China EVs & More

China EVs & More MAX Episode #6 (ME) - Steve Levine, The Electric newsletter Part #2

May 14, 2022 Tu Le & Lei Xing
China EVs & More MAX Episode #6 (ME) - Steve Levine, The Electric newsletter Part #2
China EVs & More
More Info
China EVs & More
China EVs & More MAX Episode #6 (ME) - Steve Levine, The Electric newsletter Part #2
May 14, 2022
Tu Le & Lei Xing

In Part #2 of this MAX episode, Tu & Lei welcome Steve Levine, global citizen, adjunct professor at Georgetown University, and editor at The Electric - a premium newsletter that specializes in the EV & battery spaces. 

Steve talks about the journalism journey that brought him to cover EVs & batteries, the challenges he sees ahead including consolidation in the automotive space, and how he thinks things may shake out in 2030 and beyond. 

Climate Confident
With a new episode every Wed morning, the Climate Confident podcast is weekly podcast...

Listen on: Apple Podcasts   Spotify

Show Notes Transcript Chapter Markers

In Part #2 of this MAX episode, Tu & Lei welcome Steve Levine, global citizen, adjunct professor at Georgetown University, and editor at The Electric - a premium newsletter that specializes in the EV & battery spaces. 

Steve talks about the journalism journey that brought him to cover EVs & batteries, the challenges he sees ahead including consolidation in the automotive space, and how he thinks things may shake out in 2030 and beyond. 

Climate Confident
With a new episode every Wed morning, the Climate Confident podcast is weekly podcast...

Listen on: Apple Podcasts   Spotify

CEM MAX #6 Steve LeVine Editor, The Electric (Part II)
Recorded on April 27, 2022

Tu Le:
Hi everyone, Tu Le here, one-half of the China EVs & More duo. Lei and I are always thinking about different ways to bring you, our audience, relevant and compelling content about the China EV, AV and mobility sectors. Especially now that several companies that we’ve tracked over the last 60 or so episodes have become global phenomenon. 

China EVs & More MAX is where we bring you special content, in the form of conversations we have with special guests from those sectors. 

In Part II of our conversation with Steve LeVine, Editor at The Electric, he gives us his perspectives on solid state batteries, raw material procurement, battery production capacity, the shortfall between legacy OEM EV production forecast and raw material supply, future prospects of CATL and BYD manufacturing in North America, viability of battery swapping outside of China and the difficulty of Tesla ramping up production of their 4680 battery cell. 

Tu Le:
So you don't see solid state becoming viable commercially by the end of this decade then, Factorial, QuantumScape, those types of companies, SES, I think?

Steve LeVine:
Solid state is the electrolyte. It still requires the same cathode. And either, so some kind of anode, all you've done is replace the liquid with a solid. It's crazy. When you read solid state is going to change everything. What is it going to change? It doesn't change anything. All it does is it does make batteries safer. 

Tu Le:
It charges faster, right? 

Steve LeVine:
Why?! Why does it charge faster? Ions have to move through liquid, why would ions move through a solid faster? They don't. What matters is the anode. So if you can get like a silicon and what, it's the graphite that's the problem, right? The graphite won't absorb the lithium ions as quickly as people want to shove them in to fast charge. And so they end up blocking, right? They form blocks on the outside of the graphite anode. And that ends and that's permanent. So that's the problem that does, that’s not solved by solid state.

Lei Xing:
So Henrik Fisker would pat you on the back and shake your hands, very good, because he was, when we, he was our first guest, he was big on solid state back in 2018, when I last talked to him, and last year at the LA Auto Show, he was no, no, no, solid state that's no. I think he'll be in agreement with you.

Steve LeVine:
Yeah. Solid state, it enables, it can enable lithium metal as the anode.

Lei Xing:
But if you look at the recent announcements from these legacies, it's already proving your point: 2026, 2028. And this is not mass scale production. This is something, a timeline where you say, we think we can have a production vehicle, but in large volumes, right, you still have to think post 2030. So I guess they're in agreement with you.

Steve LeVine:
Yeah, all of these, by the way, all these milestones we talk about, before, the raw materials, before we understood, there was a raw materials crisis, that all gets pushed ahead. 

Lei Xing:
So, speaking, you mentioned nickel a few minutes ago. There were two stories or two news from yesterday. So Walter Isaacson, who's writing the biography of Elon Musk, he tweeted that Elon was meeting with these guys from Indonesia on a nickel agreement, and in the shareholder letter from Mary Barra, there's that big paragraph talking about cobalt with Glencore, and then an upcoming announcement on nickel, where these OEMs are working directly to kind of solve this issue, is that now the kind of, when we talk about, you know, there's different, whether it's vertical integration or working directly with much more upstream suppliers, is that the kind of the standard going forward that there's no way around it? What do you think?

Steve LeVine:
Yes, I do think that the auto companies, the major auto companies which have been for 20 years or 30 years, Tu, you are the best at the car industry, when did they stop wanting to vertically integrate?

Lei Xing:
Delphi!

Tu Le:
This is 50s, 70s, 80s, 90s.

Steve LeVine:
Yeah, but now, so they have to have their own assets, they have to follow China into this either long-term agreements with the mines, the mining companies, or buying outright you know, I wrote a piece this week: why if $46 billion was burning a hole in Elon Musk’s pocket, why didn't he buy all the Marley and a couple of lithium companies, right? And put himself, like untouchable, he would be unassailable. Yeah, so these deals you're talking about are super important. I was wondering about, I'm interested to hear your thoughts on this meeting that Elon actually had a photograph taken of him with the Indonesian minister and the others, right? 

Lei Xing:
Holding up something, right?

Steve LeVine:
And they're all wearing suits, and he's in his black T-shirt. Anyway, Indonesia is, they have all that nickel.

Tu Le:
Talk about geopolitics.

Steve LeVine:
Yeah. And they want to be, they want to be added value. They don't want to be, hey, you're just taking our raw material. They want the cathode, the whole process made there, and that's so smart.

Tu Le:
They want, what they want to do is they want to dethrone Thailand from Southeast Asia and Vietnam for being a hub for manufacturing right?

Steve LeVine:
It’s so smart. It's good, but my question is, Indonesia also has the highest energy, not the highest but a very high energy intensity for the nickel that they produce and the processes that they're using. Also is it called HPA, it begins with an h, HAP? This is why prior to this, Elon had avoided Indonesia and gone to New Caledonia, because cleaner method of, so I’ve wondered, so the Indonesians, he didn't invite the Indonesians there, right? They are selling themselves to him, and they did talk about ESG, but I'm wondering, will he do a deal, will they clean up these methods so that he can do a deal?

Tu Le:
But Tesla has been in discussions with Indonesia for at least a couple of years. I know they were talking about, he never, Tesla never said that they were going to build manufacturing there, but you knew he was there for one reason or Tesla was there for one reason. So that's been in the news for the last couple of years, so.

Steve LeVine:
It has, but again he hasn't done a deal like for example, VW just went ahead and signed, right? Did a very large nickel and cobalt deal.

Tu Le:
But you have to remember, Steve, when we're talking a GM and a Volkswagen, this is existential for them, right? With Elon, it's a million and a half cars in 2022 that he wants to build, right? That's a quarter of production for GM, that is less than 20% of annual global production for a Volkswagen, right? And so they're looking at securing raw materials, because if they don't have it, they're shutting down dozens of factories, right? Where I think there's a little more flexibility with Tesla than there is for these legacy automakers.

Steve LeVine:
But I just want to make sure that we're on point here. Are you saying that Elon is cool with the Indonesians? He's not so concerned about these environmental questions.

Tu Le:
I think they will follow whatever Indonesia’s local policies are when it comes to that stuff, right? Like, for instance, might be Shanghai Giga factory probably runs a little bit different than Berlin Giga factory than Austin Giga factory, right? And just like Nike, we follow the local laws and the policies of the countries that we do business in, right? So we also have to remember that Tesla has that reality distortion field, so regardless of who you are, you kind of want to work with Tesla to be able to say, I work with Tesla or as GM I don't think there's that cachet or Volkswagen, there's not that cachet, right? So, but then this has been an amazing. We haven't talked, asked any one of our questions, by the way, Steve. We're just riffing, we're just talking.

Lei Xing:
I think they've been mixed in the questions.

Tu Le:
So what are your thoughts on the China market, cause to your point, right, you saw this canary in the coal mine. You wrote this book in 2014 or 2015, so you saw around the corner, you saw these angles and to a lesser extent, that's why Lei and I started this podcast, right? Because as Americans living abroad, we saw that this tidal wave was coming from China and to your point, the legacies, although they sell millions of cars in China, they just weren't waking up to the fact that this EV tidal wave was coming from China.

And so it was important for us to really create an awareness that if you're not ready, and you are caught flat footed, this thing is going to knock you off your feet, right? This tidal wave. And so what are your thoughts on, because CATL in Q1 was 50% of production of battery cells in China. So they're the 800-pound gorilla. Do you, and they're continuing to build capacity. Everybody's building capacity. Northvolt is building 6 Giga factories, right? LG in the U.S., Panasonic, now do you see in 10 years, 12 years over capacity, especially specifically in the LFP side?

Steve LeVine:
So we're talking about two different things. One is the cell making, the Giga factories. And the other one is the raw materials. There definitely is overcapacity of Giga factories announced and they're not going to be all built, right? Benchmark talks about maybe 70% of them will be built. And then remember the Giga factories are not all made equal, there are tier one, tier two, tier three, and not everyone is a CATL in terms of their ability to make a really good battery. So yes, there's overcapacity in the cell making, but not on the materials. There's still not, but you get into the situation. Jeff Dawn is a very, we haven't mentioned him, but he's like, they are, next to John Goodenough, the inventor of the batteries as we know them, right? You know he's turning 100 years old this year, and he's still working on batters. But next to him, Jeff Dawn is the biggest thing there is in batteries. So he's, for those who don't know, Professor at Dowhouse University in Halifax, Nova Scotia. And he is the key battery adviser to Tesla, key outside advisor.

So he talks about, when you look at the trajectory of EV production over decades, we got this decade and we got the 2030s. Once you get into the 2040s, and you're really at scale and you are replacing the combustion fleet, you need metals that are at a concentration in the earth's crust of 200 parts per million. This is his number, right? He gave a talk two weeks ago at a battery conference down in Florida that I attended. When you get to that scale, 200 parts per million, you exclude lithium, cobalt, and nickel. And so you have iron and manganese still, and some other. You still have sodium, you still have sulfur. So when we get up to scale, this will affect everyone. The batteries that we know today, the chemistries we know today will be marginalized and will have, sodium ion will have to work, sulfur will have to work, and those are inferior, they are not going to take a car 300 miles, and won't do a lot of the things that we want them to do. And so it just means that the landscape is going to change. CATL is on top of this. But the just whereas I think that Chinese automakers, Chinese battery makers, and we haven't mentioned BYD, I think BYD makes the best all-around EV battery on the planet, the blade, the best that there is. And it's so underestimated, we know what it is. But if you go out on the street like, does anyone know what this is, and it’s…

Tu Le:
I was reading that they're going to add about 150 GWh of capacity this year in China.

Steve LeVine:
Yeah, so people are going to, the western carmakers will do business with BYD and the blade. But if you go to 2030, the forecasts are that total around the world between 25 and 40 million EVs are made and China is like half, at least half of that and Tesla. So where does Tesla end up, right? Tesla is going to make 1.5 million EVs this year, and that's only with Giga Austin and Giga Berlin starting to crank out. So they're going to go, right? It's totally reasonable to expect two million next year and 5 million in 2025 from Tesla, from these from the four, right? Shanghai, Austin, Fremont and Berlin, right? That you can get 5 million.

Tu Le:
To hammer your point home, Steve, Elon said that on the earnings call that he forces 50% growth over the next several years.

Steve LeVine:
Right. So I did the numbers on that. I did the numbers. So he's talking about, if I call it up here about 50%, if you do or just went straight to that page, if you do the math, right? So he's talking about 20 million or 22 million by 2030 or 2032. If it's 50% a year, in 2028, it's 16.8 million,  in 2029, it’s 25 million, in 2030, its 38 million. I don't think he gets there, but I’m just saying that's, if that happened, that would be the growth.

Tu Le:
It's the other thing, too, though, Steve, it's also that Giga factories need to open two or three a year as well, then, right? 

Steve LeVine:
Yeah but where I’m getting to, again, is I’m returning to that theme if China has got half of that, let's say it's 40 million. Again, you count what, Ford and GM both say they want to be making 2 million EVs a year by 2025, so what is that in 2030? VW wants to be making 4.5 million in 20…When you add all those up, you get to about 20 million or 22 million from the major carmakers, not including China, not including Tesla. And so when you add Tesla, if Tesla does, let's say Tesla just gets 10 million and doesn't get to 20 million. So that's 33, and then China 14 you know 10 or 14 million, 43 or 45 million EVs. That's what they say they want. Do they get made? Again, everyone else is scrambling.

Tu Le:
Really quickly, Steve, for context, for our audience, the world buys between 75 and 85 to 90 million cars a year, right? So 50% at 2030 would mean around 40 million cars or EVs. And so that's where Steve is getting his numbers from, if 50% of the cars being sold are electric. And remember that we're not just talking about Europe, China, and the U.S., we're talking about Brazil where EV adoption or South America, we're talking about Southeast Asia where EV adoption is going to take a lot longer than the major regions, I think. So there's still going to be petrol vehicles sold in 2030 for sure.

Steve LeVine:
Yes, look at the number. So if you've got China with 15 and Tesla, well let's say it's 10. That's 25. It's numbers that's 15 million divided by everyone else. It is. You start out this part of the of our conversation you ask about where is China? This is China’s world, right? China and Tesla’s world, in 2030, what it looks like at this stage. And again we'll talk again in 2030 and see where things really, really went. But at this stage, that's what it looks like.

Tu Le:
And if we're giving credit, guys, we should probably call out BYD right? Because BYD is going to be a player, for sure, in 2030. To your point earlier, Steve, about how you said consolidation is likely to happen in the automotive sector by 2030. I had said months ago, last year that in 2030, I could see in the top 10, some legacy automakers, some EV first companies like a Tesla or a NIO, and then some technology companies in the top 10 of mobility companies, because they won't be called automotive companies anymore. So I totally agree with you. I think there's going to be the weaker players that are just going to get eaten up. And I see opportunities for tech companies to acquire assets on the cheap from weak automakers. And so they can, instead of being a contract manufacturer outsourcing, manufacturing, they can just buy a factory super cheap, and then build on their own where they have total control of design and manufacturing, right? So…

Steve LeVine:
Yes, and it isn't, Tu, isn't Musk’s swooping in and just say I’m going to own Twitter. Isn't that what this is, right? I mean Apple or whomever can just say, I'm going to buy, just name the company, right? And two weeks later they own it.

Tu Le:
It's not just Apple because Apple, Google, Amazon, they have hundreds of billions of dollars in the bank doing nothing, hundreds of billions of dollars.

Lei Xing:
Speaking of the volumes you have to also think about, of those 40 million EVs, how much are the robotaxi fleets, not privately owned, right? That's another kind of the topic that we haven't touched upon. What would that picture, what would that outlook look like? Because most of the robotaxis are EVs, right? That's a given.

Steve LeVine:
What do you think of just, what where's your brain in this sector?

Lei Xing:
I would imagine they will account for a big portion based on what's happening in China, right? 

Tu Le:
I think the only way these car companies get to these numbers that we're talking about, a handful of them, not all of them, right? Because we all believe that not every single legacy automaker is going to hit their proclaimed forecast or their goals in 2025 or 2027, right? But in 2026, 2027, I’ll give you, for instance, Steve, we interviewed Maxwell Zhou, who's the founder & CEO of DeepRoute, just announced a $10,000 hardware/software stack, Level 4 autonomous that he's partnering with automakers to bolt on at the factory that are integrated into the OEM's vehicle. So not as a separate add-on after the vehicle’s built. If we get to five, let's say, six, five or four thousand dollars for a Level 4 hardware/software stack, every car is going to have them pretty much by 26, 27. And so I believe the trend is going to be private car ownership is still going to go down, it'll balance out because China will grow a little bit because they're around 22, 24 million cars a year being sold. Let's say they go up 27, 28 by 2030, but U.S. is still going to go down, I think Europe is going to go down. Car sharing, ride hailing and then Robotaxis, I think will take over that delta between private car ownership and the rides that still need to happen, right?

Steve LeVine: 
Yeah, so this is interesting. I don't, you guys know a lot more about what's happening with the Robotaxi space. I'm interested in what and what you've said about the Level 4 is this which people talk about it, but no one is really there yet. That's so, has this guy shown that he really does have, I mean is there proper testing and all of that?

Tu Le:
He just launched or DeepRoute just launched 30 of them in Shenzhen. So they're being tested right now, right, and piloted. And so I think most CEOs will tell you that there and Lei had really hammered this home for me. They'll tell you that they're L4 capable. But from a policy and a law standpoint, they can't say that, right? They can't say that they're L4. But even Elon had to get his wrist slapped for FSD right? Because the lawyers basically told them that you have to say they're only L2 capable, or we're going to be liable, right?

Steve LeVine:
Right. Is he saying L4 because L4 should mean that you can go anywhere, or is it L4 on a fixed route?

Tu Le:
So when we say anywhere, we're basically saying point to point, right, I get in the car it takes me anywhere I want, and I don't touch the wheel ever, right? What's going to end up happening is there's going to be a combination of locations being geofenced that allow for it. There's going to be speed limits that are governed. It can't go faster than 30 miles an hour. And then there's going to be certain use cases that allow for, like in a traffic jam or for commercial vehicle on the highway between this point and this point. And so when you get into Level 4, that's when we also need to talk about commercial trucking. Because robotaxis from a private passenger taking over for a DiDi driver, or a Uber driver, that's probably still a good 10, 12 years out, but certain from point to point, but use cases, that could happen in the next 3 or 4 years, right?

Steve LeVine:
So that's right. In my view, that's kind of and asked Level 4 with an asterisk. But it is interesting. It's a way I’ve wondered about that since Level 5 may never happen, right? It could, but it may never happen. What are the commercial cases for Level 3 and 4? And you just named, right? You just name some.

Tu Le:
And the thing that when we talk about Level 4 and taking the driver out, it has completely different implications in China than it does in the U.S. and Europe, right? There's unions in the U.S. and Europe. But now we're talking, and people are going to be displaced out of a job in China, right? And the Chinese government's number one goal is to keep people employed, not for companies to be profitable per se, right? And so they're going to really, really manage how the technology gets rolled out to ensure that there's not all of a sudden 2 million taxi drivers that are displaced it with nowhere to go, right? So I think that's where China is going to be a little bit different than the rest of the world.

Steve LeVine:
Yeah. I can imagine that. That's right. So you can imagine like, I was just looking before we got on this call that Lucid had sold 100,000 of its vehicles to the Saudis. So this is just, Lei, what you were saying.

Lei Xing:
I heard about that.

Steve LeVine:
These fleets can be a huge customer for the EV makers.

Lei Xing:
Hertz with Tesla and Polestar, and there'll be more right? And switch gears a little bit, about battery swapping. What's your stance? I mean could that be a viable business model here in the U.S., because NIO, without a doubt, they're coming, a matter of time and they'll bring that over.

Tu Le:
And CATL, they just announced that their partnership with AIWAYS, an EV company here, so.

Steve LeVine:
Yeah, so I’ve watched the way that swapping is taking off in China, and it also is in India with two wheelers.

Tu Le:
In Taiwan. 

Steve LeVine:
So I’m skeptical about swapping in the U.S., not because it's a bad idea. I think it's a great idea. It's a way of significantly reducing the cost to us of buying an EV, a swapping situation, if you are just leasing the battery or just paying for the use of the battery, but it just it requires the automakers to change their whole plan, right? To, the way they're making their vehicles and requires them to make commitments about the batteries and about how every single vehicle they're going to make from now and forever is going to be made. They haven't done that. And so I think it's going to be niche in the U.S. at best. It's going to be niche. I do see that we didn't get there quite but that you do have China becoming the new Japan in terms of being just a major retailer of its EVs and wholesaler of its batteries in North America, in the U.S. And that's because of necessity on the battery side and on the car side, just because they're competitive. So they will come in. But in terms of swapping, I don't see the other major carmakers switching that direction.

Tu Le:
You had had a good discussion with Levi (Tillemann) for that mobility conference that we sponsored. So that was interesting, I enjoyed that one.

Steve LeVine:
Levi wants this to happen. And so he, Levi’s a salesman, right? 

Tu Le:
He's very convincing.

Lei Xing:
I met Levi about 10 years ago, 2013 at a conference in, I think it was in Wuhan and he was showing me his book on what's the title? Great Race. He's a funny guy.

Tu Le:
He's very, very convincing. So this is, I just thought of this one. Who do you think would be first to build capacity in North America, BYD or CATL and why?

Steve LeVine:
BYD. BYD is already doing it. BYD is already in California.

Tu Le:
Well like battery cell manufacturing capacity. Do you think CATL is a little bit too controversial?

Steve LeVine:
Oh that's a good question. I guess I would stick with BYD because again, they already have their foot down like it doesn't seem to me to be a big jump for them to say well, we're also going to on our land in Lancaster, California, we're also going to build cells. But CATL is really scouting, they're really going to do this. I've talked to folks who they spoke to in Mexico, but they want a good deal. They feel like they're in the driver's seat. So they want who, wherever they go to give them like a sweetheart deal, like they want 25% of the cost to be borne by the place there they're at. So the Mexicans said we're not going to do that. They moved on from there. Let's see if they can get that kind of a deal either in Canada or the U.S.

Tu Le:
But that's the thing though, right? Steve? They kind of have to be in Mexico or Texas or Arizona if they're going to supply the Austin Giga.

Steve LeVine:
This is true. So maybe CATL has to do the compromising.

Tu Le:
If I was the Mexico foreign direct investment people, I’d be like, we have the leverage because you actually don't want to be building in the U.S., there's going to be way too many controversies with that, right? If you build in Mexico, we still have the free trade agreement. We ship across the border, we are done.

Steve LeVine:
But what if you do a deal? What if you're CATL, we have the USMCA, the new NAFTA, requires 70% local content. So what if CATL does a deal? First of all, you've got Musk saying I want this factory and CATL says, not right away. But over the 10 years, we will source all of the 70% nickel and so on right here in North America. I think Texas would say yes and that the government would say yes.

Tu Le:
Yes, that's the other thing, Steve. You don't think the governor of Alabama would be like come on in, the governor of Mississippi, like we'd love to have you. Maybe CATL knows that, and is leveraging Mexico, because they'd rather build in Mexico than they would in Alabama, right? 

Steve LeVine:
What do you guys think? What happens in that game?

Tu Le:
Lei, what do you think, man?

Lei Xing:
I don't know. BYD definitely has the basis already, right? BYD just launched in what Mexico, and BYD seems they're everywhere. They're in the U.S, their cars are now, their EVs are now everywhere around the U.S., Costa Rica, Mexico, Bahamas, right?

Tu Le:
There's a few, remember Taylor, there's a few parked in Silicon Valley, right? 

Lei Xing:
In Michigan. But yeah so, I would tend to agree with Steve a bit.

Tu Le:
Here's the last serious question, Steve, and then we'll wrap it up. We've basically gone the entire conversation without a specific Tesla question. We've brought them up, but we haven't asked. So I’m going to break the streak. Why has it been so hard for Tesla to get the 4680 battery mass produced?

Steve LeVine:
Because it's not just the carcass. It's all of those bells and whistles that Musk wants inside. All you have to do is have this conversation on Twitter. We get all the maniacs, the Tesla mania. They are just fervent on this. They're angry: how dare you talk about the 4680. And so I know I’m going to get in trouble on this one. They're just not there right, the 4680, they want tabless and they want the dry cathode processing, DBE, and they're definitely not there with the DBE. It's just a slow, slow process. They only turned out enough of the 4680s in Fremont for 1,000 like 1,000 Model Ys. And so I’ve been talking around to people about the DBE, it's hard, it's really hard, right? And it's just taking dry stuff, and it's cereal with no milk in it. How do you get that to stay and to be uniformly coated, fast, right, super fast on these and safely. And so that's hard so that. They have to figure that out. And so maybe they go without, so they go, but let's drop, let's say they don't really want, or they decide they're going to compromise and not do the dry processing. If they were there on tabless, at scale, at the rate, at the yield, with the right yield, they would be producing it. They're not there yet with the tabless, either, even though everyone, you're stupid, LeVine, do you, are you Musk’s nephew? Do you know this stuff? Why do you know, as and they always sort of link to something and say, didn't you see this? And if he could make the 4680s with the tabless at scale he would be doing it.

Tu Le:
Steve, just wait now that he owns Twitter, they're going to feel like they own Twitter now too, right? So don’t, jump off my platform if you're going to talk badly about Tesla, right? 

Steve LeVine:
They don't say, they always word things like, they don't just say, hey, I disagree with you, and this is why. It's very insulting the language.

Tu Le:
This has been a great conversation. I learned a ton. I’d love to just do this like once every couple of months, just to catch up but thank you for joining us. Steve, let me throw this out. Do you have any other questions for Lei or I?

Steve LeVine:
Yeah, let's see. I guess I would be interested in, there is a question I’d be interested in. And so CATL and Gotion and BYD and so on. They are the 800-pound gorillas in the battery space. It's just it's not logical that they just stay in China doing what they're doing, just like it wasn't logical that Toyota and Nissan and so were just going to stay in Japan and just name your, so my question is, let's say it's 2030, 8-10 years from now, do we have these companies that they are based in North America and they are producing the bulk, they are the 800-pound gorillas here and in Europe, making the EV batteries.

Lei Xing:
CATL has already, CATL is halfway there, or they're already there, right? With the Thuringa plant in Germany that's recently gotten, what was the news about them getting, was it approval or something I think.

Tu Le:
For the initial 15 GWh or something like that?

Lei Xing:
It sounds small, right?

Tu Le:
When they're building 100 and something GWh factory in Ningde, right?

Lei Xing:
So, it wouldn't be surprising. It's inevitable that they have to be where your customers are.

Tu Le:
But this goes back to a question, Steve, and we'd written it down, but we didn't ask it, but now and I’ll bring it up now. Because you do talk about geopolitics, do you think there's going to be at least some protectionism in Europe or in the U.S. that says, we can't let this 800-pound gorilla come in here. And because if nothing else, the Koreans and Japanese in the U.S. would be like, no, you can't have them come in, right? Because they're going to undercut us on pricing, at least on the LFP side, right? So I don't know. Do you think there would be some protectionism in the U.S. or Europe if they saw that risk?

Steve LeVine:
So I know less about Europe, but in the U.S. I think that if one, necessity is going to play a role, but if the 70% rule is imposed, you defang, then it becomes much more benign. It's guys who know what they're doing, but they're totally using the local economy to do it. It's like the Japanese and the Germans are huge manufacturers, automobile manufacturers in the U.S., no one says a word.

Tu Le:
BMW manufactures more cars in the U.S. than they do in Germany.

Steve LeVine:
Right, so if you go there, then I wonder if these nationalistic questions get tapped down. That's what I would say.

Lei Xing:
I think the fact of the matter is that specifically on the U.S. side, the understanding should be there's no American CATL, there's no American LG, there's no American Panasonic, there's no American company that's known in the battery space, right? So they have to bring these in the case of GM and Ford, they already have the Kentucky and Tennessee battery cell plants working with SK and LG, besides the nationalistic and the geopolitical, at the end of the day it might just come down to Made in America, whoever is bringing the jobs and make things in America. I'm not sure if I care where they're from, at the end of the day.

Tu Le:
The irony is that CATL might be the catfish for the U.S., or BYD might be the catfish and create that catfish effect for the U.S.

Steve LeVine:
 That’s interesting, that's the best point of the whole conversation.

Tu Le:
I guess we will end it on that. 

Steve LeVine:
Thanks so much. I really enjoyed the conversation. And you guys are an institution, and so it was totally cool. 

Lei Xing:
Hi, your co-host Lei Xing here. Having had this long conversation with Steve was really eye opening for me not only because of the history lesson but also because of a myriad of factors at play in order for future EV volumes to materialize, whether it’s geopolitics, battery cell supremacy, raw material allocation or tons of other internal and external factors such as the chip shortage and the lingering pandemic. Steve helped us put things into perspective that not all is going to be smooth sailing as the industry transitions to an electrified future, which means there will bound to be winners and losers, we just don’t know whom yet. 

Tu Le:
Lei and I will be sharing more of conversations with the men & women around the world moving the EV/AV mobility sectors forward as part of this China EVs & More MAX series. Some folks will be instantly recognizable, but some will just be people that are doing amazing in the space that we think deserve to be highlighted. 

Don’t worry though, Lei and I will continue to host our live weekly China EVs & More Twitter Spaces room that summarizes that week’s most important news coming out of the China EV, AV and mobility space. For those that can’t catch the live show, you can find the China EVs & More Pod on all major platforms or wherever you normally get your podcasts. As EV adoption reaches its global tipping point, it’ll be even more important to stay updated on everything that’s happening here. Lei and I are confident that China EVs & More is the best resource to do that. Until next time, as always, thanks for listening!

(Cont.) China EVs & More MAX Episode #6 (ME) - Steve Levine, The Electric newsletter Part #2