New Energy Vehicles (NEVs) in China

tphuang

tphuang

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coolgod said:
That makes absolutely no sense. Those three companies have huge ties with local gov since they are HQ in Shanghai, Guangzhou and Beijing respectively. The local gov likely has part ownership of these companies and directed local banks loan billions to them. The local gov want to keep the talent, industrial base, and tax base inside their city, so it would be unlikely for byd, cherry or geely to be able to purchase them.
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Those talent, industrial base and tax base aren't going anywhere. They are going to be taken over by the fittest surviving companies. Byd has gotten this far by taking over many companies former factory and workers. If you keep losing money, then you should get absorbed by a better run company.
 
coolgod

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Your idealistic vision of capitalism flies in the face of local protectionism in the auto industry (in China or worldwide). The local gov subsidized those companies to the tune of tens of billions, they also "encouraged" local biz to buy local EV brands (BYD taxis/didi/buses) in Shenzhen. There is 0% chance they will allow their tax cash cow to be sold to outsiders. If BYD purchases NIO then Shenzhen would gain a large amount of tax revenue while Shanghai would lose a large amount of tax revenue.
 
tphuang

tphuang

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coolgod said:
Your idealistic vision of capitalism flies in the face of local protectionism in the auto industry (in China or worldwide). The local gov subsidized those companies to the tune of tens of billions, they also "encouraged" local biz to buy local EV brands (BYD taxis/didi/buses) in Shenzhen. There is 0% chance they will allow their tax cash cow to be sold to outsiders. If BYD purchases NIO then Shenzhen would gain a large amount of tax revenue while Shanghai would lose a large amount of tax revenue.
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We have seen many automakers in china fail and get bought out by someone else. It's actually quite common. Ev market in china is brutal. 1/2 of automakers are just not going to make it.
 
coolgod

coolgod

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tphuang said:
We have seen many automakers in china fail and get bought out by someone else. It's actually quite common. Ev market in china is brutal. 1/2 of automakers are just not going to make it.
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Those are small automakers without strong local gov support, it also makes the most sense XPeng would get bailed out by GAC/AION while NIO would get bailed out by SAIC, both of which are large state auto manufacturers with decent EV offerings. The only one out of the three which I could see as getting bought out by a private EV company would be Li Auto.
 
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henrik

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tphuang said:
No, Buffett just wants to make money. He is selling some shares because this is a good time to take profits
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byd shares continue to tumble very quickly on Hong Kong stock exchange. His profits will disappear very soon. Chinese investors are not so stupid that will give him the chance to liquidate gradually and run with the money.
 
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henrik

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coolgod said:
Let's wait and see who is correct.

If there really is trouble, NIO/Xpeng/Li Auto would be backstopped or bought out by their respective local gov auto group, SAIC, GAC, BAIC respectively. EV company consolidation in China is inevitable, not sure about the other EV brands, but those three brands should definitely live on one way or another.
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Shanghai government should be building more factories for Nio, not tesla.
 
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AndrewS

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tphuang said:
We have seen many automakers in china fail and get bought out by someone else. It's actually quite common. Ev market in china is brutal. 1/2 of automakers are just not going to make it.
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Look at what happened with the smartphone industry which used to have hundreds of Chinese manufacturers. Now we're down to a handful.

I reckon at least 80% of automakers won't make it.
 
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AndrewS

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coolgod said:
That makes absolutely no sense. Those three companies have huge ties with local gov since they are HQ in Shanghai, Guangzhou and Beijing respectively. The local gov likely has part ownership of these companies and directed local banks loan billions to them. The local gov want to keep the talent, industrial base, and tax base inside their city, so it would be unlikely for byd, cherry or geely to be able to purchase them.
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I don't see GAC being bailed out.

The Guangdong provincial government will be annoyed at subsidising GAC losses, particularly when they have BYD which is a successful EV company in Guangdong province.

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I also don't see BAC being bailed out.

The Central Government is close enough to ensure the Beijing Municipal Government doesn't do this.
Think about how they're trying to direct growth away from Beijing. Beijing is expensive, overcrowded and doesn't have enough land.
If BAC shrinks, it frees up resources for other economic activities. Beijing won't lose out.
A takeover of BAC by one of the more successful EV companies is likely.

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I'm not sure about SAIC though, but let's see.
 
coolgod

coolgod

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AndrewS said:
I don't see GAC being bailed out.

The Guangdong provincial government will be annoyed at subsidising GAC losses, particularly when they have BYD which is a successful EV company in Guangdong province.

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I also don't see BAC being bailed out.

The Central Government is close enough to ensure the Beijing Municipal Government doesn't do this.
Think about how they're trying to direct growth away from Beijing. Beijing is expensive, overcrowded and doesn't have enough land.
If BAC shrinks, it frees up resources for other economic activities. Beijing won't lose out.
A takeover of BAC by one of the more successful EV companies is likely.

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I'm not sure about SAIC though, but let's see.
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I think you misunderstood my point, I was referring to NIO/XPeng/Li Auto being bailed out by SAIC, GAC, BAIC respectively.
coolgod said:
Let's wait and see who is correct.

If there really is trouble, NIO/Xpeng/Li Auto would be backstopped or bought out by their respective local gov auto group, SAIC, GAC, BAIC respectively. EV company consolidation in China is inevitable, not sure about the other EV brands, but those three brands should definitely live on one way or another.
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The giant state auto manufacturer SAIC, GAC, BAIC will definitely get bailed out by the local gov, they are huge employers with JV and will not be allowed to fail. BYD's HQ in Shenzhen, remember that Shenzhen is a Special Economic Zone and doesn't pay taxes to Guangdong gov, only to the central gov. Guangdong gov will definitely support Guangzhou companies GAC/XPeng over BYD.

I still doubt BAIC could be allowed to fail since the local gov would be pretty upset. But out of the three, I think they are definitely the weakest.
 
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