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.

In 2023, China’s ride-hailing companies experienced strong revenue growth and accelerated steps toward commercializing autonomous driving, marking a new phase in the industry’s development.

The sector saw rapid expansion with significant increases in both the number of ride-hailing platforms and order volumes.

By December 31, 2023, a total of 337 ride-hailing companies had obtained operating licenses, up by 39 companies from the previous year. The ride-hailing regulatory information exchange system processed 9.114 billion orders throughout the year, a 30.76% increase from the previous year.

Against this backdrop, ride-hailing companies achieved fast growth in performance. For example, in the first three quarters, Didi’s total revenue increased by 31.2% year-over-year, with its domestic travel and international business growing by 32.8% and 33.9%, respectively.

The commercial operation of autonomous taxis also made steady progress.

Ride-hailing platforms actively deployed commercial autonomous taxi services, offering smart travel solutions.

In August, Baidu Apollo’s autonomous driving service platform “Luobo Kuaipao” was officially launched in Wuhan’s Dongxihu District, providing citizens with autonomous driving services and achieving breakthroughs in cross-district travel and full unmanned night-time operations.

In September, Pony.ai obtained the first unmanned demonstration application license in Shenzhen, covering nearly 150 autonomous driving service stations across many high-frequency travel destinations, operating during peak morning and evening hours.

Technological advancements have shifted market competition from traffic to service quality, propelling the ride-hailing industry into a new stage of development.

China Internet Overview

This development is part of Baidu’s strategic expansion of its autonomous ride-hailing service platform, which now ensures uninterrupted service to meet diverse travel needs, including those at night.

In a series of strategic moves, Apollo Go introduced fully driverless rides across Wuhan’s Yangtze River in February 2024, showcasing its advanced capability in navigating complex terrains.

This was closely followed by the initiation of a robotaxi pilot operation on highways leading to Beijing Daxing Airport, positioning Beijing as the first world capital to embrace airport robotaxi services. These achievements highlight Baidu’s commitment to enhancing urban mobility and safety through technological innovation.

Wuhan, a leader in smart transportation, has seen autonomous vehicles cover over 3,378.73 kilometers in testing, serving a population of over 7.7 million.

With a fleet of 300 fully driverless vehicles, Apollo Go’s operations in Wuhan are a testament to Baidu’s pioneering role in the autonomous driving industry.

Additionally, in observance of International Women’s Day, Apollo Go has launched a campaign offering female users priority service during late-night hours, further emphasizing its user-centric approach. This service has garnered widespread approval, with a remarkable 97.12% five-star rating from users.

Since its inception, Apollo Go has provided over 5 million cumulative rides, reflecting Baidu’s commitment to expanding autonomous ride-hailing services across China.

With operations in over 10 cities, including Beijing, Wuhan, Shenzhen, and Chongqing, Apollo Go stands out as the premier provider of fully driverless robotaxi services, underscoring Baidu’s leading position in China’s autonomous driving evolution.

In 2023, BYD showcased its remarkable performance, selling 3.02 million vehicles and securing the top spot in the Chinese market. Notably, its exports surged by 334% year-over-year, making it the fastest-growing car manufacturer among the top ten global brands.

This achievement signifies that one in every five new energy vehicles (NEVs) sold globally and one in three hybrids worldwide is a BYD. Within China, BYD claims one in three NEV sales and one in two plug-in hybrid sales.

This victory marks the end of a 39-year dominance by joint venture brands in the Chinese market, a monumental shift for local manufacturers. BYD stands out as the first and only Chinese brand to enter the global top ten auto sales list, with a continuously growing market share among these elite ranks.

BYD’s strategy of “lower price, no lower specs” is backed by its entry into the global top ten in sales, a testament to its leadership in the NEV sector.

BYD has sold over 3.2 million plug-in hybrid models to date, and in the fourth quarter of 2023, its pure electric vehicle (EV) sales surpassed Tesla, claiming the title of global leader in EV sales.

Several BYD models have dominated their respective segments: the Seagull leads in the A00 category, while the Yuan PLUS and Song PLUS are champions in the A-level pure electric and SUV categories, respectively.

The Qin family tops sedan sales, and the Tang DM9 is the leader in the MPV segment, securing BYD’s position as a “top scholar” across various markets.

BYD’s sales achievements are underpinned by its multifaceted strength.

In 2023, the company unveiled groundbreaking technologies like Yi Si Fang, Yun Nian, and DMO, and in early 2024, it announced a new strategy for the intelligent development of NEVs.

Backed by 11 research institutes, over 90,000 engineers, and cumulative R&D investments exceeding 100 billion, BYD’s innovations are well-supported.

BYD’s control over product pricing and its comprehensive industry chain integration, coupled with the benefits of scale, have enhanced its cost-control capabilities.

This strategic advantage not only secured BYD’s leading position in China’s auto market in 2023 but also allowed it to launch an array of “Glory Edition” models in 2024, challenging joint venture fuel vehicles in a significant battle.

In the third quarter, DiDi reported total revenues of RMB 51.4 billion, a notable 25.0% increase compared to the same period last year.

This surge is primarily attributed to the strong performance of its China Mobility segment, which brought in revenues of RMB 46.6 billion, marking a 26.6% year-on-year growth. The international segment also showed promising progress with a 27.7% increase in revenue, totaling RMB 2.0 billion.

A critical factor in this growth trajectory is the increase in core platform transactions, which rose by 33.9% year-over-year, reaching 3,579 million transactions. This uptick in user engagement also saw the Gross Transaction Value (GTV) climb by 36.7% to RMB 91.5 billion.

Despite these positive indicators, the company’s financial health presents a nuanced picture. While net income stood at RMB 0.4 billion, with RMB 0.1 billion attributable to ordinary shareholders, the Adjusted EBITA (Non-GAAP) showed a loss of RMB 0.3 billion.

This loss underscores the ongoing challenges DiDi faces in achieving operational profitability, especially in its international and other initiatives segments.

DiDi’s CEO, Mr. Will Wei Cheng, expressed optimism, highlighting the recovery in domestic demand and the company’s strategic focus on core mobility services. He also underscored the commitment to expanding the business and enhancing product capabilities, signaling a confident outlook for the future.

The quarter also saw significant strategic movements, including a focus on marketing and incentives in key international markets like Brazil and Mexico. Additionally, the completion of a transaction involving the sale of certain smart auto business segments to XPeng Inc. reflects DiDi’s strategic refocusing efforts.

As DiDi navigates its way forward, its robust revenue growth and strategic decisions, such as international market investments and business restructuring, are pivotal.

However, the challenge remains in balancing these growth aspirations with achieving profitability, especially in competitive international markets. The company’s next steps will be closely watched as it strives to maintain its momentum in the ever-evolving mobility technology landscape.

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.

China has surpassed Germany as the world’s second-largest auto exporter. Analysts said that China’s auto exports are also approaching Japan, and it may win the title of the world’s largest auto exporter in the next few years.

Regarding vehicle types, 2.529 million passenger cars were exported, up 56.7% year on year, and 582000 commercial vehicles were exported, up 44.9% year on year.

The export of new energy vehicles reached 679,000, up 120% year on year. Since 2021, China’s total export of automobiles exceeded 2 million for the first time, breaking the previous situation of hovering around one million vehicles and achieving a leapfrog breakthrough.

China has been the world’s largest auto market since 2009. However, China’s auto consumption market has long been dominated by foreign brands such as Volkswagen, General Motors, BMW, and Benz.

In the past two years, with the overall rise of domestic cars, local Chinese brands such as BYD and Geely have accelerated their efforts to seize the domestic market and promote them globally. Today, BYD is a leading brand in the domestic new energy vehicle market, and the joint venture brand is hard to catch up quickly.

The number of new energy passenger vehicles in the world reached 6.96 million from January to September 2022, with a year-on-year growth of 69%. The sales volume in September was 1.05 million, up 63% year on year.

In September 2022, China’s share of new energy vehicles in the world was 67%.

The number of commercial vehicles in the world’s new energy vehicles market is less than 4%, with new energy passenger vehicles as the main segment. From January to September 2022, China’s new energy passenger vehicles accounted for 62% of the world’s new energy vehicle market, which is mainly due to the strong demand for the new energy market in China.

While the production and sales of traditional vehicles and new energy vehicles in Europe are low, so China’s development is very strong.

According to the data of the Passenger Transport Association, the wholesale sales of new energy passenger vehicles in September reached 675000, up 94.9% year on year and 6.2% month on month.

From January to September, 4341,000 new energy passenger cars were wholesale, up 115.4% year on year. In September, the retail sales of new energy passenger vehicles reached 611,000, with a year-on-year growth of 82.9% and a month-on-month growth of 14.7%.

From January to September, the domestic retail sales of new energy passenger vehicles reached 3.877 million, with a year-on-year growth of 113.2%.

Forecast of China’s digital automobile and transportation market 2021-2025

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%

With a per unit cost of RMB 250,000 (about $37,000), the arrival of Apollo RT6 is set to accelerate AV deployment at scale, bringing the world closer to a future of driverless shared mobility.

Baidu Apollo RT6’s steering wheel-free design unleashes more space to craft unique interiors, allowing for the installation of extra seating, vending machines, desktops, or gaming consoles.

At 4760mm long with a wheelbase of 2830mm, the rider-first Apollo RT6 delivers comfort with independent rear seating, ample rear legroom of 1050mm, a flat floor, and an intelligent interaction system.

The Apollo RT6 exterior features a revolutionary look that seamlessly integrates sensors on the sunroof alongside interactive lights and intelligent electric sliding doors to enhance the riding experience further.

Apollo RT6 integrates Baidu’s most advanced L4 autonomous driving system, powered by automotive-grade dual computing units with a computing power of up to 1200 TOPS.

The vehicle utilizes 38 sensors, including 8 LiDARs and 12 cameras, to obtain highly accurate, long-range detection on all sides. The safety and reliability of Apollo RT6 are backed by a massive trove of real-world data, a total test mileage of over 32 million kilometers (~20 million miles) driven by Baidu’s AV to date.

Speaking at Baidu World 2022, Zhenyu Li, senior corporate vice president of Baidu and general manager of Intelligent Driving Group (IDG), said the autonomous driving capability of Apollo RT6 is equivalent to a skilled driver with 20 years of experience.

Apollo RT6 is the first vehicle model built on Xinghe, Baidu’s self-developed automotive E/E architecture for fully autonomous driving. The vehicle is 100% automotive-grade and has full redundancy throughout the hardware and autonomous driving software.

Apollo Go has expanded to 10 cities in China since its launch in 2020, including all first-tier cities, and provided more than 1 million orders.

Baidu Wins First Driverless Permits in China for Autonomous Ride Hailing Services

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

Apollo Moon Arcfox hit the road

First unveiled in June 2021, Apollo Moon is Baidu’s 5^th generation of robotaxis for fully autonomous ride-hailing services in the smart transportation industry. Compared to the 4^th generation of Apollo robotaxis, the Apollo Moon models cost half in manufacturing with a tenfold performance increase.

With the introduction of three models to its robotaxi fleet: Apollo Moon Arcfox , Apollo Moon WM Motor, and Apollo Moon Aion, Baidu is expected to expand the options for Apollo Go customers in cities across China, aiming to quickly scale up the offering and lead the estimated 1.3 trillion RMB robotaxi market by 2030.

Related report: Outlook of China’s Autonomous Driving Market and MaaS Market

The Apollo Moon robotaxi models utilize the so-called “ANP-Robotaxi” architecture, a leading navigation pilot product that can reduce the weight of autonomous vehicle kits while sharing intelligent driving vehicle data to create a closed-loop information ecosystem.

By combining these capabilities along with a customized LiDAR and corresponding unmanned redundancy functions, fully autonomous driving can be realized.

At the event, Apollo Moon Arcfox hit the road with no safety driver on board, offering a brand new riding experience.

Tripling Test Mileage

Baidu Apollo also announced that it has expanded its safe road test mileage from 6 million kilometers to 18 million kilometers – tripling the amount of road driven by its autonomous fleet.
This marks a significant achievement for Baidu Apollo in its development of autonomous technology, as it applies learnings from the data and kilometers driven to improve the safety and efficiency of its autonomous vehicles.

5G Remote Driving for Enterprise

The network is an integral technology in self-driving vehicles and 5G will play a critical role in making autonomous driving a reality.

At the event, Baidu unveiled its new 5G Remote Driving for Enterprise, which expands the ability of the 5G cloud-based teleoperation technology to support unmanned vehicles in a single scenario to three.

As a remote driving solution, the 5G Remote Driving for Enterprise has four key advantages: high safety, high efficiency, large scale, and support in multiple scenarios.
With a number of patented technologies, 5G Remote Driving can recognize abnormal traffic conditions such as road closures and assist the vehicle in navigating around these conditions safely and efficiently.

Baidu launched autonomous driving MaaS platform with five models

Baidu Apollo topped industry peers across every testing category for the third consecutive year according to Beijing Autonomous Vehicles Road Test Report 2020.

In addition to maintaining the largest fleet of test vehicles and accumulating the highest total testing mileage, Baidu is also the first and only company that has obtained permission to operate fully driverless road tests on public roads in Beijing, according to information sent to CIW from Baidu.

Baidu was the leading company across all four categories:

• number of vehicles for general technology testing
• number of vehicles piloting autonomous vehicle passenger service
• number of vehicles carrying out fully driverless testing, and
• the total mileage of testing

Beijing Autonomous Vehicles Road Test Report is the only authoritative industry assessment of its kind published in China.

As the world’s leading open platform for autonomous driving, Baidu was early in commencing road testing initiatives in Beijing and leads the industry in areas including the total number of testing vehicles, the scale of testing, and diversification of testing scenarios.

Baidu has achieved a cumulative mileage of 2,019,230 kilometers over a three-year period in Beijing, accounting for 91.23% of Beijing’s total testing mileage in three years.

In 2020, Baidu operated a fleet of 55 autonomous vehicles on the roads of Beijing, accounting for 75% of the overall number of vehicles that conducted automated driving tests in the city.

Baidu also accumulated 1,125,305 kilometers of total testing distance, comprising 95.92% of the total autonomous vehicle testing distance in the municipality with a 49.24% increase in comparison to previous efforts in 2019.

To put Baidu’s achievements in perspective, a total number of 87 vehicles from 14 companies had received general road testing permits in Beijing as of December 31, 2020, according to the report.

In late 2020, Baidu was awarded five autonomous vehicle driverless testing permits from the Beijing Municipal Commission of Transport, marking the inaugural batch of permits issued to a company that allows driverless vehicles on public roads.

In preparation for this achievement, Baidu has collaborated with the Beijing Innovation Center for Mobility Intelligent to optimize test parameters and technological specifications by running 64,827 kilometers of driverless vehicle testing in Beijing.

As part of its push to commercialize autonomous driving technologies, Baidu Apollo launched the Apollo Go Robotaxi service in Beijing, as part of the third phase of its autonomous vehicle passenger service pilot.

From October 10 to December 31, a total of 15,006 users hailed an Apollo Go Robotaxi through their mobile devices. The Apollo Go experience was well received, with over 90% of riders stating that they would like to continue using this service in the future.

With a total of 200 autonomous vehicle testing roads across four districts comprising of a distance of 699.58 kilometers, Beijing has become the leading city for promoting domestic autonomous driving initiatives in China, with Baidu spearheading its growth.

Forecast for China’s future connectivity 2021-2024

Multi-Modal Autonomous Driving MaaS Platform

Baidu deployed a multi-modal autonomous driving MaaS (mobility as a service) platform on 9 February 2021 that will provide AI-driven city transportation services in Guangzhou.

Utilizing a fleet of Apollo Robotaxis and Robobuses along with three other model types of autonomous vehicles, this initiative will allow local users to order smart transport services on demand, starting in the Chinese New Year holiday period.

Baidu has partnered with the Guangzhou Huangpu District government to roll out the world’s first multi-modal autonomous driving MaaS platform.

By integrating an assortment of autonomous driving services to provide travel recommendations, this diverse platform can holistically optimize the traveling experience of users in line with combined platform strategies.

Comprising of over 40 autonomous vehicles, the collective fleet has deployed five different model types – Robotaxi, Robobus, Apolong, Apollocop and New Species Vehicle – to begin comprehensively serving the city during the bustling holiday period.

Citizens are able to make reservations on the Baidu Maps and Apollo Go mobile applications to witness these new autonomous driving initiatives and experience the convenience brought on by intelligent transportation technology.

With the ability to cover a variety of usage scenarios, the MaaS platform ecosystem can meet the diverse needs of many citizens during their holiday sightseeing, shopping and celebratory outings.

To facilitate this, Baidu Apollo has established over 50 Robotaxi pickup stations in the district, providing users with easy access to Chinese New Year festival sites using autonomous vehicles.

Simultaneously, a batch of New Species Vehicles are cruising around the city, tasked with unmanned retail, as well as routine cleaning and disinfection.

Apolong minibusses will shuttle eager sightseers to the flower blossoms around scenic parks and lakes. Meanwhile, Apollocop patrols the main roads near key areas and the Baidu Robobus will ferry passengers along fixed routes, facilitating community travels towards festive destinations.

Real-time signal light information such as stoplight countdowns, traffic event alerts, and intersection queue length are broadcasted on both the interactive monitors embedded in Robobus or Robotaxi cabins as well as the exterior screens fixed on the rear of Robobuses.

Additionally, users can utilize the Baidu Maps app or DuerOS-powered smart rearview mirrors to receive voice alerts of electronic fence monitoring, access signal light reminders, live traffic event venue broadcasting and other connected online services.

The ACE Transportation Engine – a full-stack solution that stands for “Autonomous Driving, Connected Road, Efficient Mobility” – has been introduced to improve the traffic flow around the district, reflecting Guangzhou’s status as a center of smart transportation.

A large ACE smart traffic electronic display has been set up on a prominent skyscraper to visually display the AI solutions at work; from the coordination of smart transportation for local commuters by the transportation bureau to the intricate traffic management maintained by law enforcement, the technology is being brought to life and exhibited to the inhabitants of Guangzhou.

The MaaS platform for multi-modal autonomous driving vehicles and ACE Transportation Engine demonstrated by this Chinese New Year launch has accelerated the arrival of the intelligent era of smart transportation.

Guangzhou’s open and inclusive policy environment fosters and encourages the development of the autonomous driving industry. Going forward, Baidu will continue conducting regular trial operations by additionally deploying over 100 Robotaxis and establishing almost 1,000 pickup stations in Guangzhou Huangpu District; this will allow local citizens to continue utilizing autonomous driving services in their daily lives, in lieu of similar Robotaxi programs implemented in Beijing, Changsha, Cangzhou and other areas of China.

In the face of immense opportunities in terms of increasing digitalization, high-speed networking and automation of transportation in the future, this strategic partnership with Baidu has enabled the Guangzhou Huangpu District to become a benchmark city for new smart transportation infrastructure.

Top 10 forecasts of China’s AI market 2021-2024

Baidu co-developed self-driving car to deliver in H1 2021

Weimar Motors announced on 19 January 2021 that Weimar W6, jointly developed with Baidu Apollo, rolled off the production line at Weimar Hubei base today and will be delivered in the first half of this year.

Weimar W6 can realize unmanned driving in specific scenarios through Baidu Apollo. In addition, Weimar Motors founder Shen Hui revealed that Weimar’s next-generation intelligent vehicle platform has been officially launched.

Baidu to produce intelligent electric vehicles with Geely

Baidu announced its plan to establish a company to produce intelligent electric vehicles (EV) on January 10, 2021, and that it has entered into a strategic partnership with multinational auto manufacturer Zhejiang Geely Holding Group (“Geely”).

Baidu released new intelligent vehicle solutions for automakers and several high-end intelligent driving products last December.

Baidu will provide intelligent driving capabilities to power the passenger vehicles for the new venture, and Geely, which holds the distinction of best-selling Chinese automobile brand in past years under the Volvo and Geely brands, will contribute its expertise in automobile design and manufacturing.

At Baidu, we have long believed in the future of intelligent driving and have over the past decade invested heavily in AI to build a portfolio of world-class self-driving services. China has become the world’s largest market for EVs, and we are seeing EV consumers demanding next generation vehicles to be more intelligent.

said Robin Li, Co-founder and CEO of Baidu.

As a top Chinese automaker with global reach, Geely has the unique experience and resources to design, produce and market energy-efficient, reliable and safe automobiles in large scale. We believe that by combining Baidu’s expertise in smart transportation, connected vehicles and autonomous driving with Geely’s expertise as a leading automobile and EV manufacturer, the new partnership will pave the way for future passenger vehicles.

Baidu released intelligent vehicle solutions for automakers in China

Baidu yesterday released new intelligent vehicle solutions for automakers and several high-end intelligent driving products during the second Apollo Ecosystem Conference, reinforcing the company’s commitment to win-win partnerships to propel industry development.

Apollo’s four series of solutions include intelligent driving, intelligent cabin, intelligent map, and intelligent cloud.

Baidu also announced an enhanced Apollo presence in Guangzhou and demonstrated the progress of the Apollo Go Robotaxi service rollout in Beijing, Changsha, and Cangzhou, underscoring both the commercialization prospects and revolutionary potential of intelligent transportation, intelligent vehicles, and autonomous driving.

“The transportation industry and automobile industry are undergoing a once-in-a-century transformation,” said Zhenyu Li, Corporate Vice President of Baidu and General Manager of Intelligent Driving Group (IDG), during the conference.

“With its focus on ‘intelligence’, Apollo is helping automakers to build good cars and governments to build good roads through intelligent transformation.”

“Apollo is committed to openness and hopes to work with partners to create a better future for autonomous driving,” Li added, speaking before a crowd of representatives from 500 ecosystem partners at the conference.

Intelligent Solutions and Products for Automakers

At the conference, Baidu released new or upgraded solutions combining hardware and software to help automakers build more intelligent vehicles.

Apollo’s four series of solutions include intelligent driving, intelligent cabin, intelligent map, and intelligent cloud. Intelligent cabin solutions are already empowering 600 types of vehicles from over 70 automakers, with DuerOS for Apollo pre-installed on over one million vehicles.

Meanwhile, Apollo’s intelligent high-definition map series continued to hold the top market share in 2020 and brought on new automaker partners.

Adding to its existing intelligent driving solutions, Baidu also announced an advanced solution for passenger vehicles called Apollo Navigation Pilot (ANP), which is powered by Apollo’s L4 autonomous driving technology.

Baidu had previously announced cooperation with automakers Guangzhou Automobile Group (GAC), Weltmeister, and Great Wall Motors to mass-produce Apollo Valet Parking (AVP), an L4 autonomous parking solution.

Apollo’s intelligent driving solutions aim to be pre-installed on one million vehicles over the next three-to-five years, bringing a safe and cutting-edge autonomous driving experience to more consumers.

Building an Intelligent Urban Transportation System

During the event, Guangzhou Huangpu district officially launched an intelligent transportation MaaS (mobility as a service) platform, which will include the deployment of robotaxis, robobuses, and autonomous driving utility vehicles that can perform various functions.

The rollout of these autonomous vehicles will cover the core area of Huangpu, where AI roadside sensors and cloud engines are already set up.

Baidu and Guangzhou will also cooperate on a new model for Guangzhou’s digital transportation operator that leverages Baidu’s ACE Transportation Engine – a full-stack solution that stands for “Autonomous Driving, Connected Road, Efficient Mobility” – helping the city establish a leading position in autonomous driving new infrastructure.

Apollo Go to Expand to Thirty Cities

Baidu also highlighted various applications and milestones for its world-leading autonomous driving technologies during the conference, especially Apollo Go, which operates robotaxis and robobuses in multiple cities.

Already operational in Beijing, Changsha, and Cangzhou, Apollo Go has carried over 210,000 passengers and plans to expand to roughly 30 cities over the next three years. Baidu also announced a partnership with ride-hailing app Shouqi to allow users to hail a Robotaxi through the app, opening up a new model of commercialization.

Digitization, connectivity, and automation present revolutionary opportunities for the transportation industry, Zhenyu Li stressed at the conference. Apollo could seize these opportunities to create a new growth engine for Baidu.

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

The fully driverless Apollo Go Robotaxi service will first be launched in Beijing’s Shougang Park – one of the venues for the 2022 Beijing Winter Olympics – and will soon be transporting visitors at the games.

With the ride-hailing service being launched during the bustling Labor Day holiday period, Baidu will be the first Chinese company offering a fully driverless robotaxi service under commercial operation.

By using the Apollo Go App, users can locate a robotaxi in the vicinity and hail a driverless ride by themselves through a system of unmanned self-service processes. Features including virtual reality navigation and remote car honking can help users to identify the location of the car.

To unlock the autonomous vehicles, users are required to scan a QR code and health code on the car for identity verification and pandemic prevention purposes.

Upon boarding the vehicle and clicking on the “Start the Journey” button, the system will ensure that seat belts are fastened and the doors are shut, the trip only beginning after all the passenger safety protocol checks are completed.

With no safety driver at the helm, the 5G Remote Driving Service is present at all times to allow human operators to remotely access the vehicles in the case of exceptional emergencies.

At Beijing Shougang Park, the robotaxis will be able to transport users to sports halls, work areas, coffee shops and hotels. During the upcoming Winter Olympics, the Apollo robotaxis will be available to provide shuttle services for athletes and staff.

Since October last year, Baidu has started autonomous driving tests for the public under trial operations in areas such as Yizhuang, Haidian and Shunyi in Beijing.

Baidu Apollo is moving forward to a new stage of scalable commercialized operations with the launch of the fully driverless robotaxi services in the capital, as a starting point of commercialized operations in first-tier Chinese cities.

Baidu Apollo recently announced the completion of over 10 million kilometers of road testing for autonomous driving.

Earlier this week, Guidehouse, a leading global consulting firm, named Baidu as one of the top autonomous driving vendors in the world, with Baidu the only Chinese company listed on the Guidehouse leaderboard.

Baidu has been investing in autonomous driving for eight years and has an established a car fleet of 500 vehicles for autonomous driving trials. Baidu has been granted 2,900 patents for intelligent driving and 221 test drive licenses, among which 179 are to test self-driving cars for carrying passengers.

Baidu launched autonomous driving MaaS platform with five models

Baidu starts offering free robotaxi service in Changsha in April 2020

Baidu has started offering its Apollo “robotaxi” service in Changsha city of Hunan Province, becoming one of the first companies to carry passengers in autonomous vehicles in China.

People in Changsha can hail Baidu’s autonomous taxis for free through Baidu’s navigation app Baidu Maps, according to Baidu’s official press release earlier this week.

Currently, Baidu’s Robotaxi service is limited to specific areas of Changsha city which include residential areas, commercial zones, and industrial complexes. Each taxi has a backup driver in the car to take manual control in case of an emergency.

Baidu launched its open-source Apollo platform three years ago for autonomous vehicles R&D such as high-definition mapping and obstacle perception technology.

At the Apollo Partner Conference in December 2019, Apollo v5.5 was released to support urban road point-to-point autonomous driving, as well as open-platform development for V2X and IoV solutions. Apollo has garnered 177 leading OEMs, suppliers and other partners, and over 36,000 developers worldwide.

Apollo fleet has reached 3 million test kilometers on the road in December 2019, spanning across 23 cities, including Beijing, Wuhan, Cangzhou and Changchun. The municipality of Beijing granted Baidu its first batch of 40 manned autonomous driving licenses in December 2019.

Last week, a self-driving startup AutoX opened a self-driving taxi operations center in Shanghai in preparation for its upcoming robotaxi pilot project in the financial hub. Ride-hailing service provider Didi Chuxing also has a similar plan.

Baidu Maps car-hailing aggregation platform was launched in 2015. At present, it has access Didi, Shouqi, Cao Cao, Dida, Ctrip, and etc. covering the mainstream vehicle services such as taxi, express, special car, airport transfer machine, car rental, etc. Now it has covered more than 400 cities in China.

Baidu launched cloud-based virtual smartphone

The Chinese government has been supportive of the transition to EVs, but several changes to EV-related policies and consumer subsidies in recent years disrupted the market and automobile makers struggled to build sales momentum.

The Chinese EV market in 2020 was all about two vehicles: the made-in-China Tesla Model 3, the market leader in the first half of 2020, and the Hongguang Mini EV from the SGMW joint venture (SAIC, General Motors, and Wuling), the market leader in the second half of 2020, which only launched mid-year, according to Canalys.

The two models represented one in five of all EVs sold in China.

Tesla has already started deliveries of the made-in-China Model Y. Production of the Hongguang Mini EV has been increased to keep up with demand, particularly from young Chinese urbanites.

Other small, more affordable city cars, such as the Baojun E-Series from SGMW and the Ora R1 from Great Wall Motors (GWM), are also proving very popular.

Canalys forecasts 1.9 million EVs will be sold in China in 2021, growth of 51% and a 9% share of all cars sold in China.

Forecast of China digital automobile and transportation 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

Both sides will leverage their own resources, and carry out comprehensive cooperation in branding, marketing, channels, end-to-end operations, services, information technology, etc., aiming to implement the digitalization strategy into BMW’s full business process, and enable dealers to provide an end-to-end and online-to-offline digital experience for customers.

Jochen Goller, President and CEO of BMW Group Region China said,

Cross industry collaboration and open innovation exchange are indispensable in accelerating the ongoing digital transformation of our company. As one of China’s leading tech enterprises, Alibaba has unique competencies in terms of digital technologies, large scale customer platforms and channels as well as targeted consumers operations. We are delighted to join hands to create holistic online-to-offline digital brand experiences for our Chinese consumers, and at the same time increase our portfolio of digital products and services.

Jet Jing, Vice President of Alibaba Group and Secretary General of Enterprise Service for Alibaba Digital Economy, said,

As one of the most innovative international premium automakers, BMW is an industry leader with outstanding products and services. Now BMW is once again at the forefront of digital transformation, becoming the first auto manufacturer to leverage Alibaba Business Operating System (ABOS). This system will help accelerate the digital operations across BMW’s business segments, aiming to provide end-to-end customer-centric services throughout the product lifecycle and high-quality growth by expanding, connecting and serving customers in a more efficient way.”

Support dealers with digital technologies and accelerate business growth

According to the MoU, BMW and Alibaba will jointly launch the first online sales and services businesses engaging dealers among premium auto brands, to create a seamless end-to-end online-to-offline digital experience.

In the future, online traffic will be directed to BMW dealers to create more business opportunities for them.

In addition, with the assistance of Alibaba’s membership system, BMW and MINI will launch brands’ membership services and marketing campaigns on Alibaba’s various online platforms, to enhance customer loyalty, increase their level of activity, and drive business growth.

Creating cross-business and multi-scenario consumer experience

With the support of ABOS, BMW and its dealerships will accelerate the digital transformation of dealer networks in China, with the aim of providing Chinese customers with more premium, convenient and personalized services and experiences in digitalization.

In the future, customers can purchase BMW and MINI vehicles online, sign up as the brands’ community members with one click to obtain exclusive benefits, as well as make an online reservation for services including the test drive, repair, maintenance, etc. with the support of dealers.

In the decision-making of car purchasing, online financial services will guide customers to the most suitable financial packages and convenient financial plans to meet the diverse financial needs of customers.

In the future, BMW and Alibaba will work together with dealers to build BMW’s end-to-end operating system, aiming to provide customers with full-link service which integrates “car-viewing, car purchasing, and car maintenance” on the multiple platforms of Alibaba’s ecosystem, such as Taobao, Tmall, Alipay and Amap.

It aims to reshape the customer-centric, cross-business, and multi-scenario service experiences.

Win-win cooperation to lead digital upgrades in the industry

Nowadays, the digital economy and digital trade are thriving and changing consumers’ expectations and consumption behavior. As an innovative international auto manufacturer, BMW is accelerating the digital transformation.

In 2019, the BMW Group established Lingyue Digital Information Technology Co., Ltd to implement its digital strategy and promote BMW’s omnichannel marketing, sales management, and customer lifecycle management in China.

Lingyue supports BMW’s customer-centric operation transformation, creates a more premium experience for customers as well as creating value for the continuous growth of dealers and BMW.

In the digital era, business operations are undergoing a transformation. Efficient digitalization represents a holistic and systematic upgrading process.

Alibaba has drawn on its experience, capabilities, and successfully integrating its diversified business using cloud computing and big data technologies to create ABOS, a unique service designed to support businesses with digitalization.

ABOS helps companies by focusing on 11 major business elements: branding, products, sales, marketing, channels, manufacturing, services, finance, logistics and supply chain, organization, and information technology, which will enable end-to-end digital operation in the new era.

The partnership between BMW and Alibaba in digitalization is another proof point that BMW moves digital transformation into the fast lane. BMW becomes the first automaker to leverage ABOS. BMW and Alibaba set a new benchmark for the digitalization upgrades in the auto industry.

In the future, the two sides will work together to support dealers in pursuing business growth opportunities, drive digitalization in the auto industry and auto life, and bring further benefits to customers and dealers.

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

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

Consensus, offer, performance and ecosystem are four hurdles towards the take-off of pure EVs. China has ticked the first two and making great progress on the third.

When I worked in China a few years ago, I was fascinated by the power, scale, and speed of the changes in China’s auto market. Since moving to a global role and back to Europe, I still travel to China frequently to keep my finger on the pulse of the Chinese market.

From my recent observations and conversations with clients in China, I have a strong impression that China has entered the “Electric Vehicle for All” era, which is not yet a reality in other markets.

Whatever needs you to have for a vehicle, you can relatively easily find an EV model for it: premium, mainstream or entry models from JV and domestic brands; sedan, SUV, mini/compact cars, you name it.

This brings us to a framework to understand the four key hurdles on the path to an EV future.

Four hurdles to overcome for EV to take off

1. Consensus

It means all or most people understand that to achieve a better environment for human beings, such as cleaner air, EV plays an important role. Conceptually in China, most people have agreed that to improve the environment, the transition towards an EV future is an important part of the solution.

2. Offer

We need enough availability of car models for the majority of car buyers/users. Because if we want to attract enough supporters of an EV future, we need to ensure a large enough size of buyers/users can find an EV version of their ideal car model.

For a French man with four kids like me, I need a large enough MPV to drive my family around. But it’s not easy to find such an EV or hybrid model. The only full EV model available now in Europe that fits my functional need is the Tesla model X, a great model but the price tag is a little beyond my budget.

3. Performance

EV brands from China and other parts of the world are making promises. But to really take off, they need to deliver and meet consumers’ expectations on many aspects, such as range, power of engine, access and convenience of charging, etc. Many brands I saw at the Shanghai Auto Show were claiming their EV can run at least 400 kilometers.

This is a decent mileage to make people seriously consider buying a pure EV car because even if you are driving a gasoline car, you’ll have to stop anyway to rest or for some model stop to fill up every 400 kilometers.

To address the burden of long hours needed to reload fully an EV battery pack, I very much like NIO’s battery swapping station approach. If such battery stations can be built along highways and, it’s big AND, it’s built to fit with every brand not just for a single brand, then people will be even more assured of their EV’s range reliability.

4. Ecosystem

It’s similar to the battery swapping station network topic. For an EV future to materialize, many stakeholders need to join forces in the same direction and align for a common future. These stakeholders include auto brands, component suppliers, IT companies, electricity and power companies, research companies and institutes, government agencies, etc.

A great example is the Movin’On Lab ecosystem that brings together many actors of mobility, to explore the trends, innovate and influence the future of mobility.

Recently, I just shared some preview snapshots of our Mobility Futures report during Movin’On Lab summit in Montreal. Surveying 20,000 people across 31 cities, the study uncovered the political, economic, ecological, technological and socio-cultural factors that are profoundly changing mobility decisions in the major cities around the world.

In addition to identifying today’s patterns of mobility behavior, the project also evaluated acceptance towards new products, services, and interventions to project a 10-year vision of the urban mobility market, including city-level forecasting and scenario planning.

Likewise in China, China Mobile has already established China 5G Autonomous Driving Alliance, which has attracted Chinese automakers, universities, and research institutes, IT companies to join forces. It will be a powerful platform to boost the development of autonomous driving.

I am also aware that China Electric Vehicle Charging Infrastructure Promotion Alliance (under the leadership of China National Energy Administration) is working as a platform to push forward the access and convenience of charging EVs around China.

Various levels of governments are playing important roles in nurturing the ecosystem. Their regulations and incentives can effectively enforce alignment to push the deployment of EV cars. Take Norway as an example, where since 1990s government and private firms facilitated the import, the sell and the use of EV. Even though Norway is a small country compared to many others, it is now the third largest market for EV sales, right after China and the US.

To summarize, I think China has passed the first major hurdles and is making significant progress on others. We can expect the ecosystem to gradually take shape and accelerate the EV development in China.

Implications for auto brands

Given the status quo of EV cars in China, I think auto brands need to focus on the No.2 and No.3 hurdles mentioned here: offer and performances.

For consumers, it is good to have so many EV offers to wait to be chosen, but for EV brands, they are in a highly competitive and increasingly congested market segment. They really need to understand what consumers are looking for in an EV so they can come up with a differentiated and unique offer to win.

Auto brands also need to evaluate experiences and pain points of current EV customers/users to develop a better performing EV which can retain and win new customers in the future.

Also read: 80% of Chinese consumers’ unplanned shopping comes from social e-commerce

Author: Guillaume Saint, Global Automotive Lead, Kantar

This article was originally published on Kantar.com

Production and sales of new energy vehicles (NEV) in China reached 734.6 thousand units and 721.5 thousand units for the first nine months of 2018, an increase of 73.05% and 81.05% year-on-year, respectively, according to the China Association of Automobile Manufacturers (CAAM).

Among that, production and sales of blade electric vehicles (BEV) were 554.6 thousand units and 540.5 thousand units, an increase of 58.94% and 66.19% year-on-year, respectively. Production and sales of the plug-in hybrid electric vehicle (PHEV) were 179.9 thousand units and 180.8 thousand units, an increase of 138.04% and 146.87% year-on-year, respectively.

Automobile’s production and sales totaled 20,491.3 thousand units and 20,490.6 thousand units during this period, an increase of 0.87% and 1.49%, respectively. Such growths were 1.90 percentage points and 2.04 percentage points lower than that of the first eight months of 2018.

To be specific, production and sales of passenger car were 17,350.7 thousand units and 17,259.7 thousand units, an increase of 0.13% and 0.64% year-on-year, respectively.

Production and sales of the commercial car were 3,140.7 thousand units and 3,230.9 thousand units, an increase of 5.17% and 6.31% year-on-year, respectively.

SAIC, Dongfeng, and FAW were the top three automobile enterprises in terms of sales. The top 10 domestic automobile enterprises combined sold 8,408.3 thousand units automobiles, accounting for 81.32% of the total sales of domestic brands.

New energy vehicle is the hottest theme of this year’s Beijing Auto Show. Kantar TNS Auto expert summarizes major trends in this sector.

China is the world’s largest auto market. Its annual auto show, which is held in Shanghai and Beijing in turns, has become one of the most important events for the world’s auto industry. This year’s show is being held in Beijing’s China International Exhibition Centre, New Venue from April 25 till May 4.

Given that new energy vehicle is increasingly becoming mainstream in China, I noticed some major trends in this sector during my trip to the mega exhibition.

Many traditional automakers launched new plug-in hybrid electric vehicle (PHEV) models for today’s China market. Apparently, PHEV has become the main route towards the next phase of the new energy revolution in China.

Ford, for example, launched its first new energy vehicle for the Chinese market: Plug-in hybrid version New Mondeo. Chinese car maker Geely also unveiled plug-in hybrid sedan Borui GE, which is due to hit the market within this year. Compared with previous hybrid cars using gasoline engines to recharge batteries or to power the electric drive motors, plug-in hybrid vehicle represents a step towards a pure electricity driven car era.

Compared with plug-in hybrid electric vehicles, pure electric vehicles have made more noteworthy progress in designing. Previously, automakers have kept the external designs of new energy vehicles similar to gasoline versions – in some cases even exactly the same.

Now, pure electric vehicles, regardless from traditional car makers or disruptive newcomers, have more distinct exterior designs compared with fossil fuel-based vehicles.

The body design and interior styling of electric cars distinctively emphasize on simplicity, streamlining and futuristic design, as well as fully loaded technology features, such as intelligent user-interface, connectivity, and self-driving features. Car makers wish to impress car buyers to provide them with easier, simpler, smarter but at the same time more customized services.

BYTON, one of the high-profile disruptive car makers and founded by a team led by former BMW senior executives, unveiled its CONCEPT car and became one of the most attractive new launches during the show.

In fact, traditional car makers are also rolling out sexy concept cars, such as ICON from Geely:

Pure electric vehicles have become more personalized: automakers are not rolling out just one or two models, but various models designed for very specific car buyer segments. BAIC, for example, displayed its two-seat pure electric LITE in 12 colors for 12 zodiac signs. It will also roll out models with different driving ranges to cater for the needs of different buyers, such as single buyers, the family of two or family with a small child.

Many businesses in China are expanding outside of their “native” industry, automakers are no exception. I have seen many automakers promoting their vehicles’ connectivity with “smart home” devices, as showcasing the benefits of automobiles connected with Internet of Things.

Dongfeng Motor displayed their vehicles’ ability to turn on air conditioners and water heaters at home within a certain pre-set distance. Geely displayed apps that could be installed on their in-car operating system and control devices at home and other locations. The examples demonstrated these automakers’ vision as how a connected car-home ecosystem can enhance life quality.

Many companies also displayed their solutions to tackle the biggest bottleneck preventing electric cars from taking off in China: power charging.

BAIC displayed a model “battery station” solution which can swap a used battery pack for a fully charged one within 2’30”. This echoes the direction of start-up Chinese pure electric maker NIO is taking. According to this model, electric car buyers won’t be buying battery packs. Instead, they pay for the usage of these batteries or rent it. It is possible that people will be charged at “battery stations” based on how much power they’ve used or distance they’ve driven on the battery packs being taken down.

For the pure electric vehicle, the latest models now can be charged up to 80% within 30 to 40 minutes in quick charging mode and fully charged to 100% within 6 – 8 hours in slow charging mode. Both modes are considerably shorter, especially quick charging mode, which used to take 1 to 2 hours. At the same time, most newly launched pure electric vehicles will have at least 500 kilometers of driving range.

At every major auto show in China, we can see many cool and sexy concept cars. But after quite a few “PPT auto start-up” busts here, which refers to start-ups trying to win investment and early buyers with nothing other than a nice presentation deck, we need to be more cautious. Let’s take a step back and think twice before being carried away.

It is true that China has gone a long way in new energy vehicle development, with traditional and disruptive automakers launching new concepts, new ecosystems or new theories one after another. But we also need to check how many of these fancy models eventually hit the streets.

A newcomer announced a pure electric SUV for 300,000 yuan. Another one promises to start to sell a pure electric racing car at 600,000 yuan to 1 million yuan range this June. We have to be patient and scrutinize which ones of these big promises are in the end delivered.

It doesn’t matter whether this automaker is new or long-existing, what matters is if this company can produce safe and efficient new energy cars that brings value to Chinese consumers. They are the true “new energy” to bring Chinese auto market forward.

This post was originally published on Kantar.com.

On April 17, the Chinese government announced that it will scrap all foreign ownership limits for companies producing automobiles in China over the next five years. To be more precise, it will lift foreign ownership stake limit in manufacturers of special purpose vehicles and new energy vehicles in 2018; in makers of commercial vehicles in 2020 and in makers of passenger vehicles in 2022.

To summarize, all foreign ownership caps for China’s automobile industry will be completely removed within five years.

Initially, when foreign auto brands entered the Chinese market, they had to find a local Chinese auto company to set up a joint venture to build cars in China. They were not allowed to own more than 50% of these joint ventures.

They couldn’t form more than two joint-ventures with as many Chinese partners in the same automobile category either. (For example, Volkswagen, which formed passenger vehicle joint ventures with FAW (First Automotive Works) and SAIC (Shanghai Automotive Industry Corp), was not allowed to partner with a third Chinese partner to produce passenger cars.

How will this gradual but thorough open-up policy affect the Chinese market, which is the world’s largest? To be more precise, where will Chinese brands be five years from now?

First of all, the better ones of private Chinese auto brands are already strong enough to compete against foreign auto brands. In the recent five years, Chinese auto brands have significantly increased their market share in China. As a result, South Korean and French auto brands have been yielding market shares to them.

Now that these private brands have established a solid foothold in the lower-end market sector, they’re foraying into middle or even high-end sectors. For example, Great Wall has launched its WEY premium SUV brand and Geely partnered with Volvo to set up a joint venture LYCO & Co. to pilot a new shared smart car business model.

Secondly, we have to admit that Chinese partners have made meaningful contributions to the successes of foreign brands in China. Not all globally successful brands are automatically success in China. For example, Toyota is a global leader, but in China, it is lagging behind Volkswagen.

Apart from the ups and downs in diplomatic relationships between China and Japan, VW owes much of its success in China to its excellent domestic partners – SAIC and FAW. It is a similar story for Nissan and GM in China. To win the Chinese market, you need more than technology and manufacturing. Chinese partners can help make a big difference, especially in sales network and marketing.

Thirdly, for state-owned Chinese auto companies, they have also made big progress on developing their self-owned brands, such as FAW, SAIC, Changan, and Dong Feng. Their brands have already moved up in the best-selling model ranking in recent years and laid a solid foundation for branding and manufacturing.

Last but not least, let’s fast-forward to five years in the future. What will the Chinese market of 2022 look like? Given the trajectory, it’s safe to say that the power of Chinese auto brands and the quality of their cars will continue to rise.

At the same time, new energy vehicles will become more mainstream in China, which is a totally different realm compared with the fossil-based auto market. The Chinese government supports Chinese auto brands can boost their strength through becoming leaders in the new energy sector. As a matter of fact, some Chinese brands have already accumulated sizable advantage in this area, such as CATL and BYD’s leading position in the auto battery.

The recent five to 10 years is the story of the growth of Chinese auto brands. They have narrowed gaps with foreign brands in many areas, from product quality to branding to sales channels. In some areas, they’re even doing a better job than foreign competitors now. This is one of the main reasons for slow-down of foreign auto brands’ growth in China. For French brands, they have even reported declines in sales.

In the near future, this trend will continue, but more important game-changers will come from new-energy cars, connectivity, and AI. Chinese auto brands have a good foundation to compete with foreign brands in these areas. For example, the leading Chinese Internet companies, Baidu, Alibaba, and Tencent, are all entering this area with their mighty technology power and huge data resources. In theory, they should feel easier to work with Chinese auto brands.

To summarize, in the five-year transitional period, Chinese auto brands have a good chance to weather the challenges brought by full open-up of the industry. We can expect a smooth and gradual change of the market competitive landscape in China.

China mobile app user insights 2018

The article was originally published on Kantar.com

Kantar TNS Auto survey shows Chinese consumers are more willing to buy connected cars as well as more ready to accept self-driving cars, shared cars and new energy cars.

Chinese consumers have the strongest appetite for connected vehicle purchases: 79% of surveyed Chinese consumers said they plan to buy a connected vehicle in future, higher than North America’s 52% and Europe’s 53%. Both in America and Europe, 64% of those potential buyers will look to their car dealers for guidance on emerging technologies.

However, only 25% of Chinese consumers will consult dealers. Apparently, online communication is pivotal to the connection between Chinese car buyers and auto brands. China is one of the most digitally advanced countries in the world, so brands have to draft their multi-channel marketing strategies here.

China is the most promising land for connected vehicles: 65% of Chinese consumers accept connected car technologies, compared with 40% in Europe and 32% in North America. Chinese consumers are also more willing to try out entertainment and information services, such as social media as well as video and music in their vehicles.

Other formats of connected car features are also more welcomed in China. For example, 75% Chinese accept self-driving cars, compared with only 24% in North America and 36% in Europe; 79% Chinese accept pure electronic vehicle or hybrid vehicle, compared to 53% in Europe and 29% in North America. Shared car services are accepted by 68% of Chinese consumers, while only 21% in Europe and 8% in North America.

A gap too far

Though the prospect looks promising, there is a big gap between the future and the reality: Globally, our survey has found that 25% of car owners are not actively using their connected car’s features, and 11% don’t even know if their vehicle has them.

Currently, traditional elements still dominate the ranking of key car purchasing considerations, such as “safety” (47%) and “fuel economy” (42%). Only 11% global surveyed consumers mention “connectivity”.

In fact, more than half (56%) of drivers who accessed these services at the time of car purchase either don’t plan to, or are unsure whether they will renew them in the future.

Connection failure

The findings make clear that auto brands are struggling to convince owners of “connected” benefits despite having invested vast amounts of capital to embed new technologies and services into their vehicles.

For many owners, new tech offerings are still seen as an optional extra and not an intrinsic part of the vehicle. This highlights a perception gap given the role that technology and connectivity can play in the vehicle’s performance, safety and the driving experience.

The study also finds that 52% of respondents would pay for driver-related services such as navigation features – a figure which falls drastically to 26% for entertainment features where buyers often prefer to use well-known apps on smartphones.

Globally, premium brand owners appear to be early adopters of connected features, with a higher proportion of premium owners willing to pay for connected features when compared with mainstream brand vehicle owners. For example, 52% of all car owners said they’d be willing to pay for navigation features. Among premium car owners that number rises to 72%

The trust equation

Auto brands are in a strong position when it comes to perceptions of safety and security, as they enjoy significantly more trust than other tech companies – 40% of consumers trust car brands with their data compared with 10% for companies such as Google and Facebook.

Aside from security and privacy, demonstrating how technology can improve driver and passenger safety will also appeal to consumers – with 43% of the users of connected features globally saying it is an attractive feature.

Show the benefit

In the minds of many car owners, connectivity is complex. Rather than following the “build it and they will buy” model, auto brands have an opportunity to grow their market share by simplifying their features, aligning them with the core customer wish list and by communicating the benefits more effectively within their existing marketing channels.

In mature markets such as the United States, it’s clear that for now, dealer networks still have a big role to play here as trusted players in the path to purchase. But in China, consumers are more comfortable with a multiple touchpoint purchasing path. So brands have to give online channel higher priority to secure a place in future China.

This article was originally published on Kantar.com

China’s automotive market rebounded strongly in 2016 with record-breaking sales of almost 23 million passenger vehicles after its lowest growth since 2011. Car sales jumped 20%, nearly twice the rate of increase in 2015 according to McKinesey.

McKinsey conducted an extensive survey in July 2017 of over 5,800 auto buyers who purchased cars within the last year. These consumers came from 44 Tier-1 to -4 cities and seven counties, located in 19 key city clusters across China. Collectively, these clusters contribute 90 percent of China’s urban GDP and contain half its population.

Although sales should increase by a modest-for-China 5 percent annual rate through 2022, this will equal 53 percent of the growth in the global car market – still a lower share than in the last five years, when China contributed 78 percent of global car sales growth.

SUV sales continue to dominate growth in China, as they move beyond entry-level segments. Small SUVs in the B and C segments1have accounted for 78 percent of sales in the past two years

From a price segment perspective, cars costing more than RMB 250,000 should see sales expand at a 10.5 percent CAGR, while the rest increase just 4.1 percent a year.

Entry-level SUVs have propelled local OEM growth, explaining 98 percent of their sales increase from 2012 to 2016. The overall B and C segment SUV markets grew by 10 percent and 38 percent a year, respectively, from 2012 to 2016. In comparison, local brands in these segments grew by 94 percent and 90 percent, respectively, during the same period

Read the complete article on McKinsey.

China car sales continued to grow and car ownership totalled 170 million in 2015, up 11.4% according to iResearch.

The market size of China auto maintenance industry has already exceeded hundreds of billions yuan according to iResearch data. It exceeded 540 billion yuan in 2015 and will reach a thousand billion by 2017.

In auto maintenance market, 4S shop is still in a dominant position, accounting for about 70%. Online channel penetration rate reached 6.2% in 2015.

Also read: Trend of China’s Automobile Consumption in 2015

With the booming of the new emerging market, automobile has become less expensive, and the internet has brought an open platform which makes it more reachable to families. China Automotive Technology Research Center estimated last year that automobile sales volume will reach 25.5 million in 2015 and 35 million in 2020 with average annual growth rate of 7%.

Tencent made a research on China’s automobile consumption after surveying 33,729 internet users, 83.5% of which are between 21 to 45 years old, 30% with high school degree, 34.8% with a bachelor degree or higher. The survey was made across over 20 provinces in all levels of city tiers.

According to the research, the number of car-owners in the second or third tier cities have similar purchase intentions as that in the first-tier cities; about 30% users plan to become car-owners in one year, especially in second and third tier cities. There is still a large potentially bigger automobile market in China.

Also read: Chinese Luxury Traveler Insights 2015

Since the start of 2015, the growth rate of Chinese automobile transaction volume had slowed down its growth. In June 2015, the growth rate of the automobile market was merely 1.4%, 7 percentage points lower than June 2014.

Less developed cities might make a breakthrough for the downturn market. Automobile market in first-tier and second-tier cities shrunk gradually, while buyers in third-tier to six-tier cities increased.

According to data from Alibaba, about 67% automobile buyers who were also Taobao users were from less developed cities. Mainland China has 657 cities while many third-tier, fourth-tier, fifth-tier and sixth-tier cities were small in size and dispersion in the location. Sometimes automobile companies could not obtain a clear and correct evaluation on local market. Social media could be used for penetrate third- to six-tier cities further.

The post-90s would be another important pillar in the future automobile market. In June 2015, the post-90s buyers accounted for 29%, 8 percentage points higher compared with January 2014. The ratio of the post-80s and post-70s auto buyers decreased.

Also read: China’s Mobile Car Calling Market from 2014 to 2015

Kuaidi and Didi mobile car calling apps still rank first in China’s car calling market by usage rate according to iiMedia Research. Carpooling will become the next focus of competitions in China’s car calling market.

Public transportation is primary transportation in China’s first-tier and second-tier cities when mobile phone users go to work, which accounts for 42.8%. Public transportation system in first and second-tier cities is more sophisticated and less expensive, thus it is the main means to go to work among most mobile phone users.

Brand awareness of Kuaidi ONE and Didi cars lead the market, but China’s mobile phone users’ overall awareness of the car calling mobile commerce has room for improvement. Uber ranks next to Kuaidi and Didi, accounting for 13.0%.

Also read: Baidu’s Global Market Share Decreased to 7.52% in June 2015

In Q1 2015 in China, the top 3 private car service apps were Didi private car (including Yihao private car), Yidao yongche and Uber by total number of active users. EnfoDesk estimates that China private car service will strengthen its service and become the first choice for tier-1 and tier-2 citizens in the near future.

Didi private car (including Yihao private car) ranked the top with 80.9%, followed by Yidao yongche  (17.5%) and Uber (8.1%).

Also read: Business Car Renting Services’ Potential in China

Since 2000, China automobile market has been developing rapidly. As of 2013, average sales volume of automobile increased by 19.8% annually in China. However, the growth slowed in recent two years. China Automotive Technology Research Center estimated that automobile sales volume will reach 25.5 million in 2015 and 35 million in 2020 with average annual growth rate of 7%.

Among China internet users who purchased cars online, 68.8% of them bought their first automobile in life while 23.2% upgraded the old one. Besides, most China internet users would choose to buy new automobile other than second-hand one according to research conducted by iResearch and Yiche.com.

82.8% of respondents purchased automobile for self-driving trip while 77.8% for transportation to work.

China internet users’ automobile budget is between RMB50,000 and RMB200,000 accounting for over 70% in 2014. Automobile has been the mass consumer product in China nowadays. 64.2% of China internet users who purchase cars again would choose the ones with price over RMB150,000 (USD 24,140).

SUV was the first choice for most China internet users (36.9%) who planed to purchase automobile in 2014, followed by mid-sized vehicle (33.2%) and compact vehicle (24.9%).

77.5% of China internet users gained automobile purchase information from internet. People around and auto shows can have also impact on automobile purchase while outdoor ads and traditional media have relatively weak influence.

72.7% of China internet users would access automobile news on automobile vertical websites, followed by portals and search engine.

For most internet users in China who purchased cars online, cross-device access has become the mainstream. Desktop and laptops are still the most regular device for users to access automobile information. With China mobile internet’s development, mobile device are gradually playing a more important role than desktop.

When purchasing automobile, China internet users’ top 3 concerns are fuel consumption, configuration and price. For first purchase of cars, China internet users focus on fuel consumption and price while for those purchase another automobile, they focus on automobile’s configuration, safety, space and brand.

In 2014, 29.8% of respondents bought SUV, which is the favored one for China internet users.

Among respondents who bought automobile in 2014, 89.5% of them purchased in 4S stores and about 70% of them are automobile vertical websites users. The way of purchasing automobile online is becoming popular in China as e-commerce is key part of Chinese people’s life.

Chinese users displayed the highest level of engagement and interactions with brands on social media, according to PwC research. And, a McKinsey survey pointed out that social media has a greater influence on purchasing decisions for consumers in China. During 14 days’ promotion on Weibo, a total number of over 60 thousand cars were ordered with a total worth of over RMB9.2 billion (US$1.5 billion).

In China, mobile internet users exceeded 500 million in 2013 with penetration of 80.9%. The growth rate of mobile internet users is higher than the one of total internet users.

Compared with China internet users on desktop, the ratio of young male married ones with high education background, high income on mobile device is higher who tend to choose sports cars, imported automobile, and middle and high end automobiles according to iResearch data.

Here is a list of top 10 automobile brands on desktop and mobile device in 2014:

From January to September 2014, the index of replacing passenger vehicle in China continuously rose with monthly compound growth rate of 5.5% according to Yiche.

More online car buyers bought the first car online, especially among freshman for working, newlyweds and new parents. And people with successful career usually upgrade their old ones; family with more than one kid tend to purchase another one.

Also read: China Automobile Market Overview in August 2014

In Q3 2014, top 3 automobile websites by total user reach on desktop were Autohome.com, BitAuto.com and PCAuto.com with 47.68 million, 35.6 million and 32.48 million respectively according to data from EnfoDesk.

China top 3 automobile websites all had strategies for competing for traffic: Autohome.com reached Baidu Alading platform (it is Baidu’s search open platform which shares data and display hidden wed information to obtain valuable traffic); BitAuto.com cooperated with 360 onebox; PCAuto.com cooperated with Sougou.

Good performance on desktop will stimulate competition for traffic on mobile device among automobile websites. Automobile.com occupied the first display of mobile search results; BitAuto.com shifted to mobile Baidu Alading; PCAuto.com cooperated with Shenma search. Search engines’ revenue from mobile search was the key driving force for China search engine market in Q3 2014.

Except large traffic of top 3 automobile websites in Q3 2014, they must keep their advantages and show some unique features for users. Good content and active online community are the keys. China automobile websites could promote automobile online purchase to develop automobile e-commerce.

Social media is another platform that got automobile industry’s serious attention in Q3 2014. During 14 days’ promotion on Weibo, a total number of over 60 thousand cars were ordered with a total worth of over RMB9.2 billion (US$1.5 billion). Chinese users displayed the highest level of engagement and interactions with brands on social media, according to PwC research. And, A McKinsey survey pointed out that social media has a greater influence on purchasing decisions for consumers in China.

Also read: China Automobile Market Overview in August 2014