Chinese EVs, To Russia With Love

Greetings from London!

Thursday will see a fiesta of more costly grilling and fireworks across the pond as Americans celebrate July 4, by when car industry technology provider CDK has promised to have U.S. car dealers back on management system, two weeks after a cyberattack. But that has not come soon enough to prevent lawsuits against CDK.

In Europe, some in the auto industry will cast a wary eye on Britain’s general election on the same day, where a likely Labour Party government faces some of the biggest challenges since the end of World War Two. 

Many will also watch the horse trading between French political parties attempting to prevent  Marine Le Pen’s far-right National Rally (RN) forming a government after historic gains in the first round of the country’s parliamentary election.

But automotive-focused minds will be far more interested in a report expected from the European Commission by July 4 detailing the findings of its investigation Chinese government subsidies.

The Commission has already announced provisional duties for Chinese EVs, initially sparking threatening language from Beijing that this would cause a trade war. But China now says it hopes talks will lead to a “mutually acceptable solution” with the EU.

What could possibly go wrong?  

Which brings us to today’s Auto File…

Chinese EV makers have benefited from the exodus of foreign automakers since Russia’s 2022 invasion of Ukraine, taking a big chunk of what is still a small but rapidly growing market – and none more so than Geely-owned premium brand Zeekr, which is leading the charge.

Chinese automakers now make up more than half of Russia’s car market and while the U.S. government and European Commission have announced tariffs on Chinese-made EVs, Russia has embraced them to help prop up its car industry.

EVs face a lack of charging infrastructure across the vastness of Russia, but more electric cars sold there in the last 12 months than in the entire last decade. More than 20,500 EVs sold in Russia from May 2023 to April 2024, a jump of about 350% on the previous year.

The Russians have or are developing their own EVs, including the Evolute i-Space from private firm Motorinvest, the Moskvich 3e, an attempt to resurrect a Soviet-era classic, and the Lada e-Largus from Russia’s leading carmaker Avtovaz.

But the Moskvich highlights the supply chain challenges Russia faces in trying to build its own cars. Although listed as Russian in the statistics, it is being assembled in Moscow with kits from a Chinese partner.

Case in point, the Russian-made Aurus limousine Russian President Vladimir Putin and North Korean leader Kim Jong-un rode in around Pyongyang last month to showcase their strengthened anti-Western alliance was made using imported parts from what Kim has described as his country’s “primary foe”, South Korea.

 Volkswagen cash will help keep Rivian rolling – REUTERS/Joel Angel Juarez

Volkswagen’s planned investment of up to $5 billion in U.S. electric-vehicle maker Rivian as part of a new, equally controlled joint venture to share EV architecture and software, highlights the challenges for the legacy automaker and the relative newbie alike.

VW’s own software unit Cariad has so far not been up to the task of developing EV tech inhouse, so after secretly testing camouflaged Audis at Rivian’s Palo Alto, California, facility, the company decided the U.S. startup was worth a shot after doing the same in China with Xpeng.

Like other relative EV newbies Rivian has been burning cash as it tries to build profitable cars at scale, which the automaker says will come with a lower-cost second generation of EVs. 

Other startups like Fisker, Proterra, Lordstown and Electric Last Mile Solutions have all filed for bankruptcy and Geely-controlled Polestar’s latest loss illustrates that getting to profitable mass-production takes years and vast piles of cash.

Lest we forget, to hit Model 3 production targets in 2018, Tesla had to build a new assembly line in a huge tent outside its Fremont, California factory.

Rivian has more cash and backing to get there, but it still won’t be easy.

BeyonCa joins large list of newbies – REUTERS/Florence Lo 

Stop me if you’ve heard this story before, but an EV startup, BeyonCa, plans to set up a final assembly plant and its international headquarters in Hong Kong.

The premium EV maker, backed by Renault  and China’s Dongfeng Motor, with some potential interest from Riyadh-based Al Faisaliah Group Holding Company. 

BeyonCa’s founder and chairman Weiming Soh said the company aimed to sell 100,000 EVs annually with three to five models available within a timeline of “a few years after 2025.”

China has a surfeit of EV brands, with some zombie automakers already now producing nothing. Global EV demand has weakened and competition for sales is going to be fierce.

BeyonCa does have backers. But as noted above, making EVs at scale involves burning cash for years, so it will be interesting to see how much more we hear of BeyonCa.

Tesla’s sales fell 5% in the second quarter, though not as much as analysts had expected.

This is the first time the world’s top EV maker has experienced two consecutive quarters of decline as it deals with stiff competition and a fierce price war in China, coupled with slow demand due to a lack of affordable new models.

To illustrate the scale of the EV maker’s ongoing challenge, BYD on Tuesday posted a 21% jump in second-quarter sales, though Tesla outsold its Chinese rival for the second consecutive quarter.

Meanwhile, Tesla continues its court battle for Elon Musk’s $56 billion pay package, after shareholders voted for it a second time last month.

A U.S. Supreme Court decision limiting federal regulatory powers to interpret ambiguous laws could undermine President Joe Biden’s effort to cut tailpipe emissions from the nation’s vehicle fleet, two environmental law attorneys told Reuters.

Toyota plans to launch its first electric car model equipped with an advanced autonomous driving system similar to Tesla’s Full Self-Driving for the Chinese market next year, according to Chinese joint venture partner Guangzhou Automobile Group (GAC).

Renault’s electric vehicle unit Ampere will include lithium iron phosphate (LFP) technology in its plans to mass produce EVs, teaming up with LG Energy Solution (LGES)  and CATL  to build out a supply chain in Europe.

Four of Japan’s top property and casualty insurers and other financial firms plan to sell around 500 billion yen ($3.1 billion) of shares in Honda Motor, three people said, as the unwinding of cross-shareholding practices accelerates.

Auto File is sent weekly. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.

Want to stop receiving this email? Unsubscribe here. To manage which newsletters you’re signed up for, click here.

Reuters Terms & Conditions and Privacy Statement