China's Auto Industry Heads Towards a New Decade
The worldwide pandemic of 2020 has accelerated the adoption of electric vehicles (EVs) and autonomous vehicles (AVs) with unprecedented speed.
China is one of the most significant and most essential battlefields in the game, although local players are already taking dominant shares off the market.
In the world's largest EV market, we have witnessed four winners emerge – NIO (NIO:NYSE), Li Auto and Xpeng, along with WM Motor (combinedly as NLXW). The competition between NLXW, traditional OEMs and Tesla will be exciting. On the other hand, the country's autonomous driving ecosystem is ahead – Beijing is opening up to widespread commercial usage of robotaxis in urban areas and Baidu launched its pilot trial in the city in October 2020.
In this report, we look into key updates in the EV and AV industry. And we dissect the competitive landscape in China as we introduce Li Auto, BYD, China's BAT (Baidu, Alibaba, Tencent) & TMD (Toutiao / ByteDance, Meituan, Didi Chuxing) and auto parts maker Huayu.
NIO, Li Auto and Xpeng are making sizable net losses, but equity investors valued them at USD 53.7 bn, USD 21.6 bn, USD 21.5 bn as of Nov 4, 2020, respectively.
Legacy automakers have been suffering, though they still maintain a high market cap; its stocks were not delivering good returns.
Tesla's market dominance makes incumbents join the game – otherwise, they have to witness customers purchase EVs instead of ICE cars.
We are optimistic about China's New Energy Vehicle (NEV) market, driven by government support, improving infrastructure along with the rise of local Chinese brands.
China's dominance in EVs is continuing. The market sold ~1.2 mn EVs, representing 57% of global sales.
Autonomous vehicles will transform personal mobility further – by slashing the high driver costs that are baffling ride-hailing platforms like Didi Chuxing, Lyft and Uber, ultimately.
It might be hard for driverless technology alone to take a majority portion of ride-hailing trips while the rest rely on customer service, as Waymo executive John Krafcik implied.
Autonomous and electric systems were rated lower than OEMs in recent years, but we witnessed a rising tide of investment following 2019.
In this report…
In 2020, Tesla shorts paid the price – the stock has made 408% in gains to date.
In China, COVID-19 had a short-term impact on the auto market, dragging the sales to an almost 80% annual decrease. Since April, as the country is back to normal in most regions, the auto market showed a 5% growth.
China had 1.32 mn charging piles and 4.17 mn EVs as of June 30, 2020, suggesting an average of 3.2 cars sharing 1 charging pile vs. 6.4 cars sharing 1 in 2015.