Blog Archives

China to remove ownership caps

China will remove foreign ownership caps on local auto companies by 2022 and restrictions on new-energy vehicle ventures this year, which will open the market wider to carmakers.

The Chinese authorities said in a statement that in the next five years they would remove the rules that have required carmakers like General Motors (GM), Toyota and Volkswagen to link up with a local partner before building a factory in China. This not only applies to manufacturers of electric cars, but for companies that make jetliners, helicopters and drones.

Beijing plans to move even faster, eliminating foreign ownership limits this year.

Tesla would be the immediate big winner from the changes. The electric carmaker has already identified a site in Shanghai for a factory but has not wanted a partner for fear of losing control of its technology.

Tesla chief Elon Musk said last month China’s tough auto rules for foreign companies created an uneven playing field as scores of local and international companies compete for a slice of China’s fast-growing market for EVs.

However, some carmakers are hinting that they will remain with their local partners, and may even see more risks than opportunities in ditching the joint venture structure.

An unnamed senior General Motors executive said to the New York Times last week that even without ownership caps the U.S. carmaker would not cut ties with local partner SAIC Motor Corp., adding GM would not be as successful in China on its own.

On Tuesday GM indicated further that it was not eager to buy out its partners. “G.M.’s growth in China is a result of working with our trusted joint venture partners,” the statement said. “We will continue to work with our partners to provide high-quality products and services to consumers.”

Honda Motor Co. said its China business had grown on the back of strong local tie-ups. “At the moment we have no plans to change our capital relationship,” a Honda spokesman said to Automotive News.

Volkswagen, however, had deliberately created a temporary joint venture with Anhui Jianghuai Automobile Group, which would allow them to “explore whether new opportunities were possible.”

Tagged with: , ,

China threatens new EV tariffs

China has recently announced that electric vehicles (EVs) will be included among American products that will incur additional tariffs, a huge setback for EV manufacturers. 

Tesla Inc. is at particular risk. The car maker relies on US-built vehicles for all its Chinese sales, whereas US carmakers General Motors Co. and Ford Motor Co. manufacture in China and import few vehicles into the world’s largest market. 

China is Tesla’s biggest market after the US, and an additional tariff would hand local EV manufacturers a huge pricing advantage. 

“The jump in tax levy hurts Tesla the most as it had not yet started local production in China,” said Cui Dongshu, the secretary general of China’s Passenger Car Association to Bloomberg News. “For GM and Ford, they can always make up with China-produced ones.”

The U.S. carmaker is already hindered by China’s current 25 per cent import tax that hikes the prices of Model S sedans and Model X, relegating Tesla into a niche marque only afforded by the seriously wealthy.

China’s import taxes have contributed to other carmakers’ decisions to produce in China under joint-venture agreements. Volkswagen AG makes most of the vehicles it sells in the country at local plants, and about two-thirds of BMW and Daimler sales come from domestic factories.

 Proposed factory
Tesla said it was working with Shanghai’s government to explore assembling cars, an agreement hasn’t been clinched due to the two sides disagreeing on the business structure for a proposed factory.

Tesla’s reluctance in investing in local manufacturing means losing out on a chance to capitalise on China’s hard sell for new-energy vehicles (NEVs), such as all or hybrid EVs.

In the US, Tesla accounted for the majority of the 104,471 battery-powered cars, according to data compiled by Bloomberg. However in China, Tesla sold a mere 14,883 vehicles, accounting for just 3 per cent of the nation’s battery-powered EV sales of 449,431 units.

Tagged with: , ,

Musk struggles to finalise deal in China

Without a local partner, every Tesla sold in the world’s biggest EV market faces a steep import tax

Tesla Inc., the top-selling electric auto manufacturer in the U.S., is in danger of being relegated to a niche market of luxury cars in China as CEO Elon Musk is struggling to finalise a deal to open a factory there.

More than several months after Tesla said it was working with Shanghai’s government to explore assembling cars, an agreement hasn’t been clinched due to the two sides disagreeing on the business structure for a proposed factory, according to people with direct knowledge of the situation.

At present, all foreign automakers must partner with Chinese companies in order to manufacture locally, however Tesla wants to own the factory completely, the sources close to the situation said.

Tesla’s reluctance in investing in local manufacturing means losing out on a chance to capitalise on China’s hard sell for new-energy vehicles (NEVs), such as all or hybrid electric vehicles (EVs).

President Xi Jinping’s administration wants to scrub notorious air pollution and reduce dependence on imported oil, and it’s doling out billions of dollars in subsidies to entice consumers away from gas guzzlers.

“It’s a market they need to get a foothold in,” said Jeffrey Osborne, a New York-based analyst for Cowen & Co.

Tesla currently sells cars in China, but an import tax of 25 per cent launches the price beyond the means of most consumers.

A Tesla Model X made in the U.S. and shipped to China costs about 835,000 yuan, or around NZ$178,500, meaning cheaper models, from domestic rivals such as BAIC Motor Corp., Warren Buffett-backed BYD Co. and startups NIO and Byton, are more appealing to consumers. 

In the U.S., Tesla accounted for the majority of the 104,471 battery-powered cars, according to data compiled by Bloomberg. However in China, Tesla sold a mere 14,883 vehicles, accounting for just 3 per cent of the nation’s battery-powered EV sales of 449,431 units.

Tesla ranked 10th behind leader BAIC’s affiliate, Beijing Electric Vehicle Co., which sold 102,341 cars, according to Bloomberg Intelligence. 

Tagged with: , ,

China extends EV tax rebate

China will extend a tax rebate on purchases of new-energy vehicles (NEVs) until the end of 2020, a needed boost for hybrid and electric car makers amid a shift by policy-makers away from the combustion engine.

On Wednesday the finance ministry said in a statement that the tax exemption, which was set to expire at the end of 2017, will now run from Jan. 1, 2018 until Dec. 31, 2020 for electric, plug-in petrol-electric hybrid and fuel-cell powered vehicles.

The extension comes as automakers in China brace to meet strict NEV quotas starting in 2019 that are sparking a flurry of electric car deals and new launches of electric and hybrid models.

Automakers had concerns over the issue that consumer demand alone will not be sufficient to drive sales without state-backed incentives to attract buyers, and called on the Chinese government to financially support the market.

The Ministry of Finance said the extension would help “increase support for innovation and development in new energy vehicles”, an area where China is hoping it can catch up – and even overtake – more established global automaker rivals.

China’s auto market, the world’s largest, significantly slowed down in 2017, however, NEV sales in January-November jumped 51.4 per cent and are on track to hit a target of 700,000 NEV sales.

Tagged with: ,

China bans 553 car models

In China’s latest tough anti-pollution measure, it is stopping the sale of over five hundred models of vehicles that have failed to meet their fuel-consumption standards.

The suspension will take effect from Jan. 1, 2018 said the China Vehicle Technology Service Centre, citing approval from the Ministry of Industry and Information Technology (MIIT).

The models include products from several major domestic producers and joint ventures such as Audi, Beijing Benz Automotive, Chery and Chebrolet.

The war on pollution is now in full swing, China has been pushing for green transportation by toughening emission limits and encouraging the use of new energy vehicles (NEVs).

Beijing is set to record its biggest improvement in air quality in at least nine years, with a nearly 20 per cent change this year. This is based on average concentration levels of hazardous breathable particles known as PM2.5.

Tagged with: , ,

Tackling China’s traffic problems

As China’s personal transport options rapidly develop and evolve, BMW is researching how the latest mobility innovations can be adapted and moulded to keep the BMW brand relevant in China, the world’s largest market.

Chronic traffic congestion in China’s high-density megacities is restricting people from both buying cars and using them. This has forced automakers such as BMW to innovate.

“Growth in the future won’t come from building and selling cars but from other services,” said Thiemo Schalk, who manages BMW’s Centre of Urban Mobility Competence in Berlin.

BMW recently launched its ReachNow car-sharing scheme in the city of Chengdu, starting with a fleet of 100 i3 electric cars as the company investigates whether to expand the service to other Chinese cities.

BMW, however, knows that it needs additional mobility solutions in China so it has asked its advanced research department in Shanghai for help. The team, which works in an office tucked away in the leafy streets of the city’s old French Concession district, has been asked to take BMW into areas where no car company has ventured before.

BMW is aiming to make carpooling more attractive. “The perception right now is that carpooling is low cost. We’re trying to make it more premium,” said the head of BMW’s advanced research department in Shanghai, Markus Seidel. The project involves mining customers’ phones for GPS data to establish their daily travel patterns, encrypting that data and sending it out to try and match it with others. The second step is to treat the data the same way that a dating app would so that participants are matched with people who share similar interests.

Ride-hailing is another technology that is growing fast. China’s answer to Uber, Didi Chuxing, now achieves an astonishing 25 million rides a day in the country, according to Didi’s data.

Furthermore, Seidel and his team are working to figure out what premium customers of future BMW autonomous robo-taxis or personal cars might want. His vision incorporates elements of an airplane’s business-class cabin, complete with automated flight attendants. What that means is the car could be designed to serve passengers, such as making coffee using a robot arm that responds to voice commands.

Tagged with: ,

Chinese automakers look to future

Chinese automakers are eagerly looking at selling their cars in major Western markets.

Improvements in technology and car design have brought Chinese firms a bigger share in their home market, the world’s largest, which gives them a better chance of survival in competitive Western markets.  

Geely’s Lynk & Co launch event Shanghai, April 2017.

Geely, which owns Volvo Cars and Lotus and manufactures London’s black cabs, has its sights set on selling cars in Europe in 2019 and the United States a year later.

The Hangzhou based company plans to sell ‘green’ vehicles, either all-electric or hybrid models, overseas, where they would use directly-owned stores and online rather than through traditional dealer franchises to sell their vehicles. 

Volvo Cars, Geely Auto, LYNK&CO sign joint venture agreement in Ningbo, China earlier this year.

Geely’s Lynk & Co aims to open its own flagship store in Berlin in the second half of 2019, and a similar outlet in San Francisco in 2020.

Geely would also offer cars for rent via a subscription model, along the lines of Netflix and Spotify. 

In some U.S. states, which don’t allow direct selling, Lynk & Co plans a subscription-based sales model, renting cars to consumers on contracts as short as a month. These would also include insurance, warranty and other benefits.  

“A key obstacle in markets like the United States is a consumer bias against Chinese-made goods,” said Jeff Cai, a Beijing-based senior director at JD Power & Associates. “Our research found most U.S. consumers think China is a third-world country that builds low-quality products.”

There is also the issue of China’s trade surplus with the United States – an imbalance that has caught the attention of U.S. President Donald Trump. Chinese vehicles would be very likely to increase that surplus. 

The issue of the trade imbalance between the United States and China has long been a sore point between the countries. An issue that China will have to overcome in order to develop roots in the Western marketplace.


Tagged with: , ,

NIO takes on Tesla

Electric vehicle start-up NIO have launched their first production car, the ES8 – a 7-seater high performance electric SUV.

With both front and rear motors, the ES8 delivers 480 kilowatts of power and 840 Nm of torque to all four wheels, enabling the ES8 to accelerate from 0-100 km/h in just 4.4 seconds.

The ES8 is equipped with a 70-kilowatt-hour battery pack comprised of cutting-edge VDA square cell batteries. These cells feature the highest energy density of their kind and provide a 2,000-charge lifecycle.

The ES8 achieves over 500 kilometres of range when constantly run at 60 kph, and the car achieves an NEDC range of 355 kilometres.

The ES8 is produced at a world-class fully automated factory. The ES8 will finish a 3,000,000 km road test before NIO begins delivering the vehicle to users.

Buyers of the Nio ES8 can also have the battery swapped out at power-swap stations in three minutes, or charge it via a service vehicle that travels to you. The ES8 also comes with an autonomous driving system similar to Tesla’s, with a variety of cameras and sensors making it capable of self-driving on main roads and motorways.

Power Mobile is a brand-new power service product developed by NIO, which enables an ES8 to run 100 kilometres after charging for ten minutes. By 2020, NIO plans to build over 1,100 Power Swap Stations and deploy over 1,200 Power Mobile vehicles.

“We hope that we can have more people interested in smart electric vehicles by presenting ultimate products and services, and then we can achieve our vision of bringing back blue skies.” NIO Founder and Chairman, William Li, said at the inaugural NIO Day. “

NIO wants people to enjoy owning a car again and aspires to redefine the experience of owning a car. The ES8 launch is another beginning for NIO.”

The NIO ES8 has a base price of RMB 448,000 (NZ$97,000) before subsidies. There’s no official confirmation of a launch in the US or Europe, but bosses are planning to expand beyond their home market.

Tagged with: , , ,

China’s new energy vehicle sales double

Compared to November 2016, China’s vehicle sales in November rose 0.7 per cent to 2.96 million vehicles, making it the sixth consecutive month of gains, according to data from the China Association of Automobile Manufacturers (CAAM). 

According to CAAM, sales of new-energy vehicles (NEV) in November rose 83 per cent from a year earlier to about 119,000 vehicles.

NEVs refer to all-electric battery vehicles and plug-in petrol-electric hybrids.

While November marked a sixth consecutive month of gains, one of the CAAM officials said China’s auto sales are set to grow “no more than 4 percent” this year, weaker than the 5 percent annual growth forecast at the outset of the year.

Sales of new-energy vehicles (NEV), meanwhile, rose 83 per cent in November from a year earlier to about 119,000 vehicles amid a government push to support the sector and shift away from traditional petrol-engine cars in the long term.

Sales of new-energy vehicles (NEV) in November rose 83 per cent from a year earlier amid a government push to support the sector.

NEV sales in the January-November period totalled 609,000 vehicles, up 51.4 per cent from the same period a year ago.

China’s policymakers have set strict production and sales quotas for NEVs which automakers must meet starting in 2019, a move that is prompting an increase in electric car deals and new launches of electric and hybrid models as firms ensure they do not fall short. 

Furthermore, Chinese banking authorities announced new loan policies to allow buyers of new-energy vehicles to borrow a larger portion of the purchase price.

Starting in 2018, NEV buyers can borrow up to 85 per cent of the cost from banks, up from the previous 80 per cent.

Tagged with: , ,

Ford and Alibaba’s new partnership

While it is unconfirmed, there are talks that Ford Motor Co. will be selling cars to consumers in China through Alibaba’s online retail arm, Tmall.

Representatives of Ford and Alibaba, including Ford Executive Chairman Bill Ford and Ford CEO Jim Hackett, are expected to sign a letter of intent that outlines the scope of the partnership.

Jim Hackett, President and CEO, Ford Motor Company, outlines his plans for Ford to become the world’s most trusted mobility company earlier this week.

According to an unnamed source, the deal is intended to position Ford in the emerging Chinese marketplace where more cars will be sold online.

The partnership would be in line with the next phase of their China expansion strategy which was announced earlier this week, where Hackett shared his vision of a bigger presence in China.

Ford global chief spokesman Mark Truby said the company is expected to make an announcement on Thursday in Hangzhou, which is where Alibaba is based, but has declined to make a formal comment.

There is also talk about Ford utilising Tmall’s new retail concept called the “Automotive Vending Machine,” which entails a multi-story parking garage that partly resembles a giant vending machine, to sell directly consumers.

Those cars could come directly from Ford or from its dealers but the details are still to be worked out, the source added.

According to Alibaba, consumers can use their phones to browse through the cars stored in the vending machine and choose to either immediately buy one or test drive it. The vehicle would be delivered to them on the ground floor.

Ford believes dealers would likely agree to this direct retailing model because they still get to service cars sold through Tmall, the Ford source said.

The move could be potentially problematic for dealers, as the danger will be that they could lose out, not only on a lot of car sales, but also the lucrative auto financing aspect of their traditional business.

Tagged with: , , ,

Ford’s China expansion strategy

Ford has outlined the next phase of its China expansion strategy which revolves around SUVs, electric and connected vehicles and a new business model.

Photo shows (left to right): Jason Luo, Chairman and CEO, Ford China, Jim Hackett, CEO, Ford Motor Company, Bill Ford, Executive Chairman, Ford Motor Company, Peter Fleet, Group Vice President and President, Ford Asia Pacific.

Executive Chairman Bill Ford and CEO Jim Hackett shared the vision yesterday while in China this week to meet with employees, customers, dealers and government officials.

“China is not only the largest car market in the world, it’s also at the heart of electric vehicle and SUV growth and the mobility movement,” said Bill Ford. “The progress we have achieved in China is just the start. We now have a chance to expand our presence in China and deliver even more for customers, our partners and society.”

Ford plans to expand its product portfolio by introducing more than 50 new vehicles by 2025. The fleet will include 8 all-new SUVs and at least 15 electrified vehicles from Ford and Lincoln. And a new Zotye-Ford JV venture will deliver a separate range of affordable all-electric vehicles under a new brand.

“From luxury Lincolns, to Ford cars and SUVs, to an all-new electric vehicle brand, we will meet the growing desire and need in China for great new energy vehicles,” said Jason Luo, chairman and CEO, Ford China. “Each of them will be safe, efficient, fun to drive and backed by an ecosystem that makes charging, sharing and servicing easy,” said Hackett.

Jim Hackett, President and CEO, Ford Motor Company, outlines his plans for Ford to become the world’s most trusted mobility company.

It was also announced that by the end of 2019, 100 percent of new Ford and Lincoln-badged vehicles in China will be connected through either embedded modems or plug-in devices. Company leaders also are working on broader infrastructure opportunities to improve future mobility experiences.

“We are responding to the rapid pace of change by delivering increased connectivity and working to improve and simplify mobility for everyone,” Hackett said. “This builds on our commitment to deliver smart vehicles for a smart world, helping people around the world move more safely, confidently and freely.”

“All of the actions outlined today reflect an unprecedented commitment to focus on the needs of consumers in China through a more fit and streamlined Ford,” he added. “They are proof of our dedication to grow our business in China.”

Tagged with: , ,