BYD Sponsors UEFA Euro 2024 ⚽, Lilium’s Shenzhen eVTOL HQ 🛫, Tesla Begins Self-Driving Tests in Shanghai 🚗

2024-06-16 | subscribe | homepage

Welcome back to this week’s edition of the China Insights Weekly Newsletter!

We’ve curated the top business and tech insights from China just for you, distilled into a quick 5-minute read.

Your feedback is important to us! Feel free to share your thoughts or requests by replying to this email or commenting online.

Let’s dive into this week’s top stories! Click on any of the titles below to get the full story.

🚀 Headlines

Elon Musk’s Tesla to carry out Full Self-Driving pilot with 10 testing vehicles in Shanghai (link)

Shanghai’s Nanhui New City has allowed Elon Musk’s Tesla to carry out testing of Full Self-Driving (FSD) software, the company’s most advanced autonomous driving system. The decision opens doors for its possible rollout in China soon. Nanhui New City district, which is close to Tesla’s Giga Shanghai plant, has allowed ten testing vehicles to start pilot operations.

Chinese automakers overtake U.S. rivals in global sales for the first time (link)

Automotive companies in China sold more cars than their U.S. counterparts for the first time last year, boosted by BYD and growth in emerging markets. Chinese brands sold 13.4 million new vehicles last year, while American brands sold about 11.9 million, the data showed. Japanese brands led with 23.59 million sales. China’s sales growth also outpaced that of the U.S., up 23% from the previous year compared with the U.S.’s 9%, according to the report. Over 17.5 million new cars were sold in the emerging economies in 2023. That is more than the total sales in the U.S. or Europe during the year. Chinese carmakers picked up a sizable market share across the Middle East, Eurasia, and Africa while also posting growth in Latin America and Southeast Asia. Meanwhile, some Chinese brands also picked up share in developed economies, including Europe, Australia, New Zealand, and Israel.

EU anti-subsidy Chinese EV probe hands case-by-case tariffs on Chinese imports with BYD seeing the lowest and SAIC having the highest charges (link)

The European Union announced on Wednesday it has taken a case-by-case approach to deciding how much tariffs could increase on Chinese electric vehicles. In a move that surprised many industry professionals, the preliminary duties set to hit Chinese EV imports will rise from the general 10% basis on all of them to between 27% and 48%, with BYD at 27% and SAIC and those deemed incompliant with EU standards facing the hardest hit with 48%. Volvo parent Geely is to receive a 20% increase to 30%. Chery, as well as its state-controlled peers such as Dongfeng and Chang'an face an extra 21% charge. NIO, Xpeng Motors, and Leapmotor will also have to pay 21% extra charges. Chinese battery EVs are priced in general around 80-100% higher in Europe than in their domestic market, creating room for price adjustments. Although Bernstein analysts expect the provisional tariffs to be a serious turn-off to smaller Chinese brands, prompting them to focus on other export markets, bigger Chinese players are likely to step up their localization efforts.

German eVTOL Maker Lilium to Set Up APAC HQ in China's Drone Hub Shenzhen (link)

Lilium, the Nasdaq-listed German maker of electric vertical takeoff and landing aircraft, will locate its Asia-Pacific headquarters in Shenzhen, a city with a complete drone supply chain and excellent low-altitude airspace conditions. Lilium’s recently formed Chinese entity Powerful Wing signed an agreement with Shenzhen's Bao'an district to set up its regional HQ in the Bao'an Low Altitude Economy Industry Public Service Center. Lilium will be the first European eVTOL manufacturer to base a regional office in the district. The company’s main product is the Lilium Jet, an all-electric seven-seat eVTOL aircraft designed to offer leading capacity, low noise, and high performance with zero operating emissions. It can reach a speed of 162 knots. The company expects to begin flight tests by the end of this year and obtain certifications next year.

Foreign funds are bulls in China’s onshore commodity futures (link)

As the world's largest commodities consumer, China hosts some of the world's largest commodities exchanges. In the first four months of 2024, the three biggest commodities exchanges by contract volume were all Chinese. The largest, Zhengzhou Commodity Exchange, alone saw 713 million lots transacted. Dalian Commodity Exchange was only a shade lower at 697 million lots and Shanghai Futures Exchange transacted 599 million lots, according to data from the Futures Industry Association (FIA). In the first half of 2023, China's commodities trading volume made up 71% of global activity in the sector, according to the China Futures Association. Growing participation from overseas investors is boosting liquidity in what’s already a booming market. Deutsche Bank is seeing volumes from their clients trading internationalized contracts increase to about 2 times the previous year’s volume.

Ant, BYD, and three other Chinese firms become sponsors of UEFA Euro 2024 (link)

Five Chinese companies, including financial technology giant Ant Group and new energy vehicle maker BYD, have become official sponsors of the 2024 European Football Championship. UEFA announced on June 11 that the top goalscorer trophy of Euro 2024 will be named after Alipay+, the cross-border payment company under Ant, for the second consecutive edition. UEFA Euro 2024 held in Germany from July 14, with 24 teams competing. BYD is sponsoring the Euro for the first time. The other three Chinese companies sponsoring the event are television giant Hisense, mobile phone maker Vivo Communication Technology, and Alibaba Group Holding’s cross-border e-commerce platform AliExpress. Hisense was the world’s second-largest TV maker in the first quarter of the year after selling 6.2 million sets, with its shipments to Europe up 36 percent from a year earlier.

Monthly drop hints that China’s CO2 emissions may have peaked in 2023, as China is set to surpass 2030 Solar and Wind target already in 2024 (link)

China’s carbon dioxide (CO2) emissions fell by 3% in March 2024, ending a 14-month surge that began when the economy reopened after the nation’s “zero-Covid” controls were lifted in December 2022. Wind and solar growth pushed fossil fuels’ share of electricity generation in China down to 63.6% in March 2024, from 67.4% a year earlier, despite strong growth in demand. The ongoing contraction of real-estate construction activity in China saw steel production fall by 8% and cement output by 22% in March 2024. Electric vehicles (EVs) now make up around one-in-10 vehicles on China’s roads, knocking around 3.5 percentage points off the growth in petrol demand. Some 45% of last year’s record solar additions were smaller-scale “distributed” systems.

China is on track to far exceed its 2030 wind and solar target, according to experts — positive news for global efforts to tackle climate change but a sign of growing pressure on the country’s power grid. China set a target of installing at least 1,200 gigawatts (GW) by the end of the decade, but it is set to surpass that amount in the next couple of months.

China sets blueprint for industrial decarbonization of steel production (link)

China’s steel industry, which accounts for around 15% of the country’s total emissions, is making significant strides in its decarbonization efforts by focusing on the development of green steel products and forming international partnerships to reduce emissions across the value chain. Major steelmakers like Baowu, Hesteel (formerly known as HBIS), and Ansteel are investing heavily in electric arc furnaces (EAFs) instead of coal and iron ore for power generation. Scrap EAFs can reduce direct CO2 emissions by up to 75% compared to the traditional blast furnace process. China aims to have 15% of its crude steel production from EAFs by 2025, up from the current 10%. However, the viability of EAF-based steel production is contingent on the availability of high-quality scrap steel, as well as the cost and availability of renewable energy inputs.

🎁 Bonus Stories

China Grants New Zealand Visa-Free Travel (link)

In a significant diplomatic development, Chinese Premier Li Qiang announced that New Zealanders will be granted visa-free travel to China. The announcement came during Li's three-day visit to New Zealand, where he focused on strengthening trade and bilateral ties, before he continues his diplomatic mission to Australia. Li then announced that China will include New Zealand in its list of unilateral visa-free countries, a move that is expected to significantly boost tourism and economic exchanges. The number of flights between China and New Zealand now exceeds the levels of the same period in 2019.

American Reborn Coffee unveils major global expansion for premium brand growth in China and South East Asia with a flagship store and 70 new locations in Guangdong Province (link)

A California-based retailer of specialty coffee announced its in-depth plan for opening its first flagship store complete with a roasting and training facility, in the culturally rich Li Weiguang Art Museum in Guangzhou, China. It plans to inaugurate this landmark location in the third calendar quarter of 2024. The company plans to leverage Guangzhou's dynamic environment as a driver for expansion across China, targeting over 70 new locations in established and emerging Tier 1 cities like Chengdu, Hangzhou, and Wuhan, as well as significant growth into Tier 2 and 3 cities, each representing significant market opportunities due to their growing middle-class populations and increasing consumer spending power.

Following China expansion, Reborn Coffee, plans include broader international expansion, starting with additional Asian markets. They are establishing master franchise agreements in Singapore, Thailand, Vietnam, and Indonesia chosen for their vibrant coffee cultures and rapid market growth.

Love China Insights? Subscribe and share with your friends!

You can also find us on LinkedIn here and Facebook here. Hope to see you again next week!

Interested in starting a newsletter yourself? Check out Beehiiv!