Episode #200 - Reflections on 200 Episodes, Xiaomi SU7 Ultra

In this episode, Tu and Lei celebrate their 200th episode by reflecting on the evolution of the electric vehicle (EV) market, particularly in China. 

They discuss the rise of intelligent driving technologies, the impact of Tesla's Full Self-Driving (FSD) system, and the recent launch of Xiaomi's SU7 Ultra. 

The conversation also touches on the challenges faced by Volkswagen in the Chinese market and the competitive landscape among Chinese EV manufacturers. 

Throughout the episode, the hosts emphasize the importance of staying informed and engaged with the rapidly changing automotive industry.

Transcript

Tu: 
 Welcome to the China.. China EVs and More podcast. We will open the room up at around the 40 minute mark to anyone who's keen to ask us any questions. So feel free to post them in the X, LinkedIn or YouTu: be. In the next hour or my co-host, Lei:and I will go over the week's most important and interesting news coming out of the global EV, AV and mobility sectors. This is a very special week. What Lei and I discussed today is based on our opinions and should not be taken as investment advice. And those that are new to the show, welcome.
 
 And to our loyal listeners and viewers, welcome back. We ask that you smash those subscribe and like buttons so you don't miss anything from us in the fuTu: re. Also, I'm confident that Lei and I are two of most knowledgeable people in the world doing this. So help us get the word out about this show to others. My name is Tu: I'm the managing director at Sino Auto Insights a global management consultancy that helps organizations bring innovative and tech focused products and services to the transportation and mobility sectors.
 
 I read a free weekly newsletter that we pull many of our discussion topics from. You can sign up for that at sino auto insights.substack.com, which of course I encourage you all to do. A dressed up Lei can you please introduce yourself and can you let folks know why you're so so dapper?
 
 Lei:
 Well, because this is number 200 of China EVs and more. So I thought I'd dress up little bit. But this is your co-host, Lei Xing, former chief editor of China Auto Review. And yes, this is episode 200, big 200.
 
 Tu: 
 Yeah
 
 Tu: 
 It's not really episode 200, but we'll take it.
 
 Lei:
 Well, we number these episodes in such a way that it's 200, but we've published obviously, I believe more than 200 episodes, including the max episodes. And I mean, let's put some perspective into 200. 200 means we've done this weekly since four years ago.
 
 So averaging 50 a year. So there's 52 weeks in a year. And we've done this virTu: ally almost every week for the last four years. And...
 
 Tu: 
 Stop there. We've done it in Chicago or in China. Anywhere else. We've done it in LA.
 
 Lei:
 China, Detroit.
 
 Tu: 
 Yeah, Detroit, that's right.
 
 Lei:
 But when you came back, anywhere else in the world, I mean, we've been all over the place when we're doing this online, right? So you're in China, I'm in China, somewhere else, other parts of the world, in Germany, maybe. We didn't want a NIO on the streets of Munich.
 
 Tu: 
 Mmm. We were driving a NIO remember?
 
 Lei:
 We recorded something on our XPeng G9 last year. These come up. let's just a little bit more perspective when we started in 2021, February. Clubhouse was a thing. The rest of the world was still sleeping on China, on China EVs particularly.
 
 And part of the reason was, China and the globe was in a pandemic, right? Tough times. EV sales in the year 2020 was 5 % of the market. And in 2021, when we did this, it jumped to 13%. This is the official CAM numbers.
 
 And 2021 is the year when things took off. It was the year of the emergence of Xiaomi EV. We're going to talk about Xiaomi. They weren't around. Zeekr wasn't around. Jidu wasn't around. And Jidu is no longer around. Right? So we've seen the
 
 life and death of the players in this most cutthroat competitive environment. Anywhere, BYD sold less than half a million vehicles in 2020. And they were not all NEVs. And this year, they're going to sell five million. So it's a 10X
 
 Tu: 
 That is the statistic that blows my mind the most.
 
 Lei:
 in just five years. We've seen the crumbling of the stronghold of the foreign automakers in China. And they're scrambling to be relevant. We've seen the rise of Tesla, we've seen the rise of the emerging players and death and everything in between the last four years.
 
 The world has obviously woken up, Chinese EVs and the influence they now have is undisputed on president. And Jim Farley, the CEO of Ford has become the biggest ambassador for the Xiaomi SU7 Think about that, right? Just some of the perspective that, I mean, we can go on, but...
 
 You know, just, yeah, maybe you can reflect a little bit.
 
 Tu: 
 La Mia!
 
 Tu: 
 So we started digitally. You and I, the moment we met formally was online on a panel discussion with Bill Russo, a friend of the show, a good friend of ours for American Chamber of Commerce. I randomly reached out to you via WeChat, hey man, let's host a Clubhouse show.
 
 episode after hosting two shows we decided to record we didn't meet
 
 until in person until over a year later. And so everything is starting to really rush back in my mind because I was over in China during that time, during the pandemic. And the things that stick out to me, Lei, is every day having to get checked for COVID, those
 
 Lei:
 September, 2020.
 
 Lei:
 Yeah.
 
 Tu: 
 COVID pods popping up all over Beijing.
 
 not really being able to travel inside China, let alone outside China, and consistently seeing more, more, more green plates on the Beijing streets over that two and a half years between the times that I was in the US. So I was in the US December, January of 2020, December 2019, January 2020.
 
 all the way through August of 2022. And that's when we left permanently. And to your point, Lei.
 
 Started to see BYD vehicles, but now they're pretty ubiquitous. I'm going to give Tesla a lot of credit because Shanghai Giga started construction in the beginning of 2019, finished construction before the end of the year, late December of 2019, the first Model 3 rolled off the line. So this 2021 that you're talking about, the inflection point is really when
 
 The Model 3 started being mass produced in Shanghai Giga. And so I think that shouldn't be lost on us. I think Tesla was a huge catalyst for this. Not only bringing the level of competition up, but increasing the number of brands. Because we always have to remember, XPeng and NIO in 2019-2018, they were on the ropes.
 
 Lei:
 Yes.
 
 Tu: 
 They weren't doing very well. vehicles, NIO's vehicles were fairly well received, but XPeng's weren't that well received because I remember the promising thing was the P5 and then when it came out, it wasn't that great.
 
 Lei:
 2021.
 
 Lei:
 and
 
 Tu: 
 Yes, and going to Munich, going to the United States, we weren't very well known outside of China, and specifically foreigners, China watchers. But now I think you and I have become much more mainstream. And that's evidenced by my interview or my guest spot on Automotive News' podcast last week.
 
 So the Western folks are really, starting to wake up. They're much more curious. The one thing that I will plan a stake in the ground right now is that now is the time of intelligent driving. And my fear is that the West is going to miss out on this and also kind of be a year, two years behind. BYD has made intelligent driving something that'll be standard on most vehicles.
 
 before 2030. Tesla, we can talk about this a little bit later, but you and I know the social media, Chinese social media blew up with videos of folks testing what we'll call FSD light. They're not technically calling it FSD in China. so.
 
 Lei:
 Let's call it half self-driving instead of full self-driving.
 
 Tu: 
 Well, so that's the thing. But you tweeted just now, said assisted. So that is such a key description and such a different description than what they do in the West. So upon reflection, Lei, I couldn't have done this without you. I think you and I are really unicorns. I think we're unicorns.
 
 Lei:
 Yeah.
 
 Lei:
 Yeah.
 
 Lei:
 life points.
 
 Tu: 
 You know, I don't know anyone else who understands the market like we do. You understand the history. In addition to that, you understand the history of all these, not only brands, but the founders, the executives, and, uh, you know, hopefully I bring a dimension with the tech sTu: ff and my Detroit roots. Um, but, and it's been a great ride. It's just never boring.
 
 Lei:
 You
 
 Tu: 
 And I don't ever feel like, man, I gotta do this show again. I never feel that way.
 
 Lei:
 It's clockwork. You know every Friday at 9 a.m. we get excited because every week up until that point there's always blockbusters news happening. There's always people making type of comments that are interesting and we keep a close eye on everything. It's almost a 24-hour thing because
 
 things are happening constantly and we've kind of expanded. We talk about this China and global EV-AV mobility because it's not only China. They're stepping out into the global arena.
 
 Tu: 
 And we're not fear mongers. I think you and I feel that our job is to inform. And maybe some of the things we say seem like fear mongering, we're not trying to, unforTu: nately we're not trying to chase clicks. And so I think that's, and we're boots on the ground. We've tested these cars.
 
 Lei:
 yeah, we
 
 Tu: 
 So we were testing it. We were driving. I won't say testing because we're not car reviewers We drove a NIO in Munich. We drove an XPeng from Beijing. What was the other city? So we went to Changsha. What was the other city we went to? Okay, Zhengzhou Changsha Stopped in Guangzhou for about an hour and a half and then went down to Shenzhen. So I still think we're one of the few people that have done that
 
 Lei:
 Come drop.
 
 Lei:
 Guangzhou, Shenzhen.
 
 Lei:
 Yeah.
 
 Tu: 
 You and I have visited Hefei NIO Headquarters. We've been to Guangzhou Xpeng Headquarters. We've been to Ji Yue Headquarters. UnforTu: nately, they're not around. Li Auto Headquarters in Beijing. So I think that also differentiates us because we're not car reviewers. That's not anything I want to do. There's plenty of our friends that do a great job of that. Mark, Ethan, Will, just to name a few.
 
 Lei:
 Mm-hmm.
 
 Tu: 
 We get a lot of help from Phate and we get a lot of help from Jiri Phate is the founder of CNETV Post, Jiri is CarNews China. And so it's a brotherhood amongst us anyways. And I think that's, so I don't want to get too sentimental, but I think it'll still be interesting 200 episodes from now, like I think.
 
 Lei:
 Mm-hmm.
 
 Lei:
 We're, yeah. I mean, we're just only doing our part in, yeah, educate, informing. We have our opinions and we don't, mean, right, praise credits where it's due and criticize where it's warranted. You know, we don't owe anybody anything. We look at this
 
 from a, we try to look at this from a fair and impartial lens. And that's what we've been doing. And 200 episodes, four years.
 
 Tu: 
 Yeah, Maybe what we do is, this is what I might propose, Lei. We don't have to do a live show, but maybe we record kind of our reflections on 200 as a separate max episode. Maybe we can do that in the next couple of weeks. So, boring week in China EVs.
 
 Lei:
 They're going.
 
 Lei:
 Yeah, yeah, yeah.
 
 Tu: 
 I think something that blew up the China internet last or on Monday was
 
 Lei:
 Yeah, basically two things, two events, right? FSD and SU7 Ultra.
 
 Tu: 
 Yeah.
 
 So Tesla updated the software and launched it in China, its version of intelligent driving. Again, they're not calling it FSD, so we won't call it FSD. But within 24 hours, social media blew up. There was that guy, I forget the Chinese KOL with the glasses, I forget his name.
 
 I saw him at CES, I don't know if I told you that, but he was at CES and all the Chinese, the folks that were either from China that came to CES or Chinese, ethnically Chinese, they all knew who he was. And he was like a celebrity getting picTu: res taken with him. And I was like, who's this guy? I was at the Zeekr booth and they were like, it's this KOL. And so there's a cool video of him and he got like six tickets.
 
 Lei:
 okay.
 
 Tu: 
 while trying to FSD. But you were really tracking this very closely when social media kind of blew up. So let me know your observations of the first couple days that the intelligent driving was available.
 
 Lei:
 So first of all, we have to set the record straight about FSD in the US versus the so-called FSD in China. Chinese lesson. In China, it's officially called FSD, which means FSD, Intelligent or Smart Assisted Driving. Whereas in the US, it's called FSD Supervised or FSD.
 
 They are termed differently, but they perform very differently as well. One, due to the different complex road conditions and two, due to the capabilities as far as the ability to go from point to point, which right now is what everybody is trying to achieve, at least from
 
 the leading players. But my observation was, first of all, there's not that many vehicles, Teslas in China that have the ability to do this because first you have to have hardware 4.0. Second, you have to have purchased the 64,000 MMB or $8,800 FSD, so-called FSD package.
 
 Tu: 
 Let me stop you there. A current Model Y costs $37,000 and to purchase the 64,000 RMB FSD is acTu: ally a fairly significant investment.
 
 Lei:
 Yeah, so that's the thing. That's the caveat. So initially there were a mad scramble from the media and the KOLs, first of all, to find vehicles that have downloaded this update and have this feaTu: re. And then this mad scramble to put on live streams. And at the end, it became a race to see who got the most tickets.
 
 Tu: 
 Hehehehehe
 
 Lei:
 who got the most traffic violations. Hence, the guy you mentioned, his name is Chen Zheng. Yeah, he's known in China because he ran the second rain road in 13 minutes. So that's why he has a nickname called R huan shisan lang, which means the guy who run the second ring road for 13 minutes. And he was showing.
 
 Tu: 
 Chen Zheng, you're right.
 
 Tu: 
 And what you're referring to, Lei, is in Beijing, in a lot of Chinese cities, there are ring roads that allow you to get in and out of the city and then get back on the highway. So CBD, like where the business center in Beijing is East Third Ring. So I lived right off of East Third Ring. You lived right off of East Third Ring.
 
 Lei:
 There you go.
 
 Lei:
 Yep. Yeah. So he is probably the Joe Rogan of China in the EV or the car space. Let's put it that way. He's probably the biggest, if not. he was showing this video of him holding seven or eight tickets where you get points deducted and your license get suspended if you get 12 points deducted.
 
 Tu: 
 Yeah, he's definitely the biggest.
 
 Lei:
 because he was testing out this FSD that was going through the bike lanes or the shoulders, which is exactly the reason why we're calling it a half baked or light. Because the way the iteration that is currently available has issues understanding these certain local traffic rules.
 
 Tu: 
 bus lanes.
 
 Lei:
 And many of these videos show that. At the same time, we do want to give, still give credit for Tesla to putting this out because unlike others, they're restricted in their data training transfers from the China or from the US into China, from China outside the US. they're Elon tweeted, right? They're learning some videos on the internet.
 
 Tu: 
 You
 
 Lei:
 for them to push this out and acTu: ally doing pretty well in quite a number of certain road conditions. Very aggressive. You know, like it's impressive. But again, the caveat is I saw many of the live stream, the people that say they're definitely not at the first tier of players in terms of capabilities. But
 
 It's, you know, they're catching up and I think people are impressed with it, given their restrictions and limitations that they have in China. So that's kind of my take on it.
 
 Tu: 
 For those that are wondering about this video, if you're a subscriber to the newsletter, I posted that video, it's about a minute long, from this Chen Zheng, what's his name again? Chen Zheng. So check it out there. I...
 
 Lei:
 Yeah.
 
 Lei:
 Chen Zheng.
 
 Tu: 
 Let's say this. I have one friend in Shanghai, one friend in Beijing who both tried it now. And for all intents and purposes, I would say that you and I are pretty well versed on intelligent driving systems and robotaxis. We've tried them in the United States. We've tried them in China extensively. So we could nitpick, but you know, what's important in
 
 My friend in Beijing said this is like, you know what? was kind of pointing out a lot of these things and there's difference between not understanding the traffic laws and driving on safely. And it's not going to know the local traffic laws and the habits of, of, the Chinese roads just because it's us data that's training this. Right. And I don't think, and I think they're trying to learn the Chinese traffic laws.
 
 and habits through these videos that they're watching and changing the rules. And so he just said that, my Beijing friend said that 99 % of the people wouldn't know what the difference and what was wrong was, and they would rank it pretty highly. Okay. And so first of all, it's impressive. Both of my friends said, hey man, it worked.
 
 really, really well. Specific examples that they gave me, and you'll be very familiar with this, is there's also videos out there, and I posted alongside the guy who got all the tickets, a picTu: re of someone driving through the Hutongs in Beijing. So a Hutong is a small, these little small avenues where
 
 Lei:
 Yeah.
 
 Tu: 
 back in the day, people would live. It's basically, it's four homes that share a courtyard. And I wouldn't call them streets, I would call them alleys. But now in the Hutongs, near Second Ring Road, there's stores, there's restaurants, still people living there. And it's quite a little awesome area that you should walk around in if you're able to. But
 
 There's cars parked on the side. There's delivery people up and down riding their motorbikes. And then there's people walking and it's super narrow. But he said that it worked really, really well. But that being said, one of the things that I noticed about a couple of these Hutong videos, Lei, is that it was really slow.
 
 And you and I know, having driven through Hutongs, if you're super slow, it doesn't matter how tight it is. If you're super slow, somebody's going to lay on that horn and just start beeping at you because they want you to move. Because you get backed up in a Hutong really quickly. And you can't back out because it's effectively one and a half lanes. and.
 
 Lei:
 Yeah, yeah. No, I was going to say that it wasn't only a mass scramble to get these vehicles to live stream and test them out, but it was also a mass scramble to stress the system, which I don't know if I'm being a Tesla fan. Yeah, they performed good, but it might have not been that fair because I think people are just trying to see what
 
 in all type of the most difficult scenarios, what can this do? Maybe they have a point to see how will this mess up or how we're, I think that's what they're trying to show. Show and okay, you couldn't do this, you couldn't do that. So I'm not sure if that's
 
 Tu: 
 Yeah?
 
 Tu: 
 But also stressing, but Tesla is also stressing that you need to pay attention. They're not doing that.
 
 Lei:
 They put out a video just now, right? Someone has treated that video kind of what you need to pay attention to. And there's this fine print at the end that said, this is not self-driving or this is you have to pay attention, which is the same as the level two plus plus NOA.
 
 in China available at other brands. It's also basically level two.
 
 Tu: 
 there are very significant disclaimers for each of the level two plus plus systems and a friend of the show. Let me, let me answer this really quickly. Friend of the show. Alicia just commented, is it better than BYDs? So I haven't used BYDs and obviously I haven't used FSD in China, but go ahead. You say first.
 
 Lei:
 All right.
 
 Lei:
 Well, BYD has three systems, The 100, 300, 600, the God's Eye So who are you, which one are you comparing with? I think we compare the current capabilities of the so-called FSD in China versus the BYD's 100. I'd probably say Tesla would be better because it's performing, it's capable.
 
 in more driving scenarios, whereas the 100 is more of the highway and elevated highway, NOA, and parking lot AVPs. But the urban ones, you probably have to compare it to the 300 or the 600. So I say Tesla would probably be better in that sense. Yeah.
 
 Tu: 
 It's limited.
 
 Tu: 
 So my friend who's tried a number of them in China now, he still ranked, he acTu: ally believes Xpengs is number one. And he thinks Huawei's is pretty significant, but it's not as good as Xpengs. And he ranks Tesla's intelligent driving among the lower tier. Yeah. So.
 
 Lei:
 Second tier or earlier, probably. Yeah, I'd agree.
 
 Tu: 
 But we knew that it was not going to come out at number one, because first of all, there are a number of competitors that are already really, really good. Number two, they don't have the right system in place yet to optimize for the China roads. But it was important that Tesla have something out there, okay? Now, go ahead.
 
 Lei:
 It was important that they now have finally qualified. That's the importance.
 
 Tu: 
 Yes, because without this system, Juniper might not have had the sales they're hoping to have, because I think deliveries are starting this week for Juniper. Go ahead.
 
 Lei:
 No, I think if you think about the Tesla branding, the type of premium brand positioning that they enjoy in China, if you think about the five year zero interest financing, they're the OG on that. They have these tactical moves that have at least made them stay afloat.
 
 If you look at the weekly numbers, if you look at the monthly numbers, they're still up there despite all the competition, right? Despite all the other everybody's gunning for a Model Y killer or a Tesla killer. But now, yeah.
 
 Tu: 
 You can set your watch to the consistency in their sales.
 
 Lei:
 Yeah, and now I think this this disqualification of the so-called FSD in China is another one of those tactical moves that at least is an important factor in helping them to stay afloat, to stay where they are. Lack of new products, right?
 
 Tu: 
 Because, I'll, we've mentioned this before, but a $25,000 Model 2 is not going to be a home run hit that I think a lot of Western analysts believe it to be. At least not in China for certain full stop. BYD has some really, really great vehicles at less than $25,000. And now with a simple version of God's Eye, it closes the door.
 
 the door on reasons for Chinese consumer not to purchase a sub 250 or $25,000 BYD. So congraTu: lations to Tesla for getting it out. CongraTu: lations because there's a ton of hype around it. And to your point, they are now in the mix of all of the other Chinese EV makers. He Xiaopeng congraTu: lated them, welcomed them.
 
 Lei:
 Yep.
 
 Tu: 
 to come to China and then he reminded us that the P7 Plus has Intelligent Driving Standard.
 
 Lei:
 But yeah, this was the last point that I'll stress and make is.
 
 And I wrote this on my Medium platform article. The question I raised is what does Tesla do or sacrifice to make this available or standardized to more people? That's the big question mark because there's only a few thousand vehicles, Teslas, with hardware 4.0 in China out of, I don't know, a million or two Teslas in China.
 
 the most of the rest of hardware 3.0. So what does Tesla do? The 64,000 is very prohibitive in making this more democratized. That's what He Xiaofang was talking about. So something to see two things what Tesla does in the coming months and how to, how this system improves with time.
 
 And I'm expecting it to improve quite rapidly as they start to stress the system.
 
 Tu: 
 Well, a couple of things. I'll add to your point. Most people aren't going to buy it for $8,000. Not when the alternatives, even the ones that cost money, the non-BYD, are much cheaper and as good or better. Number one. Number two, it...
 
 The cycle of excitement in China goes away really quickly. so, and let's assume that a lot of the people that have posted videos on China social, they were likely loaned a car by Tesla in order to post videos. just like in the West, there are Tesla stands in China and there are Tesla fudsters.
 
 Lei:
 Or a friend or somebody who has it, you know.
 
 Tu: 
 And so I think you take all that sTu: ff with a grain of salt. And at the end of the day, if there's an accident, how does Tesla react? How severe was it or how serious was it? Because there's going to be this going on when there's an accident. And at the end of the day, is the attach rate going to be high and significant? At least because I don't really know.
 
 what the attach rates on some of the other intelligent driving that are charging. But at $8,000, it's really cost prohibitive for most Tesla buyers. Because again, a Model Y, I don't know what the Juniper starts at. I think it's $40,000 RMB more than the older Model Y. it's less than $40,000. Model Y is less than $40,000 in China right now.
 
 To spend an additional 8,000, that's 20%, really, really changes the calculus on everything. But.
 
 Lei:
 Yeah, something to think about for Tesla.
 
 Tu: 
 onto the SU7 Ultra because I wonder how long Xiaomi was holding on to launching that vehicle because as FSD launches, they throw out. So they didn't want Tesla to have the spotlight. That was not an accident. I'm sure that was by design.
 
 Lei:
 Ultra.
 
 Lei:
 Well, the day, I mean, it was when the new Model Y started deliveries, or maybe the day before that the Xiaomi had the, acTu: ally the day of that Xiaomi launched, the Latrine launched the SU7 Ultra. And I was acTu: ally...
 
 Tu: 
 You wanna throw some specs out? You wanna throw some specifications out? I mean, this thing is a monster.
 
 Lei:
 Yeah, mean it's a performance sporty EV but at the same time it retains lots of the things that you will find normally on a good EV. Example, free HAD.
 
 the Xiaomi's own kind of the FSD, at least for a limited time, right? The charging is because of the CATL qilin battery. I think, I don't know, it's 10, 12 minutes from 10 to 80%. I forget some other specs.
 
 Tu: 
 So let me stop you there. The SU7, I think is a 30-ish thousand, or 32, $34,000 car.
 
 Lei:
 It's between 200,000 to 300,000 MMB, depending on the version.
 
 Tu: 
 The Ultra is around half a million RMB, so it's not cheap. It's about $73,000.
 
 Lei:
 And that was after a 300,000, near 300,000 price cut, price cut. Because I was acTu: ally, I was acTu: ally.
 
 Tu: 
 35,000, 35 % reduction.
 
 Lei:
 I acTu: ally wished that the Xiaomi stayed on that price point, $14,900. And I think it would still have attracted many buyers. But obviously, with that price drop, I mean, the orders, as they've shown, right, I think it's been 24 hours now. I'd imagine they're probably getting somewhere around $15,000 to $20,000 orders now.
 
 know, for this half a million RMB performance EV, which is still much cheaper than a comparable, let's say a Porsche, yeah, Taycan or some of the other performance, BMW M's or Mercedes MGs or even the Model S Plaid that they compare to.
 
 Tu: 
 Taycan
 
 Lei:
 Right? So there was a of dunking on, yep, Porsche, Tesla, BBA. And as a matter of fact, this is important that Lei Jun, what Lei Jun shared is when he got a lot of feedback on that 800,000 price point. And they had a discussion and kind of a research where
 
 Tu: 
 Porsche needs a hug. Porsche needs a
 
 Lei:
 A lot of the BBA owners, the E-Class, A6L, the BMW 5 Series, which are priced at the half million and maybe point, these owners were acTu: ally interested in buying the Ultra. So, later in the press conference that at the end, decided to drop the price point to that exactly meeting
 
 what those kind of owners wanted. obviously, and then they put out another Nurburgring Nordschleife edition priced at the 814, the original 814, 900 price point. But yeah, I mean, I mean, also an interesting point, he spent a minute to praise Porsche in a way
 
 into our history. It's that kind of, yeah, it's a backstab almost in a good way. That he's like, know, Porsche, still the benchmark, we'll see you on the next racetrack. I mean, to translate that, it almost to me is saying Porsche is done. Porsche is done.
 
 Tu: 
 in his backhanded way.
 
 Tu: 
 Yeah, keep up, keep up. You know, we're innovating like this. You need to keep up or get out of the way.
 
 Lei:
 And the slide he put up was yesterday was yesterday, the fuTu: re is now. Basically, there was a slide of, yeah. I mean, that was.
 
 Tu: 
 And with regards to Port, with regards to Porsche, the Macan and the Cayenne are still helping them stay afloat a bit in the China market. And then the U7 is going to come out and Porsche who we know is still believing that 25 is still going to be a struggle for them. That U7.
 
 Lei:
 I'll never do the math.
 
 Tu: 
 might close the door on the popularity of the Macan and the Cayenne for all intents and purposes. Because first of all, China is like the United States. It's a crossover in SUV country. So they have this sedan, and we already know it sold 135,000 units from April 24 to December.
 
 So I'm expecting to U7 as long as there's no quality issues or anything like that. I'm expecting that to exceed SU7 sales.
 
 Lei:
 Yeah. Yeah. And speaking of, Lei Jun put out a slide showing they have, they had locked in orders of almost 250,000 units in nine months for the SU7 and they delivered 135,000 units, which means there's still nearly half of those 250,000 units to be delivered. Those locked in orders and
 
 They have to, his goal was his plan was to sell 10,000 of these ultras and that target has been met. The only question is the production bottleneck, right? And then the U7 that's coming out later this year.
 
 Tu: 
 What's important to remember here, is that Porsche, on a good year, will sell just over 300,000 units, 330,000. This year, they're looking at 250,000. They've said that. And so we look at the SU7, April to December, they sold 135,000 units. The U7, which...
 
 point which currently is pointing to being more popular than the SU7. I mean it could really really move Macan and Cayenne to...
 
 Lei:
 Think about if China is an SUV market and if the SU7 as a sedan does that well, then you can only expect U7 to do even better. Right?
 
 Tu: 
 And think about this, We are comparing Porsche vehicles to a $35,000 Chinese EV. So this goes back to premium is not a money thing or a price thing in China. So.
 
 Lei:
 Well, the other thing is, is, I'm not sure if it's, I'm so proud of it is, if you look at the font of the Ultra, if you look at the font that Xiaomi puts out, it's exactly the same font that Porsche uses. Not, you know, okay.
 
 Tu: 
 It's massaged a little bit. Massaged a little bit.
 
 Lei:
 I mean, we're not going to go to the design of the SU7 looking like a Taycan right? That's another story, but we go like a Ferrari Yeah, yeah. So, right, these we can debate about, but yeah. That's why I said it's salt on the wound in many respects. And I think...
 
 Tu: 
 Or the used something looking like it's a Ferrari.
 
 Tu: 
 for sure.
 
 Lei:
 Porsche this year, think their priority is right sizing the dealer network instead of, I don't know how much sales they'll maintain in China this year. Like I expect, it's gonna be below 50,000.
 
 most likely, but they probably are not worried so much about sales rather than making it profitable. And same with Mercedes, right? Mercedes just announced officially confirmed that they're workforce in China, but they're giving generous compensation, M plus nine, M plus 11, which is, you don't see that in other.
 
 Tu: 
 Buy outs.
 
 Lei:
 companies.
 
 Tu: 
 So the U7, we talked about the U7 or Xiaomi's upcoming SUV, mid-size SUV coming out and stealing or taking Porsche sales, Porsche SUV crossover sales, but ABB should also be very worried, very concerned because I think the X3, X5, the GL series vehicles from Mercedes, the Q5, Q7, I think
 
 for Audi are in danger of really, really having a lot of challenges because of the U7. And we bring that up, but it's the totality of all these other Chinese EV companies that have terrific, terrific, like the G6 just got updated, the i8, which is the BEV for, for Li Auto. So.
 
 Lei:
 Yeah.
 
 Tu: 
 When we say U7, that's because we're comparing Porsche directly to Xiaomi. But there's a lot of other great crossover SUVs that we haven't even talked about in this episode. I'm looking forward to seeing what the new G6 looks like, and not to mention the Zeekr 7X, right? So that thing looks great. And again, it's about the size of a Model Y.
 
 Lei:
 Hmm.
 
 Tu: 
 and about the size of a Macan. So lots of quality choices for the Chinese consumer at around three, 400,000 RMB price point.
 
 Lei:
 Yeah, and then Lei Jun also put up a slide which basically said redefining luxury, what luxury vehicle is. that's, he put up the slide said, performance like Tesla, performance like Porsche, tech like Tesla, luxury like BBA. And then he says redefining what a luxury vehicle is.
 
 Tu: 
 There it is, man. There it is.
 
 Lei:
 But again, if look at the weekly sales numbers, BBA remain at the top forever on the weekly sales rankings. How long do they continue among the luxury brands? I think Tesla is putting, if they're putting the luxury brand, they're like number four and the auto is sometimes four or five.
 
 Tu: 
 I still think that a single product from a Chinese EV maker, it'll be tough for a single product to overtake the BBAs and things like that. And I equate it to in the US, the F-150 is the number one selling vehicle. But GM will tell you that when you add Silverado to Sierra sales for a full-size truck,
 
 It outsells the F-150, but it's acTu: ally two different nameplates and two different products, technically, although it's effectively the same truck. So that's kind of how I look at it. The collective SUVs from Li Auto NIO, Xpeng, Zicar, the HIMA Huawei team, they're going to really, really start to distance themselves, I think, from BBA.
 
 in the coming years, unless a couple things happen. The products are much better coming out of Germany for China, and they sharpen their pencils. And that's the conundrum that they're under because all they know, they're programmed to believe premium pricing equals premium product. And again, you just mentioned what Lei Jun said. Okay.
 
 We don't need to price at 600,000 RMB to tell the Chinese consumer this is a premium product. The foreign automakers need to deprogram themselves with regards to the China market on how the automotive market has evolved the taste, the feaTu: res, and the dynamics of how the market works now.
 
 Lei:
 And Lei Jun and Xiaomi has nicely integrated their EVs into their ecosystem, their home appliance, their electronics, which is what this press conference was about anyways, right? This launch of the 15 Ultra smartphone and a bunch of other gadgets that you almost feel like this is just
 
 one out of the EVs is just one out of countless thousands of gadgets that Xiaomi has.
 
 Lei:
 And nobody else can do that as far as the ecosystem is concerned. And oh, by the way, his leather jacket went viral. And now they're sold out on Taobao. $400 jacket that he wore. So trying to be Jensen.
 
 Tu: 
 So late.
 
 Lei:
 Yeah. That's, yeah.
 
 Tu: 
 So anything else you want to talk about or?
 
 Lei:
 No, the other thing you mentioned about the G6, the updated G6, I think they didn't call it a refresh or facelift. They called it a semi-generational change because it came with new hardware. And this is what the auto is going to do in May when it upgrades some of their existing L series models, for example, to be equipped with some of the AD Pro versions.
 
 Tu: 
 Hmm.
 
 Lei:
 to be equipped with the Horizon Robotics J6, these type of things, to have constant updates, not only software updates, but hardware updates of the vehicles within a 12-month period.
 
 right on top of new models.
 
 Tu: 
 And this is where the Chinese brands have to find that balance because if you're not allowing your current new product to marinate a little bit in the market and then you're aping it six months later with new hardware, new feaTu: res, the buyers that bought the vehicle six months ago are going to get upset.
 
 there's this balance that they need to figure out because during the price war, everybody's just trying to get things out as quickly as possible. And it's a vicious cycle. But I think after the price war is over, let's say after 2025, think refreshes will still be in real time. But the major hardware changes
 
 will likely be a bit more measured. So in really quickly, Lei, before we get into the one or two questions that have been posted, maybe we can just quickly summarize what FSD Lite is up against. So NIO has NOP. XPeng has XNGP. Li Auto has NOA.
 
 Lei:
 P.
 
 Lei:
 In a way, they're in a way.
 
 Tu: 
 So N stands for navigation and XNGP stands for XPeng Navigation Pilot. And Huawei has Harmony.
 
 Lei:
 Yeah.
 
 Lei:
 Well, they have this A-S-D, I believe. You know, we have these acronyms all over the place. Even we can't name them correctly.
 
 Tu: 
 Yeah. Yeah. Well, yeah, exactly. And so, and then obviously BYD now has God's Eye. and that's just off the top of our heads. Great Wall is using Hao Mo. Deep Route with Great Wall as well. DJI is coming out with something. And so with
 
 Lei:
 Raza.
 
 Lei:
 Deep Route
 
 Tu: 
 In the United States, there's supercruise, there's blue cruise, and there's FSD. And so there's no competition for FSD. With all the flaws that FSD has, it's more about the lack of kind of regulations or at least people following those rules. And I think that Tesla doesn't discourage people trying to cheat.
 
 The rules in the West or in the United States, in China, if Chinese consumers, drivers were cheating the Tesla system to do dangerous things, I think they'd be quick to post something on social about not doing that with their system. I think that's a major difference between how they approach the China market versus how they approach the US market.
 
 Here is a question, Lei Man, we only really talked about two things.
 
 Lei:
 And we talked for 15 minutes.
 
 Tu: 
 So George Ayers says, can you talk a little bit about where VW is in China? So we've talked about this in the past, but I think George is a new watcher, new viewer. They have invested there for many years, but are struggling now globally. Do Chinese consumers feel positively about VW or no? What does VW need to do differently? So I'll let you.
 
 Start this conversation because you know my opinion about
 
 Lei:
 So VW, they talk about value over volume. But in reality, look what has happened in some of their vehicles. The Passat is selling for 150,000 MMB. They just dropped prices for the ID.4s of the two joint mentors to 139,000 MMB. $20,000.
 
 Tu: 
 So, stop, stop there. That's $20,000. 100, so.
 
 Lei:
 Yeah, and Volkswagen is launching the so-called 20,000-euro ID every one. They already have that in China. And this year Volkswagen, their keyword is delivering, meaning that some of their investments and collaborations
 
 with Chinese tech companies will come to fruition and come out in these models that are rolled out starting this year in 2026 with a couple of SUVs based on the XPeng G9 platform. So they're into this stabilization toward the delivery phase, but the question mark is, those products relevant and meeting
 
 the most, the current desire of Chinese consumers outside of the brand itself being diluted as the Volkswagen as the people's brand, They're the first foreign brand to have mass volumes in China. yeah, so this year would be also critical, but you know.
 
 There was this recent photo of Ralph Branseter standing on the table, talking to the employees in Hefei, which a lot of people say is cheating. Yeah, yeah. So in Chinese, yeah. Yeah. So I think Volkswagen is, I've said this before, they're the hardest trying of the foreign brands in China. They've doubled down.
 
 Tu: 
 Yeah, I saw that.
 
 Tu: 
 It's almost like a motivational speech and you don't really get that from German executives.
 
 Lei:
 So now we wait for the result. Yeah. So that's kind of my take. Yeah.
 
 Tu: 
 Well, they have the most to lose.
 
 Tu: 
 I'll add that.
 
 Tu: 
 Just within the last six or seven years, Volkswagen was on the cusp of 4 million unit sales with SAIC and FAW joint venTu: re partners. And Audi is struggling, Porsche is struggling, Volkswagen brand is struggling. all of the above. Skoda is effectively non-existent in the China market. Yeah. so they've hitched their wagon to XPeng IP to really become
 
 Lei:
 They're out, they're done, yeah.
 
 Tu: 
 Relevant and I don't I haven't heard anything significant out of Cariad in China For some time, so I'm assuming that the operations are still there I don't know how much Xpeng is doing for them versus internal
 
 Lei:
 Well, yeah, they're working on the CEA architecTu: re, right? Which will power all of their Volkswagen branded EVs in the coming few years.
 
 Tu: 
 Right.
 
 Tu: 
 And on top of this, SAIC has launched its own EV brands, IM Motors.
 
 Something in motion? I forget.
 
 Lei:
 Well, as I see it's launching this new shangjie.
 
 Tu: 
 With Huawei.
 
 And it's supposed to be mass market.
 
 Lei:
 And then the other one I saw was Dongfeng, the DPCA with the Stellantis joint venTu: re. They're launching the Hedmos. It's called Shijie. So there's two more of these.
 
 I don't even know if that's related to Huawei, but these JIA brands coming out. So yeah.
 
 Tu: 
 And to answer George's last question, what does VW need to do differently? What advice would you give Brandstader and Blume?
 
 Lei:
 I think they've done everything that they can because I said they're the hardest trying, they're the most, they have the most to lose. They're kind of the most provocative when it comes to setting up these relationships and tech collaborations. And now we wait to see the execution.
 
 Tu: 
 And that would speculate that the VW brand has lost significant sales to BYD vehicles over the last few years. And this is, I wanna be clear, this is really not about nationalism. This is not about Chinese consumers preferring Chinese brands to foreign brands. Tesla is kind of...
 
 Lei:
 yeah, without a doubt, alive since we've done this. Yeah.
 
 Tu: 
 I point to Tesla as Chinese consumers still really appreciate foreign brands. It's the fact that VW Group kind of lost the story. And to me, it's a culTu: re and management thing. I don't know if Blumo was the right one to succeed Diess. I acTu: ally think Diess had the right idea. He just...
 
 didn't communicate it very well. Seemed very abrasive with regards to how he's approaching. But I don't know if you can be agreeable and nice when the Titanic is sinking. And that's what's happening. I'm not exaggerating here. The Titanic is sinking. Porsche is down. Audi is down. Volkswagen brand is down.
 
 Lei:
 and
 
 Tu: 
 significantly. And another example, because Volkswagen brand, because of the volume, Volkswagen Group the flexibility for China. Audi and Porsche drove the margin and the profits for the China market. 50 % in the past, 50 % of their profits in the past came from the China market. So.
 
 Volkswagen's health, Volkswagen Group's health, begins and ends with Volkswagen brand Audi and Porsche in the China market. And they are, I won't say they're on their deathbeds, but they are aging, aging significantly over the last few years.
 
 Lei:
 And over the last four years since we've done this, think also a history lesson, we've been taught a history lesson of
 
 where have the disruption come from? They have not come from within the auto industry. They have come from Xiaomi. They have come from Huawei. They have come from these entrepreneurs and CEOs that came out of the tech industry. And the history lesson is still happening. We talk about DeepSeek We talk about Unitree. We talk about all of these companies. Yeah. And now going back to Porsche, they've hired these new
 
 Tu: 
 DJI.
 
 Lei:
 sales and finance guys within.
 
 I'm not even sure why the other two were kind of fired in the first place.
 
 Tu: 
 Because Blume didn't want to blame himself.
 
 Lei:
 Yeah, so
 
 And increasingly, I think we see who dictates the Chinese market. First of all, it's not the state-owned companies anymore. It's not the joint venTu: res anymore. It's these emerging players, right? Of what happens, what you do, and who follows. That's what we have seen in the last four years.
 
 which we couldn't have when we started this. But then that's what has happened.
 
 Tu: 
 So really quickly, Conrad, friend of the show Conrad Layson, what will the free versions of Level 2 ADAS do to sales of new energy vehicles exported to the EU? What are your thoughts?
 
 Lei:
 Well, first of all, free in China, but when they're exported into Europe, there has to be tweaked based on local rules and regulations. So not exactly the same feaTu: re probably will have on the vehicle in China than in Europe.
 
 Because I think regulatory-wise, we can say it's different or we can say it's behind. And the consumer tendency, the desire for these higher levels of assisted driving is different.
 
 So it remains to be seen on what kind of feaTu: res these exported vehicles will have. It's definitely not going to be as advanced as in China. That I'm certain.
 
 Tu: 
 Conrad, think that BYD putting it on other vehicles and likely to sell a boatload of PHEVs into Europe this year, I think they're working behind the scenes or will be working behind the scenes with the EU to really try to create policies that allow for use of these feaTu: res in the EU sooner than later.
 
 Lei:
 That is
 
 Lei:
 Yeah, so one example I can give right now is last September when I went to Munich again, I drove the G9, the local G9 for a day. And one feaTu: re they have on the highway is when you try to change lanes, you click on the stock slightly. So you push it down slightly and do it automatically rather than in China where it does it automatically without pushing the stock. That's the local
 
 requirement that's different. you know, that's just one.
 
 Tu: 
 And this is where the technology also needs to get used to European roads, European habits, specifically in Germany, is that BYD system, let's say, has it calibrated to be on the Autobahn going 180 miles an hour, right? So there are specific scenarios that need to be worked out that
 
 don't exist in China.
 
 Lei:
 But He Xiaopeng, he, I mean, that post on LinkedIn or on X, he said their ultimate goal is to make what's available in China globally through their ecosystem, the OTA, that things can be updated to have more advanced feaTu: res, not only in China, but there are vehicles on the roads in the rest of the world. That's what he said.
 
 Tu: 
 rest the world ex the United States for the time being. so let's see here, Conrad says, Cariad in China is overseeing Thundersoft's development of the software stack. That's the tail wagging the dog. Because I don't know if Cariad has the capability to manage any major software development projects. I still don't have a ton of confidence in them.
 
 Lei:
 Cool. Yeah.
 
 Lei:
 Well, mean, Cariad have two things going on in China, right? Cariad has a joint venTu: re with Horizon on the ADAS part of it, which is SuperDrive. They've shown this in some of their VW vehicles. And the other part is the infotainment with Thundersoft. So there's these kind of two tracks. That's why I said that the execution and what type of things come out of those remains to be seen.
 
 Tu: 
 So, I mean.
 
 Tu: 
 And this is a conversation for another time, but Horizon needs to step up. And I'm sure the Chinese government and some Chinese EV makers want to have their silicon replace NVIDIAs and Qualcomm's if possible. is that going to happen in the next few years? Probably not, but it needs to happen quickly.
 
 so that there's some independence and breathing room between US IP and Chinese needs. So, hey, this was a good show, man. CongraTu: lations on 200 episodes Lei I can't wait to see what happens over the next 200. yeah, hey, everyone, from day one to now, for anyone who's listened, viewed,
 
 Spent some time with us and listened to my voice when they in order to fall asleep. Thank you for listening and I'd love for you all to be more interactive. So feel free next week when we join to to have questions already in your mind because I think that's a big part of what we want to try to increase is engagement with our listeners. So anyways
 
 Thanks for joining us as always. Good morning, good afternoon, good evening.
 
 Lei:
 Likewise, we'll see you next week.
 
 Tu: 
 no.
 
 Lei:
 Still live.