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China EV Sales Defy Subsidy Cuts, Maintain Strong Growth in Q1 2023

BYD continued to lead China’s increasingly competitive EV market.
The market share of foreign brands declined by 4% points.
EV sales are expected to exceed 8 million units in 2023.

Beijing, New Delhi,London,San Diego, Buenos Aires, Hong Kong, Seoul – June 27, 2023

China’s passenger electric vehicle* (EV) sales grew 29% YoY in Q1 2023, according to the latest research from Counterpoint’sChina Passenger Electric Vehicle Model Sales Tracker.Battery EVs(BEVs) made up nearly70%of the sales. There was a remarkable88% YoYsurge inplug-in hybridEV (PHEV) sales as well. Recently, PHEVs have been experiencing increased popularity in China. BYD secured its leading position with 79% sales growth and 9.8% points increase in market share YoY. Thetop 10 automotive groups, encompassing28 brands, collectively accounted for over80%of the totalpassenger EV sales.

Commenting on the market dynamics,Senior Research Analyst Soumen Mandalsaid, “The discontinuation of the 13-year-old New Energy Vehicle (NEV) purchase subsidy, paired with theTesla-triggered price war, had an adverse impact on domestic EV start-ups. Especially, smart EV brands such asNIO,XpengandNetareported disappointing sales figures compared to the previous quarter. Foreign brands, likeVolkswagen,BMW,Mercedes-Benz,Tesla,HyundaiandNissan, experienced a combined 4% points decrease in market share compared to a year ago. However, Tesla stands out as an exception. Other foreign brands havestruggled to offer strong competitionto domestic brands. Furthermore, Chinese brands such asBYD Auto,Dongfeng Motors,FAW,Great Wall MotorsandGeely Auto冒险超越国内边界建立吗their presence across Europe, Latin America and Asia-Pacific.”

Eight of the top 10best-selling EV models were ofChinese originin Q1 2023. Except Tesla,no foreign modelswere able to secure a position in the top 10. Thetop 10 best-sellingmodelscollectivelyaccounted for46%of China’s passenger EV sales. Moreover, all the top 5 best-selling PHEV models in Q1 2023 were manufactured byBYD Auto.

Discussing the market outlook,Associate Director Brady Wangsaid, “Thegrowth trajectoryof China’s passenger EV market is expected to continuethroughout 2023. Othersupportive policieshave beenimplementedto boost the market’sgrowth内华达州消除后的购买补贴。我n May, China’s Development and Reform Commission released a strategic document aimed at promoting EV adoption in rural areas. This will encourage auto manufacturers to introduce more affordable models, enhance sales systems, and facilitate trade-in services for rural consumers. We expect China’s EV sales toexceed8 millionunits by the end of 2023.”

*Sales refer to wholesale figures, i.e. deliveries from factories by the respective brand/company.

*For EVs, we consider only BEVs and PHEVs. Hybrid EVs and fuel cell vehicles (FCVs) are not included in this study.

The comprehensive and in-depth ‘China Passenger Electric Vehicle Sales Tracker, Q1 2018-Q1 2023’ is now available for purchase atreport.www.arena-ruc.com.

Feel free to reach us at press@www.arena-ruc.com for questions regarding our latest research and insights.

Background

对位技术3月ket Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Soumen Mandal

Neil Shah

Brady Wang

Counterpoint Research

press@www.arena-ruc.com

US Wireless Industry Calls for More 5G Spectrum

US wireless communication industry body CTIA held its 5G Summit in Washington, DC, on May 17, bringing together industry and government officials.
我ndustry speakers were united in their warning that more spectrum must be auctioned off to keep up with rapid increases in network traffic.
Leaders also cautioned that without a clear strategy for spectrum allocation, the US risked losing its leadership position in the wireless industry to competitors like China.

Top officials from the US wireless industry and government gathered in Washington, DC, on May 17 for industry body CTIA’s 5G Summit. Speakers reflected on the impressive progress that has already been made in building out 5G networks and opening new use cases, while also looking forward to the work yet to be done and the challenges facing the industry. There was a palpable sense of optimism about the opportunities that 5G still promises and reminders that in many ways it is still in its early stages. But industry leaders made clear that for 5G to meet its potential, policymakers must do more to support it.

How far 5G has come

Speakers at the event laid plain just how much progress has been made on 5G. By most measures, it has been themost quickly adopted wireless generation yet. Between the low-band, mid-band and mmWave frequencies, Verizon, T-Mobile and AT&T cover 320 million Americans. And their mid-band rollouts have been swift – AT&T’s Egal Ilbaz noted that the operator would reach 200 million PoPs by the end of the year, while T-Mobile’s Neville Ray noted that the company was closing in on 300 million PoPs.

*Based off Earnings Call Commentary

5G rollout is quickly transforming how consumers use their devices. It has opened the first killer 5G application –fixed wireless access (FWA). Verizon Business CEO Kyle Malady stated that data consumption is growing faster than it ever has before, partially as users flock to Verizon’s FWA services in available markets, but also as mobile users take advantage of improved bandwidth and lower latency by spending more time streaming video and gaming. 5G has also made FWA a legitimate alternative or supplement to fiber in some markets, especially in rural areas where fiber to the home is too expensive to be a solution. FWA subscriber counts are growing rapidly, with net additions outpacing wireless additions in the first quarter of the year. With great speed, capacity, and low latency, FWA using mid-band 5G provides another strong solution to the toolkit for closing the digital divide.

Where 5G is going next

While 5G has already had a substantial impact on the consumer space, its impact will be the largest in enterprise in the coming years as it powers connected factories, smart cities, connected agriculture, and more. Leaders from Verizon, AT&T, T-Mobile, and DISH were all touting the opportunities and flexibility that virtualized, software-defined networks would offer for developers in enterprise, allowing networks to be optimized for the specific needs of the end use case. Distributed computing at the edge will also enable low-latency AI and ML applications for efficiency gains. Progress has been slow in enterprise, and the murky economic environment will discourage some companies from experimenting with 5G to improve their productivity. But with mid-band rollouts nearing completion, the stage is set for 5G to enable the enterprise segment. According to comments made at the event, network operators in China already have over 25,000 orders for private networks. The US is behind here, but that will change in the coming years.

The wireless industry also has a real chance to narrow the digital divide over the coming decade. The advent of FWA provides an alternative to fiber that in many topographies will be more cost-effective while providing the speeds and capacity needed to connect rural communities, enabling commerce, education, and many other activities. But as Senator Lujan of New Mexico noted, the industry must do more to make sure that underserved communities are not left behind and push to close the digital divide through programs like the affordable connectivity program for low-income Americans.

Challenges facing wireless industry

While there are major opportunities for 5G, there are also barriers to reaching its potential. The biggest challenge may be growing geopolitical tensions between the US and China. Leaders from Samsung and Ericsson warned that state subsidies for Chinese infrastructure players make them very difficult to beat on price, leading many countries to opt for Chinese providers for their wireless networks. Additionally, the Chinese state’s clear and aggressive strategy for rolling out 5G has given it a lead and Chinese network operators and enterprises are gaining practical experience in implementing new use cases before Western countries. This will give Chinese companies a significant competitive advantage over their Western counterparts and a head start in creating the platforms of the next decade. Looking further down the road towards 6G,geopolitical tensionsand decoupling between the US and China could result in a split standard, which would hurt the whole industry by reducing scale and interoperability. More consequently, this would undermine global growth. The US must work alongside allies across the globe to retain a single standard from which all can benefit.

*Based off of AT&T Comments at CTIA 5G Summit

To confront these challenges, industry leaders were united in calling on US policymakers to reauthorize the FCC to holdspectrum auctionsand open more spectrum for operators. Already, the rate of data consumption is growing quickly, while spectrum is also needed for new enterprise use cases. But just giving the FCC the authority to hold spectrum auctions is not enough – the US government must deliver a clear plan and strategy for when spectrum will become available so that operators, component and hardware providers, and businesses can prepare beforehand to make use of this spectrum. The haphazard and inconsistent nature of US spectrum auctions puts the country’s industry at a disadvantage compared to China.

我n conclusion

5G has come a long way over the last several years, but there is still work to be done and opportunities to be actualized. In order to reach underserved communities, serve enterprises and compete effectively on the global stage, more spectrum must be opened to operators and a clear schedule and strategy for spectrum allocation articulated. For the US to retain its leading role in the wireless industry, policymakers and the industry must work hand in hand.

US October Spectrum Auction to be Crucial for AT&T, Dish

The USA FWA and CPE Ecosystem Analysis and Forecast

One in Four Cars Sold in China in 2022 Was an EV With BYD Powering Country’s Outperformance

China’s EV sales almost doubled in 2022 with 87% YoY growth.
BYD led the market, followed by GM Group, Tesla, Geely Holding and GAC Group.
China’s EV sales are expected to exceed 8 million units in 2023.

New Delhi,London, Beijing,San Diego, Buenos Aires, Hong Kong, Seoul – March 15, 2023

China’s passenger electric vehicle* (EV) sales almost doubled in 2022, growing 87% YoY, according to the latest research from Counterpoint’s全球Passenger Electric Vehicle Model Sales Tracker. EVs now account for one in four cars sold in China. Interestingly, the share of battery EVs (BEVs) in the country’s total EV sales decreased in 2022, with plug-in hybrid EVs (PHEVs) increasing their share to 24%.China第二个增长最快的市场在我们吗rld’s top 10 EV markets in 2022 in terms of sales. Japan was on top with a 119% YoY growth. Nevertheless, China accounted for nearly 59% of the global EV sales volume.

Commenting on the market dynamics,Senior AnalystSoumen Mandalsaid, “China’s EV market is the most vibrant globally. More than 94 brands cumulatively offer over 300 models ranging from just $5,000 to over $90,000. Local brands command 81% of the EV market, among whichBYD,Wuling,Chery,ChanganandGACare a few of the top players. China also has a wide range of EV start-ups, likeNio,Xpeng,Neta,AITO,我M Motors,Zeeker,AiwaysandLivan, which are performing well and are giving strong competition to established foreign brands.”

Mandal added, “In China,Teslaexperienced a nearly 5% YoY drop in its market share due to production halts in April and May 2022 caused by the resurgence of COVID-19. Although production resumed at full capacity in June, Tesla faced challenges such as the availability of a limited product mix, increased costs due to a difficult supply situation, competition from affordable options offered byEVstart-ups, and domestic sentiment that hindered its efforts to solidify its position in the Chinese market. Meanwhile,BYDincreased its market share by more than 11% YoY in 2022, with six out of the top 10 models in the Chinese market coming from the brand, compared to just three in 2021.”

我n 2022, the top 10 EV models accounted for almost 45% of the total EV sales, a 3% decrease from 2021. This suggests that new start-ups are offering strong competition to established players. Further, in Q4 2022, theBYDSongsurpassed theWuling Hongguang MINI EVas the top-selling EV model, ending the latter’s eight-quarter reign in the market.

Discussing the market outlook,Associate DirectorBrady Wangsaid, “We expect EV sales to exceed 8 million units in 2023. In January 2023, BYD raised its EV prices by $250-$900 due to the rising cost of raw materials and phasing out of EV purchase subsidies. Later, in February and following Tesla, BYD announced price reductions. The prices of the 2021 versions of the Han and Qin models were reduced by an average of $2,500. The prices of new BYD models were slashed by $860-$1,150. The phasing out of subsidies and the wealth of EV players can easily lead to aprice waras brands fight formarketshare.”

*Sales refer to wholesale figures, i.e. deliveries from factories by the respective brands/companies.

*For EVs, we consider only BEVs and PHEVs. Hybrid EVs and fuel cell vehicles (FCVs) are not included in this study.

The comprehensive and in-depth ‘全球Passenger Electric Vehicle Sales Tracker, Q1 2018-Q4 2022’ is now available for purchase atreport.www.arena-ruc.com.

Feel free to reach us at press@www.arena-ruc.com for questions regarding our latest research and insights.

Background

Analyst Contacts

Soumen Mandal

Abhik Mukherjee

Brady Wang

Neil Shah

Peter Richardson

Counterpoint Research

press@www.arena-ruc.com

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iTriangle Leads India Telematics Ecosystem; EVs to Drive Telematics Demand

Telematics shipments in India are expected to reach 50 million units in 2030 at a CAGR of 31% from 2021.
Rising demand for EVs, ubiquitous 4G connectivity and favourable policies will act as potential drivers.
According to Counterpoint’s CORE evaluation, iTriangle leads the overall rankings for India’s telematics ecosystem, followed by Teltonika and Bosch.

New Delhi,London,San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – November 25, 2022

印度is the world’s second-largest automotive and mobility market in terms of production volume. It offers significant opportunities forconnected telematicsdue to its sheer scale as well as the growing design and manufacturing ecosystem. Telematics penetration in 2021 was just 2% of the total number of vehicles on the road. According toCounterpoint’s印度Telematics Ecosystem Analysis, telematics shipments are expected to reach 50 million units in 2030 with a CAGR of 31% from 2021. Currently, iTriangle leads the overall rankings for India’s telematics ecosystem in Counterpoint’s CORE evaluation.

Commenting on the market dynamics,Senior Research Analyst Soumen Mandalsaid, “Presently, India’s telematics market is at a nascent stage but there is a steady demand for telematics devices. High import dependency, lack of advanced technology adoption, and infrastructure challenges have all been inhibitors. However, the rising demand forelectric vehicles, ubiquitous4Gconnectivity, favourable governmentpolicies, and schemes related to design and manufacturing, such asPLIandMake in India, will act as potential drivers for the demand for connected telematics devices for different mobility applications.”

To understand the future trajectory of India’s telematics space, Counterpoint Research analysts evaluated the top 15 players using the proprietaryCOREanalysis technique.

iTriangleleads the overall rankings for India’s telematics ecosystem, followed byTeltonikaandBosch. With the growing market demand, domestic players such asBlackbox,Rosmerta,Nippon,AccoladeandVoltyare expected to give strong competition to top players in the coming times.

iTriangle’s expertise in different aspects of manufacturing and ecosystem creation has pushed the company to initiate business in Thailand and other Southeast Asian markets. iTriangle is one of the few Indian companies to cross international borders in the telematics space.

Detailed insights into the Indian telematics market opportunity, devices, policies, use cases and recommendations are all captured in a comprehensive white paper published on our portal.

Feel free to reach us at press@www.arena-ruc.com for questions regarding our latest research and insights.

Background

COREis a competitive ranking evaluation that evaluates a player across important criteria. For the study of Indian telematics players, Counterpoint took seven categories and more than 45 sub-categories under itsCOREanalysis. Each of the categories and sub-categories was selected carefully so that they reflected the existing market, current developments, future trajectory and market acceptance of each player. Counterpoint ranked each of the top 15 players on a计分卡基于最新的公开信息and primary interviews based on the above categories. Exhaustive secondary research was conducted to gather all the information available publicly.

Analyst Contacts

Soumen Mandal

Neil Shah

Peter Richardson

Counterpoint Research

press@www.arena-ruc.com

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‘Made in India’ Smartphone Shipments Grew 16% YoY in Q2 2022; Domestic Manufacturing Push in Wearables Continues to Grow

OPPO led the ‘Made in India’ smartphone shipments with a 24% share, followed by Samsung.
Lava led the ‘Made in India’ feature phone shipments with a 21% share.
我n the wearable segment, TWS led in terms of domestic manufacturing with a 16% contribution, followed by neckbands and smartwatches.

New Delhi, Hong Kong, Seoul, London, Beijing, San Diego, Buenos Aires – Sept 16, 2022

‘Made in India’ smartphone shipmentsgrew 16% YoY in Q2 2022(April-June) to reach over 44 million units, according to the latest research from Counterpoint’sMade in Indiaservice. This was the first quarter of the new financial year and the companies pushed for higher output to meet the criteria for PLI incentives.

Commenting on the local manufacturing ecosystem,Senior Research AnalystPrachir Singhsaid, “The Made in India smartphone shipments grew as compared to last year. During the quarter, we witnessed increasing investments in the Indian manufacturing ecosystem with new plants being set up as well as existing ones being expanded. Recently,OPPOannounced the Vihaan initiative under which it plans to invest $60 million in the next five years to empower the local supply chain.Samsungalso increased its manufacturing with the premium segment smartphones, especially the Galaxy S series. Going forward, the upcoming festive season will further drive the Made in India shipments due to the expected increase in local demand.”

On the manufacturing landscape and strategies, Singh said, “In the smartphone segment, in-house manufacturing contributed to almost 66% of the total Made in India shipments in Q2 2022, while the rest of the 34% shipments came fromthird-partyEMS players. OPPO led the Made in India shipments with a 24% share, followed by Samsung andvivo. Among the third-party EMS players, BharatFIH, Dixon and DBG were the leading players during the quarter. Padget Electronics (396% YoY), Wistron (137% YoY) and Lava (110% YoY) were the fastest growing smartphone manufacturers during the quarter in terms of shipments. Also, we may see disbursement of PLI incentives during Q3 2022, which will further boost the local manufacturing sentiments. In the feature phone segment, Lava led the Made in India shipments, capturing more than 21% share. Lava is also the leading mobile phone player among the Indian brands in terms of shipments. It is the only company that is designing its products in India. Going forward, Lava is expected to expand its product portfolio as well as manufacturing capabilities.”

Source: Counterpoint Made in India Research, Q2 2022
Note: Figures may not add up to 100% due to rounding

The local manufacturing push is now impacting other product segments as well, particularly the CIoT segments. The Indian government’s push with multiple PLI schemes has been showing a positive impact and we saw increased local manufacturing share in product segments likesmartwatch,TWS,neckbandandtablet. Optiemus leads the Made in India shipments for smartwatches with more than 75% share. In TWS, Optiemus, Bharat FIH and Padget are the top three manufacturers. In the neckband category, VVDN and Mivi have a 90% share in the Made in India shipments. In the tablet category, Wingtech, Samsung and Dixon are the top players while in theTVcategory, Dixon, Radiant, Samsung and LG have a 50% share in the Made in India shipments.

Source: Counterpoint Made in India Research, Q2 2022

On the Indian government’s focus,Research Analyst Priya Josephsaid, “The government aims to make India an electronics manufacturing hub in the next four to five years. In its vision document released earlier, the government considers consumer electronics segments like smartphones, laptops, tablets, TVs, TWS and electric components as among the most promising for India’s transformation as an electronics hub. To help drive more initiatives under the themes of Make in India and Digital India, the government, in its last budget, pushed the total allocation to $936.2 million. This step not only aims to incentivize India-based manufacturing but also catalyse investments in the sector to support job creation, ease of doing business, import reduction and export promotion.”

Going forward, with the Indian government’s additional focus on building an overall ecosystem for semiconductors in the country, the country will witness a rapidly expanding electronics manufacturing and innovation ecosystem. By doing so, it does not only aim to become an important destination for manufacturers and investors but also ensure its strategic position in theglobalvalue chain.

Notes:

OPPO manufactures smartphones for OPPO, realme and OnePlus.
Bharat FIH manufactures smartphones for Xiaomi.
Dixon Technologies manufactures smartphones for Samsung.
Dixon Technologies’ share does not include Padget Electronics.

Background

Analyst Contacts:

Prachir Singh

Priya Joseph

Tarun Pathak

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全球EV Sales up 61% in Q2 2022; BYD Leads Market

全球passenger electric vehicle (EV) sales* reached 2.18 million units in Q2 2022.
BYD Auto overtook Tesla to become the top-selling EV brand globally.
The top 10 EV models accounted for more than 30% of global EV sales in Q2 2022.

New Delhi,London,San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – August 29, 2022

全球passenger electric vehicle* (EV) sales grew 61% YoY to reach 2.18 million units in Q2 2022, according to the latest research from Counterpoint’s全球Passenger Electric Vehicle Model Sales Tracker. In total EV sales, battery electric vehicles (BEVs) accounted for almost 72% and plug-in hybrid electric vehicles (PHEVs) for the rest. China remained the market leader in EV sales, followed by Europe and the US. China’s EV sales increased by almost 92% YoY in Q2 2022 to reach 1.24 million units from just 0.64 million units in Q2 2021.

Commenting on the market dynamics,Senior Analyst Soumen Mandalsaid, “As the globalsemiconductor shortagehas eased a bit, automakers are able to cater to the increasing demand for EVs. Moreover, EV sales would have been higher if China had not experienced fresh COVID-19 outbreaks during March. Stringent lockdowns in and around major provinces halted the production ramp-up during April, which resulted in China’s passenger vehicle market recording its biggest drop since the COVID-19-hit March 2020. The situation improved only after lockdowns were lifted during the latter half of May. The second half of 2022 is expected to deliver better results, but economic downturns, energy crisis, supply chain bottlenecks and rising geopolitical tensions may hinder the growth of China’s automotive market, especially EVs.”

Market Summary

BYD Auto: For the first time, BYD Auto became the top-selling EV brand, dethroning Tesla. During Q2 2022, BYD Auto shipped more than 354,000 EV units, an increase of 266% YoY. The company officially stopped production and sales of internal combustion engine vehicles in March 2022 and has been focusing on the development of BEVs and PHEVs. More than 60% of BYD’s sales during the quarter came from its top three models – BYD Song, BYD Han and BYD Qin. The company is slowly penetrating the European market. It has already begun operations in Norway and is looking to start business in Germany, Sweden and the Netherlands.

Tesla:Tesla’s global sales during Q2 2022 grew 27% YoY to over 254,000 units, falling short of expectations. Although business in the US increased, its China business was affected by COIVD-19 shutdowns. Tesla sold just 98,000 cars in China during Q2 2022. Cumulative sales in China during April and May fell by 49% YoY. This was the lowest for the automaker since the COVID-19-hit 2020. But its sales during June improved by almost 115% YoY. Despite COVID-19 clouding Tesla’s Q2 sales, it remained the global leader in the BEV segment.

Wuling: The joint venture between SAIC, GM and Wuling has proved to be a success as the Wuling Hongguang Mini EV is the best-selling EV model in China. The model has been the undisputed market leader since its release in the second half of 2020. During Q2 2022, Wuling grew by 16% YoY to hold the third rank in the global EV market.

BMW: BMW’s EV sales during Q2 2022 increased by 18% YoY. The company has a more prominent presence in the PHEV segment. However, its BEV sales experienced a higher QoQ growth rate (18%) in Q2 2022 compared to its PHEV sales (2%). BMW’s aim to have 2 million BEV units on the road by the end of 2025 is motivating it to make significant developments in the EV category. The BMW X3 and i-series models are spearheading the company’s push in the BEV segment, while the 5-Series, 3-Series and X5 models are doing the same in the PHEV segment.

Volkswagen: Volkswagen’s EV sales declined 9% YoY in Q2 2022. Its shipments across Europe and the US declined by 44% YoY and 74% YoY, respectively. Bottlenecks in the supply of semiconductors and other automotive components due to俄罗斯入侵乌克兰, together with rising inflation, pushed EV sales down in these two markets. However, sales in China grew 115% YoY in Q2 2022. Apart from the supply chain crisis, the company’s internal issues and failure to develop new proprietary software for its vehicles are impacting the company’s EV shipment targets.

Source: Counterpoint Research Global Passenger Electric Vehicle Model Sales Tracker, Q1 2018 – Q2 2022

Discussing the reasons for the rise in EV sales,Research Vice President Neil Shahsaid, “Incentives play a crucial role in increasing EV adoption. For example, China’s strong incentive program for both automakers and consumers has helped the country become the global EV leader. China extended its consumer-side subsidies until 2023, even after deciding to end them in 2021. Moreover, China’s dual-credit policy for automakers has been a massive success and the government is planning to phase out consumer-side subsidies as its EV market reaches maturity. In contrast, lower subsidies inEuropeancountries have led to slow growth in EV sales. China’s EV market grew by over 90% YoY in Q2 2022, whereas Europe’s EV market increased by just 16% YoY. Rising EV sales in European nations have led to a discontinuation of many consumer-side subsidies on car purchases with the focus shifting to establishing improved charging infrastructure, including incentives for consumers to install charging points.”

Further commenting on EV subsidies, Shah said, “Recently, theUShas brought a new EV policy which includes attractive incentives for both automakers and consumers. Benefits upto $12,000 are available for automakers and consumers on the purchase of a new EV. As a result, we expect to see an increase in EV sales in the US. Apart from these big markets, smaller markets like India, Japan, Thailand, South Korea and Malaysia have started providing various benefits for EV buyers and automakers either directly as a rebate in prices or tax exemption.”

The top 10 EV models accounted for more than 30% of global EV sales in Q2 2022. Tesla’s Model Y remained the best-selling EV model. Wuling’s Hongguang Mini EV moved up to the second place, pushing Tesla’s Model 3 to third place. The Hongguang Mini EV’s long streak of being the best-selling model in China was broken by the Model Y in June 2022. Six out of the top ten best-selling EV models during the quarter were from Chinese OEMs and are mostly only available in China.

Source: Counterpoint Research Global Passenger Electric Vehicle Model Sales Tracker, Q1 2018 – Q2 2022

Commenting on the market outlook,Research Vice President Peter Richardsonsaid, “The automotive industry isunlikely to fully recoverfrom the semiconductor shortages until 2023. We do not expect global passenger EV sales to exceed 10 million units in 2022 considering the COVID-19 outbreaks, production shutdowns due to the power crisis, component shortages and rising consumer price inflation.”

*Sales here refer to wholesale figures, i.e. deliveries out of factories by respective brands/companies.

*Under electric vehicles (EVs), we are considering only battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). Hybrid electric vehicles and fuel cell vehicles (FCVs) are not included in this study.

The comprehensive and in-depth ‘全球Electric Passenger Vehicle Model Sales Tracker, Q1 2018 – Q2 2022’ is now available for purchase atreport.www.arena-ruc.com.

Feel free to reach us at press@www.arena-ruc.com for questions regarding our latest research and insights.

Background

Analyst Contacts

Soumen Mandal

Neil Shah

Peter Richardson

Counterpoint Research

press@www.arena-ruc.com

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US Chips Act Takes New Form Before August Recess, Leaves Some Unhappy

Yesterday, the Senate passed a slimmed down version of theUnited States Innovation and Competition Act (USICA), the CHIPS Act. After strong initial bipartisan support for the USICA earlier this year, the Bill has languished in conference as negotiations between the House and Senate over their respective versions of the Bill stalled and a laundry list of other issues took center stage in the months since.

通用电气首席执行官从专业技术公司,包括帕特lsinger of Intel and Lisa Su of AMD, signed a Semiconductor Industry Association letter to Congress last month urging action on the Bill. This is being seen as a renewed push by semiconductor players to get subsidies, tax breaks and other support cleared by Congress prior to its August recess, after which the campaign season for the November mid-term elections will take priority over legislative business. Intel even went as far as to delay the groundbreaking ceremony for its $20-billion facility in Ohio, warning that government assistance would be necessary for the company to follow through with its plans, otherwise it may choose to build its plant overseas.

As the broader USICA package becomes increasingly unlikely to pass prior to the mid-term elections, a stripped-down version of the Bill that specifically targets semiconductor manufacturers is moving onto the House. But the new Bill faces several hurdles.

Disagreements between House and Senate

首先,可能面临新的法案the same disagreements that halted negotiations over the original USICA package between the House and Senate. The House version of USICA, the America COMPETES Act, was a more sweeping piece of legislation. It packed in provisions for financial assistance to developing countries to tackle climate change, expanded assistance to workers displaced by globalization, and included other items that were unpopular with Senate Republicans. This complicated negotiations, as Republican support was necessary for the Bill to pass in the Senate, and they are more narrowly focused on the national security and economic consequences of America’s reliance on foreign production of semiconductors. Trimming the Bill back to just subsidies and tax breaks for semiconductor manufacturers will be unpopular with progressives on the left who view this as another example of corporate welfare without addressing issues like climate change. On the other hand, conservatives on the right see this as government interference in the free market. Challenges may also emerge from Republicans as they consider whether they want to grant Democrats a legislative victory prior to the midterms and as they pose questions over the anticipated recipients’ activities in China. While the passage of the Bill in the Senate is major step forward, the passage in the House is murkier.

Source: Department of Commerce

Chip designers left out

削减了版本的法案也跟从ed some pushback from a new corner – inside the semiconductor industry. This version primarily provides subsidies for the construction of foundries as well as tax breaks to manufacturers for investment in chipmaking equipment. Key semiconductor design players like Qualcomm, AMD and NVIDIA have instead advocated for the inclusion of a provision in the House version of the Bill to provide tax breaks for semiconductor designers, which otherwise would be left on the outside looking in. But this exclusion is intentional – the US is still a global leader in chip design, while minimal production capacity for semiconductors poses a real risk to American national security in today’s shifting geopolitical environment.

Source: Department of Commerce

Guardrails on investment in China

我ndustry players have also pushed back against the new Bill due to stipulations regarding investments inChina. As the Bill currently stands, companies receiving funds from the US government to build foundries in the country would be barred from investing in semiconductor production using the 28nm process or smaller in certain countries. Firms have pushed back on these restrictions, warning that 28nm and larger chips will become increasingly obsolete in the coming years. These kinds of restrictions are also more likely to put pressure on China to invest in developing its own separate processes and ecosystem, which could result in further decoupling down the line, or even increase the incentive for IP theft. News reports say China’s SMIC is now making 7nm chips using a process very similar toTSMC’s. The more the US and China create parallel rather than interconnected supply chains, the narrower the realm of cooperation and negotiation becomes, with the broader tech environment paying the price.

Closing thoughts

The new Bill is a useful step toward diversifying the global manufacturing of semiconductors. This should benefit the entire technology ecosystem, which is dangerously over-reliant on a geographically concentrated manufacturing base. But there is still a real chance of the Bill failing to reach President Biden’s desk before August recess as the Bill heads towards a vote in the House. Indeed, following news of a deal between Sen. Joe Manchin and Senate Democrats on climate change legislation, House Republicans announced they will oppose the CHIPS bill in protest, complicating the passage of this legislation once again.

One in Two Cars Sold Will Have Electric Powertrain by 2030

China will be leading the global EV market, followed by Europe and US.
BEV will have nearly 40% share in the global passenger vehicle market by 2030.
FCV will remain niche even in 2030.

New Delhi,London,San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – May 30, 2022

One in two cars will have an electric powertrain by 2030, according to the latest research from Counterpoint’sPassenger Vehicle Forecast*. The increase in environmental awareness among buyers, favourable carbon emission norms, support from governments and the collaborative efforts of ecosystem players are all helping electric vehicle (EV) adoption across the world. However, EV penetration was still below 10% of global passenger vehicle sales in 2021.

Commenting on the regional dynamics,SeniorResearch AnalystSoumen Mandalsaid, “China is leading the global EV market, followed by Europe and the US. RoW (rest of world) will be the fastest growing region in terms of EV adoption, driven by Vietnam, Singapore, Thailand and Canada.

The EV market in China is influenced by government policies. However, China has reducedsubsidieson EVs by 30% in 2022 compared to 2021. Further, the rising inflation rate and supply shortages due to COVID-19 outbreaks have forced OEMs to increase EV prices. April was the weakest month for EV sales in China this year. We expect the situation to improve after COVID-19 restrictions are relaxed and OEMs resume production. The EV sales in China are projected to cross six million units by the end of this year.

Europeis aiming to reduce emission levels by 15% in 2025 and by 37.5% in 2030 from the 2021 levels. This is one of the major reasons for Europe’s EV sales to cross the two million mark in 2021, despite the COVID-19 outbreak. More than 10 countries including Norway, Denmark, France, Germany, United Kingdom and Netherlands have proposed to phase out new sales of petrol and diesel cars. This will help Europe maintain its second position in the global EV market by 2030.

EV sales in the US increased by nearly 100% YoY in 2021. The Biden government has set an ambitious target of 50% of sales being EVs by 2030. Federal and state administrations had previously taken a less supportive approach to EV adoption compared to China and Europe. The latest policy will encourage both OEMs and consumers to be more comfortable opting for EVs over traditional fuel vehicles. Moreover, the US will provide $7.5 billion to build 0.5 million public EV charging stations. We expect the battery electric vehicle (BEV) will account for nearly 30% market share in US passenger vehicle sales by 2030 – but not the half that the government has targeted.”

Other countries contributing to EV adoption include Norway, Japan and印度. EV adoption in Norway has already crossed 85% of sales in 2021 and we expect Norway will achieve 100% electrified passenger vehicle sales by 2025. Japan, however, is lagging in EV adoption compared to other developed countries. Toyota and Renault-Nissan have recently adopted a worldwide EV policy and we expect Japan will benefit from these homegrown OEMs. India is aiming to have 30% of its passenger vehicle sales as EVs by 2030. Already, homegrown players such as Tata Motors and Mahindra Electric and a few foreign players like MG Motor and Hyundai are competing for the Indian passenger EV market.

A few years back, it was thought that fuel cellvehicles(FCVs) would be one of the key technologies for the automotive market. However, FCV penetration hasn’t increased much and only a few players such as Hyundai, Toyota, Honda and SAIC are offering FCVs. Commenting on the competitive dynamics,Associate DirectorBrady Wangsaid, “The EV market is getting more competitive as new companies, including smartphone ecosystem players, are entering the field. Companies such as富士康andXiaomihave already announced their entry into the smart electric car field to diversify business opportunities. Sony has partnered with Honda to produce affordable EVs.

Teslais also a relatively new entrant. It introduced the groundbreaking Model S around 10 years ago and now dominates the global EV market. New start-ups likeNio, Li Auto, Xpeng, Lucid Motor, Fisker and Rivian are also trying to followTesla’s wheel tracks and disrupt traditional auto OEMs, many of which hesitated to invest in EV development in the initial phase. As next-gen cars will be much more software-driven, we will likely see more new players entering the market. However, the traditional players will still have an advantage thanks to their scale of manufacturing and well-established supply chains. Nevertheless, we expect a fierce battle between traditional and newer players in the coming years as EVs become increasingly mainstream.”

Commenting on EV infrastructure developments,Research VPPeter Richardsonsaid, “Increased EV adoption will not, by itself, contribute to the goal of reducing overall vehicular pollution. While increased EV sales are positive, we also need to focus on setting up smart production ramps, more efficient battery manufacturing processes, battery recycling plants and charging infrastructure powered by renewable energy sources like solar, wind, hydro and nuclear. Unless we also adopt clean energy sources, the vision of attaining net-zero carbon emission will remain out of reach.”

在最初几年电动车采用,chicken-egg dilemma between governments andOEMs. Now, both parties are making collaborative efforts to make the transportation industry greener and more environmentally sustainable, helping smooth the transition from traditional fuel vehicles.

*Under electric vehicles, we are considering only battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and fuel cell vehicles (FCVs). Hybrid electric vehicles are not included in this study.

The comprehensive and in-depth ‘全球Passenger Vehicle Forecast, 2018-2030F’ is now available for purchase atreport.www.arena-ruc.com. Feel free to reach out to us at press@www.arena-ruc.com for questions regarding our latest research and insights.

Background

Analyst Contacts:

Soumen Mandal

Peter Richardson

Brady Wang

Counterpoint Research

press@www.arena-ruc.com

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政策干预,美国科技公司向内看

On April 5^th2022, American policymakers, firms and academics met at the IP Leadership Summit to discuss the key challenges at the intersection of industry, intellectual property and American national security. Sessions covered an array of topics but focused on the importance of R&D spending, emerging challenges faced by intellectual property-centric businesses, and the impact of global trade tensions, supply chain shocks and climate change.

The common thread uniting these topics is the belief that amid rising global instability, policymakers must work alongside industry to create an economic and regulatory environment where technology firms can thrive.

This blog is an excerpt of a longer report that subscribing clients can access.

An intellectual property summit that focused on national security

The central thrust of arguments made throughout the day was that regulatory changes were necessary to help Western technology firms compete with state-backed Chinese firms in a fracturing global economy. Strong intellectual property protections, securing second supply sources for key components, and changes to immigration and education policies were framed as critical to this struggle.

Not since the Cold War have national security and commerce been viewed as so intimately linked, and the boundaries between the two are even less distinct than they were in the past. Speakers noted that the US military is reliant on the private sector for key components,like semiconductors, but also that America’s technological predominance and economic might is a matter of national security in and of itself.

The ongoing impact of COVID-19 on supply chains also served as a clear example of the need for companies to balance “efficiency with security”, a refrain that stuck out during the sessions.

Extreme weather events related to climate change, such as the winter storm that knocked out the power grid in Texas and contributed to the chip shortage, were also highlighted as justification for more resilient supply chains.

Domestic policy remedies

Along with discussions about just how much the global business environment has changed due to trade tensions came suggestions for how to improve the US’ position. Policy remedies suggested for the short, medium and long terms included:

Passage of theUS Innovation and Competition Act(USICA).
More visas for STEM (science, technology, engineering, and mathematics) graduate students looking to work in the US.
我nvestment in education programs, especially in STEM fields.
Tax credits for businesses that send representatives to standards bodies.

Passage of the USICA, the industrial policy proposed by the Senate that would include $52 billion in funding for expansion of semiconductor manufacturing in the US, was highlighted as a major goal. The chip shortage of the last year demonstrated the foundational role of chips in the global economy and countries are now pouring capital into the segment to create second sources for their chip supply. This will not alleviate the current supply problems as new foundries won’t come online for a couple of years. But these new sites will diversify the supply of chips geographically, a smart decision when leading manufacturers Taiwan and South Korea are in geopolitically unstable positions.

What this means for US, Chinese, and other firms

American firms should see new domestic opportunities due to the shifting geopolitical tectonics. Indeed, Intel, a major proponent of the USICA, is building new semiconductor facilities in Ohio worth $20 billion and which could grow to as much as $100 billion. Global Foundries, another American chip manufacturer would likely also see some money come its way if the USICA is passed due to its past contracts supplying the Department of Defense with semiconductors. Investment in the National Science Foundation and technology transfer from universities to businesses should spur innovation.

Chinese firms likely do not see the proposed investments being considered by the United States as being particularly threatening – the total amount being invested by the US government is much lower than investment from China. Chinese officials are bristling at the rhetoric surrounding the issue, however, seeing the US government as being hypocritical with its accusations of IP theft and unfair business practices. Instead, many Chinese officials and business leaders see this as yet another aggressive stance taken by the US as it tries to defend its place atop an unfair global order from a rising China.

Firms from other countries are eager to take advantage of state subsidies, granted they’re enough to make expanded business profitable. TSMC is expanding operations in the United States but will need assistance from the US government to make this possible – operating expenses are likely to be significantly higher due to higher costs of labor and more strenuous environmental regulations. Also, having a more diverse manufacturing base globally should help to make their business less susceptible to local shocks, regardless if they are caused by geopolitics, natural disaster, or other causes.

Conclusion

我ncreasingly, policymakers, industry insiders and academics are viewing commerce between the US and China through the prism of great power competition, and this was clearly demonstrated at the summit. Firms are recognizing that a fundamental shift has occurred in the international system and that they are caught in the middle. For American firms to remain competitive, policy must be aligned with their interests and supply chains made more resilient. In the short term, the USICA will help achieve this aim. In the medium to long term, investments in education and adjustments to immigration laws would help the US remain competitive.

Efforts to Diversify Semiconductor Supply Chain Gather Pace

The past two years have brought out the importance of semiconductors in driving economies like never before. Whether it is the demand shock created by COVID-19 or the US-China tech war, the need to diversify the semiconductor supply chain has dawned on governments the world over. The issue is also being eagerly discussed at global forums, the recent meeting of the Quadrilateral Security Dialogue (or Quad) being the latest example. Quad members US, India, Japan and Australia have decided to work together to secure the semiconductor supply chain.

Another factor pushing such efforts is China’s attempts to setglobal standards for emerging technologieslike 5G internet, IoT and AI through its “China Standards 2035” plan, which seeks to build on the “Made in China 2025” plan. Clearly, the ongoing global chips shortage has only accentuated the concerns about over-dependence on a few markets for critical technologies.

Many economies are currently at work to achieveself-dependencein meeting their chip requirements. But it takes years to build semiconductor fabrication facilities and much expenditure to maintain and upgrade them. Therefore, the idea of becoming “self-sufficient” or “independent” is not a viable option. Still, many economies like the US, EU and East Asian countries are calibrating their measures toindigenize as well as diversify the semiconductor supply chainto have a more resilient supply network. We list below a few such efforts:

Taiwan

As the world’s largest contract chip manufacturer, TSMC has hugely benefited from the global chip shortage. To maintain this leadership and diversify its production locations, it plans $45 billion worth of capital investment in Taiwan and beyond.

A $52-billion plan includesincentivizing the production of “mature node”semiconductors used by the automobile, medical device, agricultural machinery and defense equipment industries. The legislation to this effect, which is broadly supported by the chip industry, would also facilitate funding for new chip fab units. This would help the companies that build them and fabless companies such as AMD, Nvidia and Qualcomm, which rely on contractors to manufacture their products. US’ share in chip manufacturing has dropped to around 11% from almost 40% in the last 30 years. With this move, the US can potentially restore its position in the global supply chain.

Europe

With the onset of the European CHIPS Act, Europe aims to double its current market share ofsemiconductor production to 20% by 2030with an allocation of $49 billion. The plan includes building a new framework to ensure the security of supply along with a dedicated ‘Chips Fund’ to focus on exports. The said plan will also have a provision to ‘halt exports’ as a last resort in case of emergencies and crises. The EU is also mobilizing more than €43 billion in public and private funding to support broader policy goals around digitalization, green transition and R&D.

China

Under the “Made in China 2025” plan, China aims to produce70% of the semiconductors it uses by 2025.The government has also signed massive deals with SMIC in this regard. The said project will also have a minority holding of the government along with funding support from the respective local government. Most recently, the country also introduced many industrial policy measures to help boost its domestic semiconductor industry through tax relief to chip manufacturers. For example, a manufacturer that has been in operation for more than 15 years and makes 28 nm or more advanced chips will be exempted from corporate income tax for up to 10 years.

印度

The most recent participant in the chip world, India has established its presence by introducing asemiconductor policyunder the Production Linked Incentive scheme. With an outlay of almost $10 billion for six years, the scheme aims to incentivize all major stages of semiconductor production – Semi/Display Fabs, Semi ATMP units and Designing. This scheme is by far the most comprehensive package designed for the sector by the government. With a special provision on designing, the Indian government has worked well to leverage this advantage of the country compared to the rest of the world. One of the best parts has been the promise of nurturing (under DLI) some 100 domestic semiconductor design companies, offering hope to the many design-linked concerns of the ecosystem.

Semiconductor Policy Plan For Different Regions

Geopolitics

The geopolitical dynamics will also shape the future of the semiconductor market, an angle that has come under much scrutiny during the last couple of years. Various ‘alliances’ and ‘councils’ are already at work preparing plans to diversify the supply chain and gain “self-sufficiency”. On the one hand, we have the Quad alliance taking shape in the我ndo-Pacific region,而另一方面,我们有新形式d EU-US tech alliance called the Trade and Technology Council, where France is expected to pivot the semiconductor negotiations. Moreover, the European Alliance for Processors and Semiconductors is bringing many EU member states together for business, research and technology under the semiconductor ambit.

A key differentiator among all these efforts would be how well each economy utilizes the combination ofmoney, time, innovation and know-how,using both international and homegrown talent. Besides, they will have to position themselves in a way that minimizes risks and reshoring impact when it comes to trade inflows and outflows. This is especially true with respect to the US, EU and Southeast Asia considering other changing factors like labor cost, economic tensions (Ukraine-Russia war) and even the not-so-gone COVID-19, which have the ability to impact the demand-supply harmony of this ecosystem.

*Source for the table: Government documents and notifications

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