+++ APPLE continues to push forward with its EV ambitions and is understood to be working with a number of Korean suppliers to make it happen. The technology giant restarted its car project late last year and at one stage, was close to forming a joint venture with Hyundai to make it a reality. It is now being reported that Apple is having discussions with multiple Korean component manufacturers to supply important parts. Industry sources claim that Apple has had meetings with SK Innovation, a leading electric vehicle battery manufacturer, as well as LG Electronics. LG’s joint venture with Magna International to create LG Magna e-Powertrain is the frontrunner to produce the powertrain for Apple’s first-ever electric vehicle. “Apple officials have been in Korea for business talks with its Korean partners in the semiconductor and display sectors”, a source told. “As seen in Apple’s smartphone business, the company is seeking business partners in Korea for its EV business. Without partnerships with Korean vendors, Apple won’t be able to complete its EV business plan. As far as I know, Apple has talked with LG, SK and Hanwha, but the talks are still in the early stages”. Apple is also said to be considering the use of a lithium iron phosphate battery that could be safer than the lithium-ion batteries used by most car manufacturers. These batteries are said to be less likely to overheat and are cheaper. However, they do not perform as well at colder temperatures as lithium-ion batteries. If Apple does opt for batteries of this type, it will likely look to source them from China as Korean firms don’t currently produce lithium iron phosphate batteries. +++
+++ Carmakers across the globe are grappling with CHIP SHORTAGES that are forcing them to halt production, but executives and analysts said they are likely to continue the fight for another 1 or even 2 years. German chipmaker Infineon Technologies said last week it was battling to supply markets as the Covid-19 pandemic disrupts production in Malaysia. The company is still dealing with the aftermath of a winter storm in Texas, the United States. CEO Reinhard Ploss said inventories were “at a historic low; our chips are being shipped from our fabs (factories) straight into end applications”. “Demand for semiconductors is unbroken. Currently, however, the market is faced with an extremely tight supply situation”, said Ploss. He said the situation could last into 2022. The latest blow to the global auto industry came as Renesas Electronics started to recover its shipment volumes from mid-July. The Japanese chipmaker suffered a fire in its plant earlier this year. AlixPartners estimated that the auto industry may lose $61 billion in sales this year because of chip shortages. Stellantis, the world’s largest carmaker, warned last week that the semiconductor shortage would continue to hit production. General Motors said the chip shortage will force it to idle 3 North American factories that make large pickup trucks. The work stoppage will be the second time in recent weeks that GM’s 3 main truck plants will stop most or all production due to the chip crisis. BMW estimated that 90.000 vehicles could possibly not be produced due to the shortage this year. “Due to the current uncertainty over semiconductor supplies, we cannot rule out the possibility of our sales figures being impacted by further production downtimes”, said BMW board member for finance Nicolas Peter. In China, Toyota suspended a production line in Guangzhou, capital of Guangdong province, last week as it could not secure enough chips. Volkswagen has been hit by the crisis as well. It sold 1.85 million vehicles in China in the first half of the year, up 16.2 % year-on-year, much lower than the average growth rate of 27 %. “We saw sluggish sales in Q2. It’s not because the Chinese customers suddenly didn’t like us. It’s simply because we are massively affected by chip shortages”, said Volkswagen Group China CEO Stephan Wöllenstein. He said production was affected heavily in June regarding its MQB platform, on which Volkswagen and Skoda cars are built. The plants had to readjust their production plans almost on a daily basis. Wöllenstein said the shortages remained in July but are to be alleviated from August as the carmaker is turning to alternative suppliers. However, he warned the overall supply situation remains volatile and general shortages will continue well into 2022. The China Association of Automobile Manufacturers said carmakers’ combined sales in the country were estimated to have fallen 13.8 % year-on-year to around 1.82 million in July, with chip shortages a major culprit. Jean-Marc Chery, CEO of Franco-Italian chipmaker STMicroelectronics, said orders for next year have outstripped his company’s manufacturing capacities. There is a broad acknowledgment within the industry that the shortage “will last up to next year at minimum”, he said. Infineon’s Ploss said: “We are doing our utmost to improve matters along the entire value chain and are working as flexibly as possible in the best interests of our customers. At the same time, we are continuously building up additional capacity”. But new factories cannot open overnight. “Building new capacity takes time: for a new fab, more than 2.5 years”, said Ondrej Burkacky, a senior partner and co-leader of the global semiconductors practice at consultancy McKinsey. “So most expansions that are starting now will not increase the available capacity until 2023”, said Burkacky. Governments in different countries are making long-term investments as cars are becoming smart and require more chips. In May, South Korea announced a $451 billion investment in its bid to become a semiconductor giant. Last month, the US Senate voted through $52 billion in subsidies for chip plants. The European Union is seeking to double its share of global chip manufacturing capacity to 20 % of the market by 2030. China has declared favorable policies to stimulate the sector’s development. Miao Wei, former minister of industry and information technology, said a lesson from the global chip shortage is that China needs its own independent and controllable auto chip industry. “We are in an age where software defines cars, and cars need CPUs and operating systems. So we should plan in advance”, Miao said. Chinese companies are making breakthroughs in more advanced chips, like those required for autonomous driving functions. Beijing-based startup Horizon Robotics has shipped more than 400.000 chips since the first was installed in a local Changan model in June 2020. +++
+++ GENESIS has sold more than 2.000 G80 EV sedans, its first electric model, in the 3 weeks since it hit showrooms. Sales of electric vehicles in the first half of this year surged 75.4 % in South Korea on-year to 40.435 cars, but the market is dominated by mid-sized or smaller models. Tesla dominates the high-end segment with the Model S and Model X, priced at over W100 million (US$1=W1,143). But it only sold 18 to 20 cars a month in the first half. The G80 EV’s success has led to forecasts that Genesis could become the outright leader in the segment. One advantage is price competitiveness as the car costs W82.81 million and is therefore eligible for government subsidies. +++
+++ HYUNDAI topped the global fuel-cell electric vehicle (FCEV) market in the first half on strong sales of the Nexo FCEV. Hyundai took 51.7 % of the global FCEV market in the first half, followed by Toyota at 40.9 % and Honda with 1.6 %, according to Seoul-based market tracker SNE Research. The Korean automaker slipped to the No. 2 spot in the first quarter due to strong sales of Toyota’s fully revamped Mirai FCEV model, introduced in December 2020. It was able to regain the top spot on Nexo FCEV sales after a partially updated version was released early this year. Toyota’s FCEV sales jumped by 735.1 % year on year in the first half, according to SNE Research, delivering 3.700 units from 400 units a year earlier. The second-generation Mirai FCEV was updated, with a 30 % increase in range to 640 kilometers per charge. Hyundai delivered 4.700 units of FCEVs in the first half, posting a 62.7 % year-on-year jump. The partially revamped Nexo has safety-feature updates. Honda’s market share continued to slip as the Japanese carmaker recently announced it would stop making FCEVs, concluding that hydrogen technology is more suitable for other industries. “The global FCEV market will be a competition between Hyundai and Toyota in the future”, SNE Research said in a report. “Hyundai’s dominant position in the global FCEV market, with a 70 % market share, is no longer the case anymore and is always prone to be overturned by Toyota. Hyundai will have to inspect its market strategy and competitiveness”. Hyundai topped last year’s global FCEV market with 70.7 % market share with Toyota only taking away 10.9 %. The growth of the FCEV market continued this year, the market tracker says. A total of 9.000 FCEVs were registered in the first half globally, which is more than a twofold increase on year. +++
+++ KIA has released its first all-electric sedan, the EV6, on the domestic market ahead of its global launch set for later this year. The model has logged 30.000 preorders since March, 21.016 of which were on the first day of the offer. It was the South Korean automaker’s best-ever presale record. The EV6, built on the company’s new EV platform E-GMP, has also seen strong demand in Europe, where it will be released later this year, and the US is set for a 2022 release, the company said. In Korea, the model is priced at 47 million to 57 million won ($40,800-$49,490). With the government’s EV subsidies, local customers could purchase it for under 40 million won. The latest EV from Kia, a unit of Hyundai Motor, is available with 2 battery packs: the 77.4 kilowatt-hour long-range battery pack and the 58 kWh standard battery pack. Each battery can drive up to 475 kilometers and 370 km, respectively, on a single charge. It comes in 4 different models, with 3 (standard, long-range and the GT-Line) available first this year and the high-performance GT model to be added by the end of next year, the carmaker said. According to Kia, the model is also the first domestically produced vehicle that had its carbon footprint certified by the UK-based global climate change consultancy Carbon Trust. The EV6 is expected to carry on the EV momentum in Korea from its larger sister affiliate Hyundai, which in April launched the all-electric Ioniq 5 to rave reviews and strong sales. Hyundai plans to further roll out the Ioniq 5 to more overseas markets, starting with the United States in the latter half of this year, and aims to sell more than 560.000 units by 2025. +++
+++ MERCEDES is readying a facelifted version of its most compact model, the A-Class, to be unveiled in 2022. I’ve already spotted facelifted development cars for the next high-performance Mercedes-AMG A 45 model, and my spies have caught a first glimpse of the standard A-Class hatchback ahead of next year’s launch. This prototype car was spotted wearing heavy camouflage on the front and rear bumpers, but even so, styling changes will be minimal for the updated model. The front grille looks to be unchanged, with a familiar single-bar design, but we expect a set of refreshed headlights and a tweaked front bumper beneath the disguise. At the rear, concealed tail-light clusters also hint at an updated lighting array, while a camouflaged lower bumper indicates a redesigned diffuser and tailpipe set-up. It appears that the rest of the exterior remains identical to the current car. Inside, the new A-Class could adopt the twin-spoke steering wheel fitted to Mercedes’ latest models, as well as the newest MBUX-based infotainment system, which uses a portrait-orientated display and does away with physical climate controls. Development of the updated AMG A 45 model is also underway, with the facelifted hyperhatch caught testing earlier this year. The AMG-variant retains the same ‘Panamericana’ grille, muscular bonnet bulges and quad-tailpipes of the current car, but will likely feature tweaked light clusters and updated front and rear bumpers. Putting out 421 hp, the current A 45 S is the most powerful hot hatchback on sale, and the facelifted version could pull further ahead with another bump up in power. Powertrain details are yet to be released, but the car is likely to retain the 8-speed dual-clutch automatic gearbox and 4Matic+ four-wheel drive system used by the current A 45 S. The facelifted A-Class is set to launch late next year, with prices and specs to be revealed following the unveiling of Mercedes’ new premium hatchback in standard and sporty AMG form. +++
+++ RENAULT SAMSUNG MOTORS , the South Korean unit of Renault, said it will partner with Lynk & Co. to develop an environment friendly vehicle in the Korean market. Renault Group has announced it will form a joint venture with Geely, the Chinese owner of Volvo Cars, to develop a Renault-brand hybrid passenger car for sale in China and a Lynk & Co-brand eco-friendly model for Korea, a company spokesman said over the phone. Lynk & Co. is the automotive brand formed as a joint venture between Geely and Volvo in 2016. Renault Samsung badly needs a new model, which will follow the XM3 compact SUV (sold as Arkana in Europe), to boost its sales in Asia’s fourth-biggest economy. In April, the French carmaker said it will quit its main passenger car business in China after a poor performance in its loss-making venture with Dongfeng Motor Group. But the joint company with Geely means Renault is returning to the Chinese automobile market. From January-July, Renault Samsung’s sales fell 13 percent to 66.959 vehicles from 76.588 units during the same period of last year. Renault holds an 81 percent stake in Renault Samsung. +++
+++ China’s Ministry of Commerce has proposed to increase new energy vehicle exports to RUSSIA to tap the fast-growing demand there supported by favorable policies. The ministry encouraged Chinese NEV makers to seize opportunities and increase exports to the country, improve marketing strategies and product promotion to expand presence. Chinese makers may also seek cooperation on NEV infrastructure, including charging facilities, gas pipeline and power grid optimization, smart services and supplies in rural areas with Russian peers and government, said a report by the ministry. “Currently, China’s development of NEVs is on a fast track with products enjoying increasing recognition in the global market, especially those for agriculture logistics, mechanical equipment transportation, and short-distance travel (such as electric bicycles). There is market potential for Chinese NEV manufacturers to export products to Russia”, said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing. Data from the China Association of Automobile Manufacturers showed that in the first 5 months, China’s production and sales of NEVs reached about 967.000 and 950.000 units, respectively, both increasing 220 % year-on-year. Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, also held positive views about China’s NEV exports to Russia. “There is a growing need for NEVs in Russia, and China’s NEV and electric bicycles are enjoying increasing popularity among consumers in the country thanks to advanced technologies and good product performance”. A report by news website jiemian.com said sales of electric vehicles (a major type of NEVs) surged sixfold year-on-year to 650 units in Russia in the first 5 months. The market for natural gas vehicles, another type of NEV, is also growing rapidly in Russia. The ministry’s report said annual growth of natural gas consumption for vehicles in Russia is more than 25 %. The number of gas filling stations has increased from more than 200 in 2015 to about 500 at present, and gas consumption has increased from 400 million cubic meters to 950 million cubic meters in the same period. A report by chinanews.com also said China’s export of electric bicycles and motorcycles through Manzhouli highway port in the Inner Mongolia autonomous region surged 4.950 % year-on-year to 6.314 units, worth about 9.57 million yuan ($1.48 million) in the first half of 2020. “However, there are also challenges in exporting NEVs to Russia, as the country has abundant energy resources and fuel cars are still a major commuting tool. Chinese NEV manufacturers may step up efforts developing technologies to cut costs and get an advantage on pricing, as well as improving sales, maintenance and after-sale services”, Zhou said. “More importantly, Russia’s cold temperatures can sap electric car batteries and reduce their range, which is an important reason that stops consumers from buying. Chinese NEV manufacturers may also need efforts on technology development to tackle the problem, in order to better promote NEVs in Russia”, Zhou added. At present, the total number of NEVs in Russia is still relatively small, taking up less than 10 percent of the total vehicle market in the country. As of 2020, there were about 6.300 EVs in the country and the market penetration rate was only 0.01 %. Construction of EV infrastructure was still at an early stage, the ministry’s report said. In order to boost NEV consumption in Russia, the Russian government is rolling out more policy support. The report said the Russian government increased subsidies for NEV car purchases and modifications. Take the brand of Lada as an example. Consumers who purchase its NGVs can get subsidies worth about 10 percent of the retail price. For environmentally-friendly cars including NEVs, the rate can go up to 25 %. Meanwhile, the Russia government plans to raise the number of gas filling stations to 1.273 to bring convenience to NGV owners, and aims to produce 7.960 units of NGVs annually by 2024. The Russian government also planned to invest 65 billion rubles ($883.6 million) each year to develop autonomous driving, technologies of hybrid electric vehicles, and electric vehicles. Last May, the Eurasian Economic Union, whose member countries include Russia and four other countries, announced it would implement zero tariffs on the import of purely electric vehicles. The implementation period of zero tariffs will last until the end of 2021. +++
+++ In SOUTH KOREA , sales of imported cars have jumped again while domestic automakers languished in the first half of the year. According to the Korea Automobile Manufacturers Association, total car sales shrank 2.6 % on-year to 924.000 cars from January to June. This is partly due to a 6.2 % decrease in output of Korea’s carmakers amid a shortage of electronic parts. The sales of the 3 smaller troubled carmakers (GM Korea, Renault Samsung and Ssangyong) plunged 34.9 %. But sales of imported cars soared 17.9 % over the same period to 167.000 cars, yet another record, due to pent-up demand for luxury goods. German car brands such as Mercedes-Benz, BMW and Audi took up more than 10 % of the domestic market, an all-time high, while the overall market share of imported cars increased from 15 % to 18.1 %. Super-luxury models costing over W400 million roared out of the showrooms, with Bentley and Rolls-Royce selling 765 vehicles, up 38.3 % (US$1=W1,149). Some 60 % of electric cars sold here are imported, up 53 %, mostly Teslas. +++
+++ TESLA ’s China R&D center is expected to become operational later this year in Shanghai, as the United States carmaker continues to deepen its localization strategy in the world’s largest new energy vehicle market. Tesla announced the schedule in a recruitment post released via its WeChat account. It is recruiting engineers for such functions as design, styling, software and vehicle engineering as well as test and validation. The Shanghai facility will be Tesla’s first research and development center outside of the US. “The goal of Tesla’s team in China is to design, develop and produce new vehicle models and products with Chinese cultural elements in China and sell them globally”, said Tesla in the recruitment post. Tesla’s China gigafactory, which is also located in Shanghai, started production in late 2019, and was its first vehicle manufacturing facility outside of the US. The plant, which now has an annual production capacity of 450.000 vehicles, is producing Model 3 and Model Y vehicles. In a tweet in late July, Tesla CEO Elon Musk praised its Shanghai plant team, saying they have done “amazing work”. Tesla said the Shanghai plant has become a major producer of Tesla models for global markets. “Due to strong US demand and global average cost optimization, we have completed the transition of Gigafactory Shanghai as the primary vehicle export hub”, said the carmaker in July. Tesla exported almost 30.000 vehicles in the second quarter from its Shanghai plant, according to the China Passenger Car Association. Its global deliveries in the quarter hit a record number of over 200.000 vehicles. Cui Dongshu, secretary-general of the association, said Tesla’s total exports from China could reach 100.000 this year. Tesla is the best-selling electric carmaker in China. Sales of its China-made vehicles totaled 161.743 units in the first half of the year, according to the China Passenger Car Association. China has been the world’s largest NEV market since 2015, with over 6 million such vehicles on its streets by the end of June. Statistics from the China Association of Automobile Manufacturers show that sales of electric cars, plug-in hybrids and fuel cell vehicles totaled over 1.2 million from January to June this year, up over 200 percent from the same period last year. The CAAM estimates that their total sales in China this year could reach 2.4 million, up from its previous estimate of 1.8 million units. +++