Despite the revenue dip, net profit attributable to the parent company increased by 7.00% to 10.51 billion yuan, with non-GAAP net profit rising 18.56% to 9.25 billion yuan. This profit growth, juxtaposed against declining revenues, underscores CATL’s enhanced focus on cost control and efficiency.

Cost Management and Profitability

The company’s improved profitability can be attributed to rigorous cost reductions and enhanced operational efficiency.

CATL reported a decrease in operating costs by 16% to 58.7 billion yuan, reflecting the first drop in fourteen quarters and signaling strong cost management capabilities.

These efforts have brought the gross margin back to the high levels of late 2021, over 26%.

Technological Advancements and Competitive Landscape

Market Share and Technological Edge

CATL continues to dominate the domestic power battery market, holding a 48.93% market share as of March 2024, an increase from the previous year.

This dominance is particularly notable in the segment of lithium iron phosphate (LFP) batteries, where CATL’s installed capacity market share surpassed that of its main competitor, BYD.

Challenges in LFP Market

However, the LFP market shows intense competition, especially from BYD, which has recently gained a significant market share due to rapid sales growth of its new models.

CATL’s ability to maintain its leadership in this segment amidst BYD’s surge is crucial and will require continued innovation and improvement in battery technology and production efficiencies.

Strategic Shifts and Operational Efficiency

Reduced Capital Expenditure

In response to market saturation and the need for heightened efficiency, CATL has consciously reduced its capital expenditures.

In the first quarter, payments for the acquisition of fixed assets, intangible assets, and other long-term assets were cut by 32.34% to 7.08 billion yuan. This strategic pullback reflects a broader trend among Chinese tech companies to optimize existing capacities and prioritize profitability over expansion.

Cash Flow and Investment Activities

Enhanced sales activities and operational improvements have led to a notable increase in cash flow from operating activities, which rose by 35.25% to 28.36 billion yuan. Investment activities also saw a growth, attributed to significant investment recoveries.

Future Outlook and Implications

Navigating Market Dynamics

As the competitive landscape intensifies, with newcomers like Xiaomi entering the market and established players like BYD expanding aggressively, CATL faces the challenge of maintaining its profitability while continuing to lead in cost reduction. T

he first quarter results suggest that CATL is finding ways to balance these pressures effectively.

Conclusion: Sustaining Leadership Through Innovation and Efficiency

CATL’s first quarter performance of 2024 illustrates a strategic pivot from rapid expansion to enhancing profitability and efficiency.

This shift is indicative of broader trends in China’s tech industry, where companies are increasingly focusing on maximizing returns from existing capacities and technologies amidst a challenging economic environment.

As market conditions evolve, CATL’s continued focus on technological innovation and operational efficiency will be crucial in sustaining its leadership position in the global battery market.

AI-Enhanced Automotive Assistants

NIO’s incorporation of AI through Microsoft Azure OpenAI service into its NOMI assistant is not just an upgrade—it’s a transformation.

NOMI now employs a car-specific version of GPT (Generative Pre-trained Transformer) to handle complex queries and provide intuitive, vehicle-specific information. This enables drivers to receive more accurate and relevant responses without diverting their attention from driving, enhancing safety and user experience.

The AI capabilities include personalized greetings, weather updates, and a new range of interactive features designed to optimize journey experiences by providing timely operational guidance for vehicle features.

For example, when asked, NOMI can now explain how to adjust mirrors or check tire pressure directly via the car’s display—tasks traditionally requiring manual lookup in user manuals.

Interactive Features and User Engagement

Beyond the basics, NOMI GPT introduces enhanced interactivity through a new FAQ feature that educates users about NOMI’s capabilities and preferences, personalizing the user experience further.

This feature allows users to engage in more natural conversations with their vehicle, asking about NOMI’s favorite music, games, or even its opinions on other AI systems.

Phased Rollout and Language Support

To ensure the best and safest user experience, NIO has begun a phased rollout of the NOMI GPT feature, starting from April 5, 2024.

The feature is initially available in English, German, and Norwegian, catering to NIO’s diverse European market. This strategic deployment underscores NIO’s commitment to accessibility and customer satisfaction through its leading over-the-air (OTA) update capabilities.

Implications for the Future

The integration of advanced AI into NIO’s vehicles is more than a mere enhancement; it’s a forward-looking move that signals the future direction of the automotive industry.

As articulated by NIO’s European Product Experience Director, Benjamin Steinmetz, the new AI features not only make the user’s journey more valuable but are also set to expand quickly, bringing exciting new functionalities with each update.

This development is not just about enhancing individual vehicles but about pushing the entire industry toward smarter, more interactive, and more intuitive automotive solutions.

The partnership between NIO and Microsoft, through the use of Azure and OpenAI technologies, exemplifies how collaborations between tech giants and automotive innovators can drive significant advancements.

Conclusion

The evolution of AI in vehicles through initiatives like NIO’s enhanced NOMI assistant demonstrates the potential for AI to transform everyday experiences and interactions with technology.

As these technologies mature and become more integrated into various aspects of driving and vehicle management, they pave the way for more connected, intelligent, and user-centric automotive environments.

This trend is set to continue, reshaping how we think about mobility and technology’s role in it, with China at the forefront of this technological revolution in the automotive sector.

One in four cars sold in China was an EV, highlighting the country’s vibrant EV market. Interestingly, plug-in hybrid EVs (PHEVs) increased their share to 24%, while battery EVs (BEVs) saw a decrease.

BYD, Wuling, Chery, Changan, and GAC are some of the top Chinese brands that dominate the EV market, with local brands commanding 81%.

Furthermore, the study shows that China accounts for nearly 59% of the global EV sales volume, making it the second fastest-growing market among the world’s top 10 EV markets. In contrast, Japan was the fastest-growing market, with a YoY growth of 119%.

Counterpoint forecasts that EV sales will exceed eight million units in 2023. However, phasing out subsidies and EV players’ wealth could lead to a price war as brands fight for market share.

Meanwhile, in 2022, BYD increased its market share by over 11% YoY, with six out of the top 10 EV models in the Chinese market coming from the brand. In comparison, Tesla’s market share dropped by nearly 5% YoY due to production halts in April and May 2022.

Moreover, the availability of a limited product mix, increased costs due to a problematic supply situation, competition from affordable options offered by EV start-ups, and domestic sentiment hindered Tesla’s efforts to solidify its position in the Chinese market.

In Q4 2022, the BYD Song overtook the Wuling Hongguang MINI EV as the top-selling EV model, ending the latter’s eight-quarter reign in the market. The top 10 EV models accounted for almost 45% of the total EV sales, indicating that new start-ups are offering intense competition to established players.

Apollo Go, Baidu’s autonomous ride-hailing service, is now authorized to collect fares for robotaxi rides – completely without human drivers in the car – in Chongqing and Wuhan, two of China’s largest megacities.

Amid increasing regulatory approval of the expansion of autonomous vehicles (AVs), the permits reflect regulatory authorities’ strong recognition and trust in the strength of Baidu’s autonomous driving technology.

They also mark a key turning point for the future of mobility in China, leading to an eventual expansion of driverless ride-hailing services to paying users across the country.

The permits were granted to Baidu by government agencies in Wuhan and Chongqing’s Yongchuan District. Both cities have been pioneering new approaches to intelligent transportation in recent years, from developing infrastructure to updating new regulations for AVs.

Having received the permits, Baidu will begin to provide fully driverless robotaxi services in the designated areas in Wuhan from 9 am to 5 pm, and Chongqing from 9:30 am to 4:30 pm, with five Apollo 5th gen robotaxis operating in each city.

The areas of service cover 13 square kilometers in the Wuhan Economic & Technological Development Zone, and 30 square kilometers in Chongqing’s Yongchuan District.

First Driverless Permits in China for Autonomous Ride Hailing Services

Baidu received the first-ever permits in late April this year in China authorizing the company to provide driverless ride-hailing services to the public on open roads in Beijing.

This regulatory approval marks a significant milestone for the autonomous ride-hailing industry in China, indicating a regulatory openness to taking a further step toward a fully driverless mobility future.

With these permits issued by the head office of the Beijing High-level Automated Driving Demonstration Area (BJHAD), ten autonomous vehicles without drivers behind the steering wheel will offer rides to passengers in a designated area of 60 square kilometers in Beijing.

These licensed cars will join an existing fleet provided by Apollo Go, Baidu’s autonomous ride-hailing service, in the capital city of China. Starting April 28, 2022, users will be able to hail a driverless ride using the Apollo Go mobile app in daytime from 10:00 to 16:00.

Currently, Baidu has the largest autonomous driving fleet in China. In expanding its driverless vehicle services, Baidu has worked to meet the unique technical challenges of Beijing’s complex traffic environment. The company plans to add 30 more such vehicles at a later stage, expanding its fleet to provide more convenient driverless services to the public.

Baidu has a proven track record of over 27 million kilometers (16 million miles) of road testing accumulated in the past 9 years with zero traffic accidents, including mileage recorded by driverless test cars in multiple cities across China as well as in California.

In September 2020, Baidu became the first company in Beijing to offer autonomous ride-hailing services. Starting in November of last year, Baidu has been charging fees for the Apollo Go autonomous services offered to the public under granted commercial permits, though safety operators are required in the driver’s seat.

Apollo Go has expanded to 9 cities in China since its first launch in 2020, including all first-tier cities (Beijing, Shanghai, Shenzhen and Guangzhou), and five other cities (Chongqing, Changsha, Cangzhou, Yangquan and Wuzhen). There have been 213,000 orders on Apollo Go in Q4 2021, making it the global leader by order volume.

Baidu released intelligent vehicle solutions for automakers in China

Baidu showcases Fully Automated Driving and 5G Remote Driving Service

Baidu displayed Fully Automated Driving during Baidu World 2020 on 15 September 2020, the company’s annual technology conference that was held in cooperation with CCTV.

With Apollo’s new Fully Automated Driving capability, the AI system can independently drive without a safety driver inside the vehicle, a breakthrough that will accelerate the large-scale deployment of autonomous driving technology across China.

Zhenyu Li, Corporate Vice President of Baidu and General Manager of Intelligent Driving Group (IDG), demonstrated the technology in Beijing’s Shougang Park with CCTV anchor Xiaofeng Bao.

“The three core components of Apollo’s Fully Automated Driving technology are pre-installed and mass-produced vehicles, the ‘experienced AI driver’, and the 5G Remote Driving Service,” said Zhenyu Li during the demonstration.

With pre-installed and mass-produced vehicles as the foundation, the AI driving system is now capable of operating the vehicles independently, and the 5G Remote Driving Service allows remote human operators to intervene in case of emergencies.

Apollo’s leading technology in pre-installed and mass-produced vehicles is a key precondition for Fully Automated Driving.

In 2019, Baidu partnered with FAW Group and jointly developed Hongqi EV robotaxi, the first pre-installed and mass-produced robotaxi in China, which has since been deployed in unmanned driving tests in multiple cities including Beijing, Changsha, Guangzhou, Chongqing, and Cangzhou.

Compared with modified models, pre-installed and mass-produced vehicles better guarantee consistency and safety.

Apollo has also released its fifth-generation autonomous driving kit, and the first pre-installed and mass-produced vehicles that meet the requirements for fully automated operations will be launched soon.

With each new generation of Apollo vehicles, the cost will be halved while performance will increase by tenfold, said Zhenyu Li.

The “experienced AI driver” refers to the capacity of the AI system to control the vehicle independent of a human driver. Apollo has completed over six million kilometers of road testing with a record low of zero accidents.

Having carried over 100,000 passengers across 27 cities around the world, Apollo’s “experienced AI driver” is well-trained. It is capable of handling various technological challenges of unmanned driving and solving the overwhelming majority of possible issues on the road.

The 5G Remote Driving Service is an indispensable complement to the “experienced AI driver” and allows human operators to remotely access vehicles in the case of exceptional emergencies.

Powered by smart transportation systems, vehicle-to-everything (V2X) technologies, and the high bandwidth and response speed of 5G networks, the 5G Remote Driving Service is engaged instantaneously to provide immediate assistance from remote human operators when the user or the system switches to parallel driving mode.

All remote human operators have completed over 1,000 hours of cloud-based driving training without any accidents, so they can ensure the safety of passengers and pedestrians under the non-autonomous driving mode.

As the “experienced AI driver” can handle most road conditions, extreme occasions that require human intervention are rare. Hence, one remote human operator will be able to manage multiple vehicles simultaneously, largely increasing efficiency compared to the traditional one operator per vehicle model.

With these advancements, unmanned driving will create a new ecosystem of shared transportation, and the autonomous driving industry will enter the stage of full commercialization in 2025, said Robin Li, Co-founder, Chairman and CEO of Baidu.

Apollo also announced new product and technological developments at the conference.

Vehicle manufacturer Weltmeister will launch a new model incorporating Apollo’s valet parking in 2021, which will be the first in China to be equipped with L4 autonomous valet parking technology.

It will be able to identify vacant parking slots in multistory parking garages and allow people to use the autonomous-parking and smart summons functions with one simple click.

In addition, DuerOS for Apollo with smart voice-interaction has been installed on over one million smart vehicles.

DuerOS for Apollo is partnering with over 60 major automotive brands and covers more than 500 vehicle models on the market.

According to IHS Markit’s latest “Report on Connected and Autonomous Vehicle (CAV) Development Trends in the Chinese Market”, DuerOS for Apollo is the world’s most installed system for CAV.

The Apollo smart transportation solution “ACE Transportation Engine” has been put in use in nearly 20 cities in China.

Robin Li estimates that by 2025 major Chinese cities will no longer need to limit vehicle purchases and usage, and by 2030 most traffic congestion issues can be solved by higher transportation efficiency.

Smart transportation infrastructure based on V2X technologies promises to improve traffic efficiency by 15% to 30% and boost the contribution to GDP by 2.4% to 4.8% in absolute value.

During the smart transportation sub-forum at Baidu World 2020, Baidu launched Apollo 6.0, the latest version of its open platform, adding multiple cloud services to make it more accessible for developers.

The Apollo open platform has now released 600,000 lines of open source code, gathering 45,000 developers and 210 ecosystem partners globally.

China’s automobile sales up 16% in July 2020; new energy vehicles up 19%

The gross margin was 22.6%, compared with 25.2% in the fourth quarter of last year. Net income was RMB 47.6 million, a decrease of 18.1% compared with RMB 58.2 million in the fourth quarter of last year. Adjusted net income (non-GAAP) was RMB 60.2 million, a decrease of 12.2% compared with RMB 68.6 million in the fourth quarter of last year.

The number of Niu e-scooters sold reached 238,188, up 58.3% year over year:

• The number of e-scooters sold in China reached 205,239, up 49.2% year over year
• The number of e-scooters sold in the international markets was 32,949, up 155.8% year over year

The number of franchised stores in China was 3,108 as of December 31, 2021, an increase of 422 from September 30, 2021. The international sales network expanded to 42 distributors covering 50 countries.

In Q4, Niu successfully delivered 14,916 units of kick-scooters in the international markets. Furthermore, it debuted five exciting new products at EICMA 2021 in Milan for the global markets, including its most powerful 125cc electric moped, the MQiGT-EVO, the first 150cc hybrid moped, the YQi, e-bike BQi, and two additional KQi series kick scooters.

Revenues in full-year 2021 were RMB 3,704.5 million, an increase of 51.6% year over year, mainly driven by 72.5% increases in e-scooter sales volume.

E-scooter sales revenues from China market represented 89.9% of its total revenues from e-scooter sales, and e-scooter sales revenues from overseas markets represented 10.1% of the total revenues from e-scooter sales.

Vehicle sales were RMB8,636.8 million (US$1,340.4 million) in Q3 2021, representing an increase of 102.4% from Q3 2020 and an increase of 9.2% from Q2 2021. The vehicle margin was 18.0%, compared with 14.5% in Q3 2020 and 20.3% in Q2 2021.

Total revenues were RMB9,805.3 million (US$1,521.8 million) in Q3 2021, representing an increase of 116.6% from Q3 2020 and an increase of 16.1% from Q2 2021.

Gross profit was RMB1,993.2 million (US$309.3 million) in Q3 2021, representing an increase of 240.3% from Q3 2020 and an increase of 26.6% from Q2 2021. The gross margin was 20.3%, compared with 12.9% in Q3 2020 and 18.6% in Q2 2021.

Loss from operations was RMB991.9 million (US$153.9 million) in Q3 2021, representing an increase of 4.9% from Q3 2020 and an increase of 29.9% from Q2 2021.

Excluding share-based compensation expenses, adjusted loss from operations (non-GAAP) was RMB726.3 million (US$112.7 million) in Q3 2021, representing a decrease of 19.0% from Q3 2020 and an increase of 41.9% from the second quarter of 2021.

Net loss was RMB835.3 million (US$129.6 million) in Q3 2021, representing a decrease of 20.2% from Q3 2020 and an increase of 42.3% from Q2 2021.

Excluding share-based compensation expenses, adjusted net loss (non-GAAP) was RMB 569.7 million (US$88.4 million) in Q3 2021, representing a decrease of 42.9% from Q3 2020 and an increase of 69.7% from Q2 2021.

Net loss attributable to NIO’s ordinary shareholders was RMB2,858.9 million (US$443.7 million) in Q3 2021, representing an increase of 140.7% from Q3 2020 and an increase of 333.6% from the Q2 2021.

In Q3 2021, NIO repurchased 1.418% equity interest in NIO China from a minority strategic investor for a total consideration of RMB2.5 billion and recorded an amount of RMB2,023.5 million (US$314.0 million) in accretion on redeemable non-controlling interests to redemption value.

Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted net loss attributable to NIO’s ordinary shareholders (non-GAAP) was RMB569.7 million (US$88.4 million).

Basic and diluted net loss per American Depositary Share (ADS)iii were both RMB1.82 (US$0.28) in the third quarter of 2021. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted basic and diluted net loss per ADS (non-GAAP) were both RMB0.36 (US$0.06).

Cash and cash equivalents, restricted cash and short-term investment were RMB47.0 billion (US$7.3 billion).

Li Auto NEV deliveries

It took Li only 17 months to reach the milestone of the 50,000th delivery from the first delivery of Li ONE in December 2019, creating the fastest record among all new energy vehicle companies.

Li had 73 retail stores covering 53 cities, and 143 servicing centers and Li Auto-authorized body and paint shops operating in 105 cities as of April 30, 2021.

Li Auto in Q1 2021

Li Auto delivered 4,900 Li ONEs in March 2021, representing a 238.6 % year-over-year increase. This brought deliveries for the first quarter of 2021 to 12,579, up 334.4 % year over year.

As of March 31, 2021, Li Auto had 65 retail stores covering 49 cities, and 135 servicing centers and Li Auto-authorized body and paint shops operating in 98 cities.

In response to robust demand for Li ONEs and in anticipation of new model launches in 2022 and beyond, Li Auto plans to further bolster its direct sales and servicing network.

Li Auto NEV deliveries up 67% in Q4 2020

Li Auto Inc (Lixiang) reported 64.6% growth in total vehicle sales in Q4 2020.

Deliveries of Li ONEs were 14,464 vehicles in the fourth quarter of 2020, representing a 67.0% quarter-over-quarter increase and setting a new quarterly record.

With 32,624 vehicles delivered to its customers in 2020, Li ONE became the best-selling new energy SUV of the year in China.

In January 2021, Li Auto delivered 5,379 Li ONEs, representing a 355.8% increase compared to January 2020. As of January 31, 2021, it had 60 retail stores covering 47 cities, in addition to 121 servicing centers and Li Auto-authorized body and paint shops operating in 89 cities.

For the first quarter of 2021, Li expects deliveries of vehicles to be between 10,500 and 11,500 vehicles, representing an increase of 262.6% to 297.1% from the first quarter of 2020.

China electric vehicles (EVs) sales grew 8% to 1.3 million units in 2020

Financial Highlights in Q4 2020

Vehicle sales were RMB4.06 billion (US$621.9 million) in the fourth quarter of 2020, representing a 64.6% increase from RMB2.46 billion in the third quarter of 2020.

The vehicle margin was 17.1% in the fourth quarter of 2020, compared with 19.8% in the third quarter of 2020.

Total revenues were RMB4.15 billion (US$635.5 million) in the fourth quarter of 2020, representing a 65.2% increase from RMB2.51 billion in the third quarter of 2020.

Gross profit was RMB724.6 million (US$111.0 million) in the fourth quarter of 2020, representing a 45.9% increase from RMB496.8 million in the third quarter of 2020.

The gross margin was 17.5% in the fourth quarter of 2020, compared with 19.8% in the third quarter of 2020.

Loss from operations was RMB78.9 million (US$12.1 million) in the fourth quarter of 2020, representing a 56.2% decrease from RMB180.0 million in the third quarter of 2020.

Non-GAAP loss from operations was RMB71.1 million (US$10.9 million) in the fourth quarter of 2020, representing a 58.0% increase from RMB45.0 million in the third quarter of 2020.

Net income was RMB107.5 million (US$16.5 million) in the fourth quarter of 2020, compared with RMB106.9 million net loss in the third quarter of 2020. Non-GAAP net income was RMB115.4 million (US$17.7 million) in the fourth quarter of 2020, representing a 621.3% increase from RMB16.0 million in the third quarter of 2020.

Operating cash flow was RMB1.82 billion (US$279.1 million) in the fourth quarter of 2020, representing a 95.9% increase from RMB929.8 million in the third quarter of 2020.

Free cash flow was RMB1.60 billion (US$245.1 million) in the fourth quarter of 2020, representing a 113.2% increase from RMB749.9 million in the third quarter of 2020.

Li Auto forecasts total revenues to be between RMB2.94 billion (US$450.6 million) and RMB3.22 billion (US$493.5 million), representing an increase of 245.9% to 278.8% from the first quarter of 2020.

Top 10 predictions for China blockchain market 2021-2025

In the first 11 months of this year, the cumulative production and sales of domestic automobiles were 22.372 million and 22.47 million, respectively, down 3% and 2.9% year-on-year. The sales volume of new energy vehicles was 1.109 million, a year-on-year increase of 3.9%.

China’s domestic auto market is expected to sell 25 million vehicles this year, according to Fu Bingfeng, executive vice president and Secretary-General of the China Automobile Association.

Nio’s vehicle deliveries increased by over 154% in Q3 2020

China’s automobile sales up 13% in Sep 2020; NEV up 68%, Tesla among top 3

China’s automobile sales volume in September reached 2.655 million, up 12.8% year-on-year, and the cumulative sales volume from January to September was 17.116 million, down 6.9% year-on-year, according to China Association of Automobile Manufacturers (CAAM).

The total number of automobiles manufactured in September was 2.524 million units, up 14.1% YoY. And, the total in the first nine months of 2020 reached 16.96 million, down 6.7% YoY.

In September, 138,000 new energy vehicles were sold, up 67.7% year on year, according to CAAM. The top 3 are:

1. GMAC Wuling 24,386
2. BYD 19,048
3. Tesla China: 11,329

July 2020

In July 2020, the production and sales of automobiles in China were 2.201 million and 2.12 million, respectively, up 21.9% and 16.4% year-on-year, according to data from China Association of Automobile Manufacturers.

12.314 million and 12.365 million vehicles were produced and sold in China in the first seven months of 2020, respectively, down 11.8% and 12.7% year-on-year.

Passenger cars

In July, the production and sales of passenger cars were 1.729 million and 1.665 million, respectively, up 13.2% and 8.5% year-on-year.

In terms of vehicle types, the production and sales of sedans were 810,000 and 773,000, respectively, with a year-on-year growth of 7.1% and 4.6%; the production and sales of SUVs were 800,000 and 772,000, with a year-on-year growth of 20.5% and 14%.

The production and sales of MPV were 84,000 and 85,000, of which the production increased by 2.2% and the sales volume decreased by 0.7%; the production and sales of cross-type passenger cars were 35000, with an increase of 36.9% and 8.5% respectively.

Commercial vehicles

In July, the production and sales of commercial vehicles were 472,000 and 447,000, respectively, up 70.3% and 59.4% year-on-year.

In terms of vehicle types, the production and sales of freight cars were 438，000 and 415，000, respectively, with an increase of 86.3% and 71.1% over the same period of last year; the production and sales of passenger coaches were 34000 and 32000, respectively, down 19% and 15.1% year-on-year.

New energy vehicles

In July, the production and sales of new energy vehicles were 100,000 and 98,000 respectively, with a year-on-year increase of 15.6% and 19.3% respectively, the first increase since this year.

In terms of vehicle types, the production and sales of pure electric vehicles were 79,000 and 78,000, respectively, with a year-on-year increase of 17.9% and 24.2%; the production and sales of plug-in hybrid electric vehicles were 210,00 and 190,00, respectively, with a year-on-year growth of 7.8% and 2.7%.

Export

In July, 62,000 vehicles were exported, a year-on-year decrease of 23.1%. In terms of vehicle types, 45,000 passenger cars were exported, a year-on-year decrease of 25.9%; and 18,000 commercial vehicles were exported, a year-on-year decrease of 14.9%.

China Auto Sales in H1 2020

China’s auto sales surged by 11.6% year on year in June to 2.3 million units, driven by rising demand for trucks and other vehicles, improved consumption market, and stimulative policy, according to data from China Association of Automobile Manufacturers (CAAM). Auto sales and productions both hit a record high.

During the first half of 2020, the decline of China’s auto sales and productions continued to narrow, with 102.6 million units being sold and 101.1 million being produced, down 16.9 percent and 16.8 percent, respectively.

Sales of commercial vehicles, which account for around a quarter of the overall market, increased by 63.1%. Truck sales stood out thanks to the rapid recovery of work and resumption amid COVID-19, especially the resumption of major infrastructure projects.

The increase in overall sales in China in June follows a rise of 14.5% in May and 4.4% in April, before which sales had languished in a nearly two-year slump. Sales of commercial vehicles went up by 48% in May and 32% in April.

Automakers such as Geely Automobile Holdings Ltd, Great Wall Motor, Tesla Inc and Ford Motor Co reported sales growth in China in June.

However, sales of new energy vehicles (NEVs) fell for the 12th straight month, to 104,000 units. NEVs include battery-powered electric, plug-in petrol-electric hybrid and hydrogen fuel-cell vehicles.

Despite recent signs of improvement, China’s auto sales are expected to fall by 10-20 percent in 2020 as a whole due to their earlier collapse, from over 25 million units sold in 2019, CAAM said last month.

China Auto Sales in May 2020

China’s automobile sales reached 2.194 million units in May 2020, a year-on-year increase of 14.5%, according to the China Association of Automobile Manufacturers (CAAM).

In May 2020, the production and sales of automobiles were 2.187 million and 2.194 million respectively, up 4% and 5.9% on a month on month basis, up 18.2% and 14.5% on a year-on-year basis, up 15.9 and 10.1 percentage points on a month on month basis according to CAAM.

China’s new energy vehicle production in May was 84,000 units, a year-on-year decrease of 25.8%; China’s new energy vehicle sales in May was 82,000, a year-on-year decrease of 23.5%.

As of June 11, a total of 204 production bases of 23 vehicle enterprises have returned to work.

Tesla sold 11,095 Shanghai-made Model 3 vehicles in China in May, more than triple the volume seen in April, according to the China Passenger Car Association (CPCA).

The China-made Tesla Model 3 powered by lithium iron phosphate (LiFePO4) batteries has appeared in a catalog issued by China’s Ministry of Industry and Information Technology (MIIT) on May 15, according to CAAM.

Although the information was deleted afterwards, it still triggered speculation within the industry that the locally-produced model will be priced lower by using the cheaper batteries.

With a curb weight of 1,745kg, the new model is as heavy as the China-built Model 3’s Long-range RWD version that carries a ternary-lithium battery pack. Thus, if the data was confirmed later, the newly-exposed one might be an upgraded variant of the Standard Range as LiFePO4 battery is outperformed by the ternary-lithium battery in density.

Reuters reported on May 14 that Tesla plans to introduce a new low-cost, long-life battery in its Model 3 sedan in China later this year or early next, expecting to bring the cost of EVs in line with gasoline models, and allow EV batteries to have second and third lives in the electric power grid.

The new battery, which is purportedly designed to last for a million miles of use, is said to be co-developed with CATL.

Other May updates: retail sales, smartphone shipment, express delivery

Founded in 2015, Xpeng is one of China’s leading smart electric vehicle, or Smart EV, companies. It designs, develops, manufactures, and markets Smart EVs in China. Its products include an SUV (the G3) and a four-door sports sedan (the P7).

According to the IHS Markit Report, Xpeng G3 was among the top-three best-selling electric SUVs in China in 2019. The P7 offers an NEDC range of up to 706 km (439 miles) on a single charge, which is the longest among EVs that are available in China, based on the MIIT NEV Catalogues.

Xpeng primarily targets the mid- to high-end segment in China’s passenger vehicle market, with prices ranging from RMB150,000 to RMB300,000, for its Smart EVs.

According to the IHS Markit report, the mid- to high-end segment represented 30.6% of China’s passenger vehicle market by sales volume in 2019 and had a higher EV penetration rate than other price segments.

As of June 30, 2020, over 90% of purchasers of the G3 chose the versions with autonomous driving capabilities. As of the same date, approximately 50% of customers ordered the versions of the P7 that can support XPILOT 3.0, its upcoming advanced autonomous driving system.

In order to optimize its customers’ mobility experience, Xpeng has strategically chosen to focus on developing full-stack autonomous driving technology and in-car intelligent operating system, as well as core vehicle systems, including powertrain and the electrical and electronic architecture, or the E/E architecture, in-house.

The XPILOT 3.0 is expected to offer the highest level of autonomous driving capabilities in commercially available passenger vehicles according to IHS Markit.

Xpeng started production of the G3 in November 2018, and as of July 31, 2020, it had delivered 18,741 units of the G3 to customers. It started production of the P7 and began delivery in May 2020, and as of July 31, 2020, we had delivered 1,966 units of the P7 to customers.

Xpeng plans to launch its third Smart EV, a sedan, in 2021. The table below sets forth certain features of the G3 and the P7.

Its autonomous driving system and in-car intelligent operating system allow customers to enjoy a new smart mobility experience, and its Smart EVs can be upgraded through over-the-air, or OTA, firmware updates.

XPILOT, its autonomous driving system, provides assisted driving and parking functions tailored for driving behavior and road conditions in China. Currently deployed on the G3 and the P7, XPILOT 2.5 offers adaptive cruise control, adaptive turning control, lane centering control, automated lane changing, and automated parking.

As of June 30, 2020, its adaptive cruise control function had been used for 25.1 million kilometers of driving cumulatively, and its lane centering control function had been used for 11.1 million kilometers of driving cumulatively.

They plan to roll out XPILOT 3.0 by early 2021. XPILOT 3.0 will feature several new functions, including a navigation guided pilot for highway driving and advanced automated parking, in addition to the functions available in XPILOT 2.5.

Xmart OS, its in-car intelligent operating system, supports a smart cockpit that delivers a seamless, easy-to-use, and voice-controlled smart mobility experience.

Xmart OS enables a broad range of smart connectivity functions, such as artificial intelligence, or AI, voice assistant, smart navigation and an app store. The in-car app store allows its customers to conveniently access third-party services and infotainment and allows Xpeng to develop its smart connectivity ecosystem and create value for all participants.

As a result of its efforts in modular design across key aspects of Smart EVs, Xpeng has strategically established two Smart EV platforms. These platforms are scalable for both SUVs and sedans with different wheelbases within a wide range, which allows it to develop new models in a fast and cost-efficient manner.

As of June 30, 2020, its physical sales and service network consisted of a total of 147 stores and service centers, which cover 52 major cities in China.

A substantial majority of its stores are located in shopping malls in tier-one and tier-two cities, as it believes such locations enable Xpeng to raise its brand awareness and attract customer traffic in a cost-efficient manner.

In addition, it actively engages in data-driven and targeted online marketing through a variety of channels to further enhance its brand recognition and acquire customers.

It produce the G3 through a contract manufacturing collaboration with Haima, which has over three decades of automotive manufacturing experience, at its plant in Zhengzhou, Henan province.

The arrangement allows Xpeng to retain effective control of key manufacturing and procurement processes and product quality with minimal required capital outlay. In addition, it has built its own plant in Zhaoqing, Guangdong province.

It started the production of the P7 at the plant in May 2020 and will also utilize the plant for future models. The Haima plant and the Zhaoqing plant have an annual production capacity of up to 150,000 units and 100,000 units, respectively.

As of June 30, 2020, it had 3,676 employees in China and the United States. As of June 30, 2020, approximately 43% of its employees focused on research and development, of which 66%, 17% and 17% were dedicated to automotive design and engineering, autonomous driving, and intelligent operating system, respectively.

Xpeng delivered a total of 2,451 Smart EVs, including 1,641 units of the P7 and 810 units of the G3, to customers in July 2020.

In August 2020, It completed Series C+ round financing. It has only recently started to generate revenues and has not been profitable since its inception. It has been incurring losses from operations and had negative cash flows from operating activities since inception.

It incurred net losses of RMB1,398.8 million, RMB3,691.7 million (US$522.5 million), and RMB795.8 million (US$112.6 million) for 2018, 2019, and the six months ended June 30, 2020, respectively.

An overview of China EV market

Li Xiang, the founder, chairman, and CEO, will hold more than 50% of the aggregate voting power immediately upon the completion of this offering and the concurrent private placements.

Certain existing shareholders have agreed to purchase US$380.0 million in Class A ordinary shares from Li Auto, including:

• US$300.0 million by Inspired Elite Investments Limited, an affiliate of Meituan Dianping
• US$30.0 million by Bytedance (HK) Limited, an affiliate of Bytedance Ltd.
• US$30.0 million by Zijin Global Inc., an affiliate of Wang Xing, its director, and
• US$20.0 million by Kevin Sunny Holding Limited.

Positioned as an innovator in China’s new energy vehicle market, Li Auto designs, develops, manufactures, and sells premium smart electric SUVs. It is the first to successfully commercialize extended-range electric vehicles, or EREVs, in China.

Its first model, Li ONE, is a six-seat, large premium electric SUV equipped with a range extension system and cutting-edge smart vehicle solutions. Li Auto started the volume production of Li ONE in November 2019 and had delivered over 10,400 Li ONEs as of June 30, 2020.

Li focuses on the SUV segment within a price range of RMB150,000 (about US$21,000) to RMB500,000 (US$70,000). With their growing consumption power, families in China tend to choose SUVs for daily commutes and weekend family trips.

Its range extension solution also enables them to significantly reduce the bill of materials cost, or BOM cost, which results in more competitive pricing of Li ONE when compared to BEVs and ICE vehicles in a similar class according to Li Auto’s SEC filing.

Li has developed its four-display interactive system, full-coverage in-car voice control system, and advanced driver-assistance system, or ADAS, delivering safe and enjoyable driving and riding experiences to the customers.

Li Auto manufactures in-house and collaborate with industry-leading suppliers to ensure the high quality of its vehicles. It has built its own manufacturing base in Changzhou, Jiangsu Province, China, which allows its engineering and manufacturing teams to seamlessly collaborate with each other and streamline the feedback loop for rapid product enhancements and quality improvements.

It plans to launch a full-size premium electric SUV in 2022, which will be equipped with the next-generation EREV powertrain system. In the future, to target a broader consumer base, Li will expand its product lineup by developing new vehicles including mid-size and compact SUV models.

China is both the largest passenger vehicle market and the largest NEV market in the world as measured by sales volume. China’s NEV market is currently skewed towards BEVs, as 81.3% of the NEVs sold in China in 2019 were BEVs, according to the CIC Report.

Li has developed its proprietary EREV technology and applied it to the first model, Li ONE. An EREV is purely electric-driven by its electric motors, but its energy source and power come from both its battery pack and range extension system.

A range extension system generates electricity with a dedicated ICE designed with high fuel consumption efficiency, an electric generator, and a speed reducer to connect them.

The Li ONE electric propulsion system consists of a 140-kilowatt rear-drive electric motor, a 100-kilowatt front-drive electric motor, and a 40.5-kilowatt-hour battery pack, which supports an electrically powered NEDC range of 180 kilometers.

Li ONE’s range extension system consists of a 1.2-liter turbo-charged engine configured and fine-tuned for EREV purposes, a 100-kilowatt electric generator, and a 45-liter fuel tank.

With its integrated powertrain system, Li ONE delivers a total New European Driving Cycle, or NEDC, range of 800 kilometers, acceleration from zero to 100 kilometers per hour in 6.5 seconds, and energy efficiency of 6.8 liters per 100 kilometers or 20.2 kilowatt-hours per 100 kilometers, depending on its driving mode.

Li ONE’s energy can be replenished by slow charging, fast charging, and refueling.

Li ONE can operate even when customers have no access to charging infrastructure, thereby completely eliminating range anxiety. To offer the same driving range as BEVs of a similar class, Li ONE requires much less battery capacity.

A smaller battery pack not only is less costly, but also contributes to a more cost-efficient body structure design, which results in less usage of costly aluminum parts for the vehicle body and suspension system. As a result, the BOM cost of Li ONE is close to that of an ICE vehicle and is much lower than that of a BEV of a similar class.

Li Auto revenues for the three months ended June 30, 2020 reached RMB1.9 billion (US$275.0 million), including vehicle sales of RMB1.9 billion (US$271.0 million), representing an increase by 128.6% QoQ from revenues of RMB851.7 million for the three months ended March 31, 2020, including vehicle sales of RMB841.1 million.

Its vehicle deliveries for Q2 2020 increased by 128.0% to reach 6,604 from 2,896 in Q1 and the average selling price of its vehicles remained consistent during these two periods. As of June 30, 2020, it had over 700 sales and service personnel deployed across 21 retail stores, 18 delivery centers, and 17 servicing centers nationwide.

The gross profit margin increased from 8.0% in Q1 2020 to 13.3% in Q2 2020. It recorded a net loss of RMB75.2 million (US$10.6 million) for Q2, compared with a net loss of RMB77.1 million for Q1.

Li Auto had RMB3.7 billion (US$521.2 million) in cash and cash equivalents, restricted cash, time deposits, and short-term investments as of June 30, 2020, compared with RMB3.4 billion as of March 31, 2020.

The April deliveries consisted of 2,995 P7s, XPeng’s sports smart sedan, and 2,152 G3s, its smart compact SUV. As of April 30, 2021, year-to-date deliveries reached 18,487 units, representing a 413% increase year-over-year.

XPeng has expanded its product portfolio and started to deliver the P7 Wing edition and the lithium iron phosphate (LFP) battery-powered G3 in April. Delivery of LFP battery-powered P7 will start in May as planned.

XPeng’s third production vehicle, the LiDAR-equipped P5 sedan, was unveiled in April and has received robust feedback for its market-leading and user-centric features. The Company plans to launch the sales of P5 in the third quarter with deliveries in the fourth quarter 2021.

Also in April, XPeng formed a strategic partnership with Zhongsheng Group, a leading automobile dealership group in China, to further expand its sales and services network while strengthening after-sales service capabilities.

Zhongsheng Group will be investing in and operating authorized XPeng branded dealership outlets to provide smart EV sales and services, first to be launched in tier-1 and high-potential cities in China within 2021.

As part of its long-term strategic roadmap to embrace the auto sector’s transformation, XPeng entered into a cooperation agreement in April with the City of Wuhan to build a new XPeng Motors Wuhan Smart EV Manufacturing Base in Wuhan with an expected annual capacity of 100,000 units.

Nio electric vehicle delivery grew 125% in April 2021