If you were an automaker, you want to be in the 3 big markets for the US, Europe and China. The Chinese market is tied to government policy and at the moment, for a number of reasons, the government of China wants the Chinese to buy electric vehicles or EV vehicles. Fortunately in China, the government allows for a wide variety of prices from $5,000 to plus $100,000.
In an article by Keith Bradsher of the New York Times News Agency, after the New York and Detroit Auto Shows, the Shanghai auto show is one the world’s largest and since 2019 the biggest one in years. It is very interesting to note in today’s markets, half the cars sold in Shanghai are electric. The projections are within 2 years, half of the vehicles sold in China will be electric, up from 6% in 2020.
Brian Gu, the President and Vice-Chair of Xpeng, said his company planned to reduce the cost of building a powertrain – primarily the battery and electric motor – by 25% at the end of the year. Powertrains represent about 2/5s of Xpeng’s overall cost of building an electric car.
Ashwani Gupta, the CEO of Nissan said the latest designs from his company would cut powertrain costs by 30%.
Most of the cars on display were using lithium batteries, although companies are developing vehicles that run fully or partly on batteries made of sodium.
Linking to dividend paying stocks, if you ever listen to the Ramsay show, Dave Ramsay often suggests people buy a beater or second hand car or gently used vehicle for $5,000 or less. If people could buy an electric for that would they? In China you can. In all markets, there is a leader and at the moment the innovation and development leader in electric vehicles is in China, although the large European and American companies are well represented in China with their own developments and joint ventures. The larger companies have resources and time on their side to ensure what type of components become the standard and they can mass produce the standard equipment and sell vehicles. Innovation is fun, interesting to watch and you can use your dividends to buy companies doing the innovation. They will likely be taken over by the larger companies and you will make your money back. In the meantime, ensure the bulk of your investments is in dividend paying companies to sleep better at night.
There are more questions than answers, till the next time – to raising questions.