The Chinese Are Coming - #34

CHINA’S GLOBAL PUSH - WHY NOW?

Page 1:  China's Global Push - Why Now? (The View from Detroit). 
Page 2: Electric • Autonomous • Ride-Sharing • New Deals 

"What were the conversations like back in your China headquarters that led to the decision to build up operations here in the United States?"

That's the question Automotive News editor Dave Versical put to a panel of Chinese companies, at the first-ever China Genius Series event in Detroit last week. 

David Wang, EVP at Yanfeng Automotive Interiors: "At a certain point, we understood that to win major contracts with global OEMs, we needed a global presence ourselves. Otherwise, we would be limited, competing only in the China market."

Today, Yanfeng operates in 110 locations in 20 countries, including 9 sites in the United States. The company employs 33,000 people worldwide and supplies most major OEMs, including the Detroit Three.  

Yanfeng is not alone. There are now more than 60 - that's right, 60 - Chinese automotive suppliers in the US. They make tires, glass, airbags, suspensions systems, batteries, drive trains and steering systems. While heavily concentrated in Michigan, you can also find them in Ohio, Indiana, Georgia and South Carolina. 

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Chinese carmakers? They are present in the US too, even if their products are not yet visible on American roads. A total of 11 Chinese automakers have set up advanced R&D centers in California and Michigan to prepare future products for global markets.

Leading names include Geely, Great Wall, Guangzhou Automotive, NIO, Byron and BYD.

Chinese firms are hiring top US and European talent to develop good-looking electric, autonomous and connected vehicles.  One example: Swedish designer Pontus Fontaeus appeared in Detroit to introduce us to Guangzhou Automotive's Entranz concept car. 

(Photo: The Entranz is an autonomous electric six-seat crossover being sculpted at GAC's design center in Los Angeles.)


There is of course, one more giant force pushing Chinese companies overseas. The massive PRC market has turned soft, sales in China declined last year for this first time in almost 30 years. Demand will fall again in 2019. Chinese automakers and suppliers understand they need access to global markets for that vital oxygen called growth. 

What does this all mean for us in America? Chinese auto investments into the US are creating enormous opportunities for a range of American companies. The Chinese definitely need local expertise from dealers, banks, tech firms, engineering firms, insurance companies. legal advisers, network planners and car maintenance and service centers. 

One more thing for today: My colleagues and I at ZoZo Go would like to say "thank  you" to  the many subscribers to this newsletter who joined the China Genius Series last week in Detroit. More than 400 people registered, far surpassing our expectations.

We will be working with the Automotive News to host more quality China Genius Series gatherings in the coming months. 

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Automotive News’ Jamie Butters interviewing Karma Automotive CEO Dr Lance Zhou


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- PAGE 2 -

ELECTRICS • AUTONOMOUS • RIDE-SHARING• NEW DEALS 



ELECTRICS




>> Record Sales in 2018. Pure electric and plug-in hybrid sales soared to 1.26 million last year, up 62% compared to 2017. Pure electrics accounted for more than 80% of the total. 

China New Energy* Vehicle Sales (*Battery Electric & Plug-In Hybrid): 

2016: 511K
2017: 776K
2018: 1.26M 
2019: 1.5M (f)

Takeaway:  China made more electric vehicles in 2018 than all other countries combined.  A couple of key drivers: 1. Government subsidies, quotas, rebates and even purchase mandates. 2. Chinese consumer appetite for (and acceptance of) low-range, low-priced electric commuter vehicles. 


>> Guangzhou Automotive (GAC). President Yu Jun introduced the Entranz autonomous-electric car at the Detroit auto show last week. The vehicle was developed by GAC's Los Angeles-based design team. 

Takeaway: GAC still plans to make the GS8, the gasoline-powered three-row SUV, their first product for the American market. Showing the all-electric and autonomous Entranz Concept in Detroit is meant to impress American media and consumers with GAC's enhanced tech capabilities.



AUTONOMOUS

Whenever large amounts of money travel fast, corruption is a sure companion. 




>> Roadstar.ai  Dismissed co-founder and Chief Scientist Zhou Guang amidst charges of manufacturing fake data and accepting kickbacks from partner companies. 

Takeaway: Obviously not a good sign when the Chief Scientist is making up numbers. In May 2018, Roadstar.ai made headlines after securing $130 million in Series A funding led by Shenzhen Capital Group and Wu Capital.  


 >> DJI. The world's largest maker of drones, DJI Technology, says it lost $150 million stemming from pervasive corruption within the firm.  Some 40 people are under investigation. 

Takeaway: DJI Technology’s 2018 revenues surpassed $3 billion.  DJI controls about 70% of the global consumer drone market. The company expects to IPO in 2019. May the buyers beware. 





RIDE-HAILING

Feeling lucky...? 




>> Didi.  China's leading ride-hailing company prepares for a blockbuster IPO in 2019 valued between $75 and $80 billion.  

Takeaway:  Didi lost more than $1 billion in 2018, beset by hefty ride subsidies. Its image was also deeply tarnished by safety lapses that led to the murder of two female passengers last year. Didi still stands by its expectation to be valued at $80 billion at the time of its initial public offering this year. Let the other investors pile in first, methinks. 





NEW DEALS 




>>  Evergrande/NEVS: Real estate giant Evergrande is investing $930 million, a 51% stake in NEVS, the Swedish-based electric car maker, formerly Saab. Evergrande also owns a sizeable stake in financially-challenged Faraday Future.  



>>  Magna/BJEV: China's leading EV maker, Beijing EV, has entered into an engineering joint venture with Magna International. Beijing EV sold 158,000 vehicles in 2018, up 53% YoY, to lead the industry. The new JV will engineer its first EV for Beijing EV in 2020 and for for other companies in the following years. 

Takeaway: When I saw Magna CEO Don Walker speak at least week's Automotive News World Congress, he confirmed that our global future will be "both electric and autonomous." That Magna is establishing an EV engineering center in China reveals where that future starts.  


This news just in: Magna and Waymo are tying up to build autonomous vehicles in Michigan. Could there be a Magna-BJEV-Waymo venture in our near future?





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