What are the Chinese doing?

Tesla’s expect to see a factory in Shanghai, China. But they’ll may be treated as foreign transplants.

On Sunday (Oct. 22) The Wall Street Journal reported that the electric car maker has made a deal to manufacture vehicles in Shanghai’s free-trade zone, independently and without a local partner.

Tesla did not confirm the news but stated that it hopes to “clearly define” its production plans for China by the end of 2017.

If the deal is completed ….this will be the first.

China has never had a foreign automakers in China, that is, a solo operation.

If you want to start a company in China … you must form a joint-venture with a local car maker and they are typically a state-owned enterprise, that are the first partner with a 51% majority stake and share of profits with that percentage.

The advantages in theory lets a foreign company enjoy lower labor and other costs…but the concerns such as property rights and other rights like license agreements have been a big problem…especially when the partner is producing his own vehicles.

So how big is the China’s electric-vehicle industry.

Last year China surpassed the U.S. to become the world’s biggest market for new-energy vehicles — comprising electric vehicles, plug-in hybrids and fuel-cell cars.

The China sold 331,092 units in 2015, according to the China Association of Automobile Manufacturers.

Today, China  has over 200 companies making new-energy vehicles backed by billionaires.

Who are these billionaires…Jack Ma, Terry Gou, Li Ka-shing, Jia Yueting and Warren Buffet..

However, many of these companies are it trouble, especially the one that our not back by the  billionaires.

Now,  the government plans to  imposes stricter technology standards on a few  manufacturers that survive because they are  limiting their number to only 10.

Their plan is to weed out the weak, said one of the senior executive with the auto manufacturers’ association…

This means over  90 percent of the new EV startups will become extinct.

One successful Player is Beijing Electric Vehicle Co., which is controlled by BAIC Group.

How do you sell cars in China?

If you want to sell cars in China you get a state owned company.

For example, suppose Hyundai Motor Co. and Daimler AG’s Mercedes-Benz want to sell cars in China. You find a  state-owned manufacturer and then  build a factory in the Beijing city that’s capable of making 70,000 EVs a year.

Or you find your self several millionaires, how about a billionaires, like   Li’s Ka-shing.

Li’s Ka-shing foundation worth about 32 billion is a minority investor in the Hong Kong-traded FDG Electric Vehicles Ltd. who is a large shareholder in Hangzhou Changjiang Passenger Vehicle Co.

Sound competitive.

And very confusing…

How about Warren Buffett’s?

One of the biggest players is  the BYD Co., a Shenzhen-based (only a 20 minute ride out of Hong Kong) auto manufacture.

Warren Buffett’s Berkshire Hathaway Inc., owns about 10 per cent and the car company has a 18 percent share of China’s energy vehicle market.

BYD has a new  sports-utility vehicle called The Yuan, costing 209,800 yuan ($32,368) for the hybrid version. 

‘Huge Problem’

 

 

So why is China is such a hurry to help Electric Builders?

Have you been to  China of late?

You can’t breath the air…pollution

Ok so how do you solve the problem?

President Xi Jinping has an idea.

Step up the  development of electric vehicles and upgrade the auto industry, curb pollution and cut dependence on imported oil.

The government is jumping in by  stepping up its support by adding a  combination of research grants, consumer subsidies and infrastructure investments

This all well and good ?

But how does this help the young Chinese buyer who is preventive from buying.

My friend Qi told me about his cousin problem…he could not get a car without getting a license plate…you can not get a license plate without getting a car…so you buy a car but you can not get a license plate only by lottery  but if you buy a electric car… problem solved.

It seems the electric car was exempt from the red tape.

Additional grants can reduce cost of ownership and expense to almost half  are now  being issued by the government.

In addition more support is need on infrastructure.

China is looking for help from private capital and other large manufactures  to construct and operate charging facilities.

China want five million electric vehicles in use by 2020.

So how are they doing by today standards?

One of the larger opportunity is that 100’s of new-energy vehicles companies are constructing their manufacturing facilities, but they’re blocked with red tape from getting the licenses.

Innovation and plenty of cash will drive  the

Chinese economy.

And some old fashion yankee know how.. where General Motors, Ford. and Tesla are moving in.

China Electric Car

So how big is the China’s electric-vehicle industry.

Did I mention the last year China surpassed the U.S. to become the world’s biggest market for new-energy vehicles.

China Cars                                    May YTD May Market Share YTD Market Share
BYD Tang                                      3,249             15,615    12%          18%
BAIC E-Series EV                        1,714 8,712 6% 10%
BYD e6                                           1,683 7,579 6% 8%
BYD Qin                                         2,912 7,334 11% 8%
JAC i EV 4/5                                  1,076 6,513 4% 7%
SAIC Roewe 550 PHEV / e550 2,198 6,382 8% 7%
JMC E100                                      1,300 4,527 5% 5%
Chery eQ                                        1,269 4,384 5% 5%
Kandi K11 Panda EV                   2,598 3,127 10% 4%
BYD e5 1,172                                 2,676 4% 3%
Geely Emgrand / Dorsett EV   1,000 2,461 4% 3%
Zotye Cloud EV                             406 2,301 2% 3%
Changan Eado EV                          721 2,163 3% 2%
JAC i EV6S                                      554 1,858 2% 2%
Tesla Model S (estimate)              400 1,811 1% 2%
Zotye E200                                      853 1,602 3% 2%
BAIC EU260 / D50 EV                  769 1,561 3% 2%
GAC Trumpchi GA5 REV               570 1,399 2% 2%
Zhidou EV                                        1,071 1,071 4% 1%
Venucia e30 / Morning Wind        274 1,052 1% 1%
TOTAL                                          26,578 89,210 100% 10

The China sold 89,219 units by the end of May 2016, according to the China Association of Automobile Manufacturers.

Today, China, still  has over 200 companies making new-energy vehicles some by billionaires.

Who are these billionaires…Jack Ma, Terry Gou, Li Ka-shing ,Jia Yueting and Warren Buffet..

So who are these billionaires ….Warren Buffet-U.S. home grown… Alibaba Group Holding Ltd.’s{the Amazon of China} Jack Ma… Foxconn Technology Group’s{Apple,HP, Dell manufacturing Activities}Terry Gou …Tencent Holdings Ltd.’s Ma Huateng …Jia’s Yueting, LeEco CEO..

Read on for more detail.

China was and is looking for help from private capital and other large manufactures to construct and operate charging facilities.

So when all these people jump in there was and could be a big problem.

China wants five million electric vehicles in use by 2020.

So how are they doing by today standards?

The startups intending to apply for manufacturing permits include Wanxiang Group Corp., owner of Karma Automotive LLC, which announced a hybrid that uses solar power and costs more than $115,000. Its $375 million factory is planned for Hangzhou.

An interesting side note.

Chinese billionaire Lu Guanqiu, plans to build this electric vehicle plant in Hangzhou, China. This city is ideally located just south of Shanghai and with great access to other markets…with an investment value for the project will be $375 million and have the capacity to manufacture 50,000 cars a year. Look out Testa here come the Chinese.

In addition, another is Jia’s Yueting, LeEco Ceo. Will invest 6 billion yuan.

Having just acquired Vizio for $2 billion- the company has gone from primarily a video streaming service— called “the Netflix of China”—to a large varied conglomerate with products that includes smartphones, mountain bikes, televisions, and a factory with capacity to produce 200,000 electric vehicles cars a year.

Another is WM Motor, raised $1 billion in an initial fundraising round with plans to introduce its first model in 2018.

The company was founded last year by Freeman Shen, a former executive at Volvo Cars owner Zhejiang Geely Holding Group Co.

Another side note.

Shen attended Harvard Business School’s while working for Geely, which bought Volvo from Ford Motor Co. in 2010 in the largest overseas acquisition by a Chinese automaker.

So What the Problem?

So far, only two companies have obtained approval to build cars, based on a review of National Development and Reform Commission documents.

The biggest opportunity is the red tape and so, the government had to raise the threshold.

Many of the others are plagued by the lack the technical know-how .

Trying to keep up with “the Jones”….presents itself with a problem…especially when “the Jones” are from the U.S…. namely Tesla Motors Inc. or General Motors Co.

“Additional Concerns”

Quality, reliability, and core technology come to mind..

For example, Tesla is building the Mega Plant in Sparks, Nevada.

Where raw material go in one end and the electric car is driven out the other. The electric motor and batteries are built in house.

Autopilot software is in house and the latest changes in robot assemble are under constant updating.

Chinese must improve its government funding fraud.

Subsidies are not the total answer…

What started out to be the solution to the world’s smoggiest skies problems… paying the makers of electric and hybrid vehicles manufactures..

but…after many investigations…many of many manufactures claimed to have more finish product… then what was actually counted..

Doubt was cast on the accuracy of reported Chinese electric-vehicle sales.

So did they double the total or not?