Tu and Lei start out the podcast talking July sales and deep dive into a few EV startups that are having challenges ramping and consistently increasing their MoM sales - Lei ranks China’s Big EV Three.
Tu moves the conversation over to his experience riding Baidu Apollo’s robotaxi and how its progressed since the last time he rode it.
Lei then moves onto a discussion about BYD and how they’re continuing their tear with no end in sight. How far can BYD go? Tu and Lei discuss what makes BYD different from everyone else.
Tu’s quick takes this week include a shout out to Innoviz and landing the VW whale as a customer for their LiDAR equipment and he highlights an article that details the companies that likely have access to your driving/location data if you’re driving in the US.
Tu and Lei close out the show with their announcement about sponsoring a happy hour on the evening of September 14th during the week of the Detroit Auto show. For those in town that week, don’t forget to RSVP for it!
Tu and Lei start out the podcast talking July sales and deep dive into a few EV startups that are having challenges ramping and consistently increasing their MoM sales - Lei ranks China’s Big EV Three.
Tu moves the conversation over to his experience riding Baidu Apollo’s robotaxi and how its progressed since the last time he rode it.
Lei then moves onto a discussion about BYD and how they’re continuing their tear with no end in sight. How far can BYD go? Tu and Lei discuss what makes BYD different from everyone else.
Tu’s quick takes this week include a shout out to Innoviz and landing the VW whale as a customer for their LiDAR equipment and he highlights an article that details the companies that likely have access to your driving/location data if you’re driving in the US.
Tu and Lei close out the show with their announcement about sponsoring a happy hour on the evening of September 14th during the week of the Detroit Auto show. For those in town that week, don’t forget to RSVP for it!
CEM Episode #77
Recorded 8/4/22
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 EV, 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 that at sinoautoinsights.com, which I encourage you all to do. Good evening Lei. Can you please introduce yourself?
Lei Xing:
This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode #77. Speaking of 77, today at least here, still, it’s July 7 on the lunar calendar. So it's the Qixi, which is the Chinese Valentine's Day, but you've already celebrated it yesterday.
Tu Le:
Yeah, by going to a basketball tournament, in the third floor of a grocery store that had no air conditioning. So.
Lei Xing:
So for those that don't know the Chinese Valentine's Day, it's about this myth of Niulang, which is a cowherd, and Zhinv, which is a fairy and a seamstress, that they only meet, they fell in love and only meet once every year on July 7th in the lunar calendar. So somehow it became the Chinese Valentine's Day. So I just had a nice dinner with my wife.
Tu Le:
Stop there for a second. So how do you know the story lines from these holidays? Did you learn them at school? Did your parents tell you them? Because I always wonder because Chinese kids tend to have much more awareness about certain things than say a typical American kid.
Lei Xing:
That's right from peers, from parents. But I think this only started in the last what, decade, 10 or 15 years, I think it caught, on all these kind of holidays. But anyways, so this is the EV sales episode. We'll get into that. Let me rattle off some of the recent headlines starting from last Friday. So last Friday, pretty much after we logged off, China announced the extension of the purchase tax exemption for NEVs, which, by the way, we predicted several weeks ago that was going to happen, right?
Tu Le:
Not surprising.
Lei Xing:
Not surprising at all. BYD we'll talk about BYD. The BYD Seal finally launched.
Tu Le:
They're just a machine. BYD is just a machine.
Lei Xing:
Neil announces a Hungarian plant, but wait, not a manufacturing plant, but a plant to produce power swap stations.
Tu Le:
I love your “read the fine print” tweet.
Lei Xing:
So BYD goes to Sweden, Germany and Israel.
Tu Le:
Right after they went to Japan.
Lei Xing:
NETA S launched. So they're saying that it's the best B/C segment EV, putting another flagpole on the ground.
Tu Le:
So best is kind of meaningless now, right?
Lei Xing:
NIO reportedly to launch a third brand codenamed firefly or FY, some stuff going on here in the U.S: TuSimple, there was that accident involving the autonomous truck, Nikola buying a battery supplier Romeo, and that CATL announcement, delayed announcement of the North American plant due to, we all know what's been happening. And finally, Innoviz announced, we knew from the beginning that it was Volkswagen, the design win for their InnovizTwo LiDAR, and make sure to listen to our MAX episode with Omer Keilaf, the CEO.
Tu Le:
Where he basically tells us how he got the contract.
Lei Xing:
That's very important. Also, BYD again, enters the Fortune 500 list for the first time. And the other big news story from CATL is the M3P battery supplying to made-in-China Model Y in Q4, reportedly, but pretty much confirmed, I think, and then some others on the Shenzhen AV, I think you had written on your newsletter. You just visited the or you just test ride the 4th-gen Baidu robotaxi right, on Monday. Pony teams up with CaoCao Mobility. There's some development on Faraday Future that their, this ieFactory.
Tu Le:
It’s alive. It’s alive!
Lei Xing:
It’s alive, it’s alive. Yeah, so also Great Wall, Great Wall is bring ORA EVs to Hong Kong and Macau, so right hand drive and AVATR gets the Series A financing led by this interesting organization, the National Green Development Fund which invested in an EV related company for the first time. That's pretty much it.
Tu Le:
That's nothing right, slow week.
Lei Xing:
I tell you as soon as we log off every episode, the news start to accumulate, so I have to keep an eye.
Tu Le:
Yeah, exactly. Let’s talk July sales.
Lei Xing:
July sales, some surprises, some not so surprised, some positive surprises, some negative surprises.
Tu Le:
Some disappointments, right? So I think we should call NIO, Xpeng, and Li Auto, let's lump them together and call them China's Big EV 3. They were down month over month, 20% in sales.
Lei Xing:
Yeah, I mean, July seasonality wise. It was kind of expected, but then the argument doesn't stand, because the other ones, let's say, NETA, LeapMotor, let's say, BYD, right? They all had records. AION, right? Over 25,000, even AITO and ZEEKR doing pretty well. This is probably close to being exclusive that I'm sharing about NIO. I was speaking to a source within NIO. An issue that they had that they disclosed at the NIO Partner Day couple weeks ago, he said in June, the chips affected production a lot, but in July, it was the kind of the mega casting subframe for the ET7 that they had an issue with build quality. So it's both the product and manufacturing processes rather than like a shortage. He told me something else. He told me that come 2023, come Q4 and 2023, what's been happening in Europe? So this electricity limits, it's going to affect supply again. So they're not out of the woods as far as having getting all of these supply chain issues behind, that is no longer problem. So they're going to be experiencing these issues for some time to come. But I think Q4 will be fine, Q4 at least, they have the ES7, they have the ET5, they have the ET7. So that's what I wanted to share with you.
Tu Le:
And Lucid also made a or reduced their forecast for 2022 to about 6,000-7,000 units.
Lei Xing:
They halved their forecast basically.
Tu Le:
Yeah, from 14,000 to 6,000, so.
Lei Xing:
IT was 20,000 at the beginning of the year.
Tu Le:
I know, which is still not. We're hand building at a few an hour, basically, if we're looking at 20,000 units for annual volume, right? To go from 20 to 6 in the span of 6 months. I tweeted Peter Rawlinson knows about manufacturing hell or at least, even if he didn't experience it himself at Tesla, he knows about it. And this is where I just, I’m not sure what NIO is doing wrong and Lucid is doing wrong and the other companies are doing right,
Lei Xing:
And a good comparison would be Fisker, right? Fisker has selected the contract manufacturing route with Magna Steyr, which is a very credible contract manufacturer.
Tu Le:
Experience.
Lei Xing:
And ever since our first, the MAX episode with Henrik, they've been stuck to that. They've stuck to that November 17 SOP target. That hasn’t been changed. Will it change? I don't know, but it's August. There's only three more months left. It looks ok, so that's kind of a different strategic route that they're taking, which seems to be fine, right?
Tu Le:
Let me tell a quick story here, Lei, as my third rotation at GM when I was a young whipper snapper, I worked in the material availability team. My projects were St. Teres, the Trans AM, and the Camaro for GM that was being built in Montreal, new model year, and Doorville, which was making the Uvan or the original GL8s. And my job was to make sure that all the new parts for the new model year. And it was just basically a carryover, a mid-cycle enhancement. So just a few hundred new parts for those vehicle lines. My job was to babysit those suppliers with the 200 new parts to make sure the production parts, the engineering changes are all approved for job one for the new model year. Suppliers will tell you everything is fine until the very last day.
Lei Xing:
And this is, if you read the news, what William Li commented on the partner day, he was basically begging the suppliers to keep up, right? It wasn't exactly put that way, but that's what he was asking, basically, to ensure production and ensure the deliveries. And that's kind of what they're facing.
Tu Le:
It's important to note that NIO has the CM business model. So with the exception of the ET5 that'll be at Neo Park, I think, is, maybe I’m speaking out of place, is Neo Park a NIO factory, or is it still going to be contract manufacturing?
Lei Xing:
I wouldn't say it's contract manufacturer in the traditional Magna Steyr sense, but NIO never. I they talk about JAC being a manufacturing partner. I look at it as a half-CM rather than a Magna Steyr, so.
Tu Le:
Sure. I guess my whole point is that if it's not your baby, you lose a lot of control.
Lei Xing:
I don't think it's so much on JAC with the CM, it's all of these issues, right? It's this low-pressure casting that they're trying for the first time I think on ET7, so they faced this issue that's exclusive to NIO, that others don't have, right? Tesla has the mega casting.
Tu Le:
And this too shall pass, right? These operational issues, because that's what they are. Operational issues. I don't think with China's Big EV 3, I think the one company that has sales challenges is probably Xpeng. With Li Auto and NIO, I think it's more of with Li Auto, it's doubling their product.
Lei Xing:
I right now would, if I were to rank the Big 3 based on the current situation, what's going on? I probably rank NIO, Li Auto and Xpeng, because Xpeng, somehow, their stock also is not performed that well.
Tu Le:
It took a beating, right?
Lei Xing:
There's been some exodus, there's been some reports of price movements or MSRP we talked about that last episode, right, or two episodes ago. International, on the international front. It's not going as smooth. And these are the chatter. This G9 is really important. They need to hit it out of the park.
Tu Le:
I'm not saying they will become a WM but if the G9 doesn't hit like double their sales, it could be really, really tough for Xpeng.
Lei Xing:
And I think NIO is a bit immune from Xpeng’s market segment, because Xpeng is competing in a segment where BYD of late either has had success for their existing models or they're launching these newer, let's say, the Seal that's competing right with Xpeng’s price range. So I think that's one way to look at it.
Tu Le:
And there's no money being left on the table. Because if Xpeng loses a sale, it's going to a NETA, it's going to an AION, it's going to a BYD, this is where the elbowing starts. And people see weakness or companies see weakness, and they take advantage of it. That's why, and that's why we believe, you and I ,think this is just such an ultra-competitive overall NEV market, and then within the NEV market, that sub-RMB300,000 small, compact, midsize SUV mass market, NEVor EV, it’s just brutal.
Lei Xing:
And NETA, LeapMotor, I guess GAC AION, they all compete in that compact or small SUV segment. So their price range a little bit lower. So for NETA, in particular, we would love to see what the NETA S does, whether they've been talking the talk or walking the walk, right? If that does well, then elevates the brand basically.
Tu Le:
And there's still, this is the crazy thing Lei, and we remind the listeners all the time that there's still a good five or six or seven brands that have some probably reputation of formidability. JIDU Auto, Xiaomi, and there's more products that are coming out from these newer guys like AITO and AVATR and stuff. And so it's not going to get any easier to convince a Chinese consumer to open their wallet for your product because again, nobody's talking about range and it's really just romanticizing your brand in order to convince people to buy it, right? Because everybody has the features with the exception of maybe one or two things like NIO with the swapping. But I think that, I don't know if we're going to have that level of competition in Europe and the U.S. I think the domestics, the Germans and the American automakers in the U.S. might have an easier go of it, right?
Lei Xing:
And NETA S is coming straight at the Xpeng P7.
Tu Le:
Which is now two years old.
Lei Xing:
Yes. It was interesting to hear He Xiaopeng. He pulled an “Elon” couple of days ago by saying, he believes that his cars will be fully self driving by 2025. They still don't, and he expects the P5 to have that city NGP feature second half of this year, I think, but it's been delayed, right? We've been talking about that for months.
Tu Le:
Yes. So can I just quickly summarize my quick trip down the Yizhuang about the robotaxi since you bring up the NGP? So as many of you who've listened to this pod for a while, I went down there about a year ago and tried out a couple of their robotaxis.
Lei Xing:
Did you go with Will?
Tu Le:
Yeah I went with Will. So that was the Gen 3. And we drove a Lincoln and it was an ICE.
Lei Xing:
MKZ or something.
Tu Le:
And it was a bit rough around the edges they needed to recalibrate it, and we got back in it. And the thing that was noticeably that was very noticeable, and I’ve experienced other robotaxis in China and they're all kind of noticeable on those as well is the abruptness of the stops and starts. Whereas a human you might ease into the gas pedal, you might ease into the brake pedal, but these robotaxis were much more abrupt. Now, on Monday, I tried the Gen 4, and this time it was a BEV from Hongqi, an HS3. And we drove around for about half an hour. I was the only person in the car besides the safety driver, talking to him. We also have to remember the Yizhuang.
Lei Xing:
The Hongqi HS5, right? HS3, yeah. That model is actually the first dedicated robotaxi model produced at a dedicated production line.
Tu Le:
The first thing I noticed, Hongqi is, pretty nice and interior and it's definitely a great above like an Xpeng on the interior materials and things like that, I believe. And the speakers in the headrests were Bose. So Hongqi, but Hongqi is more premium than an Xpeng. Anyways, that being said, I get in everything seems to be good, one moment where the safety driver took overs was we were in a construction zone, after about 10 seconds of driving around a construction zone, he reengages. And the one thing that was different from before, because before we had the principal research scientists in the passenger seat kind of explaining things to us, this time was just me and the driver. So I’m just asking him in my terrible Chinese about all these questions. And so one thing about Yizhuang is that they're also experimenting or piloting V2X and so the vehicles, he told me, can communicate with the street lights.
Lei Xing:
That's a big strategic portion of Baidu's whole, if you read Robin Li's book, he talks about that being a very important part of the Baidu's autonomous driving strategy.
Tu Le:
Right, and I'll mention this towards the end. But so the one thing I noticed and I have a small video that I’ll post shortly that has a right turn and a naked left. And the things I noticed were how smooth the stops and starts were. On the right turn, if anyone who has been to China knows, there is a bike lane. Normally, that's where the delivery vehicles are, the bicycles, the mobikes, the electric bicycles are. You have to really look to see if there are bikes coming before you turn right, the car did hesitate for a second and then took off. So that was pretty smooth. And then on the naked left, you could see cars, oncoming traffic coming, but it was there far enough away where the car just turned left no problems and so definitely a lot of improvement from the first time I drove or I rode in the robotaxi and I might actually be going down to Guangzhou next week. If I do I’d like to try out one or two of the robotaxi services maybe not even contact WeRide, just try out the services while I’m down there, because I'd love to spend a half day at WeRide, but my son has a basketball tournament, so I’m going to spending time at the basketball tournament. And so I don't want to be that dad, right? So the one thing that was different about this tour from the last tour, first of all, the last tour was more at hoc. This tour was more formal. And they showed us that set up that V2X setup where, in one of the rooms, they have all these sensors and cameras and things like that are showing how it manages the traffic or how it communicates the signals and with the vehicles.
And so to your point Lei, it's a completely integrated, full service solution that Baidu can provide to cities, I think, right?
Lei Xing:
Yeah, and also worth mentioning is that DeepRoute video that they put out was pretty good, but I would, any of these videos that I would take a grain of salt because they put the best for you to see, but still pretty impressive.
Tu Le:
Not to mention that Shenzhen is an hour train ride from Guangzhou and I wanted to go visit DeepRoute on half a day trip, but last week Shenzhen had some cases. And so this is where your eyes are always bigger than your stomach, right? Especially because that there's a lot of things going on in my life personally. So all great things, but man, I just have too many things going on in my head. So.
Lei Xing:
Yeah and going back to the EV sales a bit. So CPCA put out that chart, right? That I tweeted, of the secretary general's estimation of July new energy PV wholesale, which include exports, obviously, right? So Tesla, he put 30,000. There was some other estimates, interestingly, both the Volkswagen joint ventures, they're above 10K, so I’m expecting, I think they'll do over 20K for the ID. for July, which is a pretty good sign.
Tu Le:
It’s a good sign.
Lei Xing:
So that gives you a kind of, an idea of what we're looking at, going back to my forecast of 6 million units. Based on this, I think the rest of the way, if every month doesn't hit half a million units, I will really be surprised, which means basically, that's 6 months, half a million units. That's 3 million units, right? And then, you add seasonality to it. 6 million is easy. So I think I’m underestimating.
Tu Le:
I have not heard of any OEMs or EV first companies that are still touch and go about production. I think they feel like they've gotten the process down. And now it's just mashing on the gas pedal to get to that 6 million units.
Lei Xing:
And we go into BYD a little bit, BYD sold 160,000. I read that they still have 700,000 orders.
Tu Le:
I saw that too. That is mind boggling.
Lei Xing:
It's difficult to fathom. So for BYD, 200,000 a month should be within reach easy. And there is an outside chance that they might even get to 2 million units, outside chance.
Tu Le:
The only way they do that is they get to that 300,000 units a month in August, right, So.
Lei Xing:
Yeah, but here's where I am going to pour some cold water on to BYD.
Tu Le:
Don't do it dude, Taylor’s listening! Taylor and Jack are listening!
Lei Xing:
I know they're listening. What I’m saying is there's this thing that when you're at the bottom, the pit, right, the only way that you can go is up. But when you're at the top, trying to go even higher is so much more difficult. This is, we are at a point where I think BYD is clicking on all cylinders. They're expanding globally, they're about to become much more global, right? Their volumes of ballooning. I think they got to make sure that the quality keeps up.
Tu Le:
The other thing that should be noted Lei, is that they shipped 4,000 units overseas in July. So that number should double and triple.
Lei Xing:
And we should stress that BYD has been expanding both the vehicle capacity and the battery capacity. They've been doing this for the last however many months, they're still doing it. So sometimes people might be puzzled. And also, this Handelsblatt publishes some of the most critical pieces on German OEMs, for them to have this piece on BYD and also they got it wrong. They said it, based on that English translation they said that they can compete with Tesla on battery, I was like LOL, but it's like right now you've seen the Wall Street Journal, even Handelsblatt, they're reporting on BYD, is now being recognized by Fortune Global 500.
Tu Le:
So, you saw my tweet, my retweet or my comments tweet about BYD being recognized by western media. I think we should take some credit for that. I really do, inclusive of the Snowball team, obviously.
Lei Xing:
But then I always take a step back, and I would tell this to BYD as well, right? You're cooking, but this is the moment where you need to be extra careful, cause, right?
Tu Le:
What's great about BYD is that to your point, as people are talking about it, as companies are talking about it, they're out there, getting it done. So sometimes I retweet things with a hashtag GSD, that's kind of an internal thing. So when I was working in Silicon Valley, it's a pretty common term. It means getting shit done or getting stuff done. So as people are talking about it, I tell my sons all the time, well done is better than well said. I think Benjamin Franklin said that right. So it's amazing to see this. And the one thing that's good about BYD is because they've been so, people have known about them, at least in the automotive space because of the Warren Buffett investment. So people are more comfortable whether and they don't look at them as a Chinese company, right? Whereas I think, a lot of companies that are trying to go overseas, they have that adjective in front of EV, Chinese EV company. And so this could be where BYD gets to take more advantage of it as well, because outside of Ford endorsing CATL, which gives CATL all kinds of cover fire for entering the U.S. market. Now I think it's going to be really, really slow for most Chinese EV companies with the exception of maybe a NIO, who's more of a premium so they're not going to be selling hundreds of thousands of units per month in the U.S. in the next 18 months, right? Where, but some of these mass market that would compete directly with a GM or Chevy or some of the domestics, even the Hyundai. I think there might be some time needed to marinate in the U.S. market before customers become more comfortable with their brand. So yeah.
Lei Xing:
So I guess what I’m saying is, again, we say this many times for one month of numbers, Li Auto, let's say, the Big 3 they were down, but don't make too much of it. And BYD is on a high, but we should also be cautious that I think they can go much higher. But right?
Tu Le:
This is what, the irony with BYD is that it's a capacity issue or lack there of. But everybody else it's an operational issue.
Lei Xing:
Exactly.
Tu Le:
And they've been doing this for a long time. So operationally, they should be able to, because going from 200,000 units to 300,000 units is more incremental, but going from 10,000 units to 50,000 units. That's a big leap. It's a big leap for manufacturing. It's a big leap for your internal manufacturing teams. It's a big leap for your suppliers. And that's kind of what we're seeing with NIO. And their casting, right? Their mega casting. So yeah, I want to remind everyone that the L9 is launching in mass production very soon. The ET5 is launching mass production very soon. The ES7 has already started, I believe.
Lei Xing:
August 28 delivery.
Tu Le:
So they are already past pilots, probably the first few are coming off the lines very, very soon. So NIO still has challenges or potential challenges ahead of itself. Xpeng, this is the most important launch for them, because they're launching this as close to premium as you're going to get for Xpeng anyways, till now, into a market that already has some formidable new premium SUVs.
Lei Xing:
I just think Xpeng P5 has been a little bit underwhelming, I guess. It wasn't up to my expectations. I thought P5 was in a sweet spot, the type of tech it offered at the price point with LiDAR, but yet without the city NGP, not yet, that it would do well, but it hasn't done well as I expected. That's I don't know. I don't know whether it's the cutthroat competition in that segment or something else.
Tu Le:
I think it has to be a combination of everything. I think it was probably a bit of underfunded in marketing and the blitz.
Lei Xing:
Cause the P7 is still doing pretty well, I think, right, still strong, but P5 hasn't ramped up as high as I thought it would. The challenge with the P5 is that its moment to shine, because when it came out at less than $35,000 with the features that it did, we were like, whoa! And then like a week later, or two weeks later, another EV manufacturer, like we're doing three LiDARs, five LiDARs, six LiDARs. And so I think that moment to shine for the P5 got substantially pinched right, or shrunk
Lei Xing:
Also was there a recent accident? And then there was news that how much it cost to replace the LiDAR, right? There was some chatter on that in terms of where the LiDAR is positioned. So they've been getting some, well same with Li Auto. Li Auto just had another car on fire. These kind of things happens every other day, almost.
Tu Le:
But so let's step away from particular fires from brands and just say as more and more BEVs and PHEVs enter the market and hit the roads. There's going to be more of this, right? It's just that's the way it is.
Lei Xing:
Speaking of these kind of incidents, Lexus had a really, really bad press or incident, like involving a LM that caught on fire. It was not a BEV, it was not an electric vehicle, but one of the passengers was trapped inside and the car caught fire and they couldn't get the passenger out because the door wouldn't open. I don't know if you've read that. And it's like the negativity is through the roof for Lexus.
Tu Le:
I didn't see that, wow. This is in the U.S.?
Lei Xing:
No, in China.
Tu Le:
In China, I didn't see.
Lei Xing:
I think we've pretty much covered the sales, EV sales. If you have any other topics you want to get into.
Tu Le:
No, I just, my quick takes for the week was part of kind of what I put out on the newsletter. I think reading the fine print on the CHIPS Act that is subsidizing with $52 billion. Some of the reshoring for manufacturing or fabing of chips in the U.S., it basically prohibits any companies that take that money from making investments in fabs in China that are 28 millimeters and less, which is more of the higher tech chips. So I think that's a poke at China a little bit that we should pay attention to. The other thing is CATL’s vice chairman left or is stepping down. What is your take on that?
Lei Xing:
I wouldn't read too much into it. It's probably, it's I think he's starting a new company that’s still energy related that could still work with CATL, but it's interesting that Robin Zeng is having both the chairman and the president positions. So that's interesting.
Tu Le:
You're saying that's a conflict. Or the other thing is, my moles are telling me that the CATL factory is going to be on the Mexico side of the U.S. Mexico boder.
Lei Xing:
So there were two sites, right? That were being considered in Mexico.
Tu Le:
Let's see if I’m right.
Lei Xing:
Let's wait till September or Cctober, hopefully things will quiet down.
Tu Le:
And briefly, did we talk about this last week? Because I’ll repeat it right? Very quickly. Shenzhen has provided clarity on liability for robotaxi, non-safety driver robotaxi. So to very succinctly, if there's a driver in the seat with ADAS features on, the driver is responsible if there's an accident, if there's a person in the car, the owners are liable, but then if there's an investigation and there's a bug in the software, the company is liable. So I don't know, would they get to that point in the U.S. because we are very litigious. So I don't know unless California leads the way, right?
Lei Xing:
When I test drove (rode) the Mercedes, they were working on California and another state, I believe, to offer this L3 capability on the freeways, right? So we'll see, it's a similar, but it's not robotaxis. It's just on automated driving.
Tu Le:
Really quickly, I think we should applaud Innoviz. This is a $4 billion, 4 to 5 or 6 million unit potential sale for them to Volkswagen. Kudos to Omer.
Lei Xing:
As a tier-1, right? He stressed that in pod.
Tu Le:
And then the last thing I want to bring up was NIO is now rumored to have a third brand in play.
Lei Xing:
I just say, say, NIO, please slow down you, too much distraction.
Tu Le:
But this is where a lot of analysts will say, going from high end to low end is easier than going from low end to high end. So, but they're going with like sub-200 rumored with this third brand. Yeah. That could be completely challenging, right? But it seems like maybe they're just trying to fill their, or increase their utilization rate perhaps, I don't know, but they're getting to phones now, they're getting into.
Lei Xing:
They'll probably announce something about the ALPS, the mass band at the NIO Day this year, they’ll probably announce something toward that front, because they have no more models out of the NIO brand, right? Six of them already revealed. So.
Tu Le:
I did want to mention that I'd sent you that article about who sees your car data. And I posted in my newsletter and it's good because it actually calls out the 38 or 40 companies that have access to your data. We'll see a lot more awareness of that because I’ve gotten pinged a couple times in the last three weeks about security and the vehicles because they're smart. And so we didn't see or hear any investment or emphasis from the U.S. government about, oh we're going to make sure that smart EVs are secure and safe, and the digital infrastructure for the U.S. right? So I think that's kind of an opportunity for startups, but a risk as well as the U.S. begins to embrace more and more EVs.
Lei Xing:
So the only other thing that I’ll mention is I think we're still in the early stages of this what do you want to call it, confrontation? So what's going to happen in the, we know, CATL is delaying announcement because of this. But whether this will escalate into kind of what's happened before with the boycotting on brands on the Xinjiang cotton, right, with some of the sports apparel brands. We have to see, I don't personally think it will escalate to that. But we don't know, is still early in that. There's still some tit tat, I mean we don't usually go into this stuff, but.
Tu Le:
The bottom line is that what's going to happen is going to happen over the next several months, not the next days, not the next several days. So, but it could really affect both ways, foreign companies here.
Lei Xing:
So Pelosi could very well be the next crunch that will hit the auto industry after chips, after supply chain, after raw materials, who knows, right? That’s the world. Anyways, I missed Tesla shareholder meeting. Anything interesting?
Tu Le:
I missed that too.
Lei Xing:
But Elon Musk mention anything about China?
Tu Le:
So it should be noted that Tesla got to 3 million vehicles produced, manufactured.
Lei Xing:
Total, every all plants.
Tu Le:
And to give you a sense of how far ahead they are, NIO just announced that they got to 228,000 units this week. So, but again, Tesla is almost a 20-year old company, and NIO is less than 7 years old. So.
Lei Xing:
Yeah, and BYD 2.3 million, right, since more than a dozen years ago. So BYD would be, if we talk about them, buying Qinchuan Auto in 2003, they are a 20-year company, but we all know they started much earlier than that so.
Tu Le:
I think what's important to keep an eye on, I believe, is that Australia is finally now trying to incentivize Australian consumers to embracing electric vehicles. So I would say the closest thing to a U.S. market is Australia. So keep an eye on how BYD is received in Australia. I think there's some pent-up demand because BYD had been advertising and their partner, their import partner had been advertising for quite some time about entry and ATTO or the ATTO being sold there. There's some demand already and a reminder to everyone Tesla right now is the largest importer of EVs into Australia. Their vehicles are much more expensive than a BYD is, so they're not going after the same target markets. But let's look over the next 12 to 14 months to see how BYD does after its initial rush of imports to see if it can consistently grow its share. Like it's been doing in China in some of these other countries.
I kind of speculated that there's probably some tier one level startups on the technology side for autonomous and electric vehicles that you can buy for next to nothing. Romeo power was a $1.4 billion company when it's SPACed and Nikola, acquired…
Lei Xing:
Bought it for a tenth of that.
Tu Le:
Yes so I don't know what that says about Nikola or Romeo Power because they're both kind of in trouble.
Lei Xing:
It's like a vertical integration play. Rather than a supplier, I buy it off and it's our own now.
Tu Le:
The last thing is that Lordstown Motors did say that they their cost cutting did some good. So their cash position at the end of this year's going to be a little bit better. So I would expect to see their first, is it the Endurance, is it called the Lordstown Endurance? I just like to see that in the next 6 or 8 months on the roads in the U.S. Thanks to Foxconn by the way. Alright man.
Lei Xing:
So next week, next week is, what, it's going to be our last episode where you and I are on different time zones.
Tu Le:
For a while. I have a, in my mind, I have a pretty busy travel schedule, so we might actually be, and we'll be in the same continent, but maybe still different times zones. My plan is to come to the U.S. in two weeks and spend a bit of time there in Detroit, make some visits in Pittsburgh, Silicon Valley, LA, hopefully with you Lei, quite a few those visits.
Tu Le:
I'm really looking forward to the Detroit trip for the auto show, for whatever it's worth. Yeah, I just like to see the city for what it’s worth, and how it's changed since last time I was there was 2018. And GAC Motor was planning to come to the U.S. in 2022 or something.
Tu Le:
As Time’s, one of Time’s most essential or most, what was it, the coolest or I don't know, wonderful places on earth you got to do it for, and we might as well fill this out: on the 14th of September in Detroit. Lei and I, or China EVs & More will be sponsoring the happy hour, location TBD, but anyone that is traveling to Detroit or will be in Detroit for the Detroit Auto Show, please stop by and we'll buy your beer.
Lei Xing:
and we'll get that figured out I guess in the next few weeks, couple of weeks, a location.
Tu Le:
When I'm in Detroit, I'll have to go test out having a beer at these locations and then we can pick one.
Lei Xing:
Ok!
Tu Le:
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 or 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 this again next week as we track down all the latest news on China EVs & More.