Tesla boss Elon Musk is not known for admiring his competition, but when Chinese manufacturer Nio made its 100,000th electric car last week, he offered his congratulations.
It was a mark of respect from a chief executive who had been through “manufacturing hell” with his own company. Yet it is also a sign of the growing influence of China’s electric carmakers. They are hoping to stake out a spot among the heavyweights of the new industry and bring a significant new challenge to Tesla – and to the rest of the automotive industry as it scrambles to catch up.
Tesla mania and cheap money have pushed the market valuations of a clutch of electric carmakers to astonishing levels. Tesla’s value topped $830bn (£600bn) in January (it is now down at about $700bn – still almost three times the size of its nearest rival, Japanese carmaker Toyota).
Chinese rivals Nio, Xpeng and Li Auto have all rapidly risen in value to rival much bigger and longer-established manufacturers – despite having never made an annual profit – on the back of US stock market listings that brought access to retail investors, although their values have fallen steeply from highs earlier this year.
Their fundraising successes have allowed them to pour money into competing with Tesla in China. Now they are eyeing the European electric car market – the biggest in the world.
This would further squeeze legacy carmakers such as Volkswagen, which are trying to rapidly expand electric car production. Premium carmakers including the UK’s Jaguar Land Rover or Germany’s BMW could also lose out if Chinese brands take some of their wealthy customers. Jaguar has pledged go all-electric by 2025 and BMW said last month that half its European sales will be electric by 2030.
China’s government spotted the opportunity to dominate a new sector by giving big subsidies to its electric car industry. The resulting crop of Chinese manufacturers is following the Tesla playbook and it, too, is unencumbered by the costs of winding down internal combustion engine factories, according to Philippe Houchois, automotive analyst at US investment bank Jefferies.
Li Auto, Nio and Xpeng could grow into some of Tesla’s biggest rivals – Reuters reported last month that all three are eyeing listings in Hong Kong. Another Chinese-owned startup, Faraday Future, said in January that it would list in the US via a merger with a special purpose acquisition company (Spac), raising $1bn.
“If you’re Tesla, all of a sudden they are competing on the ground, but they are also competing in access to capital,” Houchois says.
Some Tesla rivals have comparable technology and similarly aspirational brands. Hui Zhang, Nio’s executive vice-president for Europe, told the Observer the luxury carmaker aims to combine elements of Tesla and of Apple, the world’s most successful consumer technology company.
Nio, known as Weilai in its home market, aims to start selling vehicles in Europe later this year. Its factory can currently produce about 120,000 cars a year, significantly fewer than the near-500,000 Tesla made in 2020. Nio avoided bankruptcy in early 2020 when the city of Hefei bailed it out, but it has raised more than $4.5bn in stock and bond offerings in recent months, amid soaring investor demand.
Tesla will have an advantage in Europe when it opens a factory in Berlin as early as this summer, but China’s carmakers have the capital to open production in Europe too. Matthias Schmidt, a Berlin-based automotive analyst, says Chinese manufacturers will have an opportunity while Europe’s giants are eking out profits from their petrol and diesel models, plus hybrids.
“Chinese manufacturers hoping to introduce battery electric vehicles,” says Schmidt, “ have a four-year window in which to gain traction in a market that is to some extent playing with a B team array of electrified products, with limited supply until the end of the first half of the decade.”
Chinese companies are already heavily involved in the electric car boom through lithium ion battery manufacturing. China’s Contemporary Amperex Technology – better known as CATL – is a supplier to Tesla, has a factory in Germany, and last year said it had developed a battery capable of surviving a million miles of driving and recharging.
Another battery maker that also produces electric cars is BYD, backed since 2008 by US investment billionaire Warren Buffett. Shares in the company, listed in Shenzhen, have more than tripled since the start of 2020 – even after falling from record highs at the start of February. It capitalised on investor interest in January, selling stock worth $3.9bn.
Deep-pocketed rivals can spend heavily on technology, which adds to the pressure on Tesla. Nio’s big selling point is that its batteries can be swapped in minutes by robots – removing the threat of range anxiety for drivers of electric vehicles. Xpeng, valued at $24bn, has invested heavily in autonomous driving software, so could rival Tesla through lucrative sales of subscription-based self-driving capabilities. Its P7 sports saloon could target potential buyers of Tesla’s Model 3 and Model S in Europe, rather than the wealthier customers courted by Nio.
Xpeng, chaired by tech entrepreneur He Xiaopeng, has already launched its G3 SUV in Norway –which, thanks to government subsidies, last year became the first country to see sales of electric cars outstrip those of internal combustion engines. Xpeng is now deciding which European markets to target next, its vice chair, Brian Gu, told Automotive News in January.
Analysts have repeatedly cautioned that the electric car industry, from Tesla downwards, is in the midst of a bubble. Yet even if valuations tumble further after recent steep declines, the makers have already enjoyed cheap funding that will allow them to vie for a significant slice of the market.
“Underneath what happens with the stock price, it’s a belief in the electric vehicle industry,” said Nio’s Zhang. “It’s a belief in the business model that a company like Nio or Tesla is trying to strike.”
How they compare
Xpeng P7 Guangzhou-based Xpeng is considering launching its P7 premium saloon in Europe, with downloadable updates to self-driving software. Price 229,900 yuan in China (£25,600) Range 439 miles (according to the relatively lenient NEDC standard)
Nio ET7 A very large battery gives Nio’s saloon a long range and fast acceleration – 3.9 seconds to 62mph – as it goes up against Tesla’s Model S. Price 448,000 yuan (£50,000) Range 621 miles (NEDC)
BYD Tang EV600 Formerly a plug-in hybrid, the battery version of the Tang SUV will be on sale in Norway this year. Price 260,000 yuan (£28,900); Range 373 miles (NEDC)
Tesla Model Y Musk’s seven-seater SUV will be the first off the production line in Berlin. The performance version can manage 0 to 60mph in 3.5 seconds. Price $34,000 (£24,600) Range 303 miles (according to the stricter WLTP standard)
Google has backtracked on plans to welcome most workers back to its sprawling campus in September, becoming the latest Silicon Valley company to delay reopening amid a surge in Covid cases.
The company announced Wednesday it is postponing a return to the office until mid-October and rolling out a policy that will eventually require everyone who returns in person to be vaccinated.
The decision sees Google join Apple and Netflix in postponing calling employees back to the office due to concerns about the highly transmissible Delta variant, which now accounts for more than 80% of new cases in the US. Twitter also halted reopening plans and closed offices last week due to the Delta variant.
In an email to Google’s more than 130,000 employees worldwide, chief executive officer Sundar Pichai said the company is now aiming to have most of its workforce back to its offices beginning 18 October instead of its previous target date of 1 September.
Google’s delay also affects tens of thousands of contractors who Google intends to continue to pay while access to its campuses remains limited.
“This extension will allow us time to ramp back into work while providing flexibility for those who need it,” Pichai wrote. This marks the third time Google has pushed back the date for fully reopening its offices.
Pichai said that once offices are fully reopened, everyone working there will have to be vaccinated. The requirement will be first imposed at Google’s headquarters in Mountain View, California, and other US offices, before being extended to the more than 40 other countries where Google operates.
Facebook announced a similar policy on Wednesday, saying it will make vaccines mandatory for US employees who work in offices. Apple is reportedly also considering requiring vaccines.
“This is the stuff that needs to be done, because otherwise we are endangering workers and their families,” said Dr Leana Wen, a public health professor at George Washington University and a former health commissioner for the city of Baltimore. “It is not fair to parents to be expected to come back to work and sit shoulder-to-shoulder with unvaccinated people who could be carrying a potentially deadly virus.”
Because children under the age of 12 aren’t currently eligible to be vaccinated, parents can bring the virus home to them from the office if they are around unvaccinated colleagues, Wen said.
The delays from these companies could influence other major employers to take similar precautions, given that the technology industry has been at the forefront of the shift to remote work triggered by the spread of Covid-19.
Even before the World Health Organization declared a pandemic in March 2020, Google, Apple and many other prominent tech firms had been telling their employees to work from home.Manyothers in the tech industry have decided to let employees do their jobs from remote locations permanently.
Google’s decision to require employees working in the office to be vaccinated comes on the heels of similar moves affecting hundreds of thousands government workers in California and New York as part of stepped-up measures to fight the delta variant. Joe Biden is expected to announce a mandate that all federal government workers be vaccinated.
The rapid rise in cases during the past month has prompted more public health officials to urge stricter measures to help overcome vaccine skepticism and misinformation.
While other major technology companies may follow suit now that Google and Facebook have taken stands on vaccines, employers in other industries still may be reluctant, predicted Brian Kropp, chief of research for the research firm Gartner. Less than 10% of employers have said they intend to require all employees to be vaccinated, based on periodic surveys by Gartner.
“Google is seen as being such a different kind of company that I think it’s going to take one or two more big employers to do something similar in terms of becoming a game changer,” Kropp said.
Google’s effort to build a “Privacy Sandbox” – a set of technologies for delivering personalized ads online without the tracking problems presented by cookie-based advertising – continues to struggle with its promise of privacy.
The Privacy Sandbox consists of a set of web technology proposals with bird-themed names intended to aim interest-based ads at groups rather than individuals.
Much of this ad-related data processing is intended to occur within the browsers of internet users, to keep personal information from being spirited away to remote servers where it might be misused.
So, simply put, the aim is to ensure decisions made on which ads you’ll see, based on your interests, take place in your browser rather than in some backend systems processing your data.
Google launched the initiative in 2019 after competing browser makers began blocking third-party cookies – the traditional way to deliver targeted ads and track internet users – and government regulators around the globe began tightening privacy rules.
The ad biz initially hoped that it would be able to develop a replacement for cookie-based ad targeting by the end of 2021.
But after last month concluding the trial of its flawed FLoC – Federated Learning of Cohorts – to send the spec back for further refinement and pushing back its timeline for replacing third-party cookies with Privacy Sandbox specs, Google now acknowledges that its purportedly privacy-protective remarketing proposal FLEDGE – First Locally-Executed Decision over Groups Experiment – also needs a tweak to prevent the technology from being used to track people online.
On Wednesday, John Mooring, senior software engineer at Microsoft, opened an issue in the GitHub repository for Turtledove (now known as FLEDGE) to describe a conceptual attack that would allow someone to craft code on webpages to use FLEDGE to track people across different websites.
That runs contrary to its very purpose. FLEDGE is supposed to enable remarketing – for example, a web store using a visitor’s interest in a book to present an ad for that book on a third-party website – without tracking the visitor through a personal identifier.
Michael Kleber, the Google mathematician overseeing the construction of Privacy Sandbox specs, acknowledged that the sample code could be abused to create an identifier in situations where there’s no ad competition.
“This is indeed the natural fingerprinting concern associated with the one-bit leak, which FLEDGE will need to protect against in some way,” he said, suggesting technical interventions and abuse detection as possible paths to resolve the privacy leak. “We certainly need some approach to this problem before the removal of third-party cookies in Chrome.”
In an email to The Register, Dr Lukasz Olejnik, independent privacy researcher and consultant, emphasized the need to ensure that the Privacy Sandbox does not leak from the outset.
It will all be futile if the candidates for replacements are not having an adequate privacy level on their own
“Among the goals of Privacy Sandbox is to make advertising more civilized, specifically privacy-proofed,” said Olejnik. “To achieve this overarching goal, plenty of changes must be introduced. But it will all be futile if the candidates for replacements are not having an adequate privacy level on their own. This is why the APIs would need to be really well designed, and specifications crystal-clear, considering broad privacy threat models.”
The problem as Olejnik sees it is that the privacy characteristics of the technology being proposed are not yet well understood. And given the timeline for this technology and revenue that depends on it – the global digital ad spend this year is expected to reach $455bn – he argues data privacy leaks need to be identified in advance so they can be adequately dealt with.
“This particular risk – the so-called one-bit leak issue – has been known since 2020,” Olejnik said. “I expect that a solution to this problem will be found in the fusion of API design (i.e. Turtledove and Fenced Frames), implementation level, and the auditing manner – active search for potential misuses.
“But this particular issue indeed looks serious – a new and claimed privacy-friendly solution should not be introduced while being aware of such a design issue. In this sense, it’s a show-stopper, but one that is hopefully possible to duly address in time.” ®
The Government and Enterprise Ireland are providing two funds to regional Irish businesses in a bid to help them transition to a greener, digital economy.
The Government has today (29 July ) announced it will provide €10m in funding through Enterprise Ireland to projects supporting digitalisation and the transition to a green economy.
The Regional Enterprise Transition Scheme, worth €9.5m, will provide grant funding to regional and community-based projects focused on helping enterprises to adapt to the changing economic landscape due to Covid-19 and Brexit.
Leo Clancy, CEO, Enterprise Ireland said: “The Regional Enterprise Transition Scheme is aimed at supporting regional development and the regional business eco-system, helping to create and sustain jobs in the regions impacted by Covid-19.”
Grants of up to €1.8m or 80pc of project cost are available to businesses. The projects should aim to address the impact of Covid-19 and improve the capability and competitiveness of regional enterprises.
The call for the Regional Enterprise Transition Scheme will close on 8 September 2021. The successful projects will be announced in October and all funding will be provided to the successful applicants before the end of the year.
A separate funding scheme, the €500,000 Feasibility Study fund, will provide financial support to early-stage regional enterprise development projects.
Launching the funding schemes, Minister of State for Trade Promotion, Digital and Company Regulation, Robert Troy TD said the funds would “help stimulate transformational regional projects to support enterprises embrace the opportunities of digitalisation, the green economy as well as navigate the changed landscape arising from Covid-19.”
Minister of State for Business, Employment and Retail, Damien English TD commented at the launch that the funds would help “build Covid-19 and Brexit resilience and enable applicants to support enterprises and SMEs to respond to recent economic and market challenges which also includes the transition to a low carbon economy, digital transformation and smart specialisation.”
The Feasibility Fund is open to new projects, with grants available of up to €50,000 or 50pc of project cost and will allow promoters to test their project concept and deliver virtual or site-based solutions to their target audience.
Applications for the Feasibility Fund close on 1st October 2021.
For more information and details on how to apply for the funds, see here and here.