Global Electric Vehicle Market Share, Q3 2021 – Q2 2023

Global Passenger Electric Vehicle Market Share, Q3 2021 – Q2 2023

Published date: August 31, 2023

This page depicts our quarterly data forglobal electric vehicle salesmarket share from Q3 2021 to Q2 2023.

Note: For Electric vehicles, we consider only BEV in this study.

Global Passenger Electric Vehicle* Market Share, Q3 2021 – Q2 2023
Auto Group	Q3 2021	Q4 2021	Q1 2022	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023
Tesla	20%	19%	21%	16%	17%	17%	22%	20%
BYD Auto	9%	9%	10%	12%	13%	15%	14%	15%
Volkswagen Group	10%	10%	7%	7%	7%	8%	7%	7%
Others	60%	62%	62%	65%	63%	60%	57%	58%

Source:Global Passenger Electric Vehicle Model Sales Tracker: Q1 2018 – Q2 2023

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Global electric vehicle market highlights:

BEV sales during Q2 2023 grew over 50% YoY.
One in every 10 cars sold during Q2 2023 was a pure battery electric vehicle (BEV).
China remained the leader in global BEV sales followed by USA and Germany.
BEV sales in the USA grew by almost 57% YoY, the highest among the top 3 EV markets.
Tesla Model Y retained its title as the ‘best-selling’ passenger car globally.
With the present growth trajectory, total BEV sales are expected to reach over 10 million units by the end of 2023.

Top Electric Vehicle Brands highlights:

Tesla: Tesla sales soared by 83% YoY during Q2 2023. Tesla Model Y accounted for 64% of Tesla’s global sales. Model Y retained its title as the ‘best-selling’ passenger car model globally.

BYD Auto: During Q2 2023, BYD Auto’s BEV sales grew by 96% YoY, faster than Tesla. BYD Yuan Plus (or Atto 3) was the best-selling BYD model followed by BYD Dolphin and BYD Seagull. BYD Seagull was introduced in April 2023 during the Shanghai auto expo. BYD Seagull also ranked #9 among the top 10 best-selling BEV models globally. BYD exported over 35,000 EVs during Q2 2023. Almost two-thirds of its exported BEVs were sold in Thailand, Israel and Australia.

Volkswagen Group: BEV sales of VW group grew by 48% YoY during Q2 2023. VW ID.4, Audi Q4-etron and VW ID.3 are the top 3 best-selling models of the group, accounting for nearly 50% of the group’s total BEV sales.

* Our present analysis takes Pure Battery EVs (BEVs) into account. We have removed Plug-in Hybrid EVs (PHEVs) from our analysis to avoid confusion.

For our detailed research on the global EV sales market in Q2 2023, clickhere.

For a more detailed electric vehicle model sales tracker, click below:

Global Passenger Electric Vehicle Model Sales Tracker: Q1 2018 – Q2 2023

This report tracks the global passenger vehicle sales* by brand and by model across 23 regions (China, USA, Germany, UK, France, Spain, Japan, India, Italy, South Korea, Thailand, Indonesia, Vietnam, Brazil, Argentina, Russia, Malaysia, Philippines, Singapore, ROE, LATAM, MEA and Oceania) quarterly. The report will help to understand regional trends, brand dynamics and type of EV penetration. The period covered in this report is from Q1 2018 to Q2 2023.

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

*Under electric vehicles, the report only considers battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). Hybrid electric vehicles and fuel cell vehicles (FCVs) are not included.

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Note: Numbers based on passenger vehicles only. For EVs, we consider only BEVs and PHEVs. Hybrid EVs and fuel cell vehicles (FCVs) are not included in this study.

AI Needs to Reside in the Vehicle to Work Well

Mercedes is running a beta program where those that opt in will be able to accessChatGPTfrom their vehicle by interacting with thevoice assistantalready present in MBUX-equipped vehicles. But rather than the cloud-based service that Mercedes is going with today, it should be looking at implementing ChatGPT directly in the vehicle.

Mercedes owners in theUScan enroll for the program by accepting an update for their car.
The test is due to run for three months and is being supported by Microsoft’s Azure OpenAI Service, which is an API to which clients can connect their services to havegenerative AIfunctionality.
Mercedes is able to implement this service very easily because all it is really doing is providing a prompt for the vehicle assistant to fill in, send it to the cloud and then read out the results.
This means that all of the inference or processing of the request will be done in the cloud with the voice assistant doing nothing more than acting as a front end to provide the voice functionality.
The vehicle is a use case where generative AI could have a disproportionately large impact. This is because a touch-based icon grid is a substandard user experience no matter who provides it.
The problem that the car makers have is that their icon grid is much worse than Apple, Gooxgle orTesla.
此外,在2016年和2017年,我们认为签证官ice was the leading contender to improve the digital experience in the vehicle but that voice was not good enough to create an acceptable user experience.
This is why vehicles are still limping along with smartphones embedded in the dashboard.
We have also concluded that generative AI represents a significant step forward in the ability of machines to communicate with humans and provide a user interface for a digital service.
Consequently, generative AI offers a significant opportunity for vehicle makers to win back the digital initiative that they have ceded to the digital ecosystems.
This is extremely important as vehicle makers’ ability to monetize the market for in-vehicle digital service will be contingent on their ability to remain relevant in the digital vehicle experience.
This is why Apple andGoogleare coming aggressively after the vehicle and so far, the OEMs have mounted feeble resistance or offered complete capitulation.
The problem with this approach is that the only way to implement generative AI effectively in the vehicle is to put it directly in the vehicle.
This is because reliability and speed are critical, and in this example when the network goes, the service goes with it.
Furthermore, it is unlikely that there will be any real integration with the vehicle, meaning that telling ChatGPT that one is feeling hot is likely to result in silence rather than the air-conditioner being turned up.
Using ChatGPT as the benchmark implementation in the vehicle will have a profound impact on the cost of the vehicle’s electronics as well as its power consumption which in anEVis a deal breaker.
There are rapid developments going on in the open-source community that may make this a lot easier to achieve, but implementing large language models outside of the data center remains a work in progress.
Despite the current limitations, the potential for generative AI to help OEMs to overcome their digital shortcomings is substantial and represents one of the best opportunities the OEMs have had for a long time.
The risk is that if no one uses it as a result of the way the Mercedes experiment is implemented, it will lead to the (wrong) conclusion that putting it in the vehicle is a waste of time.
This would lead to the squandering of another opportunity, resulting in digital irrelevance and greater commoditization.
We remain pretty pessimistic about the outlook for the OEMs.

(This is a version of a blog that first appeared on Radio Free Mobile. All views expressed are Richard’s own.)

Tesla Reports Record Revenue, Deliveries in Q4 2022

Tesla’s total revenue stood at $24.3 billion in Q4 2022 with 37% YoY growth.
Tesla deployed 2.46 GWh of energy storage during Q4, a growth of almost 152% YoY.
Tesla’s vehicle deliveries are expected to exceed 1.7 million units globally in 2023.

Riding on record 405,278 vehicle deliveries in Q4 2022, Tesla registered a record total revenue of $24.3 billion during the quarter, an increase of 37% YoY. Deliveries rose 31.3% YoY in Q4, bringing the 2022 annual total to1.3 million units. TheUS was the leading market在第四季度,中国和欧洲紧随其后。一年一度的德liveries of Tesla’s premium Model X and Model S grew 167% YoY to reach 66,000 units.

Tesla’s sales inChinafell short of expectations again due to the COVID-19 outbreak. Production at the Shanghai factory, which exported more than 106,000 units in Q4, was halted during the last week of December. Although no specific reason was stated officially, rising COVID-19 cases among workers were a likely cause for the unexpected production halt. On the other hand, the weekly Model Y production in the Berlin factory touched 3,000 units. The rising production in Germany has helped Tesla gain a strong grip onEurope’s EV market. The Model Y remained Europe’s top-selling car model during November and December. Tesla’s in-house 4680 cell production rate also reached 1,000 cars per week.

财务总结ry

Tesla’stotal revenueduring Q4 2022 stood at $24.3 billion, an increase of 37% YoY. The company generated more than $20 billion from automotive sales. During Q4, the widespread release ofTesla’s full self-driving(FSD) feature generated $0.32 billion in revenue, indicating that the company is striving to increase the proportion of software revenue in its overall product mix.
Revenue from Tesla’sother businesseslike energy storage, solar panel deployment, charging and vehicle servicing grew by almost 72% YoY to exceed $3 billion. Other businesses contributed 12% of Tesla’s Q4 revenue.
Tesla deployed 2.46 GWh ofenergy storageduring Q4. At 151.7%, it saw the highest YoY growth till now.
Tesla’s total revenue for 2022 exceeded $81.4 billion, a 51% YoY growth.
During Q4,gross profitalso increased by 19% YoY and stood at $5.7 billion. In October, Tesla reducedvehicle prices in Chinaafter increasing them a couple of times during H1 2022. Initially, it was thought the increase in demand would make up for the price cut but the negative foreign exchange impact restricted further gross profit growth.
Tesla’sinventoryin Q4 stood at 34,423 units, bringing the annual total to 55,760 units. The COVID-19 outbreak in China and the increased production in the Berlin factory are probable causes of the higher inventory. In addition, Tesla is facing stiff competition as legacy automakers and new players are offering more affordable EVs. In January 2023, Tesla lowered prices globally, which may help in clearing out inventories and achieving economies of scale.

Outlook

Tesla’s strong fundamentals are expected to keep the company ahead of most other electric vehicle brands globally. Tesla announced price cuts in January 2023, which has resulted in the demand ballooning to twice the production. Besides, pilot production of the Tesla Semi began in 2022 and the vehicle is expected to hit the road soon. The company also plans to start production of theCybertruckin mid-2023. Furthermore, Tesla recently announced an investment of $3.6 billion to set up a 100GW capacity cell factory and a high-volume semi factory. Tesla’s 2023 vehicle deliveries are projected to exceed 1.7 million units, with a 31% YoY growth. This seems attainable if the company’s recent price cuts remain in effect for most of the year.

Tesla’s stellar Q3 performance

Tesla delivered nearly 343,900 vehicles during Q3 2022, an increase of 42.4% YoY
Logistics remains a major bottleneck for Tesla deliveries
Tesla can exceed 1.3 million unit deliveries by year end with current trajectory

Tesla rebounded during Q3, after experiencing a relativelyweak second quarter. During Q3, Tesla delivered nearly 343,900 vehicles, a 42.4% annual increase and a sequential increase of 35%. The combined deliveries of Model S and Model X grew by more than 100% YoY, reaching 18,670 units, while the combined deliveries of Model 3 and Model Y increased by 40% YoY. China is the leading market for Tesla followed by the USA and Europe.

Tesla’sShanghai Gigafactorysurpassed the previous quarterly production rate and remains the main export hub supplying to most markets outside North America. The gigafactory updated its production ramp in July this year. The Berlin Gigafactory is also producing more than 2,000 units of Model Y, weekly. A lot of work is left to bring the Berlin plant to full capacity as it is only slowly reaching its planned output. As winter approaches, and it is feared thatEuropewill experience an energy crisis, Musk somehow remains optimistic about vehicle production in the Berlin plant and expects that no production cuts will happen.

Q3 financial summary:

During Q3, Tesla’stotal revenuegrew by almost 56% YoY, reaching $21.4 billion. Tesla generated $18.6 billion from the vehicle segment, an increase of 55% YoY. This is largely due to increased global deliveries and higher vehicle ASPs.

Although revenue fromvehicle leasingduring Q3 has increased significantly by 61% YoY, revenue from the sale of automotive credits grew by just 2.5% YoY.

Revenue generated from the company’sother businesseslike energy storage, solar panel deployment, charging and vehicle servicing also grew by 62.5% YoY, exceeding $2.7 billion.

Gross profit, was $5.3 billion an increase of 47% YoY. But below expectation due to the high cost of raw materials, upgrading the production ramps (Berlin, Texas and 4680 cell factories) and increased logistic costs.

Tesla has been facing a serious issue with vehicle deliveries. There weren’t enough transport vehicles available with its logistic partners to handle the volume of Tesla deliveries. This increases the logistic cost which, in turn, is affecting theper-vehicle cost.

3.4% of the total revenue has been diverted towardsR&D expenditureduring Q3 2022. R&D spending stood at $0.73 billion, an increase of 20% YoY and sequentially growth of 10%. This is apparently due to the development of Tesla’s Optimus Robot and full-self driving (FSD) capability. This year Tesla postponed its AI Day to showcase a working prototype of its humanoid Optimus Robot whose software is very similar to the FSD system.

TheFSD betausers reached 160,000 in Q3, up from 100,000 in Q2. Tesla is also going for a wider release of its FSD beta during Q4 2022. Hence, new Tesla owners will have the option to avail FSD beta immediately. Currently, there is an eligibility criteria to avail the FSD beta. With the resignation of Andrej Karpathy, Tesla’s AI and Autopilot director, it was perceived that the company’s FSD development is likely to stall, but it seems Tesla has made good progress and is confident of its path toward full autonomy, despite some alarming failures among beta testers.

Outlook:

Despite a weak second quarter, Tesla’s yearly deliveries may cross 1.3 million units by the end of 2022. Tesla is expected to make its first delivery of the Tesla Semi truck to Pepsi on December 1^stthis year. The Semi is claimed to have a range of 500 miles with cargo at ground level. We are also expecting to see the company’s long-advertised Cybertrucks becoming available by mid-2023. Alongside these, Tesla has also increased the production of its in-house designed 4680 cells. The constant production ramp upgrade in its gigafactories around the globe is likely to keep Tesla the market leader in thebattery electric vehicle segment.

Meet Counterpoint at EV India 2022

Our Senior AnalystSoumen Mandalwill be attending the EV India 2022 event held on 7th-9th September 2022. He will be accompanied by fellow Research AnalystsAbhik MukherjeeandFahad Siddiqui.

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About the event:

EV India 2022 Expo is an International Electric Motor Vehicle Show which will provide the opportunity and platform to electric vehicle manufacturers to showcase their latest products, technology and equipment, smart and NextGen transport, electric passengers cars, scooter, motorcycle, cycles, buses etc. and to meet and network with the trade industry as well as end users with the main aim to find new businesses and strategies for protection of the environment.

EV India Expo is the one of the best public interactive platform for resources sharing, product purchase and brand display for the people and industry.

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Can Chinese EV Makers Make it Big in Japan?

For an automotive market like Japan, which is the base of global giants like Toyota, Honda, Nissan and Mazda, and saw early entry of hydrogen-fuel vehicles, it is easy to assume that the country would be a big market for new energy vehicle (NEV) makers. But the numbers tell a different story. According to the latest Counterpoint ResearchGlobal Passenger VehicleTrackers, the NEV penetration in Japan is around 1% compared to around 15% in China.

日本的内华达州总销量从2018年到2021年回答e just 4% of the total sales in China in 2021. It is easy to conclude that Japan is not an attractive market for EV makers. But opportunities can be found when taking an in-depth look into the market. In fact, the Japanese government is now actively pushing EVs by providing subsidies to set up EV charging stations.

FCEV vs BEV: What will be the future trend?

The debate on fuel cell electric vehicles (FCEVs) andbattery electric vehicles(BEVs) has been going on for years now. Many in countries like Japan and South Korea still believe that hydrogen fuel will be the future, while China has been pushing BEVs. Leading NEV maker Tesla has also bet on BEVs and made it to the top of the China NEV market by achieving almost 50% share in H1 2022.

The FCEV has many advantages but the BEV can be scaled up in a shorter time due to a more favorable infrastructure construction cost for the government and enterprises. Moreover, the BEV beats the FCEV both in terms of unit price and cost of use. Given the current macroeconomic headwinds, any plan to set up FCEV infrastructure will find few takers in the government or industry in the near future.

The Nissan Leaf BEV was the best-selling NEV model in Japan in 2021, with more than twice the sales as the second-placed Mitsubishi Eclipse Cross, a plug-in hybrid electric vehicle (PHEV).

Why BYD decided to enter Japan electric car market?

China’s BYD recently launched three electric car models in Japan – Seal, Atto 3 and Dolphin. As discussed above, Japan’s NEV market is comparatively small. So, what are the factors driving BYD’s Japan electric car market entry? We discuss them below:

Not a newbie in Japan’s vehicle market:BYD is already selling its electric buses in Japan. Furthermore, through tie-ups with Japanese companies including Toyota, Kansai Electric Power Company and Keihan Bus Company, BYD has a better understanding of the country’s consumption patterns.
Cost competitiveness:Within the same price segment, BYD can offer better vehicles in terms of mileage and other performance parameters.
Investment in charging infrastructure:Either by itself or together with the government, BYD has to increase the number of charging stations and charging points. The difference between China and Japan here is that there is a higher proportion of private charging points in China. But in Japan, more public charging points are needed due to the higher cost of land and parking slots. That is why the Japanese government is providing subsidies to set up EV charging stations.
Localization:日本市场consum独特的味道er electronics, such as the consumers here prefer to buy the iPhone SE while their counterparts elsewhere are likely to favor bigger-screen smartphones. The same is true for vehicles. The Kei car category, created by the Japanese government for the smallest permissible cars, is popular among local car users. Of the three models launched by BYD, the Dolphin is very similar to a Kei car. The key reasons why Kei cars are welcome in Japan include:
- Streets are narrow in Japan, especially in major cities.
- There are many mountain roads in Japan.
- Parking space is scarce.

China EV makers going overseas: Challenges and opportunities

Unlike the traditional internal combustion engine (ICE) vehicle era, China’s vehicle makers are big players in the NEV arena. Core NEV technologies like battery, motor and electronic control systems are all now being developed in China also. It is undeniable that China’s NEVs now dominate the market volumes globally. China’s NEV companies and even traditional car companies consider it strategically important to enter overseas markets.

Besides China, Europe and US are the other major markets with good EV penetration and growth. The rest of the markets are still in an educational phase. Therefore, some caution is needed for the NEV makers planning to enter markets like Japan.

The acceptance of the NEV:Although the safety levels of BEVs, PHEVs and FCEVs have improved and reached that of ICEVs, it still needs time for a large number of consumers to trust NEVs, especially in the markets dominated by ICEV manufacturers. But the situation is gradually improving with more and more friends, relatives or other known people using NEVs.

Cost:Many times it is the cost that triggers a purchase or replacement decision. For Chinese NEV makers, cost control is important as still many key parts are made only by a few players.

Better products:Besides the coretechnologiesfor the car’s hardware, new applications such as smart cockpit, driving assistant and driverless option are being introduced on the software side to improve the car user experience. Vehicle makers must continue to focus on removing key pain points of target consumers.

Brand power and market competitiveness:Car consumers are more willing to pay a premium for a known brand name. At the same time, many are looking for more bang for their buck. Therefore, it is important for car makers to study consumer behavior and composition of the market they are planning to enter.

Investment and policies:TheNEVecosystem in many markets is still not mature. Huge investments are required to develop this ecosystem, whether it is manufacturing units, service centers, points of sales or charging stations. With the goal of “zero carbon” in mind, many countries provide incentives to NEV makers and consumers, though the risk of policy change always remains.

Tesla Reports Record Revenue in Q1 2022; Rising Raw Material Cost a Challenge

特斯拉汽车交付了310000辆Q1 2022, a YoY increase of 68%.
Revenue reached a record high of $18.8 billion during the quarter.
More than 46% of Tesla’s operational expenses in Q1 2022 went to R&D.

The initial months of 2021 were not favorable for automakers. Semiconductor shortages derailed the post-COVIDrecovery, affecting vehicle sales worldwide. But the shortages haveeaseda bit one year later and auto sales are reviving. Automakers expect to recover the losses made during the last two years, soon. However, traditional automakers are unable to cope with the rising demand for pure EVs, whereas Tesla’s ability to address this demand has rewarded it not only with higher vehicle sales in Q1 2022 but also a record revenue of $18.8 billion. Tesla has also started deliveries to car rental service provider Hertz against its huge 100,000-vehicle order, which is also a reason for high vehicle production and delivery during the quarter.

Tesla’s Q1 2022 revenue would have been more without the fresh COVID wave that has hit Shanghai and surrounding areas, affecting the company’s production there. From the second week of March, rising cases of a new COVID variant have forced automakers operating around Shanghai to suspend production.

The urge to achieve L4 autonomy by the end of 2023 and to roll out robotaxis by early 2025 can be a major reason forTesla’sbig R&D spend. Besides, Tesla could also be conducting research on developing new battery chemistry. Thesoaring prices of some key battery components like nickel and lithium have put the auto OEMs in a spot. Most EV makers around the globe have been forced to raise prices by a few thousand dollars to cope with the rising prices of battery-related raw materials.

After Tesla’sShanghai plantbecame operational, the company’s sales boomed globally, especially in China. In 2021, China remained its top market followed by the US and Europe. Apart from vehicle sales, Tesla has a strong network of charging stations and insurance services. Till Q1 2022, Tesla had 3,724 superchargers and 33,657 supercharger connectors worldwide.

Q1 2022 Financial Results

DuringQ12022, Tesla delivered more than 300,000 units ofvehicles, an increase of 68% YoY. Model 3/Y accounted for more than 95% of deliveries.
Total revenuestood at $18.7 billion, an 81% YoY increase. Nearly 90% of the total revenue came from vehicle sales.
Tesla’s other services like energy storage, charging and insurance contributed to the remaining 10% of the revenue. Revenue from energy-related services and insurance services saw YoY growth of 24.7% and 43.23% respectively.
Keeping parity with vehicle sales and revenue growth, Tesla’sgross profitduringQ12022 reached $5.4 billion. Compared to the same period last year, the gross profit grew by a whopping 146%. Gross profit from vehicle sales saw a jump of 132% YoY.
R&D costhas also been on the rise. During Q1 2022, it stood at nearly $1 billion, a 30% increase YoY. More than 46% of the operating expenses were incurred in the R&D segment, implying Tesla is working seriously on some new technology under the hood.
Vehicle inventoryfor Tesla is quite different from other OEMs. During Q1 2022, Tesla delivered more vehicles than it produced, putting the quarterly inventory at -1.5%. This implies that Tesla has been clearing older stock that remained unsold during 2020 and 2021. Tesla keeps a delicate balance between production and deliveries, which helps it to maintain an image that its vehicles are in high demand.

Market Outlook

Tesla’s future seems strong as it never stops innovating and keeps providing better and newer features to its customers. But within a couple of years, Tesla will face strong competition from traditional OEMs like Volkswagen, Toyota andStellantis, which released their ambitious vehicle electrification plans last year. Though it will be difficult for them to overtake Tesla sales any time soon, Tesla will witness a reduction in its share across major markets. The reason behind this is the price band in which Tesla operates. It mostly operates in the high-to-premium price band, whereas the traditional OEMs are planning to launch vehicles in the budget segment. The rising cost of a few key raw materials and inflationary impact on production have pushed Tesla to increase itsvehicle pricesworldwide a couple of times. This might play against the sentiment of new customers, which will, in turn, affect the next quarter’s financials.

NIO Registers Nominal Growth in Q4 2021

NIO中国智能电动车是一个领导者(EV) market. After starting its business in 2014, NIO delivered its first model, the ES8, in December 2017. Since then, it has grown rapidly. The company has also entered the international market with the launch of operations in Norway in the latter half of 2021.

In China, NIO operates in the premium price segment where it competes with brands like Audi, BMW and Tesla. However, NIO plans to launch a subsidiary brand for the low-tier and mid-tier segments. While this sub-brand will compete against automakers like Wuling, Volkswagen and Toyota, NIO as a brand will continue its operation in the premium segment.

Apart from its EV business, NIO also provides battery and vehicle charging solutions through its subsidiary NIO Power. In December 2021, NIO Power had more than 700 swapping stations across China, which had already provided a total of 5.3 million swaps. NIO also has 3,020 power chargers and 3,319 destination chargers in various locations across China.

Q4 2021 Results

In late March, NIO released its unaudited financial results for Q4 2021 that showed nominal progression across most metrics.

Vehicles Delivered

During Q4 2021, NIO delivered 25,034 units of cars, which is an increase of 2.4% QoQ and 44.3% YoY. NIO’s total vehicle sales grew 109% annually to reach 91,429 units in 2021. This growth was mainly driven by rising EV adoption in China and NIO’s business initiation in Norway.

Revenue

Keeping parity with vehicle sales, NIO’s total revenue for Q4 2021 stood at $1.55 billion, a 1% sequential increase. Revenue from vehicle sales was $1.45 billion, a 6.7% increase from the third quarter. For the full year of 2021, revenue from vehicle sales reached $5.2 billion, a 118% increase compared to 2020.

While around 92% of NIO’s 2021 revenue was generated through vehicle sales, revenue from power and services also increased.

Gross Profit

Although NIO saw nominal sales and revenue growth sequentially in Q4 2021, gross profit declined 14.7% QoQ to $266.7 million, giving a gross margin of 17.2%, which also decreased by 3% points QoQ. Regulatory credits helped its gross margin during Q3 2021.

Research and Development

During Q4 2021, the R&D cost was $257.2 million, amounting to more than one-third of the total R&D cost for 2021. This jump suggests NIO is working on several new vehicle projects as well as developing new services. In January last year, NIO launched its autonomous driving platform ‘NIO Autonomous Driving’. Though the platform is restricted to ADAS, it is expected that L4/L5 autonomy will be developed on this platform. Nio started the deliveries of ET7 in March this year. So, a part of R&D cost might have been mobilized even towards software development to make it a best-in-class product.

Market Outlook

With EV sales accelerating compared to previous years, the company expects to achieve revenue growth of 20.6% to 25.1% during the first quarter of 2022. However, China’s EV market is currently going through a slack period for two main reasons: Firstly, rising COVID infections are causing widespread city and even regional lockdowns, and secondly,raw material pricesfor EV batteries are rising (nickel and lithium prices have increased sharply).

Due to the rising costs, EV manufacturers are either increasing prices or sacrificing profit. Entry-level and mid-level brands are likely to be most impacted, but even premium brands will be affected eventually.

While OEMs are reluctant to increase their vehicle prices, Xpeng, another leading Chinese EV manufacturer, has recently increased its vehicle prices by at least $1,500. Even Tesla and BYD, which are believed to have strong and stable supply chains, have been forced to increase prices. NIO has resisted the move so far and expects to benefit from strong demand in the short term.

Hon Hai – Diversification Beyond Apple into Semiconductor & EV Space Key to Long-Term Growth

We deep dive into the earnings performance of the world’s largest smartphone EMS and potentially the largest EMS player by revenue – Hon Hai (Foxconn Group).

Short-Term Performance & Outlook: Apple remains the foundation, Cloud & Components business bright spots

Hon Hai”s 2Q’21 revenue climbed to NT$1351 Billion ($48.55 Billion), was in line with the expectations from the group’s revenue perspective, growing 20% YoY compared to last year which was the break-out quarter for the pandemic.
The localized production strategy is helping Hon Hai to somewhat alleviate the pandemic effect which is going on in waves.
Smart Devicesbusiness remain strong growing 29% YoY in revenues, thanks to its biggest customer Apple whose iPhone shipmentsgrewalso coincidently29% YoYduring the June-ending quarter.
Cloud Networking & Computingsegments saw a slow down in revenues compare to a stronger demand in last year’s quarter. However, Hon Hai expects thecloud& networking products demand to pick up in Q3 2021.
Overall the company’sGross marginremains stable at a6% levelwithOperating incomeand net income still hovering around the2% markeach.
We estimate the revenue to grow around 5% levels in Q3 2021, driven by cloud and computing segments offsetting a slow quarter for smart devices business (re: Apple) and some headwinds from componentsupply crunchas well as pandemic peaking in some Asian markets, home to company’s operations.

Long-Term Strategy & Outlook: Boost Gross Margins

Looking at the new growth segments globally withAI, RoboticsandElectric Vehicles, Hon Hai wants to cash in on these segments via its F3.0 strategy
For example, Hon Hai made series of investments, partnerships, and new alliances over the last 12 months in the EV Space with huge ambitions to capture more value across the EV value chain fromsemiconductorstochassisdesign tosoftwaretoassemblingto services.
Hon Hai wants to capture atleast10% of the $600 Billion EV market by 2025. This translates into 3-4 million EV units per year or $60 Billion in revenue.
Hon Hai with avertical approachacross the EV stack looks to lift its groupGross Margins up from 6% to 10% levels.

From asemiconductor perspective, Hon hai also wants to control the upstream supply chain for a more integrated offering, have invested in:
- 8-inch wafer fab (DNex/SilTerra, Malaysia) – focusing on mature nodes 110nm
- 6-inch wafer fab fromMacronixin Hsinchu to develop components such asSiC MOSFETsfor EVs
- KoreSemiin Qingdao
- GigaSolarMaterials to develop EV Battery materials
Fromsoftware and services perspective, If Tesla is the iPhone of the EV market,HonHai wants to become the “Android” of the EV marketvia its EV Open Market platform. So this is from a software perspective.
From ahardware perspective, Foxconn is also looking to set up additional factories in Thailand and the USA to produce EVs via contract manufacturing (e.g. Fisker, Byton, Geely,Stellantis) and for prospective new entrants relying on the company for the entire EV stack.

For more insights on Hon Hai’s EV Strategy, read –Will Foxconn Shake EV Industry?

So in summary, Hon Hai’s long-term strategy look solid as it looks to diversify beyond the smart devices business which is yielding very low margins to segments that can yield higher margins with more control over the entire stack. Though, execution would be the key to really become the Android of EV market.

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Tesla – A Game Changer for India’s EV Industry?

Stagnating electric vehicle (EV) sales in the US have ledTeslato explore overseas markets in Europe andChina. But the increasing competition in theEVsegment and the company’s own ambitions make it imperative to look beyond these markets. It is with this in mind that Tesla recently announced its entry intoIndia. No doubt it is an excellent move by the automaker which delivered close to 500,000 vehicles globally in 2020 and plans to produce 20 million vehicles per year by 2030.

However, the way forward for Tesla in a developing country likeIndiarequires a closer scrutiny of the market and the challenges it poses. To begin with, Tesla will have to launch an affordable EV in the country to achieve volumes and long-term success. A local manufacturing base will help here. Inadequate charging infrastructure is both a challenge and an opportunity. The automaker can set up a network of charging stations in key cities to gain an early-mover advantage.

At the same time,Tesla’sIndia entry has the potential to speed up ecosystem development in the country, encouraging other automakers and suppliers to firm up their EV plans.

Pricing a key factor

A typicalIndian carbuyer is highly cost-sensitive. Budget cars costing $8,000-$10,000 account for a vast majority of car sales in the country. Much of Tesla’s success in India will depend on the price at which it launches its EVs.

年度豪华车销售是35000单左右ts in India. Therefore, Model 3 will not find many buyers in the country. However, Tesla has a long-term plan to launch an EV priced at $25,000. Given the battery design, material and production innovations the company is undertaking, Tesla should be able to launch the $25,000 EV in the next three years.

Considering Tesla sets up local manufacturing in the country, this car can be offered at a price at least 20% lower. This is an attractive price point, accounting for some 300,000 units of annual sales and having high growth potential.

Why India?

Indiais among the most polluted countries in the world. But the eagerness to curb pollution levels in the country is rising among all stakeholders. The low penetration of cars in the country, coupled with rising income levels, also makes India an attractive market for automakers. Below are the key factors that will aid Tesla’s success in the country:

Stringent emission norms make way for EVs:In 2020,Indialeapfrogged from BS-IV to BS-VI (equivalent to Euro 6) emission norms. Corporate Average Fuel Efficiency norms require automakers to improve their fuel efficiency by 10% by 2021 and by 30% or more from 2022, when compared to that in 2017. While still a long way to go in terms of EV incentives, policies like Faster Adoption and Manufacturing of Hybrid and Electric Vehicles have generated industry interest in EVs.
Huge potential:Indiais the fourth largest automotive market with more than 4 million vehicles sold annually. Despite this, car penetration in the country stands at 22 per 1,000 individuals compared to 980 and 850 in the US and the UK respectively, presenting a huge potential for long-term growth.
Changing customer preferences:Income levels continue to rise in India. Car buyers are upgrading from budget to mid-premium cars while preferring latest digital technologies and becoming increasingly concerned over growing pollution levels.

Recommendations

Tesla’s move to enter India is certainly not aimed at selling its Model 3 in large volumes but to get an early-mover advantage when EVs prices reach cost parity with conventional vehicles. Below are some areas that Tesla should focus on during its initial years in the country:

Set up a network of fast chargers:Tesla should set up a network of fast-charging stations in key cities, where buyers can afford a $20,000 car, to tackle the range anxiety issue that potential customers may face while deciding to buy a Tesla.
Study the market:As Tesla is a new player, studying the local market, gaps left by established players (like Daimler and BMW) and pain points of its target customers is of paramount importance.
Brand building:The automaker should invest in building a brand which stands for luxury, performance and innovation. Tesla should build on its already positive word of mouth in the country.
Local manufacturing:Tesla should set up a local manufacturing unit for assembly and battery to reduce costs and use it as an export hub for Southeast Asian and African countries. Pro-investment polices like Make in India and 100% FDI route for the automotive sector have made India an attractive country to set up local manufacturing.
Global R&D center:特斯拉应该建立一个研发中心,employing young, tech-savvy engineers at a lower cost. Tesla can take advantage of the country’s prowess in software development to improve its embedded software, OTA and cloud ecosystems.

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