China Auto Trending Hashtag| PSA&Dongfeng to drop two China plants/ Continental will not produce batteries

1. PSA, Dongfeng to drop two China auto plants, halve workforce

According to Reuters, in response to the sluggish Chinese auto market and continued sales decline, PSA and Dongfeng Motor will close two of their joint venture’s four factories, one of which will be discontinued and the other will be sold. In addition, substantial layoffs are also planned.

Two PSA sources said that PSA Group CEO Carlos Tavares and Dongfeng Chairman Zhu Yanfeng had reached a consensus on the above content last month, which may prevent PSA from withdrawing from the joint venture with Dongfeng.

In the first half of this year, the operating revenue and cumulative sales of Dongfeng Peugeot Citroen Automobile Co., Ltd. (DPCA) both fell more than 60% year-on-year. Reuters said that PSA Group executives expressed disappointment with the management of DPCA. At the PSA Group's earnings call on July 24, Carlos Tavares promised to speed up cost reduction and increase pricing.

Dongfeng’s Chairman Zhu tried repeatedly to persuade Honda or Nissan to take over one of the DPCA plants. Dongfeng also tried various options for its value of €2.2 billion in PSA shares, including asset divestiture.

2. Continental will not produce batteries but focusing more on electrification

Continental recently announced that it will not enter the battery production field of electric vehicles but will focus more on electric drive systems, electric future and clean air.

The Executive Board of Continental Group has decided on the future direction of the powertrain business, which will be traded under the name of Vitesco Technologies in the future. It is reported that Vitesco Technologies can provide one-stop electrification system solutions for OEMs, including 48-volt technology, motors and power electronics for hybrid and pure electric vehicles, as well as fuel cell vehicles, smart energy and thermal management system.

In the future, Continental will not enter the battery production field of electric vehicles. Although the emergence of lithium-ion batteries has enabled electric vehicles to achieve rapid growth, other suppliers have already occupied this battery production market with their own technology in the early stages. This is one of the reasons why the Continental Group does not enter this field.

3. Evergrande Health lost 2 billion in the first half of the year

Recently, Evergrande Health, a subsidiary of Evergrande Group, which is responsible for operating the big health industry and the new energy vehicle industry, issued a profit warning. It is estimated that the net loss in the first half of the year will be about RMB 2 billion. The main reason is that “the expansion of new energy vehicle business is in the early stage. In the investment phase, related expenses such as research and development and interest expenses increased." However, the company's health management business continued to develop steadily.

At present, new energy vehicles and real estate, cultural travel, health and health are listed as the four major business segments of Evergrande Group. Evergrande has successively invested in Guanghui Group, and has cooperated with Sweden's NEVS and the supercar company Königsegger, obtaining automobile sales channels and vehicle R&D and manufacturing capabilities. Then it invested in wheel hub motor technology and entered the power battery company. It also lays out the development and production of automobile, batteries and motors in Guangzhou and Shenyang. In just one year, Evergrande covered the industrial chain of R&D, manufacturing, distribution channels, power batteries and motor electronic control.

The New energy vehicles belongs to capital-intensive industries, and the investment in technology R&D is huge, which has led many car companies to suffer losses in the early stage.