV) to offset the slowing growth of battery EVs in the short to medium term. BYD reported sales of roughly 1.57 and 1.44 million BEVs and PHEVs respectively last year, prompting a growing number of Chinese carmakers to follow suit in producing more of the battery EV alternatives. 

• Ouyang described the dual strategy of making both PHEVs and BEVs as “a wise move.” He expects PHEVs to grab significant market share from internal combustion engine cars in the coming years, especially in the price segment between RMB 70,000 and RMB 100,000 ($9,724 and $13,891), while envisioning a more widespread adoption of BEVs over the next decade.
• Sales of BEV and PHEVs in China rose 11.7% and 72.8% respectively in the first two months of this year, according to figures from the China Association of Auto Manufacturers (CAAM). Overall NEV sales increased 29.4% to 1.2 million over the period, and the industry group expects growth to further slow down to 21.1% in 2024 from last year, when the market grew by 37.9%. 

READ MORE: Chinese EV makers’ February sales hit by holiday, cold snaps

Chinese electric vehicle makers are taking a ferocious price war to a new level as BYD and its peers kicked off 2024 with dozens of redesigned models that boast improved specifications at lower price tags. 

For conventional carmakers, the situation is different from previous stages of the battle, as their Chinese counterparts claimed for the first time that “electric is cheaper than gas,” meaning their EVs now reach or even surpass price parity with similar combustion engine models. This milestone was supposed to take place as early as 2026, according to forecasts from BloombergNEF. Its ahead-of-schedule arrival is ushering a new phase for China’s car industry.

The world’s biggest EV market is being reshaped by a seemingly endless price war that has been going on for a year, and 2024 will likely be a defining moment for those faced with flagging sales, persistent losses, and cash flow pressure, analysts say. The following explainer looks at the causes and implications associated with the recent price cuts by automakers in China, as well as what we might expect in the future. 

The good: reduced costs, innovation

Among the key reasons for the price reductions is the plunging cost of raw materials for EV batteries, as the spot price of battery-grade lithium carbonate fell from more than RMB 500,000 ($69,450) per ton to just over RMB 100,000 throughout the last year. Jefferies analysts calculated that Chinese EV makers saw their gross profit margin recover by 2.3% in the third quarter of 2023 with average lithium prices falling by RMB 200,000. 

A vertically integrated supply chain stretching from batteries to chips has also granted EV leaders BYD and Tesla the ability to achieve economies of scale and innovate products rapidly. BYD, which has had strong “pricing power” especially in the price segment between RMB 100,000 and RMB 200,000, will embrace a proactive approach to competition, chairman Wang Chuanfu told investors during an earnings call last March (our translation). 

Analysts expect the downward trend in lithium prices to continue, as vast amounts of capital were poured into new mines in China following the price rise in 2022, resulting in a severely imbalanced market. Lithium prices could come in as low as RMB 90,000 a ton in the fourth quarter of this year, creating more room for most companies to make price adjustments, Jefferies strategists said in a Jan. 10 note. Meanwhile, EV makers such as Xpeng Motors are likely to improve vehicle margins “to some extent” thanks to innovations in fields such as automated driving. 

The bad: overcapacity, slowing growth

On the other hand, however, Chinese EV makers have been under pressure to boost sales volumes as they grapple with a clear capacity glut and slowing growth against the backdrop of weak momentum and insufficient demand. 

Only 20 out of 77 car manufacturers in China ran at more than 60% of their maximum operating capacity last year with numbers from the rest coming in under industry-competitive levels, according to public records. Tina Zhou, chief executive of auto parts trading platform Gasgoo, commented on social media on Dec. 17, citing this overcapacity as a major reason for the industry-wide price war over the past year. In January, the Chinese government said it would take “forceful measures to prevent superfluous projects” related to EV manufacturing, Reuters reported. 

Although China’s leadership in EV is seen as a bright spot in a faltering global economy and amid a domestic economic downturn, experts have painted a picture of a resilient but slowing market, flagging more price cuts to come as sluggish consumption abounds. Bernstein expects China’s EV sales growth to be “still impressive” but slower at 25% for 2024 compared to 35% last year, with a combined total of approximately 185 new EV models set to go on sale this year. 

“Consumers are getting spoiled by deep discounts and believe they will eventually negotiate a better price even for those new cars coming to the market,” Bernstein analysts wrote in a Jan. 10 note. 

Could it get ugly?

The unprecedented battle for the world’s biggest and most competitive EV market has pressured international auto majors from Ford to Toyota to scale back their operations since last year, with their market share (Tesla excluded) declining from 51.6% to 38.3% during 2021-2023. Citic Securities on Feb. 22 forecast (in Chinese) that number to drop to below 20% over the long term, with only German luxury carmakers able to maintain their presence. 

Meanwhile, a new wave of consolidation and some reshuffling is underway among Chinese EV makers as repeated price cuts allow the bigger ones to grab more market share and put their smaller rivals under financial pressure. The top 10 players could together claim a combined 85% of the market in 2024, driving smaller players out of business, Changan Automobile chairman Zhu Huarong, a delegate of the National People’s Congress, told Chinese reporters on Tuesday on the sidelines of the Two Sessions meetings in Beijing.

Not everyone agrees. NIO founder and chief executive William Li told TechNode during a media event in December that the company is preparing for a long drawn-out fight, while UBS envisioned China could be big enough to allow 10-12 domestic carmakers to sell significant volumes with different success stories by 2030 in the best-case scenario. 

Either way, it could be an almighty battle – it will be thrilling to see who emerges victorious.

Sales of major Chinese electric vehicle makers including BYD and Geely fell by nearly half in February from a month prior, hit by the week-long Chinese New Year holiday and a prolonged cold snap, as well as ongoing economic uncertainty. 

Why it matters: The slump largely reflects the increasingly fragile position of smaller EV makers, already struggling to maintain reasonable sales volumes while larger rivals compete for market share with new models on offer for lower prices. 

• Consolidation within the world’s biggest EV market is expected to accelerate as competition intensifies and growth slows. Li Auto president Ma Donghui told investors last week that the top three brands could together claim 70% of the segment in which an EV is priced from RMB 200,000 ($27,780) by the end of this year. 

Details: BYD on March 1 reported its lowest sales since June 2022, with 122,311 vehicles sold last month, a 39.2% fall from January. New energy vehicle (NEV) sales of rival Geely, including battery EVs and plug-in hybrids, dropped 49% month-on-month to 33,508 units. 

• Great Wall Motor saw a bigger decline from a month earlier than its rivals as the auto major sold 12,253 EVs in February, a drop of 51%, while sales of Aion, a subsidiary of China’s GAC Group, were 33.2% lower than a month before. 
• Jefferies analysts attributed the decline to a seasonal demand lull in the just past Lunar New Year holiday, which reduced working days and dampened buying interest, accompanied by an unexpected cold snap that swept through most of China. 
• Smaller EV makers were hit harder than large ones, as monthly sales of both Leapmotor and Hozon Auto fell below 7,000 units, while February deliveries of Xpeng Motors and Voyah were down roughly half to 4,545 and 3,182 units respectively. 
• Most automakers have either launched cheaper new models or offered big incentives to drive sales in recent weeks. BYD kicked off 2024 with the launch of at least eight lower-cost version cars over the past two weeks, forcing rivals including Geely, Changan, and Leapmotor to follow suit.
• Huawei-backed EV maker Aito and Nasdaq-listed Li Auto, are among few carmakers to enter 2024 in decent shape, each delivering over 20,000 units last month. General Motors’ joint venture Wuling and NIO saw deliveries drop 18.4% and 19.1% from January respectively. 

Context: Analysts expected NEV sales to bounce back in March following recent price cuts by China’s major automakers, as store traffic returns to pre-Lunar New Year levels, according to a March 1 note from Jefferies, citing a Chinese dealership. 

• Overall, NEV sales in China declined 29.5% month-on-month to roughly 668,000 units in January, in part due to a high base in December when most automakers made a year-end sales push, according to figures from the China Passenger Car Association. 
• The industry group warned that numbers would drop in February to their lowest level of the year as the market entered a traditionally low season. It remains to be seen whether March will witness a sales rebound.

Chinese electric vehicle maker Zeekr began selling a redesigned version of its best-selling 001 on Tuesday with a slew of performance features including an extended driving range and faster charging speed at a cost of RMB 269,000 ($37,364).

Geely Automobile’s Zeekr is strengthening its offerings with an enhanced advanced driver assistance system, or ADAS, which will enable hands-free driving functions on Chinese motorways, in the face of competition from Tesla and home rivals such as Xpeng, Huawei, and Xiaomi. 

Why it matters: The new 001 is the latest example of how Chinese automakers are stepping up a months-long price war by offering ever-increasing high-tech, luxury-style features for the same price or less, as the world’s largest EV market consolidates.

• The Zeekr 001’s first full model change in three years, with more than half of the components refreshed or replaced, has pushed costs up by RMB 50,000 per unit, but the company has kept the starting price the same. The automaker cut prices of the model by around 10% from its original price in August 2023. The Zeekr 001 accounted for 60% of the brand’s sales last year.

Range boost: At a press event at Zeekr’s headquarters in Hangzhou, company officials emphasized how the all-new 001 beats rivals with its large battery packs and high-voltage architecture, providing more range and allowing for faster charging. 

• Zeekr offers two standard versions of the revamped 001. A rear-wheel drive model is powered by a 100 kilowatt-hour (kWh) Qilin battery pack which provides a driving range of 750 kilometers (466 miles) between charges, while an all-wheel drive variant can reach 675 km on a single charge with 95 kWh Shenxing batteries. 
• Both battery types, sourced from CATL, boast an extremely fast charge. Owners can add 525 km of range in 15 minutes with the Qilin batteries which charge at a 4C rate. The latest-gen Shenxing supports vehicles to run 256 km after a five minute charge at a 5C charge rate and needs 30 minutes to go from 10% to 80% at a temperature of minus 10 degrees Celsius.

Self-driving improvement: Zeekr integrated the revamp with roof-top lidar as standard, along with high-definition cameras and ultrasonic radar sensors around its perimeter, allowing the vehicle to spot objects 200 meters away, a combination intended to avoid complex situations and possible collisions. 

• The sports wagons will feature an upgraded version of a feature called Navigation Zeekr Pilot (NZP), which would take over basically all driving functions on the motorway, such as changing lanes and overtaking cars, according to the company. It is set to be available to drivers in 60 major Chinese cities by March and 90% of the country by June. 
• Zeekr expects to start inviting drivers to beta test a more advanced version of the ADAS software by June, allowing them to navigate around complex city streets without moving the steering themselves. The EV maker has embarked on a hiring spree for advanced driving with plans to increase the unit’s headcount from 800 to 2,000 by year-end. 

Market outlook: Management expects the all-new Zeekr 001 to contribute at least half of its sales in 2024, with monthly deliveries reaching 10,000 units per month, Jason Lin, a vice president, told reporters on Tuesday. The company will commence delivery on Friday with a goal to deliver 230,000 EVs this year, nearly a 100% increase from last year, Reuters reported. 

• The battery EV competes with crossovers and sports sedans such as BYD’s Denza N7, as well as the upcoming Xiaomi SU7. Rivals from BYD to Great Wall Motor have been ramping up efforts to develop self-driving technology, a drive that has been led by Huawei and Xpeng in China. 
• Lin was bullish on the firm’s outlook, adding that the company will expand its retail network to 525 shops by year-end, adding 100 or so flagship showrooms in first- and second-tier cities and another 100 smaller ones in lower-tier cities. Zeekr currently has four models on sale, including the cheaper sedan 007, the multi-purpose van 009, and a compact crossover.

READ MORE: Geely to sell its Zeekr electric cars directly to customers

Geely is taking strides towards becoming a global auto leader as it finally lists an iconic sports car brand after a months-long delay. 

Lotus Technology, the electric vehicle division of Lotus, majority-owned by Geely after a financing deal in 2017, began trading its shares on Nasdaq on Friday. The brand appeared under the ticker LOT, achieved via a merger with a so-called blank-check company.

Despite China being Lotus’ largest single market, international markets are set to make a greater contribution to revenue growth and margin expansion, Feng Qingfeng, chief executive of Lotus Group and senior vice president of Geely Holding Group, told a Friday media call. 

Once a legend in the racing world with its lightweight and aerodynamic vehicles, UK-founded Lotus was for years fraught with financial trouble due in part to a mismatch between high investment costs and low-volume output. 

The $880 million infusion of capital from the deal is expected to fund Geely’s ambitious plan to fully electrify the illustrious 75-year-old racing brand by 2027 and boost its business beyond the super-luxury price segment globally. 

Global electrification boom 

Around the time Emira – the last Lotus model with an internal combustion engine – was released in mid-2021, Geely set its sights on the booming global luxury EV market set to enjoy  double-digit growth over the decade, according to Oliver Wyman, adviser on the deal. 

China’s second-biggest automaker by sales is set to expand in the US and South Korea in the second half of this year with the introduction of Coventry-designed, Wuhan-manufactured Lotus EVs featuring German engineering and Tesla-like automated driving features. 

Sales of the Eletre, an $115,000 sports utility vehicle and first of the new-age Lotus products, will begin in the US as early as September, followed by the delivery of the similarly-priced Emeya sedan next year, said Feng. Last July, Feng told the Financial Times that Lotus might use an existing plant owned by Geely-backed Volvo Cars in South Carolina, or possibly open an additional new US factory. 

The management on Friday did not give any update on the plan but expressed “full confidence” in its expansion, with its regional retail network set to be expanded to 80 showrooms from 47 in North America by 2025, despite rising US-China tensions. Global markets will account for roughly 60% of Lotus’ total sales by 2025, while China is set to contribute the remaining 40%, according to Feng.

Long road to revival

Taken public via a special purpose acquisition company on Friday, the UK-originated and Chinese-backed EV maker now has a market value of roughly $7 billion, less than a sixth of arch-rival Porsche. Yet, Lotus has set an ambitious goal of selling 150,000 EVs annually in 2028, up from 21,500 units last year, including a small number of gasoline-powered cars. 

The new phase brings different challenges. In addition to economic uncertainty worldwide, consumer sentiment for EVs is weak overall, especially in Europe, where Lotus is set to operate 105 retail stores by 2025. These challenges are compounded by policy and geopolitical risks for Chinese-backed EV makers selling abroad.

Meanwhile, EV sales in China appear to be shifting into a slower gear this year after years of accelerating growth. EVs now account for only 7-8% of new car sales in the segment priced from $80,000, lower than the “low teens” growth rate baseline estimated by the company, Feng acknowledged. Yet he continued to tout “strong growth potential” in the world’s biggest auto market. 

Management believes that a clear sales and marketing message derived from its decades of storied racing history will enable Lotus to stand out from rivals and bring it into closer competition with Volkswagen’s Porsche, which delivered over 40,600 electric Taycans worldwide last year. 

Meanwhile, Lotus Tech expects economies of scale from increased volume and competitive labor costs to bring its gross margin to at least 21% in 2025, up from 4.7% as of last June. The company has bet on a strategy similar to that of Porsche, which expanded into more affordable lifestyle luxury, from a pure focus on state-of-the-art sports cars. 

With a proven track record of turning around loss-making Volvo in just three years after its 2010 takeover, Geely has shown it can be adept at cross-border moves. The question now is, will it be successful this time?

Chinese electric vehicle maker Human Horizons will suspend production for at least six months and furlough its employees in an attempt to keep the company going as it looks for new funding, local media has reported. 

Why it matters: Human Horizons, which has been selling premium EVs under the HiPhi brand since late 2020, is the latest Chinese EV startup to scramble for cash as it tries to continue operations, as competition intensifies and growth slows in the hotly contested market. 

• Shanghai-based WM Motor, founded by former Volvo executive Freeman Shen, filed for a pre-restructuring process last October after failing to go public in Hong Kong via a backdoor listing, Reuters reported. Aiways, which began exporting EVs to Europe as early as 2020, also suspended production last year, the Financial Times reported.

Details: The austerity measures were announced at a staff meeting on Sunday and immediately went into effect, people familiar with the matter told financial media outlet Caixin (in Chinese).

• Human Horizons’ workforce were told on Sunday that their base salaries would be reduced to RMB 2,690 ($374) per month, Shanghai’s minimum wage, from March 15, the Caixin report claimed. 
• A company representative denied the report, without elaborating, according to Caixin. 

Context: The firm’s financial woes have been signposted for some time. It recently closed two showrooms and has been searching for new financing after Saudi Arabia’s Ministry of Investment withdrew its intention to set up a joint venture in a $5.6 billion deal.

• Human Horizons recorded a brief success during 2021-2022 when the automaker delivered roughly 8,700 upper premium HiPhi EVs and established a presence in the luxury segment where autos are priced above RMB 500,000 ($78,450). By comparison, Porsche delivered 7,315 all-electric Taycan cars in China in 2021. 
• The low-volume carmaker has since failed to extend its advantage in the mainstream luxury segment and struggled with a cash crunch. It delivered roughly 8,000 units last year, contributed to by the sales of its third model the HiPhi Y crossover, priced at RMB 339,000, while peers Li Auto and NIO delivered more than 376,000 and 160,000 units, respectively.

The Chinese electric vehicle segment briefly lost momentum in January as a majority of automakers reported a significant sales drop on Thursday during the traditional low season, a contrast to December when big promotions and exciting discounts gave a short-term sales boost at year-end. 

Why it matters: The decline was especially marked for BYD, which accounted for nearly a third of the country’s green energy vehicle sales last year. The biggest Chinese EV maker maintained its leading position with sales of more than 201,000 units last month, although that number represented a 41% decrease compared to December. 

• Geely and Huawei-backed Aito are among the few bright spots that have bucked the trend with their new models, becoming potential challengers to BYD’s dominance. Meanwhile, international carmakers such as Volkswagen and General Motors posted decent sales with local partner SAIC, showcasing their efforts to play catch-up. 

Ups: Geely posted its best-ever month with sales of 65,826 fully electric and plug-in hybrid vehicles last month, roughly 5,400 units more than in December and nearly six times greater than what Volvo’s parent achieved a year ago. This growth was partly due to strong sales of its Galaxy and Lynk & Co brands, which sold 19,223 and 28,176 units over the month, respectively. 

• Aito also delivered a record 32,973 cars in January. That is in line with the company’s outlook and stands in stark contrast to the same month last year when it reported deliveries of only 4,475 vehicles. The brand, launched by Huawei and its manufacturing partner Seres, said on Thursday (in Chinese) that it has secured 140,000 non-refundable orders for its redesigned M7. 
• Avatr, another Huawei-backed and Changan-owned EV brand, also posted improved sales volume for January buoyed by the positive demand for its second model launched in November. However, an ongoing shortage of Huawei’s key components may add uncertainty to the outlook of the premium brand and its peers, as reported by Reuters. 

Downs: On the other hand, China’s US-listed EV trio are the ones under pressure by reporting their lowest monthly deliveries since June, as they engage in a relentless price war with larger tech and auto forces. Both Li Auto and NIO slashed prices on current lineups last month as they prepare to launch revamped models in March, potentially causing some customers to postpone purchases. 

• Sales of Aion, which has sold a large proportion of its vehicles to ride-hailing fleets, also dropped 46% month-on-month to 24,947 units in January. The EV maker, affiliated with state-owned automaker GAC, is now ramping up efforts to go abroad, as sales in the overseas markets reached the threshold of 3,000 units for the first time last month. 
• Deliveries of Great Wall Motor and Deepal, another Changan subsidiary, also decreased by 16.2% and 7.1% to 24,988 and 17,042 units respectively, from December. Meanwhile, IM Motors, a premium EV brand launched by China’s SAIC, saw a bigger drop with its January number more than halved from a month earlier to 5,305 units.

Context: China’s sales of new energy vehicles, mainly all-electrics and plug-in hybrids, increased 92% year-on-year from Jan.1-28 partly due to the year-ago low base effect marked by a wave of Covid cases after Beijing dismantled pandemic controls in December 2022. However, that number was 24% down compared with December when most automakers made a year-end sales push, figures from the China Passenger Car Association (CPCA) showed.

BYD and FAW Group are aiming to invest in DJI’s automotive business unit – one of the few Chinese companies capable of developing partially automated driving software – as part of the latest effort by traditional automakers to catch up with rivals such as Tesla, local media has reported. 

Why it matters: The news comes at a time when a growing number of automakers and suppliers are expanding their alliances in hopes of accelerating progress in and sharing the cost of making partially automated driving passenger cars. In China, the technology is being popularized by the likes of Tesla, Huawei, and Xpeng Motors. 

• It is also the latest example of Chinese auto majors taking steps to turn their business partnerships with tech companies into deeper capital relationships. Changan Automobile recently announced it will invest in a new venture set to absorb Huawei’s car business unit. 

Details: BYD and FAW, a manufacturing partner of Volkswagen and Toyota in China, recently conveyed their message to DJI Automotive, the car business unit of the namesake drone maker, 36Kr first reported on Wednesday (in Chinese). Citing people with knowledge of the matter, the report did not put a figure on the planned investment.

• BYD is planning to roll out partially automated driving functions for future affordable models priced at RMB 200,000 ($27,920) or below in 2025 with assistance from DJI, a person close to the company told TechNode on Thursday. 
• DJI is appealing to original equipment manufacturers (OEMs) for its low-cost advanced driver assistance system, as they have been struggling to lower costs and repeatedly cut prices of their cars, another source with direct knowledge of the matter told TechNode. 
• DJI, China’s biggest drone maker, stated that its technology suite, including an affordable computing chip from Texas Instruments (TI) with only a few cameras, could enable cars with automatic lane changing and on-ramp to off-ramp functionalities on Chinese expressways. 
• Some EV makers, including NIO and Li Auto, have developed similar functions based on Nvidia’s more expensive DRIVE Orin processors, with each offering 254 trillion operations per second (or TOPS), compared with the 32 TOPS offered by a top-end TDA4 chip from TI. 
• “While BYD is not the forerunner in autonomous driving, it has the ability to be a fast follower which will likely meet the needs for the majority of Chinese consumers,” Bernstein analysts wrote in a Jan. 22 note, citing economies of scale, which allows it to collect more data for software training from its large fleet, as one of the reasons.
• BYD and DJI did not respond to TechNode’s requests for comment. 

Context: Shenzhen-headquartered DJI separated its car business into an independent company in late 2022 and became open to external funding with a target valuation of $1.5 billion, Chinese media outlet Leiphone reported in August. 

• The drone giant has worked with SAIC-GM-Wuling (SGMW), a General Motors China joint venture, since 2019, with the first model integrated with its automated driving technology, the Baojun Kiwi EV, going on sale with a price tag of RMB 102,800 in September 2022. 
• BYD showcased a Yangwang luxury off-roader that integrates an unmanned aircraft on the car’s roof in a collaboration with DJI during a press event on Jan. 16. It also announced plans to release at least 10 new models this year featuring advanced driving technology.

READ MORE:  BYD’s Denza launches cheaper driver assistance system with Nvidia amid rising competition

Just as German majors once did in the gasoline-powered vehicle segment, Chinese carmakers are beginning to jointly build a reputation for luxury in the electric vehicle segment in their home country, according to Paul Gong, head of China autos research at UBS.

Why it matters: The comments point to a dramatic shake-up in the world’s biggest auto market as once-dominant foreign car brands lose ground while Chinese counterparts such as BYD and Li Auto have risen over the past year, often in step with each other. 

• Notably, Chinese status-conscious buyers are coveting local luxury-styled cars which have enjoyed a medium-to-high single-digit increase in average selling prices each year over the last decade, Gong told reporters in Shanghai on Tuesday. 

Details: China’s new cohort of EV makers have tended to sell pricier than average cars packed with high-tech features, inspiring their more established counterparts to improve their offerings and resulting in a positive net effect on all of the companies’ profiles, Gong said, pointing to “synergies” similar to those of the German majors in the fossil-fuel car era. 

• The “glass ceiling” of China-made car prices is being shattered, according to the Swiss bank, as Chinese EV models have gained popularity, especially models in the price range between RMB 200,000 and RMB 300,000 ($27,880-$41,820).
• However, it remains challenging for them to go further upscale into the super-premium segment where a car could be priced at RMB 1 million ($140,000), Gong added, citing a lack of confidence in luxury Chinese brands among older Chinese consumers.
• UBS projected that Chinese automakers will account for close to two-thirds of China’s passenger car sales in 2024, up from 56% a year ago, while absorbing 41% of the overall profit pool, compared with 17% in 2022, boosted by higher selling prices. 
• Gong envisioned China could be big enough to allow 10-12 domestic carmakers to sell significant volumes with different success stories by 2030 in the best-case scenario, rather than just three to five as some had previously expected.
• Tesla, Volkswagen, General Motors, and BMW were the only international car makers last month to record sales of more than 10,000 new energy vehicles, mainly all-electrics and plug-in hybrids, according to figures from the China Passenger Car Association on Tuesday.

Context: Having struggled to cope with the ferocious competition of repeated price cuts, Chinese car brands such as the established BYD and new entrant Xiaomi have sometimes turned to collaborations to generate buzz and support on social media. 

• BYD showcased a dozen Chinese-branded EV models, including those of rival Li Auto, in a show of solidarity at its headquarters in Shenzhen last August, TechNode reported. Meanwhile, a video clip posted by BYD has racked up nearly 24 million views on Twitter-like platform Weibo, which looked back at the developments of major domestic carmakers. 
• Xiaomi launched an advertising campaign on several digital outdoor billboards in China’s four top-tier cities to show its respect to competitors including BYD, Huawei, and Xpeng Motors, before the pre-launch event of its first EV model last month. In a post on his Weibo account, chief executive Lei Jun called his rivals “pioneers of China’s new energy vehicle industry.”

Geely on Jan. 5 launched the first battery electric sedan under its mainstream luxury marque Galaxy, which the Chinese automaker hopes will take the crown from the likes of the BYD Han to become China’s best-selling model in the mainstream sedan segment. 

“We are aiming to see the Galaxy E8 take pole position as a top-seller against the backdrop of increasing competition in the Chinese mainstream car segment,” Jerry Gan, chief executive of Geely Automobile Group, said in an interview after the launch event (our translation). The company did not provide specific sales targets, citing fluctuations in the market. 

Volvo’s parent is looking to carve out a significant piece of China’s increasingly crowded medium-to high-end car segment. Approximately 65% of the new EV models debuted at November’s Guangzhou Auto show were priced between RMB 200,000 and RMB 300,000, including the Galaxy E8, its sibling Zeekr 007, and BYD’s Sea Lion, Jefferies analysts wrote in a research note dated Nov. 28. 

BYD’s Han was 2023’s most popular electric sedan in the price segment with sales of more than 200,000 units. Geely posted sales of 83,497 vehicles under its Galaxy marque as of December, after deliveries began last June. It began deliveries of the E8 on Jan. 5 and has two other plug-in hybrid models for sale in the lineup, the L7 crossover and the L6 sedan, priced from RMB 138,700 and RMB 115,800, respectively. 

Below are five key factors that Geely hopes will carry the Galaxy E8 sedan to success:

Pricing: The Galaxy E8, a five-meter-long flagship sedan, starts at RMB 175,800 ($24,612), which is RMB 34,000 below the base price of the BYD Han EV, and RMB 6,000 lower than the smaller, hybrid Toyota Camry. Its all-wheel drive version is priced at RMB 228,800 and additionally features an 800-volt system for fast charging and acceleration from 0 to 100 km/h (62 mph) in 3.49 seconds. 

Smart cabin: Like its homegrown rivals, Geely has packed the luxury-styled but affordably priced sedan with technologies such as Qualcomm’s latest five-nanometer cockpit processor 8295, as well as a massive 45-inch wide 8K dashboard screen made by Chinese display manufacturer BOE. This makes the E8 probably the cheapest model that enables users to play hit gaming titles such as Asphalt in-car. By comparison, the 2025 Toyota Camry hybrid, which started pre-sales at RMB 181,800 in China on Jan. 1, is powered by Qualcomm’s previous 8155P processor. 

Performance: The single-motor E8 has a power output of 200 kW and is equipped with a 62-kilowatt-hour battery pack, offering a driving range of 550 kilometers (342 miles), while the entry-level BYD Han is fitted with a 60.5 kWh battery and a 150 kW motor. The top-end version of the E8 boasts 800-volt fast charging that potentially adds 180 km on a five-minute charge; for comparison, all the variants of the more premium Zeekr 007 offer an additional 610 km from a 15-minute fast charging session. 

Exterior: The capacious midsize sedan comes with a “ripples of light” design element, featuring an aesthetic front end with a 1.1 square foot illuminated graphics area comprising 158 micro-lights that can be programmed to display “over 100 different light shows,” according to Geely. It also has an aerodynamic design with frameless doors and concealed door handles, on  a 2,925-millimeter-long wheelbase, making it slightly larger than the BYD Han.

Satellite assistance: The E8 is one of the incoming models that could provide satellite call services in areas with no cellular or WiFi signal. Geely said it will launch a further 11 telecommunication satellites into low orbit in February, following the successful launch of its first nine satellites more than a year ago, geared towards offering high-precision navigation for its self-driving cars, reported Reuters.

Top Chinese automakers BYD and Geely on Monday reported record sales of electric vehicles in 2023 on the back of year-end momentum from their home turf and strong shipments to overseas markets, as China’s booming industry ramped up its push for global expansion.

Why it matters: The latest sales figures come at a time when China is set to surpass Japan to become the world’s largest car exporter, according to estimates by the China Association of Automobile Manufacturers (CAAM)  as reported by Nikkei, buoyed by a growing demand for green energy vehicles worldwide.

• Exports of new energy vehicles, mainly all-electrics and plug-in hybrids, grew 83.5% year-on-year to almost 1.1 million from January to November, while internal combustion engine vehicles remain the major export commodity, accounting for 75% of China’s total car shipments abroad, according to CAAM.

Details: BYD posted record sales at more than 3.02 million EVs in 2023, marking 62% growth from a year ago and putting the Chinese carmaker in pole position to retain its title of the biggest-selling EV brand in the country. In particular, exports surged 334% to 242,765 units compared with the previous year, with the company now having established its footprint in more than 70 countries.

• Sales of SAIC-GM-Wuling, General Motors’ minicar joint venture in China, also reached a record high of 1.4 million units, of which 211,512 were overseas exports, representing a 9% year-on-year growth. The automaker currently sells its budget models including Mini EVs in Southeast Asian countries such as Thailand, Vietnam, and Indonesia. 
• Geely said its EV sales rose 48% year-on-year and were also record-breaking last year, at 487,461 units, including 274,101 gas-powered and green energy vehicles abroad. Its premium EV brand Zeekr delivered 118,685 units over the year, up 65% year-on-year but missing its delivery goal of 140,000 units set earlier this year. 
• GAC’s EV unit Aion was also around 20,000 units short of its annual delivery target of 500,000 EVs, closely followed by Changan Automobile at more than 470,000 units. Huawei’s manufacturing partner said overseas shipments grew 35.4% to roughly 230,000 units, as construction of its overseas production base started in Thailand last month. 
• Li Auto maintained its solid momentum throughout the year as it reported deliveries of 50,353 plug-in hybrid crossovers in December, bringing the company’s total deliveries for the year to 376,030. Young EV makers such as NIO and Xpeng Motors are catching up with annual deliveries of 160,038 and 141,601, respectively. 
• SAIC-Volkswagen, the joint venture of the Wolfsburg-based automaker and China’s state-owned automaker, said it became the most visible player among its peers with sales of almost 110,000 units of its China-made ID family electric models. The German automaker in July reportedly cut the price of its ID.3 hatchback by more than 20% to RMB 125,900 ($17,500).

Context: CAAM expected car sales in China to reach the threshold of 30 million units for the first time in 2023 and that number will be further increased to 31 million in 2024, Caixin reported. NEV sales are set to total 9.4 million units in 2023, up 37% from a year earlier. The growth rate could slow to 22% in 2024, however, as the domestic EV market is maturing.

Xiaomi held its most significant media event of the year in Beijing on Thursday: the debut of its first electric car. With a size comparable to the BMW 5 Series and a shape similar to the Porsche Taycan, the four-door sedan boasts some of the Chinese car market’s highest specifications, as cut-throat competition from maturing rivals rises.

The sleek, gadget-full all-electric sedan is aiming to become a top choice for China’s increasingly tech-savvy consumers, and certainly aroused widespread curiosity judging by the more than 46 million people who logged on for the three-hour-long unveiling on the country’s Twitter-like site Weibo. Yet from journalists and insiders alike, the reaction was mixed. 

From the event, TechNode has selected some of the car’s highlights. 

Main specs

The high-performance SU7 can sprint from 0 to 100 km/h (62 mph) in 2.78 seconds, as it climbs to a top speed of 265 km/h. It is claimed to be the world’s most aerodynamic production car with a drag coefficient (Cd) of 0.195. By comparison, the Taycan Turo can hit 260 km/h and Tesla’s Model S has a Cd of 0.208. It also comes just a month after rival Huawei launched the Luxeed S7 sedan at 0.203Cd. 

Xiaomi said it uses two 9,100-ton mega casting press machines to produce the front and rear underbody pieces, giving the car a torsional stiffness of 51,000 Nm/degree, nearly twice the number of the Ford F-150 Raptor and higher than any other car on the road. The technology, first adopted by Tesla, has since been embraced by Chinese EV makers from Geely-affiliated Zeekr to Huawei-backed Aito.

Vehicle autonomy

Xiaomi’s chief executive Lei Jun presented aspects of the company’s self-driving initiative for public viewing, highlighting that the premium version of the SU7 will incorporate two Nvidia Drive Orin processing chips plus a laser sensor unit on the car’s roof to carry out certain partially autonomous driving functions. Xiaomi also showed a short video of the car drawing into a tight garage space autonomously.

The Chinese tech company has set a goal for its advanced driver assistance software to be available to drivers in 100 major Chinese cities by the end of the next year, according to Lei. Huawei and Xpeng Motors are for now the leaders of this booming market, with established carmakers from BYD to Great Wall Motor trying to catch up.

Smart cabin

The SU7 will be the latest Chinese car model powered by Qualcomm’s smart cockpit computing platform SA8295, after the Zeekr 001 FR and its sibling Jiyue 01, and its infotainment system will turn on in just 1.5 seconds. It is also integrated seamlessly into the Xiaomi ecosystem with the adoption of the company’s self-developed operating system, the HyperOS, which takes only 30 minutes or so to carry out important updates, according to the company. 

CEO Lei said the SU7 would create the same smooth experience that anybody with a Mi Phone is used to, as various apps are pushed from their phones to a 16.1-inch in-car dashboard once they sit in the car. Other devices, from tablets to home appliances, also seamlessly work with the vehicle, an integration trend led by auto and tech majors such as Huawei, Geely, and NIO.

Conclusion

Xiaomi will have to pick an appropriate price tag, given it starts with a somewhat broad, unclear positioning, said You Xi, a seasoned economic and financial writer and co-founder of Chinese online media platform Communication Planet. “It remains challenging for the company to extend its brand into EVs,” You added, citing similar offerings from multiple competitors among his reasons (our translation).

The smartphone giant plans to introduce two variants of the SU7 to “contemporary elites with taste in lifestyle and technology” in China over the next few months, said Lei. Some experts have predicted the premium version of the car, with an estimated driving range of 800 kilometers (497 miles), could cost consumers at least RMB 300,000 ($41,124).

Chinese EV maker NIO on Dec. 23 unveiled a long-wheelbase executive sedan model, the ET9,  with a price range of $112,160. The model boasts its own self-driving chip, marking the first utilization of the five nanometer process technology in China’s auto industry. 

The four-door executive flagship, equipped with proprietary technologies such as a sophisticated yet lightweight chassis system and a superfast-charging battery pack, reflects NIO’s commitment to redefining the upper premium vehicle market, William Li, the company’s founder, chairman, and chief executive, told press at the annual NIO Day event on Dec. 23. Li further referred to the target segment as ”a spiritual home base“ for international luxury carmakers (our translation). 

With a pre-sale starting price of roughly RMB 800,000 ($112,160), NIO’s answer to the Porsche Panamera could serve as a low-volume halo car and is scheduled for delivery in the first quarter of 2025. Larger rivals from BYD to Geely have also launched similarly-priced offerings, indicating their aspirations to upscale and grab a slice of the luxury market.

Here are some of the key specifications of the ET9 presented by NIO at the company’s annual gathering held in the northwestern Chinese city of Xi’an. 

Design highlights: Different from old-money cars that Western brands typically offer, the NIO ET9 features a sleek and contemporary look with high ground clearance, large 23-inch wheels, and cutting-edge gadgets such as laser sensors on the roof and sides for an all-round view of the car’s surroundings. 

• The interior boasts a modern design language. The car features an almost two-meter (six-feet) console that extends through the length of the cabin and is integrated with equipment such as a 10L fridge and folding tables, offering passengers first-class-style seats and comfort.
• The grand tourer measures 5.3 meters in length and 1.6 meters in height with a wheelbase of nearly 3.3 meters, making it longer than the Bentley Flying Spur and almost as tall as a regular off-roader. The back seats can be reclined as much as 45° and come with full-body massage programs. 

Autonomous driving: The ET9 will be powered by NIO’s first self-developed system on chip (SoC), the Shenji NX9031, for partially automated driving. NIO stated it will be the first Chinese automaker to use chips with five-nanometer process technology, providing its vehicles a computing power comparable to the combined total of that created by four industry-leading processors. 

• By comparison, NIO’s existing lineups are equipped with four Nvidia DRIVE Orin chips that handle up to 1,016 TOPS on seven nanometers. The purpose-built chip is a strategic move as it could improve processing efficiency and machine learning algorithm coupling for autonomous driving, Jefferies analysts said on Monday. 
• Li declined to provide further details about the semiconductor. Tesla has reportedly turned to Taiwan’s TSMC to produce its next-generation full self-driving (FSD) computer on 4/5 nm processes. Homegrown rivals Li Auto and Xpeng Motors are also developing their own chips for vehicle intelligence. 

Large cylindrical battery: The ET9 will incorporate NIO’s in-house developed, 46105-type cylindrical lithium-ion battery cells. This implies a size of 46 millimeters in diameter and 105 mm in length with a cylindrical shape, a technology also embraced by Tesla in the hopes of increasing ranges and lowering costs. 

• NIO asserts that its new batteries have a cell-level energy density of 292 watt-hours per kilogram (Wh/kg), and a 120 kWh pack can provide a range of 255 kilometers (159 miles) after five minutes of charging at a 5C rate, facilitated by a 900-volt electrical system. By comparison, CATL’s latest Qilin battery would allow Li Auto’s Mega van to cover 500 km on a 12-minute charge at a 5C rate. 
• NIO did not reveal many further details, except for Li’s comments to investors during a Dec. 5 earnings call stating plans to outsource battery manufacturing for reduced investment and improved margins. The EV maker is reportedly in talks with Great Wall Motor-backed Svolt to set up a joint venture for making batteries in its car manufacturing base of Anhui. 

Smart chassis: NIO also launched an intelligent chassis suspension system which the company claimed would provide a refined driving experience featuring a steer-by-wire system, rear-wheel steering, and adjustable suspension altogether for the first time in a mass-produced consumer car.

•  NIO said the so-called SkyRide Intelligent Chassis System, in combination with hydraulic components, could be raised or lowered by 50 millimeters in one second to help passengers in and out of the car. In April, BYD introduced a similar offering that could automatically adjust to different road conditions and driving styles.
• In a 50-second video clip presented by NIO on Dec. 23, an ET9 prototype offered an apparently smooth ride when driving over multiple speed bumps and showcased a four-tier tower of Champagne glasses on the front body panel which remained in place despite the road surface. The flagship sedan is also highly maneuverable with a turning radius as low as 5.45 meters, a record also achieved by Xpeng with its upcoming X9 van.

Huawei is doubling down on electric vehicles with plans to run as many as 800 showrooms in China next year dedicated to the joint car brands that it has launched with manufacturing partners, aiming to become a more visible player in the world’s biggest auto market. 

Why it matters: The new shops, expected to present a broader portfolio with larger spaces compared to Huawei’s current policy of showcasing vehicles in its regular appliance stores, will allow Huawei to display models and arrange test drives for more potential buyers. They will also be part of a branding overhaul to enhance Huawei’s brand image as a major car tech company. 

• Huawei began selling EVs powered by its technologies and manufactured by partners via its sales network for smartphones in early 2021 under its “Smart Selection” approach, in which Huawei reportedly provides sales channels and has more control over vehicle development.

Details: In what could be the tech giant’s fastest period of growth in its history, Huawei is planning to operate 800 car showrooms next year and increase that number to 1,000 in 2025, people familiar with the matter told Chinese media outlet 36Kr. 

• Those new shops will feature a new brand called the Harmony Intelligent Mobility Alliance (HIMA), a collaborative initiative for carmakers and a rebranding of Smart Selection based on Huawei’s proprietary Harmony operating system. 
• Some of the smaller locations could start from 2,500 square meters, allowing six cars to be displayed in-store while also doubling as a delivery center with another six for-sale vehicles in parking spaces outside, according to a franchise disclosure document obtained by 36Kr. 
• Huawei’s preferred flagship stores require a wider area of 8,000 square meters or more, and the company is renovating some existing retail shops to showcase the new HIMA brand with improved layouts, according to the report. 
• Some existing locations do not showcase the newly launched Luxeed S7 due to limited space, the report said. Huawei currently has three models on sale in partnership with Chongqing-based manufacturer Seres and state-owned carmaker Chery. 
• Huawei did not respond to TechNode’s request for comment. 

Context: Sources added that a retail and distribution network of 800 shops next year will be comparable to that of Huawei’s major rival Li Auto, which operates nearly 400 direct-sales stores and 320 maintenance centers as of November. 

• Huawei is quickly expanding its EV lineup in collaborations with existing partners, which also include Changan and JAC. It is set to launch the M9, a full-size sports utility vehicle, with Seres at a price range of between RMB 500,000 and RMB 600,000 ($69,972-$83,966) on Dec. 26. 
• Aito, an EV brand set up by Huawei and Seres in December 2021, delivered nearly 19,000 vehicles in November on the back of strong order volume for its redesigned M7 crossover. It operated a network of 1,000 retail locations and service centers in 230 Chinese cities as of June. 
• Meanwhile, long-time rival Xiaomi is on track to launch its first EV model, the SU7, and is reportedly preparing showrooms for car sales with the first batch of display models expected to arrive early next year.

Xiaomi said on Tuesday that it had sacked three employees for “spreading rumors” about plans for its electric vehicle business, as the company also said it was planning legal action over photos of its first car model leaked online by two media outlets. For months, multiple reports have circulated on Chinese social media featuring unauthorized confidential information about the smartphone maker’s EV business.

Why it matters: The news comes as Xiaomi, known for its low-cost pricing advantage in the smartphone market, has captured growing attention from Chinese netizens due to speculation of an imminent launch of its inaugural EV model, potentially heightening competition in the already low-margin sector. 

Details: The three employees were found by the company to have spread inaccurate information without permission during conferences hosted by brokerages and investment firms, severely misleading the markets and disrupting operations at Xiaomi’s EV division, the company said in a post on the Chinese Twitter-like platform Weibo. 

• Xiaomi is taking legal action against the trio, who have been dismissed for breaching the company’s code of conduct. 
• In addition, the smartphone maker is taking legal measures against two Chinese media outlets over allegations that their employees leaked images of its upcoming EV and violated their non-disclosure agreements with Xiaomi. 
• The Beijing-headquartered tech giant said it will continue to take action to ascertain liability for the alleged wrongdoings, including leaks and rumor-spreading. 

Context: A research note recently circulated on the Chinese internet and obtained by financial news agency Jiemian published what it said was “key information” regarding Xiaomi’s first EV, naming some of the suppliers for components such as the head-up display. 

• Xiaomi is also rumored to be set to debut the car at a press conference on Dec. 28, an influencer with the handle “Dianwankeji” wrote earlier this month on social e-commerce app Xiaohongshu. The company later said (in Chinese) that it has not decided yet on the event date.
• On Nov. 15, images of Xiaomi’s first consumer car along with key specifications were posted online for public review, as required by China’s Ministry of Industry and Information Technology, TechNode has reported. 
• More information revealed by China’s industry ministry last week showed that the premium version of the SU7 sedan will have a driving range of 800 kilometers, powered by a 101 kilowatt-hour (kWh) battery pack sourced from CATL. 

Volkswagen’s software unit Cariad and Chinese auto tech startup Horizon Robotics expect to recruit 300 employees by the end of this month for a newly established joint venture called Carizon, in an effort to meet growing local demand for advanced driving technology. 

Why it matters: The hiring spree marks the German auto major’s latest effort to develop its own in-vehicle software following an announcement last year of a $2.3 billion investment deal for a 60% stake in the JV in partnership with Horizon. 

Details: The two companies have not officially provided details of the recruitment plan, but Horizon’s co-founder and technology chief Huang Chang, leading a team of more than 100 engineers, has reportedly joined the JV. 

• Su Jing, a former head of Huawei’s autonomous driving team who has been on board at Horizon since earlier this year, will lead the development of advanced driving systems based on Horizon’s next-generation computing solution Journey 6. 
• Beijing-headquartered Carizon was officially set up on Nov. 20 with a registered capital of RMB 6.8 ($940 million), with VW and Horizon taking 60% and 40% stakes in the entity respectively, according to Chinese corporate data site Tianyancha.
• The JV will focus on rolling out automated driving technology powered by Horizon’s Journey series processors and integrated into VW’s upcoming battery EVs in China, according to an announcement dated Dec. 8. 
• VW and Horizon are on track to deliver their first collaborative development effort as early as 2025, Cariad China’s chief executive Chang Qing told Chinese reporters last month. This will allow VW vehicles to function independently on Chinese highways and certain urban streets, a feature popular with Chinese consumers.

Context: VW has made a series of moves to step up the pace of its software development for the Chinese market, including a $700 million deal for a 5% stake in Chinese EV maker Xpeng Motors unveiled in July.

• The German carmaker is also forming a JV with China’s ThunderSoft to improve its infotainment systems and car cockpits, Reuters reported in April, while partnering with smartphone maker Vivo on a similar effort.
• VW sold roughly 2.3 million cars in China for the first nine months of 2023, recording a year-on-year decline of 3%, of which roughly 117,100 units were EVs, up 3.9% from a year ago. It delivered 341,100 EVs in Europe over the same period, an increase of 60.9% from last year.
• Horizon said in April it has shipped more than 3 million computing solutions for over 120 car models from prominent Chinese automakers ranging from BYD to Geely. Self-driving startups such as Pony.ai and Qcraft are developing assisted driving technology based on its processors.
• US chip powerhouse Nvidia is also ramping up its self-driving car efforts in China with plans to expand its workforce locally after recently hiring Wu Xinzhou, a former vice president at Xpeng Motors, TechNode has reported.
• Speaking to Chinese media outlet LatePost in July, Wu said that foreign companies would need to establish research and development teams of “at least several hundred people” locally to be able to compete with Chinese carmakers and self-driving car companies (our translation).

Tesla is preparing for a major expansion of the Gigafactory Shanghai, its core electric vehicle production facility in China, in a move that looks set to enable the US automaker to bring out its long-rumored budget compact hatchback, local media has reported. 

The company is also said to be readying to supply Chinese clients with its large-scale utility batteries known as Megapacks from next year, having begun searching for a head of local sales. The availability of the Megapack in China will step up the pace of Tesla’s entry into the country’s energy storage market.

Why it matters: The news comes after Tesla CEO Elon Musk had dinner with Chinese president Xi Jinping, alongside other American company executives, on the sidelines of the Asia-Pacific Economic Cooperation Summit in San Francisco on Nov. 15. 

• In a statement published on the Chinese Twitter-like platform Weibo the next day, Tesla said it looked forward to joint developments with China in areas such as green energy vehicles, energy storage, and artificial intelligence, citing Xi’s support for Tesla’s operations in the country. 
• The moves are expected to help Tesla almost double its local production capacity and diversify its revenue sources at a time when the EV giant sees slowing sales due to growing competition from domestic players. 

Details: The so-called phase-three expansion could facilitate the production of Tesla’s upcoming car, dubbed the “Model 2” or “Model Q” with a price tag as low as RMB 150,000 ($21,800), people with knowledge of the matter told LatePost on Wednesday. 

• The expansion was put on ice early this year, according to a Jan. 12 report by Bloomberg, after apparent concerns from the Chinese government over data security issues related to Starlink, the satellite internet unit of SpaceX, Elon Musk’s rocket company. 
• Details of the plan remain unclear, but if it proceeds, Tesla is expected to be able to nearly double its manufacturing capacity in China to 2 million EVs a year. Analysts expect volume production of the lower-priced, next-gen Tesla vehicle no earlier than 2025.
• Meanwhile, Tesla in April announced plans to build a new facility in Shanghai – capable of making 10,000 large-scale, energy-storage battery systems, or 40 gigawatt-hours-worth (GWh) of the Megapack – scheduled to commence operations in the second quarter of 2024. 
• Sources told LatePost that the China-manufactured Megapack batteries will be delivered locally and overseas. 

Context: Tesla sold 771,171 China-made EVs in the first 10 months of the year, up 39% from a year ago, of which 308,816 were overseas exports, according to figures compiled by the China Passenger Car Association (CPCA). The annual growth rate saw a drop compared to 50.3% last year. 

• The US firm said in January that it deployed 6.5 GWh of energy storage in 2022, representing year-on-year growth of 64%. It estimated that the world requires a total capacity of 2,310 GWh per year of electric-chemical battery storage systems such as the Megapack in order to achieve a 100% global clean energy transition, according to estimates from the EV maker’s Master Plan 3.

Major Chinese electric vehicle makers from BYD to Xpeng Motors have collectively posted strong delivery figures in November as they attempt to hit their annual targets and as competition shows no signs of subsiding in the world’s biggest auto market. 

Why it matters: Jefferies analysts wrote in a Dec. 1 note that they estimated sales of China’s new energy vehicles (NEVs), mostly all-electrics and plug-in hybrids, to reach 1 million units in November with a solid month-on-month growth rate of 10% from a high base. 

• However, analysts warned of an intensified price war as 2023 comes to a close, as major EV brands including BYD and Li Auto have either cut prices or increased the royalties for customers since late November to boost year-end sales. 

Details: BYD on Dec. 1 revealed monthly sales figures of its premium Fangchengbao and Yangwang marques for the first time following their launches earlier this year, announcing it handed over 626 and 408 units to customers, respectively. Delivery of the RMB 1 million ($150,000) Yangwang U8 and the Bao 5, with a price range of RMB 289,800 to RMB 352,800, began in late September and November separately. Overall, the EV giant outsold its October figures by 70 units in November. 

• Geely’s NEV sales increased 4.7% month-on-month to 65,034 units last month thanks to a wide product portfolio under a multi-brand strategy. Volvo’s parent said it delivered 13,770 units under the Galaxy marque and 13,104 Zeekr-branded battery EVs, while sales of its Lynk & Co 08 extended-range hybrid EV surpassed the 10,000 mark over the month. The numbers of GAC’s Aion and Great Wall Motor rose 0.15% and 0.23% from a month previously, respectively. 
• Huawei-backed Aito posted its best-ever month by delivering 18,827 units, which is nearly 50% higher than its deliveries in October and surpassed the top end of the guidance provided by Huawei’s head of consumer business group a week ago. The number is expected to exceed 23,000 this month and to hit 30,000 in January, as the EV maker said it has secured more than 100,000 non-refundable orders for the revamped M7 crossover over the last two months or so.
• Growth momentum has been sustained for both Li Auto and Xpeng Motors which once again reported record-setting deliveries of 41,030 and 20,041 vehicles last month respectively. Li Auto’s founder Li Xiang said it is aiming for deliveries of 50,000 EVs this month, while Xpeng on Nov. 15 forecasted the fourth quarter delivery of up to 63,500 units. NIO‘s November delivery of 15,959 vehicles is basically flat from the previous month. 

Context: China’s NEV sales were partly boosted by the opening of the annual Auto Guangzhou show on Nov. 17 with dozens of debuts of all-new cars, as major players try to enhance their presence among a crowded field. 

• More than 5.9 million NEVs were sold during the first ten months of this year, representing a year-on-year growth of 34.2% and accounting for 34.1% of total car sales in China, according to figures from the China Passenger Car Association. 
• Miao Wei, former minister of Industry and Information Technology, expects the NEV penetration rate to exceed 50% of all new car sales as early as 2025. That would be 10 years ahead of Beijing’s schedule. Miao made the comment on Nov. 29 during this year’s China Automotive Industry Forum, reported media outlet The Paper.

More Chinese automakers are planning to adopt NIO’s battery swap technology as two giants join the program – Changan and Geely. NIO on Wednesday said it will partner with Geely to develop a common standard for electric vehicle battery packs and create a sprawling network of swap stations for both consumer cars and commercial fleets, just a week after Changan said it had become NIO’s first ally in a similar effort. 

The move could give a further boost to NIO’s long-term plan to split its money-losing recharging infrastructure unit into a standalone business with financing from outside investors, two people with knowledge of the matter told TechNode on Wednesday. Meanwhile, Geely and NIO will explore the possibility of establishing a shared battery swap network in overseas markets, said one of the people, without elaborating further. 

NIO and Geely declined to comment when contacted by TechNode on Thursday, referring instead to the announcement published by the two companies.

Car industry experts foresee the acceleration of the Chinese EV industry’s migration to a more unified standard for battery specifications and swap techniques originated by NIO. Still, the EV maker and its bigger allies could face a bumpy road despite their eagerness for a unified swapping standard until a number of business and technical hurdles are cleared. 

A common standard? 

It is clear that Chinese authorities are behind the move given that Changan is state-owned and given Geely’s position as the poster child for the Chinese privately-owned car industry, said Lei Xing, former chief editor at China Auto Review. Xing expects no real progress to be made within the next 12-18 months given the challenges in achieving a clear consensus for designing new batteries compatible with their recharging networks. 

A market-wide standardization may also not happen without government intervention. It’s one thing to require a certain plug type, and quite another to force standardization of batteries and chassis configuration, said Daniel J. Kollar, head of automotive and supply chain at business development consultancy Intralink Group. 

“This could have major effects on several design aspects and possibly even lead to certain limits on innovation and supplier choice,” Kollar added.

NIO may also find the need for considerable back and forth with its partners in order to get its swap technology closer to becoming the industry standard. It’s going to be NIO dictating its intellectual property to swapping partners, but Geely and Changan may want to have a say as well, said Tu T. Le, founder of business intelligence firm Sino Auto Insights. 

“There’s a lot that needs to be settled still,” Le added, citing Geely running its own swapping system as one reason. Volvo’s parent began operating its first battery swap station for commercial fleets in the southwestern municipality of Chongqing in late 2020, with plans to run 300 more by the end of this year.

A big relief?

Although it is too early to predict where NIO’s power business may end up, it is possible that a new entity jointly invested in by NIO and multiple other carmakers could be in play – something akin to what Huawei recently announced for its vehicle business unit, according to Xing. “This would ease the financial pressure on NIO and make them de facto outside investors of the startup.” 

The partnership would probably shoulder some of the investment burden for NIO with cash injections, although it may not help them sell cars, Le said. The increase in adoption of swapping will likely result in short-term improvements to their bottom line, but the big question is if it will result in more vehicle sales. 

The Shanghai-headquartered EV maker has built up a nationwide network of more than 2,100 swap stations, each reportedly costing more than RMB 3 million ($420,000) on average. That number is expected to surpass 2,300 by year-end. It delivered 126,067 vehicles for the first ten months of this year, in line with the industry’s average growth rate but lagging behind rivals such as Li Auto. 

“It’s hard to see how this is going to change NIO’s fortunes in the long run to a significant degree without added help from their new partners – either via providing a boost to their marketing reach or supporting the development of mid-market solutions,” said Kollar.

Huawei is spinning off its automotive business unit, enabling Changan Automobile and other manufacturing partners to invest, in a move aimed at turning the loss-making car division into a profitable operation amid fierce competition. 

Why it matters: The reorganization is a rare move for Huawei – a company under 100% ownership of founder Ren Zhengfei and its staff since 2003, according to its official website – as the Chinese telecommunication giant puts a date of 2025 on its target of profitability for its as-yet loss-making auto business. 

• Deemed by Citic Securities analysts as “a milestone” for the Chinese auto industry, the move is expected to help Huawei court new industry allies and gain investment to pursue intelligent vehicle technology. Established automakers such as SAIC have reportedly voiced concern about Huawei’s move into electric cars. 
• The equity structure of the new entity may be comparable to that of the United Automotive Electronic Systems, a joint venture formed by German auto supplier Bosch and several Chinese carmakers including SAIC, FAW, and Dongfeng in 1995. This would allow more automakers to benefit from collaboration, and not just Changan, analysts wrote in a Nov. 26 note. 

Details: The new joint venture will focus on areas already covered by Huawei’s Intelligent Automotive Solution (IAS) business unit, including the development of intelligent driving software, digital cockpit systems, and digital platforms, among others, according to a regulatory filing published by Shenzhen-listed Changan dated on Monday. 

• Huawei will take at least a 60% stake in the new entity but will no longer directly compete against the new company in principle. Changan and its relevant parties will acquire no more than a 40% stake in the JV. The two companies plan to discuss the details of the transaction and sign an agreement within six months, the filing said. 
• The establishment of the new entity will have no impact on the ongoing collaboration between Huawei and Chinese car manufacturer Seres, according to a Nov. 26 statement. Seres, which makes Aito-branded EVs for Huawei, added it has been asked to participate in the investment and is in discussions to jointly develop intelligent electric vehicle architecture.
• The entity will prioritize diversified ownership, said the filing. It is anticipated that various parties will engage deeply in the development of the open vehicle platform, said Richard Yu, CEO of Huawei’s consumer business group and chairman of the IAS BU, who compared the platform to “a train engine.” 

Context: Huawei, state-owned Changan and Chinese battery maker CATL announced a partnership to establish EV brand Avatr back in late 2020. The companies have sold roughly 20,000 units of the Avatr 11 battery electric crossover since delivery began last December, launching their second premium model with a starting price of RMB 300,800 ($41,240) earlier this month. 

• Huawei has also been selling EVs since mid-2021 with lesser-known Seres, formerly the Chongqing Sokon Industrial Group, followed by the launch of the first Aito-branded EV last September. Huawei said in early October that it had secured more than 50,000 non-refundable orders for the redesigned version of the M7, Aito’s second model, less than a month after its launch. That number was updated to more than 100,000 as of Monday.
• The Chinese tech giant is also partnering with domestic manufacturers Chery, BAIC, and JAC, showcasing the first model under the new Luxeed marque jointly set up with Jaguar Land Rover’s manufacturing partner Chery on Nov. 9. The Luxeed S7 sedan will be officially launched on Tuesday and the respective new models co-built with BAIC and JAC are set to hit the market in 2024. 
• Huawei reportedly invested $1 billion in its automotive business in 2021 and has since maintained its push into the Chinese intelligent EV market in an effort to diversify its revenue sources and offset the impact on its core businesses from US trade restrictions. The IAS BU recorded revenue of RMB 1 billion during the first half of this year, accounting for around 0.3% of its total revenue. 

READ MORE: Xpeng and Huawei-backed EV maker set new delivery records as demand grows for self-driving tech

GAC Group and Changan Automobile, two of China’s biggest automakers by sales volume, detailed their respective timelines to manufacture solid-state batteries on Nov. 17, entering a global competition to bring the potentially transformative technology to play in electric vehicles (EVs). 

The moves resonate in an industry that has long attempted to commercialize the technology, widely seen as a next-generation energy storage device because of its superior performance and safety compared with the current batch of liquid-state electrolyte lithium-ion batteries. Several international carmakers have bet on solid-state batteries, with leading promoter Toyota reportedly projecting adoption by 2027. 

The news also indicates a growing trend among automakers of developing their own batteries, parts that comprise at least 40% of overall vehicle costs, to establish a self-sufficient supply chain. “Few companies have so far profited from making new energy vehicles [mostly battery EVs and plug-in hybrid EVs in China],” said Changan president Wang Jun during a press conference, citing a goal of achieving “sustainable, high-quality development” (our translation). 

Here’s what the two automakers said on Nov. 17 during the ongoing Auto Guangzhou show in southern China’s Guangdong province.

GAC: The Guangzhou-headquartered automaker is hoping to see an EV in production with its own in-house developed solid-state batteries as early as 2026. For now, the batteries have achieved a cell-level energy density of 400 watt-hours per kilogram (Wh/kg) and have proven effective under extreme conditions, according to an announcement. By comparison, the maximum energy density of CATL’s latest Qilin battery is 255 Wh/kg (per pack level).

• The state-owned manufacturer added that it is working on several other new battery types including cobalt-free and sodium-ion packs, without revealing further details.
• Meanwhile, the Chinese partner of Toyota and Honda expects its first wholly-owned battery plant to start rolling out conventional lithium-ion batteries later this month. The RMB 10.9 billion ($1.5 billion) plant, Guangzhou’s biggest ever, will produce an annual capacity of 36 gigawatt hours (GWh) by 2025, enough for 600,000 EVs. 

Changan: China’s fifth largest automaker’s plans include commercializing its first solid-state batteries by 2027 at a cell-level energy density of up to 500 Wh/kg, while large-scale vehicle application is scheduled for 2030 with the launch of several new battery products, said president Wang.

• As part of an RMB 10 billion investment plan, the Chongqing-based manufacturer will more than double its number of research and development employees from 1,200 to 3,000 by next year. It has also set its sights on making lithium-sulfur and other new battery types next decade.
• Ford’s manufacturing partner also projected its timeline for mass-producing lithium-ion batteries, starting as soon as next year. The product features a design in which battery cells are integrated directly with the vehicle body rather than segmented into several modules. This technology has enabled CATL’s Qilin batteries to promise a driving range of over 1,000 kilometers (621 miles) on a single charge. 

Context: Established automakers worldwide have been rushing to get solid-state batteries commercially ready for their green energy cars, which is intended to give them an upper hand as they navigate increasing competition in the global EV market. 

• In addition to Toyota, Nissan plans to launch a production EV with a solid-state battery pack by 2028 and BMW by 2030. China’s SAIC said in May that it has increased its investment in local battery startup Qingtao as part of its ambitious goal to sell 100,000 EVs with solid-state batteries in 2025.
• CATL in April unveiled a so-called condensed matter battery, a semi-solid state product using a condensed electrolyte, with plans to start mass production for aviation by year-end, Reuters has reported. The battery giant controls more than a third of the global market, according to figures compiled by South Korea’s SNE Research on Nov. 7. 
• The world’s second-biggest battery maker by shipment, BYD initiated its battery efforts two decades ago and accounted for 15.8% of global EV battery sales in the first nine months of 2023. Having benefited from its vertically integrated supply chain, the EV giant recorded a net income of RMB 10.4 billion in the past quarter.
• ​​A solid-state battery uses a solid electrolyte instead of liquid electrolytes, boasting a theoretically higher thermal stability and energy density than existing offerings. However, the batteries still suffer interface instability between electrodes and solid-state electrolytes, among other design issues.

As automakers continue their struggle amid an unrelenting price war in China, both established brands and startups are showcasing their latest products at the Auto Guangzhou 2023 show in a bid to take pole position ahead of what promises to be another year of tight competition. 

Traditionally one of the country’s largest car shows, this year’s Auto Guangzhou offers a glimpse of how intense competition in China has been, and how successful it has been at flushing out weaker foreign marques as domestic rivals fall over one another in a mad rush to crack the market. 

“Joint car manufacturers are faced with unprecedented challenges against the backdrop of the current situation,” said Wen Dali, a deputy general manager of GAC-Toyota, a joint venture between the Japanese automaker and its Chinese partner (our translation). More than 20% of the JV’s new car sales over the next three years in China are set to be new energy vehicles, mostly battery-run electric vehicles (BEVs) and plug-in hybrid EVs (PHEVs), Wen added at a press event on Friday. 

Here’s a quick roundup of some of the highlights from the Guangzhou International Automobile Exhibition, which kicked off on Friday in the capital of China’s Guangdong province. 

BYD – Sea Lion 07

The BYD Ocean family of electric cars on Friday welcomed a new sibling and its latest answer to the Tesla Model Y, the Sea Lion 07, crafted by Wolfgang Josef Egger, BYD’s design chief and a former head designer at Audi Group. 

The mid-size crossover boasts distinctive design elements with its muscular fenders, bold air inlets, and clean character lines on all four corners, while the high shoulder lines and the dual, through-type waistlines give the vehicle a sporty vibe. The features are intended to make the car look unique from miles away, Fan Jihan, a deputy director of BYD said on Friday during the show.

Slightly larger than Tesla’s Model Y at 4.8 meters in length and with a 2,900-millimeter-long wheelbase, the top-end all-electric car is expected to have a driving range of more than 700 kilometers (435 miles), compared with the 688 km claimed by the long-range version of its US rival. Scheduled for official launch later this year, it will be equipped with BYD’s latest advanced driver assistance system (ADAS), according to the company.

Geely – Zeekr 007 

This year’s Auto Guangzhou saw the debut of the long-awaited Zeekr 007, the first electric sedan under the premium marque of auto major Geely. 

The latest model from Stefan Sielaff, formerly a head of design at Bentley, the 4.9-meter-long all-electric vehicle comes with 1,711 high-intensity lamp beads powered by 75 automotive chips. This enables the car’s LED headlights to display a dazzling, customized lighting sequence with animation about 90 inches wide, showcasing some of the most advanced lighting technology by a Chinese carmaker. 

Meanwhile, the Zeekr 007 features an 800-volt battery system, which offers a driving range of up to 870 km on a full charge and can travel another 610 km on 15 minutes’ extra charge. Zeeker claims it to be the quickest accelerating road car of the same class ever made, going from 0 to 100 km/h (62 mph) in 2.84 seconds, while also being one of the earliest models to use Qualcomm’s latest 5-nanometer cockpit chip 8295. 

The company aims to begin delivering the car in January at a lower-than-expected pre-sale starting price of RMB 224,900 ($31,059). 

Xpeng Motors – X9

Xpeng on Friday was on its home court when it unveiled details of its first flagship multi-purpose vehicle (MPV) the X9, which the Guangzhou-headquartered electric vehicle maker expects will stand out from existing offerings with superior comfort and top-notch performance. 

With a competitive pre-sale starting price of RMB 388,000 ($53,544), the seven-seater has a claimed interior space of 7.7 square meters, which makes it 12% bigger than the Toyota Alphard, a worldwide top-seller in the chauffeur-driven luxury people mover category, according to chief executive He Xiaopeng. 

The family van is also said to have the best third-row seats on the market that can be adjusted for recline to a desired angle of nearly 180 degrees and folded down flat to increase cargo capacity. Meanwhile, the luggage compartment offers space for seven suitcases. 

The Xpeng X9 is claimed to be the world’s first MPV equipped with rear-wheel steering as a standard configuration, which reduces the car’s turning diameter to an industry record of 10.8 meters (35.4 feet), making it easy to maneuver. 

Li Auto – Mega

Li Auto has finally made available the details of its long-anticipated MPV, the Mega, with an exterior echoing the bullet-style look of China’s high-speed trains. The seven-seater van boasts the world’s fastest charging speed among electric vehicles of all kinds, capable of traveling up to 500 km on 12 minutes of charge powered by CATL’s next-iteration Qilin batteries. 

It has a drag coefficient (Cd) of 0.215, which the company claimed is the lowest Cd rating for an MPV, while it will consume 15.9 kilowatts (kWh) of electricity for every 100 km of travel, also among the lowest in the industry. 

The company, which has delivered more than 500,000 plug-in hybrid SUVs as of September, confirmed plans to build 300 supercharging stations in China by year-end. Pre-sales of the Mega started on Friday with a price tag of around RMB 600,000 ($82,800) and delivery scheduled for February 2024.

READ MORE: Chinese carmakers showed up big time at Auto Shanghai 2023

Images of what could be Xiaomi’s first electric vehicle model have leaked online ahead of the car’s expected launch next year. The photos from the Chinese Ministry of Industry and Information Technology show a large sedan with styling similar to the Porsche Taycan, adorned with a Xiaomi logo. 

Why it matters: Automakers are required by Chinese regulators to apply for registration before officially selling vehicles in the country, and the government ministry’s post indicates that the debut of the first Xiaomi car is approaching. 

• Xiaomi has begun trial production of its first EV at its facility on the outskirts of Beijing, with the vehicle expected to hit the market as early as February, a person with knowledge of the matter told Chinese media outlet National Business Daily on Wednesday. 
• A Xiaomi representative declined to comment when contacted by TechNode on Thursday, but in late October, chief executive Lei Jun reaffirmed the company’s plan for the car to go on sale in the first half of 2024, according to an Oct. 25 post published on the Twitter-like platform Weibo. 

Details: The Xiaomi SU7 is around five meters long and spans a 3,000-millimeter-long wheelbase, making it bigger than many mid-size sedans such as Tesla’s Model 3. It has a total mass of 2,430 kg and a curb weight of 1,980 kg, based on the registration details revealed by the MIIT on Wednesday. 

• The car features a sleek, athletic low profile with Xiaomi’s logo on the front and its name on the rear hatch, similar to the Porsche Taycan, a likeness brought to light by a Chinese auto influencer. The images also show a couple of wheel options and a choice of yellow brake calipers.
• The SU7 will be able to reach a top speed of 210 kilometers per hour on a relatively affordable, iron-based lithium-ion battery from BYD. The top speed of the premium SU7 Max will be 265 km/h, with the higher-end model equipped with a more expensive, nickel and cobalt-based battery pack from CATL. 
• An electric motor will provide a power output of 275 kW and 220 kW respectively, while the top-end version will integrate laser sensor units on the roof to enable partially autonomous driving capabilities, according to images released by MIIT.
• The five-seater sedan will be manufactured at Xiaomi’s factory in the Beijing Economic and Technological Development Zone, which has an initial annual capacity of 150,000 units, although its production application was filed in the name of a subsidiary of state-owned automaker BAIC.
• This appears to confirm speculation that BAIC, a manufacturing partner of Mercedes-Benz in China, has joined hands with Xiaomi, meaning the smartphone maker is still waiting for final approval to begin manufacture from the Chinese authorities. 

Context: Xiaomi and Huawei are among the Chinese technology giants with the potential to become major players in the EV space with advanced intelligent capabilities and a broad sales network, which remain difficult for many carmakers to replicate, Morgan Stanley analyst Tim Hsiao commented on an earnings call held by Xpeng Motors on Wednesday. 

• Huawei said on Oct. 6 that it had secured over 50,000 non-refundable orders for the revamped M7 sports utility vehicle less than a month after its launch. The number was updated to more than 90,000 as of Wednesday, local media outlet IT Home reported. 
• The telecoms giant started pre-sales of the first electric sedan under the new Luxeed brand with automaker Chery on Nov. 9, followed the next day by the launch of the Avatr 12, a premium crossover co-developed with partners Changan Automobile and CATL. 

READ MORE: Five things to know about Xiaomi’s new electric car company

Huawei on Thursday revealed its first electric sedan under the new Luxeed marque in collaboration with automaker Chery, saying it will compete with Tesla and Mercedes Benz’s premium offerings at a price comparable to the cheapest models of its international rivals.

“After some deliberation, we will make all versions of the Luxeed S7 available for purchase despite making a loss,” Richard Yu, the chief executive of Huawei’s consumer business group, told the media during a press conference in Shenzhen (our translation). This will allow more customers to try Huawei’s smart vehicle technology at an affordable price, said Yu.

The aggressive pricing strategy unveiled at the Luxeed S7’s launch marks the latest push by the Chinese technology giant to crack the world’s biggest and most competitive electric vehicle market. Huawei hopes it will be a new revenue source to offset the negative impact of US restrictions on its smartphone business. 

Here’s what we know about the newly-launched Luxeed S7 sedan:

Pricing: The sedan comes at a minimum price of RMB 258,000 ($35,381), RMB 2,000 lower than Tesla’s entry-level Model 3 in China. Pre-sale started on Thursday and the official launch is scheduled for Nov. 28.

Automated driving: The Huawei-Chery electric sedan is the first model to use the tech giant’s latest proprietary Harmony operating system. Its autonomous valet parking feature enables the car to park itself in lots and then return to a designated spot using a remote-control assisted function.

The premium versions of the Luxeed S7 will include Huawei’s laser sensor units and its Advanced Driving System (ADS) that uses deep learning networks and computer vision algorithms, including one called the General Obstacle Detection network, for navigating its surroundings. 

Huawei has claimed its partially autonomous driving technology will be accessible on major city roads across China by the end of the year, potentially ahead of rivals including Xpeng Motors. 

Main specs: Yu specifically identified Tesla’s Model S as Huawei’s major competitor, claiming that Huawei and Chery’s full-size luxury sedan outperformed its rival’s in terms of range, energy efficiency, and luxury. 

The top-end Luxeed S7 will have a driving range of more than 800 kilometers (497 miles) and be capable of driving another 400 km on 15 minutes of supercharging using Huawei’s facilities. By comparison, the dual-motor Tesla Model S has a 715 km range and can add 347 km in 15 minutes. 

The car also impresses with high energy efficiency, consuming an estimated 12.4 kWh per 100 km, compared with 13.2 kWh and 17.5 kWh achieved by the rear-drive Model 3 and the dual-motor Model S respectively. “This is far ahead of our rivals,” said Yu, using a phrase that has become a Huawei-related buzzword on the Chinese internet. 

The S7 slightly beats out the Model S with a drag coefficient of 0.203. Meanwhile, it offers a 0 to 100 km/h (62mph) acceleration of 3.3 seconds, just under the 3.1 seconds reported by the Model S performance version but faster than the Porsche Taycan 4S, according to Yu. 

Interior: The sleek, aerodynamically favorable sedan boasts of a larger cabin space than its major luxury competitors with an interior length of 1,910 mm. The Mercedes E300L and the Tesla Model S measure 1,898mm and 1,816mm in interior length respectively, according to figures cited by Huawei during the press conference. 

The S7 also comes with a sporty design concept for the inside, featuring a wide dashboard, a 12.3-inch smart screen, as well as an oval-shaped steering wheel, allowing drivers to see the whole display, rather than having to view it through the steering wheel. 

In addition, it has adopted so-called zero gravity seat technology for the front passenger seat. This allows the human body to take on a neutral spinal posture, reducing the amount of stress placed on bones and joints, while the backs of the rear seats are heated, ventilated, and 27/32° adjustable.

READ MORE: Huawei-backed Aito now has 50,000 orders for its redesigned M7 model

Xpeng Motors said on Nov. 3 that it will offer some existing owners of its P5 sedan discounts on new purchases after hundreds of customers accused it of failing to deliver promised advanced driver assistance features, which were supposed to be available across the country. 

Why it matters: The complaints, which went viral on Chinese social media last week, mounted after Xpeng on Oct. 24 unveiled plans to roll out its latest advanced driver assistance system (ADAS), the XNGP, nationwide by next year. The company said it will be applicable to existing models including the G6, G9, and P7i, without mentioning the P5. 

Details: Xpeng said in a statement issued on Nov. 3 that it will offer an RMB 20,000 ($2,747) coupon for people who have subscribed to Xpilot, its previous generation driver-assist software, along with their purchases of the premium version of the P5 sedan. The benefit could be used for a new purchase of one of Xpeng’s most popular models, including the G6, G9, P7i, or its upcoming X9 van. 

• The announcement comes after more than 700 P5 owners recently published an open letter, obtained by National Business Daily, asking the company for an explanation as to why its partially autonomous feature for urban driving has remained unavailable to them in most domestic cities, despite the company’s promises.
• Xpeng further explained that the availability of its previous-generation ADAS feature “relies heavily on” high-definition maps, which has reportedly required automakers to secure approval for using mapping data in their vehicles, partly resulting in slow progress in adoption (our translation). 
• The EV startup released the so-called City Navigation Guided Pilot (NGP) function first to Xpilot users in the city of Guangzhou last September and has since expanded the adoption to five major cities including Beijing, Shanghai, and Shenzhen. 
• “We will strive for more new features and improved user experience, despite many challenges,” Xpeng said in the statement, adding that more functions will be available to P5 owners through over-the-air updates next year, including steering assist and more music streaming apps. 

Context: Xpeng began delivery of the P5 electric sedan back in October 2021, with its premium versions featuring two lidar sensors to facilitate more reliable automated driving functions at a price range of between RMB 199,900 and RMB 223,900 ($27,453-$30,749). It sold 19,618 units of the car over the last 12 months, according to figures from the auto services portal Dongchedi.

• The automaker is shifting to a more affordable approach for autonomous driving, which will reduce its reliance on technologies such as lidar and HD maps as part of a plan to roll out its XNGP system in 50 domestic cities by December. 
• The Xpilot system, formerly Xpeng’s rival to Tesla’s Autopilot system as reported by CNBC, is unavailable for driving scenarios without the support of HD maps, according to a Q&A document published by the company last November.

Chinese electric vehicle makers Xpeng Motors and Aito on Wednesday posted record-breaking figures for monthly deliveries, as the pace of adoption of self-driving technology accelerates among local customers despite slowing growth in China’s electric vehicle segment as a whole. 

Strong orders for Huawei, Xpeng, and DJI’s city NOA (Navigation on ADAS) products mark the start of the commercialization of smart driving, Jefferies analysts wrote in an Oct. 24 note. They added that Chinese automakers are becoming more willing to “test the waters” with chips by Huawei on some of their vehicles.

Why it matters: The latest figures highlight a brutal price war that has been continuing for months in the market, and the struggle automakers are facing in having to choose between lower prices or losing market share. 

• Xpeng in June unveiled the G6, its crossover answer to Tesla’s Model Y, at a price tag 20% lower than its US rival in China. Aito’s all-new M7 sports utility vehicle now costs RMB 40,000 ($5,468) less than the version launched a year ago.

Riding the self-driving boom: Xpeng Motors handed over 20,002 electric cars to customers in October, crossing the 20,000 unit milestone, nearly a threefold increase from a year ago and  31% growth from September. 

• Aito also reported a record delivery number of 12,700 units last month. The Huawei-backed brand does not report its delivery figures consistently, but its Shanghai-listed manufacturer Seres posted sales of 40,389 EVs for the first nine months of the year. 
• The two companies appear to have taken an early lead in an emerging battlefield for partially autonomous technology among consumer carmakers. More than half of the orders of Aito’s redesigned M7 SUV were placed for versions with Huawei’s Advanced Driving System, Chinese media outlet Caixin reported on Oct. 7, citing company insiders. 
• The Max versions of Xpeng’s G6 crossover, which features the company’s XNGP assisted driving technology, accounted for 70% of total orders in the first month after the launch, chief executive He Xiaopeng said in August. Both companies said their vehicles would be able to travel autonomously most of the time in dozens of major Chinese cities by the end of the year. 

EV startups: Li Auto also accomplished a delivery milestone last month, distributing 40,422 vehicles, making its year-to-date deliveries 284,647 units, the highest among the country’s nascent EV startups. The company has upped its goal to 50,000 units for the remaining two months of the year, CEO Li Xiang said on Wednesday on the Chinese Twitter-like platform Weibo.

• NIO’s October delivery of 16,074 units represented a 59.8% growth from this time last year and a slight 2.8% increase month over month. The company has delivered 126,067 vehicles as of October this year, still far from the annual goal of 245,000 units revealed by CEO William Li in March. It is now aiming for monthly delivery of more than 20,000 units in the fourth quarter of 2023. 
• Leapmotor’s delivery of 18,202 EVs last month comes after the Zhejiang-based EV maker recently announced a deal with European major Stellantis for a $1.6 billion war chest and turned its negative gross margin into a positive for the past quarter. Rival Hozon delivered 12,085 units, representing a decrease of 32.9% year-on-year and 8.5% month-on-month. 

Established majors: BYD’s growth momentum continued to some extent in October as the company saw sales surpassing 301,000 vehicles with a mild 5.2% rise from a month earlier. Analysts expect China’s biggest EV maker to achieve its annual goal of selling 3 million cars this year, as the company on Monday launched a wagon version of its popular Song SUV and readied to sell its long-anticipated Bao 5 off-roader.

• Sales for Aion declined 19.6% from a month earlier to 41,503 units, as the GAC subsidiary ramps up production of its new models, company insiders told financial media outlet CLS. Changan-affiliated Deepal delivered 15,513 vehicles in October, a 10.7% decrease from September. 
• Zeekr delivered 13,077 vehicles last month, up 29.2% from a year ago and 8.5% from September. On Aug. 11, the two-year-old premium EV brand, set up by Volvo parent Geely, cut the price of its 001 hatchback by up to RMB 37,000 to RMB 269,000 for a limited period until the end of this year. 
• Voyah saw its deliveries grow 21% on a monthly basis in October after the Dongfeng-backed EV maker launched its redesigned Free SUV in August, with the model arriving 15% cheaper than the previous version and equipped with Baidu’s advanced driver-assist system. 

Context: Retail sales of new energy passenger vehicles, including all-electrics and plug-in hybrids, are expected to reach 750,000 units in October, up 34.6% year-on-year and 0.9% month-on-month, according to estimates from the China Passenger Car Association. The past two months, known as “Golden September, Silver October,” are traditionally peak seasons for auto sales in China.

Xpeng Motors teased how it sees the future of electric vehicles on Tuesday with the debut of its first multi-purpose vehicle model and a new timeline for the expansion of its self-driving software, as it faces an unprecedented offensive from major rivals like Huawei in a hotly competitive battleground.

Chief executive He Xiaopeng also revealed that the company has made significant progress in bringing flying cars closer to reality, while showcasing a working prototype of its humanoid robot, in a move reminiscent of Tesla’s introduction of its Optimus bot last September. 

Here are the key highlights from Xpeng’s annual 1024 Tech Day event. 

First MPV 

Navigating within a sharp and narrow turn at low speed on the stage at Tuesday’s event, Xpeng’s X9 is claimed to be the world’s first multi-purpose vehicle model equipped with rear-wheel steering as a standard configuration. This would allow the seven-seater, three-row van to handle “just like” a regular-sized sports utility vehicle, said He (our translation). 

Xpeng’s next-generation smart cabin system, the XOS, will also be available first to the owners of the X9, which is set to be formally launched at the upcoming Guangzhou Motor Show on Nov. 17. Powered by Qualcomm’s five-nanometer 8295 processor, the in-car software will offer a split screen mode, allowing drivers and passengers to run different applications simultaneously side-by-side for efficient multitasking.

Marking Xpeng’s entry into the Chinese MPV segment, the all-electric X9 will have to compete with an increasing number of similar offerings by established makers including BYD’s Denza brand, Great Wall Motor, and Dongfeng’s Voyah marque. Huawei-backed Aito and Li Auto are also set to launch their first MPVs later this year, targeting China’s growing three-generation families with larger interior car spaces.

Self-driving availability

Xpeng has also begun its switch to a more affordable hardware suite by removing some sensors from its incoming X9 model, betting more on cameras and artificial intelligence for its XNGP advanced driver assistance system, according to He. 

The Chinese automaker has updated its self-driving technology with what it described as some of the most advanced occupancy networks in the industry, comprising a deep neural network that reconstructs barriers and vehicles and predicts occupancy in a three-dimensional space for collision avoidance. 

A similar move has allowed Tesla to remove several ultrasonic sensors from its vehicles while enabling high-definition spatial positioning, longer range visibility, and the ability to differentiate between objects with its Full Self-Driving Beta software, which was announced by the US automaker last October. 

CEO He said Xpeng will deploy its XNGP system for urban traffic roads in 50 cities by December and make the functions available to drivers across China and Europe by 2024. It is competing with Huawei, which has quickly emerged as a rising player in the industry and previously announced a nationwide roll-out of similar features by year-end, while rivals BYD and Li Auto are playing catch-up.

Flying cars and robots

Experimenting with different approaches around flying cars, Xpeng also showcased two prototype aircrafts, or electric vertical takeoff and landing vehicles (eVTOLs). One of them boasts a two-in-one design that can fold up its wings and other components into the vehicle body, although He acknowledged that there are still some safety issues to be addressed. 

The 46-year-old serial entrepreneur sees greater potential for the commercial adoption of the other prototype, which is built on a modular system allowing the separation of the flight and automobile components. This model has a spacious interior with five seats while on the road and is powered by an extended-range hybrid engine, which can also recharge its aircraft component as it drives; up in the sky, the model is capable of carrying two passengers in an all-electric mode.

Xpeng further surprised the audience on Tuesday as its humanoid robotic prototype, the PX5, made its first public appearance. The company showcased the robot’s ability to navigate different terrain and pick up hand-held objects such as pens in a video. He envisions a near future where such AI machines could help look around in its factories or even mingle with customers at showrooms, hopefully by this time next year, he added.

Chinese electric vehicle maker Leapmotor said on Monday that it swung to a positive gross margin of 1.2% in the third quarter that ended Sept. 30 on the back of strong revenue growth, with the chief executive predicting a record performance for the remainder of the year. 

Why it matters: The quarterly results come as the Zhejiang-based and Hong Kong-listed automaker has continued its solid growth momentum in the highly competitive home market and recently announced an ambitious global strategy that covers major regional markets from Europe to Asia Pacific. 

• In addition, Leapmotor has reportedly been in talks with established automakers Volkswagen and Stellantis on potential collaborations that could include an investment deal, and on Monday expressed a willingness in its earnings report to “share” its technological capabilities with partners.

Details: Leapmotor on Monday posted a positive gross margin of 1.2% in the third quarter for the first time and “ahead of schedule,” compared with the negative margin of 8.9% it posted over the same period of last year and the negative 5.2% it achieved as of June. It initially aimed to achieve a positive margin by the end of this year. 

• The company attributed the growth to the strong deliveries of its pricier C01 sedans and C11 crossovers, which have starting prices of RMB 145,800 and RMB 149,800 ($19,933 and $20,481) respectively, significantly higher than that of its earlier model the T03, which is priced from RMB 49,900.
• Quarterly deliveries for Leapmotor increased by 24.5% year-on-year to 44,325 units over the past three months, a record high for the seven-year-old startup, with those of C01 and C11 accounting for more than 80% of total deliveries. 
• Revenue grew 31.9% year-on-year to nearly RMB 5.7 billion, with loss attributable to shareholders narrowing to RMB 986 million from the RMB 1.34 billion Leapmotor posted a year ago. Its research and development expenses of RMB 474 million during the quarter were up 17.3% year-on-year. 
• “Based on the current order volume, our deliveries in the fourth quarter are expected to record a new high,” CEO Zhu Jiangming said. The company delivered 15,800 units last month, still far behind larger rivals BYD and Tesla but slightly ahead of peers including Hozon, Xpeng, and Zeekr. 

Context: Leapmotor followed the suit of BYD and Li Auto earlier than most Chinese EV startups, betting on both pure EVs and plug-in hybrid EVs (PHEVs) with the launches of the extended-range C11 and C01 earlier this year. 

• PHEVs reported an impressive growth rate of 84.5% for the first nine months of this year in China, compared with battery EVs’ 18.1%, according to figures released by the China Passenger Car Association. 
• Meanwhile, on Aug. 1 the company announced a new round of price cuts of up to RMB 20,000 across its lineups, reversing its previous decision to keep prices stable along with several other EV makers in March.
• On Sept. 4 in Munich, Germany, Leapmotor unveiled the Leap 3.0, its proprietary vehicle architecture, and the C10, a mid-size SUV and the first model built upon it. Zhu said the company plans to launch five models in two years in markets including Europe, Asia Pacific, and the Middle East.

Chinese carmaker Guangzhou Automobile Group (GAC) is strengthening its alliance with ride-hailing platform Didi, investing up to $75 million into the latter’s autonomous driving unit. The move is expected to help GAC enhance its self-driving technological capabilities and sustain its sound growth momentum in the Chinese electric vehicle segment, according to an industry veteran. 

The deal, nearly clinched over three years ago, has recently been revived by the two companies as the impact from Beijing’s extended crackdown on Didi has waned, a person with direct knowledge of the matter told TechNode on Friday. It also comes against the backdrop of Didi’s renewed efforts to solidify its position as China’s biggest ride-hailing service with new incentives, putting smaller rivals under pressure. 

Self-driving push: Autonomous driving has proven to be among the most capital-intensive startup businesses on the current tech landscape, and the extended collaboration with Didi would allow GAC to share its costs and risks of making robocars, said Liu Guanghao, partner at Shanghai-based venture capital firm Befor Capital.

• The first robotaxi jointly developed by GAC and Didi is slated to join Didi’s ride-hailing network for commercial operation in 2025, the companies said earlier this year. GAC’s EV arm, Aion, announced a partnership with Didi back in May 2021 to develop a mass-produced car with Level 4 autonomous capabilities, indicating that the car can pilot itself without a human driver most of the time.
• Didi will also jointly test and operate autonomous vehicles for ride-hailing with OnTime, a mobility platform launched by GAC with partners in 2019, as disclosed by an anonymous source. OnTime, primarily active in the southern Chinese province of Guangdong where its parent company is headquartered, has been testing AVs with Toyota-backed Pony.ai, as well as Nissan-supported WeRide.

EV sales boost: The investment would also help GAC’s core carmaking business achieve sustained growth, especially in the Chinese commercial fleet segment, where its EV brand Aion has established a significant presence over the years, according to Liu. “Carmakers need more sales in order to survive in this highly competitive market,” he said. 

• Aion ranked second in sales among all-electric vehicles for ride-hailing, with approximately 49,000 units sold from January to October 2022, which accounted for 29% of its total sales, according to figures compiled by Shanghai-based consultancy LandRoads (in Chinese). BYD was the top-selling brand in the field, with sales of 35,000 more units during the same period, although this accounted for only 14% of its total volume. 
• GAC told investors last March that shipments of its Aion EVs for ride-hailing services only accounted for 12% of its total sales. The automaker, also a manufacturing partner for Toyota and Honda in China, reported sales of nearly 360,000 Aion EVs from January to September and is hoping to achieve 500,000 units for this year, which could almost double the number it sold in 2022. 

Context: GAC Capital, a wholly-owned subsidiary of the automaker, as well as state-owned Guangzhou Development District Investment Group, will invest the same amount of up to $149 million totally in Didi’s self-driving unit. GAC is set to inject no more than $75 million in the funding round, according to a Friday announcement (in Chinese). 

• OnTime is currently pursuing a public listing on the Hong Kong stock exchange, four years after it was launched by GAC along with a group of investors including Didi and Chinese gaming giant Tencent in mid-2019. It completed roughly 60 million rides last year and has operated in 21 domestic cities in the country’s Greater Bay area as of June. 
• GAC declined to comment when contacted by TechNode on Friday. Didi did not respond to TechNode’s request for comment. 

China’s Didi has recently set new growth targets in the three years to 2025, with new incentives for drivers and riders, in its latest move to recapture lost market share in the country’s ride-hailing sector, LatePost reported Monday. 

Why it matters: The move comes after Didi received a permit in January to resume new user registration and downloads through Chinese app stores for its ride-hailing service, marking an official end to a long-running regulatory crackdown on the company. 

• The development also puts competitors such as Meituan and Alibaba’s Amap under pressure, although industry insiders warn of a bumpy road ahead for Didi in the face of softening market demand due to weakening economic conditions, according to the report. 

Details: Didi recently informed investors that it is aiming for a 45% year-on-year growth in daily orders in 2023 and expects to keep the pace between 10% and 15% over the next two years, individuals familiar with the matter told Chinese media outlet LatePost. 

• This implies that the company is expected to complete more than 29 million rides per day for the full year, rebounding from its lowest point of around 20 million last January, and increasing the number to nearly 40 million by the end of 2025. 
• The annual target for this year is achievable, according to company insiders, with Didi starting from a low base in 2022 when major Chinese cities were repeatedly placed under Covid-19 lockdowns, dealing a blow to the country’s ride-hailing sector.
• The company delivered roughly 28.2 million rides per day on average in the first quarter of 2023, representing a 42% growth from a year ago, and increased its average number of daily rides to 29.4 million in the second quarter, according to its filings. 
• However, Didi’s ambitious objectives for 2024 and 2025 may face significant hurdles amid shrinking demand. By the end of 2022, ride-hailing app users in China totaled 437 million, down around 15.5 million on the total from the year before, according to figures compiled by the China Internet Network Information Center. 
• China’s biggest ride-hailing platform has increased its efforts to subsidize drivers and riders in recent months. A source estimated that the overall amount of subsidies could reach RMB 26.6 billion ($3.6 billion) this year, which would be equivalent to 14.8% of its total revenue at home, surpassing its previous level of 14%. 
• Didi did not respond to TechNode’s request for comment.

Context: Didi has been scaling back its efforts in developing cash-bleeding, emerging new businesses, and refocusing on its core business over the last two years after the Chinese government launched a cybersecurity probe into the company in July 2021. 

• Chengxin Youxuan, Didi’s community group-buy grocery unit, reportedly shut down more than 60% of its service locations shortly after the probe began, only a year after the launch of the service. 
• The company announced the sale of its smart electric vehicle business to Xpeng Motors in August. It had previously launched an all-electric hatchback for ride-hailing with BYD in November 2020.
• Chinese authorities announced a RMB 8.02 billion fine for Didi last July, closing its 18-month crackdown on the mobility giant, which was initiated following its mega public listing in New York in June 2021. 
• Didi had previously set big targets back in 2020. Notably, it had set its sights on overall daily orders surpassing 100 million globally for the next three years, with its four-wheel businesses in China, including ride-hailing and private chauffeurs, intended to account for half of this figure.

READ MORE: Didi app ban ignites race for ride-hailing market share

Aito, a Chinese electric vehicle brand backed by Huawei, has received more than 50,000 non-refundable orders for its redesigned M7 in less than a month. The orders follow the Sept. 12 public launch of the sports utility vehicle, which features Huawei’s Harmony operating system and assisted driving technologies. 

Why it matters: The latest sales figures, as revealed by a senior executive at Huawei, show tentative signs of a bounce-back for Aito from a months-long slump and could be a boost to the confidence of Huawei’s car manufacturing partners. 

• Aito has also been buoyed by Huawei’s comeback in the smartphone market with the recent launch of its Mate 60 Pro series, following the US ban on exports of advanced semiconductor technology to the Chinese technology giant. 

Details: The revamped M7 crossover has racked up more than 50,000 pre-orders with non-refundable deposits of RMB 5,000 ($685) as of Friday, Richard Yu, the chief executive of Huawei’s consumer business group, said in a post on Chinese social media app WeChat. 

• Yu described the growth momentum of the new M7 as “a miracle,” adding that more than 10,000 customers placed their orders over the past two days. He called on sales employees to ramp up delivery to meet the growing demand (our translation). 
• Accumulative orders per store averaged more than 80 following the launch on Sept. 12, according to figures posted Saturday by Sun Shaojun, founder of consumer behavior research agency CarFans. Aito said in June it operated a network of around 1,000 retail locations and service centers in 230 Chinese cities. 
• Sun added that a surge in store traffic for Huawei’s new smartphones has boosted the sales of the Aito-branded EVs, produced by Chinese manufacturer Seres, over the recent National Day holiday season. Huawei began selling EVs with its little-known partner via its retail network in 2021.
• Roughly 40-50% of the M7’s buyers are Huawei smartphone users and were coming to the stores for the Mate 60 handsets, Jefferies analysts wrote in an Oct. 5 note, citing an executive of a Chinese auto dealership. Customers compare the six-seater with Li Auto’s L7, BYD’s Tang, and the Ford Edge, analysts said.

Context: Huawei on Sept. 12 unveiled the redesigned version of the M7 SUV, featuring Huawei’s Harmony operating system at a starting price of RMB 249,800 ($34,299), which is around RMB 70,000 lower than the initial version launched a year earlier.

• The vehicle also comes with Huawei’s latest assisted driving software, ADS 2.0, which will allow it to travel by itself on busy urban streets nationwide as early as December, making it one of the most ambitious players in the Chinese self-driving car space.
• Huawei has offered future owners of the new large-sized plug-in hybrid early access to purchase its Mate 60 smartphones. The Mate 60 Pro flagship handset reportedly incorporates a self-developed 5G processor, a breakthrough for the Chinese tech giant following US sanctions in 2019. 
• Two-year-old Aito has seen sales slump during most of 2023 amid fierce competition from more established rivals such as BYD and Tesla. Seres, which produces Aito-branded EVs, recorded sales of around 33,000 units for the first eight months of this year, representing a 15.6% decline year-on-year. 
• Meanwhile, Huawei has partnered with several other domestic automakers including Changan and BAIC. It is also on track to launch the S7 with carmaker Chery in November, the first sedan under a new marque called Zhijie in Chinese that will compete against Tesla’s Model S.

Chinese premium electric vehicle brand Denza on Tuesday revealed a cheaper version of its advanced driver assistance system (ADAS) in collaboration with US chipmaker Nvidia, as the BYD affiliate ramps up efforts to compete against leading self-driving players such as Xpeng Motors and Huawei. 

Denza is also eyeing overseas expansion, having established its presence in the China market with year-to-date deliveries of nearly 80,000 EVs as of August. The company expects overseas sales to begin as early as next year, including in Australia, Southeast Asia, the Middle East, and Europe. 

Why it matters: The companies said the launch of the affordable assisted driving technology could reduce the barrier to a transition to intelligent mobility. The system facilitates Denza’s vehicles to navigate most highways in China as well as some busy urban streets in major domestic cities. 

• BYD launched the N7 crossover under the Denza marque in July, with the top-end version powered by Nvidia’s ​​DRIVE Orin processor, which offers 254 trillion operations per second (or TOPS). Now all N7 models can be equipped with Nvidia’s DRIVE Orin chips for automated driving, according to a Wednesday statement. 

Details: The new autonomous driving system will enable on-ramp to off-ramp driving, as well as automatic lane changing on Chinese highways, for Denza’s flagship N7 SUV. It has a price tag of RMB 15,000 ($2,053) and is powered by Nvidia’s DRIVE Orin processor, which can handle up to 84 TOPS. The N7 SUVs that feature the technology will have two lidar sensors removed to reduce costs. 

• The companies say that the higher-end version, priced at RMB 23,000, will allow the vehicles to function by themselves on bustling city streets for the daily commute, using a feature named City NOA (Navigate On Autopilot). Denza’s general manager Zhao Changjiang said the company would release its Highway NOA feature to N7 owners starting in December, followed by an over-the-air update of the City NOA early next year. 
• Tong Liu, vice president and general manager of China auto business at Nvidia, said that he was “impressed” by the efforts made by BYD in developing intelligent cars over the course of their three-year collaboration, calling BYD/Denza a “strong advocate” of commercializing self-driving technology (our translation). BYD’s Dynasty and Ocean lineups are also using Nvidia’s semiconductor. 

Context: Several Chinese auto and tech companies have announced ambitious plans for the adoption of assisted driving technologies for urban driving, akin to Tesla’s full self-driving (FSD) function that has yet to be made available in the country. 

• Volkswagen-backed Xpeng Motors in June launched its City Navigation Guided Pilot feature in Beijing and is on track to expand the capability in at least 50 domestic cities by the end of this year, while Great Wall Motor has set a target of covering 100 cities by 2024.
• In the meantime, Li Auto vehicles will be able to navigate on fixed routes for daily commuters in 100 major Chinese cities by year-end, following weeks of training with its collection of datasets. Rivals Nio and Geely’s Zeekr are also planning to roll out similar features later this year. 
• Huawei is by far the most ambitious company in the field in China, with its head of consumer business Richard Yu stating on Sept. 12 that Huawei’s self-driving system would be applicable nationwide for both highway and urban driving with Aito-branded EVs by December, Caixin reported. 
• BYD has made a series of moves in recent months to enhance its research and development capacity, especially for autonomous driving, including organizational restructuring and talent hiring. More than 80% of the 30,000 fresh graduates recruited by the company this year were research personnel. 

READ MORE: Baidu and Huawei take on global giants with new in-car software offerings at Auto Shanghai 2023

Nio took a giant leap into the smartphone arena on Thursday with the much-anticipated launch of its Nio Phone, the first handset designed by a Chinese automaker. The new device is hitting the market at a price comparable to the latest flagship offerings by Apple and Huawei. 

Having developed its own phone from the ground up, the electric vehicle maker expects to create an ecosystem across vehicles, devices, and services, which will provide a seamless experience for Nio users. The handset offers the purest form of the Android experience without any pre-installed apps or banner ads, chief executive William Li said during a press event in Shanghai on Thursday.  

Some of the standout features Nio highlights are a master remote control for vehicles with options to control everything from windows to seats, as well as seamless streaming of videos, music, and meetings from smartphone to car infotainment screen. Here’s what impressed us most about Nio’s first Android phone. 

Ultra wideband technology

Nio said the phone offers remote control for in-car devices which differs from most competitors by using Ultra Wideband (UWB) technology, an emerging wireless communication protocol that enables precise, speedy, and secure location tracking.

During a hands-on session where TechNode was present, a Nio ES8 SUV “greeted” the phone by turning its lights on when a Nio employee approached and automatically unlocked shortly before he reached for the door handle without taking out his phone. The smartphone also serves as a central hub to remotely operate the car’s air conditioning among other options at the touch of a single button. 

The short-range, high-bandwidth digital radio technology allows fast data transmission with increased security compared with other wireless standards such as NFC and Bluetooth, which are often absent from existing phone models produced by domestic makers such as Huawei and Xiaomi, according to Nio staff. The first initiative of this kind was announced by Geely-backed rival Meizu a month earlier. 

Several global automakers are also investing in the technology in collaboration with Apple. The US smartphone maker has reportedly been allowing BMW’s iX owners to unlock their cars using select iPhones or wearables since 2021, although most carmakers are currently unable to leverage the technology with Apple’s devices, Nio CEO William Li previously told Chinese reporters.

In-car connectivity

TechNode reporters also played the hit racing game title Asphalt on the in-car display with a Microsoft Xbox wireless controller. It offered a smooth experience which did not freeze or crash, as it runs in the smartphone’s background enabled with 5G services and a Qualcomm semiconductor. 

Nio’s in-car experience also allows users to stream videos on Bilibili, follow turn-by-turn navigation on Amap, or transition to live meetings on Dingtalk from their phones through the car’s infotainment screen. Huawei earlier announced a similar Super Terminal feature, while Geely claimed such capabilities with the recent launch of its new Meizu flagship series and operating system, Flyeme Auto.

It is worth pointing out that the feature is different from screen mirroring, as it actually creates a “doppelganger” of the Nio Phone on the in-car dashboard so that users can use the smartphone and the in-car system simultaneously yet separately. 

With its first self-branded device, Nio is one of the few Chinese automakers capable of integrating users’ smartphones with their car’s infotainment system at the operating system level. Such integration for Aito and Geely was enabled by their respective smartphone partners Huawei and Meizu. 

Specifications and prices

The Nio Phone is powered by a Qualcomm high-end Snapdragon 8 Gen 2 processor, the same as existing flagship offerings such as Xiaomi’s Mi 13, Oppo’s Reno 11 Pro, and the Meizu 20. It also comes with a 6.81-inch 2K+E6 Samsung screen, providing a resolution of 3,200 x 1,440 pixels, a 120Hz refresh rate, and a peak brightness of 1,800nits.

The device features a triple-camera system that includes three 50MP cameras and has a large battery of 5,200mAh, supporting 50 W wireless charging and 10 W reverse charging. An entry-level version weighs 212 grams and measures 165.19 x 75.54 x 8.9mm. 

The Nio Phone’s three versions come in seven colors, and are priced between RMB 6,499 and RMB 7,499 ($890-$1,027). Shipment is scheduled for Sept. 28. For comparison, Huawei’s latest Mate 60 Pro flagship phone costs from RMB 6,499, while Apple on Sept. 15 began selling its iPhone 15 series with a starting price of RMB 5,999 in China. 

China’s Great Wall Motor (GWM) will bring its next-generation in-car operating system to market next year, and stick to the ambitious goal of rolling out its semi-autonomous driving function nationwide by the end of 2024, according to a press event held on Tuesday. 

The company is undertaking a targeted push to create a scalable and unified software platform for future vehicle models across multiple different brands, a concept that has become mainstream in the years since Tesla entered the market. A significant increase in the number of software updates, aimed at improving the driving experience, is expected from next year, vice president Nicole Wu told TechNode at the event, held in the northern city of Baoding, where the company is headquartered. 

China’s third biggest private automaker by sales volume, GWM had a relatively early start in autonomous driving and in-car technologies. It began testing self-driving cars with the creation of a dedicated division called Haomo.ai in 2019 and became the second Chinese automaker after Xpeng Motors to build a supercomputing center, this January. Now, the company has set up a new artificial intelligence research lab to bring generative AI tools into play in future car models. 

Here are some of the highlights of TechNode’s interview with GWM executives, including vice president Nicole Wu, senior director Jiang Haipeng, director She Shidong, and Yang Jifeng, head of the AI lab. 

Major digital cockpit progress

GWM will roll out an app store and implement it across all brands, as part of its upcoming in-car operating system, Coffee OS 3.0, scheduled for release in the first half of 2024. The store will give users access to common third-party services and infotainment apps fine-tuned for car-friendly usage, as more customers expect a smartphone-like experience in the car. 

By working with smartphone makers such as Huawei and Xiaomi, the new system will allow drivers to use a handset while operating their vehicle. She Shidong added that owners will be able to play video games and watch movies in their cars by connecting gaming consoles, augmented-reality glasses or other devices, with the car dashboard using wireless or bluetooth connections.

By making constant updates of driving and infotainment features possible, the Coffee OS 3.0 is intended to take the in-car experience to a new level. Wu envisions each new GWM model getting a major software update every two to three months. Tesla and Nio released 2.8 and 1.3 software updates per month on average respectively in China during the first half of 2022, according to figures from domestic consultancy Ways. 

Ambitious self-driving goal

GWM has maintained its goal of launching Navigate on HPilot (NOH), a function similar to Tesla’s full self-driving (FSD) technology, to drivers in 100 cities around China by 2024. The software will first be available to owners of its Blue Mountain flagship SUVs in Beijing and Shanghai by next March, according to Jiang. 

This will enable vehicles to change lanes, overtake, and make turns automatically on Chinese city streets without high-precision maps. Jiang added that a set of common middleware plays an important part in creating a platform for assisted driving software that is updateable and scalable at a reasonable cost. 

Chinese auto and tech companies have been competing for a leading position in this space at a time when Tesla’s FSD function has yet to become available in the country. Xpeng’s XNGP advanced driver assistance system is set to be available in 50 major cities by the end of this year, while Li Auto’s EVs will be capable of traveling on fixed routes by themselves after training for weeks in 100 cities. 

Bring generative AI to vehicles

GWM is also looking to greatly expand its in-car system capabilities through the integration of emerging technologies such as generative AI tools. Its first aim is to use AI to anticipate user preferences and create high-quality infotainment content in some new car models in the fourth quarter of this year.

The company’s newly established AI Lab has been exploring the use of large language models in GWM vehicles. Yang expects significant improvement with the upcoming Coffee OS 3.0, especially in voice recognition and natural language understanding, expecting that the latest operating system will be able to give detailed, relevant responses to users’ queries using AI.

Rival players are all developing ChatGPT-like virtual assistants for use in future car models. Geely is scheduled to launch its RMB 128,000 ($17,600) Galaxy L6 SUV on Saturday with a proprietary AI model that can read children’s picture books. Both GWM and Geely-affiliated Ecarx earlier partnered with Baidu to develop AI assistants based on the latter’s GPT-style large language models.

Lynk & Co, a brand jointly owned by China’s Geely and Volvo Car, launched the 08, its long-anticipated plug-in hybrid crossover on Sept. 8. The automaker says the car has a starting price of RMB 208,800 ($28,815) and is powered by an in-house designed seven-nanometer (nm) chip, claimed by the company to be China’s first.

The compact sports utility vehicle is the first model under Lynk & Co which is exclusively plug-in hybrid. This marks a significant shift for Geely and Volvo as they make a determined move away from the internal combustion engine.

Having grappled with slowing growth in an increasingly competitive market, Lynk & Co expects the mid-sized 08 to be a high-volume model in the mainstream luxury SUV segment, competing against rival offerings including BYD’s Tang, Li Auto’s L7, and the Aito M5.

Why it matters: The Lynk & Co 08 is equipped with two SE1000 automotive chips, which is the first high-performance seven-nanometer semiconductor for cars designed by a Chinese company. The car can perform over 16 trillion operations per second (TOPS), Geely said in a statement. This is twice the number of Qualcomm’s Snapdragon SA8155P, the US tech giant’s flagship automotive cockpit platform. 

• It is also the first model to use Flyme Auto, an operating system jointly developed by Chinese smartphone maker Meizu and Ecarx, an auto tech startup backed by Geely’s chairman Eric Li. This offers an infotainment system that seamlessly connects users’ smartphone apps to the vehicle’s navigation screen.

Details: The Lynk & Co 08 uses a 1.5-liter four-cylinder engine along with a large 39.8-kilowatt-hour battery pack, providing a maximum driving range of 205 kilometers (127 miles) in all-electric mode and 1,400 km on a full tank plus full charge. Delivery is scheduled the begin later this month. 

• It uses little energy on short trips and ensures cost-competitive travel for daily commutes. By comparison, BYD’s Tang hybrid seven-seater and the Li Auto L7 extended-range hybrid run for up to 189 and 170 km, respectively. 
• The SUV boasts fuel consumption of 5.5 liters per 100 km, comparable to the 5.3L/100km of the BYD Tang DM-i, one of China’s best-selling hybrid models, and surpassing the Li Auto L7’s 7.6L/100 km. It can accelerate from 0 to 100 km/h (62 mph) in 4.6 seconds.
• The five-seater compact offers passengers a relatively large interior space measuring 4.8 meters in length and spanning a 2,915-millimeter-long wheelbase, close to the bigger but more expensive Nio ES6 and Li Auto L7, which are priced from RMB 338,000 and RMB 319,800, respectively.
• Priced between RMB 208,800 and RMB 288,000, the SUV is packed with advanced technology and luxurious design features, such as a 92-inch, augmented reality-based display, the largest of its kind in the industry, as well as a Harman Kardon audio system and frameless doors. 

Context: Lynk & Co reported a modest 6% year-on-year growth in sales for the first half of this year, while its peer Zeekr, a premium electric vehicle brand launched by Geely in early 2021, posted a remarkable 124% annual growth over the same period. Seven-year-old Lynk & Co, which formerly focused on China’s gas-powered vehicle segment, sold 180,127 vehicles last year, representing an 18.3% decline from a year ago.

• Ecarx announced the incorporation of the Flyme Auto into the Lynk & Co 08 SUV in March, followed by the public debut at this year’s Auto Shanghai show a month later. 
• Ecarx was founded by Geely chairman Eric Li and close associate Shen Ziyu in 2016, and set up a joint venture, SiEngine, to develop auto chips with Arm China two years later, Reuters has reported.
• Geely entered the smartphone industry with the establishment of a venture called Xingji Shidai in 2021, and renamed it Xingji Meizu after it acquired smartphone maker Meizu in mid-2022. 

BYD’s most credible competitor to the Tesla Model 3 would have a 25% cost advantage over models produced by European automakers even if it were manufactured locally in the continent, UBS said on Tuesday, taking costs resulting from protectionism into account.

Why it matters: The findings demonstrate the growing competitiveness of Chinese automakers led by BYD in making centralized, unified, and up-to-date car systems with highly integrated components and self-run supply chains, UBS analyst Paul Gong told reporters in Shanghai on Tuesday. 

• This could help Chinese brands maintain their cost competitiveness even as they transition from exporting to local production in some of the world’s most developed markets. Gong made the comment after the investment bank completed a tear-down analysis of the BYD Seal, calling it “a good balance” between technological advancement and cost optimization.  

Details: New research from UBS’s evidence lab that took apart the Seal electric car, BYD’s closest peer to the Tesla Model 3, reveals that the medium-sized sedan is 15% more cost-efficient than locally made offerings by the US automaker at its Shanghai facility. 

• This percentage would be extended to 35% when compared to Volkswagen’s similar offerings manufactured in Europe. This means it would cost BYD $10,500 less to produce each Seal in China than a Volkswagen ID.3 in Europe, UBS analysts wrote in a Sept. 1 note. 
• For Chinese-branded EVs, exporting from China to Europe is cheaper than manufacturing locally. Even so, Chinese EV makers would still maintain a 25% cost advantage over rivals if they produced in Europe, Gong added. 
• UBS attributed the gap primarily to BYD’s technological and engineering integration of vehicle components. Additionally, the investment bank noted that 75% of the auto parts, ranging from batteries to power semiconductors, were made in-house. 
• BYD could strike a balance between performance and cost by offering a relatively simple assisted driving system at a cost of less than RMB 3,000 ($411), significantly lower than the industry standard of around RMB 20,000. 
• The teardown, aimed at uncovering the secrets of BYD’s success, reinforced UBS’s confidence in the rise of Chinese EVs. The investment bank expects Chinese automakers to double their global market share to 33% by 2030 and increase their European market share to 20% from last year’s 3% over the same period. 

Context: BYD began deliveries of the Seal battery sedan, its closest competitor to Tesla’s Model 3, at a starting price of RMB 209,800 last July, followed by the launch of a cheaper version from RMB 189,800 in May.

• The Warren Buffett-backed EV major said on Monday that it has sold more than 100,000 units of the all-electric vehicle in a year. The vehicles are mainly produced in the eastern city of Changzhou. 
• On Tuesday, at this year’s IAA Mobility show in Munich, the company announced that it plans to sell the Seal to European customers at a starting price of €44,900 ($48,184) in the first half of 2024.

Tesla has released the long-anticipated, redesigned Model 3 with a sharper appearance and a range of new features in China, although at RMB 259,900 ($35,809), its starting price is higher than expected, according to a poll published on Friday on the Chinese Twitter-like social media platform Weibo.

Why it matters: The US automaker’s pricing strategy for the revamped sedan had attracted enormous attention from Chinese customers prior to its announcement, due to the car’s significant success in the electric vehicle market and Tesla’s recent policy of price cuts in the country.

• Although the launch price is not as low as some were expecting, the revamped Model 3’s arrival has still caused some rival EV makers to announce new deals for Chinese drivers. Xpeng Motors reacted immediately on Friday by offering zero-interest financing for up to 24 months or a price reduction of RMB 10,000 to buyers of its P7i. New owners of the electric sedan, priced from RMB 249,900, will be given a RMB 6,000 Dynaudio audio system for free by the end of this month. 

Details: In a poll conducted on social media site Weibo on Friday, more than 15,000 out of roughly 21,000 respondents said that they would not consider buying the newly-designed Model 3 due to “insufficient budget or an overly expensive price tag” (our translation). 

• Roughly 3,400 participants expressed their intention to purchase the new Tesla as of writing, attracted by a “competitive price or new features.” The poll was released on Friday morning by Chinese internet portal Sina, the parent company of Weibo. 
• The new Model 3 would “have no equal” if it were priced at around RMB 200,000, yet some domestic brands are more attractive at the RMB 260,000 price range, a Weibo user with the handle Kejigangzi in Chinese Pinyin commented in one highly-upvoted response. 
• In an announcement posted by Tesla on its official Weibo account, some internet users spoke critically of the car’s pricing not meeting their expectations, stating that they would be waiting for the price to go down. 
• The EV giant on Friday launched the reworked mainstream premium sedan in rear-wheel drive and all-wheel drive versions, priced from RMB 259,900 and RMB 285,900, respectively, compared with its previous base-version Model 3 at a price tag of RMB 231,900. 
• The revamp comes after Model 3’s initial launch back in 2016, and sees an improvement in driving range from 556 to 567 kilometers (352 miles) for the baseline version. The all-wheel drive version has a driving range of 680 km, reportedly powered by a new Lithium Iron Phosphate (LFP) battery sourced from CATL. 
• The all-new Model 3 gets a 15.4-inch infotainment screen, slightly larger than the 15 inch one seen in the previous version, in addition to an eight inch display for rear passengers. It also introduces new features and equipment such as ambient interior lights and ventilated seats. 
• However, the updated Model 3 removes a physical shifter, replacing it with an automatic system that may ask users to activate gear shifting on the touchscreen, a feature unfamiliar to Chinese EV owners, an analyst who asked not to be named told TechNode. 

Context: Tesla initially began selling locally-made Model 3s in China at a starting price of RMB 355,800 in late 2019. The company shipped 412,805 units of the vehicle from its Shanghai facility during 2020-2022, making it the best-selling premium electric sedan in the world’s biggest EV market, according to figures from the China Passenger Car Association. 

• Tesla sparked an EV price war in China at the beginning of 2023 when it slashed prices across its range. The carmaker announced significant price cuts for the Model 3 and Model Y lineup in China on Jan. 6, with the Model 3’s starting price dropping RMB 36,000 ($5,314) to RMB 229,900, and the Model Y dropping RMB 29,000 to start at RMB 259,900.

READ MORE:  China EV price war: Xpeng, Huawei-backed Aito join Tesla in cutting prices

Li Auto’s chief executive Li Xiang launched a series of business startup courses on Chinese audio content platform Dedao on Monday. With this move, the entrepreneur is aiming to tap a wider customer base and showcase his firm’s thought leadership, local media reported. 

Why it matters: During a livestream, Li mentioned that the target audience for his newly-launched online product development program significantly overlaps with Li Auto’s intended user base. He expects the marketing initiative to help the automaker further expand its influence in the electric vehicle market, media outlet Jiemian reported. 

Details: The program consists of 16 audio-based online courses, each lasting approximately 12 minutes, and aims to educate the audience about the fundamentals of product management, including the methodology for designing successful products, crafting powerful pricing strategies, and increasing operational efficiency and profitability.

• The program also offers insights into what makes a startup more competitive, including tips for building a collaborative and unified team, based on Li’s extensive startup business experience of over 20 years in the Chinese tech and auto industries. As of the time of writing, more than 15,000 users have subscribed to the paid program, priced at RMB 99 ($14), according to Dedao. 
• In one of the lessons observed by TechNode, Li recalled the initial challenges Li Auto faced while positioning itself as a manufacturer of EVs for Chinese families with children and grandparents, a potentially lucrative segment that was neglected by competitors, some of whom had voiced concerns that the customer base might be too small, Li said. 
• On the online education platform, some influential users have voiced their support for Li Auto and its founder. Li Auto’s success story is “worth learning and researching” (our translation), posted a user whose account was labeled as a manager at SAIC-Volkswagen, a Chinese joint venture of the German automaker.
• Li Auto entered a segment with high growth prospects and offered products at competitive prices for families, said another Dedao user, who labeled himself as a brand manager at Great Wall Motor. Li Xiang is already an outspoken and prolific user on China’s Twitter-like microblogging platform Weibo, with 2.2 million followers.

Context: Li Auto delivered 139,117 units of plug-in hybrid crossovers in the first half of 2023, surpassing last year’s total of 133,246 units. 

• The Beijing-based EV maker expects to deliver more than 100,000 units in the third quarter and anticipates posting monthly deliveries of 40,000 units during the last three months of this year, CEO Li told investors on Aug. 8.

BYD on Wednesday officially unveiled its newest premium marque with a performance-oriented plug-in hybrid off-roader. The Chinese automaker expects the new brand to signify personality and luxury, and is betting on it to help attract more of the country’s affluent middle-class buyers. 

With the launch of the Bao 5, BYD’s reply to makers of top-tier luxury off-roaders, China’s biggest electric vehicle maker is seeking to “redefine” a market segment that has been ruled by internal combustion engine cars (our translation), Chairman Wang Chuanfu declared during a press conference at BYD’s headquarters in Shenzhen on Wednesday. 

The name of the new brand, FangChengBao, translates literally to Formula Leopard. BYD said the new lineup responds to emerging and future demands for off-road travel with an edgy design, strong performance, and sophisticated personalized features. 

The architecture: The Bao 5, the first model under BYD’s new luxury lineup, is a large sports utility vehicle based on tailor-made PHEV architecture that is expected to underpin future EV performance. 

• BYD stated that its DMO (dual-mode off-road) PHEV platform splits up the car’s torque and delivers it to the wheels in a fluid way. This could provide enhanced traction and stability when driving on uneven and slippery surfaces and make the Bao 5 one of the most maneuverable SUVs on the market, with a turning radius of 3.4 meters (11.2 feet), according to chief scientist Lian Yubo. 
• The DMO platform has an in-house developed powertrain system that uses a 1.5/2.0-liter high-performance petrol engine along with a dual-motor rear-drive unit, delivering a combined output of more than 500 kW. This allows the spacious SUV to accelerate from 0 to 100 km/h (62 mph) in just 4.8 seconds, while its DiSus adjustable suspension system provides passengers with an improved experience on sideroads. 

Other details: The seven-seater SUV has a straightforward, boxy design with a lot of hard lines and angles. The car radiates a high-definition car-width strip of light in a rectangle ahead, and boasts luxury interiors including a high-quality stereo system provided by French audio engineering brand Devialet.

• The car comes with BYD’s blade battery, leveraging the company’s latest technology to place the cells in the chassis, allowing for single trips of up to 1,200 kilometers (746 miles) on a full fuel tank and a full charge. Lian added that the lineup’s upcoming models, ranging from sportscars to full-size SUVs, could travel between 800 and 1,500 km on one charge depending on powertrain and specifications. 
• No official pricing details have yet been released, but the new lineup is expected to have a price range of between RMB 400,000 and RMB 600,000 ($54,685-$82,028). The company will debut the car publicly at the upcoming Chengdu Motor Show on Aug. 25, with plans to open more than 100 direct-sales stores under the brand in 60 or so Chinese cities by year-end. 

Context: BYD first revealed its plans to develop a premium marque that “specializes in professional and personalized identities” last November. The company already operates two luxury brands, Yangwang and Denza, with price ranges between RMB 800,000 and RMB 1.5 million, and between RMB 300,000 and RMB 500,000, respectively. 

• In January, the automaker introduced the first two Yangwang-branded models, namely the U8 off-roader and U9 sports car, and is scheduled to begin delivery of the former in September. The two all-electrics come with four electric motors, have an 800-volt battery system, and can accelerate from 0 to 100 km/h (62 mph) in two and three seconds, respectively. 
• Denza’s general manager Zhao Changjiang wrote on the social media site Weibo that it has sold more than 100,000 D9 multi-purpose vehicles 10 months after delivery began last October. BYD on July 29 began delivering the N7 crossover with a starting price of RMB 301,800, the second model since its refresh of the brand in late 2021, and launched the larger N8 SUV on Aug. 5
• BYD sold 1.25 million pure electric and plug-in hybrid vehicles in the first six months of 2023, of which around 81,000 were exported EVs, representing a year-on-year growth of 94.3%. That number beat Tesla’s 476,539 units sold over the same period in China, of which nearly 40% were for overseas exports, according to figures from the China Passenger Car Association. 

In July, more than 10 Chinese automakers reported deliveries of over 10,000 units of their electric vehicles, signaling a significant shift in China’s car market as newer entrants and previously smaller brands continue to increase their sales. Notably, Nio saw remarkable growth, nearly doubling its figures from the previous month, while Xpeng Motors surpassed the 10,000 threshold following months of lackluster performance. 

Why it matters: The latest ranking of the best-selling EV brands in China reflects the changing landscape in the world’s biggest car market. Although BYD and Tesla are still miles ahead of their competitors, local rivals are capturing market share with new product launches and aggressive price cuts as the sector’s intense battle shows no signs of abating.

Bright spot: On Tuesday, Nio announced that it had exceeded the monthly delivery threshold of 20,000 vehicles for the first time in its nine-year history. The firm’s July deliveries reached 20,462 units, nearly doubling its figures from a month earlier. 

• This achievement follows the company’s decision to implement an RMB 30,000 ($4,199) price cut across its vehicle lineups on June 12. Additionally, Nio began delivering the redesigned versions of its popular ES6 crossovers and ET5 sedans starting late May, when monthly sales hit a record low. 
• Xpeng’s July deliveries of 11,008 units also marked an important milestone, one which the EV maker attributed to a smooth production ramp-up of the G6. The mainstream sports utility vehicle recorded shipment of more than 3,900 units immediately after its launch on June 29. 
• The Guangzhou-based automaker is aiming to deliver at least 15,000 units as early as September and has recently received backing from Germany’s Volkswagen. However, its year-to-date deliveries fell 35% year-on-year to 52,443 units as of July. 

Other results: While BYD maintained its dominant position in July with a new sales record, GAC’s EV arm Aion made progress with its new premium marque, Hyper. Aion sold 45,025 units during the month, with 2,011 of them being the Hyper GT coupe, which it began selling on July 3. 

• Li Auto said it has sold more than 30,000 plug-in hybrids for two consecutive months as July deliveries grew 5% month-on-month to 34,134 units. Great Wall Motor followed closely behind with sales of 28,896 units, representing an 8% increase from the previous month. 
• Leapmotor also posted impressive growth in July sales, with a notable increase of 8% to 14,335 units compared to the previous month. Additionally, the Zhejiang-based automaker is reportedly in discussions with Volkswagen’s Jetta brand regarding the licensing of its technologies. 
• This was followed by Changan’s subsidiary Deepal and Geely’s affiliate Zeekr which delivered 13,172 and 12,039 units last month, up 64% and 14% on a sequential basis, respectively. However, Hozon’s numbers declined for the third month in a row, reaching 10,039 units. 

Context: In addition to Chinese automakers, several global auto majors also revealed some details of their July sales in China.

• Volkswagen’s joint venture with state-owned SAIC reported securing more than 10,000 pre-orders of its ID.3 after the German auto giant slashed the price of the locally-made electric hatchback by RMB 37,000 to RMB 125,900 ($17,523). 
• General Motors announced that it shipped around 10,000 EVs with its local partner SAIC last month, of which 8,692 were Buick EVs. Furthermore, SAIC-GM-Wuling, another venture between SAIC, the US automaker, and Guangxi Automobile Group, sold 35,000 units, up from 31,246 units a month ago.

Chinese EV giant BYD is taking on a record 30,000 fresh graduates this year, with research personnel accounting for 80% of the total intake, in a move intended to shore up its research and development department, a company representative has confirmed. 

Why it matters: The hiring drive comes as BYD looks to retain its dominance in the Chinese electric vehicle market as rivals continue to offer a competitive challenge. The move contrasts sharply with general hiring trends as China faces soaring youth joblessness. 

• China’s unemployment rate for those aged 16 to 24 rose to a record 20.8% in May, according to the National Bureau of Statistics. One Peking University professor said she expected that number could rise to nearly 50%, according to a July 20 report by Reuters. 

Details: Around 31,800 fresh graduates have come on board at BYD since the start of 2023, more than 61% of whom have a master’s or doctorate degree, and over 80% of whom will work in R&D projects. State-owned newspaper People’s Daily was the first to report the story on July 29.

• The Chinese automaker has been hiring research employees in electronics and electricals, new energies, and semiconductors, to be mainly based in Shenzhen, Shanghai, and the northwestern city of Xi’an, according to a job post on its official website. 
• A BYD spokesperson confirmed the news when contacted by TechNode, without offering further details. 

Context: BYD has been expanding its R&D team for several years with the number of engineers hired by the company growing 31.5% year-on-year to around 40,400 in 2021. That number increased 72.6% year-on-year to nearly 70,000 as of last year. The company had around 570,000 employees in 2022, of which around 75% were production workers, financial media outlet Caixin reported.

• The Chinese EV giant, which had a relatively late start in the autonomous driving field, recently hired between 4,000 and 5,000 software engineers, Reuters reported on May 17, citing the company’s senior vice president Stella Li. It has also been running an intelligent driving research unit in Shanghai since last year, the Reuters article said, while reportedly restructuring its vehicle engineering institute. 
• The company is rushing to reach the top end of its full-year sales target of 3.6 million EV units, which would almost double last year’s total. It has sold nearly 1.3 million units this year, as of June. BYD spent RMB 20.2 billion ($2.83 billion) on R&D last year, up 90.3% from a year ago, and has developed key components in-house including EV batteries, electric powertrain systems, and vehicle control technologies. 

In a historic development, Volkswagen said on Wednesday it will make electric vehicles in a joint effort with Chinese EV startup Xpeng via a $700 million investment plan. The news sent Xpeng stock rocketing as much as 40% during trading on Nasdaq. 

The move is expected to create a win-win situation that will help the two automakers secure their market shares in a brutally competitive market. However, analysts expect big challenges for the partnership. 

Both Volkswagen and Xpeng are in a relatively weak market position when it comes to EVs and face sluggish sales in the world’s largest EV market. Also, cultural clashes and different mindsets could potentially lead to friction in the partnership. 

TechNode spoke to various analysts on the ground about what lies ahead. While some saw the collaboration as being beneficial to both automakers, most saw challenges in the unprecedented deal between a German auto giant and a rising Chinese EV maker. 

A happy union?

The Volkswagen-Xpeng partnership makes perfect sense as they complement each other’s strengths, according to Yale Zhang, managing director of Shanghai-based consultancy AutoForesight. “Xpeng’s vehicle platform is state-of-the-art compared with rivals, while Volkswagen definitely needs a helping hand in making intelligent EVs,” Zhang said.

Elliot Richards, a correspondent at the Fully Charged Show, believes Volkswagen knows how to build good quality affordable cars and has an advantage in terms of economy of scale, while Xpeng has top-of-the-line software stacks with a more lively, fun, and risk-taking brand image. He expects the collaboration to help both “efficiently grow together” in China by pooling their resources.

Volkswagen could accelerate the launch of new EV models with the latest tech in the Chinese market through the alliance, predicts David Zhang, a visiting professor at Huanghe Science and Technology University. Volkswagen has had a relatively late start in electrification and its ID series lacks competitiveness in China, despite a decent performance in Europe, added Zhang.

Looming challenges

Daniel J. Kollar, head of Automotive & Mobility Practice at business development consultancy Intralink Group, said the problem is that neither has been able to effectively differentiate themselves in the market, so it is unclear whether teaming up will allow them to change that. Both foreign and younger Chinese original equipment manufacturers (OEMs) are having a rough time lately, experiencing trouble with penetrating the mid-tier and entry-level markets and gaining the trust of average Chinese consumers, Kollar added.

Meanwhile, cultural fit will remain a challenge in this collaboration. Pitting a rigid process-oriented culture from Germany against a fast and furious startup culture in China, has the potential for problems, according to Lei Xing, former chief editor at China Auto Review. As Xing put it, “Is VW willing to sacrifice certain things for speed?” 

Tu T. Le, founder of business intelligence firm Sino Auto Insights, also expects culture clashes as VW’s careful checks and balances are challenged by Xpeng’s much faster pace. “Volkswagen will have to let go of its want to centrally control everything and do its best to learn from Xpeng if it truly wants success,” according to Le.

There might also be wounded pride on Volkswagen’s part, as global carmakers that used to enjoy the upper hand are now acquiring technologies from newcomers, rather than licensing to them, AutoForesight’s Zhang stated. “This could become an invisible barrier and lead to tension in day-to-day collaboration,” he added.

Reasons for skepticism

Experts have voiced concern about the sales prospects of the two automakers given a relatively late launch date of two new models.

“By virtue of the investment, VW is hopeful that its EV sales can be turned around with these two new products, but the 2026 launch dates could be too little too late,” said Le. His comments were echoed by Xing: “The tie-up does nothing to guarantee the success of VW badged EVs with Xpeng tech ‘inside.’ Also for the time being, at least until 2026, it does nothing to influence the market performance of Volkswagen and Xpeng as each controls their own destiny.” 

Meanwhile, they do not foresee the tie-up with Volkswagen as having a significant impact on Xpeng’s sales and presence in the market, although licensing its technologies is potentially a recurring revenue stream for Xpeng.

Volkswagen will likely have to shell out a huge amount of money as a transfer fee for accessing Xpeng’s technology, which has been a common practice in such collaborations, said David Zhang. “Chinese auto manufacturers used to pay tens of thousands of RMB per unit to their foreign counterparts for localizing a vehicle model that came from abroad.”

Zhang added that the collaboration with Volkswagen could be a significant endorsement of Xpeng to boost its credibility in the European market. Aware of Xpeng’s recent momentum following the launch of its G6 crossover last month, Le also believes the cooperation with VW could help it more in Europe than in China. “Xpeng is still two or three successful products away from becoming a sales leader in the Chinese market,” added Le.

“The game has changed”

Kollar sees the Volkswagen-Xpeng partnership as the latest sign that the Chinese market is now ready for consolidation, which means more young, domestic EV makers are either going to go bust or be acquired. The best way for foreign OEMs to regain their previous standing and catch up in the EV sector is to become an acquirer of some of the promising players, Kollar predicts.

The tie-up ushers in a new era where foreign legacy automakers now depend upon Chinese EV makers for their technologies and speed to market, noted Lei. In this context, Volkswagen can be seen as playing a “pioneering” role yet again, having been one of the first major foreign car brands to enter China, and has now opened the floodgates for similar deals involving other foreign legacy automakers and local firms in the future. The German giant on Wednesday also announced an extended partnership between its Audi brand and China’s SAIC.

Global brands are recognizing that Chinese EV companies have progressed to the point that foreign companies have something to learn from them, said Stephen Dyer, a co-leader for AlixPartners’s Greater China business. “We can expect to see more Chinese auto players become part of the global community of strategic collaboration going forward.”

Richards added that, “They now need their local partnerships more than ever, but the shoe is on the other foot.” 

READ MORE: Experts bullish on Chinese automakers’ global push as SAIC seeks EU foothold

Chinese EV maker Nio will roll out a single-motor version of its first mass-market Alps model, as part of a lineup scheduled for delivery in the second half of next year, Chinese media outlet 36Kr reported. 

Why it matters: The plan to produce a more affordable single-motor car marks a rare shift for Nio, which has so far insisted on a dual motor on all its offerings to date, as this is responsible for Nio’s impressive acceleration and premium performance. 

• The move is expected to help the Chinese electric vehicle maker adapt and appeal to a wider group of customers as the country’s months-long EV price war pushes down prices. 

Details: The upcoming sedan under Nio’s mass market Alps marque will come with the company’s self-developed electric powertrain featuring a next-generation induction motor, the 36Kr report said, citing people familiar with the matter. 

• The car, priced between RMB 200,000 and RMB 300,000 ($27,951-$41,927), will be built on the third generation of Nio’s NT vehicle architecture, which features an 800-volt battery system that allows much faster recharging than existing offerings, the report said. 
• The decision was, says the report, made after Nio announced an RMB 30,000 price cut across its lineup on June 12 in a move to defend market share as rivals reduce prices to boost sales. 
• Nio did not respond to TechNode’s request for comment. 

Context: Nio’s chief executive William Li on June 9 told investors that the company is on track to launch the first model under the Alps marque in the second half of 2024. 

• It is also reportedly in the development phase for another lower-end, budget sub-brand codenamed Firefly. The car has a target price range of between RMB 100,000 and RMB 200,000 ($13,985-$27,969) and is expected to first launch in Europe later next year. 
• Year-to-date deliveries of the Shanghai-based EV maker reached 54,561 units as of June, representing a year-on-year growth rate of 7.3%. It currently has eight models on sale, all equipped with dual motors. 
• China recorded sales of more than 3 million new energy passenger cars (a combined total of pure battery EVs and plug-in hybrids) over the same period, up 37.3% from a year ago, according to figures from the China Passenger Car Association. 

A Chinese joint venture between Volkswagen Group and SAIC Group will start building its own plug-in hybrid electric vehicles in a move to follow the growing adoption of PHEVs in the world’s biggest car market, Chinese media outlet Caixin has reported.

Why it matters: The move marks Volkswagen’s efforts to become more localized and step up its introduction of new electric vehicle (EV) models in China, where it is losing ground to electric rivals such as BYD and Tesla. Its premium brand Audi is also looking to develop EVs with the purchase of partner SAIC’s electric vehicle platform.

• The current offerings from global automakers’ JVs in China are not competitive on the EV and software side, resulting in continued market share loss and prices that remain under pressure amid overall lackluster demand, UBS analysts wrote in a June 16 note.

Details: According to the July 22 report by Caixin, SAIC-Volkswagen has yet to reveal detailed plans on any specifications or launch information for the new model.

• And yet, the move is expected to “unleash the power” of the joint manufacturer, and employees were fed a free meal to celebrate the decision, the report said, citing people familiar with the matter. SAIC-Volkswagen did not respond to TechNode’s request for comment.

Context: SAIC-Volkswagen currently has two PHEV models on sale, namely the popular Tiguan sports utility vehicle and the mid-sized Passat sedan, with a starting price of RMB 261,050 and RMB 233,150 ($36,268 and $32,392), respectively, according to its official website.

• Retail sales of the company declined 0.1% year-on-year to 532,509 units for the first six months of this year, while those of rivals such as BYD and Tesla grew 82.2% and 48.9% from a year earlier.
• Sales for FAW-Volkswagen, another China joint venture formed by the German automaker, were down 2.8% to 838,723 units in the same period, figures from the China Passenger Car Association (CPCA) show. VW Group delivered 321,600 battery EVs (BEVs) globally over the period, according to its filings.
• PHEVs have continued to gain momentum over the past few months in China, with year-to-date sales nearly doubling to around 995,000 units in China from a year ago, compared with a 19.8% annual growth rate of BEV sales, according to CPCA figures.
• A PHEV normally carries a smaller battery pack than BEVs with similar specifications, which could mean a lower purchase price. It also reduces owners’ concerns about their EVs running out of power by using both a battery pack and a gas-powered engine.

Nio announced on Thursday that it has updated its battery leasing program to allow drivers to replace their battery packs with a higher energy density one daily rather than after months or years, as was previously the case.

The Chinese EV maker also reaffirmed an earlier commitment to expanding its battery swapping and supercharging network, as a way to showcase what it sees as the superior experience offered to Nio owners, including easy access to recharging ports.

Why it matters: The daily package may present new challenges for Nio, given its already large and dispersed power infrastructure deployment across China. Despite this, it is expected to draw in revenue as it offers greater convenience to users and lowers the purchase prices of Nio’s EVs, senior company executives told reporters at a press briefing in Beijing. Nio has recently experienced cashflow pressure amid slowing sales.

Details: Customers who currently have a 70/75 kilowatt-hour (kWh) battery pack for their Nio EVs may now swap the battery for a so-called “long-range” one (100kWh) for an extra fee of RMB 50 ($7) per day and will be able to return it to any Nio swap station in China.

• The service option is part of Nio’s Battery-as-a-Service (BaaS) leasing program, which was launched in August 2021 and has since allowed Nio owners to upgrade their batteries for longer driving ranges with a monthly and yearly fee of RMB 880 and RMB 9,800, respectively.
• In the last two years to Thursday, Nio has provided 80,000 upgrades, according to the company’s president Qin Lihong. He added that number could surge by “several hundred thousand” over the next year, as customers take advantage of the flexibility afforded by a longer driving range at a relatively low cost.
• Still, senior vice president Shen Fei acknowledged that the move could put the company under “exponential” pressure to operate its consistently growing swapping network when it comes to the transport and allocation of battery packs across the nation (our translation).
• He cited an extreme case in which 100 kWh battery packs could be in short supply during hot weather in Beijing as owners travel to summer resorts. “I believe we’re well prepared, but we haven’t foreseen all the potential problems with this,” said Shen.
• Qin reaffirmed Nio’s efforts to double its number of swap stations to more than 2,300 by the end of the year, adding that the company has established 500 ultra-fast chargers since April, with a maximum power output of 500 kW and a maximum current of 660A.

Context: Nio owns and operates one of the largest recharging networks in China with 1,564 swap stations and 16,745 public chargers as of Thursday. It has swapped over 25 million EV battery packs, meaning a Nio car is starting up with a replenished battery pack every 1.6 seconds, said Qin.

• The automaker faced cashflow issues until recently when Abu Dhabi’s CYVN Holdings provided relief with a $1.1 billion investment. As a result it has scaled back production of its proprietary EV batteries. It cut prices of its vehicle lineups by RMB 30,000 ($4,199) on June 12, with year-to-date deliveries growing by 7.3% to 54,561 units as of June.

READ MORE: Nio bets big on battery swap stations amid growing EV price war

Denza, a luxury car subsidiary of Chinese electric vehicle maker BYD, released its first SUV model N7 on Monday, priced from RMB 301,800 ($41,705). The company said it has received more than 24,000 pre-orders since its public unveiling on April 18.

The N7 is also the first model equipped with BYD’s assisted driving technology and will be capable of navigating on complex urban roads in China early next year, general manager Zhao Chaojiang said during the press conference.

Why it matters: BYD’s latest launch shows its intention to elevate the brand and secure a foothold in the premium market. The budget-friendly automaker is hoping its sub-brand Denza will become a luxury marque, and the launch of the N7 is a crucial step towards achieving this goal.

• The N7 will also be seen as a test of the company’s aspirations and its ability to beat rivals like Tesla, Huawei, and Xpeng when it comes to autonomous driving features.

Intelligent driving: The top-end version of the N7 features a hardware suite of 33 high-precision sensors, including two 8-megapixel cameras and two lidar sensors, and is powered by Nvidia’s Drive Orin processor which offers 254 trillion operations per second (or TOPS). By comparison, Xpeng’s G6 features 31 sensors and Nvidia’s dual Orin chips.

• Denza also revealed that its advanced driver assistance system (ADAS) will cost RMB 23,000. It will allow cars to change lanes, speed up, and slow down on Chinese highways when it is updated in the last three months of this year and on city streets by next March.
• By comparison, Huawei-backed Aito and Avatr last week cut the price of their similar offerings in half to RMB 18,000. Both will roll out their assisted driving tech for urban scenarios in 45 cities by year-end, according to Richard Yu, head of Huawei’s consumer business group.

Other details: The N7 has a driving range of 702 kilometers (436 miles) and can be refueled with an additional 350 km of range in 15 minutes by BYD’s proprietary dual charging technology. For comparison, Xpeng’s G6 can travel 300 km on a 10-minute charge.

• The five-seater battery electric crossover is also among several new BYD models to adopt the company’s body control suspension system DiSus for a smooth ride on bumpy roads, with Zhao on Monday claiming the function can eliminate car sickness.
• Zhao also told Chinese reporters that around a third of the N7 reservations were from existing owners of German brands such as BMW, Mercedes, and Audi. Delivery of the vehicle is scheduled to begin later this month and the company expects monthly deliveries to reach 10,000 units as early as October.

Context: BYD and partner Daimler first unveiled the Denza brand in early 2012 two years after the set-up of a joint venture to develop EVs for Chinese consumers. Denza in late 2019 began selling the X, a seven-seater SUV with a starting price of RMB 289,800, which was discontinued two years later.

• In late 2021, BYD announced plans to restructure Denza as the company reached a deal to buy an additional 40% shares of the JV from its German partner, Reuters reported. Last August, Denza launched the D9 multi-purpose vehicle, its first model after the rebranding, with a starting price of RMB 329,800, and posted deliveries of nearly 80,000 units as of writing.
• China’s biggest EV maker has been aggressively entering the high-end market with a growing portfolio of luxury brands including Denza, Yangwang, and an upcoming sub-brand called Fang Cheng Bao. The first two models under the Yangwang brand were priced from RMB 1 million; Fang Cheng Bao will specialize in professional and personalized identities, according to the company.

Chinese electric vehicle makers Nio, Xpeng Motors, and Zeekr on July 1 reported significant volume gains in June after months-long dips amid intensifying competition. Nio’s aggressive price cuts and Xpeng launching new models have spurred each to improved numbers.

Although BYD remains the dominant player in China, Aion, Li Auto, and Great Wall Motor are emerging as rivals with enhanced technologies and competitive prices, with the sector’s intense competition showing no signs of easing anytime soon.

Why it matters: Jefferies analysts forecast an 8% monthly growth in the wholesale volume of new energy vehicles to around 774,000 units in June and a 20% sequential increase in foot traffic in the industry. 

• Still, the ongoing price war could intensify across the industry during the upcoming summer slow season, as global automakers such as BMW and Mercedes widen their retail discounts and compete on price, Jefferies analysts wrote in a July 1 note.

Major improvements: Li Auto crossed another monthly delivery threshold, reporting delivery of 32,575 plug-in hybrid crossovers to customers in June, up from the 28,277 units a month earlier. The automaker’s year-to-date deliveries of 139,117 units have already surpassed its total unit sales from 2022. Chief executive Li Xiang previously stated he expects that number to get to more than 40,000 units later this year.

• Great Wall Motor also saw strong growth last month, as sales of its new energy passenger vehicles, including pure electrics and PHEVs, surged 110% year-on-year to 26,643 units following the recent launches of its new Haval-branded SUV and six-seater Blue Mountain. Jefferies analysts said sales of the Blue Mountain reached a similar level to Li Auto’s L8 in some areas last month, citing information from dealerships.
• Nio’s delivery figures bounced back to 10,707 units in June, following two consecutive months of lackluster sales of less than 7,000 units. The firm’s June figures were buoyed by its recent price cut across all lineups. 
• Zeekr reported slightly fewer deliveries of 10,620 units last month when it began shipping its third model Zeekr X, a compact crossover with a starting price of RMB 189,800 ($27,590). This figure was up 22.4% from May.
• Xpeng Motors also saw a solid recovery in June with deliveries of 8,620 units, which marked a 14.8% growth from a month earlier. That figure was still 44% lower than a year ago, however, yet the company’s newest model G6 SUV might give it a chance to get further back on track. Jefferies analysts expected the G6, with delivery scheduled for this month, to “surprise on the upside” with monthly sales likely to reach more than 10,000 units.

Other results: BYD sold 253,046 EVs in June (of which 11,058 were Denza-branded multi-purpose vehicles), a new record compared to the 240,220 it achieved in May. The company had projected monthly sales of its D9 premium vans to reach 15,000 units and is set to begin sales of its second model, the N7 crossover, on Monday.

• Aion maintained its growth momentum and delivered 45,013 vehicles last month, slightly more than the 45,003 units it reached a month earlier. The EV arm of state-owned GAC Group is also moving upscale with the launch on Monday of its Hyper GT, a coupe with a price tag of RMB 219,900.
• EV startups Leapmotor and Hozon are still catching up in the sector, with June deliveries of 13,209 and 12,132 representing a mild growth of 9.5% and a 6.9% reduction from a month earlier, respectively. They’re followed by Changan’s EV brand Deepal with deliveries of 8,041 units.
• Huawei-backed EV brand Aito continues to face growth challenges in an increasingly competitive market, reporting deliveries of 5,668 units last month. That figure brings its total delivery numbers for this year to just 27,541 units.

Context: UBS analysts expect Chinese carmakers to continue market share gains as foreign rivals see a shrinking demand for internal combustion engine vehicles. Chinese EV makers “are acting fast in terms of new model launches, with a better understanding of consumer’s needs,” wrote UBS analysts led by Paul Gong on June 19.

Li Auto on June 17 unveiled details of its first purely battery-powered electric vehicle with an expected price tag of over RMB 500,000 ($69,955), claiming its supercharging facilities could give up to 400 kilometers (249 miles) of charge in less than 10 minutes.

The company also announced plans to release an automated driving function that it says will allow commuting drivers to relax their grip in urban traffic later this year, aiming to attract tech-savvy Chinese customers.

Why it matters: Li Auto is catching up with rivals in deploying advanced driver assistance systems (ADAS) at a faster pace than expected, which could be a key differentiator in the driving experience for the company, according to a June 18 note written by Jefferies analysts.

• The analysts added that the price range of Li Auto’s first battery EV would be in a “sweet spot” that could ease margin pressure in the future. The Chinese carmaker for now has three extended-range electric sports utility vehicles on sale.

First BEV: Named Mega, Li Auto’s long-anticipated first all-electric is a multi-purpose vehicle with a price range of RMB 500,000 and above, vice president Liu Jie said at a corporate event on June 17.

• Capable of traveling 400 km after 9.5 minutes of fast charging, the vehicle is scheduled for release later this year.
• Liu also spoke of the company’s goal for the Mega to become the top-selling vehicle in its price segment, regardless of vehicle type.
• Li Auto has set an initial goal of delivering 5,000 Mega vans per month, Chinese media outlet Jiemian reported, citing company insiders. By comparison, Geely’s premium EV brand Zeekr in May delivered 2,106 units of its 009 MPVs, priced between RMB 499,000 and RMB 588,000.

Driver assistance software: Li Auto also revealed plans to begin internal testing of its automated driving function for complex urban scenarios, called city NOA  (standing for Navigate On Autopilot), with a cohort of selected owners in Beijing and Shanghai later this month.

• Vice president Lang Xianpeng said the company’s deep learning model would enable vehicles to perceive their surroundings and make decisions similar to human drivers, as its growing fleet of software users has effectively driven over 600 million kilometers (373 million miles) to date.
• Lang added the cars would be able to navigate on fixed routes for daily commuters in big cities with heavy traffic after the initial two to three weeks of training with its collection of datasets. The function will be rolled out to users from 100 major cities by year-end via over-the-air updates.
• Some rivals have announced respective plans to compete for users with similar offerings. Xpeng Motors’ XNGP function for urban driving is available to owners in four major cities, while Huawei aims to release its Autonomous Driving Systems to Aito owners in 45 cities this year.

Second plant: The accelerated move to BEVs also comes as Beijing-based Li Auto recently received a green light to open its second plant in the nation’s capital, according to a document (in Chinese) released by the Ministry of Industry and Information Technology on June 16.

• The company will build its all-electrics in the RMB 6 billion factory later this year, state-owned media outlet Beijing Daily reported in late 2021. Built on the base of an old plant owned by Korean automaker Hyundai, the facility will have an initial capacity of 100,000 units annually.
• Li Auto currently has one factory in operation at a monthly capacity of 30,000 units in the eastern city of Changzhou. Its year-to-date deliveries exceeded 106,542 units as of May and chief executive Li Xiang expected its monthly delivery to reach a milestone of 30,000 units in June.

Nio announced aggressive price cuts on Monday. The unusual decision from the premium EV maker, which has previously refused to join the ongoing China EV price war, has drawn mixed reactions from experts, with some speculating on a significant sales recovery for the electric vehicle maker while others remain concerned about worsening margin pressures.

The Chinese EV maker on Monday decided to cut prices by RMB 30,000 ($4,199) across all its vehicle lineups, reversing its previous decision to keep pricing stable as part of “the DNA” of the premium brand. For instance, the base version of Nio’s ET5 sedan, once expected to be a high-volume model, now costs RMB 298,000 ($41,630) after the price cut, and RMB 228,000 if a customer chooses the company’s battery leasing plan, with a monthly battery lease fee of RMB 980.

Nio’s share price surged 8.7% on the news on Monday. But at the same time, the company’s gross margin hit a historic low of 1.5% in the last quarter, and the price reduction could further impact this figure. The company’s changing attitude toward price cuts comes at a time when it has faced a persistent delivery decline this year.  

Whether Nio’s lower-priced ES6 and ET5 cars prove to be popular could be the key to its very survival, as pressures mount on the smaller Chinese players in an increasingly competitive EV market. Nio’s deliveries in the first quarter fell by 22.5% to 31,041 vehicles from the fourth quarter last year; it also gave a weaker outlook for the second quarter: up to 25,000 units.

“Nio is playing a double sword game, and the outcome remains unknown,” said Yale Zhang, managing director of Shanghai-based consultancy AutoForesight.

Sales and efficiency boost

Nio’s recent price cuts could drive sales, especially in lower-tier Chinese cities where battery swap facilities remain inaccessible, according to Sun Shaojun, founder of consumer behavior research agency CarFans (our translation).

Sun expects the move, coinciding with the end of free battery swaps, to help Nio control costs and improve recharging network efficiency. Nio’s public chargers often lie idle as owners use the free swap service instead, Sun told TechNode on Monday.

Lei Xing, an auto industry analyst and former chief editor at China Auto Review, saw Nio’s decision as “a long overdue change” to better adapt to the environment, and the first step in a series of potential measures to save costs and improve efficiency. Xing added that Nio should also eliminate under-performing models from its overly large lineup.

Long-term uncertainty

In a market where most major EV makers are offering big price cuts in recent months, some experts are skeptical about the sustainability of Nio’s sale-boosting move.

Nio is anxious to reverse its declining sales trend and prevent further loss of market share from competitors such as Li Auto and some bigger players, AutoForesight’s Zhang said when contacted by TechNode. The price cuts will further damage Nio’s gross margins, as well as its ability to maintain its premium brand reputation long-term, added Zhang.

Xing thinks the price cut will help Nio deliver 180,000 vehicles this year, its current best-case scenario. Even this figure will fall short of an earlier prediction by the company: double last year’s unit sales of 122,486 cars.

“We believe there is an opportunity for us to still achieve deliveries of 20,000 units per month,” Nio chief executive William Li told analysts during an earnings call on June 9. “We need to make sure we can find a better way to meet user needs and expand their demands.”

Chinese EV makers saw a flat month overall in May, with 0% growth in the market from April. However, some EV makers are squeezing out growth more than others. BYD, Aion, and Li Auto managed to report monthly growth of around 10% to 14%, while Nio saw delivery figures sink to its lowest level in 12 months. Xpeng Motors and Zeekr look on track for a modest recovery. 

Why it matters: Total sales in China of new energy vehicles, including all-electrics and plug-in hybrids, were relatively flat in May despite an outstanding performance by major Chinese electric vehicle makers, highlighting the growing advantage of domestic players over foreign counterparts amid rising competition.

• Automakers mostly saw a slowdown in new order intakes and foot traffic at showrooms during the second half of May due to a new surge in Covid cases, weak consumer sentiment, and the phase-out of regional subsidies by some local Chinese governments, analysts at investment bank Jefferies wrote in a note on Thursday, citing Sun Shaojun, founder of auto consumer service platform Carfans.
• Sun expects a strong recovery during June and July, as multiple domestic players begin mass delivery of new models. Sales of passenger EVs were around 483,000 units during May 1-28, up 82% thanks to a low base from a year ago due to Covid lockdowns. However, May deliveries showed no growth from the previous month, according to figures from the China Passenger Car Association.

Strong growth: BYD reported a record high in monthly vehicle sales at 240,220 units, up 108.9% from a year ago and 14.2% from April. This was buoyed by price cuts from dealerships and the launches of multiple cheaper models, including the new Han and Tang models with smaller batteries and the entry-level Seagull. Its premium brand Denza also posted impressive results of 11,005 vehicles delivered.

• GAC’s EV unit Aion and EV startup Li Auto also hit new milestones with deliveries of 45,003 and 28,277 vehicles last month, representing a monthly growth of 9.73% and 10.1%, respectively. The two companies have set goals of selling up to 600,000 and 300,000 vehicles this year, which would more than double their totals from last year.
• Hozon and Leapmotor both reported strong May sales of 13,029 and 12,058 units, respectively, after announcing “price protection” measures in March to counter a months-long price war ignited by Tesla. Historically a budget carmaker, Hozon said it delivered 1,716 Neta GT sports cars, launched last month and priced from RMB 178,800 ($25,276).

Under pressure: Nio on Thursday revealed that its monthly delivery figures have fallen for four months in a row to 6,155 units in May, as fierce competition and an aging product lineup continue to weigh on the Shanghai-based EV maker. On May 24, the company began handing over its all-new ES6 crossovers to customers and said mass delivery of its redesigned ET5 sedans would begin later this month.

• Xpeng’s May delivery was 6% higher from a month earlier, as the EV maker began delivering the P7i, a revamped version of its popular P7 sedans in March. The modest growth was due to supply chain constraints, with chief executive He Xiaopeng recently telling investors the company would “significantly” ramp up production of the key components for P7i with partners in June.
• Geely’s premium brand Zeekr posted deliveries of 8,678 units last month, a 7% increase from April. Its new compact SUV, the X, is scheduled for delivery this month. Rival Deepal began shipping the S7, its second model, on Tuesday, with monthly deliveries of Changan’s EV marque reaching 7,021 units in May, a 9.5% decline from April.
• Aito’s sales rose 22.8% month-on-month to 5,629 units in May. The Huawei-backed EV maker began selling a top-end version of its M5 plug-in hybrid crossover equipped with Huawei components and software for automated driving in April, with delivery scheduled to begin on June 18. Meanwhile, sales of Dongfeng’s EV unit Voyah fell 10.1% to 3,003 units from a month ago.

Chinese electric vehicle battery maker CALB is reportedly withdrawing job offers to fresh college graduates who signed contracts late last year to join the company full-time this summer, Caixin reported. The company attributed the move to “changing market conditions” as it attempts to address customer demand.

Why it matters: The decision by Hong Kong-listed CALB, China’s third-biggest battery maker by volume, reflects growing pressure in the world’s biggest auto market as fierce competition and concerns of a slowdown have seeped into the EV supply chain.

Details: At least five “class of 2023” graduates who signed employment contracts with CALB were told the battery maker had rescinded its offers, according to Caixin. Having signed up in October 2022, the students were due to start work in July, but have now instead received a payment of RMB 3,000 ($424) in compensation. 

• The company said the move was necessary to ensure it could adapt to new circumstances in light of “chances and challenges going forward” in the EV industry.
• All of the company’s seven manufacturing facilities in China have taken back some of their job offers to fresh graduates, according to Caixin. 
• The report did not say how many of the firm’s graduate hires were affected but that hundreds of people had started chats on messaging platform QQ to share information.
• CALB did not immediately respond to TechNode’s request for comment.

Context: CALB’s shares slipped 6.8% to HKD 17.1 on Monday following a 4.28% fall on May 26, taking its market capitalization to HKD 30.3 billion ( $3.9 billion), down more than 50% from last October, when the company went public in a HKD 10.1 billion deal in Hong Kong.

• CALB mainly focuses on the Chinese market, with overseas revenue only accounting for 1.5% of its total last year. 
• CALB generated RMB 20.4 billion in revenue in 2022, triple its revenue from the previous year. A major supplier to Chinese carmakers GAC and Xpeng Motors, CALB is the third-largest battery maker in China. 
• Manufacturers in China collectively sold the equivalent of 25.1 gigawatt hours (GWh) of batteries in April, representing a 9.5% decline month-on-month, according to figures released by China Automotive Battery Innovation Alliance (CIBIA).

Nio on Wednesday launched a new version of the ES6, the brand‘s top-selling SUV. The EV maker has priced the new vehicle from RMB 368,000 ($52,027) and said it offers a driving range of 930 kilometers (578 miles) with its new 150 kWh solid-state battery pack. 

Why it matters: First launched in 2018, the ES6 has long been Nio’s top seller and performed strongly in China’s electric SUV category. The new version of the ES6 has the potential to become a high-volume car for the luxury automaker, which has faced slow growth as more established automakers enter the EV sector.

• Nio first unveiled details of its 150 kWh battery packs in January 2021, when the company claimed the battery would use a solid electrolyte instead of the liquid electrolyte found in existing offerings, providing high energy density and improved safety.
• The EV maker initially planned to deliver its ET7 sedans with the battery pack in the fourth quarter of 2022. However, in September 2022, CEO William Li told investors during an earnings call that production would be delayed “for several months.”

Details: The new ES6 with a 75 kWh battery pack is on sale for RMB 368,000 ($52,027) and offers a 490 kilometer driving range. The 100 kWh battery pack version is priced at RMB 426,000, offering a 625 kilometer driving range. Delivery began immediately after the launch on Wednesday night.

• The price of the ES6 can be reduced to RMB 298,000 if buyers choose Nio’s “Battery-as-a-Service” program, but they will have to budget in a monthly RMB 980 battery leasing fee. 
• The company did not reveal the pricing for the 150 kWh version of the new ES6, but CEO Li promised that delivery would begin in July during an online press conference on Wednesday, without providing any further details.
• The compact SUV can accelerate from 0 to 100 km/h (62 mph) in 4.5 seconds and has a dedicated computer to control chassis components, which the company said would improve the car’s balance and control.

Context: The five-seater ES6 has been Nio’s most popular vehicle model since it was first introduced in December 2018 and was the top-selling electric SUV in 2020, according to figures from the China Passenger Car Association. Nio has delivered more than 120,000 units of the original ES6 as of writing.

• The company currently has seven models on sale and covers a price range between RMB 300,000 and RMB 650,000. Li said it had set a target to double the company’s delivery volume from the 122,486 units it achieved last year.
• However, it delivered just 31,041 vehicles for the first three months of this year amid fierce competition, a 20.5% increase from a year earlier but a 22.5% decline from the previous quarter. By comparison, peer Li Auto delivered 52,584 units over the same period.

With its peak daily order volume for food deliveries surpassing 60 million last year, Meituan continues to sit pretty at the top of the tree when it comes to China’s local life services sector. The app spans everything from movie tickets and restaurant bookings to medical appointments, and recorded a total of 677.9 million users making transactions in 2022.

Yet Meituan’s dominance is increasingly facing challenges. Major Chinese companies including social media platform Xiaohongshu and ByteDance-owned TikTok sibling Douyin have been making inroads into the local life services market as Covid restrictions have eased. By linking consumers with nearby service providers or merchants and encouraging them to make purchases digitally before going to have the experience offline, these newcomers are looking to such transactions as a way to monetize their huge user bases.

For the moment, Meituan claims to be unperturbed. Meituan CEO Wang Xing described Douyin’s expansion into food delivery as having “a limited impact” on the company during its Q1 earnings call. However, the delivery platform recently made takeout livestreaming a monthly event and has launched group-buy delivery services in what many see as a bid to stay competitive in the face of these new entrants.

The total size of the local life services market is expected to reach RMB 35 trillion in China by 2025, though its online penetration rate was only 12.7% in 2021, according to data from Chinese research firm iResearch and cited by Chinese media outlet 21jingji, meaning there’s still plenty to play for.

Here’s a short introduction to new players in this vibrant market.

Xiaohongshu

Experience-sharing lifestyle platform Xiaohongshu, the latest major entrant to this competitive sector, has over 260 million monthly active users. The platform has maintained a thriving user base and sense of community for years and serves as a lifestyle search engine for many of its users. Now, it is making one of the biggest moves in the local life sector.

Xiaohongshu is currently inviting caterers and service providers to test the sale of group-buying packages on its platform. Participating merchants can sign up without paying a deposit or commission to Xiaohongshu for revenue earned through the service, according to tech media outlet GeekPark. Meanwhile, the platform’s influencers are able to earn commission by posting information about retailers that offer group buy options.

If the Shanghai-based company can leverage its feed algorithms while encouraging users to complete transactions within the app, it may see Xiaohongshu emerge as a serious challenger to Meituan, while also accelerating the company’s monetization quest. In 2020, 80% of Xiaohongshu’s revenue was generated by ads, the Financial Times previously reported, citing research firm LeadLeo, but the company is increasingly looking to diversify its revenue streams.

READ MORE: Xiaohongshu bets on e-commerce livestreaming to accelerate monetization: report

Douyin

Douyin has made significant strides in expanding its presence in the local life market, with its services sector reportedly generating over RMB 77 billion ($11.1 billion) in total sales last year, while advertising revenue amounted to just RMB 8.3 billion.

Growth in the platform’s brightest business continues to be strong. Local media outlet 36Kr reported that the unit generated more than RMB 10 billion in GMV in every single month in the first quarter of this year.

The TikTok sibling app has expanded its offerings to include group-buy delivery, sightseeing tickets, hotel reservations, and manicures in recent months. In mid-2022, Douyin allowed short video viewers to order meals directly on the app through a mini-program operated by Alibaba’s food delivery service Ele.me. In March, the service was introduced to 15 new cities, expanding the service to a total of 18 locations in China.

These efforts reflect the fact that ByteDance, Douyin’s owner, is stepping up its push to monetize users on the widely popular platform.

The head of Douyin’s local life business, Zhu Shiyu, recently stated that life services was a vast market worth more than ten trillion yuan, and that only a small proportion of transactions were currently being conducted online.

Kuaishou

Kuaishou, another leading short video-sharing platform in China with 366 million daily active users, has been expanding its presence in the local life services space in an effort to also capture market share, although it currently has less of a presence than rivals Douyin and Meituan.

Kuaishou had been active in offering lifestyle services in Shanghai, Qingdao, and Harbin, with Hangzhou the next major city to see local services rolled out. Kuaishou aims to provide local life services for different cities through a replicable model developed through experimentation. The short video operator incentivizes local merchants to sign up for the service while supporting local influencers who are willing to promote shops on the app.

Xiaogu, head of Kuaishou’s local life business unit, noted that since it entered the Qingdao market on Feb. 10, it has added over 300 local businesses. Kuaishou reportedly recorded around RMB 5 million in local sales in the seaside city in its first month, and already saw some influencers generate around 200,000 yuan in a single month.

Traditional Chinese automakers GAC and Geely, along with market leader BYD, have reported impressive electric vehicle delivery figures in April, taking market share away from young competitors such as Nio and Xpeng. 

Why it matters: April deliveries show the growing importance of traditional auto manufacturers in the Chinese EV market, putting additional pressure on EV upstarts, especially Nio and Xpeng.

Details: BYD has maintained its dominant position as sales nearly doubled to 210,295 vehicles in April from a year earlier. In particular, it sold 10,526 units of the Denza D9, a multi-purpose vehicle under its premium brand Denza, surpassing the threshold of 10,000 units for a second month.

• GAC’s EV unit Aion has also enjoyed strong growth momentum with sales of 41,012 units, representing a year-on-year increase of 302%. Li Auto also saw impressive growth, becoming the top-performing brand among EV startups with reported deliveries of more than 20,000 vehicles for a second consecutive month in April.
• More traditional Chinese manufacturers, namely Geely and Dongfeng, showed small but gradual rises. Geely reported deliveries of 8,101 of its Zeekr-branded vehicles, up 22% from the previous month. Dongfeng’s Voyah family cars reported 3,339 deliveries, a 10% growth from the previous month.  
• Meanwhile, deliveries of Changan’s EV arm Deepal declined by 9.5% to 7,756 units from a month ago. Yet, that number surpassed those of Nio and Xpeng for the first time following the launch of the brand by Ford’s manufacturing partner last April.
• Nio and Xpeng now face serious pressure. Xpeng saw relatively flat deliveries of 7,079 units for the month, although the automaker has managed to stall the delivery declines that began late last year, thanks to the launch of its revamped P7 sedan in late March, which began to offset the slump in sales of its G9 crossovers.
• Nio’s April deliveries plunged by 36% month-on-month to 6,685 units. Speaking on the sidelines at the Auto Shanghai show last month, president Qin Lihong said the company is in a period of model transition, clearing out most of its older models and still racing to introduce redesigned and new models.
• Seres did not reveal the numbers for its Aito brand. However, a total of 4,585 units were handed over to customers last month, according to data obtained by Chinese financial media outlet Caijing. The Huawei-backed car brand delivered 16,244 units from January to April.  
• Hozon and Leapmotor have settled into a period of steady growth, with deliveries of 11,080 and 8,726 vehicles, respectively. Both companies are increasingly focusing on higher-price segments rather than the budget offerings they are known for. Leapmotor said its pricier C series accounted for 83% of April’s sales.

Context: Established Chinese automakers commanded 67% of the country’s passenger EV market in March, a 6% increase from a year ago, according to figures published by the China Passenger Car Association. For “new forces,” which refers to younger EV startups, market share declined by 6.7% annually to 10.4%. In addition, Tesla took a 14.1% market share in China.

• The CPCA has yet to reveal detailed April figures but estimated on April 25 that passenger EV sales would decline by 8.4% month-on-month to roughly 500,000 units, as the market faced disruption from the recent price war and continued to slowly recover from the Covid-19 pandemic.

BYD on Thursday reported strong revenue growth in its first quarter, with net profit up 410% from last year despite concerns about slowing demand following a Covid-hit 2022. The EV giant’s profit growth is slowing, however, and was down 43.5% from the previous quarter due to an ongoing national price war and a rush of purchases before subsidies were ended late last year. 

Why it matters: BYD’s figures reflected a broader trend of growing competition and shrinking profits for automakers in China, as car brands were hit by the phasing-out of electric vehicle subsidies and a price war started by Tesla’s price cuts. BYD continues to lead the sector however, with a 35% share of the country’s electric vehicle market. 

Details: China’s biggest electric car maker said on Thursday it made RMB 4.1 billion ($597 million) from January through March, representing an impressive surge of 410.9% year-on-year, but a 43.5% drop from the previous quarter.

• The firm’s profit margin also fell slightly from 19% in the fourth quarter of 2022 to 17.8%, as it was hurt by Beijing’s subsidies cuts and its reduced sales volume, Jefferies analysts wrote in a Friday report.
• Sales nearly doubled from a year ago to 552,100 vehicles during the period, although that number represented a decline of 19% from the previous quarter. January and February are traditionally low seasons due to the Lunar New Year holidays.
• The Chinese auto giant is significantly ramping up its spending on research and development, with R&D expenses jumping 164.2% annually to RMB 6.2 billion during the first quarter, close to rival automaker Geely’s spend of RMB 6.8 billion for the entirety of last year.
•  Analysts expected the automaker’s profitability to recover as lithium prices began falling after a strong two-year run, and its dominance in the mainstream car segment could continue on better cost control.

Context: China’s auto industry has faced downward pressure as general passenger car sales declined 4.5% from last year to 4.9 million units in the first quarter of this year. 

• Industrial profit from the automobile manufacturing sector dropped 24.2% over the same period from a year ago, according to data from the National Bureau of Statistics.
• Sales of Volksagen’s partner SAIC fell 27% annually to around 891,200 units in the first quarter. At the same time, Chinese automaker Great Wall Motor reported RMB 217 million in net loss.
• BYD is among the Chinese automakers forced to match Tesla’s repeated aggressive price cuts to maintain their sales volumes. On March 16, BYD launched a new version of its popular Han sedan priced from RMB 209,800. Previously, the cheapest version cost RMB 269,800.
• The company on Wednesday began selling the Seagull budget car with a price range of between RMB 73,800 and RMB 89,800. At the same time, BYD is also venturing into the ultra-luxurious sector, recently announcing pre-sales of the U8, an off-roader from its Yangwang brand, for a little over one million yuan. 

As China’s car industry quickly embraces new energy vehicles, the country’s tech giants and startups are competing head-on with established global auto parts manufacturers to help automakers develop unique in-car software experiences and assistant driving features.  

Tech majors like Huawei and Baidu are positioning themselves as automotive suppliers by providing comprehensive software systems along with a full range of electronic components for the smart, connected, and electric vehicles of the future. Meanwhile, global tier-1 suppliers Bosch and Continental are localizing more of their tech capabilities to adapt to the fast-changing Chinese market.

Here’s a roundup of some of the upcoming automotive tech that debuted at this year’s auto show in Shanghai.

Baidu: Seeking long-term ties with carmakers

Two years after setting up a dedicated unit to develop self-driving tech for consumer cars, Baidu made a strong commitment to automakers by declaring itself their “best partner” in smart, electric vehicles in China in a statement made on April 16 ahead of this year’s show.

Low-cost deployment is one of its major selling points. The search engine giant launched the Apollo City Driving Max on April 16, claiming it is by far its most powerful advanced driver-assistance system (ADAS). The AI giant also claims that the new system is the only pure vision-based approach for automated driving on Chinese urban roads, meaning it operates without the use of pricier lidar sensors.

Baidu also introduced its new high-definition mapping technology at a relatively lower cost than rivals, adopting a crowdsourced approach to compile map data to help EVs get around by themselves. “This is unique to Baidu,” said corporate vice president Rob Chu. The company expects such efforts to pay off in the long run, allowing it to form consistent and reliable partnerships with auto manufacturers.

Huawei: Competing against Tesla’s software offerings 

Huawei has had a bumpy ride after making a splash at Auto Shanghai 2021 with the public debut of its assisted driving technology, as two of its major manufacturing partners – BAIC’s Arcfox and lesser-known Seres – have both found themselves facing lackluster sales.

On April 16, the technology giant unveiled the second generation of its Advanced Driving System, which was designed to let vehicles navigate not only on highways but also around complex city streets like Tesla’s full self-driving beta software. Huawei’s consumer business head Richard Yu made the announcement in Shanghai, claiming that the Chinese telecom firm has surpassed Tesla in handling on- and off-ramps among other traffic scenarios, according to its testing results.

The system will be released to users in at least 45 Chinese cities by the end of this year, where high-definition mapping services are currently unavailable to them.The system was built upon multiple sensors and cameras to reduce the reliance on mapping. A high-end version of the Aito M5 electric crossover is the first model to adopt the technology, while the Avatr 11, co-developed by Huawei and its partners Changan and CATL, and the Arcfox Alpha S will also adopt the system. 

Bosch: Chinese OEMs a major growth driver

German auto supplier Bosch debuted its fourth-generation computing platform for in-car entertainment at the Shanghai auto show, highlighting the ongoing trend of cars relying on software to differentiate themselves in a crowded marketplace.

Entirely developed by its Chinese team, the information domain computer has undergone four upgrades over the past two years, facilitating automakers’ fast and customized development of in-car applications, according to Dr. Markus Heyn, chairman of Bosch’s mobility solutions business sector. This also enables vehicle owners a seamless and smart cockpit experience both in the vehicle and on the cloud.

Heyn said he was personally impressed by the wide range of new brands and electric vehicles that are on display at this year’s Auto Shanghai. “I am extremely proud that Bosch is a part of this rapidly growing and evolving industry and serves as a global partner for our customers in China,” added Heyn. Chinese original equipment manufacturers (OEM) accounted for nearly 60% of the mobility solutions business sector of the engineering group’s total sales in China last year.

Continental: Keeping up with China’s fast transition to EVs

Continental on Wednesday showcased for the first time a high-performance computer that is capable of assisted driving and body control, giving carmakers a more agile process of software development. More than 30 new vehicle models will be using Continental’s supercomputing solution by 2024, the company said, with GAC’s EV unit Aion becoming one of its early adopters.

The German auto parts maker sees standardization as a strength in keeping up with China’s fast transition towards smart EVs. The company set up a joint venture with local startup Horizon Robotics back in late 2021.

“A lot of the cost in ADAS is coming from developing specific software. We figure out what is a common part and roll out standard components in a fast and cost-competitive way, and then we add some specific functions to make a difference,” said Frank Petznick, head of the autonomous mobility business area at Continental. “I think this is the key [to success] in China and many Western companies have not understood that yet.”

Horizon Robotics: Landing BYD as a major client

This year’s Auto Shanghai also reflected the rise of domestic suppliers. Horizon Robotics is one of the Chinese suppliers helping auto companies to secure their supply chain and reduce costs. Horizon said on Tuesday that it will team up with Chinese EV leader BYD to develop software and hardware systems for automated driving to use in the latter’s cars.

Multiple BYD cars will be manufactured later this year based on Horizon’s Journey 5, which is made specifically for computing in connected and intelligent vehicles. The move marks “a significant achievement” in the two companies’ strategic collaboration since 2021, according to Dr. Yu Kai, founder and CEO of Horizon Robotics.

Backed by a list of auto majors including Volkswagen, Horizon already supplies tech to automakers including Geely and Li Auto. The company also announced a partnership with EV maker Hozon Auto on Tuesday to build assisted driving platforms set to hit the market as early as 2024.

Chinese automaker Geely on Wednesday launched the Zeekr X, a compact luxury SUV under the electric vehicle brand Zeekr. The model is Zeekr’s third model and highlights the brand’s ambition to compete in the luxury car segment.

Why it matters: The sales of the new model could influence Zeekr’s goal to go public in the US and establish itself in Europe.

•  The Zhejiang-based automaker will begin entering the European market with the new model and 001 hatchback sedan, Andy An, Geely’s president, and Zeekr’s chief executive told reporters during a press event on Wednesday.

Details: With a starting price of RMB 189,800 ($27,590), the Zeekr X is positioned as a compact luxury crossover touting high-performance features such as fast acceleration and flexible interior space that can offer customized configuration.

• The high-end Zeekr X features twin electric motors with a power output of up to 315 kW, allowing the vehicle to accelerate from 0 to 100 kilometers per hour (62 mph) in 3.7 seconds.
• That is quicker than German offerings such as the Audi Q4 e-tron (6.8 seconds) and BMW’s M240i (5.3 seconds) and comparable to the dual-motor version of Tesla’s Model X (3.8 seconds).
• The automaker also introduced a novel, flexible interior design, such as allowing users to change the car’s central armrest into a slideable console box, helping the driver to move across the front passenger seat to get off in tight parking spaces. 
• Users can also fold up the back seat to transform the rear seating area into a new storage space. The car offers multiple seat adjustments and other luxury amenities, including a 14.6-inch infotainment screen.
•  The exterior design of the new car is also a stand-out, using designs usually seen in concept cars, such as integrated door handles, borderless rear-view mirrors, and a hidden charging cover. 
• The Zeekr X crossover will have a driving range of up to 560 kilometers (348 miles), similar to that of the Smart #1, a small electric car jointly made by Geely and Mercedes-Benz. Delivery is scheduled to begin in June.

Context: The compact SUV could be a key test of Geely’s ambition to evolve from a budget-friendly mainstream carmaker to a global luxury EV maker.

• Geely’s internal plans call for sales of 40,000 Zeekr X SUVs this year, as part of its 140,000 annual delivery target for the premium EV brand, which was launched in early 2021. The Volvo’s parent also operates several other luxury brands such as Lotus and Polestar.
• However, Zeekr is still far from reaching its goal, delivering a total of 15,234 units during the first three months of this year, including its 001 sedans and the 009, a multi-purpose vehicle with an average selling price of RMB 527,000 amid growing pressure from rivals from Tesla to peer BYD.

Chinese electric vehicle makers posted a slight increase in monthly deliveries in March, boosted by industry-wide price cuts since early this year. However, the gains were minimal and uneven, bolstering the market’s view that competition will remain fierce, with dwindling margins amid weakened demand.

Why it matters: Retail sales of Chinese passenger EVs during March 1-26 rose slightly by 10% from last year and just 1% from a month earlier, according to figures from the China Passenger Car Association. Meanwhile, overall sales of Chinese passenger cars declined 1% year-on-year and 17% month-on-month. BYD and GAC’s Aion still lead in deliveries, while Li Auto continues to outperform EV startup rivals Nio and Xpeng. 

• China’s auto industry is in a period of transition. New energy vehicles are fast growing but many brands have yet to achieve profitability, while gas cars are still profitable despite declining sales, Ouyang Minggao, a member of the Chinese Academy of Sciences, said at an industry forum on April 2.

Details: BYD said on April 2 that sales almost doubled from March last year to 207,080 units, reflecting its growing dominance in the country’s EV market. Notably, the giant manufacturer saw strong gains for its premium marque Denza, sales of which increased 42% month-on-month to 10,398 units.

• GAC’s EV arm Aion reported sales of over 40,000 units last month, marking the first month in which deliveries exceeded the critical threshold. On March 7, the company began selling a more affordable version of its compact crossover Aion Y, lowering the starting price of the model by 17% to RMB 119,800 ($17,380).
• Li Auto has maintained strong growth momentum due to the popularity of its L series family sports utility vehicles, delivering 20,823 units in March. The automaker aims to deliver as many as 30,000 vehicles per month in the second quarter of the year, as delivery of its entry-level L8 and L7 crossovers begin in April, chief executive Li Xiang told investors on Feb. 27.
• Other US-listed EV makers posted a relatively weak performance. Having stuck to its pricing strategy despite demand concerns, Nio said March deliveries fell by 15% from a month earlier to just over 10,000 units. Xpeng’s March deliveries grew by 16.5% sequentially to 7,002 units, boosted by sales of a revamped version of its popular P7 sedans.
• Hozon reported flat March deliveries of 10,087 units, while rival Leapmotor said that number increased 93% to 6,172 units. Both companies are among a group of automakers that recently assured customers no price cuts were on the horizon.
• Changan’s EV marque Deepal said sales more than doubled to 8,568 vehicles last month after offering customers cash incentives of RMB 22,000 from March 10. That number of Geely’s premium EV brand Zeekr rose 22.1%, boosted by an incentive package worth RMB 80,000 launched on March 16.
• Huawei is under bigger competitive pressure, as manufacturing partner Seres reported lackluster sales of 3,679 vehicles in March. Its accumulative sales surpassed just over 11,000 units during the first quarter of this year. The Chinese tech giant on March 31 reassured carmakers once again by saying it would not manufacture cars on its own.

Context: Ouyang from the Chinese Academy of Sciences suggested Chinese carmakers develop both all-electrics and plug-in hybrid EVs in the next ten years, as the latter is normally equipped with smaller battery packs and therefore less affected by the volatility of raw material prices.

• Speaking at this year’s China EV 100 forum in Beijing, he estimated that plug-in hybrids could take nearly half of the Chinese EV market in 10 years from last year’s 22%.

Nio announced on Tuesday that it has begun deploying its latest generation battery swap facilities as part of an aggressive expansion plan to double its recharging network to more than 2,300 swap stations and 24,000 chargers across China this year.

The electric vehicle maker expects its expensive bet on power infrastructure to put it ahead of competitors amid a fierce price war, as most owners are turning to battery swapping as the main solution to refuel their EVs, senior Nio executives told TechNode.

“Many users can never have home chargers in China so they choose our vehicles for the battery swap technology,” senior vice president Shen Fei said on March 23 in Shanghai. “Rather than lowering vehicle prices, we prefer offering users an excellent recharging service and driving experience.”

Grappling with flat sales amid growing pressure from larger rivals, Nio is hoping the battery swapping stations can help achieve its annual delivery goal with greater service capacity. The move could also pave the way for the release of its mainstream sub-brand scheduled for 2024, according to executives.

Third generation swap station

Unlike many of its rivals, Nio has long preferred swapping over charging. Swapping stations give drivers a fully-charged battery pack in a few minutes compared to varying charging wait times, which can range anywhere from 30 minutes to several hours. But the former tends to come with a higher price tag to the provider, given the more complex infrastructure and equipment. 

On Tuesday, Nio announced that its third generation power swap station could offer up to 408 swaps per day, an increase of 30% compared with the previous generation. Each swap takes less than five minutes, meaning 20% less time spent for users.

Shen said that 90% of the 1,000 swap stations in the pipeline this year would comprise the latest version, creating the possibility of serving different brands – both those under the Nio umbrella, including the forthcoming Alps sub-brand, and those of other carmakers if compatible. The latest swap facility features the potential to accommodate more vehicle models with wheelbases between 2.8 meters and 3.3 meters, an increase from the upper limit of 3.1 meters of the previous generation.

Meanwhile, Nio is pushing for more hybrid locations that will include a swap facility and a number of charging piles. Such an approach could almost double the service capacity of existing charging stations offered by competitors with a field of the same size and for the same grid capacity, allowing the station to offer both swapping and charging during peak hours and charge batteries for future swaps during off-peak hours, Shen added.

The company did not reveal how much it would cost to manufacture and operate the latest version of its swap station. “The value is more important than its cost,” said Shen.

‘Power swap district’

For some Nio buyers, battery swapping (although a capital-intensive approach) is the reason they choose Nio over other EV brands since many have difficulties installing private chargers.

A Shanghai owner surnamed Dai picked Nio’s ET5 over Xpeng’s G9 late last year after finding he couldn’t set up a home charger in his residential area due to load safety considerations. Citing other reasons, such as vehicle design and customer service, Dai told TechNode he was also impressed by the fact that there are at least two Nio swap stations near his office.

Dai is among the Nio owners living in a so-called “power swap district,” a term coined by the company to describe areas where drivers have a swap facility within three kilometers of their residential or office buildings.

The EV maker said that at least 68% of Nio owners live in a “power swap district,” and the final goal is to push the proportion to 90% across the country. “Some of our users still have places 10 kilometers (6.2 miles) away from a swap station, and I believe we owe them one,” said Shen.

Nine-year-old Nio expects battery swaps to create a model for its luxury car business and underpin its goal of delivering 250,000 vehicles this year. One of the key focuses in 2023 for Nio will be the expansion of its infrastructure to Chinese lower-tier cities, as long as each city has a base of around 100-200 users, according to Shen.

READ MORE: Nio ramps up charging and battery swap network as execs remain bullish on 2023 growth

BYD is setting up separate divisions with corresponding executive appointments and dedicated operation teams for each brand under its diverse portfolio in a move to improve efficiency and boost internal competition, local media outlet 36Kr reported.

Why it matters: The move comes as BYD pursues a wider customer base, especially in the luxury car segment, rolling out several new brands and offerings. The firm is also seeking to maintain its leadership of the Chinese electric vehicle space amid rising competition.

• The automaker originally set an ambitious sales target of 4 million units this year, which will more than double 2022’s number, financial media outlet Caixin quoted chairman Wang Chuanfu as saying. The company later declined to provide a guide figure for 2023, citing multiple challenges.

Details: Early this year, BYD carried out a reorganization under which its Dynasty, Ocean, and Denza series would be run as separate units in terms of vehicle development and project management, 36Kr reported on Friday, citing people familiar with the matter.

• The Chinese manufacturer has named executives, mostly existing automotive program directors or heads of the respective businesses, to lead each unit, calling them “brand research and development institutes” (our translation).
• Each team should be able to better allocate resources with its own leadership structures and profit-and-loss statements while maintaining access to company-wide vehicle technologies, the report said, adding that the new structure has also been adopted by rival carmakers such as Geely.
• BYD has implemented various measures to streamline operations and boost internal competition since last year, such as revamping its evaluation scheme for employee performance and letting go of those with the lowest grades, according to the report.
• BYD did not respond to TechNode’s request for comment.

Context: China’s top EV maker by sales volume has been quickly expanding its product offerings to a broader range of vehicle types than the affordable, down-to-earth offerings it has traditionally marketed.

• BYD debuted the first two models under its high-end Yangwang brand at the beginning of 2023 and is on track to set up another premium, more personalized brand (codenamed F) later this year. Both new brands will have showrooms independent of BYD’s existing sales networks.
• The company also operates Denza, a mainstream luxury brand initially co-developed by the Chinese carmaker and Daimler in 2010 and which posted sales of 9,803 D9 multi-purpose vehicles as of December, five months after its launch. Denza is expected to introduce two new electric crossovers this year.

Nio and Li Auto this week reaffirmed plans to stick to their pricing strategy, bucking an industry-wide trend of significant price cuts in China initiated by Tesla and followed by dozens of auto majors from Toyota to Volkswagen. The young electric vehicle makers are looking to protect their superior brand images and achieve profitable growth despite concerns of a slowdown in sales in the short run, according to industry observers.

Why it matters: The ongoing price war in the Chinese auto market has created an unhealthy situation, as it might cause a growing number of consumers to wait on the sidelines in anticipation of further price reductions, UBS analysts told investors in a Wednesday note.

• Sales in provinces with local subsidies such as Hubei could see a temporary boost, wrote analysts led by Paul Gong. However, they also cautioned that for many companies, their brand premiums could be negatively affected, making it more difficult to sell their cars at normal prices in the future.
• China’s passenger EV sales increased 9% year-on-year to around 131,000 units during March 1-12, while total retail sales of passenger cars declined 17% against the same period last year to around 414,000 units, according to figures published Wednesday by the China Passenger Car Association.

No price cuts planned: Nio has no plans to cut prices for, or release affordable versions of, its flagship models to counter recent price cuts by competitors, Pu Yang, assistant vice president of sales operations, told Chinese reporters on Tuesday. A Nio spokesperson confirmed the report.

• In-store visits to Nio showrooms over the past weekend rose to a new three-month high, according to Pu, who added that some potential customers are holding off on purchases and waiting for prices to stabilize, which has affected order intake.
• Nio will compete for a larger market share by offering competitive prices in the premium car segment and shoring up services with the expansion of its battery swap facilities, Pu said, citing the strength of its products and brands.
• Nio’s domestic sales declined to 2,170 units during the week of March 6-12 from 3,345 units a week earlier, according to figures compiled by Chinese auto trade media outlet EV Observer. In comparison, Li Auto’s sales grew by 32% to 4,243 units during the same week.

Protection against price cuts: Li Auto also made a related move on March 11 by offering a price guarantee on its EVs until the end of the month to reassure customers that no price cuts are on the horizon. CEO Li Xiang said on March 2 that the company would stand by its pricing strategy.

• Four car brands are following suit. On Monday, Denza, BYD’s premium EV brand, announced an upfront price protection program through which it will give customers a rebate if there is a price reduction for its D9 multi-purpose vehicles within 90 days of purchase. This comes soon after the company slightly raised the price of its electric minivan to RMB 395,800 ($57,302) on March 1.
• Lynk & Co, owned by China’s Geely Auto Group, as well as younger makers Hozon and Leapmotor, had made similar moves as of Thursday. However, on Feb. 27, Lynk & Co began selling a cheaper version of its 01 models, which will be available until the end of April at a price of RMB 159,900, an 11% reduction compared to the 2023 version of the hybrid crossover.

An all-out price war: China’s car price war was in full swing last week when state-owned manufacturer Dongfeng Motor slashed the prices of some models, such as the Citroen C6, by up to RMB 90,000, with the help of incentives from the government of the central Hubei province.

• At least 30 domestic and international carmakers have joined the fight, Bloomberg reported. SAIC-Volkswagen on Monday announced a massive cut of up to 20%, or RMB 40,000, for EVs under the German automaker’s ID family, SCMP reported. Meanwhile, some local BMW dealers reportedly offered a discount of as much as RMB 100,000 on its i3 sedans.
• Experts cited excess inventory of gas-powered vehicles, waning competitiveness of joint brands by Chinese makers and their overseas partners, and Beijing’s full implementation of new emission rules this July as reasons for the price reductions. Analysts from China’s Huatai Securities expected most price campaigns to last until the end of March.
• Multiple EV makers have been tempted to follow Tesla’s lead and reduce the prices of their vehicles since late last year when the US carmaker launched price promotions to boost sales. This was followed by a reduction of up to RMB 48,000 on select models early this year, forcing rivals from BYD to Xpeng Motors to lower their prices to stay competitive.

READ MORE: Chinese EV makers rush to offer big incentives as sales slide

Hozon, a Chinese electric vehicle maker backed by CATL, broke ground at its first overseas car plant in Thailand on Friday, as the company eyes growing demand for green vehicles in Southeast Asia.

Why it matters: The move is the latest example of Chinese automakers looking to crack global markets and find new revenue sources while dealing with increased competition and weakening demand at home.

Details: Hozon announced on Friday that construction of the company’s first overseas factory, located on the northeast side of Bangkok and due to have an annual capacity of 20,000 vehicles, has started, with mass production set to begin in January 2024.

• The Thailand plant will be built with local partner Bangchan General Assembly Co., Ltd. and become a major base to produce and export right-hand-drive EVs to ASEAN countries, according to chief executive Zhang Yong.
• Also known as Neta Auto in China, Hozon aims to sell 10,000 vehicles in Thailand as part of its goal of selling 300,000 vehicles this year. The company also has plans to enter the Middle East and Europe, though it has not revealed further details.

Context: Hozon began selling its third production model, the Neta V, in Thailand last August, marking its entry into the country’s growing EV market.

• Sales of the entry-level crossover reached 1,809 units in Thailand in the first two months of this year, making it the second best-selling EV model in the country following BYD’s Atto 3, according to figures compiled by Autolifethailand.
• Thailand reported total sales of 8,515 EVs over the same period, of which 3,108 were BYD compact sports utility vehicles. Fitch said it expected EVs to account for 4% of the country’s total car sales in 2023, and in the medium term, the Thai government is aiming for 30% of all new cars made in the country to be EVs by 2030.
• Multiple Chinese carmakers have been piling into the regional Southeast Asian market. BYD began establishing a $491-million Thai car plant, with a proposed maximum output of 150,000 vehicles, last year. The plant is scheduled to start operating in 2024.
• Great Wall Motor opened a factory in the country in mid-2021, which it acquired from General Motors a year earlier, and can churn out up to 80,000 hybrid and electric cars annually. SAIC has been manufacturing MG-branded cars with local conglomerate CP Groups since 2014.

READ MORE: Meet the Chinese carmakers racing to get a larger share of the global market

Two of Xpeng Motors’ vice presidents are stepping down after more than five years in their respective roles as the EV maker carries out a wider leadership restructuring, according to two people familiar with the matter.

Why it matters: The departures are Xpeng’s latest leadership reshuffle after it appointed Wang Fengying, a former executive at Great Wall Motor, as the company president on Jan. 30. Xpeng is undertaking a drastic reorganization in the hopes of turning its prospects around as falling sales add to its stresses in an increasingly competitive EV market. 

• The reshuffle is also meant to help chief executive He Xiaopeng reinforce his control over the company and give more weight to Wang, the sources said. Industry observers expect Wang to guide Xpeng through these difficult times.

Details: Liu Minghui, a long-standing vice president of powertrain engineering at Xpeng, stepped down last month after more than five years in the role and was replaced by Gu Jie, who recently joined the company from US auto supplier Delphi.

• Gu will report directly to CEO He Xiaopeng. Xpeng is looking to improve its development and manufacturing competitiveness, especially regarding electric powertrain and battery-related technologies, one of the sources told TechNode.
• As part of the overhaul, Liao Qinghong, a vice president of sales and chief of talent at Xpeng, handed over some of his responsibilities to Yi Han, a former executive at Geely, in preparation for leaving the company.
• Before joining Xpeng earlier this year, Yi led marketing efforts and brand execution for Volvo, Lynk & Co, and Smart within the Geely Group for more than a decade, public records show.
• The ongoing reorganization will dilute the authority of some founding members, a potential hindrance to the company’s refocus on efficiency and profitability, according to one of the sources and a third person with knowledge of the situation.
• This significant change follows the late January appointment of president Wang to a role that includes responsibility for major operations from vehicle planning to sales management, roles that used to be overseen by co-founder Henry Xia and Liao, respectively.
• An Xpeng spokesperson declined to comment when contacted by TechNode on Thursday. Chinese tech media 36Kr first reported the news.

Context: Xpeng has made a series of moves over the past months as it hopes to drive sales back up amid growing competition from larger players. Soaring battery material prices have also weighed on the company’s profitability in the past year.

• The Guangzhou-based automaker set up multiple cross-functional teams to encourage collaboration and boost efficiency last October, followed by new measures aimed at lowering costs and streamlining the company’s workflow weeks later.
• The company is rushing to launch two all-new vehicles and three redesigned models in the hope of reaching a modest delivery target of around 200,000 vehicles this year. P7i, a revamped version of the company’s best-selling model P7, launched sales on Friday with a starting price of RMB 249,900 ($35,904).
• Meanwhile, sales of the G9 crossover, initially supposed to be a flagship, high-volume model, flagged to 2,249 units in January from 4,020 units a month earlier, following heated criticism of pricing and specs from customers when it was launched in September. The company delivered a total of 6,010 vehicles last month without specifying the breakdown of models.
• Xpeng’s total deliveries were 11,228 units during the first two months of this year, falling further behind rivals Li Auto and Nio, who delivered 31,761 and 20,663 vehicles respectively. Li Auto reported a gross margin of 20.2% as of the fourth quarter of 2022, while Nio’s margin plunged to 3.9%. Xpeng generated a 13.5% gross margin as of the third quarter of last year.

READ MORE: Despite recovery in February, Chinese EV makers still face challenges as costs and competition increase

TechNode Chinese reporter Zheng Huimin contributed to the reporting of this story.

OnePlus, a Chinese phone brand owned by Oppo, revealed its new Ace 2V at a product launch on Tuesday, highlighting its high performance stats and low price tag as it looks to accrue market share in a segment long dominated by Xiaomi.

Why it matters: The Ace 2V provides a new threat to Xiaomi’s Redmi series when it comes to price sensitive consumers, a field where the latter has traditionally excelled. The basic Redmi K60 model is priced at RMB 2,999; the standard Ace 2V undercuts it by RMB 700. 

• Lu Weibing, Xiaomi’s president, announced a price cut for the Redmi K60 series on his Weibo account on Feb. 7, the same day that the OnePlus Ace 2V was revealed. A week later, president of OnePlus China Li Jie posted on his Weibo account, “Don’t give in to mediocrity, this is a victory for effort,” and “We won’t sacrifice specs and user experience to profit” (our translations).

Details: The Ace 2V phone began pre-sales on Mar. 7, though is currently only available in China. According to OnePlus, it will be renamed OnePlus Nord 3 in overseas markets, but its global release date is as yet unknown.

• OnePlus has priced its three Ace 2V models (12GB RAM + 256GB, 16GB RAM + 256GB and 16GB RAM + 512GB) at RMB 2,299, RMB 2,499 and RMB 2,799 respectively.
• The OnePlus Ace 2V offers a Dimensity 9000 chip, 12/16 GB of RAM and 256/512 GB of UFS 3.1 storage. At a press conference demonstration, the OnePlus Ace 2V achieved a score of 1.05 million on the AnTuTu software benchmarking system, the highest of any Dimensity 9000 phone to date. The company says that such specs will ensure a smooth gaming experience.
• The phone features support for 5G, Wi-Fi 6, Bluetooth 5.3, NFC, and several navigation systems. It includes an infrared port and 80W fast charging port, with a battery capacity of 5,000 mAh. It also offers a 6.74-inch OLED display with 2,772 x 1,240 resolution and a 120Hz refresh rate and comes with a three camera system featuring a 64 megapixel main camera, 8 megapixel ultra-wide angle lens, and 2 megapixel macro lens.

Context: In December last year, major Chinese phone maker Oppo announced that it would be investing RMB 10 billion ($1.43 billion) over three years as part of a “dual primary” strategy aimed at enhancing and clarifying OnePlus’ status. The two firms merged in 2021. 

• According to data from technology market research firm Counterpoint, Oppo was the third highest selling smartphone brand in China in the fourth quarter of 2022, taking 16% of the market and ranking behind Apple and Vivo. Oppo’s sales figures include those for OnePlus. Xiaomi’s market share was 12% for the same period. 
• In December, it was reported that Xiaomi was undertaking large-scale layoffs after a persistent decline in its phone sales over the course of 2022.

Meituan will stop operating its own ride-hailing fleet and shift towards aggregated rideshare services in a strategy update that will cut costs and, it hopes, develop other growth avenues, local publication LatePost reported on Monday.

Why it matters: The decision marks a significant retreat for the Chinese food delivery titan, which has been competing against dominant ride-hailing company Didi for more than six years and could be a turning point for transport in the country’s evolving services sector.

Details: According to an internal letter obtained by LatePost on Monday, Meituan has decided to cull its proprietary ride-hailing operations in several major cities and will look to expand its aggregated services with third-party providers nationwide.

• The life services platform said in the letter that it would scale back efforts in ride-hailing, with some employees to be consolidated into other business lines.
• The remaining ride-hailing team will be combined into a larger unit, with team lead Rocky Zhang to report to Li Shubin, head of Meituan’s platform operations.
• The backdrop of Meituan’s cost-cutting move is slowing revenue growth due to the macro economic environment, the report said, citing a person close to the company.
• A Meituan spokesperson declined to comment when contacted by TechNode on Tuesday.

Context: Meituan announced its entry into the Chinese ride-hailing market back in early 2017 and operates a proprietary fleet of around 120,000 drivers in cities including Shanghai, Nanjing, and Chengdu as of last December.

• The company has also been offering aggregated rideshare services that connect its users with other service providers since mid-2019 and prioritized the business in a stand-alone unit two years later, when unit leader Zhang began reporting directly to chief executive Wang Xing.
• The tech giant briefly ramped up efforts to subsidize users and drivers in exchange for market share in mid-2021. This came immediately after long-time rival Didi was banned from signing up new users by regulators in connection with its US public listing.
• The platform has a daily order volume of around 1 million rides, of which 40% are fulfilled by Meituan’s own fleet, said the report. Didi remained the dominant ride-hailing player with a market share of more than 60%, providing nearly 17 million rides per day as of February. In comparison, Alibaba’s mobility platform Amap provided 8 million rides.

Chinese automakers mostly saw a return to their growth trajectory in electric vehicle sales in February after taking measures to ride out a seasonal lull worsened by Beijing’s phase-out of EV purchase subsidies. 

BYD, GAC’s Aion, and Nio saw strong recoveries, while Xpeng and Huawei-backed Aito continue to fall behind in the competition. However, sales are still down from the historic highs of the past year, and a tougher competitive environment could create more headwinds in the near term, according to executives.

Why it matters: The figures come as many automakers have said they face increasing pressure from competitors just as operation costs mount. 

• Li Auto chief executive Li Xiang told Chinese reporters on Thursday that the lingering impact of the end of EV subsidies and recent price cuts by bigger rivals will continue to weigh on sales in the first quarter.
• Nio also anticipates more pressure on its margins as the company currently undergoes “a transitional period,” CEO William Li told investors on Wednesday, adding that it was clearing out inventory of its older vehicles in preparation for the release of new models in the second quarter.

Strong recovery: BYD has continued its growth momentum in customer demand despite a slowdown in the overall Chinese EV market, reporting delivery of 193,655 vehicles in February, a jump of 119.4% from a year earlier and an increase of 28% from the previous month.

• BYD has retained its dominant position, especially in the price segment of RMB 100,000 to RMB 250,000 ($14,478 to $36,196), according to Sun Shaojun, founder of auto consumer service platform Che Fans.
• GAC’s EV unit Aion also saw a big revival, with sales almost tripling to 30,086 units from a month ago. Sun said Aion was among the few rivals to BYD that “can catch up a little bit in certain regions and car segments.” (our translation)

Back to normalcy: Li Auto’s February sales grew 97.5% year-on-year to 16,620 units, representing a mild increase of 9.8% from a month earlier. Nio and Hozon posted double-digit growth from a month ago with 12,157 and 10,073 vehicle deliveries, respectively.

• Hozon  began offering a de-facto price cut on Feb. 3, as customers who placed an order for its Nezha S electric sedan with a deposit of RMB 5,000 by the end of the month could secure a rebate of RMB 20,000.
• Li Auto and Nio are expected to deliver around 23,200 and 12,300 vehicles respectively in their best-case scenarios for March, as delivery guidance for the first quarter reached 55,000 and 33,000 units.

Lackluster sales: Xpeng Motors is still struggling to get back on track after facing poor sales and criticism over its pricing strategy in 2022. Its vehicle deliveries totaled 6,010 in February, despite a recent price reduction. This is just 15.2% higher than January’s sales and 3.5% lower than a year ago.

• Huawei-backed EV maker Seres also saw little improvement following major promotions on their Aito-branded EVs, as February deliveries fell 21.7% to 3,505 units on a sequential basis.
• Sales of Changan’s EV marque Deepal declined 33.1% sequentially to 4,103 units. On Monday, the automaker kicked off a spat with rival Geely about the design of the latter’s newest EV.
• Geely’s premium brand Zeekr posted deliveries of 5,455 vehicles last month, and sales at Hong Kong-listed Leapmotor were up 180.8% from a 12-month low to 3,198 units.

Context: Sales of new energy passenger vehicles, which include all-electrics and plug-in hybrids, rose 9% year-on-year to around 546,000 units from Jan. 1 to Feb. 19, according to figures published by the China Passenger Car Association (CPCA) on Wednesday.

• Gas-powered cars were worse off, as sales slumped more than 30% annually over the same period. The CPCA has estimated 31% annual growth for passenger EV sales to 8.5 million units this year.

Chinese automaker Changan has issued a formal complaint against Geely for allegedly copying its latest EV car design, sending the Hangzhou-based car company a cease-and-desist letter which surfaced online on Monday, amid fierce competition in the country’s dense electric vehicle market.

Why it matters: The dispute highlights an intensification of the battle for market share among automakers in China, where the country’s EV growth momentum has slowed amid post-Covid zero economic swings.

• The move could have a negative impact on the image of Geely’s new Galaxy lineup, which Volvo’s parent company has positioned as a high-volume brand for the mainstream to premium segment.

Details: In a letter issued on Feb. 27 by Baijus Law Firm, Changan accuses Geely of taking multiple design features from its vehicles for the latter’s prototype Galaxy Light EV.

• Changan requested that its competitor stop violating its intellectual property rights and said it would consider legal options. On Wednesday, a company representative confirmed to TechNode that it had sent the letter.
• The legal effort prompted an angry response from Geely. In a statement published Tuesday on Chinese Twitter-like microblogging site Weibo, the company said it would fight “misleading” information and pursue legal action against “false” accusations.
• “Geely Auto Group takes intellectual property rights seriously and adheres to all relevant laws and regulations. We are confident that […] our team has not infringed on the intellectual property rights of any other company,” the automaker said in the statement.

Context: The legal spat came shortly after Geely unveiled the Galaxy Light sedan, a futuristic car with traditional Chinese aesthetic elements inspired by Hangzhou’s scenic West Lake area.

• The Zhejiang-based automaker also showcased the L7, a plug-in hybrid crossover and the first production car in the Galaxy family, while announcing plans to expand its product portfolio to seven models in the next two years.
• A manufacturing partner to Ford, Chongqing-headquartered Changan sold 271,240 electric cars under its stand-alone brands last year, marking a 150% growth from a year previously. To compare, sales of Geely’s electrified vehicles tripled to 328,727 units in 2022.

READ MORE: Local Chinese authorities unveil stimulus measures to spur EV sales

Li Auto aims to double its China market share in high-end sports utility vehicles to 20% in 2023, encouraged by buoyant demand from the country’s emerging middle class, chief executive Li Xiang said on Monday.

The electric vehicle maker also reported a solid rise in fourth quarter revenue and an upbeat outlook for the current quarter. Despite intensifying competition and slowing demand in China’s EV market, Li Auto is on track to launch its first all-electric model later this year.

Why it matters: Li Auto has set an annual sales goal higher than analysts had anticipated and much more positive than those from the likes of Nio and Xpeng Motors. If achieved, it would make Li Auto the first Chinese automaker to capture a significant share of the country’s premium car segment, according to Sun Shaojun, founder of auto consumer service platform Che Fans.

Rosy 2023 outlook: If met, the market share goal would more than double last year’s share of 9.5% and equates to an annual sales volume of around  300,000 vehicles in the Chinese premium SUV segment, Li said during an earnings call. This is higher than the 270,000 units forecasted by Bernstein analysts.

• The key to success on this front is a strong product portfolio that covers a broader customer base, according to Li. The carmaker estimates sales in the segment of between 1.4 million and 1.5 million units this year, including gas-powered and electrified crossovers, with a price range of RMB 300,000 to RMB 500,000 ($43,205 to $72,009).
• Li said that vehicle delivery would likely reach 30,000 units per month during the second quarter as shipments of the newly-launched L7 begin in April. Li sees little chance of cannibalization between the five-seat L7 and its larger sibling, the L8. The former is intended to attract small nuclear families comprising two or three members, while the latter targets two-children or three-generation households.

All-electric lineup: Li Auto is on track to launch its first pure electric vehicle model, which will be equipped with Qualcomm’s latest five-nanometer cockpit chip 8295, Li told investors. He added that the company’s battery EV series will cost between RMB 200,000 and RMB 500,000.

• The company sees high battery costs and inconvenient charging as some of the biggest issues for EV penetration and aims to promise future buyers the ability to add 400 kilometers (249 miles)-worth of charge in 10 minutes. Rival Xpeng pledged a similar experience with its premium SUV G9 late last year.
• Meanwhile, Li Auto acknowledged that it has been negotiating new price terms with suppliers, responding to an analyst question about reports that CATL has been offering big discounts on EV batteries, but declined to provide further details. President Ma Donghui said the company would commit to a multi-supplier strategy to ensure stable supply.

Solid Q4 results: Li Auto’s revenue increased 66.2% year-on-year to more than RMB 17.7 billion in the fourth quarter of 2022, compared with estimates of RMB 17.6 billion, according to Bloomberg. Net income declined 10.5% annually to RMB 265 million but improved from a net loss of RMB 1.65 billion in the previous quarter.

• The Beijing-based automaker’s gross margin came out as 20.2% in the quarter, from 12.7% in the third quarter and fairly close to Tesla’s 25.6% over the same period. Peers Nio and Xpeng posted gross margins of 13.3% and 13.5% in the third quarter of 2022, respectively.
• Li Auto expects to deliver up to 55,000 vehicles in the first quarter of this year, which would represent an increase of 73.4% from a year ago. Overall sales of passenger electric cars declined 6.3% year-on-year in January, according to figures from the China Passenger Car Association.

Context: Nio and Xpeng have both set a delivery target of around 200,000 vehicles this year as China’s EV market shifts into a lower gear, partly due to the phasing-out of EV purchase subsidies by the central government last December.

• Nio CEO William Li has said he expects deliveries this year to surpass the nearly 190,000 units Lexus sold in China last year. Xpeng is aiming for accumulated overall sales of 450,000 EVs this year, of which around 250,000 were delivered as of last year, according to an internal letter obtained by local media outlets.
• Li Auto’s first plug-in hybrid vehicle, the Li One, ranked fifth in terms of sales in the Chinese premium SUV segment with the shipment of 78,791 units last year, the CPCA figures showed. Tesla’s Model Y topped the chart with deliveries of 315,314 units, while Mercedes-Benz’s GLC, Audi’s Q5, and BMW’s X3 each booked sales of more than 140,000 units.

Geely on Thursday revealed the L7, its first model in the new Galaxy electric vehicle lineup. The compact SUV enters the market as a direct competitor to BYD’s popular Song Plus model, with a similar size, driving range, and price tag.

Delivery of the L7 is scheduled to begin in the second quarter. Geely will release anywhere from one to seven models of the electrified, software-defined Galaxy lineup by 2025, targeting medium- to high-end buyers with a range including four plug-in hybrid electric vehicles (PHEVs) and three all-electrics, Gan Jiayue, chief executive of Geely Automobile Group, said during a press event.

Why it matters: Geely aims to make the long-anticipated Galaxy L7 a high-volume, landmark model and wants to become China’s next answer to BYD and Tesla in the country’s crowded electric vehicle race.

Details: The L7 is a similar size to BYD’s Song Plus SUV, at 4.7 meters in length with a 2,785-millimeter-long wheelbase. The plug-in hybrid will have a driving range of about 1,370 kilometers (851 miles) on a full tank of fuel and a full charge, compared with BYD Song Plus’ 1,200 km range.

• The vehicle will be equipped with an operating system designed by Ecarx, an auto chip software firm backed by Geely founder Li Shufu, and uses Qualcomm’s 7nm cockpit chip 8155. The setup allows passengers to play high-demand triple-A games while the car is in motion. 
• Pre-bookings for the SUV are now open, for a deposit of RMB 599. The car is estimated to fall in the price range of RMB 150,000 to RMB 300,000 ($21,647 to $43,294). By comparison, BYD’s Song Plus DM-I is priced in the range of RMB 154,800 to RMB 218,800. 
• Geometry, another of Geely’s affordable premium EV brands, is to pivot to the budget segment of the market with a price range of under RMB 150,000. Vice president Lin Jie told Chinese reporters he expects the two lineups to strengthen the company’s presence in segments that could account for more than 65% of the future new energy vehicle market (including EVs and PHEVs).

Context: Geely expects more than a third of its car sales to be either all-electric or hybrid vehicles this year, vowing to sell at least 600,000 electrified cars as part of a 1.65 million volume goal in 2023. The Zhejiang-based automaker posted total sales of roughly 1.4 million units last year, of which around 328,700 were electrified.

• Geely operates several EV brands, including Lotus, Polestar, and Zeekr, while Geometry contributed nearly half the company’s 2022 NEV sales. Zeekr has announced a goal to double sales of its premium EVs with an average price above RMB 330,00 to 140,000 units this year.
• BYD’s Song model was China’s most popular SUV of any kind last year, recording sales of 478,811 units with an annual growth rate of 137.4%, according to figures compiled by the China Passenger Car Association. Tesla followed with delivery of 315,314 Model Y vehicles, while Great Wall Motor booked sales of 250,120 units of the Haval H6.

CATL is in talks with a number of Chinese automakers to offer big discounts on batteries using materials sourced from its proprietary mines. In return, the electric vehicle battery giant is requesting its clients place around 80% of their future orders with it in the next three years, several Chinese media outlets reported.

Why it matters: The move could intensify already fierce competition in the upstream value chain of the electric car industry and force smaller battery makers to follow suit in what could become a price war, experts said.

• Even without this program, preferential pricing will come to major battery companies in one way or another this year and beyond, as industry oversupply kicks in from the second half of 2023, Jefferies analysts wrote in a Monday report.
• The price war could pressure the margins of second-tier battery makers with smaller scale economies and lower supply chain competitiveness, they added. The ongoing EV pricing battle spurred by Tesla could result in further price cuts from Chinese carmakers, “leading them to ask battery companies for price cuts,” Jefferies analysts added.

Details: CATL is in negotiation with several strategic clients, including Nio and Li Auto, to sign three-year contracts that would guarantee them a certain amount of EV batteries priced at RMB 200,000 per ton ($29,152) of lithium carbonate, the compound from which lithium is extracted. Chinese media outlet 36Kr was the first to report on the talks.

• These lithium-ion batteries will be made from ingredients sourced from several domestic and overseas mines in which CATL has an ownership stake, Caixin reported on Monday, citing a person familiar with the matter. Sources said the offer is expected to run from the third quarter of 2023.
• The move could significantly reduce purchase costs for the automakers, including Huawei-backed Seres and Geely’s premium EV brand Zeekr. In return, the EV makers will be required to commit 80% of their battery purchases to CATL in the next three years.
• Some EV makers have expressed willingness to accept the deal, while others are uncertain about price movements of battery-grade lithium carbonate. CATL also asked buyers to pay a certain amount up front as a deposit, which could therefore increase the EV makers’ expenditure, the Caixin report said.
• Tesla and Xpeng Motors, two of CATL’s biggest clients, are reportedly not among this chosen group. 
• A person with knowledge of the matter confirmed the existence of the deal when contacted by TechNode on Monday, while CATL did not respond to TechNode’s request for comment.

Context: Smaller Chinese battery makers have been feeling the strain in recent months, with CALB, a major supplier to state-owned automaker GAC, and Volkswagen-backed Gotion High-Tech being asked by clients to reduce prices by 10-15% for this year, TechNode has learned.

• Lithium carbonate prices showed a downward trend at the beginning of 2023, which experts described as a ripple effect from China’s slowing sales of electric cars. The price closed at RMB 435,000 on Monday, down 26% from its historic high of nearly RMB 600,000 in mid-November, according to industry consultancy Mysteel Group.
• Multiple Chinese EV makers have been looking to diversify their supply chains for EV batteries to ensure the supply of the critical components at a favorable price. Xpeng Motors has been sourcing batteries from Sunwoda since late 2022, in addition to CATL, while Li Auto is a major client of CATL and Svolt, an EV battery maker backed by Great Wall Motor.
• The world’s biggest EV battery maker is also getting into the mining business. CATL last April bought lithium claims on 6.44 square kilometers (1,591 acres) in Yichun, a city in the central province of Jiangxi, and gained control of a Sichuan-based mining company in January, Caixin Global has reported. It also won a bid in Bolivia to develop the South American country’s lithium resources, Reuters reported.

Despite not being officially available in China, the AI chatbot service ChatGPT has dominated headlines in the country. This week, days after search engine giant Baidu announced it will launch its own ChatGPT-like service in March, at least five other major Chinese tech firms revealed plans to tool up with the powerful AI technology. 

Starting with Alibaba, the e-commerce giant Alibaba said it is developing its own AI chatbot. NetEase’s online learning unit Youdao said it will launch a similar AI service focused on the education industry, and JD, another e-commerce major, boasted that its rich experience in AI means it can soon incorporate these technologies into its services. 

Developed by OpenAI, ChatGPT is an AI chatbot that can answer natural language questions with human-like responses. It is built on GPT-3, the third iteration of a language model trained on a large amount of data. 

The feverish popularity of ChatGPT has sent investors chasing related stocks on China’s stock market. The market is already experiencing a boost in so-called “ChatGPT concept stocks.” 

On Chinese social and search platforms, ChatGPT has also become the top search keyword. On Feb. 4, daily searches for “ChatGPT” on WeChat increased 515.7% to nearly 38 million, and the search volume kept growing rapidly in the following days,  seeing 2.5 times the number or 95 million searches only five days later. 

As advanced AI technology gains momentum to disrupt the status quo, Chinese tech companies are not the only ones racing to prove their ChatGPT-like abilities. Google introduced on Tuesday its AI chatbot Bard,  while ChatGPT’s main investor Microsoft launched a new version of its search engine Bing on Tuesday with ChatGPT built in. 

Baidu: Baidu said on Tuesday that it will launch its own AI chatbot tool called “ERNIE bot” or Wenxin Yiyan in Chinese. The bot will be built based on the company’s large language model ERNIE, which was launched in 2019. Some see Baidu’s service as the most likely one to come close to ChatGPT. 

NetEase: NetEase’s online education team Youdao said it has been working on applying AIGC (AI-generated content) technology to teaching scenarios such as AI oral English teaching and Chinese essay revision. The company expects to launch a relevant demo version of the product soon, which will mark the first landing of AIGC technology and a ChatGPT-like model in China’s online education scene.

iFlytek: Responding to investors’ questions, the company that specializes in speech recognition and natural language processing technologies said it has a solid accumulation of relevant AI technology. For example, in 2022, iFlytek won first place in the authoritative evaluation of several cognitive intelligence fields such as CommonsenseQA 2.0 and OpenBookQA. Meanwhile, iFlytek has developed a series of pre-training language models which include 40 general fields of cognitive intelligence.

Alibaba: The online retail major said on Wednesday that it’s conducting internal testing on a ChatGPT-like service, and the tool is likely to be used in combination with the group’s workplace communication and collaboration tool DingTalk.

JD: Beijing-based e-commerce platform JD said it sees ChatGPT as an “exciting and cutting-edge exploration,” adding it will incorporate the related methods and technology into its products, especially in customer service.

Chinese electric vehicle maker Li Auto released its cheapest ever car on Wednesday, a five-passenger compact sports utility vehicle that the company says has been developed to appeal to women and small families, and that it hopes will take on bigger rivals from BMW to Mercedes-Benz.

The company also launched a new, RMB 20,000 ($2,948)-cheaper version of the L8, its six-seater crossover, offering customers a de facto price cut in response to increased competition from carmakers such as Tesla.

Why it matters: Some industry observers have voiced bullish views on Li Auto as the company keeps expanding its portfolio with new vehicles aimed at meeting the needs of growing Chinese middle-class families.

• Li Auto and Nio should still be able to grow their sales because of their brand new products despite forecasts of a challenging 2023, said Tu T. Le, managing director of Sino Auto Insights.
• “The market has become so competitive that we will likely see many EV makers do whatever they can to protect any share they have been able to carve out in the market,” Le added.

Details: Li Auto on Thursday introduced the L7 extended-range SUV, the company’s first five-seater explicitly designed for Chinese nuclear families. It measures around 5 meters in length and spans a 3,005-millimeter-long wheelbase, bigger than many similar mid-size models.

• For comparison, the BMW X3, Audi Q5L, and Mercedes-Benz GLC crossovers are all less than 4.8 meters in length and have a maximum wheelbase of 2,973 mm. The L7 is also more spacious than its rivals the BYD Tang, Xpeng Motor G9, and Huawei-backed Aito M7.
• The car boasts a luxurious interior and roomy passenger space, with a so-called “Queen’s seat” mode in the back providing leg room of almost 1.2 meters and well-bolstered seatbacks.
• The EV maker is targeting women in China who are increasingly picking the family car. Speaking at a conference on Wednesday, Han Ling, a product manager of Li Auto, specifically used female terms of address a dozen times during a 10-minute speech, according to a TechNode calculation.
• The L7 SUV will be equipped with a supercomputing platform – powered by two of Nvidia’s Orin X chips or by a Horizon Robotics Journey 5 processor depending on the model, and will use cameras and lidar sensors for driver assistance on Chinese highways.
• The Meituan-backed carmaker plans to send selected customers a beta version software update for assisted driving technology on busy urban streets in the fourth quarter of 2023. Rival Xpeng Motors has been implementing a similar update since September.
• The L7 crossover will have a driving range of 210 kilometers (130 miles) on a single charge and can drive for about 1,315 kilometers with a full fuel tank and a full charge, the same as its larger sibling, the L8. The company said its starting price will be RMB 319,800 and delivery is set to begin on Mar. 1. 
• Meanwhile, chief executive Li Xiang on Wednesday revealed a so-called “Air” version of its L8 crossover with a starting price of RMB 339,800, down RMB 20,000 from the Pro model which used to be the lowest-priced option offered by the automaker.

Context: Beijing-headquartered Li Auto currently has three models of different sizes on sale, namely the full-size crossover L9, L8, and the L7, with a price range of around RMB 300,000 to RMB 400,000, in a segment traditionally dominated by global carmakers such as BMW and Mercedes-Benz.

• The L9 was China’s top-selling large-size electric SUV in December with 10,582 units shifted, four months after delivery began in August, while 10,189 units of the L8 crossover were sold in the month, according to figures compiled by the China Passenger Car Association. Both were lower than the 29,387 units of Tesla’s Model Y, but higher than the roughly 4,000 units Nio delivered of its ES7 and Xpeng delivered of its G9.

Major Chinese electric vehicle makers, from Aion to Nio, are joining the likes of Xpeng Motors in an industry-wide price war ignited by Tesla, offering generous sales incentives to boost demand after posting dismal delivery results for January.

Why it matters: Sales growth for new energy vehicles (NEVs) at the start of 2023 has reached a bottleneck after the central government fully scrapped subsidies for purchasing them at the end of December, the China Passenger Car Association (CPCA) wrote in a post on Wednesday, quoting January sales figures. NEVs is a catchall phrase used in China that includes all-electric cars, plug-in hybrids, and hydrogen fuel-cell vehicles.

• A price war kicked off by Tesla has left many consumers on the fence about buying an EV in the immediate future, as some automakers followed suit with price cuts while others raised prices to help offset rising costs, the industry group added.

READ MORE: Local Chinese authorities unveil stimulus measures to spur EV sales

Flagging January sales: Retail sales of Chinese passenger electric vehicles fell by 1% year-on-year and 43% month-on-month to around 304,000 units from Jan. 1 to Jan. 27, according to figures published by the CPCA on Wednesday. The industry group has yet to publish figures for the full month, but reports by many Chinese EV makers are out, and they show a definite sales slump.

• GAC’s Aion on Wednesday reported a 66% month-on-month drop in vehicle deliveries to 10,206 units in January, during which time the company raised its car prices by between RMB 3,000 and RMB 8,000 to make up for rising costs.
• Figures from Xpeng Motors and Huawei-backed EV brand Aito more than halved sequentially to 5,218 and 4,475 units respectively. Both companies followed Tesla’s move with significant price cuts across their vehicle lineups early last month.
• Nio delivered 8,506 vehicles in January, marking a 46.2% decrease from a month earlier, while Li Auto reported a relatively solid performance with deliveries falling 28.7% sequentially to 15,141 vehicles. CATL-backed Hozon sold 6,016 EVs, down 22.8% from a month ago.
• Zeekr’s January sales of 3,116 vehicles were less than a third of the number delivered in December, which the company attributed to a 22-day production suspension for an upgrade at its Ningbo facility. Hong Kong-listed Leapmotor only delivered 1,139 vehicles, an 86.6% drop from a month ago, but didn’t provide any further details.
• BYD handed over 151,341 EVs, including around 10,400 units overseas, which was 35% lower than December’s sales but 62.4% higher than in the same month last year, according to a Wednesday statement.
• Other than diminishing subsidies, most companies blamed the slide on the seven-day public holiday during the Lunar New Year, as well as the spike in coronavirus infections that swept China after the country’s zero-Covid policy ended in early December, among other reasons.

Nio’s big promotion: Nio on Wednesday began offering customers a package of discounts and special offers for its first-generation electric sports utility vehicles, including a more than RMB 10,000 ($1,483) allowance to cover the cost increase caused by the phasing-out of Beijing’s subsidy.

• The EV maker also unexpectedly discounted inventory of the older version of its ES8 and ES6 crossovers by at least RMB 18,000 and offered existing car owners an additional exchange discount of RMB 15,000, local media outlet Powerhouse reported on Thursday, citing two Nio salespeople.
• The company also offered buyers free access to its advanced driver assistance software Nio Pilot which has a sticker price of RMB 39,000, among other promotions. If all these offers are combined, one can purchase a performance version of the 2022 ES6 SUV for RMB 313,700, more than RMB 100,000 cheaper than last month.
• Nio on Thursday responded by saying the company is about to launch its redesigned ES8, ES6, and EC6 models and is therefore offering discounts on the small amount of inventory and showroom cars of the old models it has left.
• Sales of Nio’s ET7, ES7, and ET5 cars, built upon the company’s second-generation technology platform, accounted for 85.6% of its monthly delivery in January, according to a Wednesday statement.

More price campaigns: State-owned automakers SAIC and GAC also announced they would slash prices on their vehicles this week in the hope of grabbing a share of sales during a traditionally slow season.

• Rising Auto, an EV brand launched by Volkswagen’s manufacturing partner SAIC in mid-2020, on Thursday cut the starting price of its base R7 crossover by 7.5% to RMB 279,900. The model is also available at a big discount of RMB 10,000 and can be purchased for RMB 195,900 if customers subscribe to its battery-swap program.
• On Wednesday, GAC’s EV unit Aion also began offering a limited discount of RMB 5,000 on its Aion Y SUVs and Aion S Plus sedans, priced from RMB 137,600 and RMB 149,800 respectively, before the end of this month. 
• A day earlier, Geely’s luxury EV brand Zeekr said that customers who place their orders before the end of March would be able to get certain discounts on car insurance and optional parts.

Multiple regional authorities in China are issuing stimulus measures in a bid to shore up demand for electric vehicles, ranging from cash subsidies to free parking lots, as China’s central government ends its massive decade-long EV support campaign.

Why it matters: The government measures come as sales in the world’s biggest EV market start to show signs of slowing down. The local subsidies underscore China’s continued support of green energy transport, despite the central authorities phasing out EV purchase subsidies altogether a month ago after more than a decade. In September, Beijing extended its 5% purchase tax exemption for EVs to the end of 2023.

• On Jan. 18, Tian Yulong, a spokesperson for the Ministry of Industry and Information Technology, said China would continue to create a supportive and healthy regulatory environment for EVs by ensuring the stable supply of core components and funding the build-up of charging infrastructure. This will include laying down stricter rules for EV production licenses and completing the regulatory framework for battery recycling.

READ MORE: Chinese EV makers rush to boost year-end sales as subsidies expire

Details: The Shanghai municipal government on Sunday announced the extension of its EV subsidy program launched last May in the wake of a months-long city-wide lockdown. Consumers will continue to receive rebates of RMB 10,000 ($1,482) per car for any trade-in of internal combustion vehicles for EVs until June. 30, as part of a stimulus package aimed at propping up the local economy, details of which were released on the government’s official website.

• On the same day, the provincial government of Zhejiang called on municipalities to hand out cash incentives to current gas-fueled car owners who plan to shift to EVs. The eastern Chinese province will permit EVs to park for free at public facilities for the first hour, as it aims for 60% of cars it produces to be EVs by 2025, according to an action plan published by the regional government.
• On Jan. 28, the northern province of Shanxi also rolled out a package of 14 measures to stimulate car demand, including incentives for public EV bus operators, tax breaks for personal EV purchases, and parking discounts. This followed similar initiatives released last month by the provincial governments of Heilongjiang, Henan, and Yunnan to fund EV adoption.

Context: Beijing began granting subsidies to EV buyers across China in 2010, deliberately trimming the purchase incentives starting in 2015 when it found that EVs with a range of over 400 kilometers (249 miles) were qualifying for subsidies of as much as RMB 54,000 per unit. The generous subsidies were cut by more than half to RMB 25,000 in March 2019, leaving China’s sales of new energy vehicles (NEVs), mainly all-electrics and plug-in hybrids, down 4% annually to 1.2 million that year.

• Beijing later introduced a gradual scheme which cut the subsidies by 10%, 20%, and 30% from 2020 to 2022 in the hope of stabilizing the market. EVs with a driving range of over 400 km enjoyed a subsidy of RMB 12,600 in 2022 before subsidies were fully scrapped in December. There were more than 13.1 million NEVs on the road as of 2022, according to figures from the ministry of public security.
• China’s NEV sales nearly doubled to 6.8 million units in 2022, according to figures from the China Association of Automobile Manufacturers (CAAM). Despite this, the market shifted into a lower gear in the second half of last year, as restrictions on free movement related to the Covid-19 pandemic hit consumer demand and disrupted the supply chain.
• Sales of passenger NEVs increased 35% year-on-year to around 640,000 units in December, and the number is expected to rise by just 1.8% year-on-year to 360,000 units in January, according to estimates by the China Passenger Car Association.

Tesla’s margins slid despite selling a record 405,000 electric vehicles in its fourth quarter, as rising battery costs and an ongoing price reduction campaign continue to pressure the US automaker. And yet, chief executive Elon Musk remains bullish on the company’s prospects and is predicting more than 50% full-year growth for 2023.

Why it matters: The results come as Tesla faces major challenges in China from local car manufacturers, and growth in the world’s biggest EV market shows signs of a downward trend amid economic headwinds.

READ MORE: China EV price war: Xpeng, Huawei-backed Aito join Tesla in cutting prices

Details: Tesla posted record fiscal fourth-quarter revenue of $24.3 billion, up 37% over a year ago and beating Wall Street’s forecasts of nearly $24.2 billion. Earnings per share also increased sequentially to $1.19 from $1.05 in the third quarter and beat analysts’ average estimate of $1.13.

• However, Tesla’s automotive margin dropped to 25.9% from 30.6% a year earlier and 27.9% in the previous quarter despite a 16% decline in operating expenses. The company cited price reductions and Covid restrictions in China among the factors resulting in the quarterly decline in margin.
• Musk added the company had seen strong demand recovery in 2023 due to significant price reductions over the past few months, as order volumes increased to the highest level in its history in January. The automaker expects to deliver 2 million EVs this year, a 53% year-on-year growth in a best-case scenario.
• For the calendar year of 2022, Tesla reported $81.5 billion in revenue on delivery of 1.31 million vehicles, marking a year-on-year increase of 51% and 40% respectively. The company fell short of meeting its 2022 delivery target of more than 1.4 million vehicles by around 90,000 units.

Context: On Jan. 6, Tesla launched one of its biggest ever price cut campaigns in China, with some of its Model Y and Model 3 vehicles seeing overnight price cuts of up to RMB 48,000 and RMB 36,000 ($7,088 and $5,316), respectively.

• The big promotion reportedly drove an increase of 300,000 placements in order volume in just three days. The automaker had previously offered various discounts across its vehicle lineups, such as an RMB 4,000 rebate and reduced prices by RMB 20,000 during the last few months of 2022.
• The automaker has scaled back a plan to nearly double the annual capacity of its Shanghai facility to 2 million EVs, due to softening demand and failure to secure approval from the Chinese government, according to a Jan. 13 report by the South China Morning Post.

Skirmishes have surrounded China’s speedy uptake of electric vehicles in the past year, with industry giant BYD reigning supreme but an increasingly large crowd of challengers looking to muscle in on the action. Once-promising startup Xpeng Motors and major automaker Great Wall Motor have been among those to falter in 2022 – and the war is far from over.

Industry observers link BYD’s success to China’s national shift towards electric vehicles, the company’s highly-integrated supply chain across key components, and a rising consumer preference for high-quality, cost-competitive automobiles as recession looms. 

Xpeng’s recent setbacks, however, reflect structural weaknesses at the company, including limited competitiveness and low operational efficiency in a crowded marketplace. Now, the risk of falling behind the competition has become real for the Guangzhou-based company.

Even Tesla faces an eroding market share in a highly competitive field, thanks to an onslaught of new models from various domestic rivals. Meanwhile, foreign auto giants from Volkswagen to Ford have long lagged behind Chinese counterparts in transitioning to green energy.

Here, we look at the annual results of China’s EV leaders and attempt to explain the dynamics behind some of the biggest winners and losers of the past year.

Winners and losers 

Despite being a bright spot in a slowing auto market, China’s two-year run of huge growth in the EV sector hit unexpectedly fierce competition as it shifted into a lower gear in the second half of 2022.

BYD was the biggest winner of the year, with annual sales of 1.86 million electric cars. The company’s output was more than triple 2021’s figure of around 600,000 units, comfortably exceeding its goal of 1.5 million units.

Tesla was left a distant second. The company’s sales started to slow last year as concern grew about an underlying mismatch between supply and demand. In 2022, the US automaker delivered 439,770 China-made vehicles to local customers, a 37% increase from a year ago and significantly lower than its 50% growth target for overall sales volume.

Besides BYD and Tesla, multiple Chinese EV makers including Nio and Xpeng embarked on 2022 with optimism and ambitious sales targets. However, only a handful managed to hit their goals. Aion (the EV arm of state-owned automaker GAC) and Hozon kept their word by selling around 271,000 and 152,000 EVs respectively last year. Geely’s premium EV brand Zeekr also achieved its goal by delivering just over 71,000 vehicles.

China’s US-listed EV makers mostly underperformed. Nio played tough to secure around 80% of its 150,000-vehicle delivery goal, while Xpeng delivered just over 120,000 units of its 250,000 unit target.

Why BYD dominated the market

In December, when most automakers struggled to protect their market shares by offering generous discounts as the Chinese government phased out EV subsidies, BYD went the opposite way by announcing a price rise of up to RMB 6,000 ($870) across its lineup. The move proved BYD’s role as “price maker” in the mass market, analysts at Jefferies wrote in a Dec. 1 report.

Analysts attributed BYD’s dominance partly to its success in ramping up manufacturing capacity and building a secure, integrated supply chain from batteries to chips. In 2022, when the company tripled its annual car capacity to around 3 million units at its eight manufacturing locations, according to public information gathered by investors, it also more than doubled its battery capacity to 285 gigawatt-hours (GWh), according to estimates by Founder Securities. A company spokesperson declined to comment on the capacity figures.

Also, the automaker has adopted a dual strategy of betting on both all-electrics and plug-in hybrid EVs (PHEVs) as range anxiety continues to be a top concern among local buyers. BYD offers nearly 70  models in major configurations and price categories. This helps the company stand out in a crowded market where many competitors pick a type and limit buyers’ options.

Why Xpeng and Great Wall Motor are losing ground

As China’s EV sales reported nearly 100% annual growth in 2022, Xpeng Motors and Great Wall Motor are among the most surprising names for whom sales growth dipped well below the industry average. The two companies sold 120,757 and 131,834 EV units last year, posting a flat increase of 23% and a 4% decline from a year earlier, respectively.

Multiple factors have put pressure on the two companies, including weaker consumer sentiment and interest rate hikes. 

The sales slump at Great Wall Motor indicates a major setback in the company’s slow shift to EVs. In 2022, monthly sales of the company’s Haval H6, once China’s top-selling gas-powered crossover, fell 75% to around 20,000 units from historic highs, as it appeared to be outpaced by popular EV models produced by Tesla (Model Y) and BYD (Song Plus). 

Ora, the company’s dedicated EV sub-brand, saw sales decline by 23% year-on-year to 103,996 units. Nevertheless, Great Wall Motor’s management has big plans for 2023 — promising to launch more than 10 EV models, including five new PHEVs under the Haval brand and two new models under the Ora marque.

Xpeng is facing a more complicated external environment, as well as the threat of increased pressure from rivals, said David Zhang, a school dean at Jiangxi New Energy Technology Institute. Not only are sales of big name rivals such as BYD and GAC’s Aion gaining momentum, but younger makers such as Hozon and Leapmotor are increasingly catching up. That’s the broader context behind Xpeng currently restructuring its business, according to Zhang.

Meanwhile, Xpeng is exposed to a potential demand mismatch risk in the short-term, as consumer confidence in vehicle intelligence technologies lags behind ambitious plans to bring self-driving cars to the market, analysts from Zheshang Securities told local media outlet Jiemian.

The Alibaba-backed EV maker has pledged to put more effort into overall car-making after reporting three consecutive months of dropping sales as of October and losses of RMB 6.78 billion ($1 million) for the first three quarters of 2022. It is also dealing with an aging product portfolio and implementing cost control measures to boost efficiency and drive sales, with chief executive He Xiaopeng promising to refocus on the core company after spending some time and energy on emerging businesses such as flying cars.

“We have high expectations for 2023. It’s a game of both competence and persistence. We have winning cards to play the game, and the evolution is making good progress,” a company spokeswoman said when contacted by TechNode.

Trend 1: Bring everything in-house

In-house manufacturing of key components has become one of the biggest trends in China’s EV industry over the past year, as many automakers look for ways to reduce supply chain vulnerability amid persistent chip shortages and the surging cost of battery materials. Among them, BYD is widely seen as a role model for this vertical integration strategy: the automaker builds its own supply chain and performs most of the activities required to bring its vehicles to market.

Already the world’s second-biggest battery maker and a major domestic supplier of power semiconductors for automobiles, BYD is now looking to expand production capacity significantly and accelerate the development of new products. Founder Securities expects BYD’s capacity to increase to 445 GWh-worth of batteries to close the gap with dominant player CATL by the end of 2023. In November, the company abandoned an initial public offering plan for its semiconductor unit as it decided to focus instead on expanding the capacity of a local plant by 80% to reach 360,000 wafers in 2023.

Other major industry players, from state-owned GAC to US-listed Nio, have also been racing to develop battery and semiconductor technologies in-house to ensure a secure supply of the key components. Here are some recent moves and potential developments for the companies heading into 2023:

• On Nov. 18, Svolt, an EV battery startup backed by Chinese automaker Great Wall Motor, filed initial paperwork for a public share sale on Shanghai’s Nasdaq-style Star market. The company is looking to raise RMB 15 billion to build three manufacturing plants with a combined annual capacity of around 106 GWh.
• On Dec. 29, GAC began building an RMB 2.2 billion drivetrain plant in Panyu, a city in the southern province of Guangdong, with mass production to kick off at the beginning of 2024. Initial capacity will enable it to assemble drivetrain systems for 400,000 battery EVs and 100,000 plug-in hybrid vehicles annually by 2025.
• On Dec. 21, Xpeng confirmed that it has set up an RMB 5 billion subsidiary to produce battery packs on its own but will still source battery cells from partners. On Oct. 25, peer Nio made a similar move by forming an RMB 2 billion subsidiary for battery manufacturing, in addition to a $32.8-million research facility for battery development.
• On Oct. 10, Chinese media outlet LatePost reported that both Nio and Xpeng had formed hundred-strong teams to work on chips for autonomous driving, while Li Auto had been hiring chip designers for more fundamental semiconductor components.

Trend 2: Short-term bumps

Analysts have warned about the prospects of a bumpier year for EV makers in 2023, and sure enough, the industry is already seeing some sharp movements. On Jan. 6, Tesla made a big splash by cutting the prices of its China-made vehicles by between 6% and 13.5%, a move that Sun Shaojun, a popular Chinese car blogger, described as kicking off an industry-wide battle for survival in the year ahead.

Sun added that many rivals would probably have to follow suit in the face of such a big promotion by an industry leader. Meanwhile, analysts at Bernstein expect competition to heat up with as many as 126 new battery EV models and 55 new plug-in hybrid models coming to market in 2023, a 40-50% increase on last year.

In anticipation of a post-Covid recession and in light of EV subsidies being scrapped, sales are expected to slow this year. Credit Suisse’s sales forecast of 9.4 million EV sales in China is one of the more bullish on Wall Street, while Bernstein more cautiously holds that 8 million units will be sold in the country this year.

An ongoing growth story 

And yet, long-term growth prospects remain buoyant, as demand shifts from policy-led to consumer-driven, Bernstein analysts wrote in a Jan. 5 report. UBS shared the sentiment, expecting the new energy vehicle (NEV) penetration rate, mainly for all-electrics and PHEVs, to grow by 10% this year to reach 37% of all new car sales.

2022 proved to be a big year for Chinese EVs. The central government achieved its goal of EV adoption approaching 25% of total car sales three years ahead of schedule, as industry sales nearly doubled to 6.8 million units. Still, pressure on margins is likely to persist in the near term for smaller companies, which have already been exposed to high battery material costs.

Looking ahead, China has cemented its growth momentum in the global EV race, but industry players should expect short-term sacrifices to hit their profits as they glimpse a bigger and brighter future.

Xpeng Motors is aiming for profitability on an operating level by 2025, according to an internal speech from chief executive He Xiaopeng to employees. The electric vehicle maker will also focus on redeveloping business strategies, dealing with corporate restructuring issues, and bolstering corporate value in 2023. 

Why it matters: He’s comments come on the heels of a turbulent year for Xpeng during which the company faced major setbacks, including a 23% sales drop in the second half of 2022 and an 80% plunge in market capitalization from a year ago.

Details: Xpeng expects to break even in 2025 with its earnings margin before interest, taxes, depreciation, and amortization reaching 17%, according to a report from 36Kr that cites comments made by He at an internal meeting on Wednesday.

• The management is more optimistic than some analysts’ predictions. Bernstein estimates that Xpeng will turn its adjusted operating margin from -5.1% in 2024 to 0.3% in 2025. That number was estimated to be -33.1% last year, according to Bernstein.
• He also pointed out that employee morale at the electric car company is low due to falling sales and share prices and that Xpeng’s productivity as a company is not where it should be, vowing greater restructuring efforts to simplify operations this year.
• Meanwhile, He highlighted the company’s push to forge ahead with vehicle development from the perspective of customers, adding that all future Xpeng vehicles will be equipped with safety-based driver assistance technologies.
• Xpeng will also accelerate its overseas expansion in the next few years, with plans to launch two new vehicle models for the global market in 2023, followed by a third in 2024, according to He.

Context: Xpeng reported an annual growth rate of 23% in vehicle sales in 2022, significantly lower than the industry average of around 90% and falling behind US-listed peers Li Auto and Nio, who posted year-on-year growth of 47% and 34%, respectively.

• The Alibaba-backed EV maker has been undergoing a major restructuring since late last year with the establishment of several committees and financial teams to enhance efficiency and control costs. It also announced price cuts of up to 15% for its vehicle lineups earlier this week amid rising competition with Tesla.
• Xpeng is not the only Chinese EV maker taking steps to streamline operations. On Jan. 1, Nio chief executive William Li told employees that low-productivity teams and insignificant projects would be “streamlined and optimized” this year in light of a slight increase in budget, according to an email seen by 36Kr.

China’s electric vehicle price war has edged up a notch, with Xpeng Motors and Huawei-backed Aito now following Tesla in slashing prices on their lineups, responding to intensifying competition as Tesla’s China-made vehicles gain market share.

Why it matters: These latest price cuts could force more EV makers to follow suit, hitting profit margins that have already been squeezed by the recent sharp rise of battery raw material costs.

• The next two months may see more price drop campaigns thanks to new product offerings and a decline in lithium carbonate prices, said Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), on Jan. 10.

Details: According to a “new pricing scheme for the Chinese New Year” released by Xpeng on Tuesday, the starting price of its P7 sedan dropped RMB 30,000 or around 15% to RMB 209,900 from RMB 239,900 ($30,942 to $35,365). Xpeng’s newly-launched G9 crossovers were excluded from the cuts.

• The EV maker also cut the price of the top-spec long-range model of its G3i crossover by RMB 25,000 to RMB 176,900, while the starting price of its mainstream P5 sedan dropped by 12.8% to RMB 156,900.
• The actual transaction prices of the G3i and P5 remain largely unchanged as the respective cuts on the sticker prices are in line with an RMB 20,000 discount that the company offered from October to December, Morgan Stanley told investors in a report.
• However, the price reduction for the P7 comes as sales costs increase by between RMB 10,000 and RMB 16,000. Xpeng’s gross margin in the current quarter will “likely hit a trough” due to the price adjustments, wrote the analysts.
• On Jan. 13, Aito, a Chinese EV brand backed by technology giant Huawei, also cut prices for its M7 and M5 sports utility vehicles by nearly 10%, bringing the two vehicles’ prices to RMB 289,800 and RMB 259,800.
• The price cuts will likely squeeze vehicle margins per unit. Still, selling at volume may help Aito increase gross margins and grow its business, according to an investor relations representative at Seres, which makes Aito-branded vehicles with Huawei.

Context: Despite a backlash from many existing car owners, Tesla has achieved instant results on sales and regained growth momentum after it drastically cut prices on its China-made vehicles earlier this month.

• Order volumes at some of Tesla’s showrooms in lower-tier Chinese cities have surged by as much as 500% from a month earlier, according to a Monday report by Chinese media outlet Yicai. The Beijing News also reported that the company saw an increase of 300,000 new orders in three days following the cuts.
• Some competitors have so far refused to join the fray. On Monday, an executive at Zeekr said that Geely’s premium EV brand would stick to its current price for its 001 crossovers. Meanwhile, BYD and GAC’s EV unit Aion raised prices across their vehicle lineups at the beginning of this year, citing Beijing’s phasing out of EV incentives among other reasons.
• Tesla handed over nearly 440,000 China-made vehicles to local customers in 2022, representing a below average increase of 37% from a year ago. The company’s share in the Chinese EV market fell by 8.3% year-on-year to 6.6% in December, according to figures from the CPCA.

READ MORE: Chinese EV makers rush to boost year-end sales as subsidies expire

The latest member of BYD’s Ocean family of EVs has been inadvertently revealed in China by the country’s Ministry of Industry and Information Technology (MIIT), as the electric vehicle maker looks to extend its leadership in a competitive entry-level market segment.

Why it matters: The compact EV, called Seagull, will likely be the cheapest model in BYD’s lineup, and the Warren Buffett-backed automaker will face stiff competition in a segment dominated by standouts such as Wuling’s popular and inexpensive Hongguang Mini EV.

Details: The Seagull compact SUV will measure around 3.8 meters in length with a wheelbase of 2.5 meters, according to information released by MIIT on Jan. 11. This is shorter than the length of 4.1 meters and the wheelbase of 2.7 meters of BYD’s Dolphin hatchback, both under the company’s ocean-themed EV family.

• Outed in several images from MIIT, the Seagull’s rounded silhouette and sharp shoulder line follow the same sporty design language as the rest of the automaker’s Ocean models, which cater to a younger consumer segment compared with its Dynasty Series.
• Industry observers estimated the Seagull would be priced below RMB 100,000 ($14,916), compared with the Dolphin, which is priced between RMB 116,800 and RMB 136,800. The Seagull will be powered by an electric motor with an output of 55 kW, also lower than the 70 kW delivered to the Dolphin.
• The Chinese government requires automakers to submit documents regarding new product information before launch to gain approval for models sold in the country. A BYD spokesperson declined to comment on launch details when contacted by TechNode on Monday.

Context: Budget-friendly, entry-level micro-EVs accounted for around one-third of passenger electric vehicle sales in China last year, according to figures from the China Passenger Car Association (CPCA). Competition in the sector has been heating up in recent years, and buyers are more price-conscious than those of luxury cars.

• Wuling’s Mini EV maintained its title as China’s best-selling EV model in 2022 with sales of 404,823 units, representing a slight 2.4% increase from a year earlier. Other popular micro-EVs include Chery’s QQ Ice Cream and Changan’s Benben, with deliveries of each exceeding 90,000 units last year. Meanwhile, Hong Kong-listed Leapmotor also sold 61,919 T03 compact hatchbacks, CPCA figures showed.
• Earlier this month, BYD said it had delivered more than 230,000 Dolphin vehicles since the launch of the first model under the Ocean Series in August 2021. The company also sold more than 50,000 Seal crossovers last year after delivery began in August. The Seal, the second member of the Ocean marque, is a direct rival to Tesla’s Model 3 with a starting price of RMB 212,800.

WM Motor, a Chinese electric vehicle maker backed by search engine giant Baidu, is set to be acquired by Apollo Future Mobility, a Hong Kong-listed firm backed by Hong Kong tycoon Li Ka-shing, for about $2 billion. The acquisition means the EV maker will go public in Hong Kong via a backdoor listing. 

Why it matters: The $2 billion takeover is seen as a survival move for the Chinese EV maker, once a rival of Nio, Xpeng, and Li Auto but now desperate for cash. The company has experienced significant setbacks, including sluggish sales, massive recalls, and lawsuits with Geely in the past few years.

Details: Apollo Future Mobility Group’s subsidiary Castle Riches Investments Limited will spend around $2 billion to buy 100% of WM Motor Global Investment Limited’s shares, according to a security filing (in Chinese) made on Thursday.

• Apollo also said it would sell more than HK$ 3.5 billion ($450 million) of its shares, with 20% of the proceeds to be used to repay interim financing to WM Motor and 70% to be used to fund its further development.
• WM Motor became a major shareholder in Apollo in late 2021 and held a stake of nearly 23.7% before the share sale. WM Motor founder and chief executive Freeman Shen is a non-executive director at Apollo.
• The two companies are set to complete the deal within the next three months, which could allow WM Motor to be listed on the Hong Kong Stock Exchange in the second quarter, local media outlet CLS reported.
• WM Motor Global Investment Limited owns more than 80% of the shares in WM Smart Mobility Technology (Shanghai) Co., Ltd., a major business entity of the namesake EV maker in China, the filing said.

Context: Positioning itself as a luxury EV maker with plans to launch its first model in 2024, Apollo has been chaired by Ho King-fung, previously a JP Morgan analyst and a nephew of former Macau chief executive Edmund Ho Hau-wah, since 2016.

• The company is heavily backed by political and business elites in Hong Kong and Macau, with Ho’s family holding an 11.35% stake as of March 2022, according to a Thursday report by Chinese media outlet Yicai. Hong Kong tycoon Li Ka-shing and Solina Chau Hoi Shuen, a businesswoman and close friend of Li, also own a combined 9.9% stake in the company, the report said.
• In October 2021, WM Motor said it would raise $500 million in two financing rounds, including a $300 million Series D1 led by PCCW, a telecommunication firm headed by Li’s younger son Richard. The Shanghai-based EV maker has also secured support from investors, including the city’s government funds, state-owned automaker SAIC, and Baidu.
• In June, WM Motor filed paperwork for an initial public offering in Hong Kong and was rumored to be looking to raise as much as $1 billion, according to a Bloomberg report. The company did not proceed with the initial share sale, however. The firm also had plans to list on the mainland’s Nasdaq-style Star Market back in late 2020, the South China Morning Post reported.
• Once hailed as one of the “Fab Four” in China’s EV market by Deutsche Bank analysts, WM Motor has underperformed in the past two years, reporting sales of 44,152 units in 2021, less than half those of peers Nio, Xpeng Motors, and Li Auto. That number further declined to 29,358 units from January to November 2022, according to figures from the China Passenger Car Association (CPCA).

READ MORE: Struggling EV maker WM Motor reportedly seeks back-door listing

BYD became the world’s best-selling electric vehicle brand in 2022, managing to sell a record 1.8 million units, more than triple its numbers from a year earlier. Other major automakers also reported improvement in December, according to the latest sales figures. 

Why it matters: The figures show that BYD has had an iron grip on the market in the last year while smaller EV makers faced ups and downs. China’s EV sales in 2022 are set to finish lower than expected as the industry enters a slower period after authorities phased out EV purchase subsidies at the end of 2022.

• China’s wholesale sales of electric passenger vehicles in December will increase by 17% from a month earlier to around 700,000 units, according to estimates by the China Passenger Car Association (CPCA).
• This means China’s new energy vehicle sales for last year could be below the previous estimate of 6.5 million units by CPCA. Passenger EV sales from January to November grew 100% year-on-year to 5.7 million units.

Details: BYD said on Monday that it delivered around 235,200 vehicles in December, an increase of 150.5% from the same period a year earlier. That figure also brings BYD’s total sales for 2022 to more than 1.86 million units, up 208.6% compared to 2021 figures.

• Aion, the electric vehicle unit of Chinese automaker GAC, maintained strong growth momentum with sales of 30,007 units last month. Overall sales surged 126% year-on-year to around 271,000 units in 2022. The company has set a target of selling 600,000 EVs in 2023, according to general manager Gu Huinan.  
• Hozon, a budget carmaker backed by CATL, was another bright spot with deliveries of 152,073 vehicles, an 118% jump compared with 2021. The company exported a significant number of 3,456 EVs and is looking to accelerate overseas expansion in regions such as Southeast Asia and the Middle East in 2023.
• Li Auto also ended the year with a record delivery count, handing over 21,333 crossovers to customers in December and becoming the first Chinese EV startup to reach the 20,000-unit milestone in monthly delivery. The total delivery count in 2022 for the brand was 133,246 vehicles, up 47.2% from a year ago.
• After a difficult third quarter, Xpeng Motors’ deliveries bounced back in December to a normalized level but still fell short of its US-listed peers Nio and Li Auto. The company delivered 11,292 units last month, including 4,020 units of the G9, its first premium crossover, which it launched in September. The final tally was 120,757 EVs, a mild 23% annual increase.
• Huawei-backed EV maker Aito also reported strong deliveries of 10,143 units in December, with total 2022 deliveries topping 75,000 units. 
• Monthly deliveries of Geely-backed EV brand Zeekr also surged 199% year-on-year to 11,337 units, bringing the maker’s total delivery count to 71,941 units.
• Nio delivered 15,815 cars last month, a monthly record high following November’s 14,178 units. Annual deliveries totaled 122,486 vehicles, representing a 34% growth from the previous year.
• Tesla’s deliveries increased 40% to 1.3 million EVs in 2022 from the prior year. The CPCA, which has tracked monthly sales for the company’s China operations since 2020, has not revealed its December sales figure for the Chinese market.

Context: Analysts expect industry sales to hit a plateau in 2023 after several years of strong growth as the Chinese government scraps subsidies for EV purchases.

• Citic Securities forecast sales of new energy vehicles, which mainly include battery-powered EVs and plug-in petrol-electric hybrids, to rise by 31% annually to 9 million units in China in 2023.

Xpeng Motors has intensified its restructuring efforts by setting up a new financial platform to control costs and streamline the company’s workflow, according to an internal memo obtained by Chinese media Dianchang (Powerhouse).

Why it matters: The cross-functional financial platform is the latest in a series of restructuring actions undertaken by Xpeng to get its business back on track, after it faced declining sales and slimming margins in recent months due to rising costs and competition.

Details: Xpeng has set up a number of financial units under the new scheme, including two teams to implement specific cost-saving measures with its sales and marketing operations and research and development units, according to the report.

• The new teams will allow chief executive He Xiaopeng to take back control of the company’s finances that he previously handed to management executives, such as budget planning for supply chain and technology development.
• The EV maker has also established several teams dedicated to asset management, tax administration, and business analysis to enhance its expense control, make more accurate cost estimates, and improve compliance practices.

Context: Xpeng has unveiled organizational changes that include setting up a number of committees for corporate strategy, product planning, and technology road mapping in the past few months, following criticism about the pricing and specs of its new premium crossover G9.

• With around RMB 40 billion ($5.74 billion) in cash on Xpeng’s balance sheet, CEO He told investors on Nov. 30 that the company still has enough capital to support its business growth for the coming years.
• The EV maker has recorded losses of nearly RMB 6.8 billion for the first three quarters of 2022, while annual revenue growth has slowed from 152.6% to 19.3% during the same period.

Chinese EV makers Nio, Xpeng Motors, Zeekr, and Aito, as well as Tesla’s operation in China, are racing to get the last slice of the sales pie before the end of 2022, offering special promotions with the country scheduled to phase out subsidies for electric vehicles beginning next year.

Why it matters: Analysts have projected slower EV sales in the coming months after the phase-out but remain positive on the overall growth of the EV sector in China in 2023.  

The end of subsidies: The Chinese government currently grants a small number of subsidies to EV buyers, with all-electrics and plug-in hybrids eligible for subsidies of RMB 12,600 ($1,836) and RMB 4,800 ($689) per unit, respectively. Beijing reduced the incentives gradually by 10%, 20%, and 30% from 2020 to 2022. 

• Multiple Chinese automakers, including Nio, Xpeng Motors, Volkswagen’s Chinese partner SAIC, Geely’s premium EV unit Zeekr, and Huawei-backed EV brand Aito, have recently promised to cover the price increase if customers place their order before the end of 2022 when those subsidies expire and EV prices rise accordingly. 

Tesla’s multiple discounts: Tesla China has offered various discounts on its vehicle lineups amid investors’ fears of a looming slowdown in demand, including an additional discount of RMB 6,000 and a rebate of RMB 4,000 on customers’ end-of-the-year orders.

• The US automaker kicked off the price war on Sept. 16 by offering customers an insurance incentive of RMB 8,000 and then slightly lowered the amount to RMB 7,000 for orders made from October to December.
• This was followed in October by a round of price cuts of its base Model 3 sedans and Model Y sports utility vehicles by at least RMB 14,000 and RMB 20,000, respectively.

Outlook for 2023: Some other automakers have announced the upcoming car price rises in advance, pushing customers to place their orders by the end of the year. 

• BYD said on Nov. 23 that the price of most of its EV models would be up by up to RMB 6,000 starting next year to offset the increase in vehicle costs from expiring government subsidies and rising battery prices.
• GAC’s EV unit Aion and Ford’s manufacturing partner Dongfeng followed suit by previewing a price increase for the next year of up to RMB 8,000 and RMB 9,000, respectively.
• The phase-out will also increase profit pressure for EV makers, who have already been hampered by the rising cost of battery raw materials and other supply chain issues over the past year. Carmakers are facing challenges to increase market share while maintaining their margin guidance, UBS analyst Paul Gong told Chinese media outlet Caixin in a Tuesday report.
• Gong remains positive on the market’s growth prospects for 2023 and forecasts that the penetration rate of new energy vehicles (NEV), mainly all-electrics and plug-in hybrids, will rise to 37% of all new car sales next year from the current level of 27%. China’s state council in 2020 set a goal of NEVs to account for 20% of new car sales by 2025, which was completed well ahead of time.
• Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), expressed a similarly positive sentiment during an online conference on Thursday, saying he expected China’s NEV sales to more than double annually to 6.5 million units this year. The CPCA estimates the number will reach 8.5 million units in 2023, representing a 31% growth year-on-year.

Context: Beijing’s various policy measures and a vast selection of offerings by automakers have allowed the Chinese EV industry to thrive even amid increased competition. EV buyers will still be exempt from a 5% purchase tax next year, the central government said in August.

• In November, retail sales of passenger NEVs increased 58.2% from last year and 7.8% from the previous month to around 598,000 units. BYD and Tesla are the two most prominent players, recording sales of 229,942 and 100,291 units respectively, according to CPCA figures (in Chinese) published Thursday.

Volkswagen faces a growing public backlash in China over malfunctioning software in its electric vehicle ID Series — including sudden black screens and frequent internet disconnection — after a group of Chinese drivers penned an open letter to complain. The German automaker responded to Chinese media outlet Jiemian, saying that it is investigating the cause of these issues and apologizing for the inconvenience. 

Why it matters: The complaints lay bare the challenges established carmakers face in trying to transition to EV making and in particular in incorporating ever more complex driver assistance systems and other digital technology into their vehicles. 

Details: Dozens of disgruntled car owners recently published an open letter demanding SAIC-Volkswagen stop selling its China-made ID Series EVs and issue a complete repair plan to eliminate safety risks in their vehicles, Jiemian reported on Dec. 4.

• The varied software issues reported by these owners include sudden blank screens on the dashboard and central control displays, frequent disconnection from the internet, and cases where the in-car navigation system does not work.
• Three ID Series vehicles are reportedly affected: Volkswagen’s ID.4 sports utility vehicles, seven-seater ID.6 crossovers, and ID.3 family hatchbacks.
• In the letter, the drivers argue that a malfunctioning in-car system poses serious safety hazards. Some drivers said they experienced all of the vehicle’s information disappearing from their in-car display screens, including driving speed and battery status.
• In a statement sent to Jiemian, Volkswagen apologized for the inconvenience and added that it has developed corresponding solutions which will be implemented soon.
• There were at least 30 submissions this year related to malfunctioning in-car software systems in Volkswagen EVs on 12365auto.com, a Chinese online complaint platform, according to a calculation by TechNode.
• SAIC-Volkswagen is a joint venture between the German automaker and Chinese manufacturer SAIC, which began local production of the ID.4, the first ID. family member launched in China, in October 2020.

Context: Volkswagen reported sales of around 112,700 electric vehicles in China for the first nine months of 2022, representing an increase of 139% from a year earlier. The German carmaker expects to sell 3.3 million cars in China this year, a 14% cut from its previous target, Bloomberg reported on Nov. 22.

• In October, Volkswagen’s software unit Cariad invested 2.4 billion euros ($2.3 billion) in China’s Horizon Robotics to strengthen its software offering.
• Domestic automakers are riding the wave of China’s green energy transition, accounting for nearly half of the market share in the passenger EV segment as of September, according to figures from China Passenger Car Association. China recorded sales of around 4.5 million new energy vehicles, mostly all-electrics and plug-in hybrids, from January to September.

Chinese electric vehicle makers reported slower growth in deliveries in November and some even saw decreases as the market continues to be hit by a macroeconomic downturn. Nio and Li Auto posted record deliveries, but Xpeng continued its delivery slump. For other automakers, Aion, Hozon, and Huawei-backed Aito reported a monthly decline in vehicle deliveries in the month while Zeekr and Leapmotor started to show signs of slowing growth.  

Why it matters: The latest figures reflect a slowdown of China’s electric vehicle market as consumer confidence is hit by fears of a potential recession while an ongoing rebound of Covid cases in the country impacts vehicle production.

Sales recovery: 

• Li Auto and Nio saw significant sales recovery in November following a slump linked to growing competition and supply chain disruptions. The pair reported new record deliveries of 15,034 and 14,178 units, an increase of 50% and 41% from a month earlier, respectively.
• Nio expanded its product portfolio from three to six models on sale this year. It began deliveries of its first sedan model, ET7, in March, followed by the medium-size ES7 crossover in August and the long-awaited ET5 sedan a month later.
• Li Auto adopted a similar strategy, as delivery of its second large-size crossover the L9 started on Aug. 30 and that of the L8, a smaller version of the L9, came in October.

Xpeng’s slump:

• Xpeng Motors has continued to report lackluster sales, saying November deliveries totaled 5,811 vehicles, a 14% increase from a month earlier but still far from the historic high of 15,414 units in March.  
• The Alibaba-backed EV maker, once touted as a “Tesla killer” in China, is facing a number of challenges amid economic headwinds and fierce competition. Speaking to analysts on Thursday, chief executive He Xiaopeng said he expected its second crossover the G9 to drive deliveries back up to the threshold of 10,000 units in December.

Monthly declines: 

• Aion on Thursday reported (in Chinese) sales of 28,765 units in November, 4% lower than last month, though it still represented a 91% growth from the same period last year. Vehicle deliveries totaled 241,149 units from January to November for the EV unit of state-owned automaker GAC, which represents a near doubling of last year’s total of 123,660 units.
• Hozon, backed by Chinese battery giant CATL, followed a similar trajectory as deliveries increased 51% year-on-year but fell 16% from October to 15,072 vehicles last month. Year-to-date deliveries reached 144,278 units, with three entry-level crossovers and one mainstream sedan on sale from the brand.
• Aito’s sales in November represented the firm’s first monthly decline since delivery began in March, down 31.3% month-on-month to 8,260 vehicles. The Huawei-backed EV brand provides two plug-in hybrid crossovers, the M7 and M5, which compete against Li Auto’s L9, a successor model based on the latter’s popular Li One SUV.

Slowing growth: 

• Geely’s premium EV brand Zeekr said it delivered 11,011 vehicles in November, a nearly 9% month-on-month rise, compared with a 22.3% increase a month earlier. And yet year-to-date deliveries reached 66,611 units as of last month, inching closer to its annual goal of 70,000 vehicles.
• Meanwhile, Hong Kong-listed Leapmotor reported a 14.4% month-on-month sales rally of 8,047 vehicles. However, vehicle delivery fell for a third straight month as of October after the Zhejiang-based automaker sold a milestone 12,525 cars in August.
• Nevertheless, Zeekr and Leapmotor have emerged as strong competitors in the Chinese EV market. 

Chinese EV upstart Nio will continue its investment in battery and chips research and development and keep expanding into overseas markets, according to an internal speech (in Chinese) from the company’s chief executive William Li in which he also reaffirmed a goal to break even in 2024 despite challenging economic conditions. 

Why it matters: Li’s comments come at a time when China’s electric vehicle sales start to slow amid potential recession worries, growing competition, and supply chain disruptions due to frequent Covid comebacks. As a result, EV startups like Nio are facing pressure from the market as their sales slow and costs rise.

• Sales of passenger new energy vehicles, mainly all-electrics and plug-in hybrids, declined 9% in October from a month earlier to around 556,000 units, despite a 75.2% year-on-year increase, according to figures published by the China Passenger Car Association (CPCA).

In-house batteries and chips: Speaking to employees in Shanghai on Friday, Li highlighted the company’s strategy to enhance research and development across its batteries and semiconductor units. The chief executive said in-house battery and chip capability will be essential in lowering production costs and increasing vehicle margins.

• Li said the company would “have no chance at all” of turning a profit in 2024, or of with hitting a 20% gross margin for its entry-level EVs, if it cannot be more self-sufficient in battery and chip making (our translation).
• Making batteries and chips in-house could improve Nio’s vehicle margin by at least 10%, according to Li, who added that the automaker plans to maintain external collaboration with a long-term outlook of securing 30% of required batteries from suppliers.

Global push: Li also said that the company’s next-generation vehicles would be introduced to American customers, without providing a specific timeline, while a team of more than 700 employees in Europe is upping efforts to offer more test drives on the continent.

Cost control: The chief executive asked Nio’s nearly 30,000 employees to be more effective and control spending. The company nearly doubled its employees a year ago and now takes a more restrained approach in hiring.

• He urged the workforce to streamline business operations in a systematic way, such as using more efficient planning for building battery swap stations based on user data. 
• He also promised the company would be deliberate with layoffs and shut-downs.

Context: Nio booked a record loss of RMB 4.1 billion ($577.9 million) in the third quarter of 2022, a significant increase of 392.1% from a year ago, while the firm’s vehicle profit margin fell from 18.1% to 16.4% over three consecutive quarters this year.

• The automaker is also making a foray into the competitive smartphone market with plans to launch its first phone model within the next 12 months, a defensive move against smartphone makers such as Huawei and Xiaomi making EVs.

Aion and Zeekr, the electric vehicle subsidiaries of Chinese automakers GAC and Geely respectively, each broke their monthly records for vehicle deliveries in October, while US-listed EV trio Nio, Li Auto, and Xpeng Motors lagged behind their peers.

Why it matters: Although Tesla and BYD have long been the undisputed leaders in the Chinese EV market, GAC and Geely are among the traditional automakers leading the chase. The October delivery results also reflect the strong momentum of Huawei-backed EV maker Seres and the mounting troubles faced by Xpeng.

GAC: The state-owned automaker said on Tuesday that it delivered 30,063 Aion-branded vehicles in October, an increase of 149% from the same month last year. That number brings Aion’s total delivery numbers this year to 212,384 vehicles.

• Toyota’s Chinese manufacturing partner is ramping up efforts to meet an annual delivery target of 250,000 Aion-branded EVs this year, with its second auto manufacturing plant for Aion beginning operations in Guangzhou in early October.

Geely: Zeekr made deliveries of 10,119 EVs in October, a record high for Geely’s premium EV brand. Year-to-date sales totaled almost 50,000 as of last month, with the brand close to reaching its goal of delivering 70,000 cars this year.

• Geely is looking to spin off Zeekr for an initial public offering, through which Volvo’s parent company expects to fund its plans to introduce six Zeekr-branded models within five years.

Seres: Huawei‘s manufacturing partner delivered 12,018 Aito-branded EVs last month, a 461% jump from a year earlier. October was also the third straight month that it has delivered over 10,000 units in a single month since the delivery of its first production car began in March.

Xpeng: Deliveries of the eight-year-old EV maker more than halved year-on-year to just 5,101 vehicles last month. Vehicle deliveries totaled 103,654 units from January to October, far from the company’s unofficial 2022 guidance of 250,000 vehicles set early this year.

• A total of 623 G9 crossovers were handed over to consumers last month after delivery began on Oct. 27. The company expects monthly deliveries of its second sports utility vehicle to surpass the threshold of 10,000 units next year after production ramp-up.
• The company’s second sedan model, the P5, which the company expected to be a hit in the mainstream segment with a starting price of RMB 157,900 ($21,707), has underperformed with deliveries of around 33,700 units as of October this year.

Nio and Li Auto: The two other EV upstarts each reported October deliveries of more than 10,000 units, slightly lower than the previous month. Yet both have enjoyed a solid performance despite ongoing supply chain issues amid the post-pandemic rebound.

• Nio’s premium sedan ET7 is the company’s most in-demand model on sale, recording deliveries of 3,050 units. At the same time, the company only handed over 1,030 units of the ET5, its second sedan model, as production is still ramping up.
• The automaker was also forced to cut production at its facilities in the eastern city of Hefei in mid-October due to Covid restrictions, Chinese media outlet 36Kr reported Tuesday, citing people familiar with the matter.

Hozon and Leapmotor: With three entry-level cars on sale, Zhejiang-based Hozon managed to exceed deliveries of 18,016 units in October, representing a 122% year-on-year rise, while Leapmotor deliveries dropped by more than a third to 7,026 units.

Aito, an electric vehicle brand backed by Huawei, has quietly cut the prices of its electric crossovers by RMB 8,000 (around $1,100), in what appears to be an immediate reaction by a Chinese firm to Tesla’s major price cuts aimed at boosting demand.

Why it matters: The move is the latest sign that a new price war has broken out in the world’s biggest auto market. Tesla on Monday offered a significant price reduction on its popular EVs, which analysts predict could force other automakers to follow suit.

• There could be further headwinds coming for young Chinese EV makers, including Nio, Xpeng Motors, and Li Auto, which have already faced slowing growth amid rising competition, Chinese media outlet Caixin reported on Monday, citing analysts.
• Sales of high-end models from BYD and traditional auto majors are also likely to be impacted. This would further erode profit margins for cash-burning carmakers, which have been struggling with the soaring cost of critical components, among other supply chain issues.

Details: The price cut, which Aito has not officially announced, affects its two all-electric sports utility vehicles, the M7 and the M5, Chinese media outlet The Paper reported on Tuesday. Customers who have already paid a pre-order deposit have been told to pay the remainder of the requested sum with a reduction of RMB 8,000, the report said.

• Aito currently has two models on sale: the M7 and M5 plug-in hybrid, with starting prices of RMB 319,800 and 259,800 respectively, as well as the all-electric version of the M5, priced from RMB 288,600. These amounts put them in the same price range as the Tesla Model 3 and Model Y in China.
• A spokesperson from Huawei did not respond when asked for comment by TechNode on Wednesday.

Context: Last December, Richard Yu, chief executive of Huawei’s consumer business group, announced the launch of the M5, Aito’s first car model equipped with Huawei’s HarmonyOS operating system and manufactured by Chinese automaker Seres.

• Since mid-2021, the Chinese telecommunications giant has been selling vehicles via its nationwide retail network for its partner, which reported monthly deliveries of more than 10,000 Aito-branded vehicles for the first time in August, just five months after delivery began in March.
• Nio, Xpeng, and Li Auto have reported slowing sales growth from July to September amid continuous supply chain turmoil while facing increased competition from bigger rivals, including Tesla and BYD.
• Xpeng’s market capitalization has tumbled more than 80% to $6.84 billion, while that of Nio had dropped below $18 billion as of Tuesday, compared with a historic high of more than $56 billion in November 2020.
• China’s sales of new energy vehicles, including all-electrics and plug-in hybrids, more than doubled annually to nearly 4.6 million units for the first nine months of this year. And yet, industry experts project sales to slow into 2023 when the competition will be more intense as Beijing phases out subsidies for EV purchases entirely.

READ MORE: Chinese EV makers may face a price war in 2022: UBS

Aion, the electric vehicle unit of Chinese automaker GAC, said on Thursday that it has raised RMB 18.3 billion ($2.53 billion) in Series A from a group of strategic investors, the latest boost to the company’s ongoing transition into an electric automotive powerhouse.

Why it matters: The funding round gives the Guangzhou-based upstart a whopping valuation of RMB 103.3 billion, making it China’s biggest private, venture capital-backed EV maker. Aion also expects to gain more advantages in the EV supply chain with new backers ranging from battery resources to chip manufacturing firms.

Details: Among a group of 53 strategic investors in the latest financing round were Ganfeng Lithium, China’s biggest lithium compounds producer, and China Fortune-Tech Capital, an investment arm of top Chinese chipmaker SMIC, Aion said in a statement (in Chinese).

• Other prominent investors include a national fund for structural adjustment of state-owned enterprises, as well as Guangzhou Industrial Investment and Capital Operation Holding Group.
• As Toyota’s and Honda’s manufacturing partner in China, GAC is still the biggest shareholder of Aion with a 76.9% stake, while the new investors from Series A jointly acquired a 17.7% stake in the EV maker.
• Aion said it would use the proceeds to fund the in-house development of new models, batteries, and other key components, adding that the investment would also help provide a stable supply of raw materials and car chips.
• The company will kick off its Series B fundraising process by year-end and look to sell shares publicly as early as 2023, Chinese financial media outlet Caixin reported on Sept. 6, citing company executives.

Context: Aion is China’s fifth biggest EV maker, with sales more than doubling annually to 182,321 cars in the first nine months of this year, which gave it a 4.8% market share, according to data from the China Passenger Car Association.

• The GAC subsidiary said on Oct. 12 that its second auto manufacturing plant in Guangzhou had started operation, boosting its car production capacity in the country to more than 400,000 units annually.
• Feng Xingya, GAC’s general manager, confirmed the company’s goal of delivering 300,000 Aion-branded vehicles this year, citing delivery times of around two months to customers, Caixin reported on Friday.
• Chinese auto majors, including Dongfeng, Changan, and Geely, have all sought external investors’ support and accelerated their listing plans for their cash-bleeding EV projects in the face of recent economic challenges.
• BYD is the dominant leader in the Chinese EV market, holding 29.7%. The firm is followed by SAIC-GM-Wuling, Tesla, and Geely, with shares of 8.4%, 8.2%, and 5.3%, respectively, CPCA figures show.

Huawei on Tuesday revealed its first all-electric sports utility vehicle, the Aito M5, in collaboration with Chinese automaker Seres. The new model will compete with Tesla’s Model Y and others in the world’s biggest electric vehicle market.

Why it matters: Huawei, along with Seres, has quickly expanded its vehicle offering with two plug-in hybrid crossovers and a full-electric version, just six months after delivering the first Aito-branded vehicle in March. The telecom giant’s moves in the space could pose a serious threat to major EV makers.

Details: The Aito M5 all-electric will have an estimated driving range of 620 kilometers (385 miles), surpassing its rivals. For example, Tesla’s Model Y has a 545km driving range, EVs from German automakers BMW and Audi offer around 550km between charges.

• Richard Yu, chief executive of Huawei’s consumer business group, said that the Aito M5 performs “far better” than Tesla’s Model Y and offers a more luxurious in-car experience. Yu claimed the M5 is easier to control on rough roads and has a quieter cabin.
• Huawei said it received more than 30,000 pre-orders in just four hours after the all-electric M5 was announced, local media reported. In December, the tech giant saw 6,500 reservations in four days after releasing the first vehicle model under the Aito marque, the plug-in hybrid M5.
• The new model comes at a price range of between RMB 288,600 and RMB 319,800 ($41,395 to $45,870), at least RMB 38,800 higher than the starting price of its plug-in hybrid counterpart but lower than Tesla’s Model Y, which is priced from RMB 316,900.

Context: Huawei broke its delivery record with more than 10,000 EVs to customers in August, bringing the company’s total delivery numbers for this year to 39,433 vehicles as of August. Meanwhile, sales of rivals such as Li Auto and Xpeng Motors slid last month due to cannibalization by new models and increased competition.

• Huawei is also making a push into the mobility sector with the launch of the public beta version of its ride-hailing app “Petal Chuxing” on Tuesday. The aggregation platform currently provides Huawei smartphone users access to ride-hailing services such as T3 in 92 domestic cities.

READ MORE: Li Auto deliveries halve in August while Seres and Zeekr see growth

Chinese electric vehicle upstarts Li Auto and Xpeng saw declines in August, while Huawei’s auto partner Seres and Geely’s Zeekr saw strong growth. Among them, Li Auto reported a record decline in August deliveries, more than 50%, as the electric vehicle maker’s new crossovers cannibalized sales of its existing model. Seres deliveries up28% in August while Geely’s EV brand Zeekr grew more than 42%. 

Why it matters: Li Auto’s shortfall took place when Seres and Zeekr saw growth, highlighting a more competitive EV landscape and a preference among Chinese consumers to gravitate towards the latest products, according to Tu Le, managing director of consultancy Sino Auto Insights.

Li Auto’s decline in August: Li Auto’s deliveries fell more than half in August to 4,571 crossover vehicles from a month earlier, extending a month-on-month decline of 21.3% in July.

• “Li Auto and Xpeng have recently had some high-profile vehicle launches that have likely led them to lose focus a bit,” said Le. “For Li Auto specifically, the new L9 has really cannibalized sales of the Li One, so it’s like they only have one product in the market again.” 
• This echoed a comment Shen Yanan, Li Auto’s president, made during an earnings call last month, in which he acknowledged that many customers “with enough budget” preferred the L9, the company’s second sports utility vehicle, over the cheaper Li One. The company began delivering the L9 on Aug. 30.
• Analysts also worry that the upcoming L8 crossover, confirmed by chief executive Li Xiang as a redesigned model of the Li One and scheduled for delivery in November, will have an even more significant cannibalization effect. 
• The eight-year-old EV maker on Monday confirmed to state media outlet Jiemian that it will phase out production of the Li One three years after its release in 2019, introducing a price reduction of RMB 20,000 ($2,882) for its first car model in some markets.
• The price cuts have angered some owners who accused the company of cheating them over the new car release and price changes. At least 1,000 Li One owners have filed complaints against the company on “Black Cat,” a complaint platform owned by Chinese tech firm Sina.

Rise of Seres and Geely: Meanwhile, Seres and Geely have both seen healthy growth in August. Xpeng Motors’ deliveries also declined by 16.9% to 9,578 vehicles in August from a month earlier, while Nio saw deliveries grow 6.2% month-on-month to 10,677 vehicles. There is a major concern about demand for Xpeng’s current models, as buyers might wait for the introduction of its G9 crossover, scheduled for delivery by year-end, as well as a retrofitted P7 sedan set to be released next year.

• Huawei’s manufacturing partner Seres saw a monthly record by delivering 10,045 vehicles in August, up from 7,807 vehicles in July, while Geely’s premium EV brand Zeekr also reported a record delivery number of 7,166 vehicles, representing a 42.7% month-on-month growth.
• Le expects that sales of both Seres and Zeekr will continue to grow. With Seres being able to sell via Huawei retail stores and Geely backing Zeekr, these “pseudo-startups” have support structures that most other “true” EV startups do not, which gives them quite an advantage, Le added.

Context: BYD maintained its leadership in the market by delivering 174,915 vehicles last month. Tesla is expected to have delivered more than 77,000 cars from its Shanghai facilities, according to estimates by the China Passenger Car Association on Sept. 1.  

• BYD and Tesla have much more production capacity than their counterparts, Le said, adding that the two companies’ leadership will continue amid “particularly tough” competition in the mainstream, small- to medium-sized SUV segments.

Pindudouo is reportedly planning to launch a cross-border platform designed to connect Chinese and overseas suppliers with global customers as the Chinese e-commerce giant expands its approach to take on rival Shein.

Why it matters: The move highlights a growing trend of Chinese technology companies considering going global, partly accelerated by China’s regulatory crackdown on the tech sector as well as intense competition and weakening consumption in the domestic market.

Details: Pinduoduo is currently seeking sellers for its new cross-border online marketplace, which the company aims to make available first in the US in September, Chinese media outlet LatePost reported on Wednesday, citing people familiar with the matter.

• The online retailer is offering registration and referral fee waivers for small and medium-sized merchants in a bid to attract them to sell on its platform, the report said. It is also providing various fulfillment services such as picking products, packing orders, and arranging shipments once the goods are transported to its warehouses in China.
• Aiming to differentiate itself from Shein, which primarily focuses on fast fashion, beauty, and lifestyle products, Pinduoduo’s new platform will be more of a general marketplace for low-priced household products and other daily necessities, where the company has experience and a competitive advantage.
• Pinduoduo has set up a team of 80 employees in the southern city of Panyu, where Shein is headquartered, and chief operating officer Gu Pingping is leading the project, according to the report.
• Pinduoduo did not respond to TechNode’s request for comment on Thursday. 

Context: Shein’s success selling clothing products at super-cheap prices has prompted more Chinese tech firms to follow its model, while existing major players are ratcheting up efforts to maintain their lead in the market.

• Alibaba was considering the expansion of its Southeast Asian arm, Lazada, into the European market to boost overseas growth, Reuters reported in April.
• JD.com partnered with Canadian e-commerce company Shopify in January to allow Chinese merchants to sell products to consumers on the latter’s platform, TechCrunch reported.
• TikTok parent company Bytedance launched a standalone shopping app called “Fanno” late last year in several European countries, including France, Germany, and Britain, SCMP reported.
• Driven by interest in its summer sales, Shein became the most downloaded e-commerce app in the US with 6.8 million downloads during the second quarter of 2022, surpassing those of Amazon for the first time.
• Pinduoduo’s active buyer accounts increased 10% to 868.7 million last year, lower than analysts’ expectations of 883.3 million, according to a Bloomberg report.

On Tuesday, the self-driving car startup Pony.ai announced that it partnered with ride-hailing company Caocao to provide robotaxi services in Beijing.

Why it matters: Autonomous driving is still a long way from commercialization. The deployment of autonomous vehicles on a familiar ride-hailing app might help Pony.ai get closer to making money from its pilot projects.  

Details: Starting from Wednesday, public passengers will have the option to choose Pony.ai’s custom-made test models of robotaxi from the Caocao app on their phones. However, the robotaxis fleet of 30 or so will be restricted to a designated area in southern Beijing. A safety driver behind the wheel is not required, but each car will have a monitor in a passenger seat.

• There is an RMB 18 ($2.67) base fare for all rides, and longer routes will cost RMB 3 per kilometer beyond three kilometers during rush hours and RMB 2.6 during off-peak hours. By comparison, local ride-hailing services usually have a base fare of RMB 14 per ride and RMB 1.8 per kilometer over three kilometers.

Context: In April, Pony.ai and Baidu received permits from the Beijing city authorities to offer driverless rides in an area of 60 square kilometers (23 square miles) in the city’s southeast Yizhuang district. The local government allowed the two companies to charge fares last November.

• Backed by big automakers Toyota and FAW, Pony.ai has been operating a robotaxi pilot project commercially on the outskirts of Guangzhou since May and has partnered with T3, an emerging rival to Didi, as well as Ontime, a ride-hailing service of Chinese automaker GAC.
• Last August, Chinese tech giant Baidu launched its proprietary autonomous ride-hailing platform called Apollo Go, also known as “Luobo Kuaipao” in Chinese. The company completed over 196,000 trips during the first three months of this year. Baidu has launched commercial operations of robotaxis in three domestic cities, including Beijing and the southwestern municipality of Chongqing.
• Rival WeRide also collaborated with GAC for a commercial launch for customers of Ontime in Guangzhou this year, while self-driving unicorn Momenta is piloting a non-commercial fleet of 60 robocars for ride-hailing with SAIC in Shanghai and the nearby city of Suzhou. ByteDance and Meituan-backed Qcraft also deploy a few dozen autonomous vehicles with T3 for free in Suzhou.

Chinese electric vehicle makers Aion, Hozon, and Leapmotor, reported record deliveries in July, overshadowing the numbers reported by leading players Nio, Xpeng Motors, and Li Auto as the landscape in the world’s biggest EV market continues to evolve.

Why it matters: Nio, Xpeng Motors, and Li Auto are facing increased competition. Traditional brands and new challengers have recently introduced an avalanche of lower-priced models to the market thanks to improving battery technologies, vastly expanding consumer options.

Details: Aion, the EV arm of Chinese state-owned automaker GAC Group, saw monthly deliveries surge about 138% year-on-year to 25,033 vehicles in July, meaning the firm has put roughly 125,000 cars into customers’ hands through the first seven months of the year. GAC, Toyota’s manufacturing partner in China, has a broad EV portfolio under the Aion marque with a price range between RMB 163,800 and RMB 469,600 ($24,218 to $69,430).  

• EV startups Hozon and Leapmotor followed suit, reporting triple-digit yearly growth with July deliveries of 14,037 and 12,044 vehicles, respectively. Zhejiang-based Hozon attributed its growth to increased production capacity.
• Meanwhile, Xpeng, Li Auto, and Nio lost their lead in the Chinese EV market, delivering 11,524, 10,422, and 10,052 vehicles to customers in July, respectively, with all three brands seeing a decrease of more than 20% month-on-month. Nio’s chief executive William Li said on July 31 that the company reduced production of “several thousand units” last month due to parts shortages.
• Seres, Huawei’s manufacturing partner and formerly known as Sokon, posted sales figures of 7,807, while Geely’s premium EV brand Zeekr claimed it sold 5,022 vehicles last month.
• Chinese auto majors such as BYD and Great Wall Motor have yet to release their July sales numbers.

READ MORE: BYD records over 162,000 deliveries in July

Context: Nio, Xpeng, and Li Auto are also expanding their product range in a fight to keep their lead positions.

• Nio plans to diversify its offerings by mulling a separate sub-brand targeting cheaper price points. The company is also on track to roll out a separate mainstream brand codenamed the Alps in 2024.
• Li Auto has already launched a full-size crossover, the L9, with delivery scheduled for this August, and plans to release its first medium-sized, lower-priced vehicle model in 2023. 
• Xpeng said it will soon begin taking pre-orders for its first premium sports utility vehicle, the G9, this month and launch three new models by 2025.

Chinese telecom giant Huawei is entering the ride-sharing market with the launch of a standalone car-hailing app “Petal Chuxing.” The company looks for ways to expand its car-related business and diversify revenue sources as sales of its smartphones slow.

Why it matters: Huawei’s foray into ride-hailing is a natural extension of the company’s ambition to become a key player in the automotive space as the autonomous ride-hailing service has the potential to make up a significant percentage of new car sales in the long run.

Details: Huawei launched a ride-sharing app called “Petal Chuxing,” based on its navigation app “Petal Maps,” which allows users to request rides from multiple ride-hailing providers, state media publication National Business Daily reported on Friday.

• Users can now access two domestic ride-hailing companies — Shenzhou Zhuanche, a Chinese car rental firm Car Inc subsidiary, and state-backed Shouqi. Huawei is testing the service in Beijing, Shenzhen, and the eastern city of Nanjing, the report said.
• At a press conference last week, Huawei’s head of consumer business Richard Yu said that the company has made Petal Maps more competitive than similar offerings by seamlessly linking users’ Huawei handsets to the HarmonyOS-powered vehicles.
• A Huawei spokesperson declined to comment further when contacted by TechNode, saying the company will share more information once it is available.

Context: Huawei first launched its proprietary mapping service for overseas users in October 2020, a year after US sanctions barred the company from including Google software and services on its devices. The service now has 28 million users from over 160 countries.

• The company also obtained a permit to draw up high-definition maps in its home country in mid-2019, a stepping stone to developing its self-driving car technology.
• Chinese tech companies Alibaba and Meituan also operate ride-sharing aggregation platforms, while automakers such as Geely, FAW, and Dongfeng, have built their own ride-hailing apps to take on long-time market leader Didi Chuxing.

READ MORE: Huawei begins selling EVs in stores, may offset sinking phone sales: CEO

China’s electric vehicle industry has experienced a strong recovery in June, recording over 140% growth in passenger EV sales amid the ongoing impact of the Covid-19 pandemic and supply chain challenges, data from the China Passenger Car Association (CPCA) showed on Friday.

Why it matters: The growth was driven mainly by a strong comeback from BYD, Tesla, and other Chinese auto brands like Nio and Li Auto, after Shanghai and other cities lifted pandemic-related lockdowns, showing the impressive resilience of the Chinese EV space.

Details: The CPCA said on Friday that the wholesale volume of passenger EVs in China hit a record monthly high in June with a total sales of 571,000 vehicles, a whopping yearly 141.4% increase. In June, passenger car sales, including combustion engine cars and EVs, increased by 22.6% from last year to 1.94 million units.

• The boost in sales comes as China rolls out hefty stimulus measures, which include additional subsidies and tax cuts, Cui Dongshu, CPCA secretary-general, told reporters during an online conference on Friday. 
• Tesla’s Shanghai Gigafactory came back “with a vengeance” after a 22-day stoppage in April due to Shanghai’s lockdown, chief executive Elon Musk previously told investors, with shipments surging 145% month-on-month and 135% from a year ago to 78,906 vehicles.
• BYD has maintained its top place with almost 25% of the market share, with sales in June hitting 134,036 units, tripling 2021 levels. Meanwhile, EV sales from domestic auto majors Geely and GAC’s EV unit Aion rose by 393% and 182% to 29,671 and 24,109 units, respectively.
• Young EV makers Nio, Xpeng Motors, and Li Auto are also getting back to previous levels by ramping up production and working closely with suppliers, while Sokon, a manufacturing partner of Chinese tech giant Huawei, delivered 7,658 Seres-branded EVs last month, a 41% monthly growth.

Context: Forecasts for the Chinese EV market have remained bullish. Morgan Stanley raised its outlook for this year’s EV sales by 24% to 5.7 million vehicles in a research note on Li Auto on Friday, Chinese media outlet Sina Finance reported.

• CPCA expects China’s EV sales to edge up 84% to 5.5 million units this year, while consulting firm AlixPartners forecasts that number to be 5.1 million, with Chinese-brand vehicles retaining an enormous share of the market.

Aito, a Chinese electric vehicle brand backed by Huawei, received more than 10,000 pre-orders for the M7 in just two hours, after it was unveiled on Monday. The new model is the brand’s second production vehicle featuring Huawei’s HarmonyOS operating system for cars.  

Why it matters: While reservations do not always translate into actual sales, the M7 has captured people’s attention, signaling that Huawei is turning into a serious rival to existing carmakers since entering the burgeoning EV space about one year ago.

• Experts believe that the new car will become a direct competitor to Li One, a popular large plug-in hybrid vehicle launched by Chinese EV maker Li Auto that has similar configurations and a similar price point. Aito has the potential to achieve a sales volume of up to 100,000 units for this year, state media outlet Shanghai Securities News reported Monday, citing analysts from China Securities.

Details: More than 10,000 people pre-ordered the Aito M7 sports utility vehicle in the first two hours after the car brand began accepting RMB 1,000 ($149) deposits on Monday afternoon, a company spokesman told TechNode on Tuesday.

• With a four-cylinder, 1.5-liter engine developed by Huawei and a 40.6 kWh battery pack supplied by CATL, the M7 will be able to go as far as 1,220 km (758 miles) on a full tank and 100% battery charge. It consumes 6.85 liters of fuel per 100 km, well below the 7.8 liters of Li Auto’s L9 SUV and the 10.8 liters of the BMW X7.
• The car uses Huawei’s HarmonyOS operating system, enabling drivers to access “all the mobile services“ from Huawei’s app store, Richard Yu, chief executive of Huawei’s consumer business group said during a press conference.
• The six-seater luxury SUV will have a starting price of RMB 319,800 ($47,737) and will be delivered to customers in August. More than 600 Huawei stores around China will provide test drives starting July 23, and that number will be increased to over 1,000 stores by year-end, according to Yu.

Context: Huawei and its manufacturing partner Sokon have seen a steady increase in sales of the M5, their first vehicle under the Aito brand, shipping 7,021 crossovers in June, a 40% increase from a month earlier.

• According to the latest figures, Aito has reached total delivery of 18,317 units in just four months since delivery began in March. Prior to this, the two companies had experienced an initial setback, delivering only around 8,000 Seres-branded electric crossovers in 2021 after unveiling in April, last year.
• Huawei’s core business growth is still under pressure from US sanctions with revenue dropping by 14% year-on-year to RMB 131 billion in the first three months of 2022, CNBC reported. The smartphone maker has also partnered with state-owned automakers like BAIC and Changan to make EVs.
• Domestic EV makers Nio and Li Auto released their new crossovers, the ES7 and the L9, last month, respectively, and scheduled delivery to begin in August. Another rival Xpeng Motors is set to launch its second SUV model G9 in the same month and will begin delivery in September, with pricing expected to start at more than RMB 300,000.

Chinese automakers have moved quickly in the first five months of 2022, securing a lion’s share of the country’s electric vehicle market. The country’s EV makers are likely to keep that momentum going for the rest of the year, according to management consultant firm AlixPartners.

Domestic auto brands have extended their lead over their foreign rivals in the EV segment this year, making up 85% of all new EV sales in the first five months of 2022, up from 80% in 2021 and 74% in 2020, official figures show. This number may remain unchanged by the end of the year as Chinese brands continue to launch more new EV models than their foreign counterparts, Stephen Dyer, co-leader of AlixPartners’ Greater China business, told TechNode on Thursday.

However, as more traditional global automakers prepare to launch new EVs in the next few years, this share will likely go down due to the increased availability of foreign EVs, Dyer said, predicting an increasingly competitive environment for less experienced automakers.

China’s growing EV industry is holding up better than that for combustion engine vehicles and will likely maintain an upward trend in the coming months, despite Covid-19-related lockdown measures and supply chain constraints. AlixPartners projects that there will have been 5.1 million EV sales in China by the of the year, representing a 45% increase year-on-year and accounting for 22% of total new car sales.

With that said, overall auto sales may fall by 11% year-on-year to 23.4 million units in 2022, as stringent Covid control measures disrupt offline sales, the firm said during an online briefing on Thursday. Meanwhile, supply chain issues will continue to be a headwind for Chinese automakers until 2024, when chip supply issues will largely be resolved, allowing China’s auto sales to return to normal growth rates, according to Dyer.

Chinese EV makers have been moving upmarket and squeezing most international competitors out of their home market. Major Chinese automaker BYD’s EV sales more than tripled to 507,314 units as of May this year, driving its market cap to nearly $130 billion and making it the third-largest automaker in the world in early June.

SAIC-GM-Wuling, a joint venture between General Motors, SAIC, and Wuling Motors, is by far the country’s second-biggest EV maker, with sales of 164,552 vehicles over the same period, mostly thanks to its affordable Hongguang Mini EVs. US-listed EV makers Li Auto and Nio last month launched their new electric crossovers with price tags starting from RMB 459,800 ($68,418) and RMB 468,000 respectively, aiming to take on luxury carmakers such as BMW and Mercedes-Benz.

Tesla and Volkswagen are the only two global automakers with a major presence in the Chinese EV race, selling around 172,000 and 54,000 vehicles respectively to local customers from January until May. In November, Volkswagen moved to replace its China head Stephan Wöellenstein, in part due to lower-than-expected EV sales, according to a Reuters report. The German automaker announced on June 17 that it has set up a regional China board with a new leadership team that includes Marcus Hafkemeyer, a former adviser at Huawei, as technology chief.

US-listed Chinese electric vehicle makers Xpeng Motors, Li Auto, and Nio are undergoing significant restructuring as rising costs of raw materials and supply chain disruptions cut into profit margins. Meanwhile, EV battery makers are upping their investment to increase production capacities as China continues an accelerated shift to EVs.

Chinese EV makers are restructuring their businesses as challenges grow

Having enjoyed exponential growth over the past two years, Chinese electric vehicle startups are showing signs of contraction as supply chain constraints and rising raw material costs (partly worsened by the Covid-19 pandemic) continue to weigh on the industry. 

Facing a serious slowdown in economic growth and a resurgence of Covid-19 outbreaks, the US-listed Chinese EV trio of Nio, Li Auto, and Xpeng Motors are undertaking thorough reorganizations, laying off workers, and shifting away from non-core projects to meet their growth targets. The companies have been handling these challenges relatively well, but the outlook going forward is a bit unclear.

Xpeng Motors: Xpeng is facing a significant setback in its global ambition. Several senior executives, including vice president of overseas sales He Liyang, recently left the Guangzhou-based automaker amid a comprehensive restructuring across the company meant to streamline operations and save expenses, Chinese media LatePost reported on May 26, citing people familiar with the matter. The departures come after the EV upstart experienced lackluster sales of merely 438 vehicles in Norway in 2021, while leader Tesla took a nearly 20% market share in the country as it delivered more than 20,000 EVs over the same period, according to official figures.

In an effort to pare back losses, the Alibaba-backed EV maker is trimming its sizable staff in several major divisions, including a software team developing intelligent cockpit solutions and its data management department. As part of the change, Zhao Hengyi, a tech lead on Xpeng’s in-car voice assistant, left his position in March. The company also cut some of its plans of cultivating some fresh graduates, with dozens of them recently having their job offers rescinded.

Xpeng has been known to spend cash more quickly compared with peers. It posted a record loss of RMB 1.7 billion ($268.3 million) in the first quarter of 2022, widening from RMB 1.29 billion in the previous quarter. Analysts had warned of more losses to come from April to June due to high material costs and recent Covid lockdowns in China. The company earned a gross margin of only 12.2% during the first three months of this year, far lower than the 22.6% and 14.6% posted by rivals Li Auto and Nio, respectively.

Li Auto: A relative latecomer in a competitive industry, Li Auto is also facing a critical juncture and has scaled down some of its recruitment plans as it anticipates tough times ahead, the LatePost report said. Eight-year-old Li Auto recently lowered its delivery target for this year by 15% to 170,000 vehicles and planned to recruit 2,000 fewer people than it had initially planned, as the company worried about sales performance in the face of an economic downturn.

In anticipation of it becoming harder to get capital as investor sentiment worsens, Li Auto is also downsizing. Since March, the company has cut 20% of its full-time employees in its enterprise system development team after a large hiring spree, while dismissing some workers in its camera research and development team, formerly set up by then technology chief Wang Kai, LatePost reported.

The Meituan-backed EV maker was hit harder than rivals by the recent wave of Covid-19 lockdowns in the country, seeing its April deliveries down  62% and its second production model delayed amid the current supply chain disruption. The cuts could help the automaker reduce costs and survive a looming recession, yet investors were disappointed when the automaker forecast an even lower revenue target and warned of a worse margin for the second quarter of 2022.

Nio: Once the front-runner in the field of Chinese EV startups, Nio is making a pivot to battery-making, with plans to develop and potentially manufacture its own battery packs. The move marks a revamp of company strategy that comes as soaring material costs and supply chain bottlenecks slowing its factory output. Speaking to analysts during an earnings call on June 9, chief executive William Li said that the company now operates a team of over 400 employees on battery technologies and plans to launch an 800-volt battery pack for fast charging in 2024.

A new $32.8 million research facility is also slated for construction near its Shanghai headquarters this summer, aimed at developing lithium-ion battery cells and packs. This is in line with the EV maker’s battery strategy of both in-house development and outsourcing, a move that Li believes will benefit Nio’s overall competitiveness and profit-making capability in the long term. The company has warned that battery price hikes will continue to weigh on its margins in the second quarter.

Meanwhile, the company is reorganizing its autonomous driving team, which is at the core of its long-term ambition to become China’s top luxury car brand, following the departure of a long-time vice president of engineering in April. A team of more than 400 engineers, who work on diverse technology domains including sensors, algorithms, and system integration, has been reassigned to other departments to flatten the management structure for communication and combine functions where appropriate, Chinese media 36Kr reported.

Battery makers racing to expand capacity

Despite automakers’ short-term adjustments, the long-term prospects for China’s EV market remain robust with strong consumer demand. In response, major battery makers have kicked off a fierce expansion race in the hope of scaling up supply to meet the demand and take a larger market share. Government-backed industry group the China Passenger Car Association (CPCA) has maintained its forecast of 5.5 million passenger electric vehicle sales for this year in China despite the ongoing Covid-19 outbreaks across the country. 

Here are some of the major players’ expansion plans:

CATL is moving to become more directly involved in lithium mining in order to make its own supply of the EV battery material, thanks to soaring prices. The Chinese battery giant recently won approval to build a new lithium plant with a mining claim on nearly 1,600 acres in the central province of Jiangxi, state media CLS reported on June 1, citing government documents. The new RMB 2 billion ($297 million) facility would be capable of producing 30,000 tons of battery-grade lithium carbonate annually and is scheduled to be in production in  2023.

BYD is making a similar move and is said to be on the verge of closing deals to acquire six lithium mines in Africa, which experts estimate could allow the company to produce about 1 million tons of lithium carbonate, which translates into at least 27.78 million EVs. A BYD executive confirmed that it will supply lithium-ion batteries to Tesla “very soon” earlier this month. There has also been speculation that Nio and Xiaomi are looking at sourcing batteries from the company as well.

Gotion High-Tech is the latest Chinese battery maker to expand its local production by partnering with prominent players like Volkswagen and Great Wall Motor. The battery supplier announced (in Chinese) on May 31 that two new facilities have been put into production with a combined capacity of 30 gigawatt-hours (GWh) each year. The company is on track to double its total capacity to 100 GWh by this year and expand that number to 300 GWh in 2025.

On Tuesday, Li Auto announced the L9, a full-size, three-row sports utility vehicle, as part of its stated ambitious plan to achieve 1.6 million vehicle sales by 2025. The car’s starting price is less than half that of similar offerings from the likes of BMW and Mercedes-Benz.

Why it matters: With delivery planned to begin in August, the six-passenger L9 SUV will be the second production model from Li Auto and the Chinese EV maker appears to be confident that it might become a hit.

• Speaking to reporters on Wednesday, chief executive Li Xiang declined to reveal specifics about order volume, but said that the L9 will outsell its existing Li One, which was the top-selling large new energy SUV in China last year, according to official figures.

Details: The L9, a plug-in hybrid, is described by the company as the pinnacle of large luxury SUVs, with what it says is a spacious interior specifically for Chinese three-generation family households. The automaker said the model offers passengers more room than other luxury automaker offerings.

• The plug-in hybrid has a driving range of 215 kilometers (134 miles) on a full charge but can drive for about 1,315 miles with a full fuel tank and a full charge, a 20% increase compared with the company’s first model. It accelerates to 100 km in 5.3 seconds, according to Li Auto. 
• The model comes with many high-end tech features. It has five screens, including two 15.7-inch touch-sensitive ones in the middle of the dashboard that control the in-car entertainment system, two smaller ones around the steering wheel,  and an OLED television screen for rear-seat passengers.
• The vehicle uses a combination of 24 sensors to detect and predict road conditions, including eight 8-megapixel cameras, a long-range lidar unit, and two Nvidia Orin AI chips to enable autonomous driving.
• The L9 will only enable assisted driving on highways, once delivered; the company has not revealed when its car system will support autonomous driving in city traffic. Its rival Xpeng Motors plans to send an over-the-air update that would allow its vehicles to drive autonomously on urban roads later this year.
• The vehicle will sell for RMB 459,800 ($68,418), a price that the seven-year-old automaker claims is lower than any other similar SUV on the market. For comparison, the BMW X7 and the Mercedes-Benz GLS crossovers start at RMB 1 million and RMB 1.07 million in China, respectively.

Context: Meituan-backed Li Auto has been at the forefront of the Chinese EV field with just one model on sale, recording deliveries of 90,491 Li One vehicles in 2021, a 177.4% increase from a year earlier. The sales number is close to the sales of all three of rival Nio’s models over the same period combined.

• CEO Li Xiang has set an ambitious target of delivering 1.6 million vehicles annually by 2025, according to an internal memo obtained by Chinese media outlet Caixin in February 2021.
• Li said earlier this month that monthly delivery of the latest model could reach more than 10,000 units starting from September, although investors now reportedly expect that number to be around 5,000-6,000 units due to supply chain constraints and Covid-19 control measures.
• Earlier this month, Nio also launched a new SUV model, the ES7, with a starting price of RMB 468,000. Alibaba-backed Xpeng said in April that it will launch its second SUV model, the G9, this month.

READ MORE: Drive I/O | Nio, Xpeng, and Li Auto face more challenges after a mixed 2021

Huawei has lowered its forecast for its car deliveries in partnership with various automakers this year due to worsening supply chain issues impacting the country’s auto industry, according to senior executives.

Details: Speaking to analysts on Tuesday, Huawei’s rotating chairman Hu Houkun confirmed that the company has scaled back its expectations for car sales and is now seeking support and understanding from the auto industry as it “is susceptible to making mistakes” as a newcomer (our translation).

• Hu also underscored plans to launch new vehicle models with several partners this year, without revealing any further details, and reiterated Huawei’s position to partner with automakers on vehicle technology rather than making its own cars, Chinese media outlet Caixin reported on Wednesday.
• Hu made the comment a week after Huawei’s chief of consumer and auto business Richard Yu admitted for the first time that ongoing supply chain disruptions, such as microchip shortages and soaring prices, have impacted the firm’s sales targets for its auto business.
• Speaking to a Chinese auto journalist on April 18, Yu talked about the Aito M5, the first premium electric SUV co-launched by Huawei and its partner Sokon in December, saying that sales of between 100,000 and 200,000 vehicles for the year would likely be a best case scenario.
• That is a significant cut from its original goal of selling 300,000 Aito-branded vehicles annually, which was announced during a company meeting early this year, Caixin reported (in Chinese).

Context: Sales of the Aito M5 appear to have run into a brick wall, with just over 5,000 vehicles sold during the first quarter of 2022. The luxury crossover, powered by Huawei’s HarmonyOS operating system, was launched at a price of RMB 250,000 ($39,053), but the base model cost will be increased by RMB 10,000 starting from May 5. The companies behind the model blamed soaring raw material costs for the price hike.

• Meanwhile, Sokon has ended production of the Seres SF5, its first EV model jointly developed with Huawei, after months of lackluster sales. The Seres SF5 sold around 8,000 units in 2021, while EV startups Nio, Xpeng Motors, and Li Auto each recorded deliveries of nearly 100,000 cars.
• The Chinese telecommunication giant also has plans to launch new EV models with state-owned automakers Changan and GAC this year, although another partner BAIC has not yet delivered new Arcfox-branded vehicle editions beyond the initial standard model, which were set to be equipped with Huawei’s advanced driver assistance system and released last April.

Although Nio, Xpeng Motors, and Li Auto recorded explosive growth in 2021, the US-listed share prices of the Chinese EV trio still trade much lower than their all-time highs. As the poster children of China’s electric vehicle revolution, the three automakers reported in March mixed results for 2021, with record revenue and significant losses. 

All three EV makers have seen doubled revenues and deliveries surge in their home market. And yet, having lost a total of nearly $10 billion in just 2021 alone, the US-listed EV trio is still struggling to make money. The share prices of Nio and Xpeng have slumped to under $30, falling over 60% from their respective highs two years ago, as they show no signs of turning a profit any time soon while facing risks of delisting from US exchanges.

Xpeng is expanding at a faster pace and higher cost than its competitors. In 2021, the company posted its biggest net loss in its eight years of operations, while revenue more than tripled to nearly RMB 21 billion ($3.3 billion). Li Auto has managed to make its business more efficient than its rivals, reporting a net loss of RMB 321.4 million last year, which is less than one-tenth of Nio’s and Xpeng’s losses. Nio’s sales growth slowed markedly last year, and yet the company earned the most among the three, thanks to its higher-margin luxury cars.

Key figures

Strong growth: Xpeng stole a march on Nio in the Chinese EV space in 2021, with its deliveries jumping 263% year-on-year to 98,155 vehicles. Nio, meanwhile, delivered 91,429 vehicles with a 109.1% yearly growth rate, Li Auto delivered 90,491 vehicles. Although Xpeng delivered the most vehicles among the three EV companies, it earned the least due to a lower selling price of RMB 196,000 for its offerings, almost a half of Nio’s and Li Auto’s prices. 

Heavy losses: With an aggressive expansion of its sales footprint and production capacity, Xpeng reported a record loss of RMB 4.86 billion last year, exceeding Nio’s RMB 4 billion for the first time over the past four financial years. Nio’s annual loss was 24.3% lower than a year ago, helped by growing sales, but the company expects to double its spending on research and development this year to ramp up the development of its self-driving technology. Li Auto once again proved to be better managed in terms of profitability. It increased net profit by 175% to RMB 295.5 million in the fourth quarter and kept annual losses far lower than competitors.

Other takeaways

New models: All three companies promised to speed up the launch of new models to keep their businesses strong, despite an intensifying global supply chain crunch. Nio began deliveries of its first sedan ET7 to customers in the eastern city of Hefei on March 28, with deliveries of its second sedan ET5 expected to start in September. In addition, the company is rushing to launch ES7, a new medium-sized SUV featuring its latest assisted driving technology, in the third quarter. During the same period, Xpeng is expected to deliver its second SUV model G9, in the hopes of grabbing a share of the high-end market from its peers. Meanwhile, Li Auto, which currently only has one model, will launch its second SUV L9 by June of this year, chief executive Shen Yanan confirmed during its earnings call on Feb. 25.

New plants: All the three EV makers are expanding their manufacturing capacities aggressively as orders continue to grow faster than supply. Nio’s second factory, scheduled for completion in Hefei in the third quarter, has the potential to produce 300,000 vehicles a year, the same capacity as its first plant, according to CEO William Li during the company’s earnings call on March 25. Both Xpeng and Li Auto plan to have three plants in the country by the end of 2023 with a total capacity of at least 500,000 and 750,000 vehicles, respectively, executives told investors during their earnings call. However, production could be disrupted by various supply chain shortages in the short term, while Xpeng CEO He Xiaopeng expects this situation to improve starting the second half of this year.

Conclusion

Looking ahead, the Chinese EV trio is still under pressure to capture demand and drive profitable growth in the short term. They face severe production problems due to chip shortages, rising material prices, and the recent lockdowns in Shanghai and nearby regions. Still, the companies are plotting a path to profitability in the long term, with some analysts expressing optimism about the EV upstarts achieving these goals. The gross margins for Nio, Xpeng, and Li Auto had improved to 18.4%, 12.5%, and 21.3% last year, respectively, and executives say that the companies could break even no later than 2024. 

As the industry faces challenges with supply chain constraints, including rising battery prices and a chip crunch, the sequential improvement in Li Auto’s gross margin could be “more limited” in 2022, Bernstein analysts led by Eunice Lee wrote in a March 1 note. And yet, that number could reach 25% in the longer term, as production volumes ramp up and fixed costs decline, Lee added.

In February, BYD overtook a Volkswagen’s joint venture in China (SAIC-Volkswagen) to become the second-largest passenger vehicles maker in the country, thanks to a surge in the company’s plug-in hybrid vehicles sales, industry data showed on Tuesday. Another Volkswagen Chinese joint venture, FAW-Volkswagen, kept its top seller position. 

Why it matters: This marks the first time that sales of a Chinese automaker have overtaken that of a long-established Volkswagen joint venture, as homegrown private companies ride a wave of strong demand for electric vehicles.

• Volkswagen has set up two main joint ventures in China with state-owned carmakers, SAIC and FAW Group. The FAW-Volkswagen has maintained its top position while BYD surpassed SAIC-Volkswagen in February. 

Details: Last month, BYD’s passenger vehicles retail sales grew 340% from last year to 89,000 units. Retail sales of SAIC-Volkswagen dropped by 19% to around 80,000 vehicles compared to the same timeframe the previous year, according to figures published Tuesday by the China Passenger Car Association (CPCA).

• SAIC-Volkswagen was slightly ahead of BYD in wholesale performance, moving 91,000 vehicles compared to the 90,000 units dispatched by BYD in February.
• FAW-Volkswagen led wholesale and retail sales figures last month, sold 129,000 and 105,000 vehicles, respectively.

Why BYD sold well: Industry analysts attributed BYD’s rising sales to stronger domestic demand for plug-in hybrid cars and the company’s capability to offer a wide range of plug-in hybrids. 

• BYD’s performance was buoyed by rising oil prices in recent months, resulting in the growing popularity of plug-in hybrids in the country, CPCA secretary general Cui Dongshu said during a Tuesday online briefing.
• Plug-in hybrids are generally more energy-efficient than petrol cars and much cheaper than all-electrics. BYD, a major player in the segment, was able to grab market share from traditional carmakers, according to Cui.
• BYD is the only Chinese company with a complete lineup of affordable and premium sedans, hatchbacks, and sports utility vehicles. That is a big reason why the company is taking advantage of the huge increase in demand for all-electrics and plug-in hybrids, said Tu Le, managing director of consultancy Sino Auto Insights.
• Another reason for their success is that BYD is the only Chinese automaker vertically integrated, manufacturing its own batteries and chips, Le said, adding that it could be difficult for its competitors to keep up due to their reliance on parts suppliers to ensure production.

Context: The Shenzhen-based BYD has also seen faster growth in electric vehicles sales, recording a more than sevenfold sales growth year-on-year in February with 88,283 deliveries, which were almost evenly split between all-electrics and plug-in hybrids. 

• The Warren Buffett-backed auto giant is expected to achieve sales of 1.3 million vehicles in 2022, a 78% increase from a year earlier, Chinese outlet Jiemian reported on March 3, citing analysis from Citigroup.

Note: This article was first published on TechNode China (in Chinese).

Ever since Huawei announced its push into the Chinese electric vehicle (EV) space last year, the industry has been watching the telecom giant’s moves. 

Huawei had some modest successes in the past year, first partnering with BAIC and Changan on their self-driving technologies. It also provided the powertrain system to a little-known Chinese automaker Seres, and its SF5 model debuted last April.  

Now it looks like the tech giant has pinned its hopes on a new car model released in partnership with Seres. Last December, the two companies released Aito M5, the first EV model equipped with HarmonyOS, Huawei’s alternative to Google’s Android operating system. (Huawei developed Harmony after Washington banned Google from working with Huawei in 2019.) 

On Feb. 18, TechNode China had a chance to test drive the Aito M5 in the southwestern city of Chongqing, home of the Seres’ factory. So how did Huawei do in EV tech? Here are our takeaways. 

Seamless connectivity for existing Huawei users

Aito M5 is the first luxury EV model manufactured by Seres. The hybrid sports utility vehicle claims to reach 1,242 km (772 miles) on a single charge and tank, with a price range from RMB 249,800 to RMB 319,800 ($39,518 to $50,592). By comparison, Chinese EV maker Li Auto’s plug-in hybrid crossover Li One, the best-selling medium-to-large size SUV in China last year, features a maximum range of 1,080 km and is priced from RMB 338,000.

The in-car version of the HarmonyOS shares a similar design language with Huawei’s smartphones along with some of the most frequently-used features. For example, we could activate most of the car’s functions by voice control. The car dashboard also has a shortcut bar for fast access to the most used features.

Aito M5 came with many apps, including a navigation map app, streaming services such as Tencent-backed Ximalaya FM, and Alibaba’s Youku. You can use Youku to watch videos or relax with music or audiobooks while driving when stuck in traffic. An alert system will also notify users of significant changes in road traffic.

Huawei’s ability to integrate its ecosystem with the car differentiates Huawei from other EV players. Huawei devices, smartphones, tablets, smartwatches can seamlessly work with the vehicle. Phone calls and messages could be synced on Huawei’s devices, including the car’s dashboard. That will probably become one of the biggest competitive advantages for rival EV players. 

Fast and accurate voice assistant

Huawei also brought a powerful in-car voice assistant called Xiaoyi to the car. The assistant is powered by Huawei’s in-house cloud infrastructure. During the test drive, the assistant provided accurate responses promptly. It recognized voice commands from riders in the front passenger seat and from the rear seats, opening windows and unlocking the doors for the respective speaker, for example. Huawei said Xiaoyi can control all the features in the vehicle.

Riders can even issue multiple commands to Xiaoyi without repeating the wake word (“Xiaoyixiaoyi” in Chinese). The assistant will continue to listen for another request after it completed the previous ones.

Huawei’s virtual assistant also serves as a voice guide. For example, Xiaoyi suggested turning on the in-car air purifying function when the car drove into a tunnel and encountered bad air quality. It also searched for a charging station and navigation when the vehicle battery ran low. 

Speaking to a virtual voice assistant for those control functions within the car is well-developed in the industry. Major rivals such as Nio and Xpeng have similar offerings. Nio owners could start a conversation with a voice assistant using the three-syllable phrase “Hi, Nomi,” while Huawei’s wake word “Xiaoyixiaoyi” has four syllables. Alibaba-backed Xpeng in late 2020 said each of vehicle owners used its voice assistants effectively 25 times per day on average, compared with 13 times from part of Ford models, Chinese financial media Caixin reported.

Integrating home and auto 

The Aito M5 helps Huawei build a connection between an EV and its wide range of digital and smart home devices. That connection is taking shape as Huawei and its auto partner have introduced dashboard-based smart home management tools for users to integrate their homes into the vehicle.

Being able to sync all their Huawei devices means users can read and send text messages directly by voice command in the car, then continue listening to music and podcasts at home exactly where they left off from the in-car system. However, the integration may not work as seamlessly for non-Huawei users. 

Challenging road ahead

The Aito M5 showcases in-car technologies that Huawei offers: a dashboard that performs many of the same functions as Huawei smartphones and a network that allows remote connectivity to a plethora of its home appliances.

And yet, the Chinese telecom giant and its obscure manufacturing partner will need to build a reputation for building quality cars. The Aito M5 is entering a Chinese EV market crowded with established players, competing heads on with similarly-priced rivals, such as Tesla’s Model Y and Li Auto’s popular crossover Li One. 

Meituan faces a profit squeeze as Chinese regulators order platforms to cut fees to help small businesses. Chinese e-commerce giant Alibaba is exploring rival JD.com’s direct sales model, one that Alibaba’s billionaire founder and former chief executive Jack Ma predicted would become “a tragedy in the future” in 2015. China’s Craiglist, 58.com, came under public scrutiny for recommending fake jobs to a user who was later trafficked to Cambodia as a “blood slave”. Kuaishou planned to block links to Alibaba and JD.com while building its own e-commerce business. Tencent closed social group-buy mini-program Xiao’e Pinpin, while ByteDance pulled the plug on a Shein-like fashion site just three months after its launch.

Meituan faces regulatory headwinds

News: Chinese on-demand delivery platforms, led by Meituan and Ele.me, are facing regulatory headwinds for monetizing the services they provide. Fourteen Chinese authorities, including the National Development and Reform Commission, issued a new guideline that requires goods delivery platforms to cut fees for restaurants. The guideline involves supporting policies for various service industries from catering and restaurants, to retail, tourist travel, and transportation. It’s designed to lower the operation costs for merchants who have been hit by pandemic prevention measures, according to a statement announced Feb. 18. Shares of Chinese life services app Meituan fell more than 15% on the news.

Insights: Reduced service fees will impact the financial performance of local life services giants like Meituan, for which food delivery accounted for more than half of its revenue in the third quarter of 2021. Chinese food delivery platforms, such as Meituan and Alibaba-backed Ele.me, have been criticized for charging excessive commissions from small merchants over the past few years. In one of the biggest merchant push-backs at the peak of the Covid-19 outbreak in April 2020, the Guangdong Restaurant Association accused Meituan of exploiting merchants by charging excessive commission rates that “most of the restaurants can’t endure.” In China, food delivery platforms charge commissions based on merchants’ size. Some small restaurants have to pay up to 18% to 20%, higher than the 10% to 15% commission rate proposed by the All-China Federation of Industry and Commerce in 2021.

News Link: TechNode

Cat filling in a dog’s shoe

News: Alibaba launched a new e-commerce service called Maoxiang under the direct sales model within its business-to-consumer marketplace Tmall on Feb. 18. The model would give the e-commerce giant more control over product quality, sourcing, and delivery in a manner similar to rival JD.com. The platform, which will be focused on consumer electronics products in the beginning stage, is in discussions with consumer electronics brands, including smartphone maker Realme, to join the platform, local media outlet LatePost reported. An Alibaba executive told local media outlet Guancha that Maoxiang won’t replace Tmall’s branding.

Insights: China’s top two e-commerce sites, Alibaba and JD.com, started with very different business models. Alibaba counts marketing services and commissions from third-party merchants as revenue sources, while JD earns a mark-up by selling products that it holds. The question of which model is better has been a long-running talking point. Alibaba’s “platform” model can yield higher margins than JD’s asset-heavy direct retail approach, which has to cover various extra costs, from warehousing to delivery. However, JD’s direct sales model offers better services with more quality control and strong logistics.

However, the distinction in the business model between the two companies has increasingly blurred. For example, JD expanded to adopt Alibaba’s platform model as early as 2017, while Alibaba runs a grocery store chain called Freshippo, which uses the direct retail model. But this is the first time that Alibaba has added a direct retail business to its core e-commerce marketplace Tmall.

With its model highly reliant on online user traffic, Alibaba is trying out new models to stave off the challenge of short video apps like Douyin, Kuaishou, and social commerce apps like Pinduoduo and Xiaohongshu. Moreover, tapping into a model that offers better products and services aligns with China’s consumption upgrading trend.

The new initiative is a major business shift led by Turdy Dai, the newly-assigned head of Alibaba’s Chinese e-commerce business. Dai reshuffled the back-end operations of Taobao and Tmall to bring the two pillar businesses together. 

News Link: TechNode (story 1, story 2)

58.com under fire amid job scam accusations

News: Chinese web-based classified site 58.com has come under fire after a Chinese national accused the site of hosting fraudulent job advertisements, which led him to fall victim to a human trafficking gang in Cambodia. The victim, surnamed Li, found a nightclub security guard position on 58.com last May. He then traveled to Guangxi province for an interview but was smuggled into Cambodia by a criminal gang and forced to work various telemarketing fraud schemes. Since September, his captors began repeatedly extracting blood from him, putting his life in danger. Police rescued Li with the help of local organizations. 58.com said in a Feb. 17 response that it would cooperate with the police investigation, although it had “not yet established” whether the fraudulent job ad had appeared on its platform.

Insights: As China’s Craiglist counterpart, 58.com provides classified ads for a diverse range of categories, such as recruitment, real estate, and second-hand goods and cars. Once a tech major in China, the company has lost momentum over the past few years after gaining a controversial reputation for being involved in many criminal lawsuits. This current scandal brings 58.com’s business ethics to public attention again. Other Chinese tech companies have also faced criticism for providing space to fraudulent or misleading advertisements, as long as they bring in revenue. In 2017, Li Wenxing, 23, was found drowned months after being recruited online by a pyramid scheme posing as a software company via Boss Zhipin, a direct hiring site. Apart from online recruitment, misleading health and medical information online is another area that has drawn public ire, most prominently in the case of Baidu’s “Wei Zexi Incident”.

News Link: Reuters

Kuaishou to block external links to Taobao and JD

News: On Feb. 22, Chinese short video app Kuaishou announced a plan to block external links to Taobao and JD.com, beginning in March. Taobao product links will be barred from displaying within the video app, while JD links will be blocked from showing in the shopping cart during livestreaming sessions, but will still be accessible through shopping charts in short videos and on information pages. The company has attributed the forthcoming changes to “agreement adjustments” without providing further details. 

Insights: Short video apps and e-commerce platforms have historically worked closely together within the trend of content-driven e-commerce. Video apps boast traffic and content, while e-commerce sites have brands and supply chains. As short video sites, notably Kuaishou and Douyin, build up their own e-commerce businesses, they want to keep users within their own ecosystem instead of sending buyers to other platforms to make purchases. Kuaishou reportedly achieved a gross merchandise value of RMB 680 billion ($108 billion) in 2021 and plans to achieve between RMB 900 billion to RMB 970 billion GMV in 2022.

News Link: TechNode

Business scale-back of tech majors

News: Tencent will shut down its social group-buy mini-program Xiao’e Pinpin, a feature that was expected to rival Pinduoduo when it was launched in 2020. Dmonstudio, a Shein-link fashion shopping website reportedly owned by ByteDance, is set to shut down three months after its launch. The lack of user interest is the most likely reason for the closure, according to local media. Meanwhile, JD Finance, the financial arm of JD, has stopped providing specialized services for college students, while ByteDance sold the operating body of online brokerage service Dolphin Securities to ChinaLin Securities.

Insights: Chinese tech majors are downsizing amid weakening consumer spending, intensified competition, and tightening regulations. China’s six major tech firms, collectively known as BATTMD (Baidu, Alibaba, Tencent, ByteDance, Meituan, and Didi), have closed or scaled back more than 20 projects since 2021, according to a rough count by local media outlet Geek Park. Edtech, fintech, and businesses that affect the benefits of small merchants and the daily life of regular people, such as grocery delivery, are facing business adjustments due to tightened regulations.

News Link: Guancha, TechNode, SCMP

Chinese electric vehicle (EV) sales achieved a strong momentum over the past two years, reporting robust figures in January. They are expected to reach 5.5 million units this year. Tesla ended 2021 with a solid profit performance driven by both strong consumer demand in China and Europe, and cost improvement from expanded production in its Shanghai factory. Battery maker CATL retained its competitive lead, dominating the global EV market last year, followed by a group of smaller domestic competitors. BYD’s chip unit is racing the clock to complete an initial public offering in the mainland stock market, thanks to explosive growth in EV sales amid a worldwide chip shortage.

January EV sales signal a strong 2022

News: China’s electric vehicle market remains buoyant despite the seasonal holiday slowdown and the looming impact of the recent subsidy reductions. January retail sales of new energy vehicles (NEVs), including all-electrics, plug-in hybrids, and hydrogen cars, totaled 347,000 units and a 132% yearly increase, according to figures published by the China Passenger Car Association (CPCA). However, this figure is a 27% decline from last December, as China auto sales in January and February tend to be affected by the Lunar New Year holiday (roughly the first two weeks of February this year) when consumers often delay purchases and automakers halt production, the industry group said.  

Insights: The market was relatively flat during the first half of January due to a last-minute push by automakers to get their cars delivered in December. Yet sales recovered fairly quickly during the last two weeks of the month, said Cui Dongshu, secretary general of the CPCA. Cui remained positive about the impact of Beijing’s 30% subsidy cut on EVs, with CPCA affirming its previous forecast of 5.5 million vehicle passenger EV sales in China this year. Although multiple automakers have raised prices for their EVs just enough to offset the subsidy cut, Cui expects overall EV prices to maintain relatively stable, as automakers have been taking various measures such as diversifying sourcing of parts to reduce costs.

News link: TechNode 

Tesla posts second profitable year as Shanghai factory reaches full capacity

News: Riding a wave of growing customer interest for green energy vehicles, Tesla on Jan. 26 posted a profit for the second year in a row. It ended 2021 with a net profit of $5.5 billion, a more than sixfold yearly increase. Annual deliveries also surged 87% in the year, marking the fastest pace of growth since 2019, thanks to strong sales in China and Europe. The US EV giant expects to achieve 50% annual growth in vehicle deliveries “over a multiyear horizon,” while warning that the ongoing global chip shortage could dent its production output “across all factories” this year.

Insights: Rising demand in China has been a key driver for Tesla’s growth. The total sales of Chinese-made vehicles reached 484,130 units last year, accounting for over half of its global deliveries, China Passenger Car Association (CPCA) data shows. The company’s Shanghai factory also plays a prominent role for its global expansion, becoming a “main export hub” with a shipment of around 163,000 vehicles last year to EU, Japan, among other regions, said Tesla’s financial chief Zachary Kirkhorn during its fourth-quarter earnings call.

Now, as EVs continue their current growth trajectory, Tesla has planned to invest RMB 1.2 billion ($188 million) to increase the production staff of the Gigafactory Shanghai by a quarter to about 19,000, Bloomberg reported in November citing sources. The Shanghai plant, which began deliveries in late 2019, was designed to produce up to 500,000 vehicles annually and has been regularly running at a capacity of 450,000 units per year.

News link: TechCrunch 

Battery giant CATL’s dominance unabated in China’s EV boom

News: CATL’s dominance of the EV battery market has continued unabated. It retained its top spot as the world’s biggest battery vendor last year, thanks to an accelerated shift of consumers embracing EVs in China. The Chinese battery giant supplied 96.7 gigawatt-hours (GWh) equivalents of EV batteries in 2021, representing a 167% yearly increase. It commands a 32.6% global market share, according to data compiled by market tracker SNE Research. South Korea’s LG Energy Solution came in second with 60.2 GWh, while Chinese auto major BYD ran a distant fourth with 26.3 GWh. Smaller Chinese players Gotion High-Tech, CALB, AESC, and SVOLT all rank lower in the world’s top 10 battery makers and form a combined market share of around 8%.

Insights: This has been the fifth year CATL retained its position as the world’s biggest battery maker, buoyed by a rebound in EV demand in its home market in 2021. A total of 150 GWh of battery capacity were deployed into newly sold NEVs in China last year. That number is expected to grow by over 50% year on year to 230 GWh in 2022, according to a Jan.12 report published by Chinese brokerage Huaan Securities.

The battery maker is also quickly expanding its manufacturing capacity to meet a surging demand. In December, it kicked off production at its largest plant to date in Fuding, a city in the eastern Fujian province, with a designed capacity of 120 GWh per year. 

News link: TechNode

BYD’s chip unit to list on Shenzhen stock market

News: The chip unit of Chinese automaker BYD is racing to go public with an offering that could raise as much as RMB 2 billion ($314.4 million), after getting a green light from the Shenzhen Stock Exchange. The listing is expected in the next few months and it would become the first auto chipmaker to list in China. BYD Semiconductor became an independent subsidiary of the Chinese EV giant in April 2020 and mainly develops less advanced chips such as microcontrollers (MCUs) used for controlling simple functions in cars. The company has become China’s biggest MCU manufacturer with nearly two decades of chip-making experience, Chinese media Caixin reported last month, citing analysis from market research firm Omdia.

Insights: The imminent listing comes at a time when the Chinese EV industry has seen a strong rebound in demand, despite significant disruption due to the global chip shortage over the past year. BYD Semiconductor estimated its net profit will jump by up to 574% yearly to RMB 395 million in 2021. Revenues are projected to reach an upper limit of RMB 3.2 billion, an 122% increase from 2020. However, the company is still a tiny player in the global automotive MCU sector, which is dominated by Japan’s Renasas and six other chip powerhouses with a combined market share of 98%, according to figures from information services company IHS Markit.

And yet, investors have high expectations for the subsidiary. It has already raised RMB 2.8 billion from a list of big names including Xiaomi’s industry investment fund, Sequoia Capital China, and CICC Capital prior to the IPO filing. BYD’s stake will fall from 72% to 65% after the listing is completed.

News link: TechNode 

Hozon New Energy Automobile has raised more than RMB 2 billion ($316 million) in a recent round as part of its Series D, which could value the electric vehicle startup at around RMB 25 billion, Chinese media outlet LatePost reported Monday.

Why it matters: The investment reflects continued positive sentiment among private investors towards Chinese EV companies. China’s EV industry enjoyed exponential growth in 2021 and the outlook for the industry remains strong for the next few years. 

Details: This latest round marks the close of Hozon’s Series D at RMB 8 billion. Investors include Chinese rail company CRRC Corp’s investment fund and the state-run Shenzhen Capital Group, LatePost reported, citing unnamed sources familiar with the matter.

• The Zhejiang-based EV maker recently kicked off a new fundraising process, targeting a RMB 45 billion valuation, with plans to go public in Hong Kong later this year, according to the report.
• Big name investors also expressed interest during the round but did not make an offer, the report said. These include SoftBank’s Vision Fund, Abu Dhabi Investment Authority, and the United Arab Emirates’ sovereign wealth fund, among others. Some of these investors reportedly worried about Hozon’s ability to compete with other more established rivals in the entry-level EV segment (usually priced under RMB 100,000). 
• Some investors also see Hozon’s sales in the ride-hailing market as a worrying sign of its ability to attract buyers in the private EV market. About 9% of Hozon’s vehicle sales go to business clients, such as taxi fleets, according to chief executive Zhang Yong.
• Hozon was not available for comment.

Context: In October, Hozon announced it had closed an RMB 4 billion Series D1 led by China’s biggest cybersecurity firm, Qihoo 360. This was followed by another RMB 2 billion in new funding from companies, including battery giant CATL and automaker BAIC as part of its Series D in December, said LatePost.

• The automaker currently offers three entry-level EV models for sale and delivered 69,674 vehicles in 2021, a more than threefold yearly increase and the most in terms of delivery, after US-listed trio Xpeng, Li Auto, and Nio. 
• Hozon has chosen banks like Citic Securities Co. and China International Capital Corp. to arrange its Hong Kong IPO, which could raise as much as $1 billion, Bloomberg reported last week. The company, along with rivals WM Motor and Leapmotor, had a combined market share of 6% in the Chinese all-electric EV segment last year, according to Bloomberg Intelligence.

READ MORE: Drive I/O | Meet the newest upstarts likely to grab chunks of China’s EV market

Chinese tech giant Alibaba is launching a new online platform running a direct sales model, similar to rival JD’s, Chinese local media LatePost reported on Wednesday. The new platform, called Maoxiang (our translation), will first focus on consumer electronics. 

Why it matters: Alibaba is trying out different models to boost business growth amid weakening consumer spending, intensifying competition, and tightening regulations. 

Details: Alibaba plans to rebrand its business-to-consumer (B2C) marketplace Tmall app to Maoxiang, LatePost reported, citing unnamed sources. Alibaba’s B2C retail group led the project and launched it at the end of last year.

• Maoxiang will adopt a direct retail model. The online platform can sell branded merchandise directly to consumers, having more control over sourcing, quality, storage, delivery, and after-sales.
• For starters, the platform will focus on selling consumer electronics products, big-ticket items that JD also focused on during its early days.
• Alibaba is in discussions with several consumer electronics brands, including smartphone maker Realme, to join the platform. 
• SF Express and Danniao Logistics are possible couriers for the service to ensure next-day doorstep delivery, the report added.
• Alibaba didn’t respond to TechNode’s inquiry when contacted on Thursday.

Context: Alibaba and JD, two of the largest e-commerce platforms in China, rose to prominence by adopting different business models. Alibaba operates under a “platform” model, where it derives revenues from online marketing services and commissions from third-party merchants selling on its marketplaces. Meanwhile, JD runs more like an online supermarket and earns mark-up by selling products it holds. 

• JD expanded to adopt Alibaba’s “platform” model as early as 2017 by introducing retailers, small merchants, and individuals to its business.
• In January, Alibaba’s domestic e-commerce business launched a major organizational reshuffle to connect the back-end operations of the company’s two core e-commerce marketplaces Taobao and Tmall.

Meituan is testing Zhenxiang, a shopping review feature similar to the one used by lifestyle community platform Xiaohongshu, as the Chinese food delivery and local services giant aims to boost its e-commerce business.

Why it matters: Meituan, known as the “Amazon of services” in China, is testing the feature for its physical goods e-commerce service, while fending off competition from rivals like ByteDance and Alipay in the area of local lifestyle business.

READ MORE: ByteDance is trying to take a bite of Meituan’s cake

Details: Zhenxiang, a shopping review community, is being tested among a group of users, most of whom have already used its e-commerce service Tuanhaohuo.

• The feature is now displayed in the most prominent part of Meituan’s e-commerce interface for pilot users. It was launched in December but was initially only accessible through less conspicuous entry points.
• Zhenxiang allows users to post product evaluations and tips in the form of notes, photos, and short videos for other potential buyers’ reference. Users can also rate products with a five star system, from “bad shopping experience” to “highly recommended.”
• A Meituan spokeswoman confirmed that the company is working on the pilot project, adding that it’s just one of its usual range of experiments aimed at testing new features.
• By integrating the product review feature into the app, Meituan could drive its e-commerce sales under the Zhongcao model, a marketing strategy that was first popularized by Xiaohongshu, local media Lu Lu Finance explained.
• The term Zhongcao (“planting grass”) refers to the idea that favorable and comprehensive reviews of a product can sow the seeds of an urge to buy in consumers. The actual action of purchase is referred to as Bacao (“pulling up grass”) in Chinese. 

Context: Content has emerged as the driver of Chinese e-commerce over the past three years. Chinese tech platforms like Taobao, short video apps Douyin and Kuaishou, and China’s Quora-like site Zhihu have also leveraged the Zhongcao model to boost e-commerce growth.

• Meituan has begun testing an expansion into the sale of physical goods online, entering into partnerships with consumer electronics companies, cosmetics brands, garment brands, and physical bookstores in order to diversify the physical product offerings on the platform.

China’s electric vehicle (EV) sales soared in 2021, bucking the national trend of slowing auto sales. Local automakers have shown strong competitiveness against overseas counterparts. However, industry players may face new challenges: a looming price war among competitors will likely reduce profits, a UBS Securities analyst said on Tuesday.

Why it matters: There might be greater supply than demand in the Chinese EV market this year, since consumption could be reduced by slowing economic growth amid the recharged pandemic, Paul Gong, head of China auto research at UBS, told reporters on Tuesday.

• An easing chip shortage may also help EV makers return to normal auto production this year, Gong said. He warned that an intense “price war” would push the prospect of profitability further away for automakers in the short term.

Details: Still, the rise of domestic EV makers will be “the way of the future” in China, as local players have generally “achieved greater progress” in the development of products and technology than foreign auto majors, according to Gong (our translation).

• UBS projects cautious optimism in its outlook for the industry over the long term. It expects that, compared to its 2021 projection of 3 million vehicles, China’s EV sales will increase by 35% to more than 4 million vehicles this year. Sales could grow to 7.05 million units in 2025, according to UBS. 
• Sales of new energy vehicles, which include all-electrics and plug-in hybrids, increased by nearly 160% year-over-year to 3.52 million units in 2021, according to a statement published by China’s Ministry of Industry and Information Technology on Wednesday.

Read more: Drive I/O | Auto China 2021: A banner year for Nio, Xpeng, and Li Auto

Context: The number of passenger electric vehicles sold in China surged 169% year on year to nearly 2.99 million units in 2021, according to figures published Tuesday by the China Passenger Car Association (CPCA). That figure beat the estimated 2.4 million units the industry group made in June.

• Tesla China sold a record 70,847 locally-made vehicles in December and saw its total 2021 sales reach 320,743, taking the third spot in the list of China’s top-selling EV makers. BYD dominated the market with sales of 584,020 vehicles, followed by SAIC-GM-Wuling with 431,130 cars, CPCA figures showed (in Chinese).
• US-listed Chinese EV trio Nio, Xpeng, and Li Auto are among the top 10 sellers, each achieving deliveries of nearly 100,000 vehicles. German auto giant Volkswagen sold around 130,000 passenger EVs, more than doubling its 2020 total, according to CPCA.
• CPCA raised its forecasts for China’s NEV sales, including passenger and commercial vehicles, by over 10% to 6 million units in 2022 from the previous year. The association added that China will maintain leadership in the global EV race.

Nio on Saturday revealed its second fully electric premium sedan model ET5, featuring an automated driving system, a fresh design, and a lower price point, to reach a larger customer base.

Why it matters: Speaking to reporters on Dec. 19, chief executive William Li said he expects the Nio ET5, which is priced 25% cheaper than the brand’s first sedan model ET7, will help the company attract more younger and female buyers.

Details: The new ET5 sports sedan comes with the same hardware package as the ET7, including a dozen ultrasonic sensors, 11 cameras, a Lidar unit, and Nvidia’s Orin autonomous driving processors, which allow the vehicle to detect its surroundings using supercomputing power.

• The new sedan comes in a rainbow of nine different hues, including a soft pink, the first time Nio has used such a shade for its models.
• It also features an in-car information and entertainment system equipped with custom augmented reality (AR) glasses that can project information onto the windshield for drivers.
• Priced from RMB 328,000 ($51,430), the ET5 sedan is scheduled for delivery in the third quarter of 2022. The price could be as low as RMB 258,000 if a customer pays a monthly rental fee of RMB 980 for the use of batteries.
• Nio also announced Saturday that it will begin delivering the ET7 on Mar. 28, 2022. ET7 and ET5 can achieve more than 1,000 kilometers (621 miles) on a single full charge with a new 150kWh battery pack.

Context: With three existing models, the seven-year-old Nio had so far delivered 80,940 vehicles to customers this year, a 120% yearly growth rate. Nio’s peers Xpeng Motors and Li Auto delivered 82,155 and 76,404 vehicles respectively during the same period.

• With a similar price range, Nio’s ET5 will compete against Tesla’s popular Model 3, Xpeng’s P7, and Geely’s premium EV model Zeekr 001.

Chinese tech giant Tencent announced Thursday it was ending its content creator incentive plan called “Project Dawn” after prompting wide backlash from content creators.

Why it matters: The competition among tech giants for quality content is reaching a fever pitch in China, but creators are pushing back against what they see as attempts to devalue their work.

Details: Tencent’s open content platform said in a Thursday statement (in Chinese) that it has terminated its content creator incentive program “Project Dawn,” which aimed to lure original content creators with monetary rewards for their work. On top of that, the company apologized to creators that were affected by the program.

• Tencent launched the project in July, pledging to give RMB 10 million ($1.5 million) in subsidies to empower and attract more video content creators to its platform. The project aimed at creators from various popular platforms such as Bilibili, Xiaohongshu, and video apps like Kuaishou, promising to help the creators promote their content across platforms and increase their revenue. 
• Several creators on the Chinese video platform Bilibili began to voice their discontent (video, in Chinese) last week, claiming Tencent tricked them into joining the program, which failed to deliver its promises. 
• The creators claimed that Tencent ran the program through a number of multi-channel networks (MCNs), which would take as much as 90% of the one-off incentive fee of RMB 200 promised to each creator by the platform.
• Bilibili creators who gave their ID information to MCNs after joining the program found their videos, which had already been uploaded on Bilibili, were copied to the Tencent platform and labeled as exclusive content there. As a result, their accounts were subsequently blocked on other sites for alleged piracy. Tencent refuted these claims in its statement, saying that it has never labelled content exclusive, “nor has it tried to obstruct creators’ profile on other platforms.”
• Tencent said content creators that want to leave their platform can cancel their account, an option that only became available on Nov. 9. Those who want to stay will now get the promised income from Tencent directly, instead of through MCNs, the company said.

Context: This is not the first time Tencent has faced a content creator backlash. The company’s online reading arm China Literature was subject to an author revolt due to what they saw as exploitative rules in 2020.

READ MORE: INSIGHTS | Who owns ‘internet literature’?

Update: The story has been updated with Tencent’s statement on exclusive content complaints.

Huawei ramped up its involvement in the Chinese electric vehicle (EV) space on Monday, offering in Shanghai the first view of the Avatr 11 sports utility vehicle (SUV) with partners Changan Automobile and CATL. The first model in the Avatr brand, the car features a full suite of Huawei’s autonomous driving technology. Huawei partnered with carmaker Changan and battery supplier CATL a year ago to form the Avatr premium luxury brand of EVs.

Why it matters: The Avatr 11 electric SUV will be the second mass-produced car to get Huawei Hi, a complete automotive hardware and software suite that includes the company’s operating system Harmony OS as well as computing platforms for autonomous driving.

• The three companies expect the new models to take a significant share in the Chinese premium EV segment and to fulfill their ambitions to establish a “world-class, high-end” Chinese car brand, Changan Chairman Zhu Huarong said on Monday at a press conference in Shanghai.

Details: The first EV model produced with Changan and CATL features a supercomputer developed by Huawei and running at 400 trillion operations per second (TOPS). That compares with Tesla’s 144 TOPS for its two-chip full self-driving computer.

• The electric crossover will have a driving range of more than 700 kilometers (435 miles) in a single charge with batteries supplied by CATL. It will also boast a high-volt, fast-charging electrical system that will support a maximum of 200 kW of charging power. That is a bit lower than the charging power of Tesla vehicles which, offer up to 250 kW.
• Changan plans to build the Avatr 11 SUV in a manufacturing plant in the southwestern municipality of Chongqing. Annual capacity is projected to be 350,000 vehicles, with delivery to begin in the third quarter of 2022. Prices have yet to be released but Chinese media, citing Changan sources, have reported a figure around RMB 300,000 ($47,000).

Context: Changan, CATL, and Huawei announced their smart EV tie-up back in November 2020. That was followed by the establishment of a joint venture with the state-owned automaker as the biggest shareholder in Avatr.

• Changan, Ford’s Chinese manufacturing partner, in August announced goals to have 35% of its annual car sales, or 1.05 million out of 3 million vehicles, be EVs by 2025. Rivals Geely and SAIC have previously launched their own premium EV brands, called Zeekr and IM, respectively, as Chinese companies step up their competition with Tesla. 
• Huawei and state-owned automaker BAIC in April co-launched the Arcfox-branded Alpha S, the first mass-produced vehicle model equipped with Huawei’s self-driving technology and priced from RMB 388,900. That’s more than 50% higher than the price for Tesla’s China-made Model 3, SCMP reported.

READ MORE: Huawei begins selling EVs in stores, may offset sinking phone sales: CEO

Geely unveiled on Monday an electric semi-truck model. The company said to deliver the model with highly autonomous driving functions in 2024. Such a commercial vehicle from the Chinese automaker could pose a threat to Tesla and other manufacturers.

Why it matters: The launch will allow Geely to expand its presence in the global commercial market, poised for double-digit growth in the coming years, and to compete against Tesla’s long-awaited Semi truck model and similar offerings produced by Daimler, Nikola, among others.

Details: Called the Homtruck, the semi-truck will be available in several power options, including fully electric and plug-in hybrid, and feature a modern sleeper cab interior, which Geely said will give drivers extra comfort.

• Geely did not reveal many specifics about the first premium truck model in its new commercial vehicle group, to be branded Farizon Auto, but said in a Monday statement that it has begun taking advance orders with an initial deposit of RMB 2,000 ($313).
• Scheduled for delivery in early 2024, the Homtruck will have highly autonomous features that allow drivers to cruise around hands-free on certain roads, the company said, intending to achieve full autonomy in 2030.
• Geely, the parent company of Volvo, intends to expand its presence globally with the launch of the semi-truck, eyeing markets such as Europe, Korea, Japan, and North America, Mike Fan, chief executive of Farizon Auto told CNBC on Monday.
• Farizon Auto is targeting an annual sales of 250,000 clean energy vehicles in 2025. It expects that number to more than double by 2030 with a 20% share in the market, Fan said during a press conference in Shanghai on Monday.

Context: The Chinese electric vehicle (EV) industry has been on a rebound after a market slump that began in late 2019 and lasted an entire year. Carmakers sold 357,000 EVs in China in September, accounting for more than 20% of monthly new car sales for the first time.

• Geely announced on Oct. 31 that it is aiming for 40% of its annual sales, by 2025 to be new energy vehicles; that share would total 1.55 million out of the 3.65 million vehicles and would include battery electric, plug-in hybrid, and hydrogen cars. The company also promised to invest RMB 150 billion into research and development by 2025, SCMP reported on Nov. 1.
• Tesla unveiled its electric truck model Semi in November 2017 but has since delayed volume production until 2022. The Semi truck’s first customer, Pepsico, is expected to accept delivery of 100 pre-ordered vehicles in the last quarter of this year, CNBC reported on Monday, citing PepsiCo CEO Ramon Laguarta.

Chinese electric vehicle maker WM Motor showcased its first sedan model named M7 on Friday. The company boasts that the car has an advanced sensor package and will be affordable as it aims to carve out a place in the country’s competitive auto market.

Why it matters: WM Motor’s first sedan model, the M7, will compete head to head with Nio’s highly-anticipated ET7, Xpeng’s P7 and P5 sedans, and the Zhiji L7, a premium electric vehicle co-launched by SAIC and Alibaba.

Details: The M7 sedan features extensive autonomous driving hardware, with 32 sensors, including three lidar units that use light to create a three-dimensional representation of surrounding objects. The model can provide advanced driving capabilities on highways and urban roads.

• It also delivers a total computing power of 1,016 trillion operations per second (TOPS) with four Nvidia Orin chips, matching that of Nio’s ET7 and offering around seven times the power of Tesla’s two-chip full self-driving (FSD) computer. This tech spec provides headroom for upgrading the vehicle in the future, the company said.
• WM Motor has yet to reveal the price of the sedan. But founder and chief executive Freeman Shen said the M7 will target China’s mainstream vehicle segment with prices ranging from RMB 150,000 to RMB 300,000 ($23,505 to $47,010) in a press conference on Friday in Shanghai. 
• It is unclear whether the Baidu-backed EV maker will use the Chinese search engine’s self-driving technology in the new model. WM Motor expects to start deliveries of the M7 sedan by the end of 2022.

READ MORE: Lidar is hard—but it’s coming soon

Context: WM Motor, which is also backed by Hong Kong billionaire Richard Li’s telecommunication firm PCCW, has delivered over 70,000 vehicles, failing to match rivals such as Nio and Xpeng, which have handed over 140,000 and 100,000 vehicles respectively as of September.

• WM’s rival Nio has plans to deliver its first sedan, the ET7, with a price range between RMB 378,000 to RMB 506,000 in the first quarter of 2022. Nio is also reportedly mulling a new sub-brand targeting the middle to lower auto market.
• Meanwhile, Xpeng is on track to begin delivering its Lidar-equipped P5 with a starting price of RMB 157,900 at the end of this month. It has sold over 50,000 P7 cars, its first sedan model priced from RMB 229,900, since deliveries began in July 2020.

Over the past two years, the vicious price war among Chinese delivery companies has taken a toll on an industry that’s often referred to as the “backbone” of the country’s e-commerce boom. Recently, signs have emerged that the grueling battle may finally be reaching a breaking point.

Beginning in September, six delivery services started to charge an extra RMB 0.1 ($0.02) per parcel, a major change in pricing strategy, given that courier companies have charged less than delivery costs for years in pursuit of capturing market share. 

The companies that joined the price increase are some of the biggest in the sector: ZTO Express, YTO Express, STO Express, Yunda Express, Best Express, and J&T Express. All pledged to use the extra money to boost delivery worker incomes and protect their rights. 

The change is mainly a response to intensifying regulatory pressure to improve conditions for delivery workers. But there are other, perhaps more pressing motivations for Chinese courier companies to use this shift to mark the beginning of the end for a price war that has had an impact on the long-term and sustainable development of the industry.

“The price war shows signs of easing, but there’s still a long way for the whole industry to get back on track to healthy development,” Lei Zhongnan, CEO of logistics tracking platform Kuaidi 100, told Chinese media recently.

Express delivery is no longer a lucrative business: Data from China’s National Post Bureau (NPB) shows that the volume of parcels delivered in China surged 40.1% year on year to 67.3 billion in the first eight months of this year. That’s already 81% of last year’s volume of 83 billion units. 

• However, the expansion in volume comes on top of a much slower revenue growth. Revenue generated from the sector climbed 23.4% year on year to RMB 650.9 billion over the first eight months, or 74% of 2020’s RMB 875 billion total revenue, NPB data shows.
  
• China’s express delivery market is a highly concentrated one that’s dominated by a few top players including SF Express, Alibaba-backed Best Express, and a number of couriers collectively known as “Tongda Operators” — ZTO Express, YTO Express, STO Express, and Yunda Express. The six operators represented more than 80% of China’s express delivery market in 2020, according to data from market intelligence platform askci.com.
  
• In a crowded market, the companies, mostly offering the same services, had been relying more and more on lowering prices to gain market share. Per parcel delivery price dropped 13.1% year on year to RMB 9.8 ($1.5) in the first half of this year.

The negative impact of the price war is explicit in the gloomy financial reports of the major players, as courier companies see their revenue skyrocket while profits sink. Six out of the seven listed courier businesses achieved double-digit revenue growth in the first half of this year; YTO and ZTO lead the group with an over 30% year-on-year revenue jump. But net profits slumped across the board, with STO suffering the steepest plunge of more than 300%. STO and BEST Express are recording losses.

• Delivery companies are less willing to bleed for market share. In August, per parcel delivery price of YTO Express increased 5.45% month on month, or a 0.95% increase compared with a year ago. 
  
• Similarly, SF Express and Yunda Express increased per parcel price by less than one percent month on month, although the figures still represent year on year drops. 

How the war began: Despite competitive tensions, there was a delicate balance among major courier companies before 2019. But that balance was disrupted by the entrance of Southeast Asian delivery upstart J&T in 2020. Founded by a Chinese entrepreneur in Indonesia, J&T Express expanded to China later after becoming a quick success in the Southeast Asian market in 2015.

• The company expanded rapidly, reaching the 20 million parcel per day milestone within 10 months of entering China, a feat that took rivals like STO, YTO, ZTO, and Yunda Express more than a decade to achieve. Its most effective weapon is, of course, price cuts.
• In one of its fiercest campaigns, which took place in March last year, J&T offered nationwide delivery for just RMB 0.80 per parcel for users in Yiwu, China’s eastern commodity center, compared with the RMB 1.2 to RMB 1.3 per parcel offered by rivals.
• Similar to “Tongda” couriers’ early boom being driven by orders from Alibaba marketplaces, J&T’s initial boom in China has mainly been driven by delivery for e-commerce upstart Pinduoduo, which accounts for around 80% of its orders. 

Price wars in the China tech arena are generally fueled by venture capital and express delivery is no exception. J&T has received multiple hefty rounds of investment over the past two years at sky-rocketing valuations.

• J&T Express completed a $1.8 billion financing round at a valuation of $7.8 billion in April, higher than market cap for STO Express, Yunda Express, and YTO Express at the time.
• The company closed a $250 million strategic investment deal in August.
• J&T Express reportedly plans to raise over $1 billion from a U.S. initial public offering (IPO) as soon as the fourth quarter, at a $5 billion valuation.

Delivery workers are working more for less: Price wars have also led to lower incomes for delivery drivers who earn on per package delivery fees. As delivery drivers shift to other industries for better pay, the delivery worker shortage has become a serious problem for courier companies. 

• China had more than 4 million express delivery workers in 2020. But as a result of deteriorating working conditions and lower pay, the voluntary turnover rate of express logistics personnel climbed to 33.1%, the highest across all industries.
• Increased pay and better working conditions could solve the labor shortage, but for courier companies, higher pay for workers means increased costs, making their low-price model economically inefficient.

Regulators have recently stepped in to protect the rights of express and food delivery drivers as part of the state’s efforts to help lower-income workers amid the authorities’ declared aim of creating “common prosperity.” Local and central government agencies have rolled out rules trying to end unreasonable low-price deliveries.

• April 9: The municipal postal authority in Yiwu cracked down on delivery services J&T Express and Best Express for price-dumping, partially closing their distribution centers in the county-level city.
• April 22: Zhejiang provincial government issued a guideline forbidding courier companies from taking parcel orders at lower than the cost of delivery. E-commerce platform operators were also warned against using technological means to interfere with merchants’ choice of couriers.
• July 8: Seven central government regulators, including the Ministry of Transport, the State Post Bureau and the National Development and Reform Commission, issued guidelines to protect the rights of express delivery workers, including measures aimed at ensuring more reasonable salaries, having companies buy them social insurance, and clarifying the companies’ responsibilities to protect workers’ rights.

What’s next?

• Increased pay and improved welfare may alleviate the delivery force shortage to a certain extent. An experienced courier can handle 200 to 300 parcels per day, an anonymous delivery worker told local media. That means the RMB 0.1 per parcel increase would boost their average monthly income by about RMB500.
• Instead of providing similar services, the couriers are trying to expand their product lines. “Tongda” couriers have expanded into the high-end express delivery market, and SF Express has upped its investment in cold chain delivery and delivery installment services.  
• Some companies are ditching price wars altogether. Lan Haisong, CEO of ZTO Express, said it’s “irrational and unsustainable” to compete for market share with “unnecessary” price cuts. ZTO Express topped the seven major courier businesses with RMB 180 million net profit in Q1 this year.

Conclusion: Price wars have been a successful weapon for market entry for many delivery companies such as J&T. But such tactics are not likely to last. The state is tightening its regulation on irregular pricing, while there is renewed focus on the rights of delivery workers and the impact on the user experience. Increasing costs also mean that a number of major courier companies are now turning their backs on the delivery price wars. 

Also in the news

Investors bet on robot delivery: Increasing labor costs have propelled the growth of robotic delivery technologies recently. This month, investment has flocked to a bunch of business-faced startups ready to apply robotic delivery tech in various fields, from warehouse management to the service industry.

• Chinese service robot maker PuduTech announced a RMB 500 million ($78 million) investment on Sept. 14.
• Keenon Robotics made public the next day the completion of a $200 million Series D funding led by returning investor SoftBank.
• Hai Robotics, a Chinese warehouse robotics startup, announced on Sept. 22 two financing rounds totaling more than $200 million.

Alibaba expands community group-buy push amid rival startup fallout: Consolidation in China’s community group-buy market continues. As startup casualties increase, Alibaba is pushing further to fill the market gap left by the collapse of smaller rivals.

• Alibaba-backed online grocer Nice Tuan is reportedly downsizing its operations in August.
• Meicai, a Chinese app that supplies farm-to-table produce for restaurants, has been reducing its operations and laying off employees this month.
• Chengxin Youxuan, the community group-buy unit of Chinese ride-hailing giant Didi Global, shut down operations in 22 provinces, accounting for more than 60% of its service locations.

Alibaba rebranded its community group-buy unit to “Taocaicai” on Sept. 16 as some rivals have lost momentum after rounds of market consolidation. The new brand will incorporate Freshippo Market and Taobao Maicai, Alibaba’s two existing community grocery services.

Cao Cao Mobility, the ride-hailing unit of Chinese private automaker Geely, announced Monday that it had raised RMB 3.8 billion ($589 million) from investors led by a group of state-owned enterprises. The move came two months after the country’s dominant ride-hailer, Didi Global, was put under an ongoing cybersecurity review.

Why it matters: It is the biggest funding the company has received in two years, Cao Cao said in a statement (in Chinese) published Monday.

Details: This new round brought Cao Cao’s total funding to around RMB 5 billion. Lead investors include Suzhou Xiangcheng Financial Holding Group, an investment company held by the Xiangcheng district government of Suzhou, as well as Suzhou High-Speed Rail New City Group and three other state-controlled enterprises.

• Cao Cao said in the statement that it plans to use the funds to further scale its business, such as upgrading technology and expanding its fleet. 
• The company currently offers passenger transport services in 62 domestic cities, almost double the number that its rival T3 serves, but far behind the footprint of Amap, Alibaba’s ride-hailing and map platform.
• Geely began testing ride-hailing service Cao Cao in the eastern city of Ningbo in late 2015. It raised RMB 1 billion in Series A from several Chinese venture capital firms in January 2018.

Context: Chinese ride-hailing platforms, either backed by tech giants or legacy automakers, have been rushing to take market share from Didi after regulators ordered the ride-hailing giant in early July to temporarily stop adding new customers.

• Meituan’s ride-hailing unit and Cao Cao in July saw their volume of rides increase by 24% and 32%, respectively, from a month earlier, while Didi’s only rose by 13.1% during the same period, according to Ministry of Transport figures (in Chinese).
• In July, on average, Amap completed fewer than 5 million trips while Meituan completed around 1 million trips per day, Chinese media LatePost reported on Monday, citing people familiar with the matter. Didi counted about 25 million rides a day in the first quarter of 2021.

Read more: Didi app ban ignites race for ride-hailing market share

Chinese video-streaming platform Tencent Video said it has filed a lawsuit against ByteDance’s short-video app Douyin for copyright infringement and unfair competition over clips from a hit TV drama, seeking RMB 100 million ($15.4 million), Chinese media reported Wednesday.

Why it matters: Tencent Video’s legal action is the latest attempt by a streaming platform to control the spread of clips on short-video platforms. Streaming platforms fear that widespread posting of clips will undermine the value of expensive content.

Details: In the complaint, Tencent Video accused Douyin of circulating clips of “Crime Crackdown,” a hit TV drama, without consent. Claiming ownership of exclusive right to the online dissemination of the drama, Tencent said Douyin had allowed users to upload clips from the show and failed to take any measures after receiving a notification letter from Tencent. 

• In a response, Douyin claimed that it had signed a cooperation deal with the co-production company of the drama, under which the company will open an official account on the platform while Douyin will be responsible for curating promotional activities. Douyin also said that it had taken down clips immediately after receiving complaints from Tencent.    

READ MORE: ByteDance rages against Tencent over link blocking. Here’s why

Context: Tencent won a similar case against Douyin over clips of “Honor of Kings,” a hit Tencent game, earlier this month. ByteDance was fined RMB 600,000.

• Mainstream video-streaming platforms have recently ramped up criticism of their short-video peers over alleged copyright infringement practices. Tencent vice president Sun Zhonghuai lashed out at short video content, comparing it to “pig’s feed” and complaining of widespread copyright violations at an industry conference held in June.

Chinese chipmaker Wingtech said on Monday that it had closed a deal to buy Newport Wafer Fab (NWF), the UK’s largest chip fabrication plant. The deal was closed after the UK government initially considered blocking it. 

Why it matters: The UK government’s clearance on the deal is a breakthrough for Wingtech, which quickly established its dominant position in China’s car chip industry through overseas acquisitions since 2018. But the single approval doesn’t mean Chinese chip firms looking to buy chip plants abroad will enjoy a smoother regulatory environment.

• NWF is a manufacturer of low-end chips. The plant mainly produces 180-nanometer (nm) wafers, while the industry’s bleeding edge is the 3-nm process by Taiwan’s TSMC and South Korea’s Samsung.

Details: The UK government gave Wingtech the green light to take over NWF’s parent company on Aug. 12, according to a Wingtech filing (in Chinese) to the Shanghai Stock Exchange.

• Wingtech said its acquisition of NWF had been closed as of Monday. It now fully owns the UK firm through Nexperia, Wingtech’s Dutch chip subsidiary. 
• NWF’s operation might be affected by domestic and overseas industry policies, said Wingtech’s filing, without elaborating.

Context: The NWF deal, conducted through Nexperia, was previously subject to a national security investigation by the British government following backlash from some UK lawmakers.

• Nexperia offered GBP 63 million (around $87.2) to buy NWF on July 5. The deal met with little regulatory pressure when it was first announced, but it soon met with more official scrutiny in the UK. 
• Some UK politicians have advocated taking a hard line on the deal. Tom Tugendhat, a UK parliament member and the chairman of the parliamentary Foreign Affairs Committee, told CNBC on July 5 that he would be “very surprised” if the deal was not being reviewed under the National Security and Investment Act, a November law passed to protect key UK assets from foreign takeovers.
• On July 7, UK Prime Minister Boris Johnson said he had ordered national security advisor Stephen Lovegrove to review the acquisition. Lovegrove had 30 days to complete his review.

Meituan, a Chinese life services and food delivery platform, is testing a social feature for food-ordering users, Chinese media Tech Planet reported (in Chinese) Thursday.

Why it matters: The social feature is part of Meituan’s effort to find new growth areas. The move comes as the food delivery sector becomes more crowded—social media giant ByteDance has been reportedly testing a food delivery feature through its short-video app Douyin since last month.

Details: Named “Fanxiaoquan,” the new feature allows users to share orders with their contacts on the Meituan app, in a format that is similar to WeChat’s Moments or Facebook’s News Feed. 

• Users can comment and like posts, access merchants’ shops through posts, and place similar orders.
• Users can add friends either through WeChat contacts or phone contacts. The platform also recommends new contacts based on users’ past behavior on the Meituan app, such as the mobile games they have played. 

Context: After years of fast growth, China’s food delivery industry is now growing at a slower pace. The market expanded 15% yearly in 2020, the slowest growth in the past decade, according to market consultancy Zhiyan (in Chinese). 

• Meituan hit a record in the number of transacting users and active merchants using its flagship app in the first quarter of the year, 569.3 million and 7.1 million, respectively, according to its financial statement. The growth is partly driven by the company’s popularity in lower-tier Chinese cities. 
• Meituan is seeking new growth areas in recent months by introducing social and content features, including a Pinduoduo-like group buying feature in its Meituan-Dianping unit and a short video feature in its flagship app.

Li Auto closed down 0.85% on its first trading day in Hong Kong Thursday. The Chinese electric vehicle startup opened at an issuing price of HK$118 ($15) per share. 

Why it matters: Li Auto is the latest Chinese tech firm listing in the US to seek a dual-primary listing in Hong Kong. Tech companies increasingly see Hong Kong as an attractive market as they seek to hedge risks when both Chinese and US regulators accelerate regulatory scrutiny.

Details: Li Auto’s Hong Kong debut met with a lukewarm market response. The company’s shares closed at HK$117 ($15.03), 0.85% lower than its issuing price, falling by as much as 2% soon after starting trading. 

• Speaking to reporters on Thursday in Hong Kong, Li Auto’s president Shen Ya’nan said the company has been considering a listing in the mainland, without revealing details.
• The company said it will use the proceeds from the Hong Kong listing to develop new car models and autonomous driving technology, and to expand charging infrastructure and sales networks.

Context: Backed by Chinese life services giant Meituan, Li Auto first went public on Nasdaq last July. The company is the second Chinese EV maker to seek a Hong Kong listing. Its rival Xpeng Motors raised $1.8 billion in Hong Kong in June.

• Li Auto so far has only one model for sale. The company delivered 8,589 cars in July, surpassing both its competitors Xpeng and Nio in vehicle deliveries for the first time in July.
• Both China and the US have issued new regulations that make it more difficult for Chinese companies to raise money in the US markets. In July, Chinese regulators proposed new rules requiring some Chinese companies to seek official approval before listing in overseas markets. The US has threatened Chinese companies with delisting over a dispute about accounting procedures.

Read more: Drive I/O | The untold story of Li Auto

A dozen years after it set out to build an industry from scratch, China boasts the world’s largest number of electric vehicles. More than 6 million clean-energy cars and trucks are running on Chinese roads. 

That’s 6 million electric vehicle (EV) batteries that are going to wear out one day. The oldest electric cars are starting to retire their batteries: More than 200,000 tons of them went offline in 2020, Xinhua (in Chinese) reported in April, citing figures from the China Automotive Technology and Research Center. From 2021 to 2030, the auto industry will shed 7.05 million more tons of EV batteries—about 168 times the weight of Beijing’s Bird’s Nest Stadium, Greenpeace wrote in an October report. 

It’s either a huge mountain of toxic waste, or a gold mine of rare metals. It all depends on battery recycling.

There are no public records of how much of the 200,000-plus tons of the EV batteries retired last year got recycled, but it is widely agreed that the current recycling rate is very low. China first authorized EV battery recycling in 2018, but the first batch of licensed recyclers have found it a tough business. With high costs, limited demand, and competition from cheaper pirate recyclers, it will take more carrots and sticks for the industry to take off. The key, experts told TechNode, is likely to be stronger enforcement of rules that make carmakers responsible for disposing of end of life batteries.

Second lives for old EV batteries?

If you’ve owned a device with a rechargeable battery, you already know: They wear out. The longer you use a battery, the less charge it holds. 

EV batteries are good for eight to 10 years. By the end, they’ll store only 70% to 80% of the charge they held when new. That’s when they reach the end of their useful life in a car.

The battery pack is the most single most expensive component of an EV, accounting for about 30% of the total cost to consumers. It pushes up the cost of an 80.5 kWh battery pack in Tesla’s Model Y crossover to about $9,250, BloombergNEF estimated in a December report. The components may be still useful after batteries reach the end of their first life: A customer recently sold the used battery pack of his EV to an unnamed “highest bidder” and earned more than RMB 10,000 ($1,544), according to a Xinhua News Agency report (in Chinese) in April.

The first five companies got on the white list in July 2018. That was it until December 2020, when the Ministry of Industry and Information Technology (MIIT) certified 22 more companies to recycle EV batteries. While forging alliances with automakers, these little-known companies vary greatly in backgrounds. They are subsidiaries of big battery makers or associates of cell material suppliers, or simply units of traditional scrap recyclers.

A few of these larger players already claim to be profitable. A Shenzhen-based company called GEM is a leader in the industry, with a 10% share of the market and a client list of more than 280 domestic and foreign automakers. The company, which is also the country’s largest battery materials producer, said in its 2020 annual report (in Chinese) that the amount of batteries it recycled more than doubled from 2019, its first year to turn a profit from the practice. It didn’t disclose any numbers, however. 

Other recycling companies are still investing heavily to scale up the business. For example, Hefei-based Gotion High-tech, along with the government of the city’s Feidong district, on March 22 announced they would invest RMB 12 billion ($1.85 billion) to build a new facility for the manufacturing and recycling of raw battery materials in the capital of eastern Anhui province. The move came just two weeks after Gotion established a recycling subsidiary with a registered capital of RMB 50 million. The Volkswagen battery supplier aims to ensure annual production of 100 gigawatt hours (GWh) of batteries by 2025, with raw material sourced from used packs.

Yet many of the other white-listed recycling firms are struggling to break even, according to Yang Xulai, a professor at Hefei University and a former research lead at Gotion High-tech. One reason: Not enough spent batteries are being funnelled to proper recyclers, since owners of EV vehicles are not required to turn them over to an MIIT-licensed company. 

As a result, over half of spent batteries are probably being recycled by unsustainable, polluting practices, Bao Wei, a general manager at Zhejiang Huayou Holding Group, a recycling partner of BMW in China, told business news site Caixin (in Chinese) in January.  

Where did the batteries go? The easiest and most profitable destination is the illegal one: Unscrupulous companies, usually traditional auto scrap yards, strip the electrolyte packs of valuable raw materials like cobalt and nickel, and dump the hazardous leftovers in a nearby landfill or waterway. That’s in violation of environmental regulations but enforcement is lax.  

The licensed players thus find themselves competing against lower-cost rivals which can pay higher prices to EV owners for their waste batteries, as they are normally not subject to environmental regulations and have been disposing toxic battery wastes to landfill without proper treatment.

“This leads to a low collection volume of waste batteries for qualified recyclers, and this problem gets further exacerbated by poor consumer awareness of the importance of waste battery treatment,” Chinese and Australian researchers wrote in a paper published in May.

The three types of EV batteries 

Whether their processes are dirty or clean, recyclers consider the materials in nickel-manganese-cobalt (NMC) batteries and nickel-cobalt-aluminum (NCA) batteries the most valuable. These two types of batteries are known for enabling a long driving range with a high-energy density. However, the two current mainstream recycling techniques, which recover materials through burning or the use of strong acids, produce extensive chemical waste and greenhouse gases—and at very high expense, experts told Caixin in a January report (in Chinese).

When it comes to the third type of battery, Lithium Iron Phosphate (LFP), which offers a shorter driving range but boasts better thermal stability, the outlook is less promising. The key components are too cheap for recycling to be economical. Dismantling one ton of spent LFP batteries for key materials only generates revenue of about RMB 9,300 ($1,440), which is far from covering the cost of recycling, investment advisory firm Guangzheng Hang Seng said in a report in mid-2018.

The potential profit that can be extracted from an expired NMC or NCA battery fluctuates with the fluctuating prices of cobalt and nickel. At the metals’ current prices, the 60-kilowatt NMC811 battery used in a Tesla Model 3 might yield revenue of RMB 6,254.

Nonetheless, the recycling business could take off soon, spurred by the anticipation of a shortfall in cobalt, nickel, and batteries’ other raw materials in the coming few years. Demand for cobalt used in EV batteries will reach 980,000 tons over the decade to 2030 in China, around seven times the global output of the raw material in 2019, in Greenpeace’s estimation.

Read more: Drive I/O | How Chinese EV batteries broke through

Storage and solar power

There may be alternatives to stripping spent EV batteries for their components. Perhaps they can be converted into lower-quality batteries or used for something other than powering machines. 

MIIT in a draft guideline (in Chinese) issued in October 2020 called for recyclers, EV makers, and battery suppliers to cooperate to produce new uses for spent EV batteries. In particular, the guideline  encourages companies to repurpose old batteries for backup power systems for utility-scale projects or telecommunication base stations. One such model is BMW’s reuse of EV batteries to power the forklifts in its local factory in northern Shenyang city. Such a forward-looking policy could help “enhance overall electric grid efficiency and reliability,” wrote the regulator.

Other companies such as State Grid, the country’s largest public utility, are hoping to repurpose EV batteries for energy storage. Old packs can be reassembled into a battery energy storage system that can store solar energy power for use during periods of scarcity and provide greater flexibility for grid demand spikes.

Economic deterrent

However, this storage industry is also having trouble squeezing out profits in the face of technical and commercial challenges. Second-life batteries need to be standardized in performance and safety standards, such as charge capacity, recharge time, and longevity. But the hard reality is: Batteries from different manufacturers vary greatly in design and construction, since they are custom-designed to work with a given car model, consulting firm McKinsey wrote in a 2019 report.

Recyclers need to take battery cells apart for standardization, refurbishing, and reassembly before they can be used in energy storage. Yet the performance limits and health status of these batteries vary greatly and are often not disclosed to recyclers by battery manufacturers and carmakers, according to Bao of Zhejiang Huayou Holding.

Then there are safety concerns, which have led to large energy storage plants recently being banned from using spent EV batteries. Nonetheless, Beijing is still pushing for more trials, including battery storage programs for small-scale commercial and industrial facilities such as 5G base stations.

All these practical challenges combine to form an economic deterrent: It is simply cheaper for energy  companies to start with all-new batteries than to use retired packs, according to Zhao Guangjin, an expert with State Grid.

Whether the next stage is energy storage or recycling of materials, the transportation of spent batteries is another steep expense because both the transport vehicles and warehouses need to be customized with safety measures. 

Regulatory and business outlook

A national market foundation has been set, but the government will need to provide a mixture of carrots and sticks to help the market gain scale, Zheng Mingyang, Toxics Campaigner at Greenpeace, said in an interview with TechNode on July 14. For instance, South Korea has made it mandatory for car owners to return EV batteries to designated drop-off sites. “Such mandatory enforcement measures to end users is worth consulting,” Greenpeace wrote in its October 2020 report (our translation). 

Greenpeace has proposed incentive and punitive measures to ensure players such as automakers, battery makers, and recycling companies bear their responsibilities and develop new applications for used batteries. For instance, the government should levy higher taxes on battery makers that use original raw materials, while rewarding battery makers that use recycled materials.

Loss-making companies also need an incentive to look for the value that second-life batteries promise. Zhang Tianren, chairman of recycling company Tianneng Group and a delegate to the National People’s Congress, the Chinese parliament, in March called for stimulus policies such as subsidies and tax cuts for certified recycling companies, most of which are struggling to eke out profits. 

The vice chairman of China’s biggest battery supplier, CATL, publicly dismissed the idea as “a fake proposal” in late 2018. Huang Shilin said that the company was developing new battery types made for energy storage. In 2020, the Tesla partner sold 2.39 GWh of batteries for energy storage systems, according to its annual report. 

The Chinese government has established a policy framework that places responsibility for battery recycling on EV makers, experts warn that it’s not clear how it plans to regulate the sector. Beijing has not specified a clear target for the overall collection of waste batteries, nor a clear definition of the scope of authority among multiple central and local government agencies taking a shared responsibility, according to a paper by Chinese scientists published in May in the Journal of Environmental Engineering and Landscape Management. 

One murky legal area concerns automakers’ responsibilities. According to regulations issued in 2018, the makers are required to make their dealers buy back spent batteries from auto customers. Direct-sale companies like Tesla, Nio, and Xpeng are responsible for taking back the old batteries themselves. Unfortunately, dealers have little motivation to do so.They still face no penalties for failing to take back batteries. They are more motivated to sell cars than to take back batteries, Caixin (in Chinese) reported in January, 2019 citing Zhang Guofang, a professor at Wuhan University of Technology. 

Local governments with significant auto industries may offer a way forward. In a draft action plan (in Chinese) issued by the Guangzhou Municipal Development and Reform Commission on June 22, both domestic and foreign automakers would be required to report the establishment of recycling stations for EV batteries in the city. Meanwhile, Shanghai authorities plan to create a recycling network across the city and an online tracking system to manage the fabrication, sale, and recycling of EV batteries by the end of this year, Chinese media The Paper reported. 

For now, the major obstacle to clean reuse remains profitability. Being on the cutting edge of market creation, each stakeholder needs a little more incentive to be part of a sustainable recycling process. 

 “If there is money to be made, more companies and investments will be attracted,” (our translation) Huang Shan, an industry insider told China National Radio.

At 9 a.m. on a recent Thursday, Sheng Li got out of a Didi ride at his office in downtown Shanghai. The ride-hailing company has had a rough ride recently, but for users like Sheng, Didi is still the first choice when hailing a car.

The 28-year-old office worker says he’s been experimenting with other apps lately. He’s noticed longer wait times as Didi struggles amid a “cybersecurity investigation,” temporary removal from Chinese app stores, and lawsuits from angry US investors.

Sheng told TechNode he doesn’t worry about the privacy and security issues the regulators are investigating. “That’s a matter for the state, not us,” he said. For him, it all comes down to price, service, and wait times.

Still, a Shanghai taxi driver surnamed Wu told TechNode that he has shifted his driving time to other platforms including aggregator Amap (Gaode Ditu in China), as there are now “much fewer orders” from Didi (our translation). Some former Didi users even deleted the app from their phones in a show of patriotism, the Shanghai-based driver added.

Founded in 2012 as Didi Dache, Didi has long been dominant in China’s ride-hailing market. It fended off an early challenge from Uber, buying out the US company’s Chinese operations when it left the market in 2016. The most recent estimates put its share at 90% of the Chinese market.

Now, challengers are racing to take advantage of Didi’s troubles. Like Sheng, millions of Chinese users are trying out other ride-hailing platforms. The rivals have begun a price war, offering steep discounts and subsidies to win over users and drivers.

Default Didi

Didi remains the default for most users TechNode met during rush hour interviews in Shanghai. Although Didi apps are no longer available for download on Chinese app stores, those already on users’ smartphones still work.

Chris Sun, a Shanghai-based video producer did not hesitate when choosing Didi to hail a ride to the city’s railway station for a business trip last week. Speaking to TechNode on July 22, Sun said he had no plans to try other services, adding that he “has got used to” Didi, despite some technical flaws such as inaccurate pin locations from drivers (our translation).

Chen Jie, a recent graduate, is also sticking with Didi. The 23-year-old tried Alibaba-backed Amap last year, but immediately switched back to Didi, frustrated by long waits at peak times.

Springing into action

Shopping and delivery titan Meituan, a longtime rival of Didi, relaunched its standalone ride-hailing aggregator app Meituan Dache on July 13, followed by a WeChat mini-app with the same name last week.

Meituan has offered ride-hailing services since February 2017, but shut down its standalone app in 2019 to cut expansion costs. Since then, it’s been available only as a mini-program within Meituan’s main app.

The company has boosted its subsidies to attract users after the long absence. Using a RMB 10 ($1.54) coupon, TechNode paid RMB 23.4 for a nine-kilometer trip on Meituan Dache on July 16 in Shanghai. A ride on Didi for the same route cost RMB 35 on July 2.

Upstart T3, a joint venture of state-owned automakers FAW, Dongfeng, and Changan, is among the most ambitious contenders. From its base of 21 cities and 15 million users in 2020, the two-year-old ride hailer has set goals to enter 15 new cities and add an average daily order of 1 million rides by the end of July, Chinese media reported, citing a company memo. 

Daily downloads of the T3 app on iOS peaked at 60,000 million on July 2, later stabilizing to around 40,000. In June, T3’s app was downloaded just 10,000 times a day, according to data from app-tracking service Qimai. Chinese media report that T3 staff have been working long overtime hours as the Nanjing-based company rushes to expand.

Alibaba-owned aggregator and mapping service Amap, launched in 2018, is also offering massive subsidies to both riders and drivers, including RMB 100 coupons for rides and a one-week zero-commission period to new drivers. Amap downloads on iOS have more than doubled since July.

Meanwhile, Tencent and GAC-backed Ontime is offering 50% off coupons plus a RMB 25 incentive to those who invite a friend to use the platform and take their first trip. Not everyone is joining the price war.

Chinese media reported that management at Caocao Chuxing have decided not to drive down prices,, but the company has adopted the infamous 996 work schedule following Beijing’s investigation into Didi.

Future landscape

Didi could be back on app stores later this month. Regulations specify that cybersecurity reviews should take no more than 45 days, and 45 days after Didi’s review began will be Aug. 16. However, the same regulations authorize regulators to extend the review if they find that the matter is especially complex or serious.

Some observers believe that Didi could face significant threats from smaller ride-hailers that are expanding their presence in China’s growing inland cities.

“Didi is mature in tier-one cities but not in second or lower-tier cities. There is still an opportunity for online ride-hailing in China, and Didi will not have a 90% share in China forever,” Tu Le, founder and managing director of business intelligence firm Sino Auto Insights, said during an online interview on July 6.

Didi controlled more than 90% of China’s ride-hailing market share before the government’s investigation into the company. There might be “double-digit” market share redistribution if the subsidy war meaningfully deteriorates the Didi app or mini-program core experience, according to Michael Norris, head of research and strategy at AgencyChina.

The supply of drivers, who are sensitive to subsidy and platform policy changes, will be key to winning the battle. “Didi’s competitors need to poach drivers to the point Didi’s app becomes unreliable to hail a ride,” he said.

“The competitive landscape depends on how hard Meituan pushes. Recall that Meituan, with one eye on its balance sheet, backed away from self-operated ride-hailing in late 2018. Meituan’s foray into community group-buy, including associated financing activities, have primed investors for big moves.” Norris said.

Meituan declined to comment on the story.

Still, at least one ride-hailer has decided to advance at its own pace. Rather than spending lavish sums for a victory likely to be temporary, Shouqi, operated by the namesake automaker, has publicly stated its goal is high-quality development, focusing on passenger and driver safety along with data security. With a footprint in over 170 Chinese cities, the state-backed company is now the country’s sixth biggest ride-hailer but lags far behind Didi in monthly active users, according to figures published by app tracking firm Aurora Mobile in May.

“China’s ride-hailing market has always been strictly regulated. Looking ahead, compliant, healthy, and sustainable development will be the major path for all the players,” a Shouqi spokesperson told TechNode on July 20 (our translation).

Read more: How did Didi get in trouble with data regulators?

China’s securities regulator on Thursday approved China Telecom to list on the Shanghai Stock Exchange, two months after the state-owned telecommunications company was delisted from the New York Stock Exchange (NYSE).

Why it matters: China Telecom’s domestic listing comes as US-China rivalry spreads to the equity sector. The US has set stricter rules for Chinese firms listing on US stock markets, and China has in recent months increased scrutiny on companies seeking overseas listings.

Details: The China Securities Regulatory Commission said in a Thursday announcement (in Chinese) that it had approved China Telecom’s plan to issue shares in Shanghai, without providing a listing date. 

• The company said in its prospectus (in Chinese) that it plans to raise RMB 54.4 billion (around $8.4 billion) in the Shanghai listing.
• The funds will be used to expand its next-generation 5G networks, and for research and development, the prospectus said.
• China Telecom plans to issue up to 12.1 billion Chinese A-shares in Shanghai, or up to 13% of its total equities after the listing.
• China Telecom went public in Hong Kong in 2002, the same year of its New York listing. The company’s Hong Kong-listed shares have surged more than 49% since the beginning of this year.

Context: In May, the NYSE delisted three state-owned Chinese telecom operators, China Telecom, China Mobile, and China Unicom.

• The three operators received delisting decisions from the NYSE in January. The decision came after former US President Donald Trump signed an executive order in November that bars Americans from investing in Chinese firms that the US said aided China’s military, intelligence, and security services.

Local service superapp Meituan is cutting back on mobile power bank rentals while bringing back a ride-hailing app, as ride-hailing market leader Didi faces a cybersecurity review. Tea drink chain store Heytea secures $500 million in Series D. Amazon expands a crackdown on Chinese sellers.

Meituan adjusts offerings

• Meituan plans to downsize its mobile power bank rental service, Chinese media reported on Wednesday. Donews reports that Meituan is selling its rental service in 33 Chinese cities to local operators. Most of these cities are second-tier ones such as Jinan, Baoding, and Changsha. Gao Cheng, head of the rental service division in Meituan, recently left the company. Many business development staff from the division have transferred to Meituan Youxuan, a community grocery division. [Donews, in Chinese]

• Meituan relaunched a standalone ride-hailing app on Friday, three years after removing Meituan Dache to cut expansion costs. The launch came as market leader Didi’s apps are banned from accepting new users during a cybersecurity review. Meituan’s ride-hailing service continued operating as a mini-program within the Meituan super app during the app’s hiatus. [SCMP]

Heytea raises half a billion

Modern tea drink chain store Heytea completed a $500 million Series D. Investors include Sequoia Capital China, Hillhouse Capital, Tencent Investment, and Temasek. Founded in 2012, Heytea popularized “cheese teas” and runs about 695 stores across China. The brand is popular among young, urban Chinese consumers. [Ebrun, in Chinese]

Amazon widens crackdown on Chinese sellers

Amazon closed 340 online stores operated by one of the largest Chinese retailers on the platform for allegedly violating Amazon’s rules without specification. Shenzhen Youkeshu Technology Co. sells a variety of products, including electronic gadgets, toys, and outdoor equipment. Amazon froze $20 million in payments due to the retailer. The ban may reduce Youkeshu’s first-half sales by 40% to 60%, according to a recent filing by the retailer’s Shenzhen-listed parent Tiza Information Industry Corp. Amazon banned in June three electronics brands under Shenzhen-based electronics company Sunvalley Group for soliciting positive reviews with gifts. [SCMP]

Suning chairman steps down after bailout

Zhang Jindong, the billionaire founder of Suning, resigned as chairman of the Chinese retail conglomerate this Monday. Zhang lost control of the company when the business sold a nearly 17% stake to a government-led consortium. On July 5, the troubled retailer secured a $1.36 billion bailout offer from a group of investors led by the state asset management committees of the Nanjing and Jiangsu governments. Alibaba also joined the funding consortium, alongside Chinese electronics makers Midea Group, Haier Group, Xiaomi, and TCL Technology Group. [Bloomberg]

Louis Hinnant contributed to the reporting. 

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

In this episode the guys welcome Emma Lee back to discuss MissFresh and Dingdong Maicai. Key topics include what grocery e-commerce is, who the players in the space are, how they are different, and more. Elliott and James also discuss Didi Global. The conversation with Emma Lee was recorded on July 1, 2021 and the rest of the episode was recorded on July 2, 2021. 

Hosts may have interest in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• Bilibili
• Xiaomi
• JD
• Pinduoduo
• Meituan-Dianping
• Kuaishou

Hosts:

• Elliott Zaagman– @elliottzaagman
• James Hull– @jameshullx

Guest:

• Emma Lee – TechNode

Editor:

• Peter Isachenko

Podcast information:

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• Music: “Hey Ho” by Steve Jackson, Royalty Free Music