The EV revolution is (really!) coming
By: Stefano Osellame
Tags: Self Driving Cars, Technology, Tesla, Cars, Electric Car

But this is just one aspect of what is coming. Let’s first of all consider why it make so much sense for China to push this kind of policy and phase out of ICE technology.

China ranks 2nd, after USA, in the world for Oil consumption, accounting for around 13% or the total.

Even if China is the 4th top producer of Oil in the World, this is not even close to be sufficient to cover its consumptions. Therefore, China is a Net Importer of Oil, and in fact, it imports around 60% of the total consumed every year. In 2016 this could translate into 7,5 Millions of barrels a day.

Nowadays a barrel of oil costs around 50 USD, so this is around 350–400 Millions of USD every single day!

It can be easily understood that China have all the interest into diminishing the total amount of Oil that it needs to import. Every dollar they use to push the change to EV of consumers, is actually helping them to keep one more dollar into the country, and to make it flow in the national economy.

But of course, is not only that. China had, in the last years, a huge problem of pollution. Its cities were becoming more and more dense of PM2,5 and its air every day more dangerous. There was a need for a change of policy, not only for the car industry, but also in the way energy is generated and managed, and that is exactly what is happening. And since China started to take action a few years ago, the results are slowly but surely becoming visible in the sky’s color.

Finally, China is taking more and more the central stage as the new Leader of the World, both economically and, even most importantly, politically, specially after the Trump’s Administration. The Environment Protection and the Energy Transition are surely to be the biggest problem that we will have to solve as humans in this century, and China want to give the general direction here, to prove that this is “China Century” we are living in. Altought the political side could change with Biden’s presidency, it is difficult that the economy will shift away from the Asian giant in the short term.

Put all of the previous considerations together, and you will get why a change of policy in the automotive industry, could really mean a revolution for the whole world this time.

Let’s recap for a moment. We have a strong push that is coming from one of the Top Economies of the world, to back a full transition from ICE to EV vehicles. This push translate from one side to the subsides that are given to everyone that buy electric. But even more importantly, this also translate into the backing up of several Chinese EV makers and battery producers, as we will see, and into enormous investments into the infrastructure needed for this transitions. The numbers expected are huge, and this is opening up the chance for new actors to come to the scene.

Who are than the main EV producers which are coming into the spotlight and are seen as having the potential to take the Automotive Market by storm in the coming decade? Let’s check some of them.

Photo by Martin Katler on Unsplash

Tesla. This is obvious, so I will not spend so much time talking about this company and its visionary founder Elon Musk. But I want to remark once again the numbers we have seen before. If Tesla could only retain it’s 12% market share in China, and delivery somehow a comparable number of cars globally, it would need to scale up from the 500.000 vehicles of 2020, to around 5 to 6 Millions in 2035. Nevertheless, the total China market would account for a total of 15 Millions and Tesla would take around 1,8–2 Millions of them, leaving space for another 13 Millions sold from other companies. Keep this huge number in mind. 13 Additional Millions to be divided from other Brands. The cake is huge and could be enough for everyone, is not even a question of competition anymore.

Nio EC6

Nio. Everyone is now talking about Nio like the “New Tesla” or the “Tesla of China”. But Nio is also so much more because:

They are backed from Tencent, one of the Giants of China’s Economy They have a peculiar business model, they target the “New Riches” of the growing Chinese middle class, and they offer the Battery as a Service (BaaS), which helps them to decrease the starting price of their cars. The BaaS, whit the possibility to replace the battery into swapping stations in just 3 minuts, as opposed to waiting for charging, is also backed by the Chinese government, which have recently announces the plan to define the swapping standard. The plan as been dubbed “Blue Sky” and guess what is the Chinese name of Nio? Weilai…Blue Sky Coming. Nice coincidence! If you think about it, it make so much sense to have a distributed net of batteries which can be connected to the main energy grid, and act as smoothers for energy’s picks requests. Swapping stations can become a integral part of a smart grid. No wonder government is pushing for this adoption. Nio’s battery suppliers is CATL, which is also the battery supplier of Tesla’s Shanghai Gigafactory, and that will also be a partner into the Battery Swap Service and BaaS. CATL is also backed from the Chinese government, which actively invest into the rare elements needed to produce batteries, practically giving costs advantages to companies such as CATL. CATL, by itself, is therefore another actor to be kept in mind in this EV revolution. This November Nio have just announced a new 100 kWh battery pack, which will take the range of their cars past 600 km. A 150 kWh is currently being also developed, which could take the range to 900 km. Still scared about EVs range limitations? So far they have been selling only SUVs, but a new Sedan should be on the way and be officially presented on January 2021, and possibly another one during the year. China is the biggest Sedan market in the world, so if they can already achieve so big results, without even takling this market…

Nio have seen the deliveries numbers skyrocketing this year, and will close the year with around 45000 deliveries, growing around 150% from last year alone. They are prospected to achieve 100.000 vehicles next year, growing once again more than 100% from current level, and some analyst thinks they could take up to 30% of the global High End market of EV in 2035…again, we are talking about maybe 1–3 Millions of cars only in China, starting from less than 50000 this year! Is a giant leap, which call for massive investments into production capacity. But still, is not even close to saturating the market.

Li ONE

Li Auto: this is not exactly a full EV maker, as it currently produce only one SUV, which has a range extender, a small ICE that is used with the only purpose of charging the batteries, increasing the total range of the vechicle. But the deliveries of this SUV have been quite good recently, and by the end of the year they should sell more than 30000. This is quite impressive, like the fact that they have already a good gross margin on its production. They have probably the chance to catch up, but can they put out new vehicles in the market fast and still with good results? Will they go into the pure EV space? Do they have the money to make all these investments in such a small time? The market is surely open enough to welcome them too

Xpeng P7

Xpeng: this is the brand which is more trying to follow and emulate (someone say copy) Tesla. The new P7 is quite nice as you can see, and is a direct competitor of Tesla Model 3. Their prices are quite cheap compared to Tesla, so they are trying to get the lowest price piece of the EV cake. This is quite risky, as margins are going to be lower than other competitors, and this is making difficult to reach profitability, specially at the beginning, where they will need to make huge investments to achieve volumes and to roll out new vehicles. But Xpeng is also the only chinese full EV company to currently own their production facilities, they are even building their second plant already, and they are backed from the local Guangzhou government, as well as from the other big Tech Giant of China, Alibaba. Also, they are very active in the development of sotware required to achieve the autopilot stage, with many managers coming from Xiaomi for this purpose. Their deliveries are also growing at a fast rate, with very good numbers of P7, but it seems that the other model, the G3 SUV, is not performing as well, and this could be a problem long term.

BYD Han