Tesla’s China Problem Just Got Bigger — Xiaomi & BYD Are Taking Over | Episode #238

In this episode of China EVs & More, Tu Le and Lei Xing break down the latest developments in the global EV industry as 2026 begins — including the evolving competition between Tesla, Xiaomi, BYD, and other Chinese automakers.  

January sales numbers from China reveal a complex picture. Xiaomi’s YU7 SUV surged to become the best-selling vehicle in China across all powertrains, while Tesla’s domestic demand appears to be weakening as more vehicles produced in Shanghai are exported overseas.

Tu and Lei analyze what this means for Tesla’s strategy in China and why export growth can mask softness in the world’s largest EV market.

The discussion also explores the ongoing EV price war in China, where ultra-low financing offers and aggressive discounting are putting pressure on automakers’ margins and long-term profitability. As the hosts explain, China’s EV market has entered a new phase where companies must fight not just for growth — but for survival.

The episode then shifts to the future of EV technology and battery innovation. With BYD continuing to push fast-charging infrastructure and next-generation batteries, the hosts debate whether ultra-fast charging could eventually make battery swapping less relevant outside China.

Finally, Tu and Lei turn to the North American EV market. With Rivian’s highly anticipated R2 SUV, Ford’s upcoming affordable EV platform, and Tesla’s continued dominance with the Model Y, the next few years may determine whether U.S. automakers can remain competitive as Chinese EV manufacturers expand globally.

From battery innovation and pricing wars to global expansion strategies, this episode offers a clear look at how China EV Inc. continues to reshape the global auto industry.

🔑 SEO Keywords (for description and podcast search)

China EVs & More, Tu Le, Lei Xing, Xiaomi YU7 sales China, Tesla China demand decline, BYD fast charging battery tech, China EV price war, Chinese electric vehicles global expansion, EV market China 2026, Rivian R2 review discussion, Ford affordable EV platform, battery swapping vs fast charging, Chinese EV exports, EV competition Tesla vs China, global EV industry trends, electric vehicle market analysis

Transcript

Tu Le (00:00)
 Hi everyone and welcome to the China EVs and More podcast where 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 please help us get the word out about this podcast to other enthusiasts and of course, tune in again next week. My name is Tu Le, I'm the managing director at Sino Auto Insights, 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. On the eve of Lunar New Year, Chinese New Year, 2026, the year of the horse, right? It's the year of the Horse Can you please introduce yourself?
 
 Lei Xing (01:02)
 Yes, good morning. This is Lei, former chief editor of China Auto Review, and this is episode 238. Welcome to a Friday the 13th spooky edition. A pre-Valentine's Day edition, a about to celebrate Chinese New Year of the Horse edition.
 
 Tu Le (01:18)
 Really, really, man, it's crazy.
 
 Lei, I love
 
 wo ai ni
 
 Lei Xing (01:31)
 How do you do this? How do you know how to do it? Well, you do it like this.
 
 Happy Chinese New Year. Happy Chinese New this is the last episode of the Year of the Snake. And we're heading into the Year of the Horse. A fire horse, apparently. But that's not something, you know, the EV market.
 
 Tu Le (01:37)
 I'm left-handed so I'm gonna do I'm gonna cover my left hand. I want to cover my left hand so
 
 Lei Xing (02:00)
 currently is not that on fire. To put it in a bad word, we never want it to be on fire, right? But you know what I'm trying to say. January numbers, we saw some additional numbers come out. I think one thing, more detailed numbers.
 
 Tu Le (02:16)
 more detailed numbers, not
 
 overall numbers, but more drilling down numbers that we'll talk about.
 
 Lei Xing (02:23)
 Yeah, and in the spirit of Chinese New Year, as you can see, I'm kind of wearing red. So that'll hopefully bring good fortune to the to the new year. But January was a downer, right? A downer. Especially for Tesla, Tesla is always in the headlines. Earlier in the month,
 
 I saw a headline saying Tesla bucked the trends. They had a 9 % growth. And then just a couple of days ago, Tesla crashed. Xiaomi beat them. I don't know. Yeah. No.
 
 Tu Le (02:55)
 ‚Åì I'm gonna try to stretch my arm and pat myself on the back because I said when those
 
 numbers came out, a lot of them are gonna be shipped outside of China.
 
 Lei Xing (03:08)
 Yeah,
 
 so that's the caveat, right? So I kind of don't pay attention too much to the headlines, but those are the facts, what the data presents. The YU7 was the number one selling model of all power trains in China in the month of January.
 
 Tu Le (03:26)
 This
 
 should be concerning for Xiaomi because you had mentioned the YU7 being a rock star in sales. So when we look at overall sales for January, we take that with a grain of salt. But when you look at these details, like Tesla shipping 71 % more year over year abroad, that is a significant number that should be paid attention to because the production number is almost like a requirement that they have.
 
 They can't go lower than a certain amount or the Shanghai government or the contract they have with the local government will be out of whack. Okay. So let's assume they have a minimum number of vehicles they need to produce per month. Let's say that's 50, 60, 70,000 units. The concerning thing is that a lot more are getting shipped abroad, which means that domestic consumption is not there. Number two for Xiaomi,
 
 The YU7 killing it. But in January, was 97 or 96 % of all sales for Xiaomi. So that's one of the big reasons. Xiaomi probably saw that softness months and months and months ago and is refreshing this SU7 But it reinforces the fact that China is a crossover and SUV country, just like the United States.
 
 Lei Xing (04:32)
 ‚Åì yeah.
 
 So.
 
 something to watch for Xiaomi and Tesla on Xiaomi's part. How much further, how fast can the new SU7 replenish kind of the share of their overall sales, right? Because now it's almost like Tesla China is predominantly Model Y sales in China. Is Xiaomi going that way as well or will the SU7
 
 make some kind of a significant comeback. That's one. then, right, because the sedan, again, the sedan, the SUV market. On the other hand, will the YU7 dethrone the Model Y this year in China?
 
 Tu Le (05:20)
 Whoa.
 
 Lei Xing (05:34)
 If that happens, then I would love all the headlines.
 
 Please make them. But again, it's still early in the year. It's January. February is going to be even worse. What do you call a slump after a slump?
 
 Tu Le (05:47)
 Yeah.
 
 So that's the crazy thing. Well, I won't say crazy, but that's the thing that I think guys like us are really trying to anticipate. We both believe that the market will be down in 2026. We just don't know how much. And from the looks of it, the automakers at least seem to still be pretty optimistic with Leap Motor and all these companies talking about.
 
 trying to have record sales. Now that's not going to happen with all these companies. Go ahead.
 
 Lei Xing (06:20)
 These include,
 
 so the big caveat we also must stress when we talk about these sales numbers, CAAM these companies, when they announce a sales target, they always include export numbers into their sales, right? So the 1,050,000 of Leap Motor, that includes export. BYD, let's say they want to do over 5 million this year. Those probably will include one and a half to...
 
 possibly nearly 2 million, which reflects the domestic pressure. And if we look at it in a domestic lens, they're actually not growing. So we put that into perspective, just to stress.
 
 Tu Le (07:00)
 Yes.
 
 The one thing that's what I've always said is look at, look at individual OEMs growth versus the market. If the market's growing at 5%, but they're only growing at 4%, they're actually losing share. another important dimension is that rule of thumb right now, let's say for the time being, and let's revisit this every quarter or every six months, like 20 % of all BYD sales goes outside of China.
 
 Now, if that creeps up to a higher percentage, BYD is struggling in the China market, number one. And then the other two companies that I would look at, well, let's say three that I would look at that have decent export numbers, Chery Geely, and Great Wall. So those are kind of the biggest exporters.
 
 Lei Xing (07:46)
 which
 
 which the companies you just mentioned are at the top of the finalists in trying to purchase a plant in Mexico. I'm sure you saw the Reuters article. January sales numbers. something I just tweeted about this, what stood out to me was the exports of autos and NEVs.
 
 Tu Le (07:58)
 Yep.
 
 Lei Xing (08:10)
 were at or above 30 percent. Which means China sold 2 million vehicles. Out of those 2 million, over 30 percent are exported. China sold a million NEVs. Out of those a million NEVs, over 30 percent are exported. In the years past and the months past in 2025,
 
 those percent shares are around 20 % or 15%. BYD is a good benchmark. They export 20 % of their sales. So that's something I want to watch closely because
 
 Tu Le (08:51)
 Let me stop you there real quick Lei. With an eye on long-term, they want 50-50. Remember, their goal is 50 % international, 50 % domestic.
 
 Lei Xing (08:57)
 Yeah, sure. So I think.
 
 So from that perspective, it's nothing surprising because all of these car companies are trying to be global. Toyota, Volkswagen, so why can't the Chinese be global? That's their ambition. So I think from that perspective, it's fine if it's 30%, 50%. But the other perspective is the reflection of the domestic pressure. And if that export number stays above 30 % to even a third
 
 of all auto sales or NEV sales for 2026.
 
 then I think that's a huge jump in terms of the export share.
 
 Tu Le (09:39)
 Well, there's one wrinkle that I think is different between the Japanese and the Koreans and the Europeans coming in and trying to be international. No problems with the Chinese wanting to be international. What they're trying to do is offload overcapacity, which is when you look at Japan, when you look at Korea, they didn't have that level of overcapacity. They were just trying to grow. Okay. And I think that's the biggest differentiator. And when
 
 Lei Xing (09:40)
 Good.
 
 Tu Le (10:08)
 countries require foreign direct investment so that they build locally in Canada, in Mexico, eventually likely into the United States, that doesn't help their overcapacity issue. And one of the biggest reasons BYD, Geely are sometimes not growing faster than the market or as fast as the market is because there are zombie companies that do take
 
 sales away in lower tier cities, which makes it much more difficult for Geely and BYD and Xiaomi eventually probably to really be a robust, profitable, sustainably profitable company just because of the downward pressure on pricing that's always going to be in the China market.
 
 Lei Xing (10:53)
 Speaking of pricing, this new policy just came out on the compliance of your marketing materials, sales promotions, pricing of the vehicles. One of the quite a few that just came out the recent few days, there's one on safety. There's one on the yoke steering wheel. I think from that
 
 perspective, China is also from a policy side, trying to clamp down on this kind of the involution that's been happening. Will it be effective? I don't know, because there's always going to be an involution going on.
 
 Tesla's 7-yr low interest financing is one of those involutions that's now being copycatted by everybody else. NIO, someone from NIO just sent me, it's 0.49 % for the 7-year low financing, which is literally zero financing, 0.5%.
 
 Tu Le (11:47)
 people that are not finance people, that's just basically free money for seven years, effectively. And the crazy thing is there's this cascading domino effect because if I'm NIO and let's say, Lei buys a NIO ES8 and the sticker price is $60,000, in seven years,
 
 That car, because of a continuous price war, the pressure on pricing, because MSRP seemed to always go down. Starting prices, or MSRP stands for Manufacturer Suggested Retail Price.
 
 The residual value on Lei's car after seven years is probably close to zero. And the technology in that vehicle is most likely going to be obsolete. So when there's this much pressure and competition and inability to price at a premium, it's really, really going to be messy for the automakers in years to come in China.
 
 Lei Xing (12:52)
 And then there's also from the market regulation, there's the state administration of market regulation kind of posted something about the 60 day payment. There are 17 Chinese automakers groups that are part of this. And it looks like most of them have adhered to this kind of agreement,
 
 I think the association CAAM did call out a few without naming specific ones that there's issues of not paying on time. right? All of these, you have the involution going on, but at the same time you have these policies, mandatory regulations coming, which forces you to behave in a certain way. So that's the kind of the new dynamic.
 
 I this year and we'll see how that affects what happens in the. market
 
 Tu Le (13:50)
 The Chinese government is really trying to thread a needle. They're trying to maintain growth in the market while pushing out players that aren't competitive. And if they're not able to balance those two conflicting things, then it's going to really do damage to the automakers that are.
 
 trying to be competitive. Now, with that list of companies that you had mentioned, I wonder which companies actually don't have the cash to pay versus the ones that are actually just holding on to it as a matter of strategy in order to keep working capital higher. we can speculate, but it doesn't even matter at this point in time.
 
 Lei Xing (14:37)
 on this side of the world, think recently we've heard Ford announce earnings, Rivian announce earnings. I'm seeing great response and not response, but reviews, the early reviews of the R2. It feels like R2 is one of those vehicles where it could be a new Model 3 moment for
 
 Not only Rivian, but possibly for the American auto industry or the EV sector. I don't know what you think of it for Ford's stance. Obviously, they're actually announcing their Universal EV platform on the first day next Tuesday, right? First day of the year of the horse. Looking forward to that. We're seeing more Renaissance, I feel like a bit.
 
 Although EV take-rates are probably going down this year in the US, I don't even want to comment on.
 
 Tu Le (15:25)
 You can get an Equinox
 
 in Michigan. I don't know about the rest of the United States, but you can get an Equinox EV for under $350 right now. $350, $400 a month lease for three years. With regards to Ford, they actually invited me to kind of get a sneak peek of that UEV. So there was a video that they gave a few of us access to, and then they...
 
 had a Q and A yesterday and we're under embargo until Tuesday. So can't really talk about it, but you know, generally speaking.
 
 I love that Rivian R2 is getting good reviews. I've never doubted Rivian's ability to design and software capabilities. They just don't know how to build cars very well. You know, and or sell them. And if that price point creeps up, the starting price of the R2 creeps up over 50.
 
 Lei Xing (16:03)
 I
 
 Well, yeah.
 
 Tu Le (16:24)
 then we're in the same situation. It needs to be starting at under $45,000.
 
 Lei Xing (16:32)
 Well, which is what RJ Scaringe confirmed on the CNBC interview. He said the launch additions will be not the 45. It will be a lot higher. But the $45,000 price point will come soon after. I don't know what that means, how long that takes, but maybe second half of the year.
 
 Tu Le (16:51)
 I read that as it'll come soon after if we can get enough of the higher end versions sold and delivered. That's how I read that.
 
 Lei Xing (16:59)
 Well, their guidance
 
 is what 62,000 to 67,000 total for this year. Still seems low, but
 
 Tu Le (17:06)
 of which 25,000
 
 are the R2. That's what they said. So again, you're absolutely right. 67,000 is nothing, nothing.
 
 Lei Xing (17:13)
 Yeah, so that sounds like
 
 Yeah, mean, yeah. And I feel that.
 
 Tu Le (17:23)
 That factory in
 
 Illinois can probably take at least 150 to 200,000 units.
 
 Lei Xing (17:29)
 Yeah. And I'm still as a consumer my consumer hat on, I'm still deciding between an R2 and the Model Y. I have an R2 on order since two years ago. Yeah, right. A hundred dollars. R2 seems to me is one of those great American EV startup EVs, which the American
 
 Tu Le (17:39)
 So do I.
 
 Lei Xing (17:52)
 consumer or the American industry is really lacking.
 
 And the Model Y is more established with this FSD feature that's still the benchmark of the industry, whereas the R2 is more versatile. It's more likeable. It's more a kind of a outdoorish SUV enthusiast vehicle. But Model Y is more utility, maybe. So I'm kind of torn right now. But I'll be watching and kind of
 
 go from there, you know, as a consumer here in the US trying to buy an EV.
 
 Tu Le (18:27)
 I want to like it. It looks great. I think the interiors are one of the best in the business. also think Lucid has a very nice interior, just different markets, different target segments. But again, these launch edition, if they're $60,000 cars.
 
 Lei Xing (18:29)
 Yeah.
 
 No bueno.
 
 Tu Le (18:46)
 And
 
 If the UEV that comes out next year from Ford, the R2 comes out and no, quality issues, no production issues and demand is pretty robust along with the Gravity, baby Gravity. We have and Scout now and Scout, we have competition.
 
 Lei Xing (19:03)
 Yeah.
 
 But we may have to wait really till 27, 28, even toward the end of this decade to really see those coming together in scale.
 
 Tu Le (19:08)
 ‚Åì
 
 the end of the day, I, cause.
 
 Lei Xing (19:21)
 And when does the Chinese come into the mix?
 
 Tu Le (19:24)
 the elephant in the room that the domestic automakers refuse to talk about. Okay? Because if we look at Slate...
 
 And we look at some of these other vehicles. Again, the UEV. Let's assume that the UEV has a similar.
 
 kind of market positioning as the Maverick, the current Maverick, okay? That on paper should crush a Slate for about the same price because of the number of features.
 
 Lei Xing (20:00)
 you can't talk about this, but I'm sure you have an idea since you've already seen some of it. The Ford's first vehicle off of this UEV is an affordable pickup. I'm assuming it'll be the size of a Maverick, but a EV pickup, right? That's what I'm assuming. $35,000, $40,000. But that's not my cup of tea, right? That I'm not going to be the pickup.
 
 clientele, I want an SUV like an R2, which Ford has the Mach-E but that's kind of old, right?
 
 Tu Le (20:37)
 And
 
 here's another, since we're focusing a little bit more on North America right now, there's a
 
 a dealership consultancy advisory firm called the Canton group. they help dealerships with M&A and divestitures and stuff. They do research and they said that we've reached peak SUV pickup in the United States. Because the take rate for SUV pickup is some ungodly 80 % number or something like that. even maybe even higher.
 
 Whether that's correlated with the MSRP increasing, I don't know. But let's assume that because of the price of passenger vehicles in the United States has only creeped up in the last several years. let's tie it to the fact that Tahoes, Suburbans, X7s, all these SUVs are really, really expensive.
 
 My wife's Santa Fe was, I think, 50-ish,
 
 The unfortunate thing to your point, is we know that the Chinese will come within the next five years. If the OEMs here, whether they're Toyota, Hyundai, GM, Ford, whoever, Rivian, Lucid, if they can't get 35, 40, $50,000 cars that are really, really nice, the Japanese and Koreans will lose out to the Chinese in the United States. Full stop.
 
 Because the complicating thing here, Lei, and I want your input on this, if Trump doesn't force a third term and all bets are off because I don't know, I'm serious, with how crazy politics is right now.
 
 Lei Xing (22:02)
 Yeah, I
 
 Nobody knows. ‚Åì
 
 Anything could happen.
 
 Tu Le (22:15)
 How much more complicated is the USMCA now if Mexico and Canada have Chinese EV companies building locally? How do we reconcile that?
 
 Lei Xing (22:27)
 Well, here's the thing about that Mexico news story about Geely and BYD scouting to purchase a plant. That's a thorny issue, right? Because Mexico will obviously want to get the USMCA done first before they can, and they at the same time want these investments from Chinese automakers for jobs or anything. And if I'm any foreign automaker in the US,
 
 the Japanese, the Korean, the Americans, the Germans. I'm looking out at the window and that window is slowly closing of your current supposedly...
 
 leadership or your immunity from the Chinese. That window is slowly, slowly closing. And the only way, I mean, I retweeted Jim Farley's one of his tweets and say, you know, just American innovation, you know, do it, not production. Only gets you a certain way.
 
 Tu Le (23:23)
 while our president
 
 is threatening not to not allow opening of the bridge, the new bridge that Canada built and paid for. So for those that aren't aware, in Detroit, just south of Detroit, there is a bridge called the Ambassador Bridge that goes from Detroit to Windsor, which is the Canadian city across the Detroit River. And that's where
 
 Lei Xing (23:30)
 ‚Åì Gordie how?
 
 Tu Le (23:48)
 Currently, 25 % of all trade between the United States and Canada drives over. It's a couple of lanes, four lanes, I think, each way. And it's privately owned by a Canadian who didn't want to invest further because when we look at bridges that cross borders in the United States, normally they go directly into a highway and avoid the cities.
 
 because they don't want a bunch of semis going through the city. The Ambassador Bridge goes right through downtown Detroit, and it goes right through downtown Windsor. And during COVID, they had a strike, and there was all these problems. so, US and Canada wanted to own the bridge, and it's 50 %‚Äî I believe it's 50 % owned by both parties. It's huge. It's massive. And it's a mile down.
 
 from the ambassador bridge. I was reading that the owner, the Canadian owner of the ambassador bridge talked to the Trump administration. And a couple hours later, Trump was like, we're not going to allow this opening. So we're still arguing and fighting with the Canadians about this bridge that is, I'm going to be honest with you, man. And I don't think this is hyperbole. It's a lifeline.
 
 between Michigan and the automotive industry and the competitiveness of the state of Michigan. He obviously doesn't care about the state of Michigan. all it takes is a billionaire calling the administration and then things change. And it's the weirdest thing because we didn't pay for the bridge. We as in the United States didn't pay for it. It is something that
 
 does not go through the cities, it goes straight to highways. So I think people in Michigan just thought, but people in Michigan just thought this was a done deal. this is the, and I don't want to, again, we don't want to get too political on this show, but this is not a politics thing, this is a trade thing. And so.
 
 Lei Xing (25:35)
 That's just Trump being Trump, right?
 
 Well, we can head
 
 over the Atlantic and talk about another very political issue, which is Volkswagen Anhui getting that.
 
 What would you call it? Exemption from the EU commission on the minimum price undertaking. Quite interesting that one of the German automakers got it first. Surprise, surprise. But interesting also that the kick is that the Volkswagen Anhui entity has to commit some kind of investment into Europe.
 
 I don't know how that works, but I'm sure there's the German automaker, the Volkswagen Group lobbyists were behind this, that they got this. Because they export the SEAT Tavascan or the Cupra Tavascan from Anhui to Europe. Which, one, it's kind of...
 
 I controversial. Second, it opens the floodgates because now we have the BYDs, the Teslas. Obviously, Tesla, think they already have a lower tariff. But Geely, SAIC Motor, all of these ones, meaning they probably in the coming weeks, or months should also be able to get this exemption or a lower tariff, which
 
 connects to our topic earlier in the show about the favorable or not favorable environment for export out of China.
 
 Tu Le (27:18)
 let's be clear. Stellantis, if we're to consider Stellantis a US, French, European company, they're the only company among the D two and a half that has a horse in the race. Okay. And, they do export that. What's it called?
 
 Anyways, it'll come to me. Ford, don't sell that many units in Europe. GM sold Opel to Stellantis, or at the time, PSA. So they don't have a ton of commentary on that. But we're seeing the automotive world transform before our eyes from a traditional sense, but also
 
 when we bring in the AI part of things, when we bring in the Waymo and, and Uber part of things in the next 15 years, the automotive landscape is going to be completely different. The brands that we rely on for either driving ourselves or being driven are going to be completely different. unfortunately,
 
 Lei Xing (28:06)
 Yeah, we.
 
 Tu Le (28:27)
 All the moves that the EU as well as the European automakers are making, to me, spells them being more or less bystanders. Because I want to point back to your tweet. They've got to be innovative. They've got to be product and customer focused. And right now,
 
 They're not, they rely on other people's IP. And I'm talking Volkswagen Group, Stellantis. They can't do that because we also know from following China so closely brand becomes less meaningful in a connected tech enabled mobility space. Premium.
 
 is being defined differently. So I don't want to overstate or oversimplify this, but there will be many European carmakers that become contract manufacturers and the brand will be meaningless. So companies like Nissan, Citroen, Peugeot, like why wouldn't a tech company go buy that European brand? Right. Cause one of the issues that
 
 dealers talked about last week at NADA was like, we need a new license if a new brand comes to the United States. Okay, if I'm a Chinese brand, I buy an existing brand and say, okay, I'm gonna sell that. I'm gonna rebadge my company's cars as a Citroen or Renault or one of the poor performing brands. Cause we know that Stellantis, Geely need to close, need to sell brands off.
 
 in order to be globally competitive. They have too many brands. So Volkswagen Group too.
 
 Lei Xing (30:11)
 Yeah,
 
 speaking of the changing world order, Renault develops the Twingo, a lot of the R &D done in China in 21 months. And this Twingo goes on sale in Europe. Imagine Ford or GM use China to develop their EV in 21 months and goes back to the US and sells.
 
 We probably wouldn't even have that conversation, right? But at least China and Europe, can. That's just different way cross-regional partnerships works. One can work and the other cannot.
 
 Tu Le (30:45)
 is going to bug me to no end is the organizations that were against it and then do 180-degree turn. then because there's an opportunity for them to line their pockets with some money, they will give us whiplash with how quickly things change. know, NADA was like, we're against the Chinese.
 
 but we can't tell any dealer not to be. So, I mean, what's the point?
 
 Lei Xing (31:14)
 it's interesting that the President NADA was actually, I think there was a news that as an association, they will support blocking the Chinese automakers from coming to the US. whatever their members, their dealer groups does, they have no say, right? So that was interesting.
 
 Yeah, this year, I mean, until this point.
 
 is lots of juicy developments.
 
 geopolitically and corporate-wise. Different changes, Canadian, right? This year is what that agreement comes to fruition, right? Perhaps. How many of the Chinese EVs and who of the Chinese EVs are going to be selling in Canada?
 
 And Mexico, because of the pressure on the US side, they already have that new 50 % tariff for Chinese vehicles.
 
 Tu Le (32:04)
 But this is where Mexico, some of these countries, Brazil maybe as well,
 
 The EU puts a tariff on and then makes certain exemptions, which takes all the teeth out of the tariffs. And it's the weirdest thing. Do you want foreign direct investment or not?
 
 when you make a rule and then you take the teeth out of it, number one, it shows that you're not serious. Number two, it means that these companies can find loopholes and or lobby to create loopholes. with Mexico, okay, we have a 50 % tariff, which means that Geely and BYD are looking at local factories, buying local factories. That's great.
 
 Because I think that's the reason to put 50 % tariffs up. So is Shinebaum going to create loopholes? Because I guarantee the Chinese brands are all trying to negotiate, well, you know what? We'll invest and we'll buy factories and stuff like that. But you need to exempt this or you need to grandfather this in. there just seems to be, if this was a damn
 
 into Europe and into North America. There's more and leaks in both dams. But that's all I had, man. You want to talk about anything else?
 
 Lei Xing (33:16)
 the only other thing I think yesterday was I watched quite a bit of the Mercedes-Benz Group annual results conference and a lot of China stuff. tell you, Oliver Thona, I think that's the way to pronounce it. He's the board member for the Greater China region and he's been on the job for one year.
 
 Tu Le (33:19)
 .
 
 yeah, yeah, yeah.
 
 Lei Xing (33:35)
 He was under the spotlight because every other question asked was on China in this analyst and media portion. I watched the replay and the first question that came up to him was the locally built electric CLA. The recent reports have shown since launch in early November, they've sold less than 3000 units. According to third party,
 
 data in China. And that was the question that was asked. And then he took it and he basically said, first of all, this CLA in China in that segment is a touch more niche than in Europe. So even at the price point, it's priced at which is 250,000 RMB to 300,000 RMB.
 
 They expected that it'll take longer. So he's kind of like, you know, please give us some more time so that the customers will.
 
 of built into the attractiveness. At the same time, he's also alluding to the fact that that segment is not really where the bulk of the, where they want to play in, where they have better opportunity, which is the upcoming electric long wheelbase GLC, which I'm not sure
 
 is gonna be doing better.
 
 Because we talk about the larger, more roomier, more comfortable SUVs, there's much on offering. We have the BMW iX3 long wheelbase launching in China this year. It's gonna be tough. It's gonna be tough,
 
 Tu Le (35:16)
 Noia Clasa.
 
 Lei Xing (35:18)
 So, I mean, it hasn't started well. Also for the AUDI E5 Sport, sales have not been that great. And then we have a bunch of new ones, right? The ID. ERA 9X.
 
 There's more also Japanese ones coming. And he did save on the record, Mercedes-Benz expects sales to be down in China this year from last year. So that's confirmation from, yeah. Yeah. And so they have to play with this environment down pressure for another year, if not more.
 
 Tu Le (35:43)
 Less than 500,000 units. Less than 500,000. If...
 
 Lei Xing (35:54)
 And yeah, that was
 
 Tu Le (35:56)
 the discussion that China is a SUV crossover country. So the CLA is already niche because of it being a sedan. And then the 250, 275 starting price point is too high for what you get. And so if the GLC flops like the CLA has so far,
 
 Could we see Mercedes under 400,000 units this year in China? Because those are the high runners. Those would be their high runners.
 
 Lei Xing (36:28)
 Mommy!
 
 So I mean the expectation is around half a million units. Could it dip into the 400,000? Very well. Will it be below 400,000? At this point, I don't know. That would be a shocker. You want to bet?
 
 Tu Le (36:35)
 Yeah. So that's what I'm saying.
 
 That's what I'm saying.
 
 that combined sales,
 
 I would think combined sales of the CLA and GLC need to be 150 to 200,000 units for the year.
 
 Lei Xing (36:58)
 Yeah, but here's the thing though, I mean, their penetration NEV rate is still low, right? So they still have, just like Volkswagen, just like BMW, a lot of their market share are still in the ICE segment, right? So, don't know, but if I was gonna bet, I wouldn't bet them below 400,000 units. Below 500,000, yeah, certainly.
 
 Tu Le (37:11)
 Ice, yeah. Fair?
 
 they've said that. They've said that it's going to be under 500.
 
 Lei Xing (37:25)
 Yeah,
 
 but maintain profitability is their target in China. I think he also did say the 2025, the BBACJV, they delivered on double digit returns, but this year will be down. And then 2027, hopefully they can go back up. One of the things they're is they're localizing production of the GLE.
 
 Tu Le (37:28)
 So to me, being below f-
 
 When they say...
 
 Yeah, so for me...
 
 Lei Xing (37:54)
 which previously has been exported from the US to China. And now with the US China tariff thing, is it going to be the right decision? We'll see. But in that segment, GLE, we know that the EREVs, the AITOs, the Li Autos are taking over.
 
 It's not gonna be a smooth sailing.
 
 Tu Le (38:11)
 I look at BMW and Mercedes saying sales will be under 500,000 units as sales will be 450 ish. So them losing 50,000 because CLA and GLC aren't doing well, it seems plausible.
 
 The crazy thing is the Germans, maybe Volkswagen has, but the Volkswagen brand has, but the premium...
 
 I'm sure Porsche is hoping they have. I don't know if they found a bottom yet in China.
 
 Lei Xing (38:44)
 So which means that this recent state administration market regulations announcement on the compliance on pricing will be good news for Volkswagen, because the pricing pressure, the narrative has just completely changed because of these smart EV startups. What is premium?
 
 What commands premium is no longer pricing anymore. And one of the slides that Oliver, showed on his presentation was what can the premium, the foreign premium get back? How can Mercedes get back? The three key words, comfort, space, intelligence. Okay, these are.
 
 not news to us, but there's one missing piece is how do you price the vehicles? Can you do it? I think that's the most difficult part and trying to maintain profitability while staying at a certain volume. That's the most headache, I think, for these legacies.
 
 Tu Le (39:36)
 value.
 
 Lei Xing (39:54)
 balance.
 
 Tu Le (39:55)
 It'll continue to be challenging if the Germans are seeing continued softness in demand for their products, because you can't really know if product strategy is working or overall business strategy is working if the market continues to shrink or you're updated or you revise business strategy. Because the reason you got into the mess is because the
 
 pre-decessing strategy wasn't working. Anyways, we do have one comment, one question from SPX. Thanks for joining us, SPX as always. Good morning, guys. Why would Tesla prefer shipping cars from Shanghai to Canada instead of from closer California or Texas? What does that mean for the factories in demand in the US?
 
 Lei Xing (40:30)
 Thank you.
 
 The answer is simple. Canada, America, don't like each other. That's my simple geopolitical answer, but I'm sure there's a more politically correct answer.
 
 Tu Le (40:59)
 Well, first of all, Canada is allowing 49,000 cars tariff free.
 
 Lei Xing (41:06)
 Sure. But
 
 I mean, that happened before, right? The Shanghai-built Teslas were exported to Canada before.
 
 Tu Le (41:15)
 No, but what I'm saying is that, what we talked about before, more exports. So I tweeted out that.
 
 export numbers are large for Tesla in China. I said that if they can't figure out the demand problem in China, many more of these cars will be shipped to Canada. The reason is because they'll be tariff-free, number one. People made great points.
 
 Lei Xing (41:35)
 Sure, plausible.
 
 Tu Le (41:41)
 Tesla already has ecosystem infrastructure in Canada. So shipping more units isn't an issue. The challenge is that Tesla has also a demand problem in Canada. And sales have been going down in Canada. And we can blame it on Elon getting into politics, and or we can blame it on the cars just being older. And the only feature that
 
 is very attractive right now is FSD. And so the other thing too SPX is that.
 
 I'd mentioned this earlier again, they likely have requirements that they agreed to with the Shanghai government to get Shanghai giga built, meaning that they have productivity levels or sales or not sales volume, but production volumes that they need to hit in order to maintain those, the tax subsidies and the land subsidies that they receive from the Shanghai government. And so.
 
 In order to hit those, they need to continue to produce. And if they can't sell them domestically, they ship them abroad.
 
 Lei Xing (42:49)
 Yeah, and Tesla Shanghai built vehicles are probably the best built out of all their plants. mean, that's Tesla has set in themselves, right? yeah, right. So those are all factors. But then again, I think back to the earlier topic, in China this year, the biggest catalyst aside from any new models at all for Tesla really is FSD approval.
 
 Tu Le (42:58)
 and the cheapest for them to build.
 
 Lei Xing (43:15)
 I think it'll be a significant event. Not the FSD that you have in the US, but some kind of a point to point door to door capability that's still missing while others are already offering.
 
 Tu Le (43:19)
 to the night.
 
 Did they just launch an updated version?
 
 Lei Xing (43:33)
 Well, Grace Tao, she recently said they're building a training center, right? So it's in anticipation, maybe getting that finally getting that approval. Matter of time, I think, at this point, and really how really the system works in China, we don't know yet, but looks like it's imminent.
 
 Tu Le (43:53)
 Yeah, that's probably the most interesting thing in China to keep an eye on with Tesla is how close and I feel like the impact won't be as significant as Westerners think because Xpeng, NIO, Li Auto, Xiaomi, Huawei, you name it, they have intelligent driving systems. and they're competitive even if
 
 Full FSD in the United States is better system than what's on offer by anyone in China. It's not the distance between is not as wide as many would think. And the other thing that's important is that Tesla will not allow customers to use FSD anytime they want, film it and post it on social. That's just not gonna happen in China.
 
 Lei Xing (44:43)
 it's already been five years since we started doing this. Yes, we started doing this in February 2021 on Clubhouse.
 
 Tu Le (44:46)
 Was that right? Wow.
 
 Gong Xi, Gong Xi. Happy birthday to us, man.
 
 Lei Xing (44:53)
 Yeah, so.
 
 I think it was February 18th that we started doing this.
 
 Tu Le (45:01)
 And according to Grok, ChatGPT Claude, we are the number one podcast about Chinese electric vehicles.
 
 Lei Xing (45:08)
 The qualifier
 
 being China EVs.
 
 Tu Le (45:12)
 Yes.
 
 SPX writes again, what's the mechanism of the Canadian quota for Chinese imports? Is it first come first serve? That's still be determined. I think they're working that behind the scenes, SPX. I'm sure there's a lot of lobbying going on in China, but the reality is that there's outside of Geely, maybe Great Wall.
 
 Lei Xing (45:22)
 Yeah.
 
 Tu Le (45:37)
 Tesla, there's no infrastructure, sales infrastructure, service infrastructures for many of the Chinese companies that would love to enter Canada.
 
 either way, happy Lunar New Year, Yes. Lunar New Year is Tuesday, right?
 
 Lei Xing (45:53)
 fire horse.
 
 Yeah,
 
 so a piece of Chinese, so we talk about the year of horse, we say a lot of, we say something ma shang, which means literally on top of the horse, but which also means immediately or right away. Right away, yeah. So I feel like ma shang is gonna be a viral word because ma shang really...
 
 Tu Le (46:11)
 right away.
 
 Lei Xing (46:17)
 It's China's speed. things happen, things happen ma shang in China.
 
 Tu Le (46:20)
 Hey, hey.
 
 Don't be that guy. Don't be that guy that's teaching Chinese words. Don't be that guy that's tweeting about, I'm gonna teach you a Chinese word. Don't be that guy, Lei.
 
 Lei Xing (46:24)
 You
 
 was funny.
 
 No, I just thought of this was fun. Ma Shang, Ma Shang, yeah.
 
 Tu Le (46:36)
 ‚Åì my goodness.
 
 OK, we will
 
 will will Ma Shang be back either in a week or two weeks, everyone. So thanks for joining us. Good morning, good afternoon and good evening. We will catch you all in a week or two.
 
 Lei Xing (46:54)
 Bye bye.