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)
More recently, Cotter placed third in this year’s Ideate Ireland business competition, which rewards entrepreneurial skills and new ideas from undergraduate and postgraduate students. He shared his third-place prize of €5,000 with Dr Fiona McGillicuddy and Dr Rachel Byrne of MetHealth.
Earlier in the year, Cotter Agritech participated in the inaugural AgTechUCD Agccelerator Programme, which was dedicated to early-stage agritech and food-tech start-ups. At the end of the 12-week programme, Cotter Agritech was named the winner of the AIB and Yield Lab AgTech Start-up 2022 Award, winning €10,000.
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The EU has moved to rein in the “wild west” of crypto assets by agreeing a groundbreaking set of rules for the sector, adding to pressure on the UK and US to introduce their own curbs.
Representatives from the European parliament and EU states inked an agreement late on Thursday that contains measures to guard against market abuse and manipulation, as well as requiring that crypto firms provide details of the environmental impact of their assets.
“Today, we put order in the wild west of crypto assets and set clear rules for a harmonised market,” said Stefan Berger, the German MEP who led negotiations on behalf of the parliament.
Referring to the recent slump in cryptocurrency prices – the total value of the market has fallen from $3tn (£2.5tn) last year to less than $900bn – Berger added: “The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act.”
The markets in crypto assets (MiCA) law is expected to come into force at about the end of 2023. Globally, crypto assets are largely unregulated, with national operators in the EU required only to show controls for combating money laundering.
Cryptocurrency is the term for a group of digital assets that share the same underlying structure as bitcoin: a publicly available “blockchain” that records ownership without having any central authority in control.
The sector’s supporters have said it represents a good investment because, for instance, it carries low fees and, unlike conventional currencies, is not tied to governments. Nevertheless, its detractors say a lack of regulatory oversight or implicit government support, because of crypto and bitcoin’s independent origins, make it susceptible to scams and wild fluctuations in price.
MiCA will be the first comprehensive regime for crypto assets in the world and will contain strong measures to guard against market abuse and manipulation, Ernest Urtasun, a Green party MEP, said.
The new law gives issuers of crypto assets and providers of related services a “passport” to serve clients across the EU from a single base, while meeting capital and consumer protection rules. Non-fungible tokens (NFTs), a $40bn market last year, are not covered by MiCA.
The EU negotiations on Thursday also focused on issues such as supervision and energy consumption of crypto assets. “We have agreed that crypto asset providers should in future disclose the energy consumption and environmental impact of assets,” Berger said.
The UK and US, two significant crypto centres, have yet to approve similar rules, although regulators in both countries have warned of the need for stronger safeguards in the sector.
The MiCA law is expected to set a benchmark for other regulatory regimes for crypto globally, although one expert said the all-encompassing nature of the EU regime might not be replicated.
Harry Eddis, the global co-head of fintech at Linklaters, a London-based law firm, said the EU had “nailed its crypto colours to the mast” with the law.
“Other jurisdictions have shown little appetite to date in following their lead in implementing such an all-encompassing regulation, although we can surely expect to see other financial services centres upping their game in regulating the crypto community, albeit in a more piecemeal fashion.”
In May, the Treasury declared it wants a regime in place for dealing the collapse of a stablecoin, a cryptocurrency that is backed by traditional assets such as short-term debt and therefore could pose a risk to the wider financial system.
Crypto assets came under pressure after the collapse of the TerraUSD stablecoin project in May, with the major US cryptocurrency lending company Celsius Network freezing withdrawals and transfers. However, the sector has also proven susceptible to wider economic factors.
These include stock market declines linked to rising inflation and ensuing increases in interest by central banks. Raising rates – a path taken by the US, UK and Swiss central banks last month – can make risky assets less attractive.
For instance, certain tech stocks, whose price can be based on expectations of strong future earnings over many decades, can be less appealing than the fixed returns on offer immediately from investments such as bonds, which become more attractive in a higher lending rate environment.
The regulatory breakthrough came as India’s central bank said cryptocurrencies were based on “make believe”. The bank’s latest financial stability report said cryptocurrencies were no more than “sophisticated speculation”.
The bank’s governor, Shaktikanta Das, wrote: “Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying [value], is just speculation under a sophisticated name.”
Dundee Satellite Station’s home turf at Scotland’s Errol Aerodrome is to host an Optical Ground Station to test and demonstrate satellite quantum secure communications.
The name may sound familiar. Dundee Satellite Station Ltd. is a phoenix rising from the ashes of the University of Dundee Satellite Receiving Station (DSRS), which was axed in 2019 after more than 40 years of operations.
The Natural Environment Research Council (NERC) cut funding for the facility in 2019 and, despite protestations from the likes of NASA, the lights went out when Dundee University refused to underwrite the annual costs of £338,000. As a reminder, the Principal of the University (paid nearly £300,000 including pension contributions) departed later that year under somewhat of a cloud.
The services provided by DSRS have proven invaluable over the years, with a vast archive of data collected from satellites by its receivers available to the public and industry alike. However, and despite repeated claims from politicians of the importance of space technology to the country’s economy, it appeared to be all over.
Or not. In 2020 former staffer Neil Lonie told The Register that plans were afoot to rescue the tracking antennas and reconstruct the facility at the RAF Errol airfied. The Register took a trip to the site this year, and we were impressed by the achievement of the small team in bringing the service back online.
Station operations director Neil Lonie and technical director Paul Crawford
The story of how Dundee Satellite Station Ltd. rose from the ashes of the Dundee Satellite Receiving Station is one of ingenuity and tenacity, particularly considering the pandemic. Having made the decision to proceed, the team were able to commence commercial operations in the opening months of 2021 (the first imagery was received by the 3.7m antenna in September 2020). Fiber has since been laid to keep the satellite data flowing.
The decision to host the quantum Optical Ground Station (OGS) at Errol is further testament to the effort that has gone into the resurrection of the facility.
The system will consist of a quantum signal transmitter payload on a satellite and a quantum signal receiver attached to the OGS on the ground. A reflective 70cm telescope will be used to track the Low Earth Orbit satellite with high precision. Quantum secure communications (another weapon in the armory against cyber attacks) usually run along terrestrial fiber links, but are limited by distance. The hope is that the use of satellites will allow quantum communications to be sent securely all over the world.
The project is a joint venture between Dundee Satellite Station Ltd. and researchers at Heriot-Watt University. The Errol site, located on the bank of the River Tay, benefited from excellent sight lines and low light pollution. Having visited, we’ll have to take the researchers word for cloud cover.
There are four antennas erected so far; 3.7-meter and 2.4-meter tracking antennas and a further two 2.8-meter antennas. Upgrades, the refurbishment of a another 2.8m antenna and a pair of geostationary antenna are in the pipeline, and now the OGS telescope. Reception and transmission in VHF, UHF, L-band, S-band, X-band, Ku-band, and the ground station support options are also on tap, and also handy for Scotland’s burgeoning vertical launch industry as well as satellite tracking.
Going forwards, there are plans afoot for an additional site and power backups beyond UPS units. While the site can be mostly remotely managed, the size of the team means round-the-clock coverage is tricky and depends on the needs of customers. “The goal is to have enough staff that we can actually do 24-hour support,” technical director Paul Crawford told us.
All of which require commercial contracts and revenues. The Dundee Satellite Station has been quietly notching up customers during its first year and a half of operations, and the OGS project is a further demonstration of the determination of a team unwilling to be parted from their antennas.