How China will Win the EV Race

Nio's entry into the U.S. is a sign of things to come.

I’ve long been bullish on China’s vision of its EV startups taking marketshare in the automobile manufacturing sector. Much of Tesla’s success has China to thank for it, as 50% of its sales comes from China.

About half the 936,000 vehicles Tesla delivered last year came from Tesla's Gigafactory in Shanghai. China’s playbook will be allow its own EV companies to launch a bigger footprint in the U.S. I think news on NIO depicts this story nicely.

Nio, a Chinese electric vehicle startup, is planning to charge into five new European countries next year, part of a brand development strategy aimed at eco-conscious drivers. It’s targeting Norway, Germany but also the United States.

NIO is a Chinese EV automaker founded in 2014 that has quickly become a company to watch. As one of the leaders in EV sales in China, the company signed a ten year lease on a building in San Jose, CA. The new 200,000+ sq. ft. US headquarters is more than double the size of NIO’s current footprint, signaling that a long speculated entry into the North America could be one stop closer to becoming reality.

As much as GM, Ford and Rivian are investing in EVs, I’m not sure the car manufacturers of today understand the importance of China or the agility of its own makers to integrate software, EV and AV technologies. While we think of Tesla as some super companies that transcends car industry standards simply for being an EV leader, the market will be ultra competitive.

NIO’s current US headquarters is an 85,000 sq. ft. building located at 3200 N. First St., a two-minute drive away on the same block as its new location. China’s EV push has dozens of companies around the scale of Lucid, one of the Tesla upstarts of North America. The scale of China’s ambitions will consolidate and prove potential winners in the future of the smart car. I think it will surprise a lot of car industry experts and Tesla bulls alike.

NIO’s manufacturing capacity is roughly 100,000 vehicles a year, and while the company plans to triple that figure coming years, it is selling all the cars it can make in China, at least for now. Companies like BYD, Xpeng, Li Auto could also expand as Nio is doing globally.

The key point is the Chinese consumer is adopting EV leading the global consumer trend. Electric vehicle sales in China skyrocketed 154% last year, despite a global slowdown in auto sales owing to the crunch in semiconductor supplies, as more consumers opt for greener cars. It’s where people are buying EVs where there is the most incentive to make the best cars.

China will leverage its own dominant Chinese consumer in a way that benefits its own companies to eventually learn from the likes of Tesla and expand globally. Elon Musk’s Tesla sold more than 200,000 electric cars in China during the first three quarters of the year, China Passenger Car Association data in October, 2021. Tesla’s success in China will fuel China to grow their EV firms into global giants.

In China during the first three quarters of 2021 these were the best selling cars:

1. Hongguang Mini (SAIC-GM-Wuling)
2. Model 3 (Tesla)
3. Model Y (Tesla)
4. Han (BYD)
5. Qin Plus DM-i (BYD)
6. Li One (Li Auto)
7. BenBen EV (Changan)
8. Aion S (GAC Motor spin-off)
9. eQ (Chery)
10. Ora Black Cat (Great Wall Motor)
11. P7 (Xpeng)
12. Song DM (BYD)
13. Nezha V (Hozon Auto)
14. Clever (SAIC Roewe)
15. Qin Plus EV (BYD)