BMW Waves the White Flag? China’s EV Market Just Got Tougher | China EVs & More #251

China’s EV market is entering a new chapter—and it could be the toughest one yet.

In Episode 251, Tu and Lei break down why BMW’s latest guidance may be one of the clearest signals yet that China’s traditional ICE business is deteriorating faster than many expected. As NEV penetration accelerates and ICE sales continue to shrink, legacy automakers face mounting pressure to reinvent themselves while Chinese brands battle for survival in an increasingly competitive market.  

The discussion explores why China’s slowing economy affects foreign brands differently, how the latest sales trends are accelerating industry consolidation, and why companies like BYD, NIO, XPeng and Li Auto are entering a critical new phase. Tu and Lei also debate Volkswagen’s manufacturing reset, BYD’s global ambitions, BMW’s warning on China, and whether the current price war is giving way to a fight over profitability, capacity and long-term survival.

If you want to understand where the global automotive industry is heading next, this episode explains why China’s market remains the industry’s most important battleground.  

🔑 SEO Keywords

China EVs, China EV market, China EVs and More, BMW China, BMW profit warning, Volkswagen China, BYD, NIO, XPeng, Li Auto, China auto market, NEV penetration, EV price war, China ICE sales, Chinese automakers, EV exports, EV market consolidation, Beijing Auto Show, global automotive industry, Tu Le, Lei Xing, Sino Auto Insights

⏱️ Suggested Chapter Timestamps

00:00 BMW Sounds the Alarm
02:10 China’s Economy and the Auto Market
06:00 Why ICE Sales Keep Falling
10:20 NEV Penetration Hits Another Milestone
15:15 Volkswagen’s Manufacturing Reset
20:10 BYD’s Capacity Challenge
26:00 Can Europe Slow Chinese EVs?
31:30 NIO, XPeng & Li Auto Update
37:45 Will Consolidation Finally Begin?
44:30 Who Wins the Next Phase of China’s EV Market?
49:30 Final Thoughts

Transcript

Hi everyone and welcome to China EVs and more, 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. Don't forget to like and subscribe so you don't miss anything from us in the future. My name is Tu Le. I am 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 Sinauto Insights.substack dot com, which of course I encourage you all to do. A newly trimmed Lei. Can you please introduce yourself?
 
 Lei Xing (00:52)
 Morning. This is Lei Xing, your co-host, and this is former chief editor of China Auto Review, and this is episode 251. 251. happy Juneteenth and a safe and peaceful Dragon Boat Festival. As we say in in China, we don't say happy, we say safe and peaceful. It's the only time of the year where we say that.
 
 Tu Le - Sino Auto Insights (01:08)
 Dragon Boat.
 
 Lei Xing (01:17)
 Well BMW group
 
 Tu Le - Sino Auto Insights (01:19)
 What's this Dragon Boat Festival
 
 Lei Xing (01:25)
 poet. And we have to race do these Dragon Boat races and and eat this d sticky rice dumplings. It's part of the culture.
 
 Tu Le - Sino Auto Insights (01:37)
 about a year I was going to Houhai about once a week doing dragon boat. It was really fun, but it is tough exercise. It is a tough, tough exercise. So
 
 Lei Xing (01:51)
 Yeah. S
 
 speaking of tough, I think that's the key word of the past week. it's been kind of a slow week, but the headlines
 
 Tu Le - Sino Auto Insights (01:57)
 Stop for a second, though.
 
 Go USA, three PM today, man. We're playing, who are we playing? I forget. Yes, yes, so I'm I'm wearing my team USA shirt. That's why I'm wearing that, so
 
 Lei Xing (02:04)
 Soccer Roos, we're playing the Socceroos Which are which are the Australia team?
 
 Down under.
 
 Yeah, definitely tuning in for that one. Speaking of tough, so this guy over here is having a tough time. BMW group, and then I think the the two headlines or the news I caught in in a relatively slow week. One is BMW group revising guidance downward because of China, and the other is the retail sales.
 
 Retail goods sales in China fell in May. it's been a while that we've seen that kind of number. so it's it's pretty drastic. I think the situation is probably worse than what many of us expected. so that's those are probably the two two biggest things that we can talk about this this episode.
 
 Tu Le - Sino Auto Insights (03:03)
 So what's important, I think, Lei is also that the economy hasn't been doing good for a while. And this not only affects the legacy automakers, the reason it affects them differently is because they've been on a they've been having shrinking market share for quite some time. And most of the other Chinese players are treading water with only a few gaining.
 
 In recent months, you've seen NIO gain a little bit to at the expense of a Li Auto. You've seen Xiaomi increase a little bit. You've seen the HIMA brands doing fairly well at the top end. and so it it's just a broader reflection of the current economic environment in China. And we've seen the subsidies go away a little bit earlier this year. Now this makes me wonder.
 
 the Chinese government is gonna look at this and say we need to boost the economy a little bit and revisit subsidies. So
 
 Lei Xing (04:05)
 Well China just announced another
 
 What's the tr translation? It would be the NEVs to the countryside program. So that has been going on quite a few times in in recent years, but that that's that's one of the things that that that's trying to drive and and boost consumption. But here's the line I I I wanted to read in the press release by BMW Group. And I quote,
 
 The negative development in the Chinese automotive market accelerated further in the second quarter, particularly for non electric vehicles.
 
 So the context I think I wanted to stress is over the last 25 years that I've covered the Chinese auto market, this is probably the first time that I've seen the foreign automakers pinpoint the reason that they're doing this re-guidance on exactly China. Now these
 
 They they post these guidance updates often, regularly. But I think this is the first time that I've seen China being at the very top of the reason why they're doing this. So that shows the significance and the drastic s situation in the market for the foreign automakers. And I posted that BMW Group is obviously not alone. Every other
 
 foreign automaker that that are dependent on on the non electric vehicles are facing the same issues. So quite significant.
 
 Tu Le - Sino Auto Insights (05:42)
 let's let's put a number on this and kind of frame it a little bit better. I had posted in today in in this week's newsletter Lei that
 
 Peak ICE was 2021 in China and topped around 19 million units. That number's fallen by 7 million units or 36%. So this is exactly what BMW is talking about. We're gonna get well over 50% NEV take rate in 2026, not only because a little bit of growth, a little bit of growth in the NEV sales, but also.
 
 what we're talking about shrinking of that ICE number. So that's that's why we could get closer to that 80% that Li Bin has talked about, He Xiaopeng has talked about with regards to NEV take rate by 2030 or whatever. So man, it is disproportionately affecting the legacy automakers, the the shrinking of the ICE space. So
 
 Lei Xing (06:44)
 I think structurally we're entering a period. I think we're at another inflection point. a few kind of numbers. So you mentioned about the take rate, right? So it's getting close to two thirds of vehicles sold, passenger vehicles, are NEVs. And the 80% Li Bin talked about could be within reach within the next year in a certain month. So that is probably
 
 Going faster than all of us expected. At the same time, the fall of the the non-electric ICEVs. At the same time, exports outpacing domestic sales. and the glass half full in me is actually I believe this is good.
 
 Because Li Bin talked about for the longest time China has been in this muddy water. Right? He mentioned something about the brands being in this muddy water stage now moving into more clarification stage, which means that you know the weaker players are in danger, finally. I mean, we talk about consolidation and then this is the time to do it.
 
 Tu Le - Sino Auto Insights (07:34)
 For who?
 
 One one one thing that's really important to kind of keep an eye on because Volkswagen during their their investor day this week said that they're reducing their manufacturing footprint from 12 million units to nine million units, which is much more realistic to where their sales are going to be, they feel. But if we look at BYD, they're continuing to to to add capacity on the battery side and on the E V side.
 
 And then we see the EU this week announcing that that loophole for PHEVs where there's no tariff. There is a tariff on on BEVs, but not PHEVs currently. And that loophole is where BYD LeapMotor kind of take advantage of exports into the into the EU region. that's gonna be closed, or at least that's the rumor. And they're gonna start adding a tariff on PHEV imports as well.
 
 Into the EU. The reason I bring that up is because BYD already has a large base of manufacturing in China, millions and millions and millions of units. NEO, Xpeng, Li Auto, Xiaomi, much smaller footprints. So if the market continues to struggle, and then BYD, Chery, Great Wall are all also building.
 
 capacity outside of China, that puts enormous pressure on BYD to make sure the factories in China, especially if protectionism continues to happen around the world, it's gonna put huge pressure on BYD to stay at 75, 80, 85%. And not only on the the the finished goods vehicle side, but also the battery side. So
 
 That's going to be much more challenging for the BYDs and the Cherys and the Great Walls and the SAICs because they're already selling millions of units. You know, Li Bin, he's still at the hundreds of thousands of units, so he doesn't have the type of capacity. Although the pressure might feel the same, the absolute number of of extra capacity that NIO has is not even close to what BYD or
 
 Or Chery could potentially have.
 
 Lei Xing (10:17)
 And BYD wants 75% of sales in Europe produced locally. Right? Stella has been on the record saying that. there was a recent yeah, go ahead. Mm-hmm.
 
 Tu Le - Sino Auto Insights (10:28)
 reason that's important for them is because in order to reach the 11 million unit mark to pass Toyota, they can't all build it in can in China. So that's why they're doing that. So if you if you listen to Wang Chuan Fu and Stella Li, they're almost trying to will this into existence, that they're going to be this number one brand. But you and I believe, or at least I believe, and I'd love to hear your thoughts on this.
 
 How much more challenging it is going to be to go from 4.6 to 10.6?
 
 Lei Xing (11:01)
 Yeah. Well, we talked about that last episode, but I was saying that the German Manager magazine came out with a report which talked about Volkswagen Group at the end of last year, internally they had this a internal gauge of confidence of their board members. And I think of the eight or nine board members, I don't know whether you saw this, that they voted that they're pretty much in survival mode.
 
 and yeah, adding on top of what BMW group announced publicly, I think that the situation is just more dire than all of us expected. Yeah.
 
 Tu Le - Sino Auto Insights (11:34)
 They're in survival mode, Lei, but no no no manager
 
 no manager is jumping on the sword. they they they all
 
 Lei Xing (11:43)
 Well, I mean Blume, he's
 
 Tu Le - Sino Auto Insights (11:51)
 I it so this week was there's an organization called Center go ahead before
 
 Lei Xing (11:58)
 but I was saying that the the the flip side is Volkswagen Group is the most aggressive in becoming Chinese and going through China speed. So we applaud them for that.
 
 Tu Le - Sino Auto Insights (12:11)
 here here's a comparative debate that you and I can talk about for a few minutes. Do you believe Neue Klasse in the China market will be successful, or do you believe ID series with Xpeng Foundation will be more successful? Now we're talking two different segments, but
 
 i it's this new brand of vehicle, at least under the body, under the the physical structure. I I'd love to hear what you think. 'Cause I don't know if I don't know if they can both win.
 
 Lei Xing (12:43)
 Well, what benchmark are we talking about when we say successful? Are they consistently delivering 10,000 units per month per model? I think that's a minimum to to say that they're successful. ID. ERA 9X is not there yet. I think they did like I don't know. I think they cumulative cumulatively I think they're approaching 10,000 units since launch. it's lukewarm, I'll say it's it's better. not the best performance.
 
 But if we're benchmarking on the products being down to earth Chinese, then they have the potential to be successful.
 
 But jury is still out at this point.
 
 Tu Le - Sino Auto Insights (13:23)
 But not but
 
 but but successful but not claw back the million and a half, almost two million units of of sales that they've lost over the last six or seven years, correct?
 
 Lei Xing (13:34)
 because they're they're still depending a lot on the ICEVs. And actually BMW Group just stopped production of their I think i3 and iX1 to make way for the Neue Klasse iX3 in China.
 
 Tu Le - Sino Auto Insights (13:49)
 I want to be clear about this, Lei. BMW Neue Klasse, it's still fairly expensive in China. Now it's much more affordable than traditional BMWs 10, 12, 15 years ago, because BMW priced pretty aggressively in you know in the premium space and we're was able to get away with it. But I I
 
 You know, it's almost like they're playing a different game because if you look at the iX and you look at the ES8, the feature set is just so radically it's same same but different because BMW is still trying to price as a premium brand in China. Although that's been capped a little bit, it's still trying to price as a premium brand.
 
 Lei Xing (14:25)
 We
 
 And then the other perspective we can talk about is what type of competition are the Neue Klasse and ID. ERA 9X, 8X, upcoming 8X are facing. Case in point, it's the Da Tang that just launched this week. This Da Tang not only competes with the large 9 series, 8 series SUVs, but on that price point of RMB200,000-300,000, it competes with the Xiaomi YU7, It competes with the Tesla Model Y.
 
 Tu Le - Sino Auto Insights (14:49)
 Hmm.
 
 Lei Xing (15:05)
 it has 150,000 units. When the Neue Klasse and the ID. ERA, they never announce orders intakes, right? When do they if they say something, we got 100,000 orders.
 
 Tu Le - Sino Auto Insights (15:17)
 If they're proud if they're proud
 
 of them, they'll announce it, but they're not very proud of them.
 
 Lei Xing (15:22)
 So yeah, there's a lot of ways to dissect if they're successful or not, but I mean, w do we benchmark against the success of the models like the Da Tang or yeah.
 
 Tu Le - Sino Auto Insights (15:34)
 I
 
 I I so
 
 I hear I I wa watch some of the VW Group investor day and I don't see real change happening. I see cost reduction goals, I see cutting staff, but I don't see management is doing this differently. What management is doing is trying to grab a lifeline from Xpeng, trying to grab a lifeline from from Rivian.
 
 trying to grab a lifeline from Horizon That's what they're doing. And
 
 So here like here's a question, Lei. And I'm sure there's someone we could pull in that could answer this intelligently, but you and I we we talk to people consistently every week. There's a there's three chefs in the technology side of VW group. There's Rivian, there's CARIAD, and then there's Xpeng. How is that automatic how is that going to shake out?
 
 What's CARIAD's role? And then Rivian is designing its own silicon. Xpeng has already launched and fabbing its own silicon and stuffing it in the G6, G7, and P7. So that to me looks like it's still pretty complex. And if we're looking for additional speed, if we're looking for you know simpler processes.
 
 Th that's not happening at VW and that's just a simple example that I'm making.
 
 Lei Xing (17:02)
 And also the fact that we're entering this period of this this latest numbers reported by the National Bureau of Statistics of the domestic retail sales goods down if you include the autos.
 
 It's not the best of time to right. That's another factor. not only are you facing the competition, cutthroat, bloodbath competition from the domestic players, you're also in this kind of a period of of economic pressure, domestic sales pressure.
 
 Tu Le - Sino Auto Insights (17:34)
 And
 
 the rest of the world doesn't want your exports.
 
 Now we'll we'll so a couple of things that I'm thinking about. How how long this truce between Iran and and United States will be. The Strait of Hormuz is supposed to be opening up, but that's gonna take a little bit while to to kind of get back to the homeostasis. And that was actually a good thing for the Chinese automakers because it meant that they could
 
 push more NEVs into the export markets. But you know, VW and BMW still sell quite a bit of ICE vehicles. Not only they're trying to in China and they're not that successful, but in Europe they're still doing that. And then North America obviously is still the major market for ICE vehicles. And so with BMW and Mercedes and Volkswagen, Audi
 
 in particular and Porsche under Volkswagen, getting tariffed when they ship to the United States. It is just not a favorable global situation for the Germans, if if if I'm being frank and honest. So
 
 Lei Xing (18:48)
 No.
 
 Yeah, it's tough tough nut to crack. Yeah.
 
 Tu Le - Sino Auto Insights (18:51)
 Well, how was your morning, Lei?
 
 But but but here's the thing.
 
 As the Neue Klasse, as you know it, right? As you've seen the vehicles yourself. Is that a standout winner in the China market?
 
 At any price, let alone the price that it's at.
 
 Lei Xing (19:09)
 I like the Neue Klasse better, at least compared to the Mercedes GLC or CLA. and you know what if I had to rank these I think in terms of really the the the Chinesefication and the Chinese speedification. I probably put the ID in the new ID. ERA 9, 8 up there on the top and then the Neue Klasse and the Mercedes. I would rank it that way. Yeah.
 
 Tu Le - Sino Auto Insights (19:32)
 Hmm. I like the I like the
 
 the new Volkswagens to be quite frank. You know, I I I I liked them when I saw them at the show.
 
 Lei Xing (19:35)
 Yeah. Yeah.
 
 And
 
 you remind me of something else to point out because you know, I always I I talk about me being a glass half full, but the fact that the products are refreshing within every nine to twelve months is having a negative effect on the end consumers because now they have this holding my money in my pocket tendency.
 
 Because I know that the better product is coming in a few months. So it's unintended. I think it's something that was recently talked about. And also right, the the the the China recently talked to a few automakers. they didn't name who, but about this cutthroat competition and fighting each other on on
 
 on marketing. so a lot of things at play that that yeah, I think it's it's been quite a while since I've seen that that domestic retail goods sales fall in a month. I think the trend was going down in the in the past year, but yeah. that that's just a reflection of yeah of how tough it is.
 
 Tu Le - Sino Auto Insights (20:33)
 Well
 
 I I I
 
 I thought
 
 that was gonna happen towards the end of this year, but so it's a little bit surprising, but it feels like
 
 It's the law of diminishing returns and we've chin we've kind of reached that homeostasis and that's why the Chinese government is looking at the the NEVs for the countryside. Because yeah, so they're they're trying to create more demand for NEVs because
 
 Lei Xing (21:11)
 Countryside. Villages. Yeah.
 
 Tu Le - Sino Auto Insights (21:19)
 If for whatever reason exports begin to taper off, because now we're shipping a million exports a month out of China. Okay, and it's not just Chinese brands. Let me be clear. You know, Tesla is shipping out of China. Ford is tr is asking for an exemption for the the Lincoln Nautilus that's built in China to ship into the United States. Volkswagen or Volvo has has gotten an exception from the
 
 The US government. And so if that flattens out and we see continued softness in the domestic market, wow, decisions are going to tough decisions are going to have to be pulled in by the legacy automakers as well as some of the Chinese automakers. Now, again, when we think about
 
 all of the brands, you have to look at sales volume and the capacity that each of these brands has. And that's why NIO, Xpeng, Li Auto, Xiaomi, some of these smaller players, I I think they can manage a lot better than making drastic decisions like a Chery might have to or a BYD might have to. And I'm saying prolonged, I'm saying six, seven months. BYD is
 
 has a has a lot of tools at it on its tool belt to to kinda manage that. But some of these other companies that that build in the millions of units in China could could be really, really under a lot of pressure towards the end of this year.
 
 Lei Xing (22:49)
 Something to watch. I mean, in in the coming few months, because the summer months are are usually a bit slower, and then we get into the fall and then the end of the year push. But yeah, it's it's quite drastic and dire, it seems. switching gears, you mentioned about Ford, they started production of LFP with world-class class cutting-edge technology.
 
 Tu Le - Sino Auto Insights (23:05)
 Mm-hmm.
 
 Lei Xing (23:14)
 finally in in Michigan, right? so something to cheer about, but also knowing that who is behind the technology right. So the the Chinese have kind of made their way into the US.
 
 Tu Le - Sino Auto Insights (23:26)
 And
 
 I I maybe it's by feed, but we're s we're also starting to see
 
 People talk or media kind of acknowledge that there are different ways to save costs, to still bring batteries effectively into the market affordably or try to affordably. There there's been one or two articles about the silicone anode anode. normally the the anode uses graphite as a mineral, but there are companies Kirk Kelty is really, really, really trying to
 
 Commercialize the silicon anode, there's still graphite in it, but and graphite helps when when batteries get hot, they tend to expand. And the graphite helps keep the the battery the same size because at the end of the day, if it gets too hot, the pack would need to leave some room for the battery to expand, which creates all kinds of other issues. But you know.
 
 So there's more talk and education about particular chemistries, particular form factors. And, you know, it starts with LG moving to ESS. Now you see Ford talking about the Marshall Michigan factory rolling cells now. And they got a huge bump because of it. And that's kind of the share price, anyways, which is ironic because everybody was.
 
 Bitching and moaning about that Marshall Factory, right? So and not only that, but Gotion is suing the the local community to claw back some of that, yeah, to claw back some of the investment that they've made, or the penalties, or something like that. I I need to read up on it to to to speak accurately. one thing I did want to mention, Lei, is that.
 
 Lei Xing (24:53)
 Then
 
 Township, right? Yeah, wha what's the township? Yeah.
 
 Yeah.
 
 Tu Le - Sino Auto Insights (25:12)
 this week in Detroit there was the reindustrialized conference that is all about reshoring and it's kind of code word for defense, meaning okay, we are so reliant, our supply chain is so reliant on foreign entities, quote unquote foreign entities of concern, so we should reshore.
 
 And I met a lot of people, let's say a third to almost half. They're they're they're they're not having serious con conversations. They're not serious people because they have no idea how much effort it's going to take, how much money it's going to take to reshore everything that they're talking about. I believe we as the US, as the US government, we need to be surgical in.
 
 And reshore some things. But the the the the people that I've some of the people I've spoken with was like, man, we reshore everything, like whole hog. And I'm like, that doesn't make a lot of sense. But and and then I was also attending the one of the organizations that you and I know of is is called the Center of Automotive Research or CAR. they had their
 
 Lei Xing (26:20)
 Yeah, CAR yeah.
 
 Tu Le - Sino Auto Insights (26:22)
 Management briefing sessions or MBS, their big conference every year. And I got an invitation to go. Yeah, and it and they used to have it in Traverse City, but now cost savings, cost savings, cost savings. And so it was in
 
 Lei Xing (26:27)
 already? Usually it's in August, right? In in Traverse City? Right. But now it's too far away. Too far away, Travis City. I I w
 
 I was there one year, many years ago.
 
 Tu Le - Sino Auto Insights (26:42)
 or Ann Arbor this year. And so I went to the conference on Tuesday and there was a interesting panel, of course, talking about China. There are some half truths that were continued to be espoused by some of the panelists. And then there's one person who worked at a global restructuring firm. I won't say the company or the person, but
 
 Lei Xing (26:43)
 Yeah. Okay.
 
 Tu Le - Sino Auto Insights (27:07)
 you know, he was the single objective person on the panel. There was another person that was was kind of talking about China like five years ago. And you know, his his knowledge seemed to be a fairly limited. But anyways, and then a couple days ago there was a round table just for members. And unfortunately I I I kinda hijacked one of the round tables because
 
 Lei Xing (27:34)
 crash the party.
 
 Tu Le - Sino Auto Insights (27:36)
 Well,
 
 it's weird. I I I I don't care to be lectured by people who don't know what I know, don't know what you know, as fact. and and so but anyways, just just kind of it it's still alarming. It's less alarming, but it's still alarming that people man, when did the Americans become so whiny? you know.
 
 Lei Xing (27:50)
 Yeah.
 
 Tu Le - Sino Auto Insights (28:01)
 'cause they talk about how unf you know a a not a level playing field, blah blah blah. I don't what do we do now, guys? What what are we gonna do now? And you know, the other big thing and and this is what I've been trying to make a big deal about over the last several months is that even if we can compete with China, the tech companies are coming right on their heels.
 
 So we have to be able to compete with what's coming from the West and then also compete with what's coming from the east. So you know, I I don't want to lose sight of that. So
 
 Lei Xing (28:40)
 Yeah. So the other few headlines on the on the AVs, so Momenta is preparing for its IPO in the Hong Kong stock market. Mobileye interestingly announced entry into operating AVs on its own. It's quite interesting. And then Wayve announced a new deal with Stellantis, and Uber and Nuro are launching in Houston.
 
 Tu Le - Sino Auto Insights (28:56)
 Yeah.
 
 Lei Xing (29:05)
 next year, I guess.
 
 Tu Le - Sino Auto Insights (29:07)
 I need to test out a new a Nuro Gravity we need to to to hit up our friend Nick Twerk to do that. But he's he said that it's a Nuro thing, it's not really a Lucid thing. So I I know a few people at Nuro. So but but yeah, man, I I did is there anything else that I wanted to talk about? You know, I think the momenta
 
 Lei Xing (29:07)
 Yeah.
 
 Yeah.
 
 Well I mean yeah.
 
 Tu Le - Sino Auto Insights (29:32)
 is is is is is a pretty important IPO because they might leapfrog WeRide and Pony from a valuation standpoint. And I'm expecting that they will. So
 
 Lei Xing (29:43)
 So a few numbers for Momenta. When they the first vehicle that they launched with was in b 2022 with the IM L, I think it was L6 or the LS6. That was one model. fast forward today, it's more than 70 models and 800,000 units on the market. and
 
 I think they have 60% of the third party supply of ADAS systems in the Chinese market. and their Daimler and GM were early investors. More than ten years ago, or nearly ten years ago, so yeah.
 
 Tu Le - Sino Auto Insights (30:20)
 In Toyoto, right?
 
 So so GM should get a decent payout from their investment unless unless for some reason they already divested it. but I don't I haven't heard that they have because they're using Momenta for for their intelligent driving in China. So
 
 Lei Xing (30:37)
 Momenta is in every one of the Top 10 global automakers, I think except Stellantis. I think every other global automakers that produce and sell in China are a customer of Momenta. So
 
 Tu Le - Sino Auto Insights (30:55)
 you can bet at least the the Stellantis indecision in China is not likely going to affect them. but but l let me take that back. The Wayve partnership, is that global, I wonder? Meaning Europe and North America? I I I'm assuming that it is because Wayve operates in both regions. but
 
 We could we see a DeepRoute versus Momenta versus QCraft versus WeRide type of situation where these guys are courting Stellantis for the China market? Potentially. you know, but yeah, Momenta is kinda come from nowhere. And I guess next time we're we're in China we'll have to really test out their system. I'm hoping.
 
 to to borrow a Cadillac and drive it for a couple of days, so we'll see. Yeah, that's right. I think, yeah, anyways, but man, I I this kind of you know, circling back to the BMW and and and V VW stuff, it it's tough times for them. And I see no
 
 Lei Xing (31:44)
 Or an O D or an ID era, they all have momentum.
 
 Tu Le - Sino Auto Insights (32:00)
 shortcut to get them back to competitiveness in the China market is gonna threaten to bring the entire house down, unless they're able to kind of reconcile and right size their operations in that in that mar in that market. Both parties, you know, so anyways, let's go to comments and questions.
 
 Lei Xing (32:22)
 Whoa, lot of comments,
 
 it seems.
 
 Tu Le - Sino Auto Insights (32:25)
 Felix, what's going on, buddy? It's good to see you, man. Thanks for joining us. Jojo EX6BI asks, is Lexus Shanghai Factory too late for the game, Lei?
 
 Lei Xing (32:37)
 well, you know, the Lexus actually Lexus they grew as a pure imported car brand in the Chinese ma market in 2025. So it's something for cause for celebration. Is it's not easy to achieve in in this day and age. But is it too late? I I think all of the foreign legacy automakers, there's no way they can go back to the
 
 Tu Le - Sino Auto Insights (32:36)
 Taiwanla.
 
 Lei Xing (33:03)
 Their years of what's the word? prominence or so I think yeah, I think it it might be too late. Yeah. Yeah. You can't blame them for trying. I mean, the Neue Klasse, the ID. ERA series, all of the I mean they might be late too, but they they have to try. Yeah. Yeah.
 
 Tu Le - Sino Auto Insights (33:07)
 Profitability?
 
 slow and steady
 
 So, PF Cutters. What you gentlemen think of Geely making an issue along with some popular blogger in China about BYD's new flash charging blade battery temperature getting too hot while fast charging.
 
 Lei Xing (33:42)
 I don't know. I mean this is the the the game name of the game over a number of years has been dunking on each other, first of all. and then, you know, he said, she said, I mean Li Auto right? Li Xiang just recently posted about don't diss the EREVs, Right? and obviously he's saying that because that's their moat.
 
 Tu Le - Sino Auto Insights (33:58)
 Ha ha
 
 Lei Xing (34:04)
 At the same time they're transitioning into BEVs. But I I I don't these these things, I mean I I I laugh at these things. it it I don't know if it helps anybody at all for doing this. it's just a common way of competition, I think in the Chinese market. And and it doesn't do anybody good. It it
 
 Tu Le - Sino Auto Insights (34:24)
 I look at it Lei as if there's any commentary from the central government, that's when I'll start really, really well.
 
 Lei Xing (34:30)
 Well that's what I mentioned
 
 before that they they s the the government talked to some of these car makers over these beefs, over these competitive marketing stunts.
 
 Tu Le - Sino Auto Insights (34:39)
 no, I'm talking about,
 
 you know, if the battery is too hot, like if there's a engineering issue or a you know, or a design flaw, that that that's when I'll take it much more seriously. 'Cause to your point, it's just competitors poking at each other to me.
 
 Lei Xing (34:54)
 I mean we talked about this two episodes ago. I think BYD has openly responded saying that it's not an issue. But what we're saying is that any time you
 
 Tu Le - Sino Auto Insights (35:02)
 Well they plan on they they plan
 
 on launching them in in in in Europe, you know, the cars in the charging station, so
 
 Lei Xing (35:10)
 So so there there's the vehicle part and there's the grid part. So for the grid part, BYD has these ESS in place in the flash charging stations. But on the vehicles themselves, I put a half question mark on that. because imagine I mean that's their moat, that's their tech prowess. I'm sure they they've solved it, or if they were gonna
 
 Tu Le - Sino Auto Insights (35:29)
 That's the bread and butter.
 
 Lei Xing (35:34)
 put these flash charging capabilities. that's what they do. So
 
 Tu Le - Sino Auto Insights (35:38)
 so he has three part here. Hold on a second. And that it will fall over time as it goes over the 65 degrees Celsius temperature threshold every time it charges. Is it true? I I I can't answer that question. I haven't really looked into it that that closely. and then the last part Lei is do you ever still foresee Chinese cars entering the US market in regards to what the US Congress is doing?
 
 Bringing bills to block them from ever coming in via Mexico and Canada.
 
 Lei Xing (36:09)
 Yes.
 
 Tu Le - Sino Auto Insights (36:10)
 Yes. These Chinese cars are gonna come into the United States. for sure. probably before 2030, I'm certain. what is happening with Xiaomi? this is SSJJ zero zero five. Never mind the monthly numbers. The weekly number has still been weak as of yet. Is this about the demand or the production?
 
 Lei Xing (36:29)
 I I don't pay attention. I've I've never paid too much attention on the weekly numbers, first of all. Second, it looks like Xiaomi's Lei Jun enjoy some noodles. Like sans Jensen Huang, so I I'm not too worried about about the weekly numbers at this point. I I I think I think the broader what we talked about is the broader economic domestic sales headwind.
 
 Tu Le - Sino Auto Insights (36:41)
 Mm-hmm.
 
 Yeah, I'm not that worried about Xiaomi just yet.
 
 Lei Xing (36:55)
 retail sales of products, how that affects everyone, right? So
 
 Tu Le - Sino Auto Insights (36:57)
 I I think what we should
 
 I think what people should be focusing on are who is doing good despite the economic situation. 'Cause it's gonna affect pretty much everyone. PF Cutters again writes
 
 yeah, PFC. Even also, they're going to block Chinese companies from manufacturing in the US.
 
 For now.
 
 Lei Xing (37:21)
 It's politics.
 
 Tu Le - Sino Auto Insights (37:21)
 I I
 
 I don't you know I think one of the ways they enter the US market is by committing to invest some FDI into building local capacity. I think that's gonna be one of the requirements. Or at least if if I were the leader of the free world, I would I would require that. Jeffrey, what's going on, buddy? Been a long time. Hope you've been well. good morning, good evening, good
 
 good morning, good evening, gentlemen. What's the vibe on the Trump Carrie conversation, Carney conversation? Will Trump ego force his hand to let the China EVs in? Any thoughts on UK entry with the NIO?
 
 Lei Xing (38:02)
 Carney's enjoying the World Cup yesterday, in the Canada game. Trump, I don't I mean, Rubio is spotted in a in a World Cup game in in the USA last week, right? But Trump has yet to make it to the World Cup. So I'm not sure they're talking at all.
 
 Tu Le - Sino Auto Insights (38:17)
 But he was but he was at the he was
 
 at the NBA Finals and at UFC, so
 
 Lei Xing (38:21)
 All
 
 right. so but no, there's no update that we've heard.
 
 Tu Le - Sino Auto Insights (38:26)
 I was at the CAR and there was a small round table with probably about 25 people. two or three of them, four of them maybe were Canadian, and two of them were government officials. I think the council general Colin, I forget his last name, but real nice guys. they're they're they're still trying to maintain a great relationship with the United States, because I think it's important for Canada to do that because we share a border, number one. Number two.
 
 we've had a terrific partnership for quite some time, but make no bones about it, they're moving full steam ahead. And I believe Carney is really, really trying to get a commitment from one of the Chinese EV makers to build locally in Canada, in most likely in Ontario, the province of Ontario. Now, how Trump feels about that, I'm sure he's gonna be upset if and when.
 
 A formal announcement is made that Carney was able to to get a commitment from one of the OEMs. But you should also look at battery companies because if Canada begins to build electric vehicles in Canada, there will likely need to be much more locally built capacity for batteries as well. So keep an eye out for that.
 
 Lei Xing (39:41)
 And at least in the industry side we've heard Magna CEO Swamy saying for the record that they would be happy to work with Chinese OEMs as long as it's long term. So
 
 Tu Le - Sino Auto Insights (39:52)
 So again, PFC cutters, do you gentlemen have any insight if Nissan will be exporting their Dongfeng built NX6, NX8 EV and N7 EV globally?
 
 Lei Xing (40:05)
 So not at this point, but we do know at the the strategy that they announced that there's certain products. I think the was it the Frontier, Nissan Frontier built in China is exported to the the South and and emerging markets. there's one other model, but not the EVs at this point. I don't think at this point. we do know there's there was another, was it the
 
 Murano that was exported back to the Japan from the US. So I mean these things that do reflect that Nissan is open in terms of where the products are produced and exported. But at this point, no, not on the NX series 'cause 'cause those are China exclusive. Yeah.
 
 Tu Le - Sino Auto Insights (40:52)
 and Jeffrey and finally, why did the Trump administration allow Volvo Geely to pretty much avoid all the restrictions and tariffs and do business in the USA? When I worked for a Volvo dealer, all the parts I saw were stamped made in China. Was funny, but strange this was allowed.
 
 Lei Xing (41:11)
 We kind of talked about it briefly. it it has to do with maybe Volvo being even though it is parent company is Geely, but they've been in the US for 70 years, building in the US
 
 Tu Le - Sino Auto Insights (41:25)
 and it's important to separate Volvo from Geely here, 'cause that was that was for Volvo, not Geely.
 
 Lei Xing (41:28)
 Yeah, yeah.
 
 You know, the the state, local, there's I'm sure there's leverage and and and lobbying that went on. that that there's exemption, but it's not everything, right? I think it was only one thing that was approved. and and we s we still don't know what what's happening with the Mercedes-Benz because that new wording of the law saying that they could be banned from sales because
 
 Tu Le - Sino Auto Insights (41:45)
 I'm trying to find out more myself.
 
 Lei Xing (41:56)
 They're owned by BAIC Group and Geely. So that that kind of is stuck. I don't know what's happening next, but
 
 Tu Le - Sino Auto Insights (42:05)
 Jeffrey, stay tuned to to new episodes and the newsletter because I'm gonna try to find out more myself behind the scenes a little bit. let me see here.
 
 PF Cutters again. BYD hinting at entering Formula One. Well, I think they're hinting at sponsoring Formula One, maybe not being a team yet.
 
 Lei Xing (42:25)
 Well, it it looks like I just heard that the other teams are not happy that BYD is coming or something like that. but it's the talks are definitely going on, that's for sure. But in what capacity BYD moves into F1, we'll have to wait to hear the official word when it happens.
 
 Tu Le - Sino Auto Insights (42:43)
 Felix, always a pleasure as well. let me ask you, man, who are you rooting for? USA or or the Aussies? Jeffrey, this fast charging hood roadblock once the government understands its risk and power consumption. Battery swapping makes so much more sense. And look at CATL completely shifting its thesis.
 
 Lei Xing (42:49)
 Who else?
 
 Look, I've always said there's there's a market for both the flash chargers and the battery swapping. It's not one over the other. as as large of a market as China is. I I'm I'm you know
 
 Tu Le - Sino Auto Insights (43:15)
 Dude, I'm I'm I'm my
 
 my my feelings are hurt, Jeffrey. I got some cool stuff behind me. He he write he wrote, I'm going to take that awesome poster behind you poster poster behind you, Lei.
 
 Lei Xing (43:27)
 I'll take it if you want it, I'll give it. I'll give it to you.
 
 Tu Le - Sino Auto Insights (43:32)
 PF Cutters, what's the probability of the Rivian R2 making its way to the China market? Not for a while. I I my moles tell me that Rivian's not going to be entering China for quite some time. They're going to be focused on
 
 Lei Xing (43:44)
 market right first. And it's still it's still jury is still out. I mean a lot of people saying that the they're the next Model Y killer. it
 
 Tu Le - Sino Auto Insights (43:46)
 Well
 
 And they're
 
 then aggressively moving into Europe as the R2 ramps.
 
 Jeffrey, all those
 
 Lei Xing (43:57)
 Yeah, I yeah.
 
 Tu Le - Sino Auto Insights (43:58)
 Mexico suppliers will be shipping lots of parts to their friend to their friends in Canada. Well, so negotiations again or review of the USMCA starts in a few weeks, I think. And so, yeah, we'll we'll find out whether or not the USMCA gets blown up. My Canadian friends seem to think that the USMCA is going to stay in place.
 
 But I know the Trump administration would would prefer to have bilateral agreements with each of the countries, Mexico and Canada. So here I'll show you what Felix wrote.
 
 Jeffrey doesn't want it, man. He was just joking. So, all right, everyone. I, you know, right before we got on live, Lei and I were like, we this could be a quick one, but again, 52 minutes. So thanks for joining us, everyone. Love, love the participation. And you know, join us again next week. yeah, next week, because it's not the fourth yet.
 
 Lei Xing (44:44)
 Well, it's a relatively quick one. So
 
 Yes.
 
 Tu Le - Sino Auto Insights (44:55)
 good morning, good afternoon, good evening. We will talk with you all very, very soon.
 
 Lei Xing (45:00)
 Bye bye.