Episode #69 - Unpacking the Jidu Robo-1 Unveil, NIO earnings takeaways, BYD out there #GSD

The pod starts out with Tu and Lei unpacking what Lei calls the biggest China smart EV reveal this year, the unveil of the Jidu Robo-1.

Tu gives an update on the status of Covid restrictions in Beijing including a bit of what’s opening up then Lei transitions over to an update on May sales numbers and how things are beginning to recover from a very poor April. Lei expects June to move towards normal as the OEMs are now more capable of dealing with COVID as being part of the 'new normal' for operations.

The dynamic duo spend the next several minutes dissecting NIO’s earnings and what you should look for later this year from them with important launches still on the calendar that will almost double the number or products they have on offer.

Tu summarizes a few pieces of news which segues to a broader discussion about BYD, and how they’ve surpassed VW Group this week by market capitalization. Lei and Tu then discuss the announcement this week that BYD will supply Tesla with batteries. 

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Transcript

CEM #69 Transcript
Recorded June 9, 2022

Tu Le:
Hi everyone and welcome to China EVs & 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 EVs, AV and mobility sectors. 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. Lei, can you please introduce yourself?

Lei Xing:
Hi, good evening from my side. This is your co-host Lei Xing, former chief editor of China Auto Review. This is episode #69, and it's happening on June 9 here U.S. time, I’m a bit of sensitive to the numbers. So it's a coincidence, but I guess the chatter this whole week, since we last talked, basically Apple's CarPlay, right, that was announced at the WWDC, I think, was a big topic discussed in the industry and then the JIDU ROBODAY.

Tu Le:
Let me interrupt you really quickly. Its CarPlay version 2.0 and is already better than a lot of infotainment systems out there. So please continue.

Lei Xing:
It seems that way. So the JIDU ROBODAY reveals the JIDU ROBO-01 Concept Production Robocar. So that's a mouthful. NIO earnings plus CPCA’s May EV sales. So let's get into JIDU first. I say it's THE biggest Chinese smart EV reveal this year. That's my personal opinion. So let me start off by asking you this question: what word comes to mind when you saw this thing? What was your, and I’ll share mine. 

Tu Le:
What word. That's a good question. I think that I want to say technology or metaverse. So I was, restaurants opened up this week, so I went and had some dinner with a few friends sitting out. And so I had the show unveil on my iPhone. And as I’m watching the lead up, they had a little homage to Kitt on Knight Rider. And then this, as want to do in Chinese unveils, they have the comments popping up on the left side, right? And so how you see traditional product unveils from the automakers is just 180 ° turn from what Baidu and Geely did with the JIDU. And I thought that was refreshing. And the metaverse was kind of cool. I don't know how that'll age. So will it be like kind of dated in a year or two? Probably, but that was kind of cool.

Lei Xing:
The first word that came to mind, once I saw this thing, the word that came to mind was underwhelming. And this is an honest opinion that I told Tony about. He asked me about some of honest opinion. And the reason I say that is not in a what, it sounds negative, but the reason I say that because coming into this event, you have Baidu, right, the search engine giant and perennially the number one, autonomous driving robotaxi company, teaming up with Geely, the next global empire that's still expanding. The way they positioned this car was an auto robot or a robotcar. So coming into this, I think I at least had rather high expectations of what exactly they're going to present as far as this being a robot is concerned. And when it came out, when I saw the Chinese charter, social media, the first set of comments that I’ve seen was, remember, I traded tweets with you that this is a déjà vu, meaning some of the at least the design aspects that we seem to have seen somewhere else, whether it's the fascia, right, the front design, whether it's the A-pillar to A-pillar screen, whether it's some of the lighting features, exterior lighting.

Tu Le:
The door, handless doors. 

Lei Xing:
The butterfly wing doors. And what do you call it the suicide doors or something? And this is the first set of comments that have seen on my WeChat moments that people are commenting. And we kind of try to understand what exactly being, they had the robotic, futuristic and emotional, the three features, right, the claims that they have this car. So I guess from a design point of view, it wasn't that out of this world, maybe that for us who's been in the industry, who’s been observing these new cars that are coming out. There's some kind of what's the word, homogeneity, that it's really difficult these days, at least from a design point of view, to have something that you say, ok wow, we've never seen this before, right?

At least from that point of view, it did not accomplish that, oh, coming into this, this is an auto robot, how cool can it be? I don't think that was accomplished. So that is why I said it was underwhelming, but on the flip side, I think what they did was the metaverse. It's a bit cheesy, I think. They had this Xirang app where you can it sign up and be right in it. And then they had this Xijiajia, the 000 owner

Tu Le:
Basically an avatar.

Lei Xing:
 Basically an avatar. So these are a bit cheesy. But after the press conference, they already had these first set of media who’ve seen the actual car and did the reviews. They published these videos. And one thing I did like was if you look at the side profile, I think this is the best designed, if you look at it from a side profile.

Tu Le:
Like a silhouette.

Lei Xing:
Yeah the silhouette, I think it's close to being perfect. Look at the side profile.

Tu Le:
Until the LiDAR pops up, then it's like.

Lei Xing:
That’s the next thing we can discuss, which is, basically 90% will stay and the 10%, what are those 10% that are likely will not stay? So LiDARs are cool. I think they debated about where to put the LiDAR, the benefits and the pros and cons of putting it as watchtower, or putting it on the bumpers. And they decided this was a new way that it would put on the hood.

Tu Le:
Let me add a little bit of color to that. This is where form needs to follow function, because LiDAR is going to be a key to L3/L4 autonomous. So it can't be, it looks cooler if we do a pop up on the left front quarter. So hopefully, that was a negotiation between the design engineers and the autonomous vehicle team and said this still optimizes, is for safety and for imaging capabilities, right?

Lei Xing:
So they did apply for a patent. I'm not sure they got it, but they did apply for a patent for that set up that they call it a collapsible LiDAR. But I personally believe this is one of the features that will not make it to the production car. Because if you look at it, at least from the videos that have shown, it's rather slow coming up and collapsing. So they did talk about in case of an accident, hitting a pedestrian, whether that'll meet relevant regulations. But I don't think it's going to make it into the production car. I think they have to compensate and just make a decision.

Tu Le:
You and I had kind of debated direct messages about the butterfly doors making it into production as well.

Lei Xing:
No, that won't happen.

Tu Le:
I don't think so either. 

Lei Xing:
And the retractable steering wheel, also something that I think we'll get a tweak.

Tu Le:
So let me piggyback off of your comments, because there are limitations, I guess, outside of these little catchy things about these collapsible LiDAR, the butterfly doors, the collapsible tail, these physical features, what traditional automakers would think were unique features to the vehicle. And I almost feel that the UX guys are back in the lab now, because they got some initial feedback and they didn't really describe what this emotional intelligence and how it's going to be, the use of AI is going to be like the most in any vehicle. So that's not clearly defined internally, that's what that tells me. I didn't expect the car to be like revolutionary from a design standpoint. I wanted, I was more curious, and this is where I was disappointed that they couldn't articulate or they didn't actually, I won't say they couldn’t, they didn't articulate how the UX was going to work well with the passengers, right?

Lei Xing:
I think a lot of what they try to show was this is the voice AI part of it, the continuous voice AI that they pretty much got rid of all the physical buttons. There's no shift levers, there's no, just a steering wheel, and then a huge screen in front of you.

Tu Le:
There's no physical air conditioning, there's no physical, yeah, so.

Lei Xing:
So supposedly that the voice with the Baidu DuerOS is supposed to be one of the biggest features. And then He Xiaopeng, he kind of posted a moment and saying this all scenario, voice thing, continuous, we are already doing that.

Tu Le:
But the key here Lei, is that do people use it? When do they use it? Because at the end of the day, if it's not useful, it's not a good feature, right? And so if He Xiaopeng says that he needs to back it up with statistics that say 90% of our users use it, they use it for these 15 things, right? Because that's where Baidu has this opportunity. That's where Xiaomi has this opportunity, because this is the first of a number of vehicles that are going to be launched by technology companies. And so they have this opportunity to redefine that stuff. And to me, JIDU took over for XPang, because XPeng originally was positioning themselves as the most technologically advanced smart EV in China. They got blown away by what Baidu or not Baidu, what JIDU is promising.

Lei Xing:
Given that this is, if I remember the number correctly, this is day number 463 since the inception. So it's roughly, so March of 2021, so roughly 15 months, right? That this is more than China speed. Coming out with a concept car that’s 90% close to the production vehicle in 15 months.

Tu Le:
They cheated because they already had an existing architecture from Geely and stuff like that.

Lei Xing:
That's where Geely comes in. The SEA architecture and Baidu just I think one commnent that I heard from Joe Xia talking to some of the media was that in terms of the intelligent aspect of this car, smart connectivity, this is a generation ahead of everybody else. That's his comment. And again, he benchmarked against the Model Y which is, I guess, in terms of.

Tu Le:
Yeah, even the Model Y is a little bit slow.

Lei Xing:
So in terms of size, right, the cadence, I think this is just to put this out on how you interact. Would that screen with the I think that's the next step, the specs they didn't even talk about the batteries, right? We know CATL is supplying the batteries, but none of the specs were announced size, length, wheelbase.

Tu Le:
Again, this tells me that they still haven't figured some of that fundamental stuff out yet, right?

Lei Xing:
It's a cadence that they'll do something at the next event. The other big part of this car, I think everybody was looking forward to anyways was how robotic can it be and when I ask that question, I mean how autonomous can it be? And even though it's got the LiDARs, okay, I believe, like everyone else, you're not going to get the standardized everything ADAS that they will do this or do that. It's going to be a vision only option plus a LiDAR supported option, right? And you can bet there will be revenue streams coming in for subscription.

Tu Le:
Or they're hoping for, right?

Lei Xing:
Yeah. And keep in mind, this is a RMB200,000 starting price, so it could go up to RMB300,000, who knows? But that's pretty cheap nowadays, you look at the Tang DM-p just launched yesterday, more than RMB300,000.

Tu Le:
So as the traditional guys go up market, a traditional being BYD, the startups are really trying to go mass market, right?

Lei Xing:
And also the other aspect of being robotic I think was also these moving parts, right? That the retractable steering, the up and down LiDAR, the rear spoiler, how you communicate with the car inside and outside, being emotional, and futuristic is the immerse experience in a cockpit. I think one thing that differentiates in terms of competition is you always have something that other people don't have. And this time is the Snapdragon 8295. We're only talking about 8155 being popularized. So Baidu is already going with this next generation chip, I think that's like 8X speed. That means to me, I was fiddling around with SIRI and CarPlay today. This immerse conversational interface interaction is going to be big part of this car.

Tu Le:
So you and I have a pretty good relationship with the Baidu folks. And so I think they really value our input or our outtakes. And so one of the things that I'd mentioned to them, I traded some DMs with Tony this morning, but is and let me ask you this first question before I follow on, they need to reconcile the robot part of the car and the emotional intelligence part, because those two words oppose each other. How are they going to connect to create a better user experience that needs to be clearly defined in Chinese? Does it? Do you see it the same way a robot is? If you think about a robot is pretty cold, right? It's pretty like, and then emotional intelligence is like I understand you, I'm warm. And so in English, anyways, I just feel that there's these opposite kind of positioning going on, but in Chinese does it feel the same way?

Lei Xing:
I don't necessarily think that they oppose each other. I just think to me personally the connotation when we say it's a robocar, to me, that I believe you're talking about this is a self-driving car or autonomous capabilities. I wouldn't think over to the AI part of it, how you interact, but nowadays that’s.

Tu Le:
But if I don't have physical knobs and buttons, the robot part is completely tied to the emotional intelligence part. And so again, that's where it's like, for me it’s a little weird. 

Lei Xing:
Supposedly every single function and feature can be activated with voice, right? But again, we talk about this being a concept car versus in an actual production car, right? You have to reconcile, you have to balance.

Tu Le:
There could be these Chinese laws that you and I maybe don't know about, maybe you do. I don't know about it, that requires a physical doorknob, that requires a physical X, Y and Z. These are the kind of things that from a regulation standpoint, will be dictating what's in and what's out of the car, some of that. And then the other thing really quickly is that I told the Baidu folks that you just got to fulfill that promise. You've made these promises to people this huge, splashy unveil. Now, you just got to create that hardware software integration that you're leaning into. And if that voice command stuff is one of the differentiating features, it's got to be best in class. It can't be clunky. Can they execute on this?

Lei Xing:
That's one part of it. And the other part is whether they can execute is, similar to all the other startups that supposedly the door to door all scenario is still L2, I believe. But all scenario autonomous driving that Xpeng is trying to, I think they are behind. So you have this talk the talk, but what's the walk the walk is going to be like? We don't know yet. That's the promised part that you are referring to.

Tu Le:
So there's 12 cameras on this ROBO-01. How's the Chinese government going to react? Probably nothing, but they did make a fuss about it a year and a half ago with Tesla. So fair’s fair but I doubt it if there's going to be any fuss about this.

Lei Xing:
Yeah, and also the side cameras that extrude out that I don't even know whether they can make it production. So we'll see, the steering wheel, the pop up LiDARs, the doors, how they open. These are question marks, which I believe they will not make it to production.

Tu Le:
Yeah, there's some, the last comment I have is that Geely is who I think you and I agree that they're trying to reposition themselves as being more technologically or more of a high tech company than a traditional automaker. They're just riding on Baidu's coattails to really pull them into that kind of vector, right? It has Baidu's fingerprints all over it, but you don't really see Geely in the background at all.

Lei Xing:
Right. And I would use maybe platform innovator. This is a term that Mary Barra used for describing GM, so kind of Geely, right, with the SEA platform, facilitating Baidu on this robot car. And we didn't even, there was no talk about the batteries or the EV part of it. Everything was on how the smart part of it was, right? So that's 3.0, the intelligent car 3.0 age as Joe Xia refers.

Tu Le:
Let's not underestimate that point you're making, because we're not competing on battery range anymore. Everybody can pretty much get X kilometers. We're competing on features. This is where the market enters, right?

Lei Xing:
Yeah. And that's why we call it the second half of the competition, right? The term often being used.

Tu Le:
So this is where we're starting to see the elimination of the E in front of the V and I think it's important to note that because Europe and the U.S. aren't there yet. They're definitely not there yet. There's not enough products. There's not enough sales. There's not enough competition to really push the envelope on what you can do. From a software standpoint, from a partnership standpoint, what apps I want, what capabilities I want in the vehicle. We'll talk about this later, but Apple is trying to push that a little bit with version 2.0 of CarPlay.

Lei Xing:
So the consumers are completely different as well the way they accept or embrace new things, not as aggressive as the Chinese consumers.

Tu Le:
Yeah, so Baidu just decided to go straight to where their target market lives, right,  in the metaverse, online and stuff like that where I think the first wave of EV companies kind of tipped a toe in those areas. Baidu is just like I’m diving right in. 

Okay, so should we move on to just a quick May sales thing? And let me start this Lei. I'll give a quick update on status in Beijing. Starting Monday of this week, everything started to open back up. Restaurants could have dine-in at 75% capacity. And subway stations started opening up, and offices started opening up. As I’d mentioned earlier, my wife is actually working in her office. We are required, not required again, not mandated effectively. It's a tacit mandate that we need to get tested every 48 hours. My kids will go back to school on Monday, but here's how fragile the situation is. Yesterday or two days ago now, Chaoyang had a couple of cases. So they shut down the clubs and the bars, now. So they're open for 48 hours. In Shanghai, there are still a couple areas that got re-locked down. So it is going to be fragile like this. And they have these testing centers that are all over the place in Beijing and Shanghai. That's the new normal.

Lei Xing:
I think people are pretty much getting used to this nowadays, right? With understanding that if you are to, you want to do this, then the prerequisite is you have to do this. And life carries on. It’s not completely open, but it's open. That's kind of the.

Tu Le:
And if people are wondering in detail why, I said it's a tacit mandatory to get tested every 48 hours is because there's a health kit, and it tells you if you're green, number one, so green meaning that you're not infected. And then number two, it has integrated, and this only happened about a week ago, two weeks ago, when's the last time you got a test. And restaurants, first of all, they're going to ask you to show the green code, and then they're going to look at when the last time you've been tested is so most office buildings and the subway cards have also integrated this. And again, this is the new normal. So.

Lei Xing:
Yeah, but anyways.

Tu Le:
May sales are starting to recover. We saw. So.

Lei Xing:
It's actually stronger than I expected, to be honest, at least from the CPCA's numbers, quite a huge rebound. I think 50% rebound, right, month a month. And Tesla I just retreated Qin Gang’s, he tweeted something about Tesla getting back to normal. 40,000 units produced since they opened up April 19, and then I think their first 5 months total deliveries out of Giga Shanghai was like 210 or 200 something thousand units. But the thing is, with the purchase tax cut on the traditional ICE vehicles, we say the tipping point has passed, which means nothing is going to stop this trajectory of continuing. So NEVs a percentage of sales, right? We see the numbers is more than 20% again. I think retail for the Chinese brands were over 50% by CPCA numbers. And if you look at that list that you retweeted.

Tu Le:
From 42How.

Lei Xing: 
 Yeah, with the exception of Tesla, everybody on the list that's gotten over 10K was a Chinese brand. So no wonder that their penetration’s so high because I think it's consumers are used to it. Once you get into EV, you buy an EV, you're not going to go back to an ICE, that's one. And the other factors I think at play are anyways is there's additional stimulus on the EV side of it as well in numerous regions. On the policy side, you still have to meet this dual credit requirements that's been in place for years, certain percentage that you have to meet. And I think one thing to mention is, again, is actually, if you look at the PHEVs, driven mostly by BYD, right? They have what, 500,000 or 600,000 orders on hand. And quite a few of those are PHEVs. The DM-is, the DM-ps. So June, again, should be another huge month. Probably back to normal numbers if everything goes, no hiccups.

Tu Le:
Now that the safety net is put in place, I’m not knock on wood Lei. I'm hoping that these citywide lockdowns are kind of not going to happen. There will still be lockdowns in neighborhoods and complexes, but hopefully Beijing is pretty open all summer. I that's the only thing I can hope for.

Lei Xing:
CPCA secretary general, he again reiterated his prediction of 5.5 million. So my latest projection is about 5.3 million looking at it from a quarterly trend, I believe 5 plus, no problem. 6 will be a stretch, and 5.5 million is pretty optimistic. But I think things are looking up, and we can go into NIO a little bit, NIO, I think, hopefully.

Tu Le:
Even if we get out of the COVID mass, getting factories back online, if we hit these super high numbers in June, July, August, which we think could happen, the other constraint still could be batteries and chips. Until that capacity issue, until those supply issues are cleared, there could be a ceiling on production because of supply chain issues, not just because of factory closures, right? 

Lei Xing:
Going to towards NIO. So, NIO, it feels like from their earnings report and the call that they haven't hit bottom yet as far as margins and this headwind, so Q2 will be even worse than Q1. That's one of conclusions from the earnings call, at least from a financial perspective and delivery, right?

Tu Le:
I got to tell you, I got to say this really quickly, okay and this is unfair, but life is unfair, right? There's that sports analogy, the best ability is availability. And if your cars aren't available to sell, then you're not doing your job. So I look at NIO's challenges of not being able to produce as a management issue, because despite these, if across the board, everybody can't produce, then I get it. But everyone else is able to get over 10,000 units. Why can't NIO? So this is where I think they need to emphasize management of operations a little bit more closely.

Lei Xing:
I guess what, one answer to your why question is, perhaps their positioning, right? Also they're ramping up, right, these important new models, the 757 models, right? And they're facing the, although they didn't say this specifically, there will definitely be some cannibalization going on.

Tu Le:
On both the ET5 and ET7 and the ES6 and ES8 for the ES7 on both sides.

Lei Xing:
So when you go from 3 to 6, sometimes I think it doesn't necessarily mean that your sales are automatically going to increase. It will, but right, you have to balance, you have still these orders they have to fulfill. But I would imagine that the ET7 and the ET5 right now are probably among all of the orders, probably are at the top in terms of what they have to still deliver. They did say that May had a recommend in terms of order intake, whatever that number is, we don't know. But June, they did say it would be a record month of delivery. So we can expect 12,000, 11,000, 12,000, I think the record was like 10,500 or something that was. 

Tu Le:
I thought it was 11,500, but you might be right.

Lei Xing:
I think it was in March, just a little bit over 10,000 a month. But right, you tend to look past the first half already, right? Forget about the first half, because the second half is going to be really, if NIO can deliver quantitatively and qualitatively as promised and seems that they can. And they did mention the 20K run rate at the end of this year and plus the 10K at the NIO park, which is, they mentioned 3 to 4 months after production begins. So I would imagine that's early next year. So let's say at the end of this year, NIO does 20,000 a month, deliveries, it’s possible. So.

Tu Le:
Let me put an asterisk to that Lei. If we want 5.3 to 5.5, almost everybody needs to get to 20,000 units a month.

Lei Xing:
You're responding to the tweet.

Tu Le:
So what will announce officially when that floor needs to get raised, right?

Lei Xing:
Yeah, it's just a psychologically, 10K, it's a minimum. Yeah, in order to be, regardless the price point, regardless, if you need to be at the forefront of everything. And a more, I guess, info on that mass market brand, right, all these, the second half of 2024, a lot going on.

Tu Le:
 I can forgive NIO because they have stacked their deliveries or of the two important cars, right? ES7 not as important as ET5, obviously. And we could expect ET5, I would think to be at least 2X ES7, at least 2X, and degree of difficulty again on ET5 is much higher because it's a new factory. Let's make sure we keep an eye on initial quality of the first couple thousand, few thousand units coming off of the line for the ET5. I think that's an important thing that needs to be tracked because of this new factory.

Lei Xing:
I mean Wall Street looks, or they look at the quarterly results more. We kind of, maybe, the sense I got, at least from the earnings call was, let's look past the past. And let's look forward.

Tu Le:
And NIO, in particular, has a lot to look forward to, right? The margin kind of stood out to me, and the average of 8,500 units a month for Q1 is not great, right? So it's been consistently under 10,000 units for a quarter, so.

Lei Xing:
You're not cutting slack, but I like to cut some slack.

Tu Le:
Because this is me wearing my operations hat, and you can't make excuses about X, Y and Z when there's other companies that are getting it done. This week BYD surpassed Volkswagen Group for market cap. Now, BYD is the third most valuable car company in the world behind Tesla and Toyota, a psychological blow to Germany.

Lei Xing:
And it so happens that BYD is working with both Tesla and Toyota. And they're the three top three, most valuable automakers.

Tu Le:
And the next announcement, that's a good Segway, BYD official did confirm that they are going to be working with Tesla to supply batteries. And so you and I were DMing with Steve LeVine trying to think through some scenarios here. But I wrote in my newsletter that this is, this has multiple implications because maybe Tesla doesn't want to be behold into CATL number one, number two, maybe Tesla is also looking at BYD having a better shot at opening a battery factory in the U.S. and so I look at this as a play by Tesla to mitigate risk, but also create more leverage between the relationship with CATL, and BYD is happy to be a supplier because it further validates their technology.

Lei Xing:
Yeah, lots of implications, not just the supply relationship.

Tu Le:
For sure, without question, but yeah, but I also wrote on the newsletter that with the volume that Tesla has, and depending on how much of that volume is going to be given to BYD, BYD could build a custom blade, just for Tesla. And normally in these situations, when a new supplier comes on for an important part with the GM, with the Toyota, they'll normally go 8020. CATL will still supply 80% of the batteries. And then BYD will get 20. And as they get the kinks out of the system supply chain, quality, reliability, software bugs, and ultimately pricing. That's when Tesla will probably either start reducing orders to CATL and increasing the corresponding orders to BYD but remember, on the Tesla side, when we introduce another part, increases the complexity of the manufacturing, right?

Lei Xing: 
And also, I think, issue with BYD as we've been discussing this, CTC, CTP, CTB and how those are going to play with BYD’s set up with Tesla.

Tu Le:
And one thing that's really important is that this doesn't affect Europe and the U.S. as much for Tesla, but they have no new features on their cars in China anyways, right? And with the competition just coming out gangbusters, so many more competitors and new features and new capabilities, Tesla really needs to pull in some of their new tricks, new toys in order to maintain sales I think and so this is likely another reason for them to use BYD better range, then a 2022 model year 3 and Y, right? 

Lei Xing:
What when we talk about capacity, we really talk about battery capacity, we really talk about the raw materials. And imagine, let's say BYD does 1.5 million this year, as projected. Was it BYD that had the relationship with the South Africa, lithium mines, was BYD right? Imagine that BYD has to meet its own half a million order backlog, and at the same time supplying somebody like Tesla, and you wonder how they do it.

Tu Le:
This goes back to next level, right? To me, again. I don't mean to be the dead horse, but the best ability is availability. And if BYD is just turning, first of all, they're hitting their numbers, right? Over 100,000 units three months in a row, right? So they're not having production challenges per se. And now they've made all these announcements about supplying to Tesla. And when we're talking about Tesla, we're not talking about small volume, right? So if they've made that commitment to Tesla, then we know that they're able to get at least probably 10,000 units of cell packs out to Tesla per month, at least, right? So it's amazing to see how operationally efficient BYD is, because I actually haven't been able to pull the veil off to really understand how they're doing it, because I am an operations guy, so i'm very curious how they're doing it so successfully versus their competitors right, at high volume. So we're not talking 8,000 units a month, we are talking 120,000 units, so on orders of magnitude more efficient than their competitors. So amazing stuff. 

The only other thing that I have Lei, is Cadillac teased their super sedan that's going to be about a RMB2 million Celestiq. Yeah, just parts of it, right? So I admire Cadillac. They're coming back. They seem to be coming back a bit strong. Maybe they see some weakness in the Germans and they see an opportunity in the China market for sure, and they are gunning for Bentley. They're not gunning for Audi, they're not gunning for BMW because again, this super sedan is priced at around $300,000, potentially. And they also this week launched that hyper car, that's kind of like a Le Mans race car。

Lei Xing:
For the Le Mans.

Tu Le:
So you got to give them kudos. I always said I applaud people that and companies that want to push the envelope. If we're only going to be critical of them, Lei, is if they can't execute properly, right?

Lei Xing:
Yeah and also just kind of see that what Oliver Zipse said regarding the 2035 ban in Europe, right, him putting on the ACEA president's hat. And it's kind of, I don't know to me, BMW truly is actually one of the pioneers in the EV space, right? For some reason, they've kind of slowed down.

Tu Le:
And gotten uglier. Because their vehicles, they're not as attractive as they were with these huge front grilles, and their pricing is not that competitive, either.

Lei Xing:
I mean he did have a point though, given the current, I don't know, I mean given the current internal and external environment, kind of sort of similar, I guess, let's say the Carlos Tavares and Luca de Meo, they are kind in a camp where they're kind of more conservative, though they have these strategy laid out, but I think they're a little bit mum on at least comparing to let's say Volvo right? Volvo is 2030 all-electric, Cadillac we are 2030, Lexus we are all electric. These companies are rather a bit more considered conservative. So it was interesting to see him commenting.

Tu Le:
We do know of one company in particularly that's gunning for them here in China, right? A bunch of ex-German car company executives that have formed a stealth startup. But the other thing I think is worth mentioning to the audience is that the European Union is really aggressively pushing for the elimination of ICE and diesel fueled engine vehicles, so that's dictating a lot of the growth in that region. The U.S. is not…

Lei Xing:
Even China has not decided a on right, though China is leading in terms of sales and parc. But I think that sense EU is trying to be the leader.

Tu Le:
China is kind of dictating it. They'll never flat out say we're going to do this on this date. But by using the credit system and all this other stuff, they're effectively forcing the foreign automakers to make that move, right? So if the U.S. really wants to try to catch up, then the government's really going to have to start dictating, force feeding policies that are much more aggressive with EV adoption. That's my humble opinion.

Lei Xing:
And then that Polestar 3 teaser, which I think is a key for them, the China and the U.S. play.

Tu Le:
And we should remember that Polestar, JIDU, they're all Geely brands and the Polestar 3, which is going to be built I think both in China and the U.S. is going to start off at around $75,000 and is aiming directly at the Porsche Cayenne market segment and the X5 segment, which is interesting, but I'm excited to see, it looks good from the outside. I tend to think their interiors are a little bit too Scandinavian, little bit too spartan, but they have good lines. I think the Polestar 2 is a little bit awkward. It's a good car. I like the car, but the design’s a little awkward. 

That brings us to the end of this week show. Lei and I thank you for tuning in. My name is Tu Le, and you can find me on twitter @sinoautoinsight. You can find Lei on twitter @leixing77. If you wouldn't mind rating and reviewing us on Apple Podcast, Spotify or wherever you grab your podcast from, we'd appreciate that as well. Even better if you enjoy this show, please tell your friends about it. Please join us again next week as we track down all the latest news on China EVs & More.