Car batteries at a factory for Xinwangda Electric Vehicle Battery, which makes lithium batteries for electric cars, in Nanjing in China's eastern Jiangsu province.
STR/AFP via Getty ImagesChina’s already crowded auto sector is getting more competitive, as Xiaomi and Didi Chuxing jump in, and other players expand their electric and autonomous driving lines and move to relieve chip shortages that have crippled car makers across the globe.
China is the world’s largest auto market, and unlike in the U.S., which has only a handful of players in the sector, China has dozens, many of which have been pursuing EV expansion for years.
China’s Xiaomi (ticker: 1810: Hong Kong)—the world’s third-largest smartphone maker behind Apple (AAPL) and Samsung Electronics (005930. Korea)—said last week it was investing $10 billion over the next 10 years in electric vehicles.
Xiaomi will establish a wholly-owned subsidiary for its auto unit, with initial funding of $1.5 billion, CEO Lei Jun said in a company statement. Lei added, “This will be the final major entrepreneurial project of my life.”
On Tuesday, Chinese online media outlet Late Post, citing a person familiar with the matter, reported that ride-hailing leader Didi Chuxing has begun an auto production unit. Didi Vice President Yang Jun is heading the new unit, and personnel recruitment is under way, according to the report. Didi did not respond to Barron’s request for comment.
Didi has tapped Goldman Sachs Group (GS) and Morgan Stanley (MS) to lead its IPO, expected in July in New York, according to Reuters. The company expects a valuation of at least $100 billion, with up to $10 billion raised if it sells 10% of its shares in the IPO, the report said.
The two tech leaders have unique advantages in joining with the auto sector, but still face a steep learning curve, analysts said.
“Xiaomi has the fan base, device ecosystem in place, and hardware-software integration capabilities, but lacks automotive know-how. Meanwhile, Didi has the mobility user habits and data, and already works with [China’s] BYD Auto, and is accelerating their autonomous vehicle efforts,” Lei Xing, former chief editor of Beijing-based China Auto Review, told Barron’s.
“Both have to figure out how much they do in-house versus how much they work with existing partners and OEMs. I don’t think Xiaomi and Didi will be the last ones from the tech space entering the smart EV space. More will come,” he said.
Deutsche Bank analyst Edison Yu said of Xiaomi’s and Didi’s auto forays: “I don’t think they will have a tough time entering the market given both have access to a tremendous amount of capital and the EV sales in China continue to accelerate every month. With that said, success will not be easy and I generally think there is a fierce battle brewing among legacy auto makers, newer upstarts and technology companies.”
Indeed, the sector has been white-hot with movement this year. In January, search and tech giant Baidu (BIDU) announced it was teaming up with Geely Automobile Holdings (ticker: 175.Hong Kong), China’s biggest auto maker, to move from vehicle software to actual car production.
Geely itself recently announced it will unveil a high-end electric vehicle that it said would compete with Tesla (TSLA) in China. That project is a joint venture between Geely, which owns Volvo and Lotus, and its parent company, Zhejiang Geely Holding Group. Geely said it expects to launch the new line of vehicles, under the brand name Zeekr, in the third quarter of 2021.
Zeekr will harness Geely’s array of EV components, including its in-house auto software and battery systems, the company said.
Smartphone and telecom equipment provider Huawei Technologies said Wednesday its tie-up with Beijing-based EV maker BAIC Blue Valley would be bearing fruit next week, with the release in Shanghai of an electric smart car targeting high-end consumers. Huawei has been teaming up with BAIC for years, but said its role in providing the advanced technology used to power smart and autonomous driving had significantly improved.
After quashing subsidies last year for new-energy vehicles, which hurt numerous domestic players, authorities now seem eager to resume various forms of auto-sector support. On Thursday, central government officials announced support for the construction of charging stations and battery exchange facilities on the island province of Hainan, which was designated a “free trade port” last year.
Also on Thursday, the city of Beijing said it plans to have more than 10,000 fuel cell cars on its streets alongside 74 hydrogen stations by 2025. Part of that project envisions an early rollout of a smaller number of such vehicles for the 2022 Winter Olympics.
Foreign brands have also stepped up their activities in China. Tesla has continued strong sales in the country. Last year its Model 3 sedan was the bestselling electric car in the country. Its Model Y midsize fully electric SUV is among the bestselling EVs so far this year.
Ford Motor (F) sold 153,822 new vehicles in China in the first quarter this year, a 73.3% increase year-over-year, company data show. The firm’s joint venture in China, Changan Ford, unveiled the test vehicle for its electric Mustang Mach-E last month, which falls into a price and capability range with Tesla’s Model Y and NIO’s ES6.
Chinese autonomous driving start-up Momenta raised $500 million in series C funding in March, led by Toyota Motor (TM), Bosch, and Chinese state-run SAIC Motor. No new valuation was given, but Momenta was estimated to be worth $1 billion after its series B round.
Yet with all the movement among players in China’s EV market, stocks in the sector aren’t responding positively. Despite Wall Street analysts urging to buy, investors remain wary, perhaps in part from suspicions that shares in companies like NIO (NIO) and Xpeng (XPEV) have become inflated, Barron’s reported Thursday.
And although China’s new vehicle sales increased in March for the 12th straight month, production and sales for the first quarter of 2021 are down compared with 2019, the most recent year of comparison before the coronavirus crushed markets.
Part of that is the global shortage of semiconductor chips used in automobiles. The shortage is a result of the confluence of pandemic-related production slowdowns, as well as the growing appetite for the technology among both car makers and consumer-electronics producers.
Geely’s Volvo stopped or adjusted production in China and the U.S. last month because of the shortage. Ford and Volkswagen have seen similar interruptions at some of its plants globally.
But the problem particularly affects China, where industry data show that local auto makers import more than 90% of their chips.
Tanner Brown covers China for Barron’s and MarketWatch.
"electric" - Google News
April 10, 2021 at 06:15PM
https://ift.tt/3uJJVBr
China’s Electric-Vehicle Market Gets Crowded as Competitors Jump In - Barron's
"electric" - Google News
https://ift.tt/2yk35WT
https://ift.tt/2YsSbsy
Bagikan Berita Ini
0 Response to "China’s Electric-Vehicle Market Gets Crowded as Competitors Jump In - Barron's"
Post a Comment