Evergrande Auto terminated its strategic investment agreement with Newton Group, and Musk denied giving up affordable cars Yicai Auto Daily Review

Important news tips

1. Musk denied giving up affordable cars, and Tesla plans to build a factory in India

2. South Korean battery manufacturers and chip manufacturers build factories in the United States

3. Isuzu will launch L4 autonomous driving in fiscal 2027

4. Kia Motors' joint venture in China is insolvent

5. BYD will launch its first electric pickup truck in 2024

6. Tesla is the first to buy a car with 0 interest

7. BYD raised the price of some anode head suppliers by 10%, and the industry said: the price is reasonable and returns to "change from loss to loss"

8. On the B-side, the first model of the joint venture between GAC Aion and Didi Autonomous Driving is planned to be mass-produced in 2025

9. Evergrande Automobile terminated the strategic investment agreement with Newton Group

International News

1. Musk denied giving up affordable cars, and Tesla plans to build a factory in India

A few days ago, foreign media reported that Tesla will abandon its plan to launch low-cost cars and go all out to develop robotaxi, a self-driving taxi. Later, Tesla CEO Elon Musk posted on the social media platform X denying that he would abandon affordable cars, but said that Tesla plans to launch Robotaxi on August 8.

At the same time, Tesla will send a team to India in April to select a site for its electric vehicle factory that plans to invest between US$2 billion and US$3 billion (about 14.5 billion yuan).

Yicai Comments: On April 3, local time, it was reported that Tesla's headquarters will send people to India to inspect the site selection of the factory before the end of April, focusing on Maharashtra, Gujarat, and Tamil Nadu, which already have an automobile industry.

Tesla is also likely to look for potential sites to build factories in areas close to New Delhi, according to people familiar with the matter, but the company's focus will remain on the three locations mentioned above, as all three areas have ports for exporting cars. The company expects the plant to produce 500,000 vehicles a year at full capacity, according to people familiar with the matter.

It is worth mentioning that in 2020, India imposed strict restrictions on countries with which it has land borders. BYD submitted a proposal last year to build a factory in India in partnership with Indian company Megha Engineering. However, according to Indian government officials, the project has so far failed to receive approval from New Delhi.

An Indian official, speaking on condition of anonymity, said the government would formally enact a tariff reduction plan for electric vehicles by the end of this month, under which eligible companies would be allowed to import up to 8,000 vehicles per year.

2. Korean battery manufacturers and chip manufacturers build factories in the United States

A few days ago, South Korea's LG New Energy said that its planned $5.5 billion battery plant in Arizona, USA, has begun construction and is expected to be put into operation in 2026. The company said it plans to produce Series 46 cylindrical batteries for electric vehicles and lithium iron phosphate (LFP) pouch batteries for energy storage systems at the new plant, with annual production capacity expected to reach 36 GWh and 17 GWh, respectively.

At the same time, South Korea's SK hynix plans to spend $3.87 billion to build an advanced packaging plant and an artificial intelligence product research center in Indiana. The world's second-largest memory chip maker said it will build its first U.S. factory in West Lafayette, with mass production scheduled to begin in the second half of 2028. The plant will focus on building a production line for next-generation high-bandwidth memory chips, which are key components of graphics processors that train artificial intelligence (AI) systems.

Yicai Comments: In 2024, the United States is increasingly eager for chip and power battery companies to build factories in China. On January 18, the U.S. Department of Energy announced that it would allocate more than $131 million to advance research and development of electric vehicle batteries and charging systems, with the aim of "reducing dependence on other countries" in the manufacturing of key battery components. U.S. Deputy Secretary of Energy David Turk said the investment plan would "expand the local battery supply chain and ensure U.S. energy independence."

In addition, the U.S. government is recently considering launching a second wave of chip subsidies after the CHIPS Act to continue to build semiconductor manufacturing capacity in the United States, which is also desired by a large number of chip companies. In fact, the subsidies related to the "CHIPS Act" enacted in 2022 have only officially begun to be issued this year. Currently, grants have been awarded to Intel, BAE System, Microchip and GF. The CHIPS Act totals around $50 billion, of which $39 billion is earmarked to subsidize manufacturing and the other $11 billion is invested in research and development. In addition, the U.S. government offers tax credits that can save semiconductor manufacturers billions of dollars in taxes.

3. Isuzu will launch L4 autonomous driving in fiscal 2027

Recently, Japanese automaker Isuzu announced that it plans to launch a truck and bus business equipped with Level 4 autonomous driving technology in fiscal 2027. This innovation will allow the vehicle to be fully unmanned under certain conditions.

Yicai Comments: Since 2019, Isuzu has been researching autonomous driving technology for trucks. In that year, Isuzu acquired UD Trucks, Volvo's Japanese business, for 250 billion yen. The two companies have formed an alliance to cut costs and develop electric vehicles and autonomous driving technology. The business has an enterprise value of approximately $2.3 billion.

In 2021, Silicon Valley self-driving startup Gatik and Isuzu North America announced that they would collaborate to produce self-driving delivery vans. At the time, Shaun Skinner, head of Isuzu's North American commercial trucks division, said the partnership was limited to the U.S. and Canada, and that Isuzu would provide engineering support for Gatik to retrofit its N-Series medium-duty trucks.

As of March this year, Japan's Isuzu Motors established a capital and business alliance with TierIV, a Japanese startup that develops software for autonomous driving systems, and invested 6 billion yen in the latter to accelerate the development of Level 4 autonomous driving (highly autonomous) buses. As the shortage of drivers in Japan intensifies, Isuzu Motors hopes to leverage TierIV's technology to promote the manufacture and sale of self-driving buses.

According to the latest plan, Isuzu has been acquiring autonomous driving technology and building basic services since the spring of this year.

4. Kia Motors' joint venture in China is insolvent

As a joint venture in China, Jiangsu Yueda Kia Automobile Co., Ltd. remains insolvent in 2023, with total assets of 2.08 trillion won and total liabilities of 2.48 trillion won. Based on this calculation, Jiangsu Yueda Kia's asset-liability ratio reached 119%. It is understood that since Dongfeng Motor Group withdrew from the joint venture, the company has been in a state of insolvency.

Yicai Comments: Retail data shows that the cumulative sales of Yueda Kia in 2023 will be 83,875 units, a year-on-year decrease of 11.40%. According to the latest data, in the first quarter of 2024, Yueda Kia sold about 50,000 units, a year-on-year increase of 76.9%, of which 18,665 were sold domestically, a year-on-year increase of 94.5%, accounting for 37%, and the remaining 63% were sold to foreign markets.

In addition, in order to catch up with the wave of new energy, Kia has also begun to develop new energy vehicles. On April 5, Kia Motors announced its mid- to long-term development strategy and announced that it would expand its hybrid vehicle lineup in the future. At the same time, Kia reaffirmed that the ultimate goal of the company's electrification strategy is electric vehicles, and set a target of global sales of 4.3 million units (including 2.482 million new energy vehicles), 1.6 million electric vehicles, and 250,000 personalized customized (PBV) electric vehicles by 2030.

Domestic news

1. BYD will launch its first electric pickup truck in 2024

A few days ago, BYD issued a statement saying that it will launch its first electric pickup truck later this year. This mid-size to full-size pickup truck was developed for the global market and is also BYD's first new energy pickup. At this time, specific information on the powertrain and performance specifications has not been announced.

Yicai Comments: The reporter learned that BYD's first electric pickup truck has two power versions: pure electric and plug-in hybrid. According to the spy photos released by BYD, the car adopts a hard-core straight line design, with luggage racks or armrests on the roof and cargo bed. According to the patent drawings published by the State Intellectual Property Office, the car has a multi-level grille, equipped with a wrap-around through headlight group, and a large "BYD" logo in the middle of the front of the car.

2. Tesla is the first to launch a car purchase with zero interest

According to Tesla's official WeChat news in China, Tesla launched a limited-time financial replacement policy. That is, for the Model 3/Y models, Tesla launched a limited-time low-interest replacement policy, and launched a preferential policy of "zero interest" installment purchase for the first time. It is reported that if you order the latest Model 3/Y model before the end of April, you can enjoy zero interest or ultra-low interest. Taking 3 years and 36 interest-free periods as an example, the Model Y only requires a down payment of 79,900 yuan.

Yicai Comments: According to Tesla's production and delivery report for the first quarter of 2024, a total of 386,000 vehicles were delivered in the first quarter, far lower than previously expected, a new low in the past five quarters, and a year-on-year decline of 8.5%. Tesla's shares plunged 4.9% the day after the data was released, causing Tesla's shares to fall 29% in the first quarter, the largest quarterly drop since its IPO in 2010.

Investor Ross Gerber posted on social media platforms, criticizing Tesla's sales decline in the first quarter of this year, and rehashing the old story, accusing Musk's words and deeds of causing Tesla's cars to not sell, and Musk must bear full responsibility. On the same day, Gerber also posted a number of posts arguing that Tesla's overall strategy was "wrong."

Subsequently, Musk hit back and mentioned that the situation in the first quarter of this year was difficult for major automakers, including BYD's sales in the first quarter of this year fell by 42% compared with the previous quarter. Affected by the Spring Festival and other factors, BYD's sales in the first quarter of this year declined compared with the previous quarter, but compared with the total sales of 550,000 units in the same period last year, BYD's data in the first quarter of this year increased by about 14% year-on-year.

In recent years, BYD's overseas sales have performed well, and the New York Times once called BYD a "Tesla killer". In this regard, Musk has argued that Tesla is not only an electric vehicle manufacturing company, but its main development areas are artificial intelligence and robots.

3. BYD raised the price of some anode head suppliers by 10%, and the industry said: the price is reasonable and returns to "change from loss to no loss"

Recently, it has been reported that BYD has begun to increase the price of ultra-low price orders for the head manufacturers of the negative electrode, which is expected to increase by about 10%. According to multiple interviews, the price increase stems from the low price of the bidding orders before the year, and the company is facing loss-making production, and most orders are difficult to execute. Regarding the price increase, some industry insiders said: "It was originally a loss, but it rose a little, not a loss." ”

Yicai Comments: At present, the prices of power battery products and raw materials continue to fall, and the anode materials have been at the bottom of the past two years. In the first quarter of 2024, the mainstream price of mid-end products will be 29,000 yuan/ton, a decrease of 12.12% from the fourth quarter of 2023. In addition, the current price of graphitization box furnace is 7,000~8,000 yuan/ton, which touches the cost line, some foundries have stopped production, and the overall operating rate of the industry remains at about 40%.

Previously, in 2023, the anode material market will set off investment and expansion, with an annual production capacity of more than 200,000 tons of leading enterprises. However, at present, there is overcapacity in the anode material market. At present, there are more than 90 enterprises in the production of anodes, and the industry production capacity exceeds 4 million tons, and the production capacity needs to be improved. Previously, based on the mismatch between supply and demand in the market, material factories launched a "price war" in order to grab orders, resulting in pressure on the profitability of anode material companies.

4. On the B-side, the first model of the joint venture between GAC Aion and Didi Autonomous Driving is planned to be mass-produced in 2025

On April 7, GAC Aion officially announced the establishment of a joint venture company with Didi Autonomous Driving, Andi Technology, and invested 420 million yuan in the field of Robotaxi (driverless taxi), the first L4 driverless production car has entered the substantive stage of development, and is planned to be mass-produced in 2025, and plans to produce 100,000 units in its life cycle, and make efforts to open up the L4 large-scale commercial closed loop on the B-side.

Yicai Comments: The first financial reporter learned that the first model is based on GAC Aion's AEP3.0 high-end pure electric exclusive platform, integrating Xingling's high-end electronic and electrical architecture and multi-fusion perception autonomous driving mass production technology, which will give full play to GAC Aion's advantages in ICV and manufacturing, effectively reduce hardware cost and ensure production quality.

At the same time, the model will also be equipped with Didi autonomous driving L4 urban generalization engine and software and hardware technology solutions, using Didi autonomous driving experience in algorithms, software and hardware systems and other aspects to explore the optimal system construction scheme. Moreover, after mass production, the model will be fully adapted to Didi's unmanned operation and maintenance platform Huiju Port, and will be connected to Didi Chuxing's network in the form of hybrid dispatch, so as to efficiently build a business model and improve profitability.

5. Evergrande Automobile terminated the strategic investment agreement with Newton Group

Evergrande Automobile recently announced on the Hong Kong Stock Exchange that the strategic investment agreement signed with Newton Group has been terminated. The original transaction and related debt-for-equity swap amendments failed to develop further. Evergrande Auto said that as of the date of this announcement, no further progress has been made on the proposed transaction and the amendment of the terms of the debt-to-equity swap. The Company confirmed that the proposed transaction and debt-for-equity swap will no longer proceed. As the Share Subscription is no longer proceeding, the Subscriber is not obliged under Rule 26 of the Takeovers Code to make an unconditional mandatory general offer in respect of all the issued shares not yet owned or agreed to be acquired by it and those acting in concert with it.

Yicai Comments: On August 14, 2023, Evergrande Auto announced that it has received the first strategic investment of US$500 million from Newton Group (NWTN.US), a listed company held by the UAE national sovereign wealth fund, and another 600 million yuan of transition funds will be received from 5 working days after the announcement. The proposed transaction is expected to close in the fourth quarter of 2023. Upon completion of the transaction, Newton Group's shareholding in Evergrande Automobile will account for 27.5% of the total issued and outstanding ordinary shares of the enlarged company.

At that time, the market believed that Newton Investment would become the "life-saving money" of Evergrande Automobile. Evergrande Automobile has announced that the company plans to use all the war investment funds for Evergrande Automobile's Tianjin plant to ensure the normal production of Hengchi 5 and the mass production of Hengchi 6 and Hengchi 7. Newton Group will also assist Evergrande Automobile to explore overseas markets and export 30,000-50,000 Hengchi vehicles to the Middle East market every year. However, the transaction is subject to 19 conditions precedent, including the effective effect of China Evergrande's debt restructuring and the absence of material adverse events.

On January 1, 2024, Evergrande Automobile announced that Newton Group's share subscription agreement and corporate debt-to-equity swap subscription agreement for Evergrande Automobile had expired on December 31, 2023. The deadline for the two agreements is December 31, 2023, and the parties to the agreements have not agreed to extend them.

Evergrande Auto said that the parties to the Newton Group Share Subscription Agreement and the Debt-for-Equity Swap Subscription Agreement, as well as certain stakeholders, have been and will continue to negotiate on amending certain key terms of the proposed transaction and the debt-for-equity swap. The Company will make monthly announcements until it announces its exact intention to proceed with the proposed transaction and debt-for-equity swap or decides not to proceed with the proposed transaction and debt-for-equity swap.

(This article is from Yicai)