Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

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<ol><li>In our October 11th note <a href="https://www.smartkarma.com/insights/commercial-evs-and-autonomous-vehicles-in-china-pace-of-adoption-may-surprise-part-1-of-3" target="_blank" data-smartkarma-citation="insights:6352">Commercial EVs and Autonomous Vehicles in China: Pace of Adoption May Surprise (Part 1 of 3)</a> we argued that the pace of adoption of EVs in China could surprise on the upside -- if the right incentives are put in place. We noted that commercial vehicles (CVs) have a few unique characteristics that should make buyers more responsive to incentives: a) they are purchased mainly based on cost per km; b) the relative stability of electricity prices (vs. fossil fuels) is attractive to fleet owners; and c) the operating cycles of many CVs neatly match the recharging cycles of many EVs.</li><li>To these three characteristics from our original note we should add two more: d) many CVs are purchased in fleets, ie, in large numbers, featuring uniform specs; and e) for some types of CVs, governments are key buyers, meaning authorities can directly promote EV policy through the purchases they make for their country, province, municipality, or state-owned enterprise (SOE). </li><li>In Part 1 of this series we identified mini trucks and small trucks as the segments within the CV space most likely to see aggressive EV adoption in the medium-term. This is because of their relatively high sales volume and the wide availability of low-cost EV powertrains capable of powering these vehicles. To these we need to add metro (city) buses, which, though expensive, are virtually always part of large fleets and often purchased by governments. </li><li>Cases of subsidy fraud uncovered earlier this year in China's commercial EV space (primarily buses, in fact) is a frustrating setback, but we believe this unfortunate event could be turned into opportunity to re-vamp incentive schemes, making them more effective and less vulnerable to abuse. </li><li>In this note we attempt to identify some investable companies with significant exposure to commercial EVs and related components and systems. We include names with exposure to EVs today, as well as a few names that expect to gain greater exposure in the medium-term. We also discuss ways in which EV subsidies could be improved to help speed adoption by owners of commercial fleets (while reducing the likelihood of fraud). </li></ol>

In our October 11th note Commercial EVs and Autonomous Vehicles in China: Pace of Adoption May Surprise (Part 1 of 3) we argued that the pace of adoption of EVs in China could surprise on the upside -- if the right incentives are put in place. We noted that commercial vehicles (CVs) have a few unique characteristics that should make buyers more responsive to incentives: a) they are purchased mainly based on cost per km; b) the relative stability of electricity prices (vs. fossil fuels) is attractive to fleet owners; and c) the operating cycles of many CVs neatly match the recharging cycles of many EVs.To these three characteristics from our original note we should add two more: d) many CVs are purchased in fleets, ie, in large numbers, featuring uniform specs; and e) for some types of CVs, governments are key buyers, meaning authorities can directly promote EV policy through the purchases they make for their country, province, municipality, or state-owned enterprise (SOE). In Part 1 of this series we identified mini trucks and small trucks as the segments within the CV space most likely to see aggressive EV adoption in the medium-term. This is because of their relatively high sales volume and the wide availability of low-cost EV powertrains capable of powering these vehicles. To these we need to add metro (city) buses, which, though expensive, are virtually always part of large fleets and often purchased by governments. Cases of subsidy fraud uncovered earlier this year in China's commercial EV space (primarily buses, in fact) is a frustrating setback, but we believe this unfortunate event could be turned into opportunity to re-vamp incentive schemes, making them more effective and less vulnerable to abuse. In this note we attempt to identify some investable companies with significant exposure to commercial EVs and related components and systems. We include names with exposure to EVs today, as well as a few names that expect to gain greater exposure in the medium-term. We also discuss ways in which EV subsidies could be improved to help speed adoption by owners of commercial fleets (while reducing the likelihood of fraud). 

Commercial EVs and Autonomous Vehicles in China: Don't Miss the Bus! (Part 2 of 3)

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Advanced Lithium Electrochemistry Cayman Co Ltd manufacturing lithium iron phosphate cathode materials and battery solutions.

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Commercial EVs and Autonomous Vehicles in China: Don't Miss the Bus! (Part 2 of 3)

In our October 11th note Commercial EVs and Autonomous Vehicles in China: Pace of Adoption May Surprise (Part 1 of 3) we argued that the pace of...

Daniel Hellberg

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