New Energy Vehicles (NEVs) in China

Alright, my daily BYD roundup
Bringing Yuan+ EV and Song+ DM-i to Chile. That leaves Mexico as the other big market where Han/Tang was announced but the mass market models have not. In South America, I feel like Argentina is the only major one they haven't announced PV entrance yet. Interesting thing that BYD positions itself as more of a high end brand in Latin America. Domestically, it's always been considered a cheaper brand that have only gained brand strength recently with Seal, Tang and Han. That's why they had to add Denza and YangWang to raise their brand to an even higher level.

A whole bunch of stuff here
BYD Han now getting into Israel. Atto 3 has been very popular thus far. BYD is also bringing over Tang in Q4. They are again taking orders for the Atto 3 in Thailand after pausing it due to too many orders. And finally, the first 6 electric forklift delivered into Malaysia.

I think they are looking to move into all these commercial vehicle markets. And in order to do so, you will probably see BYD opening up factories all across Asia.

And also in Europe
First cars getting into Germany now. Supposedly, delivery in Sweden for the month is complete. Expecting close to 1000 in sales. They also got. new store front/experience center in Cologne which was a Tesla store before.

And I save the best for last, Japan.
They are going to be bringing Atto 3, Seal and Dolphin the to the Tokyo Auto Salon 2023 from Jan 13th to 15th. Atto 3 is expected to hit the market in Japan on the 31st of January.


At the same time this is happening. Here is the reaction to the pricing for the new Honda Civic Type R. Let's just say the local dealers and the Chinese consumers are not impressed with how much Honda is charging for a new ICE car. Honda and Toyota are going to get their asses kicked next year in China.

NiuBiDaRen said:

How would you guys evaluate NIO's sustainability and future success?

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I'd rate it as good, given the estimated sales are 26K for Dec 2022 numbers
If they only had another 5K of sales, they should be profitable overall, based on the figures in the Q3 2022 quarterly statement
And if you strip out the effect of R&D spending (which is aimed at developing future products), NIO should have been profitable for Dec 2022

Gross margins are 13% (or 19%?) so they do make a profit on every car sold.
But then you have R&D, fixed and administrative costs as well, which brings NIO to an overall loss

They've got a cash pile of $7 Billion, which should be more than adequate to cover anticipated monthly losses for 2023

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They have another 10K available stated capacity at the new factory that only really started ramping up last month.
If you look at the factory, they don't have a production line per se. They have a flexible AGV setup in the factory and I expect this to accommodate all models of their new second-gen NT2.0 vehicle platform.

Given the flexibility of this factory and the common platform, it looks like they are prioritising their more expensive models for immediate production (as per the 2-3 stated delivery times). At the same time, they have a 3-4 month backlog of their lowest cost and presumably most popular ET5 car.

So they've already made the upfront spending on a state-of-the-art factory with a flexible AGV production line and they are using gigacastings. Future factories will be cheaper to build and straightforward to ramp up. The development of the 2-gen EV platform has also been fully paid for, which they can now leverage for future models. This includes an affordable brand in addition to the current premium NIO brand. Note the BBA brands are significantly behind in terms of EV platform technology

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Once the 2 current NIO factories are fully ramped (100K+300K capacity), there's still a huge amount of potential untapped demand in the premium segment.

As per the recent JP Morgan survey, only 10% of Chinese customers want a petrol/diesel car
In 2021, there were over 2.4 million in sales of premium BMW, Mercedes, Audi and Lexus cars.

NIO then doubling from 400K to 800K in the Chinese premium segment is still very much possible.
Note that BMW, Mercedes and Audi all sell roughly 700-800K per year in China

Keep in mind that NIO backlog disappeared as soon as Tesla lowered their prices. The likelihood of NIO sticking around as a standalone brand 5 years from now is not high. Also, everyone and their mother will be crashing the luxury market. Denza brand will take a huge chunk of the 300 to 600k market. I just saw GAC Aion come out with a supercar and it looks fantastic. Zeekr 009 looks great and Geely is steadily raising production level. I would bet on Geely over NIO any day of the week. Huawei will come out with more cars in partnership with your traditional brand.

By this point next year, NIO may very well be in XPeng's current position.

henrik said:

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BYD is extending their lead.

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Yup, BYD's SUV from their Yangwang brand will beat the Cybertruck by at least 6 months.

NiuBiDaRen said:

How would you guys evaluate NIO's sustainability and future success?

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Too many models and they are attempting to create too many sub-brands.

Huawei is committed to EV long-termly.

A summary of China's auto industry:

tphuang said:

Keep in mind that NIO backlog disappeared as soon as Tesla lowered their prices. The likelihood of NIO sticking around as a standalone brand 5 years from now is not high. Also, everyone and their mother will be crashing the luxury market. Denza brand will take a huge chunk of the 300 to 600k market. I just saw GAC Aion come out with a supercar and it looks fantastic. Zeekr 009 looks great and Geely is steadily raising production level. I would bet on Geely over NIO any day of the week. Huawei will come out with more cars in partnership with your traditional brand.

By this point next year, NIO may very well be in XPeng's current position.

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NIO still had a backlog as of early December. But by that point Tesla's China backlog had completely disappeared and the effects of Tesla price cuts had mostly happened.

Yes, everyone wants part of the luxury market, but this segment is still predominantly BBA with ICE vehicles.
So there is room for NIO to double sales, and also for Denza/GAC/Zeekr to take a huge chunk as well

As for NIO sticking around as a standalone brand, I doubt that will be the case as well. Either

1. NIO will sell out to a larger company, as NIO do make good cars and have a loyal fan base. Plus their underlying operations should be profitable.
or
2. NIO will have to succeed in building up an affordable mass-market car brand. They've already publicly identified as a goal.

EDIT. Note that Mercedes and BMW are currently standalone premium car companies, whereas Audi/Infiniti/Lexus as part of larger auto groups. But I think the independence of Mercedes and BMW is an artefact of the combustion engine era, when performance was hugely tied to customising an engine/powertrain for a specific sized vehicle.

But in the electric vehicle era, it's not about custom engines anymore.
It's the same EV platform which is used across multiple models and the raw performance of the car is due to the electric drive motors and the battery size/chemistry. The motors are almost like commodities with very little difference between them and the batteries are available for anyone to buy as well.

So there is a huge advantage in terms of cost, performance and time-to-market, if a premium car brand can share an EV platform with a mass-market brand

First BYD showroom in Austria opened up in Vienna. Will take a little more time for delivery to start.

tphuang said:

Keep in mind that NIO backlog disappeared as soon as Tesla lowered their prices. The likelihood of NIO sticking around as a standalone brand 5 years from now is not high. Also, everyone and their mother will be crashing the luxury market. Denza brand will take a huge chunk of the 300 to 600k market. I just saw GAC Aion come out with a supercar and it looks fantastic. Zeekr 009 looks great and Geely is steadily raising production level. I would bet on Geely over NIO any day of the week. Huawei will come out with more cars in partnership with your traditional brand.

By this point next year, NIO may very well be in XPeng's current position.

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You may well be right. but it sounds like you have a "snitch" with the NIO brand.