This year, BYD, a notable figure in the global automotive market, has recently faced a downturn. The extensive price reductions initiated on November 24th have raised concerns, as it is perceived to contradict the company’s earlier commitment to avoid participating in price wars. BYD is now under pressure to intensify its efforts to reach its annual sales target of 3 million vehicles.

According to multiple reports from Chinese media on November 25th, in an attempt to overcome this challenging situation, BYD has been taking frequent actions. Following a wave of promotional activities in early November, on 24th, dealers reportedly implemented large-scale price reductions, expanding cash discounts to various models such as Qin, Han, Tang, and Song, ranging from CNY 3,000 to 10,000.

The discounts on models like Qin PLUS DM-i and Qin PLUS EV are particularly significant, reaching up to CNY 10,000, with the starting price of Qin PLUS DM-i dropping to CNY 89,800.

BYD Chairman Wang Chuanfu emphasized at the end of August that he was confident in achieving the annual sales target of 3 million vehicles and would not engage in intense price wars within the industry.

The recent measures of BYD, involving two price reductions within a month, have sparked discussions. BYD stated on November 25th that this promotion is limited to the month and is not an official price reduction activity. Its purpose is to accelerate the transition from gasoline-powered cars to electric vehicles.

The market is closely watching whether BYD can achieve its annual target. BYD’s official Weibo account stated on November 24th that it took just over three months to go from 5 million to 6 million units of EVs, marking another milestone. Moreover, in October, the sales of new energy vehicles exceeded 300,000 vehicles for the first time, setting a new monthly record.

However, while BYD’s monthly sales continue to grow, the year-to-date sales growth has significantly declined. In the next two months, BYD’s sales still need to climb above the 300,000 mark to achieve the 3 million annual target. Industry insiders suggest that BYD’s recent price reductions may boost its sales target but are also expected to intensify market price competition.

In addition, BYD faces threats from local competitors. Recently, various forces in the Chinese auto market have made significant deployments. The Huawei Luxeed S7 is set to be launched on November 28, and Huawei showcased a video on the 24th demonstrating the autonomous parking function of the Luxeed S7, highlighting its powerful technological capabilities.

Furthermore, Xiaomi’s progress in the car manufacturing sector continues to advance, with its new car expected to debut in the first quarter of 2024. The competition in the Chinese new energy vehicle market is, without a doubt, increasing.

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• [News] Amid Chinese Car Price War, Tesla Takes a Step Back, while BYD Secures Sales Crown

On October 26, 2023, Stellantis announced a EUR 1.5 billion investment to acquire approximately 20% of Leapmotor, securing two seats on its board. Additionally, Stellantis and Leapmotor will establish a joint venture named “Leapmotor International” with ownership stakes of 51% and 49%, respectively. The CEO of the joint venture will be appointed by the Stellantis group.

TrendForce’s Insights:

1. Leapmotor’s High Self-Reliance in EV Technology (Electric Motor, Battery, Electronic Control) with Completed Four-Domain Integration in EEA Architecture

Before Stellantis took over Leapmotor, European automakers like Volkswagen and Audi had previously collaborated with Chinese counterparts such as XPENG and SAIC in the electric vehicle sector and technological development. The primary aim was to exchange different resources, including funding or access to the European market, for China’s EV technology.

Leapmotor, in addition to independently developing battery packs and an 800V silicon carbide electric drive system, has based its control system on the self-developed “Four-Leaf Clover” Electronical/Electric Architecture (EEA).

This architecture achieves cross-domain integration across four domains—power, body, ADAS, and cabin—utilizing a central computing platform to significantly reduce the use of Electronic Control Units (ECUs) and related wiring. This integration enhances the overall intelligence and range of the vehicle.

Stellantis had previously expressed a “light asset” strategy for the Chinese market, aiming to reduce fixed costs. Collaborating with Leapmotor enables cost savings in independent research and development.

On a global strategic level, Stellantis has its own electric platform, “STLA.” Therefore, cooperation with Leapmotor provides immediate support for Stellantis in the platform of EV technology and market development, both in China and globally.

2. Leapmotor Need to Seize the Opportunity to Accelerate Overseas Expansion

While Stellantis’ current focus is not on the Chinese market, its integration of resources from the merger of FCA (Fiat Chrysler) and PSA (Peugeot Citroën) provides a significant market foundation in Europe and the Americas. According to Stellantis’ disclosed data for the first half of 2023, it achieved a net revenue of EUR 98.4 billion, a 12% growth, and a net profit of EUR 10.9 billion, a 37% growth.

The sales volume of new energy vehicles also grew by 24% during the same period. The “Leapmotor International” joint venture between Stellantis and Leapmotor is not only responsible for the Greater China region but plays a crucial role in global sales and holds exclusive manufacturing rights for Leapmotor’s vehicle models.

Although Leapmotor holds a technological edge in three key components over European and American automakers, it faces fierce competition in the Chinese market from startups like NIO, XPeng, Li Auto, and traditional manufacturers like SAIC and Great Wall Motor. In the third-quarter financial report of 2023, Leapmotor achieved a gross profit margin of 1.2%, marking its first positive gross profit.

However, the net profit continues to incur losses. Stellantis’ financial injection serves to alleviate Leapmotor’s financial pressures, allowing it to capitalize on opportunities for global expansion.

In addition, amidst the escalating competition among Chinese automakers to enhance their export capabilities, Leapmotor can leverage Stellantis’ mature sales channels and resources to gain a strategic advantage in the international arena. The operational control of Leapmotor International remains in the hands of Stellantis, not only acquiring Leapmotor’s technology but also eliminating a potential competitor.

This transaction is built on the mutual benefits each party seeks, potentially establishing a collaborative model for future technology and market-sharing partnerships between Chinese and European automotive manufacturers.

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• [Insights] Even Ford Halts EV Investment, How Will the Automakers Adjust Its EV Strategy?

Tesla initiated a price war in the Chinese market this year, forcing local manufacturers to confront the challenge. However, after nearly a year of intense competition, Tesla unexpectedly called a truce, while Chinese manufacturers led by BYD thrived in the fierce price war, turning adversity into opportunity.

According to a tally by Tencent News-affiliated media “Deep Web,” in the first two days of November, three Chinese automakers have already announced price reduction and promotion policies: BYD offers discounts ranging from CNY 5,000 to RMD 18,000 on five models; Leapmotor provides a maximum discount of CNY  10,000 across all models; Lynk & Co, under the Geely umbrella, offers a subsidy of CNY 6,000 for its Lynk 08 model. Since October, more than 10 car manufacturers have implemented price reduction and promotion policies.

Tesla Bucks the Trend with Price Increase

While several Chinese car manufacturers are engaging in a price war, Tesla is moving against the current by increasing prices. On November 9th, Tesla officially announced a price hike for the Model 3 Long Range version by CNY 1,500, bringing the total price to CNY 297,400. The Model Y Long Range version also saw a price increase of CNY 2,500, bringing the total to CNY 302,400.

This marks Tesla’s second price hike in nearly a month. On October 27th, Tesla China raised the price of the Model Y Performance version by CNY 14,000, resulting in an adjusted selling price of CNY 363,900. Additionally, the North American Tesla Model Y Long Range version also experienced a price increase of USD 500.

The report further indicated the industry analysis, suggesting that the previous round of price increases has already eroded Tesla’s profitability. Tesla’s third-quarter financial report, released in mid-October, revealed earnings and delivery volumes below Wall Street expectations. The gross profit margin was particularly impacted by the price war, reaching a four-year low of 17.9%.

BYD Secures Sales Crown in Chinese Car Price War  

In contrast to Tesla’s unexpected withdrawal from the recent price war, Chinese manufacturers are not only surviving but maintaining their ability to continue the battle. BYD, sitting comfortably as the global leader in new energy vehicle sales, reported a third-quarter net profit of CNY 11.54 billion.

Meanwhile, AITO revived its fortunes with the new M7 model, and XPeng Motors successfully returning to growth in sales.

Data indicates that BYD emerged as the winner in the first half of the price war, maintaining the top position in sales. Despite a decrease in unit revenue amid the price war, quarterly net profit per unit increased. In contrast, Tesla’s per-unit net profit has declined each quarter this year, reaching a global per-unit net profit of only CNY 31,300.

The overall gross profit margin trend and per-unit net profit trend of BYD and Tesla align. In the third quarter of this year, BYD achieved a historic high gross profit margin of 22.1%, while Tesla’s gross profit margin hit a near three-year low at 17.89%.

However, the price war is inevitably taking a toll on the industry, with multiple research institutions and investment banks predicting an increase in mergers and acquisitions, as well as bankruptcy reorganizations among Chinese new energy vehicle manufacturers in the future.

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• [NEWS] BYD Outpaces Tesla in Production, Securing the Crown in EV Sector

(Photo credit: BYD)

On November 23, YICAI reported that Huawei is set to divest its Smart Car Solutions Business Unit (referred to as “Car BU”), with the business subsequently being acquired by the Chongqing State-owned Assets Supervision and Administration Commission, making it the largest shareholder.

However, to this report, the head of Changan Automobile’s strategic planning department further indicated on November 24 that the information is inconsistent with the facts.

In terms of Changan Automobile’s cooperation with Huawei, even before the establishment of Huawei’s Car BU, both parties had already formed a certain level of collaboration. In 2019, Changan Automobile, in collaboration with Huawei and battery company CATL (Contemporary Amperex Technology Co. Ltd.), jointly created Avatr Technology.

Huawei provided advanced assisted driving features and Harmony OS smart cockpit technology to Avatr Technology. When Huawei officially announced its commitment to “helping automakers build good cars,” the collaboration between the two became even closer.

In 2021, Changan Automobile, in partnership with Huawei, began developing the Avatr brand based on the Huawei Inside mode. Following the launch of Avatr 11, the Avatr 12 was recently introduced to the market. Additionally, in August of this year, Changan’s sub-brand, Shenlan (BluePark), signed a framework cooperation agreement with Huawei.

Shenlan Automotive stated that the collaboration will focus on the field of automotive intelligence, jointly advancing the research and application of new technologies in the smart electric vehicle domain.

According to Changan Automobile’s data, Changan Automobile has sold 241,028 vehicles in October, representing a year-on-year increase of 7.21%. The cumulative sales for this year reached 2,110,636 vehicles, reflecting a year-on-year growth of 10.76%. Specifically, the sales of new energy vehicles under the independent brand in October were 57,399, marking a significant year-on-year increase of 57.1%. For the cumulative sales from January to October, the figure reached 364,081 vehicles, indicating a substantial year-on-year growth of 88.76%.

(Photo credit: Flickr)

Recent reports suggest that Li Auto, a Chinese new energy vehicle company, is currently building a team in Singapore dedicated to the R&D of SiC power chips. On LinkedIn, Li Auto has posted five recent job openings in Singapore, including roles like General Manager, SiC Power Module Failure Analysis/Physical Analysis Expert, SiC Power Module Design Expert, SiC Power Module Process Expert, and SiC Power Module Electrical Design Expert.

In terms of power devices, electric drive systems in current 400V models typically employ Si IGBT, while 800V models mostly utilize SiC MOSFETs. This choice enables higher power density, leading to smaller and lighter equipment.

SiC, known for enhancing the driving range of electric vehicles and improving charging efficiency, finds widespread application in components like main inverters, on-board chargers, and DC/DC converters.

Recognizing the potential, Li Auto is among the many new energy vehicle makers incorporating SiC into their products.

As of August last year, Li Auto had launched the construction of power semiconductor R&D and production base in the Suzhou High-tech Zone. The base aims to initiate sample production in the first half of 2023, officially beginning full-scale production in 2024, with an ultimate annual capacity of 2.4 million SiC power modules. This marks Li Auto’s strategic move into the independent industry landscape for the next generation of high-voltage electric drive technology.

To achieve higher efficiency on the high-voltage platform, Li Auto is opting for SiC power modules over traditional IGBT. At the 2023 Auto Shanghai in April, Li Auto unveiled an 800V fast charging solution featuring an 800V high-voltage electric drive system built on SiC technology, enabling a 10-minute charge for a range of 400 km.

Li Auto’s next-gen SiC power module, integrating multiple components into the motor controller design, compresses the controller’s volume to within 4L, boasting a high power density of up to 62 kW/L. This reduces the volume and weight of the electric drive system, further optimizing the vehicle’s spatial layout and energy consumption.

In addition to Li Auto, the all-new NIO ES6, also showcased at the 2023 Auto Shanghai, incorporates SiC power modules and is equipped with a the second generation high-efficiency e-drive platform.

Furthermore, Hongqi, FAW Group’s premium auto brand, latest electric E202 SUV debuted at the 2023 Auto Shanghai. Based on the FMEs architecture 800V SiC charging platform, it requires only 5 minutes of charging for a range of 300 km.

Notably, Huawei recently introduced the new DriveONE 800V high-voltage SiC motor platform, focusing on better performance for electric vehicles. With high-voltage SiC technology, this motor platform achieves a rotation speed of up to 22,000 rpm and a maximum efficiency of 98%. Huawei’s latest SiC motor release is anticipated to open a new page in the electric vehicle industry.

The integration of SiC power devices into electric vehicles represents a significant trend in the development of the new energy vehicle industry. Leading automakers are poised to invest more resources in the research and development of related products, ultimately attaining independent control over core technologies.

(Image: Li Auto)