Why China’s power crunch is such a big deal

Published

4 years ago

September 30, 2021

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A general view shows the Wujing Coal-Electricity Power Station in Shanghai on September 28, 2021.

Hector Retamal | AFP | Getty Images

BEIJING — Local Chinese authorities have abruptly ordered power cuts at many factories in the last week, reflecting a system trying to react to a number of directives from Beijing, and macroeconomic developments.

While a few economists have cut their forecasts on China’s GDP growth as a result, others are still waiting to see the scale of the impact.

Here’s a broad overview on how the power crunch developed:

Coal supply drops, prices surge

Back in late 2020, China stopped buying coal from Australia, once the Asian giant’s largest source of imported coal. Political tensions between the two countries have escalated after Australia supported an investigation into how Beijing handled the coronavirus pandemic.

Meanwhile, historically cold weather that winter drove up demand for coal. Some cities reportedly restricted electricity use in homes and factories.

Alongside a global surge in commodity prices, thermal coal, the primary fuel for electricity production, saw prices soar by more than 40% over 12 months to around 777 yuan per metric ton ($119.53) in December 2020 on the Zhengzhou Commodity Exchange, according to data from Wind Information.

As spring approached, central government authorities announced five-year targets for the country to achieve its publicly declared goal of reaching peak carbon emissions by 2030. China aims in the next five years to boost the share of non-fossil fuels to about 20% of energy consumption, up from about 15% currently.

Renewable energy falls off

But as China tried to shift to renewable energy, a severe drought hit the hydropower center of Yunnan province. Water-generated power declined year-on-year in July and August by more than 4% each month, according to the National Development and Reform Commission.

Wind-generated power has also slowed its growth, rising 7% in August from a year ago, down from 25.4% growth in July, the commission said.

Analysts have also said China’s climate goals in the latest five-year plan are more moderate than expected. Climate Action Tracker, an international non-profit that reviews countries’ efforts to meet Paris Agreement goals, rated China’s policies and actions as “insufficient” in a report released Sept. 15.

The bulk of electricity in China is still generated by coal. Year-on-year growth in electricity use has surged to its highest in a decade, according to data accessed through Wind.

Power rationing begins

In addition to extreme temperatures, factories are demanding more electricity as they rush to fill global orders for Chinese goods. Exports have surged by double digits amid the pandemic.

“Demand for power has risen with China’s economic recovery,” Eurasia Group analysts wrote in May. They noted that “several industrial hubs along China’s eastern coast, including Guangdong, Zhejiang, Jiangsu, and Shandong, have warned about potential temporary power supply shortages during the summer peak season.”

In June, state-backed Securities Times reported of some power restrictions in parts of the export hub of Guangdong.

Meanwhile, coal supply was falling as mines shut down in a national effort to reduce carbon emissions. The coal inventory of major power plants reached a ten-year low in August, according to Wind data.

But in mid-August, China’s economic planning agency announced that 20 regions — accounting for about 70% of China’s GDP per Nomura — failed to meet carbon-related targets, prompting local authorities to take action.

Some authorities cut electricity overnight

Some of the latest moves were quite abrupt. For example, on Sept. 23, management of a high-tech business area in Hunan province ordered power restrictions, effective immediately, according to a copy seen by CNBC. The curbs are set to last through Thursday, the day before China’s National Day holiday that runs Oct. 1 to 7.

On Sunday, state-backed Securities Times reported of major power cuts for factories in Guangdong’s manufacturing hub of Dongguang city for the same week. The report also noted sudden power outages in many parts of northeast China, including residential areas in Liaoning province.

“The power outage means products cannot be delivered on time,” said Wen Biao, general manager at Qianhe Technology Logistics Co. in Shenzhen, Guangdong province. He said the situation is the same in Shanghai and the port city of Ningbo.

The drop in production has cut demand for shipping overseas, and prices for shipping to the U.S. West Coast have dropped to $9,000 per container, down from $15,000, he said, noting the declines began Sept. 24.

In all, Reuters reported that more than 10 provinces and regions have restricted power use.

For context, Guangdong province accounts for about 23% of China’s exports by value, while Liaoning accounts for 1.6%, according to official data for January to August.

Economic impact

The shock to many Chinese factories comes as investors worry about fallout in the massive real estate sector as indebted property giant Evergrande warns of default. Together with related industries like construction, real estate accounts for about a quarter of China’s GDP, according to Moody’s.

After the industry’s roughly two decades of rapid, debt-fueled expansion, regulators have stepped in with tighter rules on how much developers can borrow.

When it comes to the economic impact, Dan Wang, Shanghai-based chief economist at Hang Seng China, said she would “focus more on the restrictive policies in the property market.”

She attributed the power curbs mostly to an inability of authorities to adjust the electricity price, which is largely set by the state. Wang said factories’ rush to fill global demand has also created overcapacity.

“The impact from the power restriction is equivalent to a natural disaster,” she said.

Some economists expect a more severe impact. Among major investment banks, Nomura cut its China GDP forecast on Friday, followed by Goldman Sachs on Tuesday.

“The power cuts by themselves may not be significant enough, but combined with the property sector slowdown and regional Covid outbreaks, they do make me worry more about GDP growth in Q4,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “I have lowered my forecast for Q4 to around 4% from 5%, with risk on the downside.”

Economists at other financial institutions have mostly held off on forecast cuts and are waiting to see how significant the drop in production is.

Also weighing on growth is a crackdown on major internet technology companies for alleged monopolistic practices. A sudden order in July that after-school tutoring companies restructure as non-profits has put hundreds of thousands of jobs — and incomes — in question.

Consumer spending, a major driver of Chinese economic growth, has also been sluggish since the pandemic as Covid-related restrictions have kept many people from traveling and eating out.

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Xpeng launches G7, a new Tesla Model Y competitor for just $27,000

Published

60 mins ago

July 3, 2025

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Xpeng launches G7, a new Tesla Model Y competitor for just ,000

Xpeng has officially launched its new G7 electric SUV in China, entering the fiercely competitive electric crossover market with a starting price of just 195,800 yuan ($27,325 USD). The G7 is positioned squarely to compete with the Tesla Model Y and the newly unveiled Xiaomi YU7.

It is priced significantly more aggressively than the YU7, which shook up the industry just last week.

The G7, Xpeng’s seventh model, offers an attractive balance of performance, technology, and value, with an emphasis on the latter.

Like Lei Jun with the launch of the YU7 last week, He Xiaopeng was not shy about positioning the G7 against the best-selling Tesla Model Y.

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He compared the specs and pricing with the leading premium crossover. Like Jun, he brought up Tesla’s comparison challenge against the new Model Y:

The G7 is powered by a single rear-wheel-drive electric motor producing 292 horsepower (218 kW), it achieves a 0-100 km/h acceleration in 6.5 seconds. Impressively, the G7 can cover between 602 km and 702 km (374-436 miles) based on China’s generous CLTC standard, depending on the battery option and wheel size.

Two battery options are available, both using lithium iron phosphate (LFP) technology: a 68.5 kWh and a larger 80.8 kWh pack. With Xpeng’s advanced 5C charging technology, drivers can recharge up to 436 km (271 miles) of range in just 10 minutes.

Additionally, the G7 supports Vehicle-to-Load (V2L) functionality, providing up to 6 kW of external power, like the YU7 announced last week.

On the design front, the Xpeng G7 adopts the company’s second-generation “X Face” styling, featuring sleek running lights connected by a continuous LED strip, a closed front end for aerodynamic efficiency, and a distinctive “Star Ring” rear taillight design. Xpeng emphasizes the vehicle’s aerodynamics with a drag coefficient of just 0.238 Cd, slightly higher than the Model Y’s 0.230 Cd.

Inside, the G7 embraces minimalism, replacing conventional buttons with a large 15.6-inch central touchscreen powered by Qualcomm’s Snapdragon 8295 chipset. A standout interior feature is the expansive 87-inch augmented reality head-up display (AR-HUD), developed in collaboration with Huawei, that significantly enhances navigation and driving assistance.

Practicality is emphasized with ample cargo space: an 819-liter trunk that expands to 2,277 liters with the seats folded, plus an additional 120-liter compartment beneath the trunk floor and a modest 42-liter front trunk (frunk).

Xpeng is touting an adaptive AI-driven suspension system that actively adjusts to road conditions within milliseconds, allegedly surpassing comfort benchmarks set by the Mercedes-Benz GLE and Tesla Model Y. Cabin quietness also ranks high on Xpeng’s list of priorities.

Luxury and convenience features include dual 50W wireless phone chargers, a 20-speaker premium audio system, and a panoramic sunroof. Passengers in the second row enjoy premium touches like an 8-inch control screen, individual climate settings, a foldable table, and wireless charging.

The top-tier “Ultra” variant employs two proprietary Turing AI chips capable of delivering a massive 2,250 TOPS of computing power, enabling advanced Level 3 autonomous driving capabilities set to become active via an OTA update by December 2025, pending regulatory approval. Standard versions use dual Nvidia Orin-X chips with 508 TOPS.

The Xpeng G7 starts at 195,800 yuan ($27,325 USD) for the base “Max” variant with 602 km of range, stepping up to 205,800 yuan ($28,720 USD) for the longer-range “Max” (702 km) and topping out at 225,800 yuan ($31,510 USD) for the high-end “Ultra” trim.

Customers ordering the G7 Ultra before July 31 will receive complimentary upgrades including Nappa leather and power door handles.

G7 quickly demonstrated its popularity by securing 10,000 pre-orders in just 46 minutes.

Electrek’s Take

It’s not 200,000 orders within 3 minutes like the YU7, but Xpeng doesn’t have the brand power that Xiaomi has.

Nonetheless, it is pretty impressive.

The price is insane. The specs are competitive with the Model Y, which starts at 263,500 yuan and ranges up to 313,500 yuan ($36,770 – 43,750 USD), but the price starts at about $10,000 USD less.

Between this, the YU7 last week, and a few more models launching this month, the premium crossover segment is about to get crowded in China.

I think the Model Y is in serious trouble in China. We are about to see how it fares with real competition.

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Tesla Optimus is in shambles as head of program exits, production delayed

Published

3 hours ago

July 3, 2025

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Tesla Optimus is in shambles as head of program exits, production delayed

Tesla’s humanoid robot program, Optimus, is reportedly in disarray amid the departure of the senior vice president in charge, Milan Kovac.

Production has been delayed due to a new redesign, as the robot has yet to prove useful in Tesla’s factories.

Elon Musk has previously set a goal for Tesla to produce 5,000 to 10,000 Optimus humanoid robots this year.

The goal has reportedly been delayed as sources within the Chinese supply chain report Tesla informed suppliers of a 2-month halt on orders.

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AI Invest first reported the news, and The Information later corroborated the report:

Two supplier sources said Tesla has not explicitly stated it will reduce robot parts orders but will wait until the Optimus design adjustments are completed before finalizing a new mass production plan and resuming procurement. The adjustments may take two months. Musk recently stated on social media that the new version of Optimus has seen significant improvements over the second-generation Optimus unveiled in 2023 and now includes voice interaction powered by Grok.

The news came after we learned that Milan Kovac, the head of the Optimus program left Tesla last month, just months after being promoted to senior vice-president by Musk.

The new reports confirm that Ashok Elluswamy, who was elevated to senior vice-president in charge of self-driving at the same time as Kovac, is taking over responsabilities.

AI Invest reported some concerns from Tesla about Optimus that reportedly trickled down to Chinese suppliers:

According to Tesla’s feedback to suppliers, Optimus still faces hardware challenges, including overheating in some joint motors, low load capacity in dexterous hands, short lifespan of transmission components, and limited battery life. Tesla is currently evaluating samples from multiple dexterous hand suppliers, testing at least three different technical approaches. On the software side, Tesla may use more synthetic data to train the robot model, improving Optimus’ autonomous operation capabilities and success rate in performing complex tasks.

According to the report, Tesla had secured parts to build over 1,000 Optimus robots earlier this year and built quite a few, but they are currently only used “for moving batteries in Tesla’s battery workshops, with efficiency less than half that of human workers.”

The redesign is expected to delay plans by at least two months and could push many of Tesla’s goals.

However, Tesla is expected to still move ahead with the prgroam and it is likely to unveil the new generation of Optimus robots at its shareholders meeting this year.

Electrek’s Take

As I previously stated, I’m actually quite hyped for humanoid robots, but I don’t think they will be nearly as big as Musk claims and I simply don’t see Tesla having a significant advantage over the competition, which is significant.

Companies like Unitree are already selling robots, Figure has made impressive progress and poached from Tesla, then there’s Boston Dynamics and dozens more.

Kovac leaving just as Tesla is supposed to ramp-up production to 50,000 units next and make this a “multi-trillion-dollar” product is a red flag.The engineer would have certainly received sweet stock option packages when he was elevated to SVP and would have likely made a fortune if he would have been able to deliver on Musk’s goals.

But I think the real product at Tesla now is the stock – hence why they reportedly plan to unveil the next generation of the robot at the shareholders meeting and have it do another shady demostration, like it did at the ‘We, Robot’ event where the robots were remotely controlled by humans.

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Honda’s new electric two-wheeler doubles the power and range

Published

4 hours ago

July 3, 2025

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Honda's new electric two-wheeler doubles the power and range

Honda is stepping up its electric scooter game with the launch of its second electric model for Europe, the CUV e:. Following Honda’s previous debut of the EM1 e:, a compact, city-focused moped, the CUV e: brings more power, more range, and more real-world usability to riders who want a practical electric alternative to a 125cc scooter.

Now finally ready for the spotlight, the CUV e: is built on an underbone-style frame and powered by a 6 kW side-mounted electric motor producing 22 Nm of torque. That puts it squarely in the 125cc-equivalent category, allowing it to reach a top speed of 83 km/h (52 mph).

It’s not built for the highway, but rather for urban and suburban riders who want to achieve speeds seen on the fastest of urban roads and keep up with just about any traffic in the city. For that role, it looks like a solid performer – more than capable of keeping up with city traffic or carrying a second passenger.

One of the most useful features, especially for urban residents and apartment dwellers, is its use of Honda’s Mobile Power Pack e: swappable battery system. The scooter carries two of these Gogoro-style removable battery units, each rated at 50 V and 1.3 kWh. Combined, they offer over 70 km (43 miles) of WMTC-rated range. Compared to the Honda EM1 e:’s single Mobile Power Pack battery, the dual batteries of the CUV e: give Honda the chance to pull twice as much power or offer twice the range.

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Honda’s swappable battery standard is designed for portability and long life, with each pack weighing around 10 kg (22 lb) and rated for 2,500 full charge cycles. Honda has been slowly building a swappable battery ecosystem, and the CUV e: is clearly meant to be part of that larger infrastructure play.

Charging of the batteries is designed to be done easily off-board, either at home or at a battery station (where available). A full charge from 0 to 100% takes about six hours per pack, but Honda says 75% can be reached in just three hours. While fast charging would be nice, the swappable format means riders can keep an extra pair charged and ready if necessary, eliminating downtime altogether.

Honda didn’t skimp on features, either. The CUV e: offers three ride modes (Sport, Standard, and Econ), plus Reverse Assist for easier maneuvering. It includes a fairly spacious flat floorboard, under-seat storage, LED lighting, a USB-C port, and keyless ignition. Buyers can choose between a five-inch color TFT display or an upgraded seven-inch “RoadSync Duo” screen, which supports turn-by-turn navigation, music control, Bluetooth phone integration, and EV-specific ride data.

Positioned as a mid-range electric scooter, the CUV e: fills the space between low-speed mopeds and larger, premium e-motorcycles. It’s a key piece in Honda’s broader electrification strategy, which aims to introduce 10 or more electric motorcycle models globally by 2025 and reach full carbon neutrality in its motorcycle division by the 2040s.

With anticipated pricing starting at around €4,000 (approximately US $4,300), the CUV e: is expected to roll out in Europe first, with other global markets potentially following. Its combination of practical range, moderate speed, high build quality, and swappable batteries could make it an appealing option in cities where electric two-wheelers are on the rise.

If the EM1 e: was Honda dipping a toe into the electric waters, the CUV e: feels like a confident step forward. It’s not flashy, but it’s functional, well-designed, and undeniably useful, which is exactly the kind of machine that could help electric scooters go mainstream.