Alina-Sophie Ernst, Autor bei Berylls - making automobility viable

he automotive industry is on the verge of the mostsignificant transformation in its history, as the worldshifts to electric-powered and increasingly autonomous cars.

In meeting this challenge, a key issue will be software. Volkswagen’s chairman Herbert Diess has described software as the biggest test of the coming change, forecasting that it will eventually account for 60-70% of vehicle product differentiation. The reason lies in the nature of the product: the electric car of the future will always be connected, updatable and mostly self-driving, and be part of an everexpanding, integrated mobility services ecosystem. Berylls Strategy Advisors expects that by 2030 the proportion of vehicles worldwide that are connected, upgradable beyond just infotainment, and may even support autonomous driving, will sharply increase from less than 5% to 37%. Meanwhile, connectivity
will progressively expand beyond online services for “connected” cars to software updates for the entire vehicle system, including critical safety functions such as driver assistance. Greater connectivity will enable continuous innovation, even after the vehicle has been sold, as customers purchasing decisions continue to shift away from traditional selling points such as engine power and torque to software functionality and over-the-air (OTA) update capability.

Tesla is an example of how public perception of electric cars is now being significantly influenced by the innovative potential of software. Founded in 2003, the California-based company’s status as the leading pioneer of software-defined vehicles has propelled its meteoric rise to a market value of around $689bn in August 2021. Tesla is now the most valuable car manufacturer of all time, worth more than Toyota and Volkswagen combined, even though the latter companies respectively delivered 14.7 times and 12.7 times as many vehicles as Tesla in the first quarter of 2021.

Berylls Insight

Market expectations and prospects for software-defined vehicles

DOWNLOAD

Authors

Dr. Matthias Kempf

Partner

matthias.kempf@berylls.com

Malte Broxtermann

Principal

malte.broxtermann@berylls.com

Sebastian Böswald

Associate Partner

sebastian.boeswald@berylls.com

Dr. Matthias Kempf

Dr. Matthias Kempf (1974) was one of the founding partners of Berylls Strategy Advisors in August 2011. He began his career with Mercer Management Consulting in Munich, Germany, in 2000. After earning his doctorate degree and further consulting work at Oliver Wyman (formerly Mercer Management Consulting), he joined the management of Hilti Germany in 2008. At Berylls, his area of expertise is new mobility services and traffic concepts. In addition, he is an expert in developing and implementing new digital business models, and in the digitalization of sales and after sales.

Industrial engineering and management studies at the University of Karlsruhe, Germany, doctorate degree at Ludwig Maximilian University, Munich, Germany.

Malte Broxtermann

Malte is an expert in the development and implementation of automotive digitization strategies.

He focuses on helping clients scale (generative) artificial intelligence to improve their bottom line across the entire automotive value chain. His primary customers are automotive manufacturers and their suppliers, especially those active in the Software-Defined-Vehicle space.

Before his time at Berylls by AlixPartners (formerly Berylls Strategy Advisors), he advised leading North American utility companies. Prior to that, he saved lives as emergency medical technician. Malte holds master’s degrees in economics from Maastricht University and Queen’s University in Canada.

Sebastian Böswald

Sebastian Böswald (1991) joined Berylls by AlixPartners (formerly Berylls Strategy Advisors) in April 2021. He is an Associate Partner and an expert in both transformation and operations. Over the last decade, he has focused his work on strategy and organizational design, as well as on two megatrends shaping the automotive industry: software-defined vehicles and CASE (connected, autonomous, shared, and electrified mobility). In these fields, he has advised our global OEM clients as well as Tier-1 suppliers and tech companies.

Prior to joining Berylls, he worked for PwC Strategy& and started his career at BMW as a project manager for product strategy and digital charging services.

He received a Bachelor of Science in Automotive Computer Science at the Technical University of Ingolstadt as well as a Master of Science in Management from the Technical University of Munich.

ith cars becoming devices-on-wheels, traditional OEM R&D organizations are reaching their limits. The component-focused organizations, that have at their core not changed since the mid-90s, are failing to tackle the complexity of modern, software-defined vehicles, as they were simply not set-up for this – but there is a tried and tested approach they can adopt.

With cars becoming devices-on-wheels, traditional OEM R&D organizations are reaching their limits. The component-focused organizations, that have at their core not changed since the mid-90s, are failing to tackle the complexity of modern, software-defined vehicles, as they were simply not set-up for this – but there is a tried and tested approach they can adopt.

By following systems engineering principles and translating them into their organization, OEMs can reduce development and management efforts and increase the quality of the product.

Find out more on which approaches we recommend the R&D organization of the future should take in our newest Berylls Insight “The future of automotive R&D: Lessons for OEMs from systems engineering”.

Berylls Insight

The future of automotive R&D: Lessons for OEMs from system engineering

DOWNLOAD

Authors

Dr. Jan Burgard

CEO

jan.burgard@berylls.com

Timo Kronen

Partner

timo.kronen@berylls.com

Heiko Weber

heiko.weber@berylls.com

Sebastian Böswald

Associate Partner

sebastian.boeswald@berylls.com

Dr. Jan Burgard

Dr. Jan Burgard (1973) is CEO of Berylls Group, an international group of companies providing professional services to the automotive industry.

His responsibilities include accelerating the transformation of luxury and premium OEMs, with a particular focus on digitalization, big data, connectivity and artificial intelligence. Dr. Jan Burgard is also responsible for the implementation of digital products at Berylls and is a proven expert for the Chinese market.

Dr. Jan Burgard started his career at the investment bank MAN GROUP in New York. He developed a passion for the automotive industry during stopovers at an American consultancy and as manager at a German premium manufacturer. In October 2011, he became a founding partner of Berylls Strategy Advisors. The top management consultancy was the origin of today’s Group and continues to be the professional nucleus of the Group.

After studying business administration and economics, he earned his doctorate with a thesis on virtual product development in the automotive industry.

Timo Kronen

Timo Kronen (1979) is partner at Berylls by AlixPartners (formerly Berylls Strategy Advisors) with focus on operations. He brings 19 years of industry and consulting experience in the automotive industry. His focus is on production, development and purchasing as well as supplier management. Some of his recent projects include:
• Restructuring of the Procurement Function (German Sports Car OEM)
• Supplier Task Force for a HV battery cell (German Premium OEM)
• Strategy Development for the Component Production (German Premium OEM)
Before joining Berylls, Timo Kronen worked at PwC Strategy&, Porsche Consulting Group and Dr. Ing. h.c. F. Porsche AG. He holds a diploma degree in industrial engineering from the Karlsruhe Institute of Technology (KIT).

Heiko Weber

Heiko Weber (1972), Partner at Berylls by AlixPartners (formerly Berylls Strategy Advisors), is an automotive expert in operations.

He started his career at the former DaimlerChrysler AG, where he worked for seven years and was most recently responsible for quality assurance and production of an engine line. Since moving to Management Engineers in 2006, he has been contributing his experience and expertise to projects for automotive manufacturers as well as suppliers in development, purchasing, production and supply chain. Heiko Weber has extensive experience in the development of functional strategies in these areas and also possesses the operational management expertise to promptly catch critical situations in the supply chain through task force operations or to prevent them from occurring in the first place.

As a partner of Management Engineers, he accompanied the firm’s integration first into Booz & Co. and later into PwC Strategy&, where he was most recently responsible for the European automotive business until 2020.

Weber holds a degree in industrial engineering from the Technical University of Berlin and completed semesters abroad at Dublin City University in Marketing and Languages.

Sebastian Böswald

Prior to joining Berylls, he worked for PwC Strategy& and started his career at BMW as a project manager for product strategy and digital charging services.

He received a Bachelor of Science in Automotive Computer Science at the Technical University of Ingolstadt as well as a Master of Science in Management from the Technical University of Munich.

hether Germany’s federal election results in a traffic light or a Jamaica coalition, the country’s biggest industry will change in ways that will have an impact across Europe – and in China.

Since the last federal elections in 2017, Germany has been through an ecological metamorphosis. Public sentiment, particularly among younger people, has shifted decisively in favor of strong action to reduce carbon emissions and prevent a climate emergency. Even before the damaging floods in the summer of 2021, the rising commitment to green issues could be seen in the level of popular support for the “Fridays for Future” movement started by Greta Thunberg.

The Green Party has achieved its best-ever election results, taking a 14.8 per cent share of the vote, up 5.8 percentage points on 2017. As a result, the party is now a key player in coalition negotiations that we believe are most likely to result in either a so-called “traffic light” coalition of the SPD, the Green Party and the economically liberal FDP, or the “Jamaica” coalition made up of the CDU/CSU, the FDP and the Greens. We assume that if either of these three-party groups succeeds, and the country avoids falling back on the “grand coalition” of the SPD and CDU/CSU, then the Green Party will claim the Ministry of Transport as its price for agreeing to other compromises.

Of course, OEMs operate on far longer timescales than the four-year government term: planning cycles span 10 years, and models are in production for five years. However, decisions made on green transport policy will undoubtedly have an impact on the country’s dominant car industry. In turn, the size of Germany’s car market, which generates €400 billion a year in sales, means it will pioneer change across Europe and even influence the automotive industry in China.

As we noted at last month’s IAA event in Munich, German OEMs are now making e-mobility their priority, with affordable battery electric vehicles (BEVs) in the best-selling B and C categories planned for the middle of this decade, plus support for the full EV ecosystem, including the all-important charging network. This puts the industry in alignment with the wishes of voters on September 26, and the course is therefore set for transformation on both the product and the market side. But how will the choices of the eventual coalition government affect the plans OEMs and suppliers already have in motion?

Impact of a traffic light coalition

The auto sector is the largest industry in Germany, employing 1.8 million people. However, the role of cars in the life of the nation also goes far beyond their industrial and economic contribution. Cars have been dubbed the “favourite child” of Germans, the majority of who remain committed to keeping their individual mobility.

With this in mind, we expect the full focus of the traffic light coalition will be on getting more BEVs on the roads. This will drive lower emissions in line with the Green Party’s goals. It will also support the SPD’s priorities of preserving private car ownership, particularly among lower income groups, and protecting jobs in the car industry, given the close links between the SPD and the labor unions.

BEVs will therefore benefit from government support out to 2025, and this will also help keep Germany on track to meet its EU emissions obligations under the “Fit for 55” program. To achieve the Fit for 55 targets, around 14 million vehicles, or 30 per cent of the cars on Germany’s roads, would have to be electric by 2030.
As well as government support for BEVs, we would also expect a gradual withdrawal of support for plug-in hybrid electric vehicles (PHEVs) and higher taxes on internal combustion engine (ICE) cars. However, the Green Party’s call for ban on new ICE cars from 2030 will not happen in a traffic light coalition, because of the scale of the impact on German jobs.

Impact of a Jamaica coalition

The combination of the yellow and black strands of this group – the economically liberal and car-friendly FDP, and the CDU/CSU – are likely to be less focused on the BEV, and to maintain a more open position when it comes to alternative technologies for reducing emissions. That would keep PHEV and ICE vehicles, as well as hydrogen-powered fuel cell electric vehicles (FCEVs), in the mix, and would be particularly applicable to commercial vehicles. We would also expect this coalition group to support further research into synthetic fuels (e-fuels) as an alternative to gasoline and diesel.

Maintaining openness on which technology will supersede ICE in the long-term does mean that the right solution would be driven by industry, rather than by politics. However, given the significant investments OEMs have already made in BEVs, it is not clear why the next government would want to undermine their progress. From the perspective of the auto industry, it will be important that maintaining an open mind on which engine technology will “win” in future, and support for research into e-fuels and hydrogen technologies, does not slow down the roll out of the charging infrastructure and other investments needed to ensure Germany and German carmakers meet EU-wide emissions targets.

What about carbon taxes?

We expect fuel prices to go up, whether the traffic light or the Jamaica coalition wins. The Green Party are seeking to increase the carbon dioxide tax from €25 per tonne of CO₂ to €60 per tonne by 2023. Doing so would increase the additional cost of the CO₂ tax on a liter of diesel from around 8 cents to around 20 cents.

However, if the traffic light coalition with the SPD forms the next government, we do not expect the CO₂ tax to increase by such an amount. This is because the SPD does not want the cost of the xEV transition to be borne equally by all drivers, when higher income groups currently buy the majority of xEVs. We expect a Jamaica coalition would agree to a gradual increase to close to €60 per tonne, in line with the Green Party’s pledge, by 2023/34.

Subsidies for China?

The scale of Germany’s car industry and its leading position in Europe means the policies taken by the next government will impact the transition away from gasoline and diesel engines across the continent. However, another important point to note is the possible impact in China. The country is the world’s biggest BEV market, and to date, most of the country’s EVs have been made by Chinese OEMs (see chart below). However, the government is scaling back subsidies for BEVs and PHEVs. If growth in the Chinese market slows as a result, BEV subsidies in Germany will make the market more appealing for Chinese OEMs, which are already increasing their sales in this country.

Author

Dr. Alexander Timmer

Partner

alexander.timmer@berylls.com

Dr. Alexander Timmer

Dr. Alexander Timmer (1981) joined Berylls by AlixPartners (formerly Berylls Strategy Advisors), an international strategy consultancy specializing in the automotive industry, as a partner in May 2021. He is an expert in market entry and growth strategies, M&A and can look back on many years of experience in the operations environment. Dr. Alexander Timmer has been advising automotive manufacturers and suppliers in a global context since 2012. He has in-depth expert knowledge in the areas of portfolio planning, development and production. His other areas of expertise include digitalization and the complex of topics surrounding electromobility.
Prior to joining Berylls Strategy Advisors, he worked for Booz & Company and PwC Strategy&, among others, as a member of the management team in North America, Asia and Europe.
After studying mechanical engineering at RWTH Aachen University and Chalmers University in Gothenburg, he earned his doctorate in manufacturing technologies at the Machine Tool Laboratory of RWTH Aachen University.

hile incumbents are resorting to the announcement of partnerships and vast investments to cater investor demands, the SPAC frenzy of the ‘new kids on the block’ is making headlines.

The long-term performance of (mobility) SPACs remains to be evaluated – three things already stand out: SPACs are a reoccurrence, not a new invention; mobility SPACs are largely driven by electrification, SPACs per se are no panacea for the future of mobility financing.

Read on in our latest point of view.

Berylls Insight

SPAC: The Panacea for new mobility financing?

DOWNLOAD

Authors

Andreas Radics

Executive Partner

andreas.radics@berylls.com

Jan Dannenberg

Executive Partner

jan.dannenberg@berylls.com

Andreas Radics

Andreas Radics (1973) has been advising the automotive industry as a consultant since 2001. In addition, he can look back on over four years of professional and management experience in industry. Before co-founding and building up Berylls Strategy Advisors in 2011 as one of its Managing Partners, he worked at Gemini Consulting and Oliver Wyman, two international strategy consulting firms.
Besides being one of the leading subject-matter experts in Mergers & Acquisitions as well as in the development and implementation of corporate strategies in the automotive industry, he is an expert in e-mobility and a proven expert on the US market.
Business administration degree at Catholic University of Eichstätt-Ingolstadt, Business Administration Faculty, Ingolstadt, Germany.

Dr. Jan Dannenberg

Dr. Jan Dannenberg (1962) has been a consultant for the automotive industry since 1990 and became a founding partner of Berylls Strategy Advisors in May 2011. Until spring 2011, he worked with Mercer Management Consulting and Oliver Wyman in Munich, Germany, on international projects – for five years as Associate Partner, and another three years as Partner. He is a recognized specialist in innovation and brand management in the automotive industry, and primarily advises suppliers and investors on strategy, M&A and performance improvement. In addition he is Managing Director at Berylls Equity Partners, an investment company that specializes on mobility enterprises.

Bachelor of Arts in economics at Stanford University, USA; business administration and doctorate degree at the University of Bamberg, Germany.

ur China MD Willy Wang with the latest news and trends directly from Shanghai.

Many know Chinese EV brands like Nio, Xpeng or Li Auto, which emerged in recent years and gained quite some awareness, not least because of the rally some Chinese EV stocks enjoyed in 2020.

Yet, in addition to these “stock market superstars”, there are plenty of other, big Chinese car brands many people outside of China are not aware of.
Today, I want to introduce you to some of these “hidden Chinese champions” I think are worth knowing.

1: Wuling

The best-selling local Chinese brand is Wuling, which is owned by SAIC GM Wuling, a joint venture between SAIC Motor, General Motors and Liuzhou Wuling Motors Co Ltd.

In 2020, Wuling sold over 1.05 million units to an audience that is seeking inexpensive vehicles. Wuling’s product offering includes pick-ups, MPVs, SUVs and a tiny hatchback EV, the Wuling Hongguang Mini EV. And exactly this mini EV with two doors and seats for just 4 people is rivaling Tesla in China when it comes to sales numbers. Launched in summer 2020 and selling in China for only for 28.8k RMB (4.4k USD), the tiny EV is taking the EV market by storm: in the first two month of this year, more than 55k Wuling Hongguang Mini EVs were sold in China, compared to less than 30k Tesla Model 3, making it the best-selling EV in the Chinese market.

2: Geely

With more than 1.04 million Geely’s sold in 2020, Geely maintains the spot as one of the most popular domestic brands in China. Geely is owned by Zhejiang Geely Holding Group, China’s largest private automaker, which also (partly) owns the Swedish carmaker Volvo and Polestar as well as Lynk&Co – among others. Its founder, Li Shufu, is Daimler’s largest single shareholder.

Geely’s crossover SUVs, the Geely Boyue (also called Geely Atlas or Emgrand X7 Sport), the Geely GS and the Geely Binyue (also known as Geely Coolray) belong to Geely’s top-selling cars in 2020, making up 38% of the total sales.

Even though its EVs, such as the Geely Geometry, are not as wildly successful as its gasoline peers, Geely still counts as the benchmark within the Chinese auto industry.

3: Chang’An

The carmake Chang’An is the third most popular vehicle brand in China with over 1.04 million vehicles sold in 2020.

Owned by the state-owned vehicle manufacturer Chang’An Auomobile Group, Chang’An’s offers cars, such as the Chang’An CS74, a crossover SUV and the Chang’An EADO, a compact car, starting from 108.8k RMB (16.6k USD) and 72.9k RMB (11.1k USD) respectively. In addition to this offering in the lower price segment, Chang’An also caters premium customers with its car sequence “UNI” (or “Yinli” in Chinese, which means gravity) high-end SUVs. Their UNI-K, the second model of the UNI lineup, was introduced at the Guangzhou Auto 2020 and hit the market at the end March of this year.

4: HAVAL

Owned by the Chinese carmaker Great Wall Motors, HAVAL is mostly known for their SUVs, such as the Hover H6 or Haval F7. Haval vehicles can also be spotted outside its domestic market, such as in Australia and Russia. In fact, the Haval F7 is even produced in Tula, Russia.

Besides Haval, Great Wall also owns Ora, an upcoming EV brand going in a similar direction as Wuling Hongguang Mini EV, offering inexpensive small EVs targeting female drivers.

5: BYD

BYD is one of China’s largest carmakers and is owned by the BYD conglomerate, which not only manufactures passenger vehicles, but also a wide variety of products including trucks, buses, solar panels, and batteries.

BYD stands for “Build Your Dreams” and is one of the most well-known Chinese brands outside of China. BYD’s top-selling vehicle, the BYD Song Pro SUV, was sold in 2020 over 146k times in China alone and can be purchased with a choice of three different powertrains: petrol, plug-in hybrid and pure electric.

An interesting fact about BYD is, that in comparison to its competitors, it does not westernize its product names, but rather bases them on Chinese dynasties (Yuan, Qin, Tang etc.).

6: Baojun

Baojun, like Wuling, is owned by SAIC GM Wuling and has a reputation of designing products that strongly appeal to Chinese customers. With a strong inexpensive SUV portfolio, Baojun has been able to achieve significant market share in this segment. The Baojun RS-3, Baojun 510 and Baojun 530 are its top-selling SUV models. Supported by Xiaomi technology, Baojun has begun to target the compact EV market. The launch of the E300, a compact BEV with a range of 305 km and starting price of 64.8k RMB (9.9k USD), provides strong competition to the incumbent Hongguang Mini EV and Great Wall Oro models.

7: Roewe

Roewe was created in 2006 by its parent company SAIC Motors after it acquired the failed British carmaker MG Rover. SAIC was unable to acquire the brand name Rover but Roewe vehicles are internationally exported under the MG nameplate.

With over 115k units sold in 2020, the Roewe RX5 SUV, is the brand’s best-seller, closely followed by the Roewe i5 with nearly 111k units sold.

8: Chery

Most of you probably have heard of, or even know Chery. This is largely due to the fact that Chery has been one of the largest vehicle exporters since China joined the WTO in 2001. Back in 2001, Chery exported its first 10 cars to Syria but now, almost 20 years on in 2020, it exported over 100k vehicles to a global customer base.

The Tiggo 8 SUV was launched in May 2018 and has quickly become Chery’s best-selling vehicle, achieving sales of 110k vehicles in 2020. Beside China, the Tiggo 8 has gained popularity in overseas markets such as Russia and Brazil.

9: GAC Trumpchi

Trumpchi was launched in 2010 and is owned by Guangzhou Automotive Group (GAC). While the name bears a striking resemblance to a former US president, the brand derives its name from the Chinese name Chuanqi, meaning ‘Chinese Legend’. GAC sold nearly 280k Trumpchi vehicles in 2020, of which the Trumpchi GS4 SUV made up the bulk of sales with 124k units sold.

10: Hongqi

Hongqi is a brand owned by the China First Automotive Works (FAW) Group, focused largely on the luxury segment. Hongqi translates as ‘red flag’ and until the 1980s their vehicles were reserved for Chinese government officials.

Hongqi suffered stagnating sales (2017 = 5k and 2018 = 31k) but following a revival, the company was able to achieve considerable sales volume, reaching 200k vehicles in 2020. Hongqi’s best-selling car, the Hongqi HS5 SUV, was designed by Italdesign and sold more than 96k times in 2020.

Hongqi HS5 SUV

Author

Willy Wang

Principal & Managing Director Berylls China

willy.wang@berylls.com

Willy Wang

Willy Lu Wang (1981) joined Berylls Strategy Advisors in 2017. He started his career participating in the graduate program of Audi focusing on production planning. After stations at another strategy consultancy as well as being the strategy director for a German Tier-1 supplier, he is now responsible for the China business at Berylls.

He has a broad consulting focus working for all clients in China, whether they are JVs, WOFEs or pure local players. He is also responsible for the development of AI and Big Data products dedicated towards the Chinese market further strengthening the Berylls End-to-End strategy and product development capabilities.

Wang studied Electronics & Information Technology with focus on Systems and Software Engineering and Control Theory at Karlsruhe Institute of Technology.

ur China MD Willy Wang with the latest news and trends directly from Shanghai.

Auto Shanghai ended a few days ago, and it didn’t disappoint. International and, in particular, domestic OEMs brought out impressive debuts (along with a highly publicized incident with Tesla) and there were a few surprises, too. Berylls visited the fair during the media days, and we have summarized what we consider to be the highlights for you below:

Hengchi 1.

Hengchi 1. Source: Berylls.

1. Domestic players on the rise – Displaying lots of self-confidence & high-flying ambitions

While all domestic heavyweights premiered new models, Hengchi (the auto subsidiary of Evergrande, China’s second largest real-estate company) stole the limelight. It invited more than 1,000 media for the premiere of its nine models, and made bold claims that it competes with established premium brands.

2. The contest over ICV has begun – “TOPS” & “MP” are the new “hp” & “kW”

While Chinese NEV (New Energy Vehicle) players previously battled for longer range, faster acceleration, etc., they are now competing in the autonomous driving arena. Their target: ICVs (Intelligent Connected Vehicles), and KPIs such as “TOPS” (Tera Operations Per Second), and “MP” (megapixels).

Xpeng P5

Xpeng P5. Source: Berylls.

NIO showed its upcoming ET7, equipped with its latest autonomous-driving system. In terms of specifications, it is superior to the Tesla Model S. It has an impressive range of 1,000 km as well as 11 cameras with a resolution of 8MP (compared to 8 cameras in Model S with 1.2 MP), and computation power of 1,016 TOPS (compared to 144). The autonomous-driving system will be available as “ADaaS” (Autonomous Driving-as-a-Service).

Xpeng premiered its P5, which will be the world’s first mass-produced model to feature LiDAR sensor technology.

It seems that the battle for ICV superiority has kicked off, and that, today, the three top winning criteria are number of sensors, TOPS, and MP.

3. Pressure in all segments – Premium facing the greatest threat

IM L7

IM L7. Source: Berylls.

Chinese players have now begun to seriously attack the premium segment – new (ICV) players in particular are readying their turn. IM (Zhiji Motor), a new EV brand (a joint-venture between SAIC and Alibaba Group), premiered its IM L7. With similar dimensions as the BMW 5 Series, it comes with wireless charging, a luxurious minimalistic interior (a trend in itself), and a maximum range of 800 km.

Geely debuted its Zeekr premium brand. The first model, Zeekr 001, will be offered via direct sales and via subscription model, and comes with an OTA shop.

HiPhi, a self-proclaimed “TECHLUXE®” (technology & luxury) brand, put its HiPhi X on display. The price range from RMB 570k to RMB 800k is a very big one for a Chinese brand. It is plain to see that Chinese players are eyeing premium, and are all set to take on Mercedes-Benz, BMW, and Audi.

4. Tech players make a big splash – New challengers are emerging in the autonomous driving & some other sectors

Arcfox Alpha S

Arcfox Alpha S. Source: Sohu.

Huawei, the exhibitor attracting the most media attention after Hengchi, rolled out a plethora of new products – HarmonyOS smart cockpit powered by its own Kirin chips, AR-HUD (Augmented reality – Head-up displays), MDC810 (intelligent driving computing platform), etc. All these tech, along with super-fast charging, can be experienced within Arcfox Alpha S (a brand of BAIC), and is thus labelled with a sticker “Huawei Inside”.

The products presented by Baidu were very similar. It is interesting how new players are surging into the automotive market with a vast array of product offerings.

5. Micro EVs, the next big thing – Highly popular among young & female customers

Ora Good Cat

Ora Good Cat. Source: Berylls.

Micro EVs, such as SGM Wuling Hongguang’s Mini EV, and Great Wall Motors’ ORA Black Cat, are racking up high sales numbers. Today, Wuling Hongguang’s Mini EV is already greatly sought after by young women (80% of its mostly female buyers were born after 1980 / 1990) and its latest convertible model hopes to continue this trend. The latest ORA models is testimony of the company’s continued intention to position itself as a brand that “loves women more”. In March 2021, women accounted for 70% of its customers – and the company hopes to have continued success with new cat-themed models such as “Cyber Cat”, and “Punk Cat”.

Previously thought of as a cheap entry point into mobility, these brands are pioneers of a new wave of EVs that target the young female population.

Summary

Dual circulation, in particular the idea of strengthening the domestic market, was omnipresent at Auto Shanghai – especially when it comes to autonomous driving and ICV along the entire value chain.

As Chinese players all strive to move abroad, they will pose formidable competition for established premium OEMs in their heartland.

Author

Willy Wang

Principal & Managing Director Berylls China

willy.wang@berylls.com

Willy Wang

Wang studied Electronics & Information Technology with focus on Systems and Software Engineering and Control Theory at Karlsruhe Institute of Technology.

n China, German gasoline-powered vehicle sales at full throttle – electric-vehicle sales stalling.

The product strategy that helped German automotive OEMs dominate the Chinese market for decades is now alarmingly out of date.

For decades German OEMs dominated the Chinese automotive market by following a trickle-down strategy: they introduced technology they had developed elsewhere as optional equipment first and continued selling it at high markups until competitors had caught up.

How out of step this product strategy is with the expectations of present-day Chinese car buyers, German OEMs are currently getting a first taste of – with alarming implications for the future.

The days that China fitted the description of technological laggard are long gone. As China has moved to the forefront of consumer innovation, Chinese customers have neither the patience for technologies to trickle down the line nor the willingness to pay extra for the latest features.

The EV-only sub-brands of German OEMs are outpaced by their domestic peer group

In June, Audi, BMW, Mercedes-Benz, and Volkswagen together accounted for just over 20% of all cars sold in China.

Sales of their EV-only sub-brands, e-tron, i, EQ and ID, did not fare so well, however. In fact, the four sold fewer e-trons, iX3s, EQCs and ID4s in China than they did in Germany, a market that is only an 8th the size.

Notably, while Tesla remains the most dominant EV-only brand in China, its local rivals NIO, Xpeng, Li Auto and Weltmeister remain not far behind while German EV-only sub-brands are outclassed by both.

Exhibit 1

EV SALES IN CHINA

Sales of selected EV-only brands & sub-brands in China, June 2021.

If lackluster sales aren’t alarming enough, the reasons why Chinese customers eschew EVs made by German OEMs certainly should be

To understand why Chinese customers eschew EVs made by German OEMs, we turned to our “Automotive Heartbeat”, a proprietary big data tool that scans customer sentiments across a broad range of Chinese social media channels to glean customer insights for each make and model.

We looked for what Chinese customers value when it comes to EVs and how the German EVs in question fare by those standards. The results, we believe, should have German OEMs worried. Very worried.

The product strategy pursued by German OEMs is drastically out of step with what Chinese customers have come to expect by the standards set by local EV-OEMs

By a wide margin “connectivity” and “autonomous driving” are the most important and talked-about features on Chinese social media in relation to EVs.

Yet Chinese customers do not associate German EVs with either.

The names of all four German OEMs are mentioned in conjunction with these two topics only in 5% of all conversations on relevant Chinese social media channels. With a 30% share, even Tesla only comes in second after NIO. The NYSE-listed, Shanghai-based company appears in conjunction with connectivity and autonomous driving in 39% of all social media conversations.

Overall, Chinese social media conversations on connectivity and autonomous driving are dominated by four local EV-OEMs, who together account for nearly 65% of all mentions.

Exhibit 2

SHARE OF VOICE ANALYSIS

Share of mentions associated to “connectivity” and “autonomous driving” with regards to the following brands.

This is not Chinese nationalism – local EV-OEMs are simply considered superior

It might be easy to attribute such sentiments to preferences for cars made by domestic OEMs or even nationalism. But the basic truth of the matter is: local EV-OEMs are simply considered superior.

Around 80% of negative sentiments regarding EVs manufacturer by German OEMs relate to technical issues such as outdated or unreliable technology. Specific sentiments range from complaints that “remote start, lock & unlock fail too often!” or that the “navigation system is a joke. It is not up-to-date, and many areas are not even covered!” Others bemoan that “real-time information is imprecise” or that the “remaining driving range is not shown.”

A smaller number also complains about losing connectivity altogether: “Today I couldn’t connect with my head unit – again!” can be read or “Why can I not do the update? My car always loses the connection, and I can’t update!” Consequently, many Chinese customers believe that, considering the price at which German EVs retail in China, they “will get a local car with similar specs and configuration for much cheaper.”

In short, the technology offered by NIO, Xpeng, Li Auto and Weltmeister, being cheaper, more reliable, and more innovative, is considered superior.

Exhibit 3

SOCIAL MEDIA SENTIMENT ANALYSIS

Share of positive, negative and neutral sentiments associated to “connectivity” and “autonomous driving” with regards to the following brands.

While Chinese customers appreciate traditional virtues such as a car’s cornering ability, these aspects don’t matter when stacked against what they consider superior value at a lower price

When asked to compare Audi’s e-tron to NIO’s ES6, Chinese customer are quick to point out that the Audi is more fun to drive and that it corners better than the NIO.

At the same time, customers note that the Audi does not have – not even as an option – the kind of interactive infotainment system that comes standard on the NIO and that the Audi doesn’t meet Chinese tastes as well as the NIO does, with the latter offering wellness passenger seats. Many consider the e-tron’s range of 341 km insufficient, while believing the e-tron’s RMB 546k price tag to be unjustified in light of what the NIO offers for RMB 200k less.

Conclusion: A wake-up call to a harsh reality

For decades German OEMs were able to corner a large share of the Chinese automotive market at price levels that were well above their local competitors’. Now local EV-only manufacturers best German OEMs on innovation, reliability, and value for money.

This situation is the result of a product strategy that still banks on trickle-down innovation in a market that has long since adopted Tesla’s model of best-in-class connectivity as standard across all segments.

It is also a damning indictment of German OEMs’ failure to leverage China as a hub for innovation and should sound a harrowing wake-up call to their CEOs to quickly overhaul their China strategy or risk being left behind.

Author

Willy Wang

Principal & Managing Director Berylls China

willy.wang@berylls.com

Willy Wang

Wang studied Electronics & Information Technology with focus on Systems and Software Engineering and Control Theory at Karlsruhe Institute of Technology.

here is no doubt that strong measures are needed to slow down climate change – some of them inevitably painful.

There is also no doubt that electric vehicles powered by renewable electricity can quite easily reduce climate-impacting emissions – more easily in some applications than in others.

We also see that electric vehicles are gaining increasing traction with car buyers in many global new car markets including the UK. Late in 2020 the UK government has announced a ban of combustion engine powered cars from 2030 – pulling ahead their original target date by five years.

However, a large uncertainty remains around how fast the transition should and can happen – and which roles governments need and should play in it.

In this article we want to discuss:

What does this ban really entail? Is it going to be effective?
And if not, what could or should be done instead?

Berylls Insight

Is the UK´s ICE ban a good idea and is it doable in 2030?

DOWNLOAD

Authors

Arthur Kipferler

Partner

arthur.kipferler@berylls.com

Arthur Kipferler

Arthur Kipferler (1963) started his career in 1989 at the Boston Consulting Group, where he consulted for 13 years in the automotive industry. After consulting, Arthur Kipferler held senior management positions at Toyota in Europe and the U.S. From 2013 to 2014, he was global head of the BMW Group’s Future Retail program. Subsequently, he had leading roles in strategy, corporate planning and transformation management at Jaguar Land Rover in Coventry, UK. Arthur Kipferler complements the expertise of the Berylls by AlixPartners (formerly Berylls Strategy Advisors) partner team in the fields of market & customer, technologies, sales, and digitalization, as well as in the development and implementation of corporate, product, and regional strategies.
Mechanical engineering, production engineering, at the Technical University of Munich (TUM); MBA in Strategy, Marketing and Organizational Behavior at INSEAD Business School, France.

er jetzt die Party verlässt, verpasst den besten Teil.

Schon vor der Covid-19-Pandemie begannen viele OEMs, sich aus ihren Shared Mobility-Aktivitäten zurückzuziehen.
Es wird zwar noch einige Zeit dauern, bis sich die weltweite Nachfrage nach urbaner und damit auch der Shared Mobility wieder erholt, sie bleibt jedoch ein entscheidendes Mittel bei der Bekämpfung der sich verschärfenden Verkehrsprobleme.
Nur die Zusammenarbeit mit Städten und den bestehenden Anbietern wird nachhaltig tragfähig sein – öffentlich-private Partnerschaften werden eine wichtige Rolle dabei spielen, die Shared Mobility in der „prä-autonomen Welt“ wirtschaftlich tragfähig zu machen. Diese müssen jedoch adäquat ausgestaltet sein.
Automobilhersteller sind gut beraten, Know-how, Technologie und Marktzugang, die sie sich im Zuge ihrer Mobilitätsangebote aufgebaut haben, zu erhalten und nicht einer kurzfristigen Bilanzmaniküre zu opfern.

Angst vor Ansteckung bei der Nutzung von Shared Mobility lässt während der Pandemie das Interesse am eigenen Auto wachsen.

Seit dem Ausbruch von COVID-19 im Januar dieses Jahres ist die Weltwirtschaft auf den Kopf gestellt worden. Die Lockdown-Maßnahmen, die Einschränkungen des öffentlichen Lebens, Homeoffice-Zwang und Schulschließungen hatten auch einen massiven Rückgang der Mobilitätsnachfrage zur Folge.

Während hiervon alle Verkehrsträger betroffen waren, traf es die öffentlichen Mobilitätsangebote besonders hart. Busse, Straßenbahnen und Züge sind so leer wie nie zuvor, und die öffentlichen Verkehrsbetriebe berichten von einem Rückgang der Fahrgastzahlen um bis zu 90% in der Hochphase des Lockdowns. Die Kunden fühlten sich in ihrem eigenen Auto einfach sicherer: eine von Berylls kürzlich unter deutschen, amerikanischen und chinesischen Shared Mobility-Nutzern durchgeführte Umfrage bestätigt, dass zwischen 60% und 80% der Befragten aus Angst vor Ansteckung künftig vermehrt mit ihrem eigenen Auto fahren wollen. Zwischen 20% und 40% der Shared-Mobility-Nutzer, die derzeit kein Auto besitzen, ziehen angesichts der Krise sogar einen Fahrzeugkauf in Erwägung. Vor allem in China wird der Wunsch nach einem eigenen Auto geäußert. 47% aller Befragten planen, in den kommenden Monaten weniger öffentliche Verkehrsmittel zu nutzen als vor COVID-19.

Langfristige Perspektive: Shared Mobility wird wichtiger.

Betrachtet man jedoch die Daten aus der Zeit nach dem Lockdown, wird deutlich, wie wichtig einige Shared Mobility Dienste mittlerweile für die tägliche Mobilität geworden sind. Chinas DiDi Chuxing ist bereits Anfang Juni wieder zum Auftragsvolumen von vor COVID-19 zurückgekehrt. UBER und Lyft befinden sich fast wieder auf dem Stand der Marktbewertungen von Anfang 2020 und damit nahe einem Allzeithoch.

Parallel zur Nutzung der Mobility Services steigt jedoch auch das übrige Verkehrsaufkommen und die sich ständig verschärfenden Stauprobleme kehren zurück. Vor allem der Pendlerverkehr aus den schnell wachsenden Vorstädten in die Innenstädte wächst mit großer Geschwindigkeit. Hinzu kommt, dass eine alternde, aber mobile Bevölkerung und ein zunehmender Fokus der Öffentlichkeit auf Nachhaltigkeit die Kommunen und Behörden unter Druck setzen, praktikable Transportalternativen zum privaten Auto zu entwickeln. Dr. Matthias Kempf, Partner bei Berylls Strategy Advisors: „Um ein attraktives, gut funktionierendes Mobilitäts-Ökosystem zu schaffen, bieten neue On-demand-Mobility Services die perfekte Ergänzung, wenn sie als eine stimmige Ergänzung zu den bestehenden öffentlichen Verkehrsträgern begriffen werden.“

Die Zeit für einen Wandel ist günstig.

Kommunen sollten jetzt die Initiative ergreifen, um nachhaltige Erweiterungen ihres Verkehrskonzepts im Hinblick auf alternative Mobilitätslösungen vorzubereiten und den motorisierten Individualverkehr in den Innenstädten zu beherrschen – und sie tun dies bereits, wie zahlreiche Beispiele europäischer Großstädte zeigen. „Das Rad lässt sich nicht mehr zurückdrehen: keine größere Stadt kommt mehr darum herum, einen 10- oder 15-Jahres-Plan zur drastischen Reduktion des Privat-PKW-Aufkommens in Innenstädten vorzulegen“, meint Matthias Kempf. Folglich werden sich die OEMs etwas einfallen lassen müssen, um für städtische Kunden relevant zu bleiben. Der Rückzug aus der Shared Mobility ist hier nicht die richtige Entscheidung. Selbst wenn profitable Geschäftsmodelle mit Shared Services bisher schwer zu realisieren sind, ist der Wert der Option, an der zukünftigen Wertentwicklung zu partizipieren, den Aufwand allemal wert – zumal es andere Wege gibt. Dr. Matthias Kempf: „Die Lösung sind Partnerschaften zwischen der öffentlichen Hand und den Mobilitätsanbietern. Die Zeit dafür ist günstig, denn die Städte haben die Vorteile erkannt, die sich aus der Koexistenz von traditionellen öffentlichen Verkehrsmitteln und neuen Formen der Shared Mobility ergeben. Mobilitätsanbieter können dabei ihr Geschäft in der Regel kostendeckend betreiben. Nutznießer dieser Partnerschaften werden diejenigen Anbieter sein, die maßgeschneiderte Lösungen in enger Abstimmung mit städtischer Politik und Regulierung bereitstellen – insbesondere einige Micromobility-Anbieter machen vor, wie das gelingt.

Eine gemeinsame Mobilitätsvision ist die Lösung für die OEMs.

Angesichts des aktuellen Kostendrucks laufen die Automobilhersteller Gefahr, in dieser Entwicklung nicht den Anschluss zu verlieren und ihre bereits aufgebaute Position aufs Spiel zu setzen. Einige Mobility Services wurden bereits eingestellt oder zurückgefahren. Dabei haben die Hersteller durch das Engagement im Bereich der Shared Mobility in den letzten Jahren viele neue Kompetenzen aufgebaut, starke Technik-Teams etabliert und neue, junge städtische Kunden erreicht, und damit genau jene Personen angesprochen, die den traditionellen Autobesitz vielfach meiden. Das Segment der regelmäßigen Nutzer der neuen Mobilitätsangebote wird in den kommenden Jahren wachsen und das Sprungbrett für in Zukunft – vermutlich – autonome Transportlösungen bilden. Daher wäre es kurzsichtig, das etablierte Mobilitäts- Know-how einer kurzfristigen Bilanzmaniküre zu opfern – insbesondere, weil der Einspareffekt im Kontext der Kostenstrukturen im automobilen Kerngeschäft verschwindend gering ist. Dr. Matthias Kempf: “Wir gehen davon aus, dass wir am Ende des Jahrzehnts in den heutigen Automobil-Kernmärkten ‘Peak Car’ erreichen werden. Danach werden die OEMs die Auswirkungen der Shared Mobility zu spüren bekommen”. Die OEMs wären daher gut beraten, eine ganzheitliche, nachhaltige Mobilitätsstrategie zu entwickeln und konsequent zu verfolgen. So vergrößern sie ihre Chance, für die Anforderungen ihrer Kunden in den kommenden Jahren gerüstet und weiterhin relevant zu sein.

Berylls Insight

SHARED MOBILITY – Wer jetzt die Mobility-Party verlässt, verpasst den besten Teil

DOWNLOAD

Autor

DR. Matthias Kempf

Partner

matthias.kempf@berylls.com

Dr. Matthias Kempf

Industrial engineering and management studies at the University of Karlsruhe, Germany, doctorate degree at Ludwig Maximilian University, Munich, Germany.

WANT TO DISCOVER MORE?

SEARCH

Market expectations and prospects for software-defined vehicles

Market expectations and prospects for software-defined vehicles

Berylls Insight

Sign in to download

Authors

Dr. Matthias Kempf

Malte Broxtermann

Sebastian Böswald

Dr. Matthias Kempf

Malte Broxtermann

Sebastian Böswald

The future of automotive R&D: Lessons for OEMs from system engineering

The future of automotive R&D: Lessons for OEMs from system engineering

By following systems engineering principles and translating them into their organization, OEMs can reduce development and management efforts and increase the quality of the product.

Find out more on which approaches we recommend the R&D organization of the future should take in our newest Berylls Insight “The future of automotive R&D: Lessons for OEMs from systems engineering”.

Berylls Insight

Sign in to download

Authors

Dr. Jan Burgard

Timo Kronen

Heiko Weber

Sebastian Böswald

Dr. Jan Burgard

Timo Kronen

Heiko Weber

Sebastian Böswald

The impact of the federal election on the xEV market won´t stop at Germany´s borders

The impact of the federal election on xEV market won´t stop at Germany´s borders

Impact of a traffic light coalition

Impact of a Jamaica coalition

What about carbon taxes?

Subsidies for China?

Author

Dr. Alexander Timmer

Dr. Alexander Timmer

SPAC: The Panacea for new mobility financing?

SPAC: The Panacea for new mobility financing?

The long-term performance of (mobility) SPACs remains to be evaluated – three things already stand out: SPACs are a reoccurrence, not a new invention; mobility SPACs are largely driven by electrification, SPACs per se are no panacea for the future of mobility financing.

Read on in our latest point of view.

Berylls Insight

Sign in to download

Authors

Andreas Radics

Jan Dannenberg

Andreas Radics

Dr. Jan Dannenberg

Bachelor of Arts in economics at Stanford University, USA; business administration and doctorate degree at the University of Bamberg, Germany.

The hottest Chinese vehicle brands

The hottest Chines vehicle brands

Many know Chinese EV brands like Nio, Xpeng or Li Auto, which emerged in recent years and gained quite some awareness, not least because of the rally some Chinese EV stocks enjoyed in 2020.

Yet, in addition to these “stock market superstars”, there are plenty of other, big Chinese car brands many people outside of China are not aware of.Today, I want to introduce you to some of these “hidden Chinese champions” I think are worth knowing.

1: Wuling

2: Geely

3: Chang’An

4: HAVAL

5: BYD

6: Baojun

7: Roewe

8: Chery

9: GAC Trumpchi

10: Hongqi

Hongqi HS5 SUV

Author

Willy Wang

Willy Wang

Berylls at Auto Shanghai – Omnipresence of dual circulation

Berylls at Auto Shanghai - Omnipresence of dual circulation

1. Domestic players on the rise – Displaying lots of self-confidence & high-flying ambitions

2. The contest over ICV has begun – “TOPS” & “MP” are the new “hp” & “kW”

3. Pressure in all segments – Premium facing the greatest threat

4. Tech players make a big splash – New challengers are emerging in the autonomous driving & some other sectors

5. Micro EVs, the next big thing – Highly popular among young & female customers

Summary

Dual circulation, in particular the idea of strengthening the domestic market, was omnipresent at Auto Shanghai – especially when it comes to autonomous driving and ICV along the entire value chain.

As Chinese players all strive to move abroad, they will pose formidable competition for established premium OEMs in their heartland.

Author

Willy Wang

Willy Wang

Yet, in addition to these “stock market superstars”, there are plenty of other, big Chinese car brands many people outside of China are not aware of.
Today, I want to introduce you to some of these “hidden Chinese champions” I think are worth knowing.

What does this ban really entail? Is it going to be effective?
And if not, what could or should be done instead?