Forensic Analyst

Jason Yap, CFA

Forensic Accounting

On 20 August 2021, the Cyberspace Administration of China and the Ministry of Transport, together with other relevant authorities, jointly issued the Provisions on Management of Automotive Data Security (Trial) ("Auto Data Provisions"). 
The Auto Data Provisions since took effect on 1 October 2021 to limited fanfare, with media headlines instead focused on the Personal Information Protection Law ("PIPL"), which took effect on 1 November 2021, and specific affected sectors, such as <a href="https://www.reuters.com/business/chinese-online-brokers-futu-up-fintech-face-regulatory-risks-peoples-daily-2021-10-14/" target="_blank" rel="noopener">China online brokerages</a>. 
Further, on 29 October 2021, regulators issued <a href="https://asia.nikkei.com/Business/China-tech/China-to-tighten-rules-on-data-transfers-abroad-with-review-trigger" target="_blank" rel="noopener">draft data protection regulations</a> which provide that businesses in China face a national security review prior to transfers outside the country of personal information of 100,000 individuals or more.  The draft consultation period will last through 28 November 2021, following which the directives would likely take effect soon after. 
EVs of today are no longer a mere mode of transport that depend on analog platforms.  As EV companies race to develop autonomous driving technologies, most if not all EV companies now harness vast amounts of users and real-time mobility data.  Think <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a>. 
Yet, apart from <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a>, Chinese EV manufacturers (all listed in the US) such as <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a>, <a href="https://www.smartkarma.com/entities/xpeng-inc" target="_blank" data-smartkarma-citation="entities:29217:1" rel="noopener">Xpeng (XPEV US)</a> and <a href="https://www.smartkarma.com/entities/li-auto-inc" target="_blank" data-smartkarma-citation="entities:28812:1" rel="noopener">Li Auto Inc. (LI US)</a> have remained largely unscathed from the news flow and analysis surrounding data security in China. 
In this Insight, we discuss what the Auto Data Provisions entail, whether Chinese EV companies face any repercussions from tightening of data security laws, and which one is the most at risk.

On 20 August 2021, the Cyberspace Administration of China and the Ministry of Transport, together with other relevant authorities, jointly issued the Provisions on Management of Automotive Data Security (Trial) ("Auto Data Provisions"). 
The Auto Data Provisions since took effect on 1 October 2021 to limited fanfare, with media headlines instead focused on the Personal Information Protection Law ("PIPL"), which took effect on 1 November 2021, and specific affected sectors, such as China online brokerages. 
Further, on 29 October 2021, regulators issued draft data protection regulations which provide that businesses in China face a national security review prior to transfers outside the country of personal information of 100,000 individuals or more.  The draft consultation period will last through 28 November 2021, following which the directives would likely take effect soon after. 
EVs of today are no longer a mere mode of transport that depend on analog platforms.  As EV companies race to develop autonomous driving technologies, most if not all EV companies now harness vast amounts of users and real-time mobility data.  Think DiDi Global (DIDI US). 
Yet, apart from Tesla Motors (TSLA US), Chinese EV manufacturers (all listed in the US) such as NIO Inc (NIO US), Xpeng (XPEV US) and Li Auto Inc. (LI US) have remained largely unscathed from the news flow and analysis surrounding data security in China. 
In this Insight, we discuss what the Auto Data Provisions entail, whether Chinese EV companies face any repercussions from tightening of data security laws, and which one is the most at risk. 

Nio Inc (Nio US) - Automotive Data Security, Delivery Declines and Hefei Investors

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

Equity Bottom-Up

<ul><li>XPeng and Baidu leading China's autonomous driving technology advancements in 2023</li><li>Malaysia's semiconductor sector set for growth in 3Q24 with talent recruitment and AI integration</li><li>Singtel partners with SK Telecom for 6G and AI innovation, while automakers persist in V2X development efforts</li></ul>

XPeng and Baidu leading China's autonomous driving technology advancements in 2023Malaysia's semiconductor sector set for growth in 3Q24 with talent recruitment and AI integrationSingtel partners with SK Telecom for 6G and AI innovation, while automakers persist in V2X development efforts

Tech Supply Chain Tracker (19-Jul-2024): China's auto exports, 2023.

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>BZ US: Age 16-24 unemployment rate declined for three consecutive months, mainly driven by the manufacturing sector.（+）</li>
<li>LI US/NIO US/XPEV US/1810 HK/1211 HK: EV post holiday sales weak, LI and AITO strong but NIO and Xiaomi down.（/////////）</li>
<li>1810 HK: Xiaomi to launch new products on July 19th (/)</li>
</ul>


BZ US: Age 16-24 unemployment rate declined for three consecutive months, mainly driven by the manufacturing sector.（+）
LI US/NIO US/XPEV US/1810 HK/1211 HK: EV post holiday sales weak, LI and AITO strong but NIO and Xiaomi down.（/////////）
1810 HK: Xiaomi to launch new products on July 19th (/)


[Blue Lotus Daily]:BZ US/LI US/NIO US/XPEV US/1810 HK/1211 HK

<ul>
<li>LKNCY US: Luckin Coffee Opens Its 20,000th Store . (+)</li>
<li>1810 HK/NIO US/XPEV US/1211 HK:July holiday saw normal seasonliaty in EV sales, Xiaomi ramp up nicely（///////）</li>
<li>XPEV US: Details of new refreshed Xpeng sedan P7 revealed (+)</li>
</ul>


LKNCY US: Luckin Coffee Opens Its 20,000th Store . (+)
1810 HK/NIO US/XPEV US/1211 HK:July holiday saw normal seasonliaty in EV sales, Xiaomi ramp up nicely（///////）
XPEV US: Details of new refreshed Xpeng sedan P7 revealed (+)


[Blue Lotus Daily]:LKNCY US/1810 HK/NIO US/XPEV US/1211 HK/MNSO US/3690 HK/981 HK/AAPL US/700 HK

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We summarize the Jun 2024 price discounts at dealers for major automakers in this report.</li><li>Note that such discounts for each automaker are calculated based on the weighted average of May 2024 retail sales volume for each model, as Jun 2024 retail sales volume data have not been released yet.</li><li>The industrywide average discounts widened by 0.6ppts MoM in Jun based on our calculations, similar to the pace in May, again driven by German and Japanese brands.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We summarize the Jun 2024 price discounts at dealers for major automakers in this report.Note that such discounts for each automaker are calculated based on the weighted average of May 2024 retail sales volume for each model, as Jun 2024 retail sales volume data have not been released yet.The industrywide average discounts widened by 0.6ppts MoM in Jun based on our calculations, similar to the pace in May, again driven by German and Japanese brands.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Auto - Chinese brands’ 2Q earnings could be resilient

China

FAW Jiefang Group Co., Ltd, through joint ventures, manufactures and markets cars and auto parts.  The Company produces automobiles, transmission systems, and engines.  FAW Car also provides auto repair and customizing services.

BAIC BluePark New Energy Technology Co.,Ltd. operates as a passenger car manufacturer. The Company engages in research, development, and marketing of new energy vehicles and power battery system. BAIC BluePark New Energy Technology conducts businesses in China.

BAIC BluePark New Energy Techn (600733 CH)

Chongqing Changan Automobile Company Limited develops, manufactures, and markets mini cars, mini sedans, full size sedans, and engines.

Chongqing Changan Automobile Company (200625 CH)

Anhui Jianghuai Automobile Co., Ltd. manufactures and markets bus and truck chassis, gear boxes, other auto parts, and business automobiles.

NIO Inc. manufactures and sells automobiles. The Company offers electric vehicles and parts, as well as provides battery charging services. NIO serves customers worldwide.

Dongfeng Motor Group Company Limited, through joint ventures, designs, manufactures, and markets diesel engines, light trucks, automobiles, castings, and related spare parts.

China Automotive Engineering Research Institute Company Limited develops, manufactures and sells automotive products, provides consulting, automotive testing and evaluation services. The Company's main products include dump trucks, concrete mixer trucks, and sanitation trucks.

China Automotive Engg Rsrch Inst (601965 CH)

Beiqi Foton Motor Co., Ltd. manufactures and markets automobiles and parts. The Company produces light trucks, medium trucks, heavy trucks, passenger cars, and engine parts. Beiqi Foton Motor also conducts automotive wholesale businesses domestically and internationally.

Guangzhou Automobile Group Company, Ltd. manufactures, sells, and services automobiles. The Company is also involved in automobile parts and components, and auto finance and related services for both overseas and domestic markets.

Lifan Industry (Group) Company Limited develops, manufactures and sells motorcycles, cars and gasoline engines. The Company's major products include motorcycles, motorcycle engines, passenger cars, passenger car engines, gasoline engines and other terminal products such as generator sets, water pumps and lawn mowers.

MITSUBISHI MOTORS CORPORATION develops and manufactures passenger cars and its related parts.  The Company has production facilities in Japan, the US, and Thailand.  Mitsubishi Motors Corp provides vehicle-related financing and leasing service through its subsidiary.

Harley-Davidson, Inc. designs, manufactures, and sells motorcycles.  The Company's products include heavyweight touring, custom, and performance motorcycles, as well as a line of motorcycle parts, accessories, and general merchandise.  Harley-Davidson also provides motorcycle floor planning and parts and accessories financing to its North American and European dealers.

Thor Industries, Inc. produces and sells a wide range of recreation vehicles.  The Company markets its products through independent dealers located throughout the United States and Canada.  Thor's products are sold under the Airstream Classic, Dutchmen, Skamper, Infinity, Four Winds, Citation, Signature, and other names.

Mazda Motor Corporation manufactures and sells automobiles, trucks, auto parts, and its accessories.  The Company operates its business worldwide.

Yadea Group is a leading electric two wheeler brand in China. The company produces electric bikes and scooters.

Tofas Turk Otomobil Fabrikasi AS manufactures cars and automobile parts under license from Fiat.  The Group also imports Alfa Romeo and Fiat cars for domestic market and provides financing services.

Geely Automobile Holdings Limited operates as a passenger vehicles manufacturing company. The Company provides passenger vehicles development, manufacturing, sales, and other services. Geely Automobile Holdings also exports passenger vehicles.

Brilliance China Automotive Holdings Limited, through its subsidiaries, manufactures and distributes minibuses and sedans in the People's Republic of China.  The Company also manufactures and trades automotive components.

Yamaha Motor Co., Ltd. manufactures motorcycles.  The Company also produces motor vehicle engines for Toyota Motor Corp. and Ford Motor Co.  Yamaha Motor's specialty products include motor boats, snowmobiles, golf carts, and electric power generators.  Yamaha Motor sells products in Japan, North America, Europe, Asia, and South America.

Isuzu Motors Limited manufactures and markets trucks and automobile parts. The Company's products include pickup trucks, light/heavy duty trucks, medium and large-sized buses, recreational vehicles, and sport utility vehicles.

XPeng Inc. designs, produces, and distributes electric vehicles. The Company designs, develops, manufactures and markets smart smart electric vehicles, as well as finance, parts, and maintenance services. XPeng serves customers in China.

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XPeng (XPEV US)

Nio Inc (Nio US) - Automotive Data Security, Delivery Declines and Hefei Investors

In this Insight, we discuss the impact of tightening auto data security laws, Oct 2021 delivery declines and residual Hefei investors risks on Nio...

Jason Yap, CFA

Tech Supply Chain Tracker (19-Jul-2024): China's auto exports, 2023.

China advances in autonomous driving tech; Malaysia's semiconductor sector grows with AI; Taiwan backs AI supercomputers; Google Cloud Taiwan faces...

Tech Supply Chain Tracker

[Blue Lotus Daily]:BZ US/LI US/NIO US/XPEV US/1810 HK/1211 HK

Unemployment rate for 16-24 age group in US drops due to manufacturing sector; EV sales post-holiday weak, Xiaomi to launch new products on July...

Blue Lotus Research Institute

[Blue Lotus Daily]:LKNCY US/1810 HK/NIO US/XPEV US/1211 HK/MNSO US/3690 HK/981 HK/AAPL US/700 HK

Luckin Coffee celebrates milestone with 20,000th store opening, EV sales remain steady during July holiday, Xpeng unveils details of new sedan...

Blue Lotus Research Institute

Auto - Chinese brands’ 2Q earnings could be resilient

The industrywide average discounts widened by 0.6ppts MoM in Jun based on our calculations, similar to the pace in May, again driven by German and...

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nio Inc (Nio US) - Automotive Data Security, Delivery Declines and Hefei Investors

In this Insight, we discuss the impact of tightening auto data security laws, Oct 2021 delivery declines and residual Hefei investors risks on Nio...

Jason Yap, CFA

Tech Supply Chain Tracker (19-Jul-2024): China's auto exports, 2023.

China advances in autonomous driving tech; Malaysia's semiconductor sector grows with AI; Taiwan backs AI supercomputers; Google Cloud Taiwan faces...

Tech Supply Chain Tracker

[Blue Lotus Daily]:BZ US/LI US/NIO US/XPEV US/1810 HK/1211 HK

​Unemployment rate for 16-24 age group in US drops due to manufacturing sector; EV sales post-holiday weak, Xiaomi to launch new products on July...

Blue Lotus Research Institute

[Blue Lotus Daily]:LKNCY US/1810 HK/NIO US/XPEV US/1211 HK/MNSO US/3690 HK/981 HK/AAPL US/700 HK

​Luckin Coffee celebrates milestone with 20,000th store opening, EV sales remain steady during July holiday, Xpeng unveils details of new sedan...

Blue Lotus Research Institute

Auto - Chinese brands’ 2Q earnings could be resilient

The industrywide average discounts widened by 0.6ppts MoM in Jun based on our calculations, similar to the pace in May, again driven by German and...

CMB International

Unemployment rate for 16-24 age group in US drops due to manufacturing sector; EV sales post-holiday weak, Xiaomi to launch new products on July...

Luckin Coffee celebrates milestone with 20,000th store opening, EV sales remain steady during July holiday, Xpeng unveils details of new sedan...