China EV Insights | Vol.002

2024/6/14

The EU's additional tariffs on Chinese EVs are a Double-Edged sword

The EU imposes an additional tariff of up to 38.1% on Chinese EVs.

The European Commission has decided to raise tariffs on pure electric vehicles (EVs) produced in China, citing that Chinese EVs are being sold at unfairly low prices due to subsidies from the Chinese government. However, in reality, 60% of the EVs imported by the EU from China are products of European and American manufacturers such as Tesla from the U.S. and Renault from France.

China is discussing retaliatory tariffs on European products, with the Chinese government hinting that high-end cars with large engines, brandy, and dairy products produced in the EU could be the targets of these tariffs. China currently imposes a 15% tariff on EVs imported from the EU, which may be increased in the future. This could potentially escalate trade tensions.

The joint venture car companies, that are being pessimistic about：Is there still a golden age？

In China's auto market, domestic brands like BYD are challenging joint ventures with their advanced plug-in hybrid tech. BYD's fifth-gen DM tech, known for low fuel use and long range, compels joint ventures to downsize and cut jobs. Despite market share losses, they're fighting back by enhancing smart tech, partnering locally, and revamping PHEV projects, aiming for new launches by 2025.

Joint ventures also seek growth in overseas markets, using Chinese manufacturing cost benefits to boost exports. They leverage their tech heritage and global experience to adapt, moving from P2 parallel to series DHT + large battery tech, which fits Chinese needs with its endurance, fuel efficiency, and smart features.

This rivalry extends globally as Chinese automakers eye international markets. Joint ventures must discover new growth amid contraction, adapting to a dynamic market.

Chinese auto industry leaders engage in heated debate over "Involution"

In China's automotive industry, "involution" and price wars are intensifying. Involution, characterized by excessive competition leading to profit reduction and cost-cutting, is exemplified by aggressive price wars. Since 2023, the EV market has seen nearly 60 models drop prices by 2024, causing industry-wide concern.

BYD's Wang Chuanfu sees involution as part of market competition, while Huawei's Yu Chengdong stresses competing on value, not price, focusing on intelligent features and user experience. However, leaders like Geely's Li Shufu and GAC's Zeng Qinghong worry about the negative impacts of unchecked involution and price wars on product quality and fair competition.

The essence of involution is capturing market share through price wars, but as this becomes routine, controversy grows. The challenge for companies is to compete effectively while ensuring profitability.

Innovation and market expansion are key to overcoming involution, with overseas strategies offering new growth opportunities despite international challenges. As China's auto exports rise, some countries have adopted trade protection measures against the "Chinese EV threat."

The industry's involution and price wars are symptoms of market competition, revealing the need for companies to innovate, build brands, and expand markets to break free from price wars and pursue sustainable development.

CATL and BYD race towards supercharging, power batteries to enter the 6C era

EV charging is poised for a breakthrough with 6C technology. CATL's second-gen Kirin battery, capable of 6C rates, is due this year, with automakers like Li Auto and Zeekr in potential talks for adoption. BYD, after a three-year innovation hiatus, is also developing a 6C battery, suggesting a hybrid lithium iron and ternary material approach.

CALB plans 46-series cylindrical 6C batteries and 5C models that can charge 80% in 10 minutes, slated for 2024. The "C" scale reflects charging speed, with 6C meaning a full charge in 10 minutes theoretically.

The battery industry faces a plateau with liquid batteries maxing out on energy density and solid-state batteries not yet ready for scale. Fast charging is key to boosting market appeal. The industry is rapidly evolving from 3C to 6C, aiming to make EV charging as convenient as refueling, marking a major leap in capability.

U POWER Tech showcases at Plug and Play Innovation Day

From June 11th to 12th, 2024, Pacific Time, U POWER Tech participated in the Plug and Play innovation days held in Silicon Valley, North America, marking the second time the company was invited to attend. Yao, the head of U POWER Tech U.S.A, delivered a wonderful live presentation, sharing the latest product developments of U POWER Tech. At the same time, U POWER Tech's skateboard chassis products were displayed alongside technology companies such as Tesla and Waymo, and in-depth communication was conducted with global investment institutions, technology peers, and many car manufacturers on-site.

Plug and Play is a globally renowned technology investment incubator, focusing on helping startup teams grow rapidly. Established in Silicon Valley, USA, in 2006, it has successfully incubated several internet industry technology giants, including Google, PayPal, and Dropbox.