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China set to overtake Japan as world’s largest car exporter thanks to surging EVs.

China set to overtake Japan as world’s largest car exporter thanks to surging EVs.

China's total vehicle exports are expected to reach 4.4 million units in 2023, with new energy vehicles (NEVs) expected to account for more than 30 percent of the total, market research firm Canalys said in a report.


China's auto exports have been climbing since 2020, surpassing Germany as the world's second-largest exporter in 2022. In the first quarter, China surpassed Japan as the world's largest auto exporter, with growth in NEVs exports the main reason for the overall increase, Canalys said.



In April, China's vehicle exports rose 142.40 percent to 424,200 units, up 9.61 percent from March, according to the China Passenger Car Association (CPCA).


In January-April, China's auto exports were 1.49 million units, up 71 percent year-on-year, according to the CPCA.


The core regions of China's auto export destinations are shifting from Africa, Central Asia and South Asia to more developed regions, including Europe and Southeast Asia, the report noted.


China's light vehicle exports to these two core regions contributed 5.9 percent and 7.6 percent of the country's vehicle exports in 2020, respectively. In 2022, the share was 22 percent and 14.3 percent, respectively, according to Canalys.


The average selling price of Chinese car exports increased from RMB 112,000 ($15,670) in 2021 to RMB 140,000 in 2022, up by more than 25 percent. In the European market, the figure was RMB 210,000 in 2022.


In 2022, Chinese automotive products had a penetration rate of 2.6 percent in the Southeast Asia region. By 2025, that figure is expected to rise to 12.8 percent, Canalys said.



In Europe, the penetration of Chinese cars is expected to rise to 16.5 percent by 2025, according to the report.


The average selling price of mainstream products in the European market is highly aligned with the average price of Chinese automotive exports, and consumers here are more aware of the NEV market, according to Canalys.


The overall light vehicle market volume in Europe and Southeast Asia is expected to grow to 13.7 million and 3.8 million units, respectively, by 2025, with NEVs penetrating more than 40 percent in Europe, Canalys said.


In 2021, the Covid pandemic caused instability in overseas supply chains and was the core reason for the growth of Chinese vehicle exports. After 2022, the growth of the overseas NEV market presents new opportunities, according to the report.


Chinese automakers have a first-mover advantage in electrification and vehicle intelligence, and have sufficient capacity and short product delivery times, Canalys said, adding that brands in other countries are lagging behind in the NEV transition and are falling short of expectations in core technology development.

($1 = RMB 7.1457)


Source: Canalys



EV industry braced for shakeout as price...

EV industry braced for shakeout as prices plunge.
Amy Liu is unsure whether she should trade in her five-year-old electric sport utility vehicle for a newer model with a longer range or wait a bit longer. “If I place an order now, I’m afraid the price might drop next month,” said the property agent in Shenzhen. Automakers in China’s highly competitive market for new energy vehicles (NEVs), which include all-electric and hybrid models, have been aggressively cutting prices since late last year as demand softened and the government cut back on subsidies.
Local players in the world’s largest EV market have sounded the alarm, projecting that the number of electric-car makers in China will shrink from about 200 to between five and 10 in the coming years. The shake-up is compounded by competition from foreign automakers. Volkswagen, BMW and Nissan all plan to introduce new electric models for China, where local EV makers account for nine out of the top 10 by sales. Encouraged by government policies aimed at bolstering the emerging industry, about two-thirds of China’s existing EV makers were registered between 2018 and 2020.
Nio, Xpeng and Li Auto are among the poster boys competing against Tesla of the US in the medium and premium segments. Others include domestic leader BYD, as well as subsidiaries of state-controlled automakers and independent brands.
Drivers in China have embraced electrics — more than a quarter of all cars sold last year were NEVs — but experts say only EV makers with economies of scale and enough financial firepower will remain standing in the years ahead. “Those without a deep-pocketed parent company will be under the largest pressure, especially those that haven’t got access to the equity market,” Jing Yang, a Shanghai-based director at Fitch Ratings, told Nikkei Asia. “For independent EV makers, we still think their brand positioning and cost structure will make the key difference.” Some are already feeling the heat. Zhejiang Leapmotor Technology is one of the EV start-ups to go public recently. In the past four years, Leapmotor logged consecutive net losses that widened to Rmb5.1bn ($734mn) in 2022, largely due to higher selling expenses. “We will try to achieve a balance between sales volume and gross profit,” chief executive Zhu Jiangming told local media in March. “We will prioritise winning market share.” Hong Kong-listed Leapmotor sold 111,168 vehicles in 2022, a 154.1 per cent yearly growth.
By comparison, Tesla delivered 711,000 vehicles in the same period. Leapmotor last month reduced the price of its flagship sedan C01 by a fifth to match rivals. The price war extends to the lower segment. Ballet Cat, an electric hatchback that resembles the Volkswagen Beetle, now sells for as little as Rmb149,800 after a discount of about Rmb50,000 to meet the “market reality”, a promoter said. The model is made under the Ora brand, one of several EV marques under state-owned Great Wall Motor, itself better known for making pick-up trucks. Ora sold 103,996 vehicles in 2022, a 23 per cent dip. China’s total new-car sales grew just 2 per cent last year, while NEV sales rose 93 per cent to 6.88mn units, or 27 per cent of all cars sold, as buyers rushed to capitalise on a deadline for EV subsidies that year. Partly driven by a drop in the cost of raw materials for batteries, Tesla began slashing prices in October. Other EV players soon followed suit, and makers of traditional petrol-powered vehicles joined the fray as they tried to clear inventory ahead of new emission standards in China that will come into effect on July 1.
“These moves have led to a wait-and-see sentiment and have not helped in increasing vehicle sales,” said Phate Zhang, founder of the China auto news outlet CnEVPost. Total vehicle sales contracted 6.7 per cent in the first three months this year, while NEV sales grew 26 per cent, compared with 138 per cent in the same period last year. Even established EV start-ups are alarmed by the intensifying competition. “The elimination of players in the auto industry has just begun,” He Xiaopeng, chief executive of Xpeng, said on April 16. “Players with an annual sales of 3mn units will qualify . . . and only eight mainstream players will remain in the next 10 years.”
Xpeng, which is listed in New York and Hong Kong, delivered 120,757 vehicles in 2022. A more consolidated EV industry would apparently suit Beijing just fine. The government warned in 2021 of the danger of having “too many players and [being] too scattered” and stressed the need to create “big and strong” EV players. But there have been few mergers and acquisitions in the industry, though some start-ups have thrown in the towel, such as Byton, which suspended operations in China in 2020. Nio was kept afloat after securing a $1.4bn lifeline from the Anhui provincial government in 2020. “It is the Chinese culture where entrepreneurs try to maintain the independence of their business rather than merging with other companies when they are in trouble,” said CnEVPost’s Zhang.
The price war is not going away anytime soon, analysts say, even as the Chinese economy rebounded from three years of zero-Covid policy with a 4.5 per cent yearly expansion in the first quarter. That growth was driven by consumption, markedly in the services sector, and infrastructure spending. “We are still concerned because under such a fierce competitive environment, some leading players and emerging brands backed by large auto groups may opt to price their products more aggressively to gain market share,” said Fitch’s Yang.
Demand was strong for plug-in hybrid vehicles based on first-quarter data, Yang added, and that would benefit players with such line-ups, including state-owned auto groups. For potential buyers such as Liu, however, the challenges facing the market could spell bigger savings. “I will wait it out for the best deal,” said Liu, whose existing car has lost two-thirds of its value.
Source:  This article was first published by Nikkei Asia on May 5 2023.


EV upstart Xpeng is expanding beyond...

EV upstart Xpeng is expanding beyond China

Like Nio, Chinese electric car maker Xpeng has kickstarted its international expansion. But unlike its rival, which put on a series of splashy campaigns in Norway, Xpeng launched quietly in the Scandinavian country last month.


In Norway, Xpeng has begun shipping its G3 SUVs and P7 sedans. The Chinese EV startup aims to enter more European markets in 2022, a company spokesperson told TechCrunch.



Xpeng has stayed low-key with its overseas expansion probably because it was waiting to launch its first “international” model, the G9 SUV that came to light today.


“G9 is our first model to be conceived and developed from the ground up for both the international and Chinese markets, bringing our most sophisticated designs to our customers worldwide,” the firm’s co-founder and president Henry Xia said at an auto exhibition on Friday.


The SUV is Xpeng’s fourth production model and will be the first to possess the carmaker’s latest advanced driver assistance system. The ADAS, called Xpilot 4.0, is built for urban driving, as Xpeng explained at its Tech Day last month. Baking Xpilot 4.0 into a passenger car is ambitious, as the version aims to assist anything from “vehicle start-up to parking,” a big step closer to fully autonomous driving.


Xpilot 4.0’s computing power comes from two Nvidia Orin-X system-on-the-chip units. Its hardware includes a mix of cameras, lidar, millimeter-wave radar and a 3D visual perception network.


In other words, G9 will be layered with sensors. But Xpeng tries to make them inconspicuous. Its dual-lidar units, for example, have been integrated into the headlights. Lidar had traditionally been too expensive for mass-produced cars, but Xpeng and other industry players are working to make the sensing tech affordable.


G9 is not launching in China until the third quarter of 2022, according to a person familiar with the matter, so European customers won’t likely get to try the SUV until 2023.


In the meantime, Xpeng has much work to do before its highly autonomous passenger cars are ready to ship internationally. It will need to set up charging networks in its target markets, a process that is prone to COVID disruptions. Xpilot also relies on high-definition mapping, so the Chinese firm will probably need to team up with local navigation providers.


Xpeng may also be questioned by local governments regarding the safety of its smart cars. Governments around the world vary in their attitude toward vehicle autonomy, and episodes of collisions involving Tesla’s ADAS have only increased their skepticism about the tech’s readiness.


Xpeng has done some preparation in this regard. For instance, it will be testing drivers and giving them a safety score before letting them activate Xpilot. Its vehicles’ built-in monitoring system will also keep vetting drivers and may revoke Xpilot access if it determines a driver is acting irresponsibly.



Global expansion

[Update on Nov 24] During the firm’s earnings call on Nov 23, founder and CEO He Xiaopeng declared that Xpeng’s target between 2020 to 2022 is to “lay a good foundation” for “software and hardware R&D development, our safety, and data protection, and also our team and organization structure revamp.” Sales, on the other hand, “is not our priority in the international market.”


Norway is just the first step, and it already is eyeing Sweden, Denmark, and the Netherlands. It will no doubt be interesting to see how Xpeng structures its operations and supply chains as it starts shipping at a greater scale globally.


Other specs

The G9 is compatible with Xpeng’s “superchargers”, 800V high-voltage mass-production SiC (silicon carbide) that’s able to charge a car for up to 200 km of range within five minutes.


The SUV comes with a “fault detection” system that can identify the fault location after a breakdown. The system will then display the service center with available inventory as well as estimated repair time and cost.


Lastly, the G9 uses the Gigabit Ethernet communications architecture, which “improves communications and support” for higher-level autonomous driving, smart cockpits and OTA upgrades.


Source: TechCrunch

NIO Selects NVIDIA for Intelligent,...

NIO Selects NVIDIA for Intelligent, Electric Vehicles.

Chinese electric automaker NIO will use NVIDIA DRIVE for advanced automated driving technology in its future fleets, marking the genesis of truly intelligent and personalized NIO vehicles.


During a global reveal event, the EV maker took the wraps off its latest ET7 sedan, which starts shipping in 2022 and features a new NVIDIA-powered supercomputer, called Adam, that uses NVIDIA DRIVE Orin to deploy advanced automated driving technology.


“The cooperation between NIO and NVIDIA will accelerate the development of autonomous driving on smart vehicles,” said NIO CEO William Li. “NIO’s in-house developed autonomous driving algorithms will be running on four industry-leading NVIDIA Orin processors, delivering an unprecedented 1,000+ trillion operations per second in production cars.”



The announcement marks a major step toward the widespread adoption of intelligent, high-performance electric vehicles, improving standards for both the environment and road users.


NIO has been a pioneer in China’s premium smart electric vehicle market. Since 2014, the automaker has been leveraging NVIDIA for its seamless infotainment experience. And now, with NVIDIA DRIVE powering automated driving features in its future vehicles, NIO is set to redefine mobility with continuous improvement and personalization.


“Autonomy and electrification are the key forces transforming the automotive industry,” said Jensen Huang, NVIDIA founder and CEO. “We are delighted to partner with NIO, a leader in the new energy vehicle revolution—leveraging the power of AI to create the software-defined EV fleets of the future.”


An Intelligent Creation

Software-defined and intelligent vehicles require a centralized, high-performance compute architecture to power AI features and continuously receive upgrades over the air.


The new NIO Adam supercomputer is one of the most powerful platforms to run in a vehicle. With four NVIDIA DRIVE Orin processors, Adam achieves more than 1,000 TOPS of performance.


Orin is the world’s highest-performance, most-advanced AV and robotics processor. This supercomputer on a chip is capable of delivering up to 254 TOPS to handle the large number of applications and deep neural networks that run simultaneously in autonomous vehicles and robots, while achieving systematic safety standards such as ISO 26262 ASIL-D.


By using multiple SoCs, Adam integrates the redundancy and diversity necessary for safe autonomous operation. The first two SoCs process the 8 gigabytes of data produced by the vehicle’s sensor set every second. The third Orin serves as a backup to ensure the system can still operate safely in any situation, while the fourth enables local training, improving the vehicle with fleet learning as well as personalizing the driving experience based on individual user preferences.


With high-performance compute at its core, Adam is a major achievement in the creation of automotive intelligence and autonomous driving.


Meet the ET7

NIO took the wraps off its much-anticipated ET7 sedan — the production version of its original EVE concept first shown in 2017.


The flagship vehicle leapfrogs current model capabilities, with more than 600 miles of battery range and advanced autonomous driving. As the first vehicle equipped with Adam, the ET7 can perform point-to-point autonomy, leveraging 33 sensors and high-performance compute to continuously expand the domains in which it operates  — from urban to highway driving to battery swap stations.


The intelligent sedan ensures a seamless experience from the moment the driver approaches the car. With a highly accurate digital key and soft-closing doors, users can open the car with a gentle touch. Enhanced driver monitoring and voice recognition enable easy interaction with the vehicle. And sensors on the bottom of the ET7 detect the road surface so the vehicle can automatically adjust the suspension for a smoother ride.


With AI now at the center of the NIO driving experience, the ET7 and upcoming NVIDIA-powered models are heralding the new generation of intelligent transportation.



Source: NVIDIA


China’s EV Startup Xpeng Motors Export...

China’s EV Startup Xpeng Motors Exports its First Vehicles to Norway.

Chinese electric vehicle startup and Tesla challenger Xpeng Motors has exported its first batch of vehicles to Europe, expanding its global presence. It's the first time the automaker is selling its electric vehicles outside of its home country.



Xpeng loaded 100 of its G3i fully electric SUVs on a cargo ship which will be shipped to Norway, which has the highest EV adoption rate. Roughly 75% of all new vehicles sold in Norway are plug-in hybrids of fully-electric models.



With Xpeng's expansion to Norway, the EV startup will give Tesla some additional competition in both China and in Europe. The Tesla Model 3 has sold briskly in the Scandinavian country, but so have Tesla's in general. Tesla was the second best selling car brand in Norway in 2019, selling roughly 18.8 thousand cars last year, according to data from Statista.



Xpeng is shipping the latest version of its G3 to Norway, which first went on sale in 2019. The newest version offers a longer range and other technology improvements from the previous model. The upgraded G3i is available with an extended NEDC driving range of 323 miles (520 km). It was launched at this year's Chengdu Motor Show.



"The first European-spec super-long-range Xpeng G3 intelligent SUVs formally left for Norway today, which made us so proud. It indicates that Xpeng Motors has made headway in various links such as product R&D, intelligent manufacturing and market expansion, and its products started to be tested by overseas consumers," said Xia Heng, co-founder and president of Xpeng Motors.



The Guangzhou-based EV manufacturer will partner with Zero Emission Mobility AS (ZEM), a Norway's automobile dealer. ZEM will be responsible for marketing after-sale service to local consumers, according to China's news outlet Gasgoo.



Xpeng had to make some minor changes to the vehicles to meet local regulations and standards of the European market. The European-spec version however will include Xpeng's popular autonomous valet parking feature. The automated parking feature is supported by a suite of 20 sensors including ultrasonic radars, high-definition cameras and millimeter-wave radars.




Xpeng alos modified its AI-powered Xmart OS in-car Intelligent System which supports voice commands for many of the vehicle's controls. The system will now be able to recognize words in English.



Xpeng is a strong competitor to Tesla in China, but now Tesla too is planning to ship its electric vehicles built at its Shanghai factory to Europe. Tesla's Shanghai factory is its first overseas plant.



Two weeks ago, Bloomberg reported that Tesla also plans to export its Model 3s built in China to Europe in an effort to boost profitability. The California company began delivering the first Model 3's built in China in December of last year.



The China-built Model 3s for delivery outside the country likely will start mass production in the fourth quarter of this year, the people said, asking not to be identified because the details are private. 



"Exporting Model 3s to Europe would take advantage of China's lower production cost base in a bid to improve profitability," said Michael Dean, a Bloomberg Intelligence analyst.



Xpeng Motors was founded in 2014 and its electric vehicles are viewed as a popular alternative to Tesla models in China.



Xpeng's second electric model is the P7 smart sedan which went on sale in April. The electric sedan comes loaded with advanced technology, including self-parking like the G3. It's billed as a lower priced alternative to the Tesla Model S in China, costing less than half the price.



The automaker says it's offering the same level of technology, connectivity features and performance for around $50,000 less than Tesla's flagship Model S sedan. Xpeng's P7 also achieves an NEDC Range of 439 Miles, the longest of all EVs sold in China, including the Model S. The car features an all-wheel-drive setup with dual electric motors.




Xpeng Motors is backed by China's e-commerce giant Alibaba, which is China's equivalent of Amazon.



The company raised $1.5 billion in its U.S. IPO in August becoming a public company. Xpeng's stock now trades on the New York Stock Exchange under the stock symbol "XPEV."



Source: FutureCar

Tesla Gigafactory Shanghai set to produc...

Tesla Gigafactory Shanghai set to produce 100,000 units in 2020.

It appears that Tesla’s expansion into the Chinese EV market is maintaining its momentum, with data from the China Association of Automobile Manufacturers (CPCA) revealing that the American electric car maker has sold 11,041 vehicles last month. Such numbers allowed Tesla to become China’s leading electric car maker in July 2020.



Local reports indicate that the majority of Tesla’s July sales in China were comprised of Made-in-China Model 3, which were produced at Gigafactory Shanghai. This is quite encouraging, as it shows that the locally-produced all-electric sedan is starting to get embraced by the mainstream market. If Tesla could maintain this pace, the company could be a familiar sight in the local market even before it ramps the Made-in-China Model Y, a vehicle that would likely outsell the Model 3.



Tesla has so far exhibited strength in China this year, with its vehicle sales maintaining a healthy level despite the effects of the coronavirus pandemic. Reports also indicate that the production of the Model 3 in Gigafactory Shanghai continues to get optimized, with speculations pointing to a production rate of more than 4,000 vehicles per week. This milestone was reportedly achieved by the facility’s Phase 1 zone with only two working shifts.



As China pushes for electrification, industry watcher and researcher @DKurac noted that the country’s New Energy Vehicle sales estimate for the year remains unchanged at about 1.1 million units for 2020, a 10% decline year-over-year. Yet interestingly enough, the China Association of Automobile Manufacturers (CAAM) has also noted that Tesla sales for 2020 are estimated at about 100,000 vehicles. Such a feat would be impressive for Tesla, especially since consumer deliveries for the Model 3 only started this January.



Tesla’s push into the Chinese EV market is now hitting its stride, and this is represented by the rapid buildout of the Model Y factory in the Phase 2 area of the Gigafactory Shanghai complex. Over the past months, workers have been pushing to complete the new facility as quickly as possible, and so far, great progress has been made. Recent drone flyovers of the Gigafactory Shanghai complex show that the Model Y factory’s exterior is all but completed, and work is now focused on equipping the facility with production equipment.



If Tesla continues this pace, it would not be surprising to see the Made-in-China Model Y entering trial production later this year. This could pave the way for a serious production ramp of the all-electric crossover by the first quarter of next year, allowing Tesla to extend its reach into the country even further. The Model Y is a crossover, after all, and it competes in the highly-lucrative and popular crossover market.



By Simon Alvares for Teslarati

China Automotive Roundup 2018

China Automotive Roundup 2018

According to the China Association of Automobile Manufacturers (CAAM), domestic vehicle sales increased 3% year-on-year in 2017, to 28.88 million units, a sales increase far lower than the 10% rise seen in 2016. The slower growth was due to higher taxes on smaller cars and subsidy adjustments on electric vehicles. Passenger car sales, led by Volkswage, increased 1.4% (among those SUV sales rose by 13.3%, to 10.25 million units), while sales of minibuses/multi-purpose vehicles plunged 20% and 17% respectively. Commercial vehicles recorded robust demand with sales increasing 14%, to 4.16 million units. In 2018 it is expected that vehicle sales will increase as much as 5% year on-year.



Whilst Government of China views its automotive industry, including the auto parts sector, as one of the country’s pillar industries, Electric cars remain a promising segment, as the government still provides substantial subsidies to manufacturers, while customers are offered incentive and favourable discounts for purchasing. State-owned institutions are encouraged to buy more new energy vehicles. The electric car market grew 53.3% in 2017, to about 780,000 units, while sales increased 111.5% in H1 of 2018



However, concerns over overcapacity are rising, as there are currently more than 200 electric-vehicle projects in China with investment of over CNY 1,026 billion and a potential capacity of more than 21 million units, while the government-set target aims at just 7 million units on the road by 2025. In order to guide the industry, the Chinese state is gradually reducing subsidies. Stricter rules are also set to raise the subsidy threshold, which will force automakers to increasingly convert themselves into hi-tech companies with core competencies. In this way, low-cost manufactures will leave the stage.



It seems that the Chinese car market is rather resilient in the light of the ongoing Sino-US trade dispute. Vehicle import and export volumes (1.25 million units and 1.06 million units respectively) are quite small compared to the industry output (29 million in 2017). The government has recently taken several measures to boost the automotive market. Since July 2018 import duties on vehicles have been slashed to 15% from 25%, while duties for car parts have been lowered to 6% from around 10%. The additional 25% tit-for-tat tariff is only imposed on products made in the USA. At the same time China announced it will ease limits on joint ventures within five years and open up the market to overseas carmakers. The rules will be loosened on electric cars this year, commercial vehicles by 2020 and passenger cars in 2022. All that should ensure a solid and steady performance of the domestic automotive market in the coming years. However, despite its resilience a major escalation of the current Sino-US trade dispute would surely impact the automotive business along with other sectors (e.g. potential deterioration of business and consumer sentiment).



New Energy Vehicles

Made in China 2025 is an initiative to upgrade the country’s industry from low cost mass production to higher value-added advanced manufacturing.  It prioritizes 10 sectors, including the auto sector (and NEVs). The initiative’s objectives are to sell one million units of domestically produced pure electric and plug-in hybrid cars in China by 2020, which should account for a minimum of 70% of the country’s market share. Moreover, it aims to sell three million domestic brand units by 2025, and account for a minimum of 80% of the country’s market share.



The NEV market in China is dominated by domestic brands including BAIC, BYD, and JAC.  A draft measure has been released for public comment that aims to set NEV production targets for both domestic and foreign automakers operating in the Chinese market.  Automakers that do not meet this target would need to purchase NEV credits from other automakers that exceeded it.



Recreational Vehicles

China’s RV market has undergone significant changes over the past several years, including a national focus on the development of tourism, campgrounds and the RV industry. With a growing demand for RVs and a shift in consumers' travel preferences, tourism experts in China anticipate a surge of RV-related businesses in the coming years. According to the “2016 China Campground Industry Report”, there are total of 958 campgrounds in China, of which 489 are under construction. There were about 25,000 RVs in China by 2016. 33% of the campgrounds are located along the eastern part of China, for instance Shandong, Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong), while another 22% are in western China, for instance Inner Mongolia, Gansu, Sichuan and Yunnan. There are currently around 80 RV manufacturers in China, of which 56 are active. It is predicted that the campground industry will hit a trillion RMB market ($145 billion USD) by 2020, which will also stimulate the RV industry’s development.


China has made a push in recent years to develop domestic tourism, including campgrounds and the RV industry. Campground development has received great support from the central government.  The China National Tourism Administration, together with 10 other ministries, released “Several Opinions on Promoting the Development of Self-Driving Tourism” on November 9, 2016. This set a target of building 2,000 campgrounds by 2020, and allows vehicles to tow trailers which are less than 2.5 tons.


However, the RV industry faces issues such as lack of standards and regulations, as well as the luxury car consumption tax challenge. China Customs does not have an HS code for RVs, so RVs are treated as automobiles upon import.  This means imported RVs have to pay the same high tariffs and duties as imported cars.



Whats next for Didi Chuxing?

Whats next for Didi Chuxing?

When China’s largest cab-hailing app company Didi Chuxing announced at the end of July a merger with Uber after a bitter battle for dominance, it was unclear what, exactly, would become of Uber’s China operations. Essentially, Uber sold its China operations to Didi, leaving Uber free to focus on less challenging markets ahead of a widely expected IPO.



In August, Didi said that the two companies would remain independent. More recently, Didi has said that “customer facing operations” will remain independent. Over the next two weeks, Uber users will have to download the new app.



This new app is in Mandarin only, is not compatible with Uber international, uses the same map software as Didi, uses the same drivers as Didi, and does not work with foreign credit cards.



So…Uber is dead, though the company did announce an “international edition” planned for next year. Given Didi’s international aspirations, it’s unclear whether this would be “Uber” as such. As for the present, there have been reports of difficulties using the app and of price hikes, which commentators are attributing to the fact there is a monopoly, compared to in the past when there were two companies offering generous subsidies in order to undercut each other.



Inside China, Didi’s future is even more difficult to discern. While it has become the undisputed number one in the car-hailing app market (there are still much smaller competitors like Yidao Yongche), there were sweeping new laws introduced just before the merger.



The devil is most certainly in the details. The new laws specify requirements for drivers and ban the large subsidies that characterized the Uber-Didi battle, but mostly, they palm off the heavy duty rule-making to local governments to do as they see fit.



And earlier this month, a host of local governments did just that. The big problem relates to migrant workers—the people who already find it tough to live in big cities because they lack a hukou (household registration, basically citizenship of a city) for that area. The rules issues by Beijing, Shanghai and Shenzhen all prevent migrant workers from being drivers, presumably in an effort to ensure drivers don’t have criminal backgrounds.



Critics say it is an effort to assist cab companies, who provide a fair chunk of revenue to local governments, and say that this is effectively regulating car-hailing apps to the point where they are basically just cab companies that use apps instead of part of the sharing economy.



The Wall Street Journal cited Didi as saying that just 2.6 percent of its Shanghai drivers were local residents. This rule would effectively lock migrant workers out of one of the more stable work opportunities for the upwardly mobile. Unsurprisingly, Didi loudly voiced its objections, in a rare case of the company being openly critical of government regulation.



It is important to note however, that these are draft regulations. The final version may end up being less harsh if Didi persuades the authorities that these requirements are too onerous. On the other hand, there have been strikes by cab drivers specifically complaining of the savage competition from car-hailing apps, and effectively turning Didi into a big cab company would make things far easier from a regulatory standpoint.



One thing is certain: while the war between Didi and Uber is well and truly over in China, the struggle to regulate the winner is ongoing. And with Didi gearing up to go international, the company still has its work cut out for it.



Source: This article originally appeared in “The World of Chinese” magazine.



Reshaping the automobile market in China...

Reshaping the automobile market in China: digitisation

For many years, foreign manufacturers experienced record growth in China. But those days are over: last year, all major car makers reported slower growth in the world’s largest car market. China’s economic slowdown can only partially explain this phenomenon. The other reason is that local car brands have become serious competitors. Furthermore the rapidly proceeding digitisation of cars and traffic systems in China could amplify this trend.



Companies and policy-makers in China are promoting vehicle connectivity as ‘the Internet of Vehicles’. This concept covers all forms of vehicle integration within a digital infrastructure, including communication between:

  • A vehicle and its driver (or driver’s mobile)
  • Several vehicles
  • Vehicle and intelligent transportation systems
  • Vehicles and the internet
  • Vehicles and mobile networks
  • Vehicles and satellites (satellite navigation)
  • Car-related online services (pay-as-you go insurance).



Internet companies such as Baidu, Alibaba and Tencent dominate the Chinese internet and are key sources of impetus in driving the development of an Internet of Vehicles. Chinese smartphone manufacturers are the second driving force behind this trend. Xiaomi, LeTV, Huawei and ZTE have all discovered the automotive sector and re also committed to enhancing connectivity in the automotive sector.



Lastly state-owned companies are exploiting vehicle connectivity to consolidate the position of China’s Beidou satellite navigation system in the transport sector. Their long-term plan is to drive the American Global Positioning System (GPS) out of the market.



The companies involved in these new developments are all competing with each other, as they share a common goal: to design a digital ecosystem for connected cars that will provide them with a sales market for their own distinctive services and technologies and enable them to be independent of foreign suppliers and patents. They collaborate closely to this end, building cross-sector alliances where expedient. A lively network of powerful Chinese companies has thus emerged since the start of 2015, all of whom are working together to set up an Internet of Vehicles.



The Chinese Government is attempting to steer the development of the automotive sector through two fields of technology that have not been dominated by international players yet: e-mobility and the Internet of Vehicles.



Chinese car manufacturers have dominated the domestic market up till now, achieving a market share of around 75 per cent in 2015.2 A co-ordinated programme for promoting e-cars produced in China along with massive expansion and standardisation of battery-recharging facilities have helped to fuel this development.



The Internet of Vehicles represents a continuation of this strategy by the Chinese Government: they support Chinese companies in the digitisation of the automotive sector in the hope of securing them a competitive edge. Automotive companies are not the only ones to benefit, though: a number of other strategically important industries are also profiting, including the internet, information and communications sectors, quite apart from Chinese software makers. The Ministry of Industry and Information Technology (MIIT) is currently devising a strategy to promote the Internet of Vehicles as part of the 13th five-year plan (2016–2020).



Creating a competitive advantage for Chinese businesses, Beijing is no longer prepared to bow to international IT standards, patents and associated license fees, but would like to see Chinese standards adopted internationally instead. This applies to hardware and software systems for intelligent transportation systems as well as for satellite navigation and telecommunications infrastructure.


Source: Mercator Institute for China Studies

Recharging China’s Electric Vehicle...

 Recharging China’s Electric Vehicle Policy
Electric vehicles offer China an opportunity to reduce its reliance on foreign oil, improve air quality by curbingemissions from the burgeoning transportation sector, and enjoy the future economic benefits of being a globalpioneer in an emerging industry. While the government has prioritized the development of electric vehicles, morecan be done to ensure success.
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The Chinese Auto Industry in 2012: Joint...

The Chinese Auto Industry in 2012: Joint ventures, locations, sales & export figures.


The Chinese auto market has already undergone a staggering transformation; just a few decades ago Chinese domestic automobile manufacturers held an almost negligible market share, but now China is the largest automobile producer in the world. This success has been achieved by focusing on selling low-end cars to first time buyers, a strategy which worked in the past as more and more of the Chinese population graduated to the middle class. However, after explosive expansion, growth started to slow in 2011 and this trend continued throughout 2012.

The infographic below illustrates the state of the automobile industry in China in 2012. Click on the company logo to view its joint ventures, manufacturing locations, sales and export figures.



Historically, China has hoped to partially de-fang foreign competition by establishing joint ventures. These were especially significant in the 1990s as they allowed Chinese companies to garner technology and trade secrets from European and American automobile companies. Although co-opting foreign car manufacturers has been successful, it means that exclusively domestically manufactured cars are now struggling to establish themselves in an increasingly crowded market. Sales in Chinese-brand passenger vehicles may have increased by 6.5% in 2012, but domestic automakers still only own 41.39% of the market. 


As Chinese consumers get richer, their thoughts turn to concerns such as safety, reliability and customer aftercare, qualities which many Chinese-made automobiles have traditionally lacked. Neither is the domestic forecast particularly heartening; the compound average rate of growth in the automobile market between 2005 and 2011 was 24%,but year-on-year auto sales in 2012 only grew by 4.3%, which is significantly less than the forecasted 8%. 


The shrinking and possible oversaturation of the market combined with foreign competition has forced Chinese auto manufacturers this year to look overseas in an attempt to revive flagging sales. Exports have been increasing by 46.3% year-on-year since 2001, with auto companies applying their domestic strategy abroad by selling cheap cars to first time buyers in developing countries. Algeria was the top export market in 2012, with Iraq, Iran, Russia and Chile following closely behind. Despite the short-term success of this business strategy, it is highly likely that consumers in these emerging markets will eventually follow their Chinese counterparts in requiring safer and better quality cars.


In response to this, Chinese automobile manufacturers have been making conspicuous efforts to bring export cars up to international standards in an attempt to increase trust and remove the stigma traditionally attached to the ‘made-in-China’ label. Some companies, such as Great Wall Auto, have even focused on exporting mid to high-range cars in an effort to build their reputation.


Several high-profile cases may have thwarted this strategy; in August, 2012, asbestos found in Chery and Great Wall brand automobiles exported to Australia resulted in blanket recalls. Furthermore, a recent China-Brain survey found that the majority of respondents would not buy a Chery, Geely, BYD or Great-Wall manufactured car. As China’s automobile companies face the future following the mixed success of 2012, they should look towards increasing brand trust and quality, rather than continuing to manufacture cheap, mediocre vehicles.

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