Bottom line: Nio’s shares are likely to debut flat to down slightly in a lackluster New York trading debut, capping an IPO process pockmarked by investor skepticism.
Investors fail to charge Nio IPO
Wall Street investors will get a taste of a new flavor of Chinese company very soon, when homegrown electric vehicle maker Nio makes its trading debut on Wednesday. But based on all the signals so far, this offering for a company that some have likened to China’s answer to Tesla (Nasdaq: TSLA) could be a major flop. That would be somewhat appropriate given all of the real Tesla’s current woes, which point to the difficulties of building up a major new car maker from scratch.
Nio’s road to New York has been pockmarked with negative signposts pretty much all of the way. The latest of those has media reporting the company has priced its IPO American depositary shares (ADSs) at the very bottom of their range, at a price of $6.25 apiece, raising a total of $1 billion. (English article) That compares with an initial target of up to $1.8 billion, and I’ve heard that even that figure was trimmed back from initial hopes of more like $2 billion. (English article) Read Full Post…
Bottom line: Tesla’s announcement that its China plant is three years away puts a clear and realistic timeline on its intentions, which include strong growth in the market banking on supportive policies by Beijing.
Tesla gets realistic about China car production
Anyone who was hoping that electric car superstar Tesla (Nasdaq: TSLA) would start cranking out its products in China anytime soon will have to think again. Founder and celebrity CEO Elon Musk has poured cold water on all the speculation about his company imminently building a China manufacturing base by saying local production is at least 3 years off. That’s just a single data point, but it’s quite a significant one considering all the talk that’s been swirling around these days.
That talk dates back a couple of years, when reports first emerged that Tesla was interested in such a move. One of the stumbling blocks all along has been the ownership issue, since China now limits foreign ownership of any car-making joint venture to 50 percent. But that looks set to change, which had fueled speculation that Tesla would step on the gas pedal once it got the green light, pardon all the car metaphors. Read Full Post…
Bottom line: New reports detailing big amounts of idle wind and solar plants, and Beijing’s plans for a new EV incentive scheme, reflect wasteful spending under earlier development plans, the result of China’s rush to quickly develop the new energy sectors.
Huge volumes of China solar, wind plants sit idle
Two new reports are shining a spotlight on the failure of China’s efforts to promote new energy through the construction of wind and solar power plants, and to put more hybrid and electric vehicles (EVs) on the road. Neither report will come as a huge surprise, since the failure of both efforts has been widely reported this year. But they both highlight how cutting-edge industries promoted by Beijing often attract participants more interested in getting generous government subsidies than actually building anything of value. Read Full Post…
Bottom line: BYD’s latest new share issue, including a sale to Samsung, reflects a dire need for cash as its electric vehicles fail to gain traction, and could be followed by more fund raising in the next 12 months.
BYD issues more new shares
Sputtering electric car maker BYD (HKEx: 1211; Shenzhen: 002594) is making some big adjustments in a bid stabilize its financial footing, with word of a major new share sale that includes the addition of Korea’s Samsung (Seoul: 005930) as a stakeholder. At the same time, that same new share issue has further diluted one of the company’s oldest and most loyal stakeholders, US billionaire investor Warren Buffett. Following this latest shift, Buffett’s holdings in the company are about half of what they were when he first purchased nearly 10 percent of BYD in 2008, when it looked poised to become a new energy car superstar. Read Full Post…
Bottom line: Beijing needs to overhaul its new energy vehicle policies to reward companies that truly innovate and manufacture cars that buyers are really driving.
BYD loses bulk of big bus order
A series of headlines last week showed how fat and even corrupt China’s booming electric vehicle (EV) sector has become in a very short time, spotlighting an urgent need for reform. The sector’s rapid evolution to its current state repeats a familiar pattern, which sees huge amounts of wasted investment and other inefficiencies emerge when local governments and inexperienced companies flock to industries targeted by Beijing for rapid development. Read Full Post…
Bottom line: Tesla will announce a joint venture production facility in Shanghai within the next 1-2 months, and could see its China sales pick up sharply after its more affordable Model 3 reaches the market next year.
Telsa eyeing China home in Shanghai?
Just a week after Disney (NYSE: DIS) launched its newest theme park in Shanghai, media are saying that new energy car superstar Tesla (Nasdaq: TSLA) is also eyeing China’s commercial capital as the location for a new production base costing up to $9 billion. We should note from the start that the potential partner mentioned in the reports, the Shanghai government-owned Jinqiao Group, has denied the signing of a memorandum of understanding (MOU) for such a deal. But in this case I trust the source of the story, Bloomberg, more than the Chinese officials who have a track record of denying reports that later turn out to be true. Read Full Post…
Bottom line: A new report spotlighting suspicious sales by BYD shows that last year’s EV explosion in China was fueled by people seeking to pocket government subsidies, while Yingli looks set to receive a government bailout from Beijing.
Yingli set to get new government rescue
A couple of stories from China’s new energy sector, one from the car space and the other from solar panels, are shining a spotlight on the challenges companies are facing after becoming too reliant on government support. One recounts a twisted tale involving electric car maker BYD (HKEx: 1211), and shows how its boom in sales last year may have been largely due to big government rebates for buyers. The other has Beijing telling one of the nation’s biggest policy lenders to provide money for struggling solar panel maker Yingli (NYSE: YGE) before it defaults on a bond payment due next month.
Let’s begin with BYD, which has experienced a rocky road over the last few years as its dream of a future filled with new energy vehicles failed to take off. That seemed to change last year, as new energy vehicle sales suddenly exploded at the company backed by billionaire investor Warren Buffett. BYD and industry boosters said the sales explosion showed that Beijing’s years of support for the sector was finally bearing fruit. Read Full Post…
Bottom line: BYD’s EV sales are likely to see strong growth based on government-supported buying in China this year, but could slow sharply in 2017 if China’s economic slowdown accelerates.
Li Lu boosts BYD stake
Chinese electric vehicle (EV) maker BYD (HKEx: 1211; Shenzhen: 002594) shot into the headlines in 2008 when investment guru Warren Buffett bought 10 percent of the company. But it has struggled to find a mass audience for its cars since then, at times raising doubts about its future. That seems to be changing recently, as a nascent surge in its home China market has quietly begun to charge up the business, bringing some excitement back to the company.
Now one of BYD’s biggest backers, the man who first introduced the company to Buffett, is quietly building up his own stake in BYD, and disclosed that his LL Group recently bought more shares to boost its stake to 8.24 percent. (HKEx announcement) That’s up from 6.3 percent of BYD’s H-shares that LL Group, formerly known as Himalaya Capital, held at the middle of last year, and is a sign of growing confidence by LL Group founder Li Lu. Read Full Post…
Bottom line: Tesla’s China reboot appears to be complete, paving the way for it to gain some traction in the market by year end if it can effectively target the nation’s wealthy, image-conscious trend setters.
Tesla finishes China reboot
Nearly a year after driving into China on a wave of fanfare and big hopes, electric vehicle (EV) superstar Tesla (Nasdaq: TSLA) is pressing the reset button on a market that has huge potential but also some major obstacles. This particular reset has been in the works for the last few months, but appears to be near completion with indications that the company has discarded its previous short-term aggressive sales targets for the market.
The reboot to Tesla’s China business is discussed in a series of interviews by Zhao Kuiming, its head of China sales, who was on a PR offensive following the recent overhaul. (Chinese article) It’s unclear from the reports if Zhao is new to Tesla, but he appears to be the company’s new public face after previous China President Veronica Wu resigned in December after just 9 months on the job. (previous post) Read Full Post…
Bottom line: BYD’s latest asset sale, combined with its new auto finance joint venture, are both aimed at boosting its struggling EV business, but it may have to sell off more assets before the market finally starts to gain some momentum.
BYD sells electronic component unit
Struggling electric car maker BYD (HKEx: 1211; Shenzhen: 002594) is starting to look a bit desperate, announcing a major asset sale just days after it received approval for a stalled finance joint venture aimed at boosting its sputtering sales. The approval this week for its auto finance joint venture comes as rival Geely (HKEx: 175) also has just announced its own approval for a similar stalled joint venture with France’s BNP Paribas (Paris: BNP). That indicates Beijing may be starting to worry about a broader slowdown in China’s car market after several years of breakneck growth. Read Full Post…
Bottom line: Tesla and other EV makers are likely to face an uphill road in China for the next year, but prospects could start to improve in mid 2015 as new initiatives gain momentum.
Tesla launches trade-in program
Reports on a new trade-in promotion from Tesla (Nasdaq: TSLA) are adding fuel to talk earlier this month that the high-flying electric vehicle (EV) maker isn’t doing as well as hoped in China, where sales have gotten off to a slow start. This kind of a sluggish start isn’t too unexpected, since EVs are rare in China and face many obstacles despite a strong push by Beijing to boost the sector. Tesla should be commended for its numerous efforts to promote EV development in China through a wide range of initiatives, but is also largely to blame for the building disappointment after it built up huge expectations for itself in the market. Read Full Post…
