Edison Yu's team shares their key takeaways on new model pricing, design, ADAS, and ultra-fast charging.
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As one of the most important auto shows in several years, the ongoing Shanghai auto show is attracting a lot of interest. In a research note sent to investors today, Deutsche Bank analyst Edison Yu's team shares their thoughts on the event.
This year's Shanghai auto show began last week, with media days on April 18-19, professional visitor days on April 20-21, and general public access on April 22 - 27.
Yu's team shared their four key takeaways regarding new model pricing, local design, Advanced Driver Assistance System (ADAS) capabilities, and ultra-fast charging.
"Pricing to be competitive at least through early 2024 With the price war raging on, we continue to expect OEMs to be aggressive as market share is the #1 priority," the team wrote.
Although no significant price cuts were announced at the show, automakers were very careful in disclosing prices.
Xpeng did not reveal pricing details for the G6 other than the previous range of 200,000 to 300,000 yuan. Likewise, Nio did not detail the price of the new ES6, the team noted.
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If demand stays low, there could be another wave of price cuts, so the automakers do not want to overprice their new models. In addition, lithium carbonate prices have fallen sharply, providing more cushion for pure electric vehicles, Yu's team said.
The team expects G6 pricing to trend toward the lower end of the range previously mentioned by Xpeng, especially given that the Zeekr X starts at just 190,000 yuan and the Model Y could see one more price cut this year.
To offset the drop in average selling price, automakers are taking steps to squeeze the structural costs of new platforms, such as Xpeng's SEPA 2.0 platform, according to the team.
In terms of product design, the quality of local models is improving rapidly, and several local automakers began turning to foreign talent a few years ago to speed up the process, the team said.
BYD's design chief is Wolfang Egger, previously at Audi, and Nio's vice president of design is Kris Tomasson who came over from BMW, the team noted.
The team highlighted two models that really showcase this shift: the BYD Song L and the Hozon Neta GT Speedster.
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"There are many other examples of bold and sleek design at the show and we expect this to be the new norm as the market shifts from ICE to EV," the team wrote.
With design and cost advantages, a natural extension is to export. During the show, Zeekr provided more details about its European strategy, the team noted.
On the ADAS side, Yu's team said subscriptions have proven difficult to monetize.
"We would have thought selling an ADAS subscription service could be easy next step. However, consumers are reluctant to adopt this business model," the team wrote.
Xpeng is trying to dramatically reduce the cost of its XNGP system while improving its performance.
Li Auto is currently beta testing the City NOA software with a goal of rolling it out to 100 cities nationwide by the end of 2023. The company believes its AD Max 3.0 system will be able to operate without HD maps and guarantees that all upgrades will be free for life with no subscription fees, the team noted.
Nio's NOP+ beta program is expected to end at the end of June and then begin charging subscribers RMB 380 per month.
"Nio is offering 2 years for free to 2023 ET7 buyers who pay the order deposit before June and we would expect this subscription to be increasingly used a promotional bundle to boost sales," the team wrote.
In terms of ultra-fast charging facilities, Yu's team said that automakers are just beginning to build up such capabilities, and real-world charging requires synchronization of the car, charger and grid. If any part becomes a bottleneck, charging speeds will not reach maximum performance.
Nio's ultra-fast 500 kW charger is now in service and open to other brands.
Xpeng is rapidly rolling out its new S4 480 kW DC ultra-fast charging station, with a target of 500 this year.
Li Auto is focused on 800V solutions and expects its upcoming battery electric vehicle (BEV)to have 400 km of range in 10 minutes, the team noted.
Li Auto announced on April 18 that its first all-electric model will be the world's first to feature CATL's 4C Qilin Battery.
By 2025, Li Auto's product array will include a super flagship model, five extended-range electric vehicles (EREVs), and five BEVs, the company said.
Shanghai auto show: EVs take center stage, nearly 40 models equipped with LiDARs
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