Episode #201 - Feb Sales, The EMPIRE(S) Strikes BACK, MX & CA Tariffs start TODAY - JK!

In this episode, Tu and Lei discuss the latest developments in the electric vehicle (EV) market, focusing on competition, technology, and consumer preferences. 

They analyze the impact of new models like the XPeng G6 and the challenges faced by legacy automakers like Volkswagen and NIO. 

The conversation highlights the importance of technology, such as lidar, and the evolving landscape of RoboTaxis. 

The hosts also touch on global market trends and the growing presence of Chinese brands in the automotive sector.

Transcript

Tu Le 

Welcome to the China EVs and More podcast. In the next hour or so, my co-host, Lei Xing, and I will go over the week's most important and interesting news coming out of the global EV, AV, and mobility sectors. What Lei and I discuss today is based on our opinions and should not be taken as investment advice.

For those that are new to the show, welcome. 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 future. Also, I'm pretty confident that Lei and I are two of the most knowledgeable people in the world doing this. So help us get the word out about this show to others. My name is Tu Le 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 write a free weekly newsletter that we pull many of our discussion topics from. You can sign up for it at sinoautoinsights.substack.com, which of course I encourage you all to do. A lack of electricity Lei Can you please introduce yourself?

Lei Xing 

You

a out of power, out of electricity, out of heat, freezing to death, doing this episode in the kitchen.

Tu Le 

man, we're

like the mailman. We always deliver, baby. Always deliver.

Lei Xing 

Yeah, this is

this is 21st century infrastructure in the US. So, we have to deal with it. And this is your co-host, Lei Xing former chief editor of China Auto Review. And this is episode number 201. We officially have a trade war and a war of words between China and the US. And it was funny.

Right on fifth, which is Wednesday of this week, just as President Trump was giving his speech in the Congress, Chinese Premier Li Qiang was giving his government work report right about the same time. And we heard about...

It was a spectacle to watch. I watched some of the President Trump's speech, but also a little bit of Premier's government work report. And we heard about the Chinese foreign ministry talking about they'll fight any type of war, whether it's a trade war or something else. But again, we've seen this, what would you call it? This flip-flop?

whipsawing of the tariffs here in the US from Canada, Mexico. We have February sales. So, lots of things going on.

Tu Le 

Lei I would just call this another Monday at the Trump administration. I mean, that's his MO. I think for the next four years; it's going to be pretty choppy. Now, we could argue whether these policies are going to help the United States or not, but at the end of the day, the uncertainty is what really gets a lot of the businesses. To your point, prior to

Lei Xing 

I don't know.

Yes.

So, yeah.

I, yeah.

Tu Le 

his speech, he had a conference call with Mary Barra, Jim Farley and Elkann forget, John Elkann, who are the CEOs of the D2 and Stellantis, who the tariffs, I feel, would disproportionately affect the automotive sector, specifically in the area that I live in the United States, in the Midwest, because we always have to remember

Lei Xing 

John Elkann

Tu Le 

Detroit's the only city where you drive south to get to Canada. And our Canadian neighbor is very close to me in Michigan. And then in Mexico, Volkswagen and General Motors have a lot of exposure just because they produce and manufacture quite a few vehicles there that they ship to the United States.

Lei Xing 

Yeah, and at this point, it's really not about the tariffs anymore. Jim Farley talking about this putting a huge hole. At this point, it's more about the inconsistency and the erratic decisions that are being made because for one month you're preparing for tariffs. And then at the start of next month, you have one more month of relief. And then what happens in another month?

Like in auto industry, you just can't have that kind of inconsistent, which messes up your planning, right? And it takes, I don't know, eight months, 12 months to move production. And Trump is thinking you can do it in a month, which is not, I mean, he, so.

Tu Le 

Well, let me add to that, because...

Well,

this is the extreme roller coaster that you're talking to because the Trump administration version one put those, he renegotiated the USMCA and created those policies that he's now kind of abandoning. Okay. And so, I think that is the irony. It's not like all of these policies were.

Where Biden's policies are pre-Biden, the Obama policies, a lot of these policies, or some of these policies, I won't say a lot. The Trump administration put in place from a trade standpoint. So, you know, I think they were trying to hammer home without being too, you know, when you sit down with Trump, I'm assuming you need to stroke his ego.

At a moment where legacy automakers are globally fairly weak, long-term, we're not talking quarter to quarter, we're not talking annual year over year because in the short-term GM share price has been great, but that's also because they've bought back about $25 billion worth of their own shares.

Um, there's just not as many shares outstanding in the market. And then, you know, with Ford who I just saw their earnings or their numbers. Sales for February of EVs was up 23%, but ICE vehicles was down 13 % in the United States. So, this is their, by far their most important market and any hiccups to F-150 production sales.

manufacturing is going to really, really hurt them.

Lei Xing 

Yeah, and we probably would expect a rise, a spurring of sales in March because of the anticipation that the tariffs would come back, you know, the reciprocal by April 2nd, right? So, which is good and bad for the industry. But it's amazing how much sway the big three still has on the president. They can call him up and say, you know, please help us.

Yeah, we get this one month. Yeah. Yeah.

Tu Le 

I don't know, I think you're giving that way too much credit because Elon is this right-hand man. So, if we're saying who has

more sway, I would argue that it's Silicon Valley and specifically Elon. And this while SpaceX is raining debris down on some airports in Florida.

Lei Xing 

And we can transition perhaps to Elon and Tesla with respect to China sales. And I think that the big number that jumped out in February was 30,000 units. But here's the latest number. I don't know whether you saw this this morning. 36 KR just reported Tesla received 200,000

Tu Le 

That's a nasty number, huh?

Lei Xing 

refundable orders for the new Model Y in China. 200,000.

I mean, it's refundable, still, that's why I say, you know, I have, this is a question I'm asking you. I'm giving this credit to you, you know, whether it's time to reach for that panic button or not.

Tu Le 

You

So, I don't think you and I...

thought that there wouldn't be a bump in sales because of Juniper. But Juniper plus FSD is creating this excitement for Tesla in China. My question is, with the G9 coming out, with the U7 coming out in the next few months, the i8 from LiAuto coming out very soon, how long does that honeymoon last?

In our experience, we've seen that new products that seem very exciting prior to launch or during launch, get maybe a month of, with the exception of the Xiaomi Su7, they might get a month of glory before a BYD...

an Xpeng, a Nio, a LiAuto a Mona, an Onvo could, Zeekr I could go on and on and you know I could go on and on. There's just way too many competitors for me to believe that this bump lasts through the end of summer. Meaning that I think by June, July, we'll see how many of that 200 shake out because Tesla sold

a little over 300,000 units, I think, in China last year. So, we're talking, and let's assume that production is around 100,000 units a month. That would take at least two months for them, because this is not, I'm only manufacturing model-wise. There's also threes on that line in Shanghai Giga, number one. Number two, they're still priming that pump from a component standpoint.

So, I don't believe they're ramping to 100 % of the Juniper Model Y within 60 days. And so that 200,000, if it's true orders, could take six, seven months to fulfill.

Lei Xing 

I think that if we treat the new Model Y as a model in terms of competitiveness in China and the globe, it's still at the very top. So, we haven't seen really a similar one model.

Tu Le 

Yeah.

Lei Xing 

let's say one single Tesla Model Y killer emerged. We haven't seen that yet. what you're saying is basically a host of these Model Y wannabes or killers that are pushing, that are adding on the pressure for Tesla. it's right. And I tweet about this kind of the resiliency, which you alluded to, and how much

can that continue. It's something we need to watch. So, I think the 30,000 units, again, I repeat what I said the last episode, the episode before, is wait till end of March to make any kind of conclusion. Because on paper, 30,000 units, I XPeng did 30,000 units and Tesla only did 30,000 units. I think that kind of spooked

the market but the larger picture is in the rest of the world at least in Europe Tesla is having some issues there's no doubt about that and

Tu Le 

And to give more context, like 30,000 units for Tesla in a month is almost half as much they would normally sell. 50 to 60 would be a normal month for them.

Lei Xing 

Yeah.

And how much was that

due to the changeover? Because people would have waited for the new Model Y, which began deliveries at the end of February in China. We don't know how much of those 30,000 were exported versus domestic. We have to wait till the CPCA number come out next week.

Tu Le 

And we also have to remember that each of these Chinese EV companies in the domestic market, the Chinese domestic market, they're also looking at sales numbers every month to figure out how aggressive they need to be the following month for incentives, for promotions. And so, they're not sitting there saying, I'm helpless now because Tesla is gaining 200,000 orders.

They're saying, how do I take some of those because they are refundable? How do I convince that Tesla order person to buy a G6, to buy ES6? And so, we should see maybe over the next few months, what would normally be a pretty quiet few months. It might actually be pretty action packed.

Lei Xing 

No, it's never quiet, right? And we saw the city of Hefei giving out a special subsidy for battery-swappable vehicles, e.g. NIO. You know, like on top of the five-year zero-interest financing that both of the NIO and onboard brands are offering. And the other panic button I kind of alluded to was

And I also tweeted about this is on though because they This hard goal that they had communicated of 20,000 units in March

I don't know how they get there or whether they still want to make that happen or it's starting to backfire a little bit to me.

Tu Le 

Yep.

And one of the things that I'd like to transition over to is the fact that now, and I had written the empire with an S strikes back on my newsletter yesterday because we saw Toyota and I don't even know it's alphabet soup of a name BZ four three something.

Lei Xing 

You know?

BZ3X, yeah, and they

have actually a Chinese name for it,

Tu Le 

and the ID.3. They're both launching with a price point of around 15 or 16 thousand US dollars which

So here's a couple of things real quick. I think that's where they need to be, number one. Number two, I'm not as concerned about how many features now. What I'm concerned about is can they execute on the features that they have in the vehicle? So, meaning, does the software work? Are there latency issues? Because...

Even if it's a simple car, which you would expect at $15,000, can it fulfill that promise of Toyota being a reliable car? Can it fulfill that promise of Volkswagen kind of being ubiquitous historically in the China market? Those are the things that I'm looking at now. And again, BYD is not going to sit around and let Toyota and Volkswagen take share without a huge, huge fight.

Lei Xing 

Yep.

Well,

that's the thing. And to be clear, the 15,000 we're talking about in the BZ3X, we should make clear that it doesn't have the higher levels of smart driving as their $20,000 versions with lidar, right? And also, the pricing that they position that model in is actually cheaper. They're actually

competing against the Yuan plus. I tweeted about its Song +, but this car debuted at the Beijing Auto Show almost a year ago, the BZ3X. And it looked quite big. I think it's at least a RAV4 sized. know, RAV4 here in the US, it's actually gotten quite big. Not the high-end, it's really big. So, I think it's much bigger than the UM+. And the pricing is...

Tu Le 

Really big.

Lei Xing 

actually, slightly below I think some of the BYD similar position models. And plus, the fact they talk about one interesting thing they put up at the press conference was this is Toyota's first Xin Shi Li which means new force. Xin Shi Li really means the NIOs, the XPengs the Li Autos, these smart EV startups.

everything they talked about this model; it feels like a model that was launched by a Chinese smart EV startup. One, the price and second, RoboSense, Momenta, these bunch of Chinese suppliers that they showed that was about this model.

Tu Le 

And you raise a terrific point because the Xinshi Li, right? They're attaching themselves to the Chinese brands so that Lei, when you're looking at an Onvo a Mona, a NIO you're thinking about Toyota because they told you to think about Toyota. They like, you know, indirectly, number one, and yes, the local content is something that stands out as well. And so, I guess my next question to you.

is how long do you think they can still charge for intelligent driving? Because they made this announcement earlier this week, or in Vale, earlier this week, so they knew that God's Eye was going to come standard. And BYD started delivering vehicles with God's Eye now. So, it's already in the market, number one. Number two.

I guess we'll find out how much better these intelligent driving services are, or these featured intelligent driving features are, because our friends at Zeekr are also launched an intelligent driving system called G something, G-Force or something like that. So, I'm excited, man. Maybe we'll get to drive them all or at least get driven in them all when we're in China next month.

do side by sides is going to be really important, or at least for me, to give me a better sense of how much progress everyone has made in the last 12 months.

Lei Xing 

But mean, they claim to be the first Toyota's first SUV with these higher levels of smart driving and the first SUV in the industry priced in the $140, $20,000 range with LiDAR. I mean, we talked so much about these Chinese brands, but you talk about empire striking back. This is...

one example kind of the legacy striking back and Toyota I think relatively to other foreign brands, they are actually doing relatively better. They're still selling quite a significant amount of ICE vehicles, a lot of them hybrids in China. and this model, and remember,

Tu Le 

Mm-hmm.

Their head down, their head down grinding.

Lei Xing 

Toyota signed this deal with BYD before the pandemic on this tech joint venture. So BYD actually also supplies some of the batteries to the BZ series. So they had this thinking probably more than other foreign brands of integrating into the kind of the Chinese EV ecosystem.

So, right, I mean, you share the article where they said the crashed, the order system crashed because there was, and then, you know, you look at this and then you look at the ID every one, the 20,000 euro ID every one, that's available in 2027. And then you're like,

Tu Le 

Tell us a little bit about that, Lei.

Lei Xing 

I can get a PZ3X for $20,000. Why wait? Yeah.

Tu Le 

Well, well, well, before we talk about that ID everyone,

can you tell everybody about this ID three that's $16,000?

Lei Xing 

the ID3 in China or?

Tu Le 

VW?

Yeah, yeah, they just launched that ID3.

Lei Xing 

It's

a new addition, I think, that was launched. It's called congming, which is a smart addition. And the ID4, remember ID4 also had a price reduction, kind of a price reduction 10 days ago, I think, at the end of February. And they're all in the $20,000, $25,000 range.

Tu Le 

Mm-hmm.

Yeah.

Let me stop you there, Lei.

Let me stop you there. You said this BZ3 is about the size of a RAV4. Okay? Or差不多. Okay? This is the benefit that Chinese consumers have.

Lei Xing 

Yeah, it's pretty big.

Tu Le 

resulting from the competition in the Chinese market. All these products, all these brands, we're not getting the benefit of that competition. Rav4 still costs $50,000 US dollars. There's nothing in the US market that's worth a damn. That's $15,000. Okay, nothing. At a minimum, at a minimum, we have to pay $30,000, which means we pay twice as much.

Lei Xing 

No.

Tu Le 

for a product that's likely not as good and has technology that's years behind. and here's the thing, if the products weren't of a high quality level, Toyota and Volkswagen wouldn't have to go down on the price curve so low.

because you and I would be smart consumers and we would say, know, this Chinese vehicle is a piece of junk. So I'm going to still spend a little bit more and get a quality vehicle. But guess what? Everything is pretty high quality. And I would argue that the ID3 and this BZ3 probably have less features than a BYD or a Mona or an Anvo that are right around 20,000.

Lei Xing 

Well, that means the power is back on. No, but remember a few days I tweeted ago about Cadillacs in China are being sold at Buick prices and Buicks in China are being sold at Chevrolet prices. This is price deterioration of the foreign brands going down as Chinese brands, they're charging a premium.

Tu Le 

nice, power! Nice, dude.

Lei Xing 

Think about Aito. Think about some of the Zeekr models. Half a million MMB. And the foreign brands, can no longer command that price. Pricing power, first of all, and then how they price the vehicles. This is turned completely upside down. And that's why I use... Yeah.

Tu Le 

And to

the creatives and to the marketing and to the agencies that, the marketing agencies that are working with the foreign firms in Europe and the United States, the foreign firms are actually trying to position themselves as more Chinese now, to your point, right? congming know, xingshili like they're really, really leaning into, you know what?

we're a foreign brand but we have Chinese DNA. That's what they're saying. Now is that convincing? Because I'll tell you what, Toyota sells really well because their reputation for quality and reliability in the United States leans into their Japanese heritage. go ahead.

Lei Xing 

And also Lexus has made that decision to set up a whole new venture in Shanghai to produce Lexuses in China.

So, you know.

Tu Le 

It is

It's just, I always say this. I feel like I say this every six months. It's just nothing, it's just such an interesting time to be in the space and to kind of be able to follow it at a global level. I know we don't get into the politics too much, but they do affect what's going on. And,

That's why it's really so important to visit and check these things out because if you're skeptical of whether or not these Chinese vehicles can compete, then just go for a week. to China, get an international driver's license and go for a week. Rent a car in China, rent a NIO, rent an XPeng, and then you'll know.

You know, I think, and I'm going to pat ourselves on the back for 30 seconds. And that's why I think people trust us because as, two Americans who have lived a good portion of our lives in China, we, we straddle a little bit and I think we're torn a little bit on certain things because we want the hometown people to win, at least me being from Detroit.

or just outside of Detroit, but I digress. I just think that it's really important for those that are commenting on how good or bad these companies are, these products are. I'd love to see you in April and May when I'm in Shanghai and Beijing, wherever I'm

Lei Xing 

Yeah.

Yeah.

Tu Le 

And honestly,

unless you and I know the people that we don't get along very well with, but I'm happy to help in any way I can to help people better understand the China market so they're not like spinning their wheels. So that's how I feel.

Lei Xing 

Yeah, I even for us, think we... I try to...

use the word enthusiast rather than expert because even as frequent as we get to go back, it's still a learning process for us because it changes every time we go back, whether it's the capabilities, whether it's you know, how companies they reorient themselves. But as you can see, I think from the February sales numbers and the recent

whether it's the BZ3X, whether it's Onvo the city of Hefei, launching this incentives and subsidies. I just feel like we're in another round of intense competition.

Tu Le 

Well, that is reflected

in Onvo struggles, sales struggles. I think Nio is kind of consolidating some of Onvo retail locations with Nio. And so a brand that you and I, or at least I thought was fairly promising, seems like it's off to a pretty slow start.

Lei Xing 

I

think the advice that I kind of want to give NIO is stop making these... Remember three years ago, I don't know, four years ago, was it chimney home that he said the ET5 would catch up with the three series? It never did. And now this...

20,000 in March was specifically announced by Alan and I at the Guangzhou Auto Show at their press conference. And he's like, you know, if I don't do it, you guys supervise and you know, I may have to resign. That's what he said. And these kind of things, I just wish they, I mean, you know, just get down to work rather than say these things that that

Tu Le 

I feel that Lei Jun bullies them into making bold statements a bit because he is very humble, but he humblebrags. Lei Jun, if you're wondering who a good way to describe Lei Jun and his demeanor is that he humblebrags. He says, you know, I'm not that smart, but I go to MIT.

Lei Xing 

Yeah.

Tu Le 

You know, it's those types of ironies that You know we owe so much to Porsche, but we plan to beat them in a month you know those kind of things and that's the definition of humble breath and so it's like it's like trying to even some more is a small podcast But we're in a hundred countries where night we're downloaded in 97 countries, right? So that's a humble

Lei Xing 

Yeah, yeah, yeah, yeah.

Yeah, we talked about this last episode. Silently dunking on others.

Yeah, maybe.

Yeah.

Tu Le 

But

it's like a flex. Another way to say it for the younger folks, it's a flex.

Lei Xing 

So

the Su7 Ultra, so less than 72 hours. So when we had the episode last week, they just announced that they had 10,000 orders in two hours. So now they have 10,000 locked in orders less than 72 hours. And probably by now more than 20,000 firm orders. And they're actually saying that the SUV7 Ultra

is driving sales of the normal SU7, which still have dozens of weeks of you have to wait to get it. And the U7 is coming soon. So I don't blame him for humble bragging, right? It's just...

Tu Le 

Yeah.

And

it should be noted that Lejinder also said that they're going to go international in 2027.

Lei Xing 

Oh, I mean, they're an international brand already. I mean, look at their launch at the MWC, right? In Barcelona. No, no, yeah, that's Su7. Yeah, that are their EVs. I mean, that's only a matter of time. We know that's only a matter of time. Because they have these channels. They have these talent that are already there. So it's just a matter of adding one extra device.

Tu Le 

No, I'm saying the passenger vehicles.

Lei Xing 

to their ecosystem.

Tu Le 

And that's where they have a BYD type of advantage because to your point, they have the infrastructure. Now it's for handsets, it's for air purifiers, it's for different things, you know, the brand is already recognized. It's recognized in India. It's recognized in Eastern Europe, a lot of these more emerging markets where people still want Apple features, but at a Xiaomi price.

They're still firing on all cylinders. I'm very impressed with how long the Su-7 has been in a positive way in the consciousness of the Chinese consumer.

Lei Xing 

and see

how Lei Jun, he always brings these new topics into viral discussions. And the latest example is being the license plate. He submitted a motion about the green EV license plates about China, and that has become a huge topic of discussion. So.

I thought that was one of the very interesting proposals or motions that came out of these Chinese auto executives. He Xiaopeng was an NPC member. Lei Jun was an NPC member. They both submitted a number of motions. NPC is National People's Congress, which is the legislative body. And it's one of the

Tu Le 

Can you tell people what NPC is?

Lei Xing 

so-called two sessions, the other being the CPPCC, the Chinese People's Political Consultative Conference, which is the advisory body. And in early March, these two sessions meet to kind of talk about the government work report, talk about the laws and the policies.

Tu Le 

where they established the

growth forecast for China.

Lei Xing 

GDP,

again, 5%. And I think one number that has relevancy to the auto industry was 300 billion in the so-called super long-term bonds that's been earmarked for the trading incentive to spur consumption. And the number they give for the auto industry is that as of March 5th, they've received over a million applications for either trading

or scrap incentive. So that's an additional 1 million vehicles that's not there had that policy not been there. So this is how China is driving.

Tu Le 

But it's largely symbolic, these

two sessions, but I think there is some influence that can had by the folks that get invited. So Lei Jun, obviously you had mentioned earlier as a member. so I think Wang Chuangfu has also been influential in kind of emphasizing what's important to BYD as well.

Lei Xing 

And yeah, and the other, I think the other important motions or proposals raised was one on autonomous driving and the other one on battery swapping. I think the chairman of GAC Group, I think he also submitted something about spurring this battery swapping network.

Tu Le 

I still think

battery swapping is building momentum, but it's actually pretty slow. think Onvo not making a huge impact in a short period of time makes that struggle even worse.

Lei Xing 

I think,

yeah, if you look at the BZ3X, it also impacts models or brands like Anvo because Onvo with the battery swapping and the BAAS, it's also in the 150,000 RMB range. So it's multiple competition gunning for each other. It's not only the Chinese gunning for Tesla. It's the Japanese gunning for NIO. Right? This is all inter...

Related that's that's what makes it tough

Tu Le 

I think

what's important to understand is that

The foreign legacy automakers, because let's say Chevy is almost non-existent, Ford is almost non-existent. And so the Toyotas and some of these, like the Volkswagen brand, they probably think that they're not going to win too many battles with BYD. So they need to go attach themselves and position themselves to everyone else. Okay. And.

Lei Xing 

Yeah.

Tu Le 

BYD just has so many different products, brands, variations at all these different price points. So the totality of what BYD has on offer in China just makes it so compelling for a Chinese consumer to buy BYD. As opposed to the foreign legacies are still redefining themselves in the China market.

Lei Xing 

And then BYD, can quickly establish this DJI relationship. It's, yeah, Something like that. So, no, I saying that BYD can quickly come up with this new idea of working with DJI on this drone.

Tu Le 

What this?

It's a Xiaomi Smart Rice Cooker? my goodness, dude.

Lei Xing 

additions of the function bow right it's it's it's a bit cheesy but still right it's it's a type of innovative water

Tu Le 

that's kinda, that's kinda weird.

Which car had that selfie cam?

Remember the Chinese EV that had the selfie cam? Was that Hi Phi?

Lei Xing 

No, think XPeng when they launched the G3, they had this thing that come out on top. Yeah, that could be a picture.

Tu Le 

Yeah, yeah, okay, so that was, it was XPeng

it was XPeng, okay. So basically think of it like...

FangCheng Bao has a GoPro.

Lei Xing 

Yeah. Basically.

Tu Le 

So,

but they've partnered with the right company DJI. If anyone can pull it off, it would be DJI.

Lei Xing 

Yeah. And DJI is not insignificant in the auto industry because Volkswagen is using DJI. And speak of Volkswagen, e-car X just got into the Volkswagen group and Skoda in Brazil and India. They're actually providing hardware for these entry-level models of Volkswagen globally.

Tu Le 

This is so confusing for Volkswagen Group.

Lei Xing 

Some, yeah.

Tu Le 

Cause

they wrote two huge checks. And so for everyone that's wondering, ECarX was Geely's Cariad. They're a publicly traded company now in London or London, think, or US. I think it's London. And so if we're counting, if we're keeping score, Volkswagen Group now has hardware software coming from Rivian.

Lei Xing 

The US listed.

Mother, you're a first.

Tu Le 

Hardware software coming from XPeng Well, maybe just software from XPeng. And then this announcement now with ECarX So I don't know how that's a winning strategy at all. Why wouldn't they? So let's say Rivian, that IP is a little more expensive than an XPeng. Why wouldn't they ride or die with XPeng in South America? So.

Lei Xing 

next one.

Tu Le 

It's just baffling to me when things should get... Because here's the simple equation. If I introduce a lot of different players, it gets more complicated and it slows me down at a time where I need to simplify so I can speed up. I think...

Lei Xing 

Yeah. Well, the inner slogan

would be diversification.

Tu Le 

I think, Lei, that German management, US management, Japanese management at these big conglomerates, they don't know how to simplify. They only add layers and process, which is opposite of what a startup does. Now startups also sometimes reinvent the wheel because they don't know how

Lei Xing 

Yeah.

Tu Le 

They don't

have mature processes and policies. So there's a give and take. get that. But I don't know if you saw that, but I posted a little excerpt from an article that one of the Volkswagen brand chief said that Rivian is going to be responsible for all of our

Lei Xing 

Yeah.

Tu Le 

hardware software and then I, do you call it X? I X'd a tweet. Yeah, I said, so what is Cariad doing? That's what I wrote. And I just don't know what is going on there. But if I'm part of the Kariot team, I can't feel very good.

Lei Xing 

Cariad right?

Alright, right. Yeah. So it's... Yeah, it is about...

Yeah.

No. But speaking of reinventing the wheel, FAW is reinventing the wheel through LeapMotor looks. The significance is that FAW being the number one centrally administered state-owned enterprise. And now the

Tu Le 

Yeah.

Mm-hmm.

So for those wondering,

FAW stands for First Auto Works, and FAW is in Dongbei, which is, so in Chinese literally means East North as opposed to Northeast, but they have joint venture currently with Volkswagen Group in Toyota, and they build, so a lot of Volkswagens.

Lei Xing 

Thank

and Toyota.

Yeah,

their Chinese brand, independent brand, besides Hongqi, is actually pretty weak. So it's interesting that they have picked Leap Motor to develop NEVs, and possibly there could be some capital collaboration as well. So that's interesting. Now you have Stellantis as a shareholder in Leap Motor.

Tu Le 

What a tangled

web we weave.

Lei Xing 

Yeah, and remember, this is not the FAW's first time working with a Chinese smart EV startup. Remember, Byton? FAW was bought into Byton a few years ago. Remember that? And that didn't go anywhere. And now it's kind of like a second try.

Tu Le 

And we should thank, we should congratulate Daniel Kirchert He launched a new venture. I forget what it's called. Daniel Kirchert for everyone. First of all, he's a good friend of ours. He was an ex BMW sales executive for China, German, but is very, has a lot of Chinese innovation.

Lei Xing 

Okay.

Adventure!

Tu Le 

going around in his head. He was a co-founder at Byton and recently saw him in Paris, I think. he launched a commercial trucking venture with GAC. And he plans to sell them into the European market. I forget what it was called. I'll have to look on LinkedIn again.

Lei Xing 

Mm-hmm.

Yeah, it's an interesting

name. I forget as well.

Tu Le 

Congratulations to

Daniel. Hopefully we'll get to see him sometime soon. oh man, the Stellantis FAW Volkswagen seems pretty complex. And it would leap motor now, leap motor now. it's gonna get, there's a lot going on. But I talked about this earlier.

Lei Xing 

Yeah.

Tu Le 

desperate times you start creating these weird partnerships and we're starting to see that. So.

Lei Xing 

Yeah, we're partnerships

and then really going low with pricing. We talked about BZ3X and high with Chinese content. The same for Nissan. And the same day that the BZ3X was launched, I think all the discussions submerged

the Dongfeng Honda S7. It was launched on the same day, but it was based on that new year brand, which they no longer talk about because year doesn't resonate. So it's just called the Dongfeng Honda S7. And that's a kind of a CRV sized EV priced in the high 200,000 million range, which

I don't know. I think it's overpriced.

Tu Le 

Like, you hear me? Somebody just posted that they couldn't hear me. Okay. Let me see here. That's pretty much all I have.

Lei Xing 

Yeah, I can hear you. I can hear you.

Yeah, that's

pretty much all for this week.

NIO, they had their global debut of the Eve concept at the 2017 South by Southwest. and I think Rivian is sponsoring this event. I think they have something in the eye. So it'd be cool to check that out.

Tu Le 

Mm.

South by Southwest to be.

yeah, they are main sponsor for South by Southwest now.

So here's some comments. One from Greg Reed, a point that I've been making for a while on social media, so many Americans incorrectly think the US is the leader of global car production. That hasn't been the case, Greg, and you know this because you're bringing this up. That hasn't been the case for at least a decade, I would think.

Lei Xing 

15 years.

Tu Le 

Now, most, Greg again writes, if most EV buyers are Democrats and nearly all Democrats load Elon and Tesla now, and the EV offerings for most other OEMs are not the best, do you expect US EV sales to be considerably lower than 2024 sales?

Lei Xing 

Peace.

Well, this is something that we didn't talk about. This Tesla's political stance affecting Tesla sales are more, I think more apparent now, at least in this side of the world, or probably in Europe, less so in China. But it doesn't look promising if we talk about Tesla growing sales.

Tu Le 

Tesla will always be apolitical

in China. will not, Elon will not say anything. So they will be completely apolitical in China.

Lei Xing 

Yeah.

But at this point,

I think it's very difficult to see growth globally or on this side of the world.

Tu Le 

I don't know

if they shrink, but I don't see tremendous upside either unless there's this tremendous product at sub $20,000 that they plan to launch into the US market.

Lei Xing 

Well, we still have the model Q right?

That will do, we don't know. It's a wild card, I think.

Tu Le 

So.

Lei Xing 

But I Model Y in China, based on that report, seems pretty good.

Tu Le 

Yeah,

yeah. Well, and Reuters had kind of posted about an article about how people are getting tickets and stuff like that. So maybe we can explain how that system works. So you get a driver's license and then there's cameras. So if you disobey a law, the camera will take a picture and send a ticket to you. And if you get 12 points, then

Lei Xing 

yeah.

Tu Le 

your ticket, your license can get revoked. But the camera doesn't know who's driving. if you can technically move those points over to somebody else. Yeah.

Lei Xing 

You have to go. Yeah.

Yeah, like you can move them to me. we can, I

mean, it was you who had the penalty, but I could use my license to take off those points. That's,

Tu Le 

If

I'm at 10 points or 11 points and the fine gets me past 12, I can say, Lei, take this ticket for me and then go pay it and say it was your fault. So I can stay at 11 points. there's the ticket is attached to the vehicle, not the person driving.

Lei Xing 

Mm-hmm. Mm-hmm. Yep.

Tu Le 

which was funny to me because it was like, know, a lot of times my wife and I would drive on different days or whatever. we would just, cause the tickets would just come and we would only look at it in certain periods of time, right? We weren't checking it every week, but I wasn't sure sometimes who was driving the car when we got a ticket in Beijing. And so we would just make sure that neither of us got to the 12.

Lei Xing 

Yeah, right.

Tu Le 

Let me see if Trump wins the peace deal in Ukraine, he will regain some of his ability to withstand China in the auto industry because the Ukrainian metals deal is considered a treasure. Well, it might be a short-term win, to really say it's a win, there needs to be refining capacity. And that's still predominantly all in China for most of the minerals.

and rare earths. it's minerals like lithium, like cobalt and nickel. So it's not just having the mines and having the mineral capacity, the actual minerals, it's also how to refine it so that it is automotive grade that can be put into a battery cell, battery module, battery pack.

Lei Xing 

Wasn't there news that just came out that Sichuan province discovered a huge lithium ore or something? I remember seeing that this week.

Tu Le 

Yeah, so that's really all I have. Yeah, man, I'm glad you got your power back so you can kind of warm up, because it looks like you're a little cold with your hoodie all zipped up.

Lei Xing 

Yeah.

Well, the

kitchen is where I get my light in the morning.

Tu Le 

And we should let everyone know next month obviously is the Shanghai Auto Show. So you and I are going to be there. I've bought my ticket. We'll work out some details, but you and I are going to have some surprises while we're over there. And we'll make those announcements in the coming weeks.

Everyone have a good morning, good afternoon and good evening. We will talk with you all next week.

Lei Xing 

Yeah.

Talk next week.