The Daily Update - Shanghai Motor Show and Electric Vehicle Supply and Demand (Part One)

One of the largest car shows in the world’s largest auto market began today; it is of course the Shanghai Motor Show. It’s a chance to ogle as new cars like the Aston Martin Rapide E are unveiled – their first electric vehicle – which with 600hp becomes another contender to Tesla in this ever broadening market. Also on the horizon are cars like the Lotus Type 130 “electric hypercar” confirmed at the show by Geely: the Chinese manufacturer that bought a majority in Lotus last year. The show is also a reminder of the acceleration that Chinese brands have managed to achieve in just the past few years: not just on the road but their manufacturing and supply chain achievements. These, twinned with government incentives, have helped EV supply and demand boom simultaneously in China and given them a potential market edge through these formative years of what seems like a global EV revolution.

Chinese brands BYD, Geely, Nio and Wey all launched new EVs at the show that will sell into Europe as well as Asia. Last year Chinese manufactures made and sold more electric cars than the rest of the world combined. Meanwhile mature auto companies like VW still lag these newer players after having been asleep at the wheel when - just like the camera and phone industries – the auto industry turned digital. Yet it remains to be seen if the combined brand and supply chain intelligence of these industry titans will put them back in pole position: with companies like Tesla still struggling with supply issues, and branding and perception headwinds likely to persist for Chinese firms in the global market. VW, for example, will have to get the design, cost and production of its MEB (Modular E-Drive Building) skateboard platform and their new range of cars near perfect to best stand a chance of recapturing market share. As such larger more established brands step-up production this year we’ll begin to see if they can price and market themselves back into the market.

Alongside new and old western car manufactures China aims to be selling 15 million electric cars annually within the decade and rank amongst the top global industry leaders in this market within five years. Furthermore, Tesla is building its newest and largest combined “Gigafactory 3” in Shanghai which could begin production before the end of the year. So if visionary Elon Musk et al. become just as passionate and determined over their manufacturing processes, China meet their production targets and all the new factories from the old guard come online the world could soon become awash with electric vehicles. What then is the path forecast for electric vehicle demand as Tesla gains production efficiency, Chinese brands build their reputation and the established legacy autos flick the switch on all the recent and ongoing cap-ex? More on this tomorrow…

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