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VW joins e-car price war as global rivalry heats up

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It will soon cost less to drive away with VW's ID.3 as a price war intensifies in the battery electric car market
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German giant Volkswagen is set to follow Tesla’s lead with a high-profile price drop as the battle for global dominance in the electric car segment intensifies, and local challengers race ahead in key market China.

A new version of Volkswagen’s flagship ID.3 electric car model will go on sale from the end of March for just under 40,000 euros ($42,000), the VW brand announced this week.

That is a 3,000-euro markdown from the current ID.3 price tag, putting it on par with US rival Tesla’s popular Model Y.

Industry insiders see the move as a direct response to several rounds of price-cutting by the Elon Musk-owned company in recent months, including discounts of up to 20 percent in Europe and the United States.

In Germany, Tesla’s sales soared by more than 900 percent year-on-year in January as a result, making it the top-selling e-car in the country that month.

Although the 10-brand VW group was Europe’s leading e-car manufacturer in 2022 with 352,000 vehicles sold, Tesla’s audacious markdowns have forced the German firm’s hand, said industry analyst Ferdinand Dudenhoeffer.

“Volkswagen sees how big the threat is from Tesla,” he told AFP.

The automaker will have “no choice” but to enter “a price war” to defend its place in the hotly contested market for battery-powered vehicles, even if that means profit margins take a hit for a while.

VW group CEO Oliver Blume has so far ruled out a general price drop on all e-cars, but the topic is bound to come up when the group presents its 2022 financial results on Tuesday.

But Musk is not VW’s only headache. In China, the world’s largest car market, the industry’s electrification has shifted into higher gear and VW is rapidly falling behind domestic competitors.

– China challenge –

The Asian giant currently accounts for some 40 percent of VW group sales, mostly vehicles with traditional internal combustion engines, giving it a market share in China of 16 percent.

But in the electric car segment, the Volkswagen brand has eked out a market share of just 2.4 percent, trailing Tesla at 7.8 percent and China’s BYD at 16 percent. 

A slew of other Chinese automakers such as Wuling, GAC and Chery are also outperforming VW, according to data compiled by the financial daily Handelsblatt.

Fellow German carmakers Mercedes-Benz and BMW are faring no better in China, their e-models holding a market share of less than one percent each.

“In the world’s largest car market, German manufacturers have so far lagged behind local brands,” industry expert Stefan Bratzel said in his annual report on electromobility.

Of the more than five million electric vehicles sold in China in 2022, VW accounted for just 155,700.

– Traffic jam entertainment –

“The times when German traditional carmakers could take their market shares (in China) for granted are gone,” said Gregor Sebastian, an analyst at the Mercator Institute for China Studies.

“In Germany, driving performance remains a key factor” when customers choose a new car, he said. 

“But in China, where many people spend a lot of their driving time stuck in traffic jams and highly value new technologies, the car’s interaction with the smartphone and overall connectivity is more important,” he added.

VW’s China chief Ralf Brandstaetter said the group needed to make cars “in China, for China” if it wanted to boost e-sales there — and do so faster.

“The Chinese develop a new car in two and a half years. VW takes just under four years to do that,” he recently said in Germany’s Sueddeutsche newspaper.

With VW expecting China to make major strides in autonomous driving in the near future, the German group last year said it was teaming up with Chinese AI chip specialist Horizon Robotics to accelerate the development of smart-driving technologies.

And even with all the changes sweeping the industry, the reputation of German carmakers remains a trump card in China, said Sebastian.

“The competition is tough,” he said. “But German carmakers like Volkswagen have over 80 years’ experience building cars for different markets and customers, that will give them an advantage.”

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Smartphone makers bet on AI to boost sales

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Smartphone makers are promoting AI-infused devices at the Mobile World Congress
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Smartphone makers are packing their latest devices with flashy new artificial intelligence tools such as real-time voice translation and advanced photo editing in efforts to reignite consumer demand.

The trend was on display at the telecom industry’s biggest annual show, the four-day Mobile World Congress (MWC) which got underway Monday in Barcelona, where handset makers focused on the unique AI-powered features of their new flagship devices.

“Phones have just got boring, they are not as exciting as they used to be. The changes from one model to the next are not that great,” Ben Wood, chief of researcher at CCS Insight, told AFP.

While cameras, battery life and screens are “a little better” than before, companies need to add more “exciting” capabilities to their products to encourage people to upgrade their phones, Wood added.

“AI is a way to do that,” he said.

South Korean giant Samsung’s stand at the MWC prominently plugged its new premium AI-powered Galaxy S24 range, which allow users to make or receive a call in a language they don’t speak and then receive a live translation of the call both audibly and on the screen.

The feature can handle 13 languages, including French, Japanese and Hindi.

The new handsets — which were launched in January — also includes an AI-powered photo editing tool that allows you to easily move and erase objects and people from photos, and then generates content to fill the empty spaces that match its surroundings.

– ‘Changes everything’ –

Smaller device makers are also betting heavily on AI.

China’s Honor launched its new AI-infused flagship Magic 6 Pro smartphone in Barcelona which features a camera with motion-sensing capabilities that can detect and automatically photograph a fast actions such as sports at the best moment.

The device anticipates users’ needs to help them navigate apps more efficiently. For example it can recognise an address in a text message to automatically direct you to a map app.

“AI changes everything,” Honor CEO George Zhao said, adding it “can make fantastic things happen.”

Smartphone makers are now able to offer these sort of AI-powered features — often directly on the handset without resorting to more time-consuming and costly cloud computing — because the computing power of AI chips has increased significantly, analysts said.

“This potentially could be the start of a new era for smartphones,” said PP Foresight analyst Paolo Pescatore, adding the challenge for device makers will be to inform consumers about the new AI-powered tools.

“Articulating the merits of AI and the new features to users will be no easy feat. Not all users are necessarily aware of AI and they will be sceptical at first,” he told AFP.

– Falling sales –

The focus on AI comes amid sluggish smartphones sales as consumers are taking longer to upgrade their devices due to a lack of significant innovations, high inflation and economic uncertainties.

Global smartphone shipments declined 3.2 percent to 1.17 billion units in 2023, its second consecutive yearly decline, according to the IDC consultancy which predicts a marginal rebound this year.

AI-powered tools could also become a new revenue stream for device makers. Samsung has hinted that it may introduce more powerful AI features in the future for paid subscribers.

“The kind of value it is adding does not feel like it is enough to justify spending money on it. But Samsung have more of an eye on the future when AI goes to a whole different level of experience and becomes even more powerful that people then may be prepared to pay for it,” said Wood.

“Everybody wants to drive a services revenue. They all look at Apple, particularly in the mobile phone business, and they are so jealous of Apple being able to generate so much revenue from a services model,” he added.

Apple charges users of its iPhone for a variety of services such as extra cloud storage which has buoyed its profits.

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‘Fake love’ crypto scammers ensnare US victims

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Romance crypto scams have resulted in losses worth billions of dollars
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The “wine trader” wooed her online for months with his flirtatious smile and emoji-sprinkled texts. Then he went for the kill, defrauding the Philadelphia-based tech professional out of $450,000 in a cryptocurrency romance scam.

The con — which drained Shreya Datta, 37, of her savings and retirement funds while saddling her with debt -– involved the use of digitally altered deepfake videos and a script so sophisticated that she felt her “brain was hacked.”

The scam is commonly known as “pig butchering,” with victims likened to hogs fattened up by fraudsters with feigned love and affection before the proverbial slaughter — tricking them into a fake crypto investment.

The rapid growth of this fraud, thought to be run by crime syndicates in Southeast Asia, has resulted in losses worth billions of dollars in the United States, with victims saying there is little recourse to recover the money.

As it has for many victims, Datta’s experience began on a dating app — Hinge, in her case, where last January she met “Ancel,” who introduced himself as a French wine trader based in Philadelphia.

Datta said she was “charisma bombed” as the conversation quickly moved to WhatsApp. The gym buff with a dreamy smile deleted his Hinge profile to give her “focused attention,” a refreshing experience in the age of fleeting online relationships.

They exchanged selfies, flirty emoticons and did brief video calls in which the suave but “shy” man posed with a dog, later determined to be AI deepfakes.

They texted daily, with “Ancel” enquiring about little things like whether she had eaten, preying on Datta’s desire for a caring companion after her divorce.

Plans to physically meet kept getting pushed back, but Datta was not immediately suspicious. On Valentine’s Day last year, she received a bouquet from “Ancel” sent from a Philadelphia flower shop, with the card addressing her as “Honey Cream.”

When she sent him a selfie, posing with the flowers, he sprayed her with red kiss mark emojis, according to WhatsApp exchanges seen by AFP.

– ‘Traumatizing’ –

Between the mushy exchanges, “Ancel” sold her a dream.

“The dream was, ‘I’m retiring early, I’m well off. What is your plan?'” Datta, an immigrant from India, told AFP.

“He’s like, ‘I’ve made all this money investing. Do you really want to work till you’re 65?'”

He sent her a link to download a crypto trading app — which came with two-factor authentication to make it appear legitimate — and showed her what he called money-making trades through annotated screenshots seen by AFP.

Datta converted some of her savings into cryptocurrency on the US-based exchange Coinbase and the fake app initially allowed her to withdraw her early gains, boosting her confidence to invest more.

“As you make astronomical amounts of money trading, it messes with your normal risk perception,” Datta said in hindsight.

“You feel like, ‘Wow, I can do even more.'”

“Ancel” egged her on to invest more savings, take out loans and, despite her reluctance, liquidate her retirement fund.

By March, Datta’s nearly $450,000 investment had more than doubled on paper, but alarm bells went off when she tried to withdraw the amount and the app demanded a personal “tax.”

She turned to her London-based brother, who did a reverse image search of the pictures “Ancel” had sent her and found they were of a German fitness influencer.

“When I realized it was all a scam and all the money was gone, I had proper PTSD symptoms — I couldn’t sleep, couldn’t eat, couldn’t function,” Datta said.

“It was very traumatizing.”

– ‘Brainwashed’ –

Dating sites are rife with disinformation, with Facebook groups such as “Tinder swindler dating scams” and “Are we dating the same guy?” cropping up, and researchers calling out the growing use of AI-generated profile pictures.

But the use of romance as a hook to commit financial fraud is provoking new alarm.

The FBI told AFP that last year more than 40,000 people reported losses totaling well over $3.5 billion from cryptocurrency fraud, including pig butchering, to the agency’s Internet Crime Complaint Center.

But that estimate is likely low, as many victims tend not to report the crime out of shame.

“What’s horrific about this crime is it is meant to take every last penny from its victim,” Erin West, a California-based prosecutor, told AFP, adding that she is “deluged with victims every day.”

Self-harm among victims is a common concern, campaigners say, with most unable to recover their losses and some falling prey to another breed of scammers — fake recovery agents.

Datta, who is in therapy and has moved to a smaller apartment to manage her debt, said she had little hope of recovery after reporting the crime to the FBI and Secret Service.

Neither body responded to AFP’s queries about her particular case. Nor did Coinbase, which informed Datta in an email –- after she was conned — that she “may have sent cryptocurrency to a fraudulent investment platform.”

More agonizing, Datta said, was dealing with public judgments such as, “How could you be so stupid?”

“There should be no shame in becoming a victim of this absolutely masterful psychological scam,” West said.

“Victims are truly brainwashed.”

burs-ac/bbk

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Chip giant TSMC shifts away from hotspot Taiwan with Japan plant

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A general view shows the new semiconductor plant by Japan Advanced Semiconductor Manufacturing Company (JASM), a subsidiary of Taiwan's chip giant TSMC (Taiwan Semiconductor Manufacturing Company), in Kikuyo, Japan
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Taiwanese chip giant TSMC is set to open an $8.6 billion plant in Japan on Saturday as the firm moves some of its crucial hardware manufacturing away from its native base.

Taiwan Semiconductor Manufacturing Company, which counts Apple and Nvidia as clients, produces half the world’s chips, used in everything from smartphones to satellites and increasingly to power AI technology.

But TSMC’s customers, as well as governments concerned about supplies of chips vital to the economy and to defence, want the firm to make more chips away from the self-ruled island.

China’s increasing assertiveness towards Taiwan — which it claims as its own territory and has not ruled out taking by force — has sparked worries about the world’s dependence on the island for chips production and pushed TSMC to diversify where it makes them.

The new plant in Japan is “the most significant TSMC international investment to open in many years”, said Chris Miller, author of “Chip War: The Fight for the World’s Most Critical Technology”.

“It will also solidify the political relationship between Taiwan and Japan at a time when Taiwan is looking to make sure it’s got powerful friends that can help it stand up to Chinese pressure,” Miller told AFP.

But TSMC’s new facility on the southern island of Kyushu is also a coup for Japan as it vies with the United States and Europe to woo semiconductor firms with huge subsidies.

– State sweeteners –

Prime Minister Fumio Kishida will reportedly be among those attending Saturday afternoon’s opening ceremony with senior TSMC executives.

Firms like Toshiba and NEC helped Japan dominate in microchips in the 1980s but competition from South Korea and Taiwan saw its global market share slump from more than 50 percent to around 10 percent.

Now Japan is making available up to four trillion yen ($26.7 billion) in state sweeteners to help triple the sales of domestically produced chips to more than 15 trillion yen by 2030.

The new TSMC plant in the town of Kikuyo, for which the government pledged over 40 percent of the costs — Sony and Denso are also on board — is just the first.

With “strong” Japanese government support, TSMC this month announced a second facility, to make more advanced chips, and is reportedly eyeing a third and even a fourth.

Others getting state funds include Kioxia, Micron and Rapidus, an ambitious joint venture involving IBM and Japanese firms for state-of-the-art two-nanometre logic chips.

– Welcome banners –

TSMC is building a second factory in the US state of Arizona and plans another in Germany, its first in Europe.

But Japan has the advantage of being geographically closer, has a wealth of experience in the sector and, for the Kikuyo plant at least which took 22 months to build, is fast.

By contrast in the United States, which itself has announced subsidies of $52.7 billion to boost its own sector, the Arizona plant has been delayed and has seen disputes with unions.

“I have seen many factories being built by various companies, but TSMC was built with remarkable speed,” Taro Imamura, a local official in Kikuyo, told AFP.

“Everyone in town, from children to the elderly, now knows the words ‘chips’ and ‘TSMC’,” Imamura said at Kikuyo’s town hall, where a banner reads “We welcome TSMC workers”.

The Kumamoto area of Kyushu is already a hub for Japanese semiconductor companies, including makers of machines for chip fabs like Tokyo Electron that are doing brisk business with China.

But as with other sectors in ageing Japan, there are worries about finding enough workers, particularly with local students either leaving or preferring other industries than chips.

Graduates are “more interested in software”, Kenichiro Takakura, associate professor at the National Institute of Technology’s Kumamoto College, told AFP.

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