Global EV Weekly Recap $TSLA cut prices in the US and Europe by up to 20% (before IRA) China CPCA released FY22 EV sales: 6.5M EV sales, or 28% of EV penetration. $LCID released FY22 production number of 7,180

Policy-wise: - China completely phased out of NEV subsidy by the end of Dec-22 - NEV still enjoys purchase tax exemption (vs. 5% of ICE)

Since 1Q 2021 (BYD's market share bottomed due to competition), BYD's market share has increased from 12% (1Q21) to 32% (4Q22). TSLA's market share (for domestic retail sales) dropped from 12% (FY20) to 7% (FY22)

Local brands dominate the NEV market, taking 85%+ of the market share (vs. 50% for PV). NEV market is fairly concentrated, with BYD taking 29% of the share (followed by Wuling 10% and TSLA 7%). The PV market is more fragmented, with Top 3 OEMs (VW, Toyota, Honda) taking 25%

CPCA released Dec-22 and FY22 China NEV and PV sales. In FY22, China’s domestic NEV sales reached 6.5M units (+98% of YoY). Penetration reached 28%. China accounted for 60% of global NEV sales in 2022.

2/ $F sold 61,575 EVs in the US in 2022 (+126% yoy). ~7% market share in the US next to $TSLA (53%) 3/ $RIVN 4Q production and delivery came in below the St. Deliveries: 8,054 in 4Q; 20,332 in FY22. 4/ $BYDDF $NIO $LI $XPEV reported Dec sales 5/ First week of IRA in the US

Most notable events globally: 1/ $TSLA China’s 3rd price cut in <3 months. On 1/6, $TSLA dropped the price of Model 3 to Rmb230k (-18%), and Model Y to 260k (-10%). Market is concerned about the competition in the Rmb200-300k model offering segment (EV trio, Huawei, BYD, etc.)

Global EV Weekly Recap Chinese EV stocks had a volatile week – rallied sharply at the beginning (China beta) but gave up early gains on Friday, as investors weighed the headwinds of more serious price cuts by $TSLA. $RIVN -11% in the first week of 2023, stock reached new low.

On a monthly basis: $BYDDF's lead over $TSLA became more obvious since 2H21 as BYD continued expanding its product offerings. It now has 25+ models across 4 different product lines - Denza, Dynasty, the Ocean series and Yangwang.

BYD is the No.1 player, with ~30% of the market share. In 2022, $BYDDF sold 1.9M of cars (+209% yoy), 50/50 split btw PHEV/BEV. Domestic sales of $TSLA were 440k (+42% yoy). The growth rate is below industry growth of 100% yoy, meaning $TSLA has been losing market shares.

China EV 2022 Recap EV sales doubled in 2022. Penetration increased from 5% in 2019 to just below 30%. EV market in China has become increasingly competitive: - 450 EV manufacturers - Top 20 brands have unit sales >50k in 2022 - Top 10 brands hold 80% market share

Per U.S. Department of Energy (https://t.co/RUorGtQzVH), electricity demand has been flat over the past 15 years, while capacity has grown an avg. of 12GW/yr (1 GW can power half a million homes). With proper planning, supply can meet even the most aggressive increase in EV.

Interesting article on Li Qiang (China's future PM) and TSLA https://t.co/ULvfwkQNn3 Li brought TSLA into SH. It's the ONLY automaker with WFOE (wholly foreign-owned enterprise) structure As much as TSLA needs China (30% rev), China also needs TSLA for the technology spillover

Why it matters: The ¥12K subsidy is set to expire on 12/31. The price cut is good news for Q4 because it will help with more orders EV tax exemption was extended until the end of 2023. https://t.co/2MteAg8CBB E.g. ¥200k EV is exempt from purchase tax of 200k/1.13*10%=¥17.7k

TSLA's ability to ramp up production & its operational efficiency is way underrated. Comparing 3 companies' cash burn to reach the first 150k of deliveries: $TSLA (Model 3&X) burned $28k/unit, vs. consensus for $RIVN at $144k and $LCID at $68k. The difference is up to 5x.

Dealers' service profit will also shrink under EV. EVs generate ~40% less aftermarket revenue vs. ICE. Dealers still trade at ATH, boosted by covid-driven demand and the high used car prices. Seeing early signs of OEMs transforming their sales network. https://t.co/z48BuAhVov

TSLA's direct distribution model is one key reason it can enjoy a sustainable margin advantage. - 500bps of benefits from dealer profits - 200bps from distribution efficiency: lower inventory carrying costs; higher efficiency (low SKU, smaller footprints) - "Customer intimacy"

With increasing EV adoption, the traditional dealership model is being challenged. Under the dealership model, OEMs make ~6% of EBIT margin. Dealers generate another 5% of EBIT margin (w/ 70% of the profit from services). Vertical integration can DOUBLE OEM's profit pool.

E.g. In 10 years since iPhone was introduced, smartphone penetration (as % of handset installed base) reached 65%. E.g. Music has undergone changes from LPs to cassettes, to CDs to MP3, and now to streaming. Adoptions take ~20yrs from introduction to peak sales in a new format.

Consumer technology adoptions follow the S-curve. In most cases (smartphone, color TV, music), 80% penetration/substitution is reached over a 10-20-year period. Disruption is often triggered by a breakthrough offering (iPhone, Model 3). Penetration won't stop once it hits 5%.

FinTech YTD performance: - Median: -32% - $V $MA: -2% - Credit names (Capital One, Ally): -25% - $PYPL $SQ $TOST: -50% - $BILL $COUP $AVDX: -40% to -50% - $COIN -62% - $AFRM -65%; $UPST -79%

Fintech Index is now 9% below the 5-yr avg. The real question is - what should be the reasonable multiple, given macro (rates) and the recession narratives?

Since the 6/16 bottom: - Nasdaq +18% - High growth fintech names had some nice rebounds: $SQ & $ADYEN +50%, $COIN +89%, $HOOD +55%, $GLBE +65% - Lending names also up big: $AFRM +110%, $SOFI +48% Fintech co. still trading below 5-yr avg multiples. High growth names at EV/GP 18x