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Feb 01, 2023

At the end of 2022, the five-year new energy vehicle (NEV) government subsidy was officially withdrawn. Upon the phase-out of this incentive, some OEMs enacted price increases, there being the double impact of subsidy withdrawal increasing vehicle cost, and core plug-in vehicle component prices continuing to rise. According to the latest information, the current lithium carbonate price per ton has exceeded CNY500k, which directly increases cost pressure on any vehicle that has a large battery pack – battery electric vehicles (BEVs) and, to a lesser extent, plug-in hybrids (PHEVs). Despite this, at the beginning of 2023, Tesla suddenly announced that its Model 3 and Model Y prices would be reduced, only three months after the last price adjustment. The price of the Model 3 RWD version is now less than CNY250k, which is almost a 13% reduction.

From January to November 2022, according to wholesales data, there were 235,728 units of Model 3 sold and 419,341 units of Model Y. However, only 47% and 68% respectively were delivered in China (as seen in the chart below). Weakening growth in China and fewer local orders have prompted the Tesla price reduction.

Turning to domestic OEMs, BYD announced an increase in sales prices of its models, and many other brands including Volkswagen, BMW, Chery, Changan, and Xpeng followed suit. BYD has increased its vehicle prices by CNY2k to CNY20k, but as we know, most other NEV brands are still losing money. According to 2022 Q3 financial reports, the traditional OEMs with high net profit rates can maintain cash flow via ICE sales but NEV brands, apart from BYD and Tesla, currently operate at a loss. Although their gross margins are close, the difference between Tesla and BYD in net profit is four times (in Tesla’s favour). It means Tesla has an absolute advantage in the price war.

Tesla will avoid direct price competition which could break its control of the market. At the same time, we can see that in the last round of competition, domestic OEMs are already in the lead. Tesla would like to get more orders as a result of its price realignment, but how long this can last is unknown. Domestic OEMs have accumulated much experience in product control, but how to better apply this in future product planning and strategy is a major problem. Excellence in key new technologies will be critical, and that’s the reason most domestic OEMs prefer to focus on developing and investing in advanced functions on their vehicles. Developing what is seen as missing in Tesla’s cars could help them attract more consumers.

In addition to the impact on the NEV sector, the impact on the ICE segment is significant. In the price range from CNY250k to CNY350k, NEV penetration is 36%, most of which is contributed by Tesla. At the same time, NEV penetration in the CNY200k to CNY250k segment is only 22.4%. With the price of Tesla’s Model 3 now below CNY250k, we see scope for the phase-out of ICE to be accelerated, a result of Tesla’s advantage in the price war.

(LMC Automotive blog on January 30, 2022)

Jan 27, 2023

Reported on January 25, 2023, BYD Auto Co. Ltd., is choosing the right area to situate its PHP multi-billion EV assembly facility in the Philippines, according to the industry sources, who mentioned that the Board of Investments (BOI) was also actively supporting the carmaker.
The BOI also unveiled that it approved the registration of 3 other Chinese EV makers with local partners that plan to launch 1,000 charging stations, assemble 10,000 passenger cars for lease, and 10,000 units for transport network vehicle services.
Executive Order No. 12, which was issued by the president, removes tariff on imported e-vehicles and reduces tariff for e-vehicle parts and components for a 5-year period. The BOI also added that EV assembly would qualify for fiscal incentives under the Tier II of the Strategic Investment Priority Plan.
The current authorized distributor of BYD Auto in the Philippines is Solar Transport and Automotive Resources Corp.
(From an article of Manilastandard.net on January 25, 2023)

Jan 25, 2023

On January 24, Ford was reported to be in talks with BYD over the sale of its Saarlouis plant in Germany, according to people familiar with the matter.
Ford executives plan to travel to China to discuss the potential sale with BYD, though talks are still in a preliminary stage and may ultimately fall through, the people said.
The company will end production of the Focus compact car at the plant in in 2025 as the company shrinks its passenger car lineup in Europe to focus on EVs and light commercial vehicles.
Ford reportedly has interest from 15 different entities – each of which is exploring the idea of buying the Saarlouis plant – ranging from investors to manufacturers.
The company said in June 2022 it was seeking alternatives for vehicle production at the Saarlouis plant, which employs 4,600 workers, including involving other manufacturers.
Ford has chosen to produce vehicles on its next-generation electric vehicle architecture at its plant in Valencia, Spain instead of Saarlouis, in addition to the VW-related EVs at its plant in Cologne, Germany.
(multiple sources on January 24, 2023)