The Chinese Are Coming - #28

CHINESE CARS, GLOBAL DESIGNS

Page 1: Chinese Cars, Global Designs 
Page 2: Electrics • Autonomous • Ride-Sharing • New Deal

For years, clunky designs have been killing the reputation of Chinese cars. Crude rip-offs have hurt, too. 

No longer. Chinese automakers are fixing the problem by hiring top global designers. 

Geely set the trend 5 years ago when the company persuaded Peter Horbury - the highly-respected Volvo designer  - to move to Geely HQ in China.    

Take a look at Geely designs before and after Horbury's arrival.  

Before: The 2013 Geely CK 

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And after: The 2018 Geely Borui

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If you are wondering about a correlation between better designs and higher sales, check the numbers. 

Geely Sales (2014-2018)

2014: 425,000
2015: 532,000
2016: 778,000
2017: 1.2M 
2018: 1.6M (f) 

A quadrupling of sales in four years. "Putting design at the forefront of Geely Auto has helped the brand develop the value chain hand-in-hand with engineering," says Geely spokesperson Ash Sutcliffe. 

Other Chinese companies are now following Geely's lead. BYD hired former Mercedes designer Wolfgang Egger to put good looks into the all-new Tang SUV.

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During the past 12 months, several other Chinese automakers have made similar moves: 

• Great Wall Motors persuaded highly-touted designer Phil Simmons to leave Land Rover after 11 years.

• First Auto Works hired former Rolls Royce stylist Giles Taylor in September to design the next generation Red Flag limousine. 

• Changan lured Detroit-native David Hilton (from Bentley via NIO) as strategic design director in early 2018. 

• Chery Automobile recruited GM design veteran Steve Eum in 2017.

• NIO and BYTON, two premium EV start-ups, each operate global design houses in Munich, Germany, employing hundreds of talented designers.  

Warning to global automakers:  Those objects in your rear view mirror are much closer than they appear. 


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- PAGE 2 -



ELECTRICS • AUTONOMOUS • RIDE-SHARING• NEW DEALS 


ELECTRICS


>> BJEV. The Beijing Automotive Bluepark New Energy Technology Co got off to a turbulent start after listing on the Shanghai Stock Exchange last week. 

Takeaway:  BJEV's share price is fragile because profits are razor thin (just $6.2 million in 2017). BJEV this year became China's number one producer of electric vehicles, edging out perennial front-runner BYD. 

>> Warren Buffett & BYD. Ten years a go this month, Warren Buffett invested $250 million in BYD. He's earned $1.3 billion on the bet. 

Takeaway: Most of the share price rise is attributable to BYD's non-automotive businesses - batteries and energy storage systems. BYD has earned profits on electric cars only after China introduced rich subsidies. 

>> BYTON/Bosch. Inked a deal for Bosch to supply BYTON with EV power train and driver assist systems.  

Takeaway: Call it a global car powered by Chinese capital. Designed in Munich. Autonomous technology from Silicon Valley (and Bosch). And manufacturing, of course, in China. 

>> Tesla: Trade tensions have led to 40% tariffs on Tesla in China, hence the automaker is accelerating construction of their Shanghai factory.

Takeaway: Tesla is the first “WOFE” (Wholly Foreign-Owned Enterprise) among automakers in China, not required to joint-venture. Between factory construction and ramp-up, Tesla is 4-5 years away from their target of producing 500,000 vehicles/year in China.


AUTONOMOUS


>> Chinese/Silicon Valley.  Chinese AV start-up operate two homerooms - one in China and the other in Silicon Valley. Key players include Baidu, Roadstar, Pony and TuSimple. 

Takeaway:  The Trump Administration is now scrutinizing Chinese investments in AI And AV in California as potential national security risks.  The picture gets complicated when you have entrepreneurial Chinese founders (often educated in the United States) with investments by Chinese state institutions. How to not throw out the baby with the bathwater? 

>> Made-in-China 2025.  China's AI (and by extension, AV) strategy: Breakthroughs in AI by 2025, world leadership by 2030.

Takeaway: 
 China has identified five national champions to lead the way: Baidu, Alibaba, Tencent, iFlytek and SenseTime. 


RIDE-SHARING


>> Didi/Softbank. Didi launched ride-hailing services in Osaka, Japan this week. Didi Mobility Japan is a JV between Didi and Softbank, the power-house Japanese investment company. 


Takeaway:  Significant because Didi has been hit hard by the tragic deaths of two passengers in China within the past six months. Deploying in Japan is a sign of confidence from Softbank, arguably the most powerful investment company in the world. 


NEW DEALS


>> Zebra. This Alibaba-backed smart car company raised $234 million from VCs and a Chinese government investment corporation. (Name is Banma in Chinese). 

>> Ganfeng Lithium. This Shenzhen-listed, Jiangxi based, state-owned company just signed a 5 year contract to supply BMW. Plans HK listing to raise a fresh US $660 million. 

>> Way Ray.  Swiss-based augmented reality firm with applications for autonomous tech gets fresh $80 million, The company's early funding came from Alibaba. 

>> Niu Techologies. Maker of lithium-ion powered e-scooters seeks $150 million from a planned Nasdaq listing. GGV is leading the round. China's e-scooter sales 2017: 27 million units.   

>> Baidu/Lunewave. Arizona-based car sensors start-up is securing $5 million from several investors including Baidu Ventures and BMW. 

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