Daily Brief: China’s EV Sales Keep Making The Rest Of Us Look Bad

Daily Brief: China’s EV Sales Keep Making The Rest Of Us Look Bad

over 1 year ago3 mins

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Chinese EV sales are forecast to hit a record 6 million this year, according to data out on Tuesday.

What does this mean?

There were twice as many sales of “new energy vehicles” (NEVs) – both pure battery EVs and plug-in hybrids – in July as there were a year ago, according to the China Passenger Car Association. That brings the total to around 486,000, or 27% of the country’s car market that month. That’s led the organization to increase its forecasts for this year’s NEV sales, lifting them to 6 million. That’s double last year’s total, and dwarfs the 3.2 million and 1.2 million expected to be sold in Europe and the US in 2022.

China EV market

Why should I care?

Zooming in: BYD isn’t playing fair.

The data also showed that Tesla sold 64% fewer vehicles in July than the month before, largely because Tesla shut its Shanghai gigafactory for an upgrade. That means BYD sold almost six times more than its biggest rival, but it does have an added advantage: plug-in hybrids accounted for more than half its sales, while Tesla doesn’t make them at all. That’s important because they’re much easier to pitch to EV-curious buyers: they come with the same subsidies they would if they were an out-and-out EV, along with a traditional engine in case they run out of juice.

Tesla sales

The bigger picture: The US comes through.

China is by far the EV frontrunner, but at least the US is trying to close the gap: it passed a bill on Sunday that – among other green initiatives – lifts the cap on the number of tax credits that EV makers are eligible for. That’s a big win for Tesla, which hit the limit way back in 2018. Better yet, its major rivals Lucid Motors and Rivian don’t have any models cheap enough to qualify for the credit, which is only available on new EVs under $55,000.

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Nvidia Warned Investors To Steel Themselves

Nvidia image

Chipmaker Nvidia gave a far worse-than-expected earnings preview earlier this week.

What does this mean?

Nvidia isn’t due to give its official quarterly earnings update until later this month, but things seem so bleak that it’d rather let the cat out the bag sooner rather than later. The chipmaker’s expecting its second-quarter revenue to come in around $6.7 billion – a 19% drop from the quarter before, and well below the $8.1 billion it previously predicted. It put that down to its gaming division: Nvidia’s expecting its second-quarter gaming revenue – which accounted for almost 60% of its sales last year – to be 44% lower than the quarter before, and a third less than the same time in 2021. Investors certainly weren’t playing games: they sent Nvidia’s shares down 6% after the announcement.

Nvidia revenue
Source: The Wall Street Journal, Nvidia

Why should I care?

Zooming in: Was it really gaming, though?

You’d be forgiven for thinking that gamers have just been turning off their consoles, but there could be something else at play. Nvidia was fined by US regulators back in May for attributing a huge boost in revenue to its gaming segment, even though a lot of those high-spec chips were actually going to crypto miners. So it’s probably no coincidence that the segment’s sales have dropped off just as the prices of bitcoin and ether – and in turn the potential rewards from mining – are down by over 50% this year.

Nvidia revenue types
Source: Nvidia

The bigger picture: This could be just the start.

Nvidia can categorize its crypto mining chips however it likes: it’s not going to change the fact that Ethereum is doing away with mining altogether on September 12th in one of the biggest events ever seen in the crypto world. That’ll wipe out a huge source of demand in one fell swoop, and could take the chipmaker’s revenue along with it.

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