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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’sgrowthafter the elimination of NEV purchase subsidies. In 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

Counterpoint Technology Market 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

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’sGlobal 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%.Chinawas the second fastest-growing market among the world’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,IM 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.”

In 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 ‘Global 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.

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Analyst Contacts

Soumen Mandal

Abhik Mukherjee

Brady Wang

Neil Shah

Peter Richardson

Counterpoint Research

press@www.arena-ruc.com

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China Q2 EV Sales Almost Doubled YoY, Despite a Weak Quarter

BYD led China’s EV market, followed by Wuling, Tesla, Chery and GAC Group.
Top 10 EV models in China accounted for more than 44% of the country’s total Q2 2022 EV sales.
One in four cars sold in China will have an electric powertrain by the end of 2022.

New Delhi,Beijing, London,San Diego, Buenos Aires, Hong Kong, Seoul – September 15, 2022

China’s Q2 2022 passenger electric vehicle (EV) sales* almost doubled from that a year ago, despite the quarter being a weak one, according to Counterpoint’sGlobal Electric Passenger Vehicle Model Sales Tracker. Pure battery electric vehicles (BEVs) accounted for almost 78% of total EV sales, while the remaining were plug-in hybrid electric vehicles (PHEVs). BYD remained the market leader, followed by Wuling and Tesla. Emerging brands, such as Xpeng Motor, Neta (Hozon Auto), Leapmotor, Li Auto,NIOand AITO (Seres), proved to be strong competition for the top players.

Commenting on the market dynamics,Senior AnalystSoumen Mandalsaid, “China is a mature EV market but it still has immense potential to expand further. Fresh COVID-19 cases from March 2022 onwards and the supply chain crisis due to theRussia-Ukrainewar have adversely affected the Chineseautomotiveindustry. Had it not been for these factors, the China EV market would have achieved sharper growth. Theprice hikeby most Chinese automakers during March, followed by strict COVID-19 lockdowns during April and May around Shanghai, restricted growth in the domestic automotive industry. Although better results are expected in H2 2022, the economic downturn, energy crisis, supply chain bottlenecks and rising geopolitical tensions may hinder market growth, especially for EVs.”

Market summary:

BYD Auto:BYD, which has been the market leader in China since mid-2021, sold more than 353,000 EV units in Q2 2022. The automaker’s BEV segment grew 229% YoY while its PHEV division expanded 312% YoY. The company’s decision to discontinue the production and sales of pure ICE vehicles since March 2022 allowed it to focus on electrified vehicles and become the global EV leader.

Wuling: The SAIC-GM-Wuling joint venture has been very successful in China. Wuling’s Hongguang MiniEVhas been the flag bearer for the brand since the end of 2020 and has been China’s best-selling EV model for more than the past 18 months. Wuling’s EV sales grew almost 16% YoY during Q2 2022.

Tesla: The pandemic-related lockdowns in Q2 2022 severely hurtTesla’s business. Production ramp-ups were almost completely halted in April and May during which its sales in China fell 49% YoY to reach the lowest number for the automaker since 2020. The situation improved only after production resumed to full capacity in June 2022. The company ended Q2 2022 on a positive note with 10% YoY growth in sales.

Commenting on the EV infrastructure development,Associate DirectorBrady Wangsaid, “Direct subsidies toconsumershave played a big role in increasing EV adoption across China. Now, as the government plans to phase out direct subsidies to consumers, the country’s dual credit policy for EV production is likely to play an important role. Moreover, many laws that were implemented to save China’s automotive industry from the onslaught of foreign OEMs are being lifted as domestic brands have matured and are now even penetrating other markets, such as Europe andSoutheast Asia. Moreover, China’s component industry, especially the battery supply chain, has been strong and is expected to maintain its global dominance. Apart from the increased EV sales and a strong battery supply chain, China also has a goodcharging networkand domestic players are currently focusing on developing proper battery recycling facilities. China is at the forefront in every aspect of the EV ecosystem and has become the leading global figure in the EV space.”

排名前十的EV模型在中国占了than 44% of the country’s total EV sales in Q2. Wuling’s Hongguang Mini EV remained the undisputed best-selling model for the quarter followed by BYD’s Song and Tesla’s Model Y. However, in June 2022, the Model Y overtook the Hongguang Mini EV to become the top-selling model. China’s EV market is dominated by domestic brands, along with Tesla. Six of the top 10 models were from BYD, among which the BYD Yuan Plus and BYD Dolphin were released after Q2 2021.

Source: Counterpoint Global Passenger Electric Vehicle Model Sales Tracker, Q2 2022

Commenting on the market outlook,Research Vice PresidentNeil Shahsaid, “EV sales in China constituted 15% of the total passenger vehicle sales in 2021. According to Counterpoint’s Global Passenger Car Forecast, EV sales are expected to cross the 6-million-unit mark by the end of this year. The market will likely remain subdued due to the ongoing chip crisis,COVID-19 outbreaks, energy crisis, geopolitical tensions and rising consumer inflation. However, we believe one in four cars sold will have anelectric powertrainby the end of 2022.”

*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-depthGlobal Electric Passenger Vehicle Sales Tracker, Q1 2018-Q2 2022is 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

Brady Wang

Counterpoint Research

press@www.arena-ruc.com

Related Reports:

LiDAR Now High on Automotive Industry Radar

激光雷达出货量预计将跨越1亿年units by 2030 driven by the automotive industry. The increase in demand for LiDAR will match the increase in demand for ADAS and automated driving in passenger cars and robotaxis. As the number of LiDAR sensors per car increases, reaching a likely maximum of eight units to enable fully autonomous driving, the LiDAR market is expected to grow at a CAGR of 65.9% to reach $15 billion by 2030.

Level 3 and above automated driving will require a fusion of LiDAR, radar and camera sensors. While a few companies, like Tesla and Wayve, will look to make autonomous driving successful without LiDAR, most car manufacturers, like Mercedes-Benz, Nissan, BMW, Stellantis, Volkswagen and Volvo, have already announced their intention to include LiDAR in their sensor suites for ADAS/AD in upcoming car models.

The biggest threat to LiDAR comes from alternative technologies such as cameras and machine vision. A small number of companies believe that vision-based systems are sufficient to support autonomous driving. This can hamper the growth of LiDAR as the cost of switching to cheaper vision-based solutions is relatively low.

Automotive LiDAR market

The current LiDAR market is crowded as more than 70-80 companies are operating globally, targeting different industries and regions. From 2020 onwards, a total of nine companies – Velodyne, Luminar, Aeva, Ouster, Innoviz, Aeye, Indie Semiconductor, Quanergy and Cepton – have announced listing of stocks through SPAC mergers.

Valeo’s Scala is the world’s first mass-produced LiDAR for cars. In 2021, Mercedes-Benz and Honda introduced Level 3 models S-Class and Legend respectively. Both are equipped with Scala LiDAR. Since 2017, Valeo has shipped more than 170,000 LiDAR units.

According to a Counterpoint study, the value of the automotive LiDAR market reached around $100 million in 2021 as car companies including Toyota, Honda and Chinese companies like Xpeng launched models equipped with LiDAR. Many car OEMs have signed deals with LiDAR suppliers for their upcoming models. Chinese automakers are at the forefront in entering such partnerships.

Future of automotive LiDAR market

According to Counterpoint’sGlobal Autonomous Passenger Vehicle Forecast, by 2025, 10% of the new cars sold globally will have Level 3 driving capabilities. Developed markets like the US and Europe will have a higher percentage of Level 3 cars and will first see the entry of Level 4 cars (subject to regulatory approval). This suggests LiDAR has a considerable growth opportunity as Level 3 and above cars will reach the mass market in unison by 2030. According to Counterpoint’sAutomotive LiDAR Market Trends and Implications, 2022study, the LiDAR market is expected to grow from $0.1 billion in 2021 to over $15 billion and over 100 million units shipped in 2030.

Conclusion

After the first use of LiDAR in the automotive segment, it took more than five years for LiDAR to make it to a production vehicle and it still has not been successful at achieving broad market penetration. But it is early days and the scope for LiDAR is considerable. We believe that despite the slow initial diffusion, LiDAR adoption will gather pace.

For more insights and analyses on the Automotive LiDAR Market, please refer toAutomotive LiDAR Market Trend and Implications, 2022,which captures the current and future LiDAR trends, LiDAR cost, and threats to LiDAR in the automotive industry.

Global EV Shipments Up 79% YoY in Q1 2022; Tesla Remains Leader

In Q1 2022, global electric passenger vehicle (EV) shipments exceeded 1.95 million units.
Passenger battery electric vehicle (BEV) shipments grew 90% YoY during the quarter.
EV shipments are expected to cross 10 million units by the end of 2022 and 58 million units by 2030.

New Delhi,London,San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – July 8, 2022

After surviving theCOVID-19pandemic and semiconductor shortages, the global automotive sector continued to recover in early 2022. Passenger vehicle shipments, especially electric passenger vehicle* (EV) shipments, grew during the first quarter. According to the latest research from Counterpoint’sGlobal Electric Passenger Vehicle Model Shipments Tracker, EV shipments grew 79% YoY in Q1 2022 to reach 1.95 million units. Of these, battery electric vehicles (BEVs) accounted for 73% and plug-in hybrid electric vehicles (PHEVs) for the rest. China remained the market leader in EV shipments, followed by Europe and the US. China’s EV shipments increased 126% YoY in Q1 2022 to reach more than 1.14 million units from just 0.5 million units in Q1 2021.

Commenting on the market dynamics,Senior Research AnalystSoumen Mandalsaid, “The EV market is witnessing a boom. However, shipments would have been higher if the automotivesupply chainwas not affected by theUkraine crisisand fresh COVID-19 waves in China in March 2022. With EVs comprising just 12% of the total passenger vehicle shipments during the first quarter of 2022, there is a lot of scope for expansion. Fresh players are entering the market to benefit from the opportunity. To counter new entrants, existing players are using leading-edge technologies to have improved battery, superior IVI system and higher levels of ADAS in their EV models as major selling points.”

Tesla:Teslahas registered phenomenal growth over the course of a year. The company’s shipments grew 68% YoY in Q1 2022 and are expected to cross 1.3 million units by the end of 2022. After operations started at theShanghaiGigafactory in 2019, Tesla’s China shipments skyrocketed. With the Berlin Gigafactory becoming operational in March, Europe sales are likely to increase in Q2 2022. Tesla is currently the global EV market leader. In Q1 2022, it sold more vehicles than the next three OEMs combined in the BEV segment. Tesla will face competition from BYD,NIOand XPeng in China while Volkswagen is gearing up to compete on the global front. Despite this competition, Tesla is likely to remain the market leader in the BEV segment for the next few years.

BYD Auto: BYD emerged as China’s top EV seller during Q1 2022. Its EV shipments increased by a whopping 433% YoY to reach more than 0.28 million units. This was due to BYD increasing its production of BEVs and PHEVs while completely halting its internal combustion engine business. In Q1 2022, BYD’s BEV and PHEV shipments grew 271% YoY and 857% YoY, respectively.

Wuling: The joint venture between SAIC, GM and Wuling has proved a success as the Wuling Hongguang Mini EV is the most sold EV model in China. Compared to Q1 2021, Wuling grew by just 14% and currently holds the third rank in the global EV market. Wuling achieved high EV shipments by just operating across China and Indonesia. Expanding across the SEA countries will help its business to grow as competition in the region is not that high. An early entry will help Wuling to secure a significant market share.

BMW: Over the years,BMWhas developed its business more in the PHEV segment than in BEV. BMW’s 16% YoY growth is mostly due to its offering of several new and improved PHEV models. BMW’s BEV shipments are predominantly driven by the company’s i-series models, while BMW Series 3 and Series 5 models are driving its PHEV shipments.

Volkswagen: Volkswagen is working hard to compete with Tesla in Europe, but its efforts have been disrupted by the supply crisis caused by Russia’s invasion of Ukraine. With its ID models, Volkswagen wants to capture a significant share of the EV segment. During Q1, Volkswagen’s EV shipments increased by 25% YoY. China remains Volkswagen’s top EV market, followed by Europe and North America. Across all major regions, the company’s all-electric ID.4 model registered most shipments.

Source: Counterpoint Research Global Electric Passenger Vehicle Model Shipments Tracker, Q1 2022

Discussing the reasons for the rise in EV shipments,Mandalfurther added, “Technological development is the key reason behind the increase in EV shipments.Battery technologyhas undergone recent breakthroughs. These developments have made batteries capable of longer ranges and longer overall lives. Range anxiety, one of the barriers to EV adoption, has reduced. The development of composite charging network infrastructure, subsidies from governments on EV purchases and increasing fuel prices combined with increasing environmental awareness are other reasons.”

On battery technology,Research Vice PresidentNeil Shahsaid, “Different compositions of lithium-ion batteries and the development of LFP batteries have been a game changer in this field. Battery chemistries like NMC, NCA and LFP are used widely for their high energy density and safety. After an increase in the price of lithium due to the Ukraine crisis, OEMs are transitioning to LFP batteries which use very little lithium and are safer than NMC and NCA composition batteries. Alongside LFP, manufacturers are also working on revolutionary solid-state battery technology. Besides being safer, solid-state batteries have higher energy density and will be able to outperform other battery chemistries. In 2021, NIO showcased its new ET7 with a solid-state battery of 150kWh. But this was later replaced by a semi-solid-state battery for the vehicle’s launch in March 2022. Despite several clear advantages, the high cost of solid-state batteries will limit their potential for mass adoption in the near term.”

The top 10 EV models accountedfor a third ofglobal EV sales in Q1 2022. With Tesla’s new gigafactories coming up across the world, its Model Y and Model 3 currently hold the first two positions. Wuling’s budget model, the Hongguang MINI EV, has been the best-selling model in China for more than 15 months. Seven out of the top ten EV models are from Chinese OEMs. This shows the development of Chinese EV market over the past few years.

Source: Counterpoint Research Global Electric Passenger Vehicle Model Shipments Tracker, Q1 2022

Commenting on the market outlook,Research Vice PresidentPeter Richardsonsaid, “With many countries aiming to phase out gasoline-powered vehicles by 2040, car makers are facing a seismic change. Not only are they having to move to electric drivetrains, but cars are becoming smart, connected and increasingly able to drive themselves. This is the most tumultuous period since the auto industry was established more than a century ago. According to Counterpoint’sGlobal Passenger Car Forecast, EV shipments are expected to exceed 10 million units in 2022 and reach around58 million units in 2030. There will be a fight for existence as incumbent auto manufacturers use their scale and manufacturing expertise to fend off new entrants that have no legacy business to protect. The current economic headwinds are likely to favor deep-pocketed incumbents, but some new entrants will either survive on their own or be acquired by established players.”

The comprehensive and in-depth ‘Global Electric Passenger Vehicle Model Shipments Tracker, Q1 2018-Q1 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

Peter Richardson

Neil Shah

Counterpoint Research

press(at)www.arena-ruc.com

Related Reports:

NIO Registers Nominal Growth in Q4 2021

NIO is a leader in China’s smart electric vehicle (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.

除了其电动汽车业务,NIO还提供了棉絮ery 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

在2021年第四季度,研发成本为2.572亿美元,mounting 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.

虽然oem厂商不愿意提高他们的车辆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.

Will Foxconn Shake EV Industry?

Apple supplier Foxconn, with an aim to diversify its business and reduce overdependency on Apple for revenue generation, is betting big onelectric vehicles(EVs). During the Hon Hai Tech Day 2020 (HHTD 20) event on October 16 last year, the company launched MIH, an“EV software and hardware open platform”, with an aim to position it as the“Android system of the EV industry”.

Foxconn is not new to the automotive industry. It has already entered partnerships with Yulon Group and FCA Group to produce EVs, provide parts and handle supply chain management. But will the self-declared aim of becoming the Android system of the EV industry make it a threat for traditional automakers? To find the answer, we will have to understand the extent of Foxconn’s ambitions in the automotive space.

MIH to target both software and hardware ecosystems

With the global smartphone industry maturing, Foxconn is looking for an alternative business opportunity. EVs andautonomous vehicles(AVs) perfectly fit into this strategy because here Foxconn can use its existing expertise in automotive and smartphone component manufacturing. However, Foxconn has no plan to make cars under its brand name. Instead, it will manufacture cars for its partners, just like it assembles phones for Apple.

Most of the automakers are using a closed system for developing cars. But Foxconn is aiming to build an open EV platform where any automaker can alter the design to meet specific requirements. Tesla is using its own platform to build EVs, just as Apple does in the smartphone industry. Since Tesla has come a long way in the race for EV industry dominance, Foxconn wants to become the Android of the EV industry. Getting into a partnership with a major automaker will be a challenge as such automakers may not be interested in sharing their core expertise with an open platform.

In the age of AVs, the software will play a crucial role. Foxconn is trying to tap this segment by having a software system that allows automakers and service providers to offer unique features.

Right partnerships to drive success

Foxconn has entered a partnership with Chinese EV start-up Byton, which is facing insolvency, to revive its EV brand. Foxconn is targeting to produce the M-Byton model starting 2022.

Foxconn has inked another partnership with Geely Holding Group to provide customised consulting service to automakers working with CASE (Connected, Autonomous, Shared and Electrified) technologies.

Apple is in talks with Hyundai Motor to build a pure electricautonomouscar from 2024. It will be interesting to see how the iPhone maker and assembler compete in the same segment. Or will Foxconn start manufacturing cars for Apple as it does for its phones? the next couple of years, we may also witness more smartphone makers entering this space.

Whatever may be the situation, right partnerships with ecosystem players and the presence of an experienced leadership team will play a vital role in the success of the business.

Industry veterans to aid in faster development of MIH

Foxconn has hired an experienced leadership team for theMIH platform, which indicates that it is serious about this foray. Jack Cheng, who is a co-founder ofNIO, ex-MD of Fiat China and chairman of XPT, besides earlier working with Magneti Marelli and Ford Motor, has been appointed as the CEO of MIH platform. William Wei has been appointed as the chief technology officer (CTO). He has more than 20 years of experience in internet and mobile computing which can help Foxconn build a software-powered car likeTesla.

MIH has already more than 400partners, withecosystemplayers like Amazon Web Services, Mediatek, Qualcomm, ST Micro, Texas Instruments, Eaton and Dana. Foxconn also launched an EV developer kit technical specification on January 31, 2021, displaying seriousness about following the declared timeline.

Foxconn’s aim goes beyond EV platform

As part of a new strategic plan, named 3+3= ∞, Foxconn is focussing on three emerging technologies:EVs, digital healthcare and robotics.

As part of a long-term plan, it is trying to become a key supplier for the EV andAVecosystem. It is already working with CATL and SES to develop its solid-state battery by 2024, while aiming to get a 10% market share in the EV component and services industry by 2027.

Foxconn is also trying to build a state-of-the-artbatterymanagement system (BMS), powered by cloud-based artificial intelligence (AI) to improve battery efficiency.

Some airport shuttle buses withLevel 3自治和一个最小的激光雷达(A15) the world are supported by Foxconn technology. The MIH platform is being readied for5G6 g无线更新和vehicle-to-anyt (OTA)hing (V2X) communication. Therefore, Foxconn is preparing for theconnectedandAV空间在未来。然而,它可能面临强烈的补偿tition from Qualcomm and Microsoft in this segment.

Counterpoint’s take

As Foxconn is not interested in building its car brand, it may not be a threat to major automakers. ButEVcomponent suppliers may face stiff competition from Foxconn. Scalability and price will play a key role in the selection of component players by EV makers.

Large automakers with a clear goal of electrification may not be interested in an open platform as it may raise questions of security and intellectual property. However, small players and start-ups will be more interested as a shared open platform will require less investment.

NIO’s Battery-as-a-Service (BaaS) Strategy: A Smart Move

Nio has launched battery as a service (BaaS) under Nio-Power, offering charging and swapping of batteries forEVowners. BaaS users can buy a Nio car without the battery and enjoy more than $10,000 (CNY70,000) off on all NIO models. They can subscribe to a 70-kWh battery for $142 (CNY980) per month.

This blog discusses why this is a smart move by Nio and a perfect time to launch such service. Below are some of the strategic advantages Nio will get by launching this service:

Lowering of EV cost

High prices ofEVshave been a major barrier for their sales, especially during the pandemic when people are saving on high-ticket items. A $10,000 price cut can reduce the price gap between Nio cars and the conventional ones. Nio can also improve its price competitiveness against new entrants (likeTesla) in theChinaluxuryEVmarket.

Subsidy

In April,Chineseauthorities enhanced the 2020NEVpolicy, favouring battery swapping. EVs over CNY300,000 are eligible for subsidies only if they supportbatteryswapping. Combining BaaS benefits with subsidies can considerably reduce the prices of Nio models.

Feedback

Battery swapping is a great tool to get user feedback on battery performance and user preferences. Moreover, Nio can obtain critical user data, including frequency of battery change, and offer tailored services.

New revenue streams

WithEVsales inChinadeclining during H1 2020 due to the COVID-19 pandemic and reduction in subsidies, automakers are finding new ways to improve their bottom-line. The BaaS service is included in Nio’s common platform, which supports other services like home chargers and on-the-move charging. Moreover, this platform is fully integrated from app to cloud and supports EVs of other automakers. Such a solution can go a long way in opening new revenue streams for Nio. The company has obtained more than 1,200 patents related to battery swapping.

Brand value and popularity

Nio is still a small player in the global EV market with around 10,000 cars sold during Q2 2020. Nio-Power will give Nio much needed visibility and popularity, and enhance its brand image of being an innovator. Nio apps, charging stations, swappable batteries and mobile charging vans will not only give the company visibility but also a positive word-of-mouth like inTesla’scase. As the platform supports EVs from other automakers, it is much easier to scale. Nio has already completed more than 800,000 battery swaps.

Choice of battery

Users can choose the bestbattery选择基于他们的需求。他们可以upgrade to a more powerful battery pack or incorporate a battery with the latest technology. The Nio scheme also helps users avoid any battery degradation cost, thus improving car’s resale value.

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