Episode #61 - March/Q1'22 China sales numbers, Q2'22 Challenges, Lei goes to New York (auto show)

Tu and Lei start this podcast by highlighting a WeChat moment post by He Xiaopeng, founder of XPeng warning that if issues can’t be contained and resolved production for the entire month of May could be lost. 

They then move on to review the March & Q1 sales and registration numbers.  

Tu takes a few minutes to explain his prior experience working on the supply chain side back in the US and dealing with production disruptions in the automotive and high tech spaces. 

Since they talked about Q1 numbers, Lei dives deeper into the brand sales numbers that were reported. Lei points out that for the first time, Ford China reported March sales numbers for the Mustang Mach E. Most brand sales numbers were down from Q4’21 which is no surprise. 

Tu and Lei agree that the Volkswagen ID Series sales numbers continue to disappoint and Tu takes a few minutes to explain that the opportunity to build sales momentum starts when the product is launched when you have a marketing budget that’s supposed to build excitement for the product. 

One year into the initial launch of the ID.4 and sales are still hovering around 10K/month which points to a lack of overall enthusiasm for the products. Tu stresses that it’ll be difficult to ignite any real excitement for the products after having been in the market an entire year already. 

Tu takes a few minutes to rant about Newsweek’s article about automotive disruptors without any mention of Tesla or any Chinese EV makers. 

Lei then talks about his trip to the New York International auto show and how Hyundai and Vinfast seemed to be the BIG news along with a few American EV startups that he’d not heard of until that event. 

Transcript

CEM #61 041422

Tu Le:
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 China EV, AV and mobility sectors. We will open the room up at around the 40-minute mark to anyone who's keen to ask us any questions. What Lei and I discuss today is based on our opinions and should not be taken as investment advice. If you enjoy this room, please help us get the word out to other enthusiasts and tune in again next week. 

My name is Tu Le. I am the managing director at SinoAuto Insights, a Beijing-based 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.com, which I encourage you all to do.

A recently visited New York City, Big Apple Lei. Can you introduce yourself?

Lei Xing:
Yes, sir. This is your co-host Lei Xing, former chief editor of China Auto Review. This is Episode #61. Let's start off by talking about He Xiaopeng's tweet, not tweet, but his WeChat moment and we will kind of roll this along with the March industry EV sales. So if you missed it or if you haven't heard, so basically He Xiaopeng, he posted a WeChat moment by saying that if the Shanghai and the surrounding area supply chain shutdowns continue into, continue is, then virtually all OEMs in China are going to be in danger of shutting production in May. And then he said the good thing is that various ministries and commissions and government departments are coordinating, but this is the most serious, comment that we've heard yet of the current situation, down on the ground.

Tu Le:
That's his cry for help.

Lei Xing:
It is, but there's no joking around. 

Tu Le:
None.

Lei Xing:
So that kind of gives you an indication of how serious it is from the production side of the equation, let's not go into details of what it's like in Shanghai, because I can't, you're not there, I'm not there. I can't imagine, but we can only presume through all, whether it's WeChat, whether it’s news, our friends telling us what's going on the ground, and it's not looking good.

Tu Le:
The one thing, the things that we do know Lei, is that the numbers aren't going down in any significant way.

Lei Xing:
The COVID numbers.

Tu Le:
Yeah, the COVID, the COVID positive numbers aren't going down, which pushes out the recovery every single day. And the other thing we want to make note of is that He Xiaopeng’s or Xpeng’s manufacturing is in Guangzhou. It's not in shanghai. So number one, Guangzhou recently was put on semi lockdown, certain parts of the city were put on lockdown.

Lei Xing:
Different districts.

Tu Le:
Yes. But this tells you how integrated the supply chain is because he's likely getting tier-one level supplies or parts from Shanghai, or somewhere that's under lockdown or restriction because again, his factory or Xpeng’s factories are in Guangzhou. So.

Lei Xing:
Sure, and this is a national thing, not a regional thing as far as supply chain is concerned. And we've heard from NIO who said they were affected by supply chain issues as far away as Jilin Province, right? That was one of the causes for the shutdowns. And I just want to kind of recap quickly, the major numbers that were put out recently by the three different organizations to help everybody kind of catch up on what's been the situation as far as production, sales, mostly sales in Q1.

So the Ministry of Public Security was the first to announce the registration numbers. And these are more actual numbers, rather than sales, a lot of those include exports. So the Ministry of Public Security numbers were 1.11 million NEVs registered in China in Q1. And that's almost 17% of the roughly what, 6.56 million autos. And by the end of Q1, nearly 9 million NEVs were on the roads in China, and that's nearly 3% of the automobile parc. The CAAM numbers in March was 484,000, that's nearly 22% of the market penetration. And Q1 was over 1.25 million units, that's nearly 20%. But remember, if we compare the 1.25 versus the 1.11 from MPS then we can kind of infer that roughly you know, let's say, 150,000 were exported. That in itself is still pretty significant. And then the CPCA numbers are just relatively smaller, because it only includes passenger vehicles, 455,000 for March, Q1 was 1.19, but the interesting numbers were the penetration rates among the three different buckets, right? The retail penetration rate for Chinese brands was 46%, now obviously, BYD was a huge contribution to the plug-in hybrids, and then for the premium brands which includes like NIOs and others, HiPhi, 32% penetration in March. And for the foreign mass brands, which includes the VWs, Toyotas, Chevrolets, Buicks, Fords, 4.3%. So that kind of tells you the gap, right?

Tu Le:
32 % on the premium side is pretty significant.

Lei Xing:
So those numbers look really rosy, that's Q1. But this is the calm before the storm, right? I think people are kind of scared to S as to what kind of numbers we're going to see in April. For example, Tesla has been shut down, right, for what, today's the 14th or 15th, more than two weeks. Are we going to see a production zero? Probably not, but it's not going to look great for April. What's your intel of production resumption? I think we've heard some chatter.

Tu Le:
Lei, let me back this up just a little bit. Let me throw out just for context. So 3.5 million cars or NEVs were sold last year in China. We're at 1.2 for Q1 for China this year. So we're already tracking at smashing that full year number in 2021 if we just multiply.

Lei Xing:
Right, full year based on the Q1 numbers adjusted is still looking at 5 million. But we have this situation.

Tu Le:
And you said export numbers were 300,000, you said, or one something?

Lei Xing:
Roughly 150,000.

Tu Le:
So remember last year that about half a million cars were exported, NEVs were exported from China, mostly to Europe, mostly by or a good portion of them by Tesla. And so we're about smash that number too, because we track 150 times 4 we're at 600,000 units, right? And remember, always a reminder that Q1 is always notoriously the slowest quarter in China auto sales. So looking good for Q1, the uncertainty comes into Q2. And we have to remember that Jilin Province. So Changchun is the capital of Jilin Province. But Shenyang is also an automotive hub for many of the Germans, ex-Mercedes, Toyota is up there as well. So just think about, FAW whoever their JV partners are, they have factories up there. So Jilin, because Shanghai has really sucked most of the air out of the room. We have to remember that Jilin Province is still under lockdown as well. And I don't see that opening up, unfortunately, until May.

Lei Xing:
The context is if you look at the numbers reported nationally, what, 95% of the cases are reported from Shanghai, right, roughly.

Tu Le:
Yes.

Lei Xing:
And the rest are scattered in other areas, but not as significant, or serious as Shanghai is reporting.

Tu Le:
The fact of the matter is I think over 95% come from Jilin province and Shanghai, and Shanghai is about 25 million people as the city. But it's kind of a, not considered a Province, but it's effectively anyways you think of it as almost like a Province.

Lei Xing:
Yeah, I'm sure people over, probably including yourself, in Beijing and Guangzhou are stocking up. 

Tu Le:
We have a refrigerator freezer that's being delivered tomorrow. There's a lot of uncertainty. We are still okay in Beijing where I live. So knock on wood and just another thing about Jilin Province there is about 25 million people in Jilin Province as well. And so we're talking 1/5 of the size of the U.S., less than a fifth, but around a fifth of the size of the U.S. And so and then Guangzhou there's pockets, Shenzhen is out, which means that BYD should be okay to resume production. But…

Lei Xing:
But remember He Xiaopeng's comments.

Tu Le:
Yes, so let me explain my background, at least initially from a work experience standpoint. My first job was at General Motors. I started in the production control and logistics department. So we were, as a department responsible globally for keeping plants running. My first job was at a factory, at the Orion Assembly Plant. Did that for 8 months, I think about 8 months and was the lean manufacturing resident. So we fixed and resolved issues on the line. If there was a complaint by a UAW worker, we would go over there with the industrial engineer and try to figure things out. My second job was as material availability coordinator. So I chased parts for new model year product launches. So a vehicle might have 25,000 parts on it. And for a mid-cycle enhancement, you might change 1,000, 500 of those parts. And so if they are new parts they need to get engineering approved and then manufactured on production tooling, that was my second rotation. Third rotation, logistics liaison. I managed transportation for two assembly plants at GM, some of the parts where shipped via rail, some parts over the road trucking.

So my background in this is like really, really, I understand at an intimate level, unfortunately, what's going on here?

Lei Xing:
Yeah, and another issue, I think that He Xiaopeng's WeChat moment alluded to, actually it's hiding his comments somewhere is not only the supply and the production itself, but the logistics is another huge issue that China is trying to resolve in recent weeks, months, because it's not a, it's the regional managed differences that are making it difficult, right? So not only you have to wait as an OEM, you got to wait for the suppliers to produce, but those parts have to get to you, right? So it's like…

Tu Le:
And then the third part Lei, is that people need be go out and be able to go out and buy these cars. 

Lei Xing:
Exactly.

Tu Le:
If a good part of the country, if Shanghai is locked down, let's say, and I’m making this number up, 1/5 of vehicle sales comes out of Shanghai.

Lei Xing:
Probably not that much, but still…

Tu Le:
But you're right, so it's a multifaceted challenge that needs to be resolved. And when you see companies like GM who have a closed loop system in Shanghai, who I also believe is still manufacturing. When you say closed loop, I’m saying that most of their suppliers are in Shanghai and are able to still manufacture. But when you see a city being locked down, and then you also see manufacturing or OEM still producing, there's likely two reasons. It's likely that they've stockpiled parts. So they bought ahead. And they just have a ton of parts that they're going to run out of very soon. And I think that's what He Xiaopeng is alluding to a bit, right? Because some of these companies, Chinese factories that I’ve been to are not really known, or they don't push the just in time thing, right? They carry a decent amount of inventory that might give you a week, that might give you two weeks worth of production before you start running out of parts. 

And then there are certain parts that you need to assemble sequentially. Let's say, for instance, you don't have part X from Lei Fastener Company, I can't do the next job. I can't build the rest of the car, some parts you can build the entire car. But if it's like a door handle, you can build the car and then put the door handle on after the fact. So there also might be ways to build to a certain point and then wait for a certain part to get shipped to you. Okay? And jumping back to the truck driver. They're getting tested every day. And the highways are being restricted. So it's not only that there might not be enough truck drivers, but that they might not be able to deliver the part into the city. So many things going on. And as we are at April 15, it just looks less and less likely that any type of production is going to start in the next couple of weeks.

Lei Xing:
I think the latest intel, we’ve heard some chatter that NIO seems to be on the way back up. I don't know, have you seen this that they said that they’ve worked out some of the supply issues, but still no exact date of return to production. And I think I saw a tweet from Yilei, he mentioned there were two days put out there, April 18 and May 15. So that kind of gives you an idea of the best scenario is right, for companies like Tesla, you lose half a month, more than half a month, maybe three weeks of production, right? So for April, I think it's not going to be as serious as February 2020, when it was virtually, it tanked, not zero, but tanked right? Huge. It's not going to be like that. But this makes me think that for the first time in a long time, Q2, overall, if you look at not only NEVs, including everything else might actually be lower than Q1. This is a possibility, and that hasn't happened. Usually Q2 is higher than Q2, Q3 is higher than Q2, and Q4 is the biggest quarter of the year. So that's very possible, I think.

Tu Le:
The one thing that I think, I believe you hope for as well, is that there's this miraculous recovery in the next few weeks and, because we're in the first period of Q2, there is still a possibility to make up any loss units via working overtime in May, in June. But if that happens, that's amazing because that means that Shanghai is probably back up, Jilin is probably back up. So that's the best-case scenario we could hope for. Unfortunately, if numbers do not drop significantly, it just pushes out any type of sector wide recovery in production, which is completely unfortunate.

Lei Xing:
But as far as brand rankings are concerned, you are going to definitely see Tesla fall way down the list. Everybody else is okay. BYD seems to be okay, right? Others seems to be okay as long as they they're not in Shanghai. If you look at some of the recent announcements of sales reports, Volkswagen did this yesterday, right, reported some numbers, GM, Ford. So Ford, interestingly me, being sensitive in the Chinese press release, they gave out the Mach-E numbers: 969. But in the English presser, nothing was mentioned. I don't know why is that difference, but in March they delivered, let's just say they delivered 1,000 Mach-Es. Is that good? Is that bad? I don't know. It doesn't sound very high.

Tu Le:
I was told the level of challenges, or the seriousness of the challenges that they had to deal with was pretty significant. And I’m also being told that they've gotten passed the supply part, and they've gotten passed the capacity part. So they should be able to deliver many, produce and deliver many more Mach-Es, which is great, because I think there's still demand and interest in the Mach-E in the China market, so they could quickly recover.

Lei Xing:
Yeah, still and if you look at their overall numbers, 125,000 for Q1 including everything, PVs, commercial vehicles, more than half of their sales are commercial vehicles from JMC: Ford and Jiangling branded, but compared to like a million units a year some years ago, this is a steep climb back up. And then GM, basically if you look at their numbers, every brand was down except Wuling and Hongguang MINIEV, the whole GM EV sales in China, basically, the Hongguang MINIEV, right? And Volkswagen.

Tu Le:
Let me finish this off with another one last Ford comment. The things that you want to make sure of to understand whether or not Mach-E production is going to be stronger or maintain some sort of pace, Chongqing is where they build the Mach-Ese via their joint venture partner Chang’an and their batteries are built in Xi’an by BYD so those two places will likely tell you if they put on restrictions or lockdowns, that's going to cause some issues with production of the Mach-E likely, please precede, Lei.

Lei Xing:
So I was going to say Volkswagen Group numbers. Their official Chinese presser is basically 38,700 NEVs in Q1, including 27,100 ID.s which means it's still averaging less than 10K a month. So still not at that level yet and were already more than a year since their launch, since the ID.4 launch, right? So that kind of gives an indication.

Tu Le:
And I want to kind of stress this point here because there's only one opportunity. Obviously you get to launch a vehicle or brand new product. And you have forecasted, it could be a car, it could be any electric product or any type of product. You have a lot of marketing budget for that. And you think that with this marketing budget, we should get a significant number of eyeballs looking at the product. And then what, assume, an attach or take rate. And so with the ID. series, they've launched all of them in 2021.

Lei Xing:
No ID.s this year, no new IDs. this year.

Tu Le:
Their take rate was a lot less than they thought. And then, in addition to the chip challenge, it is very difficult. If your product is in the market for several months to really build that interest after the fact.

Lei Xing:
And the third “whammy” is the Shanghai and Changchun production locations.

Tu Le:
Yes.

Lei Xing:
They're over proportionately exposed than others.

Tu Le:
That's one of the challenges outside of the current supply chain and COVID challenges that Volkswagen has. It's trying to restart a fire after it wasn't even burning very hot. And normally what a carmaker will do and you know this Lei, they’ll put a lot of money on the hood to get those units shipped out and sold. In automotive terms, when I say putting money on the hood, they'll offer discounts, they'll offer some sort of incentive for you to buy that which craters their margin on the vehicles. But they need to run these factories because they have orders that they sent to the suppliers. So they're getting parts regardless of whether the vehicle is sold or not. This is the crazy thing, because we can't look at fundamentals because of a chip shortage because of COVID. It's going to be really hard to tell, at least in Q2 the health of a company.

Lei Xing:
Interestingly, GM and Ford, they never, I guess for Ford, the Mach-E is the only, what, EV there is in China pretty much, right? And then GM they never, GM and Ford never report, group wide, NEV sales, so only single model EV sales. So you don't know exactly how much the others account for. But April, I think the forgone conclusion is that industry sales will probably be looking at, I don't know, 30, 40, or 50% year on year declines, that’s my expectation and hopefully May and June would be better. But and that's the current…

Tu Le:
This makes the rest of the year very ominous, because the momentum that has been built for the last 24 months in this sector was a huge tidal wave. Then think of it, you're going 120 miles an hour and you slam on the brakes. It's really hard to get that momentum back, right? And it's not going to be a two month thing.

Lei Xing:
Another way to look at this is if we go back to the beginning the year, we were quite confident it was going to get to 6 million units. And now, if you were to tell me that we're still going to get the 6 million units, I’d be like, what are you talking about, right? It's that kind of that…

Tu Le:
That would tell me that every factory virtually was working three shifts in overtime on the weekends, starting in Q3, basically. So, hey, I did want to mention this cool little thing that Cadillac did. Jay, who's a friend of China EVs & More. He tweeted a picture of a box with the an envelope that said LYRIQ on it, and he said that Cadillac sent him a care package with vegetables and some other things. 

Lei Xing:
Other have done this also, I've seen on my WeChat Moments that people showing these care packages delivered by these different brands.

Tu Le:
And the struggle is real. I feel helpless because whether it's a PR thing, it doesn't matter right in time of need, that's a nice gesture and it should be mentioned. Before we move on to the New York Auto Show, I did want to mention in my newsletter this week, the Newsweek has an article or on the cover, it says

Lei Xing:
Bloomberg?

Tu Le:
No, no. Two things. Let me talk about this Newsweek thing. First, it was like the world's auto disruptors.

Lei Xing:
Right, Eui-Sun Chung and who else.

Tu Le:
Jim Farley.

Lei Xing
Jim Farley.

Tu Le:
So I jumped on my soapbox, wrote in my newsletter, I was I like I was going to give Newsweek a pass because you could argue, hey, Hyundai is really kicking butt. And Ford is kind of turning a corner it seems, so yes. Then not but two days after that, Newsweek or three days after Farley tweets April 26, that's when we're going to launch the F-150 Lightning, awesome.

Lei Xing:
Job 1 at the Rouge Factory.

Tu Le:
But it said, and it kept on eating at me. I was like the world's auto disruptors. And I was like, I got to say something. How can you not say Tesla? How can you not say BYD, NIO, Geely,. Because NIO, if no other reason, William Li is bringing back battery swapping, right? Like, and then Geely, they resurrected a Swedish brand, and that Swedish bank created another brand. And now they're trying to resurrect an old British brand. And so like, if that's not disrupting. But anyway, so that's why we started this podcast rightly because there's a huge blind spot.

Lei Xing:
But they'll get their turn, so just wait, right? You look at the one I tweeted on, was it Forbes or Fortune, right? They had that list of people and look who's on there, right? William Li, and Robin Zeng (CATL) and these types of people, but it was, yeah, I mean…

Tu Le:
The other digital cover of a magazine. I saw this morning was Bloomberg’s, and it has Jim Farley in a F-150 Lightning. And in big bold font, says “Hey Elon, This is a Truck”, and I tweeted it. This is how you poke a bear. So with that being said, I know that you tried on for size at least got driven in an F-150 Lightning. And let's lead into your thoughts on that. And the New York Auto Show that you attended last week, or earlier this week.

Lei Xing:
Man. Yesterday. I left early in the morning, very early in the morning to beat the traffic. I got into New York City by 7am, so you can guess how early I woke up. It was okay. And I think New York Auto Show for those that may not be aware is actually the longest running, the oldest auto show in North America since 1900, so 122 years. I thought it was close to where I am and kind of I was itching to kind of again, to see to hear uh more on the EV chatter in particular.

So this show it kind of started in the morning. Speaking of Hyundai, you mentioned Hyundai, Hyundai was a huge winner, because in the morning, they started off with the World Car of the Year award breakfast. So they had, I think that in this room, there's probably, I don't know, close to 1,0000 people or more, maybe around 20 tables and less than 30 minutes into this thing, so you had the governor of New York, she talked about investing in EV infrastructure and New York coming back and kind of a little bit scary because the day before there was that shooting in the subway, but less than 30 minutes into these, VIPs speaking, somebody mentioned, lo and behold, the Chinese companies, NIO, Xpeng, Li Auto, right?

Tu Le:
It's a long shadow.

Lei Xing:
Yeah. And at my table sat three guys from a Mustang Club, from New Jersey. And we kind of talked and then we talked, they talked about Mach-E owners, whether they should be in the club. They allowed them into the club, how they decided on this Mustang brand. And I kind of talked about production in China and conversation turned into Lincoln, right? Lincoln is now selling more in China than in the U.S., and then talking about the Chinese EVs and they were saying, hey, the Chinese, they'll have a lot of opportunities in electric vehicles, then they left early. And as far as model introductions, Chrysler had that Airflow Graphite, which is just, I don't know, just a different variant, there wasn't anything new in particular. There's a few refreshed models here and there, they weren't even EVs, right? The Jeep Wagoneer L, they did have a 4xe model for the Grand Cherokee, I think, in that Bluish shape. And Hyundai and Kia, they had their newer, refreshed Palisade and Telluride, which is selling very well. But speaking of the World Car of the Year awards, I think it's worth mentioning that Hyundai, of the six awards, the IONIQ 5 received the Car of the Year, EV of the Year and Design of the Year. So it’s what, triple crown or hat trick or whatever you want to call it.

Tu Le:
So they are crushing it in the U.S.

Lei Xing:
The six awards. There's the Performance Car of the Year which was won by Audi e-tron GT, I think the Luxury Car of the Year was one by Mercedes EQS, and the only ICE model was the Toyota, the Urban Car of the Year, right, the Corolla Cross. Like I never even heard of that model. But that tells you the sign of the times that…

Tu Le:
Even in the U.S.

Lei Xing:
No I mean the World Car of the Year is supposed to be right, so I think it's voted and awarded every time during April during the New York Auto Show. But right, that's the sign of the times that going forward, I don't think you'll ever see another ICE model winning these type of awards, right? That's the beginning of the end or the end of the beginning, whatever you want to call it.

Tu Le:
I should say this: as BMW in China launches the brand new X7, they launched the revised X7,  2023, which is an ICE. Some companies are still milking it.

Lei Xing:
Other than that, there was a couple of VinFast, right? VinFas we've been talking about this. They're just moving fast and furious, right? They announced this battery kind of subscription plan. I was like, that's a page out of NIO, right? Like $35, I think for one of the models a month, there's a pay per use, but there's also a fixed, so like $110 and $160 depending on the battery size, I think, per month. So you can kind of use it whenever I don't remember details, but and the 65,000 orders, I believe that's globally for their models, but I think that's the $200 deposit reservations, right? And today they announced the deal with Amazon Alexa, integrating that into and then the Electrify America. So ever since they revealed the EVs at the LA Auto Show, there's just been announcements, deals. And what I also did was they had this EV test track down below in Level 1. So I waited during lunchtime, they open up for these different EVs so there was the VinFast VF 8. So I test, kind of rode in that, the EV6, the Volvo C40 and the INDI ONE.

So INDI is another, I'll share a comment, I sort of interviewed Andre Hudson, the head of design. And I’m going to quote him, I put down some notes. The VinFast VF 8 is nicely built, nice quality, nice interior. And the guy who was driving it said this was a Pininfarina thing, right? With the little cockpit style buttons down below the center stack. But I thought it was, it's almost 100% production model and the guy said delivery should start in November, first imported and then 2024 is when they plan the North Carolina production, right?

But it's nice, nicely built EV, I think it was, I would rank it high among the ones that I tried. The worst would, by the way, would be the INDI One, because that was bit of a, I don't know, a makeshift, it's got the red buttons, it's got the Windows interface on the screens. There's holes everywhere. It was shaky, it was a prototype. But still.

Tu Le:
Did you have to sign a waiver?

Lei Xing:
Yeah.

Tu Le:
My goodness. God bless you.

Lei Xing:
I didn't really like the Volvo C40 because for some reason, they told me you can either shoot videos without talking to the driver or you can talk to the driver, but without shooting the videos. So I got turned off by that. I don't know maybe it's company policy. Then the EV6 is nice. But then Hyundai, outside of their booth, they had their own track upstairs. For the IONIQ 5, I again, sat in IONIQ 5 and took a spin twice around the track this time on the passenger side. And remember, I test drove sometime last year at a local dealer. But this time I kind of after they won the award, I really can see why sitting in the passenger seat and this guy drove me and he was telling me about the battery degradation, the range, how he's been doing this accelerating/ breaking all morning, and the range, the state of charge was actually pretty good. He told me A/C was on at 68° full blast, and the interior, just the space, the way it was designed and the exterior design and the interface, HMI, balancing the screens and buttons. I thought of all the ones that I test rode, I can see why it won all that award. And F-150 Lightning, the Platinum version, the top version, was all these not gimmicks, but like 180° of lie flat seat with massaging and that center console with the station, you can put your laptop on, and the shifter you can make it flat. So the center, the place where you put your computer on can lay flat on top of that. 

Tu Le:
They still have a shifter?

Lei Xing:
Yeah, the shifter, into drive and park, exactly. We tried that acceleration, 0 to 60 was something like 4 seconds, a little bit more than 4 seconds。

Tu Le:
Who had the longest lines?

Lei Xing:
VinFast. I waited almost an hour, but one part of the reason was due to this guy shooting some videos, he was, they only have one car while the other brands they had two cars. So like I was like but it was worth it. I think quality, I think it passes, I believe it passes.

Tu Le:
Those have to be hand built parts, right? Especially if there's only one car available.

Lei Xing:
The guy from INDI, I was at the press conference and Andre Hudson, he stayed and answered some questions from the media. And I was talking to him, I said what about Chinese brands coming pretty soon and competitors? And here's what he said and I’m quoting: “certainly everybody is a competitor, the landscape will be amazing in the next 2 to 3 years, the change completely with the plethora of EVs in the space and certainly see them.” Then he said, “maybe even 4 to 5 years ago as an auto designer, you didn't really care about what was happening in China, today to me is some of the most innovative, advanced design, as well. So we're certainly staying aware of what's happening there, knowing anytime those products will get, will be over here.” That's what he said.

Tu Le:
Without question. 

Lei Xing:
But INDI, I don't know, it seems to be, I don't know, startup. I think they only have like few dozen people.

Tu Le:
But let me remind you Lei. So I read up a little bit about INDI. And they basically outsource entire functions of development to external companies. I think they develop the battery anbd the UX in house. But other parts of it are not.

Lei Xing:
And then he talked about manufacturing, they're looking at locations. And in the U.S. and I actually I asked him, will it be greenfield or existing plants? And he said existing. So that also gives you an indication.

Tu Le:
You better believe that the Chinese EV companies are talking to JLL, they're talking to CBRE to look also right for these factories. And so we should see in the next, I’d say 30 months, a few different deals for an old factory in Illinois, Indiana, Ohio, that's going to be rehabbed, invested $250, $300 or $400 million. And now it's going to build EVs or…something.

Lei Xing:
So the interesting thing is, they're taking orders for the INDI One, $45,000. And they said delivery expected next year, in the second half of next year. But I don't know. You don't even have a place of production yet. 

Tu Le:
So, Lei, I will remind you that back in 2004, the Tesla Roadster was effectively a kit from Lotus Tesla powertrain. So INDI, I’m not saying INDI will be the next Tesla. But we have to remember that these companies, some of these companies are humble beginning, right? Like the two founders are of Tesla are not part of the company anymore and effectively Elon, as one of the largest early investors took over and got a co-founder role.

Lei Xing:
But he seems to be going off track a bit the past couple of days. You know what I mean.

Tu Le:
Yes, but it's nice to be able to say I’m just going to buy this company at 70% premium of what was trading at the day before, I bought 9% of it anyways.

Lei Xing:
Yeah, the other thing about INDI was rather, I don't know whether people saw this, but in the skateboard that they showed with the dual motors, the one in the front and the one in the rear are supplied by Jing-Jin Motor, a very prominent company in the space, a Chinese company.

Tu Le:
So I looked on LinkedIn at the management team. And there are few people that seem, pretty well connected. So I think there's strong Chinese ties to it, but also how was the fit and finish of the F-150 Lightning, because that has to be a pilot that has to be coming off production.

Lei Xing:
It's fine. It's a F-150, I mean what can you expect. It is what it is.

Tu Le:
So you didn't see any noticeable quality, or fit and finish problems.

Lei Xing:
No. They had on the Chevrolet booth. They didn't announce anything pretty much, but I saw the Silverado EV, it is humongous. I don't know why they made it that big. So the F-150 Lightning or F-150 in general is already big. I think the Silverado EV, it's almost 1/3 bigger than the F-150. 

Tu Le:
Are you serious? 

Lei Xing:
It's huge. The thing that made it even bigger was the small Bolt EVs that sat beside it. Other than that, I think that's pretty much. I also talked to Zerolight, Barry Hoffman. That's an interesting conversation. 

Tu Le:
How's that? 

Lei Xing:
It's great. The one, the kind of, what do you call that, the CGI, interaction with the car?

Tu Le:
What they do is amazing.

Lei Xing:
Yeah and it's awesome. And he showed me something else on his phone, which was pretty cool, couldn't really talk about it. But my general summary is there was no Chinese brands, but the Chinese narrative, the Chinese EV narrative, was equally there.

Tu Le:
Still looms large.

Lei Xing:
Yeah, still loom large. The e-motors company was represented there. VinFast as a none European or another Asian company coming to the U.S. right? It's all relevant and I was talking to people and I’ll say I wouldn't be surprised if at the LA Auto Show, some Chinese brands show up, it could be possible, or CES.

Tu Le:
I’m going to speculate Lei, there might be one or two in Detroit in September.

Lei Xing:
Hell yeah.

Tu Le:
I’ll just say that because I get this feeling, hey, but it’s 9:56, we will open the room up. You and I have talked a lot about production. We've talked about the New York Auto Show, so we still have a couple topics I know that you and I wanted to touch on. But if anyone has any questions or comments, please raise your hand, we will bring you up, we'll have a chat with you. 

The one last thing I did want to mention because we're talking about Tesla a little bit about the New Yeork Auto Show was that Elon has to be anxious about getting Berlin Giga online very quickly because of what's going on in Shanghai. And so there has to be a ton of pressure on those guys in Berlin to get that factory up and going. The one thing I will mention was that Shanghai Giga, at the very early stages, were getting a lot of their parts from Fremont. My assumption is that initial production parts for Berlin Giga would have likely have shipped from Shanghai. They're probably having to rethink and ship a lot of their parts as kits over to Berlin Giga from Fremont now. So the operations team at Tesla must be working overtime to really try to reconfigure production, especially because losing days, we're not talking hours, we are losing days of production. And they want to get a million and half units in 2022 shipped. So I'm betting Elon is not letting up on that number. And I'm betting that he's making Fremont and Berlin and Austin really take on that heavy load from Shanghai Giga for now.

Lei Xing:
The other thing was the interesting announcement by RoboSense and TuSimple that they're working together to have RoboSense fit their LiDARs on the L2 and L4 trucks, but I’ve confirmed with both RoboSense and TuSimple that this is only focused on the China business side of it. So if you look at the pressers, the person who was quoted from TuSimple was not Xiaodi, but was Chen Mo, and if know, Chen Mo recently, he left as chairman, right? But now he's trying to start something new in China. So this deal is only focused on the Chinese market. You haven't seen any announcement from TuSimple here, in the U.S. because it's not relevant yet.

Tu Le:
I'm wondering if there will be, because you and I agree that there will be a separation.

Lei Xing:
 Yes.

Tu Le:
What, if any, relationship they will have in the future as these two separate entities? That'll be interesting to see because Chen Mo is effectively now the head of TuSimple China, TuSimple East, and then TuSimple West, Xiaodi is, because they're not separated yet so we'll just call them TuSimple West and TuSimple East, is now the CEO of the U.S. Entity. Who is going to take on Europe? Who is going to take on other parts of Asia?

Lei Xing:
Maybe I don't know they'll just not bring that onto the plate at all. Who knows.

Tu Le:
But the negotiation must be pretty intense, pretty messy.