AD #3518 – BYD Builds Gigafactory Faster Than Tesla; Is VinFast Moving Too Fast?; Turkey Slaps 40% Tariff on Chinese EVs

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

CHINESE CARS FLOOD INTO RUSSIA
Chinese car companies are rushing into Russia to fill the void when everyone else pulled out of Russia because of its invasion of Ukraine. Car News China reports that 100 Chinese brands will enter the Russian market this year. Last year, 122,000 Chinese vehicles were sold in Russia, up 13% from the year before. Chinese brands now account for 20% market share. Close to 500 new Chinese brand dealerships opened in the country last year, bringing the total to more than 1,000, which is about a third of all dealerships in the country. So, it sure looks like Chinese automakers are taking over the Russian market.

TURKEY SLAPS 40% TARIFF ON CHINESE EVs
But not everyone is welcoming Chinese vehicles with open arms. Turkey just slapped a 40% tariff on EVs imported from China. The government already invested billions of dollars in a company called Togg to manufacture electric SUVs in the country. And Ford is making e-Transits there. So Turkey doesn’t want Chinese EVs flooding the market. We think other European countries could end up doing something similar. The transition to EVs is going to eliminate a lot of ICE jobs. The only way to salvage as many of those jobs as possible is to get those workers to make EVs, batteries and motors. But if Chinese EVs flood the market, more jobs will go away. We think it’s likely that powerful labor unions in the EU will pressure their governments to impose higher tariffs on Chinese EVs.
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IS VINFAST MOVING TOO FAST?
VinFast, the Vietnamese car company, moved into the auto industry with blinding speed. But maybe VinFast is moving too fast. LMC Automotive reports that sales of its electric cars in Vietnam are going nowhere. It only sold 358 of them in January. In the US, it’s delaying the construction of its assembly plant in Georgia, as well as delaying its IPO to get listed on a US stock exchange. In the first three quarters of last year it lost $1.4 billion. LMC says it wouldn’t be surprised to see VinFast pivot instead to commercial vehicles and two-wheel electrics for the southeast Asian market. But VinFast isn’t the only EV startup that’s struggling. A whole bunch of them are learning the hard way that getting into the auto industry isn’t easy.

REDWOOD WORRIES ABOUT LOGISTICS COSTS
Most automakers that operate in the American market are counting on battery recycling to get the materials they need to make EVs and help them qualify for incentives under the IRA. But unless transportation costs come down for recyclers, the cost of EVs might actually go up. According to battery recycler, Redwood Materials, which was started by Tesla co-founder JB Straubel, its biggest cost is logistics. It says current regulations were never intended to cover transportation of large EV battery packs, which could lead to additional fees and thus an increase in EV costs. One of the ways Redwood can reduce logistics costs is by increasing scale by getting more batteries to recycle, but at the moment it’s only profitable recycling small batteries like the ones in consumer devices. Now, don’t go thinking it’s not recycling any car batteries. Over the last year at its new site in California, Redwood was able to recycle almost 1,300 batteries and a good portion of those came from 19 different BEV and hybrid models. Most of the batteries, 82%, were lithium ion and Redwood was able to recover nearly 95% of the metals. It’s then able to refine those materials so they can go back into battery production.

TESLA SALES IN CHINA JUMP 31%
Despite fluctuating weekly production numbers, Tesla was able to post one of its best sales months in China. According to data from the China Passenger Car Association, it sold just over 74,400 China-made EVs in February. That’s an increase of more than 31% compared to last year and about 12.5% better than January. While that’s good, Tesla is falling behind the rest of the market. Total EV sales in China increased 81% last month compared to Tesla’s 31%. And BYD continues to gain market share. It sold 76,000 pure electric vehicles in China in February.

BYD BUILDS GIGAFACTORY FASTER THAN TESLA
And BYD will very likely keep growing. It’s working at warp speed to expand a new production facility in China. It only took 42 days from the start of site negotiations until ground was broken on the plant and only 10 months until the first car rolled down the line. This new second phase of expansion will build on the current annual production capacity of 400,000 vehicles and a daily run rate of 1,200 vehicles. When the third phase is completed at the end of April it will be able to make over 1.3 million vehicles a year. But you may have already worked out that while BYD sells more pure EVs than Tesla in China, Tesla’s manufacturing is more efficient. Its Shanghai plant already has about the same yearly capacity that BYD hopes to hit and it’s able to make about 3,000 vehicles a day vs. BYD’s 1,200. And Tesla has done it much cheaper. It reportedly spent a little more than $2 billion on Giga Shanghai, but BYD will have spent $4.3 billion by the end of this second phase and it still has another to go.

FORD CREATES NEW AI SUBSIDIARY
Ford and Volkswagen gave up on trying to develop autonomous cars through Argo AI. But they didn’t throw in the towel on autonomy. Ford just created a new subsidiary called Latitude AI for developing hands-free, eyes-off-the-road technology. Latitude will be based in Pittsburgh, Pennsylvania which is also where Argo was based. And Ford is hiring 550 people who used to work at Argo. Ford BlueCruise was rated as the best hands-free system by Consumer Reports and Ford says Latitude will accelerate the development of all-new technology for automated driving.

GM TO SIGN BATTERY DEAL WITH SAMSUNG
Earlier this year, General Motors and LG Energy Solution canceled plans to build a 4th EV battery plant in the U.S. But now GM has a new battery partner. According to South Korea’s Yonhap News Agency, GM will team up to build the new battery plant with Samsung SDI in Michigan. The plant with LG was originally going to be in Indiana. GM and Samsung are expected to sign the deal next week, so that’s when we’ll likely learn more about it.

VW EYES TWO PLANTS IN NORTH AMERICA
Reuters reports that the Volkswagen board is meeting today to discuss plans to build two new plants in North America, an assembly plant in the U.S. for Scout and a battery plant in Canada that would presumably supply VW, Scout and Audi. It’s kind of surprising to us that it’s taking the VW board so long to make a decision. Scout publicly announced its plans to come to the market a year ago, and VW has been searching for a Canadian site for about a year as well. When you compare that to BYD throwing up a gigantic assembly plant in China in only 10 months, it could build a whole other plant and have cars rolling down the line before VW even starts construction.

But that brings us to the end of today’s show. Thanks for making Autoline a part of your day and I hope you have a great weekend.