$1.2 Trillion (10/24/22)

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Ok, now to the news:

In today's newsletter:⚡ The Headline: Automakers to double EV, battery spend to $1.2 trillion by 2030🚨 Making News: U.S. battery dollars, GMC Sierra EV, Hummer ramp, Stellantis factories 🇪🇺 Europe Electrified: NIO buy option, Rolls-Royce EV, Arrival looks to the U.S.🧧 China Report: Tesla price cuts, EV investment stays strong, CATL profits, Xpeng reorg

⚡ The Headline ⚡

Automakers to Double EV, Battery Spend to $1.2 Trillion by 2030

From Reuters: the world's top automakers are now planning to spend nearly $1.2 trillion through 2030 to produce millions of EVs. The figure also includes investments to produce batteries and secure raw materials.

To put that number in context, Amazon's market cap is currently just over $1.2 trillion. Alphabet sits at $1.32 trillion.

In 2030, analysts expect automakers to build 54 million EVs, representing more than half of total vehicle production. Doing so will require 5.8 terawatt-hours of battery production capacity, according to data from Benchmark Minerals.Tesla has a plan to produce 20 million EVs by 2030. During the company's earnings call last week, Musk said Tesla is working on a smaller vehicle platform targeted to cost half as much as the Model 3 and Model Y.

Volkswagen, meanwhile, is targeting over $100 billion in investments to build out its global EV portfolio. Toyota is investing $70 billion and plans to produce at least 3.5 million EVs in 2030.Ford continues to boost its spending levels - currently at $50 billion - and aims to hit 3 million EVs by 2030, half its total volume.Mercedes has targeted $47 billion, while BMW, Stellantis and GM have each announced plans to spend $35 billion on EVs and batteries.

🚨 Making News 🚨

GM and Ford to report earnings this week. It'll be a tough crowd for GM and Ford, who are reporting earnings on Tuesday and Wednesday, respectively. Wall Street suspects that both companies could fall short of their 2022 profit forecasts, or underperform next year, with consumer demand dented by rising U.S. interest rates, higher oil prices and economic slowdowns in the United States, Europe and China.

U.S. awards $2.8 billion for EV battery, grid projects. The Biden Administration announced the move on Wednesday. It also launched the American Battery Material Initiative aimed at strengthening critical mineral supply chains as automakers race to expand U.S. electric vehicle and battery production. By 2030, President Biden wants 50% of all new vehicles sold to be electric or plug-in hybrid electric models. His administration is also targeting 500,000 new EV charging stations.

Tesla Confirms Plans to Build Lithium Refinery in Texas. CEO Musk confirmed the company's plans in response to an analyst's question on the 4680 battery cell technology during Tesla's earnings call. Tesla has told Texas state regulators that it plans to build a battery-grade lithium hydroxide refining facility near Corpus Christi that would process raw ore material into something more production-ready.

Mercedes Unveils New Electric EQE SUV Aimed at Tesla’s Model Y. The EQE SUV, unveiled on the eve of the Paris car show, will edge out the cheaper Model Y with 590 kilometers (367 miles) of driving range and start at around €70,000 ($68,000) when sales begin late this year. The EQE is the fourth model to use Mercedes’ dedicated EV platform, which also underpins the flagship EQS sedan. The EQE SUV will be manufactured at Mercedes’ US plant in Alabama.

GMC unveils Sierra Denali EV with 6-figure price tag. The GMC Sierra EV Denali Edition 1 borrows from the Hummer playbook by offering the same basic powertrain and features, such as four-wheel steering and crabwalk. The price? $107,000. But this is the first of three models. Duncan Aldred, global VP of Buick and GMC, said that the Elevation model will have a starting sticker price of around $50,000. And GM claims that the 350-kilowatt charging system can add 100 miles of range into the Ultium batteries in 10 minutes.

750 GMC Hummer EV Units Were Built In September Alone. During the month of September, GM built 750 units of the 2022 GMC Hummer EV Pickup at the GM Factory Zero plant in Michigan. The September production figures represent nearly 30% of all Hummer EV production so far. When including the 140 units built during the 2021 calendar year, total production of the all-electric Hummer totals 2,570 units through September 30th. Meanwhile, GM is considering adding a midsize Hummer to the brand.

Tesla Cybertruck enters tooling phase at Texas Gigafactory. Tesla revealed the status in it's Q3 2022 shareholder deck:

Tesla Model Y passes long-time top sellers in global rankings. Estimates have Tesla delivering up to 760,000 Model Y vehicles by the end of this year. That would put it in the top 5 global rankings, surpassing even the Ford F-150.

Fisker speeds up search for U.S. assembly plant to win tax credits. Founder and CEO Henrik Fisker said that the IRA "has definitely made us think to accelerate because we think this might give us an advantage." Fisker is considering a range of options, including buying a factory or extending its partnership with Magna International, the company's current contract manufacturing partner. The company's first model, the Ocean, is expected to start production on November 17. Fisker already has a deal with Foxconn to make the PEAR, it's second vehicle, at a factory in Lordstown, Ohio.

Polestar 3 to benefit from U.S. factory Plan, with 70% of supply chain in the Americas. The first Polestar 3s will be made at Volvo's plant in Chengdu, China starting by the middle of next year. Production at Volvo's 2.3-million-square-foot Ridgeville, S.C. factory (an hour northwest of Charleston) is scheduled to start a year later. That factory will build about 40,000 Polestar 3 crossovers in 2025, according to estimates, and will allow Polestar to avoid a roughly 25% China import tariff.

Mullen acquires bankrupt assets of Electric Last Mile Solutions. With mixed emotions, the EVDigest editor must cover the news that EV startup Mullen is buying a manufacturing plant in Mishawaka, Ind., and other assets out of bankruptcy for $92 million. Last month, Mullen said it bought a 60% stake in another EV truck startup, Bollinger Motors, for $148.2 million in cash and stock. Mullen said the addition of the Indiana manufacturing plant gives it the ability to integrate Bollinger’s vehicle platforms with Mullen’s into an already existing and capable high-volume facility.

BMW joins U.S. battery frenzy with $1.7 billion investment. The project includes domestic sourcing of next-generation batteries, a $1 billion investment in its 7 million-square-foot Spartanburg, South Carolina factory and a $700 million battery-pack assembly plant to be built nearby. It also requires construction of a new battery-cell plant in the state by Envision AESC. BMW says the investment will enable it to build at least six fully electric models in the U.S. by 2030.

Hyundai seeks delay in the IRA requirements in order to catch up. Hyundai sold more than half a million vehicles in the U.S. through the third quarter, including over 44,000 EVs (more than Ford and GM). While Hyundai EVs don't currently qualify for the tax credits under the new rules, the company is planning a $5.5 billion EV plant in Georgia that may create thousands of jobs. Hyundai COO Jose Munoz suggested that U.S. legislators should provide firms investing within the United States some sort of waiver or an extended transition interval.

Honda's EVs get a leg up on price thanks to partnership with GM. Honda has announced two EVs: the Honda Prologue and the Acura ZDX. Both are co-developed with GM and will use the latter's new flexible and scalable electric architecture powered by the Ultium battery pack. Importantly, the collaboration will likely allow Honda to take advantage of the $7,500 tax credit, giving it a strong pricing edge against automakers importing their EVs.

Stellantis eyeing tow more North American battery plants by 2030. The company behind the Jeep and Ram brands already announced two JV battery plants - one in Indiana with Samsung and the other in Canada with LG Energy. COO Mark Steward has now said that Stellantis will need two more plants in North America by 2030. The first two plants are scheduled to launch in 2025.

🇪🇺 Europe Electrified 🇪🇺

NIO to offer buy option in Europe starting Nov 21. Excitement over NIO's European entrance earlier this month was dampened when the company announced it would only allow users to lease, rather than buy, its vehicles. NIO seems to have taken the feedback to heart, and has confirmed that it will offer a purchase option for its ET7, EL7 and ET5 models.

Arrival pivots van production from Britain to the U.S. Arrival explained the larger U.S. market, better margins and the IRA as reasons for the decision. The IRA allows for federal credits of between $7,500 to $40,000 for commercial vehicles. The move is a blow to Britain’s ambition to transition its manufacturing base to battery power. Arrival would have needed to invest significant capital into its Bicester microfactory, and will instead focus on vehicle production in North Carolina.

Spain increases subsidies for EV projects after VW threatens to pull out. The Spanish government will offer more European funds than initially planned to investors in the first phase of support of electric mobility projects to satisfy VW. The company plans to build a new range of small EVs for its VW, Skoda and Cupra brands in Spain and open a battery plant near Valencia.

Rolls-Royce goes electric with the Spectre coupe. The company beat other ultraluxury brands, including Aston Martin, Ferrari and Bently, in launching an EV. The vehicle will have a range of 320 miles and a price tag of approximately $400,000. Deliveries of the Spectre are expected to begin late next year.

Mercedes signs $1.47 billion deal with Rock Tech Lithium. As part of the agreement, Mercedes will receive on average 10,000 tons of battery-grade lithium hydroxide per year. The deal allows the luxury carmaker to supply its battery partners with raw material, starting in 2026, and will cover enough lithium hydroxide for 150,000 cars a year, the companies said.

BMW adds EV battery capacity in Germany to ramp up EV MINI Countryman production. Last week, we noted that BMW was moving production of its EV MINI models from the UK to Germany and China. Now the company has announced it will be adding additional battery capacity ahead of several highly-anticipated MINI EV launches. The electric MINI Countryman is expected to debut in 2023 and will be produced at BMW's plant in Leipzig.

🧧 China Report 🧧

Tesla announces big price cuts for all models in China. The Model 3 RWD and Performance variants saw their prices drop by $2,000 and $2,500, respectively. The Model Y RWD, Long Range and Performance models saw price drops of $3,900, $6,500 and $2,800, respectively. It's likely that Tesla first exhausted its China backlog before implementing the price reductions so it would not have to honor new prices for existing customers.

China's EV Startups Defy Funding Slump With $6 Billion of Deals. While China is leading a global contraction in VC investment, its auto sector has bucked the trend with more than 147 deals amounting to $5.95 billion. Much of that has been from capital flowing into EVs. This years largest deals include Changjiang Capital’s $1.57 billion bet on a high-end EV startup founded by Renault China CEO Soh Weiming, and a $1.17 billion Series A round for Sunwoda’s EV battery unit.

GAC AION closes Series A with valuation of over $14 billion.  GAC Group attracted 53 strategic investors for its GAC AION NEV subsidiary, the company said on October 20. The deal paves the way for further expansion and a possible IPO next year. paving the way for further expansion and a possible IPO that may come next year. GAC AION was established in July 2017 and began independent operations in November 2020. , with the Aion LX Plus, Aion V Plus, Aion S Plus, Aion S, and Aion Y models currently on sale. It's second manufacturing center went online in October, expanding annual capacity to 600,000 units.

CATL Q3 net profit soars 188% to $1.3 billion. CATL reported a gross margin of 19.27% in the third quarter. This compared to 14.38% in the first quarter and 21.85% in the second quarter. The company's revenue in the third quarter was RMB 97.37 billion, up 232% from the same period last year and up 52% from the second quarter.

CATL said to slow battery investment plan for U.S., Mexico. The pullback is related to concerns that new U.S. rules on sourcing battery materials will drive costs higher. China, led by CATL, is the dominant player in the EV battery supply chain, producing 70% of battery cells made globally. China also has a commanding lead in the refining of key materials including cobalt and manganese.

VW CEO to join German Chancellor on trip to China next month. VW CEO Oliver Blume is under pressure to improve the company's performance in China, its biggest market accounting for roughly 40% of deliveries. Poor handling of the chip shortage and a dearth of digital features that China’s tech-savvy drivers expect has hurt sales in the region. Blume will join Chancellor Olaf Scholz. Last week, VW said it will invest $2.4 billion to set up an autonomous driving joint venture with China’s Horizon Robotics.

Guangdong has more EV chargers than all of the U.S. With 345,126 public chargers (3x the U.S. number) and 19,116 charging stations as of the end of September, Guangdong has the largest EV charging network in China. The province's network has doubled in less than a year, according to the China Electric Vehicle Charging Infrastructure Promotion Alliance.

BMW to expand its battery production facility in China. BMW plans to invest tens of billions of yuan to expand its high-voltage battery production center in Shenyang, Liaoning province in northeast China, to expand its investment in battery projects in the country, the Global Times said in a report today. The battery production center is BMW's third globally and its first outside of Germany.

Xiaomi EV can only succeed if among top 5 automakers globally, says CEO. Xiaomi Founder Lei Jun said Xiaomi's EV unit must be one of the top 5 and ship more than 10 million units annually if it is to be successful. His comments come on the heels of those made by Huawei's automotive business head, who voiced similar aspirations. Xiaomi is expected to receive its Vehicle Production Qualification from the government mid-next year.

BYD and Mercedes-Benz JV Denza sees first production of D9 MPV. After a delay in the original schedule, Denza, a JV between BYD and Mercedes-Benz Group and majority owned by BYD, saw the first production vehicle of its D9 MPV roll off the production line. Since its August launch, the Denza D9 has received more than 30,000 non-refundable deposits.

Leapmotor registers over 10,000 vehicles for four straight months. Despite a lackluster IPO on the Hong Kong Exchange at the end of September, Leapmotor continues to stay in the 10k club, and has almost tripled its registrations from a year ago, according to the data compiled by Gasgoo Auto Research Institute.

XPeng reorganizes in attempt to stop downward trend. The biggest change in the restructuring is that XPeng will move to a business unit-based management structure to improve the previously overly centralized structure that slowed down operational efficiency. The round of restructuring involves business units including UDS (user development and service center), product planning and marketing and PR departments.