New Energy Vehicles (NEVs) in China

4Runner

4Runner

Senior Member
Registered Member
mossen said:
I think Huawei's and Xiaomi's move into EVs should be seen the same way when Samsung moved into smartphones. Lots of younger folks think Samsung got their start in smartphones and then branched out to other areas, which is of course absurd. But it's an impressive feat of Samsung to shift from "old tech" to "new tech" so successfully.

We're entering a phase in Chinese development where you get these mega-conglomerates that can compete at a world-class level in many different sectors. Korea got Samsung and to a lesser extent LG with a much smaller population. I suspect China should be able to get at least 10 of these megacompanies.

So, while I understand that people are skeptical about Xiaomi, if you think about it, it's not so crazy. Cars are becoming much more digital, which is the core strength of both Huawei and Xiaomi. Both are also used to running large manufacturing operations. The one key deficit is batteries where BYD clearly has a "strategic moat", but CATL is doing well. The big unknown is if CATL itself will throw its hat into the ring and also try to build an EV. That would probably be foolish since it would give its customers a disincentive to select them over other battery suppliers, since they wouldn't be also direct competitors. For that reason, I don't think we'll see a CATL EV but who knows.

Still, while the EV market is growing like crazy, China's overall car industry is shrinking. So it's cannibilising sales. So while Xiaomi makes sense as a new EV player, I wonder if it's simply too late to get into the game now. In life, timing is (almost) everything. By the time they enter, I suspect most of the "easy growth" will be a thing of the past and the established players will be much more ruthless & refined. Huawei just got in by the skin of their teeth.
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(1) The case of Huawei going into EV is fundamentally different from Samsung moving into smartphone business.
Samsung had scale in semiconductor manufacturing as well as electronics manufacturing before moving into smartphone business. It was an easy extension for Samsung as it simply adopted Android as the smartphone platform. As we all know, smartphone business is like PC business in that much of the segment profits goes to Apple/Google in smartphones and Microsoft/Intel/Apple in PCs.

But when Huawei is going to the EV business, it leverages its ICT competence and knowhow. As EV chassis and assembly is becoming an ODM business, the main barriers to entry are battery and ECU/ICT/software integration. EV is probably the first mass consumer segment that China no longer needs to pay for foreign IP rights, because the main supply chain and eco-system are already in Chinese hands. The vehicle partner that Huawei chooses looks more like a vehicle JDM vendor. In a few years when this EV JDM/ODM model evolves, it would be much easier for companies like Xiao Mi or Baidu to have their own branded EV end products. But that business model would be hard for Korean or Japanese or American companies to follow, because barriers to entry would be much higher for them than their Chinese competitors.

(2) China EV industry has been exploding in the past 3 years, while its ICE industry is struggling.
That is a trend the Chinese government wants to see. China EV industry captures most of the profits and fringe benefits as the EV segment expanding. However, China ICE segment has been dominated by foreign brands since mid 80s. Even though China has been the largest ICE market and the largest luxury auto market, their profits and fringe benefits have been mostly going to BBA, VW, Toyota or Honda. Therefore, the Chinese government is laughing all the way to the EV bank right now because they are trading the legacy ICE segment for the new promising EV segment.

US now is trying to catch up in the EV eco-system. EU is also trying hard, particularly after US IRA policies. Regardless, they have no chance catching China for at least the next 5 years, not just in supply chain or battery, but also in 5G/AI/software integration.

Day after day, EV is becoming a story of "Tesla in China".
 
escobar

escobar

Brigadier
Overbom said:
Reduced oil demand because of EV adoption is the most important strategic benefit that China is going to gain. Does anyone roughly know how many thousands of barrels per day can 1 000 000 EV cars displace?
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Norway's EV penetration is 2nd to none, yet oil consumption continues unabated.
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W

weig2000

Captain
KYli said:
Every 30 millions vehicles consume around 1 million barrels of oil daily.
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Based on which country's consumption pattern? The US definitely is one the higher end of that consumption, due to geographical distance and lack of public transportation. Europe and China should be a lot lower than 1m bpd, particularly China.

Overbom said:
China consumed 15m bpd in 2022

We have quite a long way to go
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If 30 millions vehicles consumes 1m bpd, and China has over 300 million vehicles, then they add up to 10m bpd, out of 15m bpd total. Clearly that doesn't make a lot of sense. So the assumption that 30 million vehicles consume 1m bpd does not hold for China. China should be a lot lower.
 
H

henrik

Senior Member
Registered Member
mossen said:
I think Huawei's and Xiaomi's move into EVs should be seen the same way when Samsung moved into smartphones. Lots of younger folks think Samsung got their start in smartphones and then branched out to other areas, which is of course absurd. But it's an impressive feat of Samsung to shift from "old tech" to "new tech" so successfully.

We're entering a phase in Chinese development where you get these mega-conglomerates that can compete at a world-class level in many different sectors. Korea got Samsung and to a lesser extent LG with a much smaller population. I suspect China should be able to get at least 10 of these megacompanies.

So, while I understand that people are skeptical about Xiaomi, if you think about it, it's not so crazy. Cars are becoming much more digital, which is the core strength of both Huawei and Xiaomi. Both are also used to running large manufacturing operations. The one key deficit is batteries where BYD clearly has a "strategic moat", but CATL is doing well. The big unknown is if CATL itself will throw its hat into the ring and also try to build an EV. That would probably be foolish since it would give its customers a disincentive to select them over other battery suppliers, since they wouldn't be also direct competitors. For that reason, I don't think we'll see a CATL EV but who knows.

Still, while the EV market is growing like crazy, China's overall car industry is shrinking. So it's cannibilising sales. So while Xiaomi makes sense as a new EV player, I wonder if it's simply too late to get into the game now. In life, timing is (almost) everything. By the time they enter, I suspect most of the "easy growth" will be a thing of the past and the established players will be much more ruthless & refined. Huawei just got in by the skin of their teeth.
Click to expand...

Chinese brands are taking market share from Japanese brands. A couple of million car sales will be shifted from Japan to Chinese brands worldwide. But in general local Chinese car sales is affected by covid and the economy. Car sales will surge in a big way from now on. There is no cannibilising sales at all.
 
tphuang

tphuang

General
Staff member
Super Moderator
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No
coolgod said:
Don't compare Xiaomi with Huawei, they are two totally different types of companies. Huawei does R&D and owns patents, Xiaomi just manufacturers/contracts out consumer electronics. Huawei is the pride of China, Xiaomi is an Apple copycat.
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No offense but byd is pride of china. It employs the most people. It's going to be world's largest company and the least sanctionable company imaginable. Since this is ev thread, I think it should be obvious that Huawei is having issue selling it's cars right now based on all the reports. That's why it has to cut prices.
 
K

KYli

Brigadier
weig2000 said:
Based on which country's consumption pattern? The US definitely is one the higher end of that consumption, due to geographical distance and lack of public transportation. Europe and China should be a lot lower than 1m bpd, particularly China.



If 30 millions vehicles consumes 1m bpd, and China has over 300 million vehicles, then they add up to 10m bpd, out of 15m bpd total. Clearly that doesn't make a lot of sense. So the assumption that 30 million vehicles consume 1m bpd does not hold for China. China should be a lot lower.
Click to expand...
It is based upon the US. US has around 300 million vehicles and consumes around 9 million barrels of oil per day. However, 44% of the US oil use is gasoline and 20% diesel. So if includes diesel, then around 13 million barrels per day. However, you might or might not want to include big trucks for calculating oil consumption.

China gasoline consumption is around 4 million barrels of oil and around 25% of total fuel consumption. Demand of diesel is almost another 4 million barrels of oil.

So it really depends upon what you include in the calculation. Do you include trucks, small trucks or just cars and motorcycles?

However, China gasoline consumption per vehicle exclude EVs is increasing due to more mainland Chinese travel long distance. So even if EVs become a major portion of the sales, in the short term oil consumption would still be increased in China because Chinese economy is still expanding much faster than the US and personal consumption would still increase. On the other hand, the US has a decrease in gasoline consumption per vehicle due to both changing habit and economy and increase in use of ethanol.
 
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