Welcome back to the working week. I hope this morning’s Dump will thrill you, I’m fairly certain it won’t kill you. I am excited to begin today’s news roundup with a fairly exciting car reveal from Nio, a Chinese automaker with its sights on the United States. The ET9 is Maybach-sized electric flagship “sedan” with a price that’s about half as steep.
While we’re on the topic of China, BYD has formally announced the plant in Hungary everyone thought the company would build. This is a big deal for Europe and the rest of the world.
Finally, the ongoing Daihatsu scandal is going to get more expensive for Toyota as the company has to support its suppliers. And, finally (a second finally), maybe GM can qualify for some of those sweet sweet Inflation Reduction Act tax credits if it can swap out a couple of parts.
The ET9 Is A Battery-Swapping, 900V Euro Killing EV
We’ve spent a lot of time talking about the collapse of non-Chinese automaker market share in the Chinese market. For years, foreign automakers had highly profitable tie-ups with regional automakers like SAIC (GM/VW) and Dongfeng (Stellantis). This helped provide a lot of cash for the larger companies but, more importantly, taught Chinese automakers how to efficiently build, design, and market cars.
As all of this was happening, China saw electric vehicles as the future, and invested heavily in companies willing to build the batteries, infrastructure, and cars necessary to fulfill this vision. Many in the auto industry made jokes about Chinese-designed cars, which were bad clones and copies of more popular European or American models. No one is laughing now.
What Chinese automakers have long lacked, however, was status. A BYD Han might be a nice car, but it doesn’t have the cachét of a Porsche or a Mercedes-Benz. That’s slowly changing, with automakers like HiPhi and Nio offering an alternative perspective on what luxury is, albeit at a more reasonable price, and focused on extreme high-tech luxury in the vein of Lucid or Tesla.
Mercedes has long tried to make Maybach the big brand in China, and even offered an entry-level six-cylinder sedan that cost just over $220k. But both Mercedes and BMW have struggled in China this year according to Reuters:
Mercedes-Benz’s supply issues affected its global sales, which fell 4% year-on-year in July-September, although the company said it was still on track to meet its full-year guidance for flat sales growth.
[…]
BMW fared better, reporting a 5.8% rise in its global retail sales to 621,699 vehicles in July-September, but said retail sales in China of BMW and Mini models dropped 1.8%.
This is the world that the Nio ET9, just unveiled, is entering. We probably don’t talk about Nio enough because there are so many upcoming Chinese brands it’s easy to lose track, but unlike some would-be automakers, Nio has proved itself to be a legit player. The company has already sold more than 125,000 vehicles so far this year, mostly in China. It’s also beginning to make small inroads into Europe.
So what is this thing? Here’s how Nio describes it:
NIO ET9 adopts a four-seat layout. The innovative “Sky Island” and “Executive Bridge” create exclusive first-class comfort. Inside the “Executive Bridge”, NIO ET9 offers a 360-degree versatile tray table for the passengers in the rear seats, which can be adjusted at any angle. The first-class rear seats of NIO ET9 file 24 self-developed patented technologies, with a maximum backrest adjustment angle of 45 degrees, a seat cushion width of 582mm, and 11 adjustments with one click, providing benchmarking comfortable experience. Moreover, the 7 electric sunshades can be activated with one click.
NIO ET9 defines the executive flagship with leading position in technology, bringing together over 100 NIO full-stack technologies, including 17 world-first technologies, 52 leading technologies, and 525 patents filed, setting a new technological benchmark for electric vehicles.
SkyRide Intelligent Chassis System of NIO ET9 integrates three core hardware systems – steer-by-wire, rear-wheel steering, and full active suspension – for the first time, making it the world’s only driven-by-wire intelligent chassis. In the face of complex road conditions, NIO ET9 can deliver a driving experience akin to traveling on a flat surface.
NIO ET9 is equipped with China’s first Full-Domain 900V Architecture, boasting the highest voltage of 925V, a charging peak power of 600kW, and a charging peak current of 765A. The 900V ultra-fast charging and swapping platform allows fast recharging after a 3-minute battery swap or extending the range by 255km with a 5-minute charge.
There’s a lot of things to digest here, but key to the car is a 900V architecture capable of delivering both power and super- fast charging speeds, with the addition of about 160 miles of range happening in just five minutes. Additionally, the vehicle can use Nio’s battery swap capabilities to add a fully charged 120 kWh battery in just minutes. Plus it has a Tesla-like steer-by-wire, rear-wheel-steering, and other driverless assist systems that are becoming the norm on fancy cars in China.
While the look doesn’t quite have the presence of, say, a Taycan or Maybach, it’s plenty nice inside:
Even better, this thing costs just about $112,000 to start with, putting it in the range of the HiPhi X ($80-$120k), which is another hi-tech luxury flagship automaker that currently has about 20% of the high-end EV market in China. This is also way under the starting price of a Panamera in China, which costs about $148,000.
BYD’s New Hungary Plant Is A Big Deal
It’s official: BYD will build a plant in Hungary, as previously reported. The Chinese automaker is the biggest maker of “electrified vehicles” in the world and is competitive with Tesla for the overall crown even though it doesn’t sell cars in the United States and hasn’t fully broken into Europe yet.
That last bit is about to change with the addition of a BYD plant in Hungary that will aid the company in building EVs for that continent.
From the company:
The new production facility will incorporate the most advanced global technology and highly automated production processes to create a leading global new energy passenger vehicle manufacturing facility. The construction of this production centre is expected to have a positive impact on the local economy by promoting technological exchange and innovation between China and Hungary. BYD will also utilise its expertise in integrated vertical supply chains to help create a green ‘ecosystem’ locally.
Situated in the heart of Europe, Hungary is an essential transportation hub and boasts a rich history of expertise in the automotive industry. With a mature infrastructure and a well-established industrial foundation, Hungary has been chosen by several premium European manufacturers as a production location for passenger cars. This further supports BYD’s decision to make Hungary the centre of European production operations.
Funny story: The former Gawker Media was based in Budapest, so every now and then the executive editorial board would get to go hang out there. I love Hungary.
Anyway, Egészségedre to BYD and good luck to European automakers now having to compete with Chinese automakers in China and at home.
Daihatsu Is Gonna Have To Pay Its Suppliers
While the ongoing Daihatsu Safety Charade (that’s what we’re calling it) is still in the early days, and it’s not clear how big of a deal this will be outside of Daihatsu’s market, it’s causing major issues for Japanese suppliers.
As a reminder, at the root of the scandal is an admission by Daihatsu’s parent company Toyota that the economy car/truckmaker had rushed safety tests and faked results for decades. The Japanese government issued a stop-sale and stop-export on all Japanese-built Daihatsu vehicles.
That means all of Daihatsu’s suppliers either have to stop their production or shift to other products. Because Daihatsu (and Toyota) need those suppliers, the company has to pay for them to survive, especially because overseas production continues.
The company will work with its main suppliers to address the fallout from the scandal and may also help smaller subcontractors that do not receive compensation to access support funds from the industry ministry, the spokesperson added.
Daihatsu’s overseas operations focus heavily on Southeast Asia. It has resumed production of Perodua brand cars at two joint venture plants it operates with Malaysian automaker Perodua after getting regulatory clearance, the spokesperson said.
It’ll be fascinating to watch this all play out.
GM Can Get Tax Credits Back By Swapping Two Parts, Will Cover The Difference
For all of the many difficulties of the rollout of GM’s Ultium range of electric cars, the one advantage that General Motors seemingly had going into this year was the idea that its vehicles, unlike most of the EVs on the market, would continue to qualify for tax credits.
Now that revised rules are out it seems like that’s not entirely the case as the Lyriq and Blazer EV will actually lose their eligibility next year, just as point-of-sales tax credits begin according to The Detroit News:
“After reviewing Treasury’s long-awaited proposed guidance, we believe the Cadillac LYRIQ and Chevrolet Blazer EV will temporarily lose eligibility for the clean vehicle credit on Jan. 1, 2024 because of two minor components,” GM spokesperson Liz Winter said in a statement. “While we await final rules, GM has pulled ahead sourcing plans for qualifying components in early 2024 and will advocate for our dealers and customers who purchase vehicles built ahead of the new guidance.”
The components at issue for GM are separators and electrolytes. Chevrolet Bolt EVs and EUVs will remain eligible for the credit. The GMC Hummer EV truck and SUV were not eligible because of their higher price. Nothing commercial, including the Chevrolet Silverado EV Work Truck, will lose the incentive.
This is a hiccup, but it seems like GM will be way faster than other automakers in retaining tax credits and will cover the difference for now. GM’s long-term plan makes a lot of sense and being early to tax credits has been a nice indication of that, so we’ll see how quickly execution can improve.
What I’m Listening To While Writing This
“Mule Variations” by Tom Waits, much to the annoyance of my family.
The Big Question
This Nio thing isn’t going on sale until 2025, so it’s premature to guess sales, so let’s ask this question: Do Porsche, BMW, Mercedes, et cetera grow in China, stay flat, or drop in 2024?
Fun fact: Chinese peeps with money that have migrated to Western countries don’t drive Chinese cars. They drive German cars, because status is a big thing and Chinese cars don’t provide the right kind of status. Whether that changes with the high-end models coming out of China over the next few years, is another story.
This comment is a little late, but what is wrong with your family that they are annoyed by Tom Waits?
Did you ever see the episode of Fishing with John that Waits was on?
NIO is doing some interesting things, but it’ll be tough for them to compete in the luxury segment until they get their user experience figured out.
I watched a review of the ET7, and what stood out to me was that (1) they made a road tripping sedan with rear seats that somehow don’t fold down, and (2) they gave it a personal assistant with an animatronic head that follows you like some creepy elf-on-the-shelf thing while it tells you in the voice of a prepubescent child that you’re using the car wrong.
So yeah, I think they’ll need a few years of studying western markets so they can stop making the most comically loathsome features in their cars.
I always felt going after the Chinese market was a bad idea. I mean getting into an arrangement with LA Cossa Nostra bad. They use slave labor. They will kill you if it benefits them. They like Hitler make agreements until they steal your secrets and put out crap under their name. They control with an iron fist their market and then cry when foreign markets do the same. I don’t trust any foreign manufacturers imports that don’t even own a majority of their home market and until the cream of the Chinese market wins out more than half of the manufacturers will go bust and you will be left with DT quality vehicles with no support.
Battery Component changes for GM are certainly a small hiccup, the recently announced Blazer EV Stop-Sale on their “Motor Trend COTY” on the other hand, that’s the good old pre-bankruptcy GM we all knew rising from the dead
“Do Porsche, BMW, Mercedes, et cetera grow in China, stay flat, or drop in 2024?”
If the reliability, safety, and comfort are close enough, and especially if there is a price delta to make up for any weaknesses, it will be domestic Chinese cars all day.
The current China is not one where the well-off should stick out as too flashy or especially as not supporting the country. Otherwise, they will get the ire of everyone from Winnie-the-Pooh to unemployed recent grads.
The Western brands are going to keep losing sales in China. The “buy local” sentiment is strong. Plus the crappy Chinese economy right now makes foreign cars more expensive.
To answer the big question, drop, drop and drop. There is no way they can compete fairly long term.
Yep! I today work with a fair number of folks in other parts of the world, that isn’t China or East Asia. To say BYD has made major inroads is an understatement. Moreover, the Korean brands are also much more prevalent, simply because of price and being “good enough.”
I think BMW grows in China solely because of their outrageous styling. The Chinese market wants their cars as ostentatious as possible and BMW sure knows how to make their EVs in particular ridiculous looking. The idea of stealth wealth isn’t really a thing over there based on what I’ve read/learned from folks who’ve traveled there over the years.
I think Benz is in a tough position because their EVs are:
1). Bad
2). Restrained
Some of their ICE models might still fit the bill but China is all about EVs. When it comes to Porsche they’re going to need better battery technology. The Taycan is gorgeous and is apparently very engaging to drive for an EV, but the ranges and charging times are about 3-5 years behind the ball.
Some of their next gen stuff is about to launch (Macan EV, 718 EV) and it’ll be interesting to see how much they catch up. They’re also going more and more extroverted with their styling, which the Chinese market will like. The refreshed Cayenne and Panamera look god awful by Porsche standards (too busy IMHO) but they’re good for the conspicuous consumption crowd.
And hey, Porsche doesn’t give a shit what I think. I can maybe afford to buy a low optioned new Macan or a certified higher mileage 911/Panamera on a good day. They’ve got people who will throw down 300 grand in cash for MAXIMUM PARSH OVERLOAD without even blinking…and most of those folks are of the MORE IS MORE variety.
1) I have to wonder how this will affect the Toyota Tax. May have to lurk in a forum or two: I’m here for the outrage 😉
Picking aside, cheating on safety tests is literally deadly serious, and it’s hard to conceive of people deliberately building cars that could kill people. How do they sleep? That’s all sorts of F’ed up!
as to the big question, well, I don’t really keep up with financial stuff, but from articles here and there, I get the impression that the money sloshing around from the real estate boom has pretty much dried up. It may not quite be all dried cracked mud & shimmering mirages on the horizon, but certainly sounds like things are kind of tight. With their rising quality and nationalism, I would expect more people will buy domestic, so I would guess Porsche et al will drop slightly next year
I don’t think the Daihatsu scandal will have any effect on Toyota values in North America, and only minimal, if any, effect anywhere outside Japan, the majority of the vehicles involved are kei class models, along with some larger subcompacts and compacts which we don’t get here.
Fortunately, or unfortunately, depending on how you look at it, the vast majority of people in North America won’t even know about it, let alone care about the Daihatsu thing.
You could ask ten Americans “what was diesel gate” and 9 of them will go “I have no idea what you’re talking about.”
On the bright side, GM can swap out those parts on the Blazer EV and Lyric while they are already in the NICU for all the software glitches. How very efficient of them!
Hungary plays a surprisingly huge role in this automotive puzzle. First off, Audi Hungaria is the entire VW Group’s most important research and production plant, by a long shot. Simply put, right now, VW couldn’t function without Audi Hungaria. There’s Suzuki and Mercedes-Benz as well, but what’s also crucial is the new BMW factory. The Neue Klasse will be launched from here, so the new factory has to work flawlessly from day one. And now, BYD. They won’t fool around.
I thought China already had knock off Porsche/Mercedes/BMW, etc, as they do everything else, so not sure how the real ones even compete. I say decline, hard to compete against government subsidized companies.