Foreign automakers such as Volkswagen, Toyota and Ford have been caught out in China by two fundamental transitions; the pace at which customers are abandoning the internal combustion engine and the rise of China’s homegrown EV groups. Chinese-made EV makers have outsold legacy foreign rivals, however only a handful of winners will stay afloat with the rest drowning in the market. So far this year, 38% of sales in China in the “new energy vehicle” market were manufactured by BYD which is set to dethrone VW as the overall top spot by 2023.
Leaders and firms in Europe’s largest markets are beginning to question the ambitious pace of the continent’s green push due to the large costs associated with transformation. The EU plan to make the continent climate-neutral coincides with the implementation of emergency rules to alleviate the effects of an energy crisis and rising competition from China and the US, which has led to calls for a slower pace. Countries such as France and Germany have started to chip away at parts of the EU’s Green Deal, which has led to concerns from EU officials that the timeline for no net emissions of greenhouse gases by 2050 is in jeopardy.
Battery costs make up a large portion of the price tag for electric vehicles (EVs), with lithium being the key ingredient in such batteries. However, volatile lithium prices have led manufacturers to seek alternatives: sodium, in particular, has similar chemical properties to lithium and is more abundant. While cheaper, the lower energy density of sodium would mean that its true price advantage looks closer to 10% compared to currently popular lithium iron phosphate batteries. Sodium-based batteries are better suited to micro EVs and scooters rather than high performance EVs that require longer ranges.
Electric vehicle (EV) drivers are encountering charging infrastructure problems as EVs become more widespread in the US. While the number of EVs in the US has soared to 3 million over five years, the charging station industry has not kept pace with the growth. The US has 135,000 public charging points, but these are often located in inconvenient spots and are unreliable. The Biden administration has set a target of 500,000 public charging stations by 2030, but this is unlikely to match up to China’s 1.8 million stations that are already up and running.
Chinese EV maker Li Auto has seen its stock more than double in value, and analysts expect further growth despite a slowing Chinese economy and price war among the competition. The automaker posted profits in the past two quarters and has outpaced rivals in introducing new models each quarter, while the cost of falling battery prices puts pressure on margins. Analysts are bullish, with Citigroup expecting an 88% climb in the shares by the end of the year. Meanwhile, Li Auto is anticipated to introduce its first purely electric vehicle alongside its present range of hybrid cars later this year.
At the Super Taikyu Series 24-hour endurance race in Japan, Toyota's experimental class Corolla H2 Concept, the world’s first liquid-hydrogen car, successfully crossed the finish line. The car was retrofitted for liquid-hydrogen supply and, whilst the engine had no issues, it has shown that there is still a lot to learn about hydrogen. Toyota argues that while battery electric vehicles are vital to achieving zero net carbon emissions, hydrogen is another viable way to reduce emissions, as it continues to explore new sources of electric fuel and technology.
Shanghai-based Ronbay Technology, an EV battery component supplier, is preparing to expand production globally despite Chinese criticism of US subsidies aimed at reducing the country's economic dependency on China. Ronbay founder and chairman Bai Houshan is among a generation of billionaires helping China take the lead in cleantech. The company dominates the market for cathode electrodes, which are core building blocks in EV batteries and account for 30% to 50% of component costs. Ronbay holds around a third of the global market for high-nickel cathodes and is investigating sites in Europe and North America with a view to setting up factories to serve those markets.
The tropical island of Hainan has over 75,000 charging points for electric vehicles and aims to end the sale of fossil fuel cars by 2030. Electric and hybrid vehicles account for 42% of new cars sales in Hainan, where the local government has provided significant financial incentives for their adoption. More electric vehicles are being used in Hainan due to the island’s small size, temperate climate and significant investment in electric transport. Hainan is encouraging other Chinese provinces to follow this blueprint to enable China to greatly increase the number of all-electric vehicles.
China’s Geely is considering entering Thailand’s EV market, and is currently assessing both imported models and local manufacturing types, including an electric mode pickup truck, according to industry insiders familiar with its plans. Thailand’s Board of Investment has already spoken to Geely as well as four other major Chinese EV manufacturers in April during a roadshow. The others are even more interested in Thailand’s policy of developing home EV production and supply chains. Thailand has set a 30% goal to convert its annual production of 2.5 million vehicles into EVs by 2030.
Stellantis CEO Carlos Tavares has said Europe needs to protect its car industry as Chinese carmakers look to expand their presence in Europe. His comments came as Chinese companies including Nio and BYD Co. assess their European prospects. The warning followed the inauguration of a battery factory in northern France where Tavares spoke on the subject. Meanwhile, Mercedes-Benz Group CEO Ola Kӓllenius has argued that Europe should resist the urge to take protectionist measures and emphasised the need to continue to build on free trade.
Toyota will invest $2.1bn in an electric and hybrid battery plant under construction near Greensboro, North Carolina, to improve green vehicle production and support expansion opportunities, the automaker said. The factory will house six production lines, four for gas-electric hybrid vehicles and two for fully electric vehicle batteries. The plant will supply batteries to Toyota's massive factory in Georgetown, Kentucky, which will make the automaker's first US-made electric vehicle, an SUV with three rows of seats.
Nvidia's CEO, Jensen Huang, has plans to visit China for meetings with executives from top companies such as ByteDance and Tencent, despite US sanctions preventing the sale of its advanced AI chipsets to Chinese buyers. Prior to the ban, Nvidia obtained approximately 20% of its revenue from the Chinese market. In response, the Santa Clara-based firm created new chips that comply with the restrictions, and is now a critical player in the AI sector. Huang will make the trip to China in June.
Nvidia CEO Jensen Huang plans to visit China in June, meeting Chinese consumers including Tencent, BYD, Li Auto, Xiaomi and ByteDance. Despite US sanctions and rising global tensions about human rights and security issues, a growing number of corporate leaders are capitalising on China’s booming economy by inking deals with the consumer giant. Huang, who has rocketed to celebrity status over the past week as Nvidia forecast booming demand for AI chips that pushed its market valuation to $1tn, has led the world’s first chipmaker to succeed in surpassing the $1tn market valuation mark.
Elon Musk has been welcomed to China during a recent trip to Beijing and Shanghai and hailed by the Chinese Communist Party as an ally, in contrast to the perceived US campaign to separate the two economies. "Decoupling from China means decoupling from opportunity, decoupling from the future," wrote the People's Daily affiliated blog Xiake Dao. The trip was seen as a propaganda win for Beijing's campaign to signal openness to foreign investment, although companies remain sceptical following a raft of unpredictable political crackdowns. Nevertheless, the country is rolling out the red carpet for visiting American executives and working to woo the American business lobby at a time of tensions between the US and China. As we reported earlier this week, JPMorgan CEO Jamie Dimon and Starbucks CEO Laxman Narasimhan were also in the Chinese capital with the aim of shoring up their business interests.
China's top two EV makers, BYD and Li Auto, both achieved new monthly sales records in May following a recovery in consumer demand driven by the end of a price war in the sector. BYD recorded the world's biggest electric-car production figures, delivering 240,220 pure electric and hybrid plug-in vehicles to customers, while Li Auto delivered 28,277 EVs, a sales record for a second consecutive month. The price war, which slashed some cars' prices by as much as 40%, was initiated by Tesla last October but failed to generate a significant sales increase despite hopes it would stimulate consumer demand. The global choice of EVs is set to expand after Stellantis, the fourth-biggest automaker, announced plans to sell electric utes in Australia in partnership with Amazon-backed electric-vehicle maker Rivian.
Hong Kong's benchmark index, the Hang Seng, has experienced its biggest rally in three months, surging 2.5% after Chinese tech stocks gained on China stimulus bets and a potential pause in US interest-rate hikes. Car maker BYD led the pack following robust sales data in May, while e-commerce giants Tencent, Alibaba Group, and Baidu enjoyed gains of up to 4.8%. The benchmark index ended up further out of bear-market territory and narrowed this week's loss to 0.7%, with 76 members all gaining.
Nvidia CEO Jensen Huang may visit Shanghai next Tuesday, according to Chinese newspaper Shanghai Securities News. The rumoured trip would form part of Huang's first visit to China in four years, and reportedly encompass meetings with executives from companies including BytesDance, BYD and Xiaomi. Nvidia has not commented on reports of the trip. Speaking at the Computex event in Taipei, Huang said China's growing investment in cutting-edge chip technology should not be underestimated, citing ongoing tightening of US export restrictions.
Goldman Sachs has cut its bullish forecast for Chinese stocks and its 12-month target for the MSCI China Index to 70 from 80. The reduction was due to a pullback in earnings and valuation forecasts for the country’s stocks traded at home and abroad. The US bank’s previous downgrade for the MSCI China Index last month was its first in nearly two years. The gauge has since fallen 22.4% from a high in January. Ongoing geopolitical tensions have led many investors to question the merits of investing in China equities, according to Goldman Sachs.
The world will require $20tn worth of investment in hydrogen by 2050 to achieve a net-zero future, according to Lex's Camilla Pallodino. The report called for investment in electrolysers, citing Nucera, a German-Italian joint venture between Thyssenkrupp and De Nora that makes the devices, and is reportedly planning an IPO and valued at €3bn. The report also suggested a role for hydrogen in electricity storage and iron processing, however it pointed out the ambitious goals came up against an as-yet-undersized industry. QuantumScape's sodium-ion battery research and Turkey's WE Soda have both been highlighted by Lex as potential sources of cheap lithium and supply diversification. In addition, the report argues despite concerns over waste disposal, nuclear is inevitable if the aim is to balance out power supply during periods of low solar and wind output.
Donald Trump has likened himself to the Mona Lisa during an interview with journalist Maxine Hughes ahead of a documentary being made called Trump: Byd Eithafol (Trump: Extreme World) focusing on his supporters, known as the 'front row Joes'. He said that despite talking about the same 20 subjects, his supporters still came to hear him repeat them at his rallies.
