Tu starts the pod out by talking about the last time he was in the US and his plans to head back to visit next week.
The conversation then moves on to July sales with both Tu and Lei giving their take on the results. Lei then pushes the discussion to the XPeng G9 unveil and subsequent reservations that suggested that Chinese consumers are excited about it.
They also discuss the AVATR 11 and Tu talks about his visit to the AVATR pop-up to see the 11 in real life,
The pod ends with Tu and Lei sharing their opinions about the recent US Inflation Reduction Act (IRA).
Tu starts the pod out by talking about the last time he was in the US and his plans to head back to visit next week.
The conversation then moves on to July sales with both Tu and Lei giving their take on the results. Lei then pushes the discussion to the XPeng G9 unveil and subsequent reservations that suggested that Chinese consumers are excited about it.
They also discuss the AVATR 11 and Tu talks about his visit to the AVATR pop-up to see the 11 in real life,
The pod ends with Tu and Lei sharing their opinions about the recent US Inflation Reduction Act (IRA).
CEM #78
Recorded August 11, 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 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 and I'm the managing director at SinoAuto Insights, a management consultancy that helps organizations bring innovative and tech-focused products and services to the transportation and mobility sectors. I write a free weekly newsletter that we pull many of our discussion topics from. You can sign up for it at sinoautoinsights.com, which I encourage you all to do. Lei, can you please introduce yourself?
Lei Xing:
Good evening from my side. This is your co-host Lei Xing, former chief editor of China Auto Review. This is episode #78, and this is the last episode in which Tu and I will be recording while in different time zones. As some of you may know, by this time next week, Tu will be stateside. Thank you for the shout in this week's newsletter. By the way, I do read your newsletter.
Tu Le:
Yes, thank you. One of the five people that do. Thank you.
Lei Xing:
I know you’ll have a whirlwind week next week, as you say, in the newsletter and I guess tons of emotions, as you prepare and make that trip, so best of luck, man. And I’m really excited to be able to talk to you in person, and hopefully do a few episodes not only in the same time zone, but in the same room.
Tu Le:
What a novel idea, right? Like talking to each other face to face.
Lei Xing:
And also, coincidentally, this is exactly the halfway point, so it's been exactly 1.5 years counting the weeks. So there's 52 weeks in a year, and 52 + 26 is 78. So this is at the one and half year point.
Tu Le:
That’s bananas, that we've been talking to each other more than every day pretty much.
Lei Xing:
So one and a half years of just babbling about EVs, and AVs, and mobility. So.
Tu Le:
So just to update everyone, the last time I was in the U.S. was March 23 of 2020. So almost two and a half years, and we will have a 34-hour flight. So initially we went to, in 2020, we came back during Chinese New Year. As some of you know, my two boys go to a local school. So Chinese New Year is their long holiday, and we were planning on visiting for 3 weeks. COVID had started happening in November and December of 2019 I believe. And so we felt that we were safe. We stayed there, and then the U.S. started getting pretty bad. And my wife, who is working at a company here in China, ended up, staying up most of the night working and then getting about 4 hours asleep, waking up and being a mom. So we came back. So we just kept on looking for one way tickets and kept on getting cancelled, but through perseverance and my wife's patience, we were able to book a one-way ticket back on the last day you could enter China before they closed the border, on March 26, I want to say.
Lei Xing:
So this is something new. So we were actually in the same time zone. But I didn’t know you back then.
Tu Le:
Now we're like the 18-year-old kids, because we're like digital besties, right? We're internet besties. So.
Lei Xing:
So anyways, just rattling off some headlines. On Monday was a very auspicious day, because it's 8.8, August 8, so a lot of companies I guess announced big news that day. So we obviously heard about Baidu getting that approval to launch paid fully fully driverless robotaxi services in Wuhan and Chongqing of all place, so that was interesting. A couple of…
Tu Le:
Let me add a caveat to that Lei, because Cruise and Waymo have similar U.S. versions of those licenses in San Francisco. But when we talk about their licenses versus what Baidu has been granted, first of all, Cruise is from like 11pm to 6 am in San Francisco, a city of seven. If we're talking San Francisco proper, about 800,000 people, 700,000 people. Wuhan has 11 million people, Chongqing has 9 million people. And I don't believe there are those types, it's not going to be in the middle of the night autonomous driving and robotaxis. I think it is a lot of many parts of the city, so it's not limited to certain areas within those two cities. I think it's broader than that. So the magnitude of space that Baidu's robotaxis in Wuhan and Chongqing are going to be roaming, I think is much more significant than it is in the U.S. right now.
Lei Xing:
Well, I mean it's baby steps, right? Because the caveat is still, even though it's during daytime, it's still within that special, what, ODD, or the special zones, which I think are what, 30 km wide, right? So that's the caveat, but still, nevertheless very significant development, especially not so much, well, few weeks after they got that driver's side driverless permit in Beijing, right? So that's that. And then another Baidu related, which was JIDU, announcing that capability, I stress, capability of delivering 800,000 of those robocars by 2028, in 2028.
Tu Le:
How do you take that Lei? Is that like I am capable of dunking a basketball, but it's not like it's not likely.
Lei Xing:
I think it's open to interpretation. I think one of the reasons behind that, I think is because of unlike the other startups, JIDU has Geely to thank, because right, Geely is a parent company and production wise, they are covered. So I think in that sense, they're a bit more confident than some of the other startups. But like I tweeted that I don't understand why they throw this number out so soon without starting the production and delivery of the first car.
Tu Le:
Invariably, JIDU and Xiaomi will get compared to one another, because they're driven by technology companies effectively. So maybe they kind of heard something about, well, it also had something to do with them launching their new headquarters in Shanghai, right? In Jiading, right? One that I happened to miss.
Lei Xing:
Other news on that day was the couple of AV startups, chip companies getting that C-round financing, Maxieye and Black Sesame. And then there was that important draft for comment issued by the Ministry of Transport on the Guidelines of Autonomous Vehicle Operations Safety guidelines. That was interesting. We can probably discuss that a little bit. The CPCA and CAAM numbers came out later in the week. And another, I won't say blowout, but unseasonably warm like the weather that’s been here for NEV sales still at a very high level close to 600,000 units, including exports, right? The couple of new products, the AVATR 11, which you had talked about in your newsletter and we're talking about Xpeng for both the good, the G9, and bad, very bad. And the accident…
Tu Le:
I got to tell you, they shouldn't post those videos, man. That's gruesome. Oh my goodness.
Lei Xing:
That's the word to describe. I couldn't. And the interesting thing is this happened almost exactly a year to the date that the NIO ES8 accident, which killed that entrepreneur, because it hit that service vehicle on the left lane. And then this news about BYD possibly inside Teslas, made in Giga Berlin, I guess pretty soon. And here in the stateside, we've got the CHIPS Act. We got the IRA, we've had Ford raising prices on the Lightning
Tu Le:
By $7,000, right? From $40,000 to $47,000, right?
Lei Xing:
Rivian and Lucid are all telling customers to get those orders, so you can enjoy the tax credits and we know you can get right. What else I think that's probably the most of the headlines.
Tu Le:
I think non-China specific is Arrival the EV commercial van company. They reduced their forecast from like 2,000 units and $1 billion of revenue for 2022 to I think they're going to deliver like 20 cars this year or 20 electric vans. So.
Lei Xing:
Seriously? I thought Lucid cutting it in half was bad. This is cutting it…
Tu Le:
The thing with Arrival is that it's a delivery van. It's actually really simple from a manufacturing standpoint and then Arrival, one of their core competences is this small batch manufacturing where they can pop up all over the world, right? So how are you not able to manufacture if your key core competency is manufacturing flexibility? I’ve only saw a headline on Twitter, and so I didn't dig too deeply into the whys, but that's a significant standard deviation from what they forecasted when they SPACed, right? Because that number was to attract investors on the SPAC. So.
Lei Xing:
I haven't followed them that much. Anyways not important because we're talking about China, so.
Last but not least Xiaomi today Lei Jun he teased some of the autonomous driving features or what they've been doing. It's hard to believe it's already been 500 days since they announced their entry into the smart EV game. So time flies. You want to talk about sales a little bit, EV sales?
Tu Le:
Yeah, go ahead, let's kick that off.
Lei Xing:
I, like I said, it's been unseasonably high or warm, because July usually, well month on month, there was a small dip, but wasn't significant, I think, based on numbers that were reported. I guess, one of the things that stood out that was interpreted was, again, the CPCA's numbers on Tesla. One of the most reported was that month on month, it was downward, 60%, 64%. So I think it's, what's the word, overblown a little bit? We’ve seen the story before.
Tu Le:
We got to see a trend, right?
Lei Xing:
Especially after quarter end you start a new quarter, considering the stoppage, production stoppage, it’s probably a blip. But I think again, we want to look at this trend over months, if not years rather than one month. So not really going to read too much into it.
Tu Le:
We should also pay attention to how Berlin Giga ramps, because that will affect export numbers. And it'll take at least a couple quarters to kind of create that new equilibrium, right?
Lei Xing:
Yeah, I guess from the CPCA standpoint, the penetration rates in the new energy passenger vehicle are exceptionally high, over a quarter. So 26% wholesale, 26.7% retail, the difference being exports, obviously.
Tu Le:
It doesn't surprise me. I'm overwhelmed by new products every week, every month. And it's just getting really, unless they're on a spreadsheet, it's just very difficult to manage them and keep tracking them.
Lei Xing:
And also going to the CAAM’s numbers. A few things stood out for me was that July had an high, all time July high in terms of auto sales. All time. So that was interesting.
Tu Le:
The overall pie is growing is basically what you're saying.
Lei Xing:
I think we've now had 2 months where the purchase tax for those passenger vehicles have been halved, right? So that's starting to show the desired effects. And we’ve seen the numbers. But at the same time NEVs are rising with the tide as I tweeted, keeping that momentum close to 600,000 units. And that's close to a quarter (in penetration), based on the CAAM numbers. So this year, right, again, the mystery or the suspense is not whether it's going to be 6 million and 20%. It's how much over. That's what I want to stress, right? It's a foregone conclusion, I think. And we've seen some early August numbers based on the insurance registrations. Seasonally, I think it's expected, but let's wait until the end of the month. Because some of the numbers were shown were extremely low, based on weekly numbers like for Li Auto, I think it was 800.
Tu Le:
Yeah, I saw that.
Lei Xing:
That was interesting. But I think from now on it's going to be at a high, pretty high level. I would expect a month-on-month fall in August. But if it drops below 500,000 or half a million I’ll be surprised. So it's going to be relative high until the end of the year and by Q4, it's going to step up.
Tu Le:
Remember that Tesla is likely to get close to 1.2 (million) on capacity for Shanghai Giga, for the annual number. BYD is supposed to get to 300,000 units a month starting in August. And so those are two drivers of that half a million or 600,000 to 700,000 units a month number that you're talking about to get us past 6 million for the entire year, which is a mind boggling number, because we were at 3.5 million or 3.3 last year, right?
Lei Xing:
And what's also been driving the sales, part of it has been exceptional exports. These include NEVs. We've just seen some pictures or videos of the ET7 being shipped over to, I don't know, somewhere in Europe, right? And now we have NIO, we have Great Wall, the ORA band, and we have BYD announcing plans to start delivery in Germany in Q4.
Tu Le:
I want to stress something here. The premium side of the export market for China EV Inc. is a feel-good story. I think ET7 could sell hundreds of units a month, or maybe even 1,000 units a month by the end of this year. But it's the lower end of the market that is going to get blitzed, right? Because BYD is coming, Great Wall is coming. So really watch for how that affects sales of the ID.4, of the ZOE, of the hybrids on the more affordable side in Europe.
Lei Xing:
The other thing that stood out was if you look at that rankings of the 10K club put out by CPCA, there's what, 16, or I didn't do the counting, but there was these manufacturers that had 10K.
Tu Le:
It’s not unique anymore.
Lei Xing:
10K if you look at the list. So five of them are kind of the smart EV startups like NIO and Xpeng, right? They're all in there, 10K club. The rest are all Chinese brands with the exception of Tesla and Volkswagen. And GM is kind of halfway in between because Wuling is, right, it's a Chinese brand, but GM's going to count that or their sales, obviously, but…
Tu Le:
You could set your watch to Wuling getting 35,000 units a month like clockwork, right?
Lei Xing:
And then we had that, I think that Ambassador in Indonesia tweeting those Air EVs rolling out the factory, right? That was interesting.
Tu Le:
That's going to be a thing, that’s going to be a thing.
Lei Xing:
And up to this point, right? Besides Tesla, besides Volkswagen, the rest of the players, the foreign players are still in, very far behind. If we talk about significant sales, we talk about 10K club, right? And let's say a Polestar. Polestar China just announce another CEO change. This is like the 4th CEO change within like the last 2 years.
Tu Le:
I get confused, honestly, I get confused about that stuff.
Lei Xing:
Then the legacy premium brands, right?
Tu Le:
But let me interrupt you really quick. That's not surprising, right? Because the Polestar 2 is not doing well here, it’s not doing well at all. I think it sells in the hundreds of units a month kind of thing. So for a domestically manufactured EV that is actually, if you look at all the reviews across the board from the people that we respect, there's not really any negative, overtly negative reviews of it. Most people think it's a really fun car to drive, a bit on the conservative side from an interior standpoint. And I think that's a turn off for the Chinese consumer, but it's a solid car. So it is a bit surprising that it hasn't resonated a little more in China.
Lei Xing:
Yeah, we had talked about it two episodes ago, right? On you guys’ test drive or ride few weeks ago and the car was fine, but the charging was a bit off right, but that's another issue. So I guess generally, again, to iterate August, I won't be surprised if there's a month on month fall, but the rest of the year, right? So year-to-date, CAAM number was 3.2 million. So remember, last year full year was 3.5 million. So we're already roughly at the same point, the rest of the year, basically, all net additions, right?
Tu Le:
And let me point this out because I haven't given an update on COVID in China, but we can talk about Sanya a little bit right?
Lei Xing:
Yiwu, Xinjiang.
Tu Le:
So, right, so a personal anecdote, my son plays basketball for a club here in Beijing, in Shimao. They have that basketball court. And he was selected to be part of a national tournament that was down in Guangzhou and leaving on Tuesday, next Tuesday. And so we were supposed to go down there on Monday and stay until Wednesday,night, Thursday morning, because the national tournament was down there all the clubs in all the other cities in China to go down to Guangzhou, to have this national tournament. I was excited, he was excited, I was going to moonlight and go visit WeRide potential Yihang, Xpeng, maybe and check out some of their robotaxi services. So I was excited. But then Sanya had closed off its airport and stranded 80,000 people because of some outbreaks. And since we're a few days away from getting on a plane, we decided to cancel that trip. And so there's still this grey cloud, and you can talk about the other regions. I just want to kind of describe my personal situation, but there is still this great cloud over China production, sales. There could be a hiccup, but while production is still running hard, the OEMs and the tier-ones, they're all getting while the getting’s good. So.
Lei Xing:
Well, so far I think these regions are not traditional, right, automotive manufacturing regions, so but like we said, it's Whack-a-mole, right. It could happen any time. And so far it’s looking good as far as maintaining this production, distribution, logistics stability, always with an asterisk, right? These are projections based on current trajectories and trends.
Tu Le:
And I am still or Beijingren are still, every 3 days testing. I talked to DeepRoute because I was going to take a train from, an hour train from Guangzhou to Shenzhen to visit DeepRoute and my contact there. She said they're testing every day in Shenzhen, not every 72 hours. So depending on the city, the severity of any outbreaks that's going to dictate kind of the testing protocol, but also just a caveat: there was quite a few people I was told that were part of the Shanghai lockdown that went down to Hainan or Sanya to vacation. They got stuck there too, so, that they need a hug.
Lei Xing:
But at least Shanghai seems to be doing well, pretty normal, I guess. So knock on wood, people are out and about.
Tu Le:
I met with three people this week that traveled from Shanghai. No issue.
Lei Xing:
So you want to move on to a couple of the products, the G9 and the AVATR? Did you think G9 hit it out of the ballpark? We had said that they needed to do so because Xpeng they've been mired in some negative news recently and now today another one. So what do you think about G9. Did it meet your expectations?
Tu Le:
So the early returns are that I think there was 21,000 pre-orders. I think it was…
Lei Xing:
22,800 or something, based on…
Tu Le:
I think it's a $500 deposit, fully refundable. But if you put that deposit down, you get RMB5,000 discount on features once you actually order the G9. So pretty good deal, but Mark Andrews had forwarded that marketing doc from Xpeng that said 22 in change or what 22,000 units. And I said, we should reflect that this is 2022 and 21,000, although impressive, it is also reflection of how high demand has become overall for the NEV sector. So I’m still lukewarm. I still think, you as well, we know that there are a lot of management moves going on at Xpeng right now. And I think they had this opportunity to take the spotlight, but then that video of that tragic accident happened in Ningbo. And I don't know what I was expecting when I press play on that video, but holy cow did that. I don't want to see stuff like that anyways, but they can't buy a basket. It seems like, right? They make a three pointer and they foul on defense and get a 3 point play called on them, right? So what do you think?
Lei Xing:
I think in terms of putting the best features out, whether it's hardware, whether it's software, whether it’s anything else, I think the G9 did the job and plus, they're positioning this as a super-fast charging smart SUV, so the top selling point was that what, 10 minutes, 200 km, right? So.
Tu Le:
800V charging stations.
Lei Xing:
Yeah the silicon carbide platform that they're using. And also, I guess, two ORIN chips for the autonomous driving. And so I think feature wise and then He Xiaopeng saying that this is the best, right, like he put that positioning that this is the best, the smartest within the premium segment, and the most premium within the smart segment, that the way he put it was putting that flagpole on the ground again.
Tu Le:
So he basically pissed all over both segments and said we're the best.
Lei Xing:
I think nowadays, any product that launches expect to see something on the lines of “this is the best car under RMB5 million,” “this is the best 5-seater half a million RMB and below,” things like that. And every product, at least on the upper premium, they're going to have make some statement. So I think it's definitely a model worth looking forward to.
Tu Le:
I'm looking forward to seeing it.
Lei Xing:
Yeah. And especially with, I guess, the way the screens, the 14-inch screens and all these features and hardware.
Tu Le:
Let me get on my soapbox for a second. So I alluded to this similar conundrum with the Lotus ELETRE a little bit, because Xpeng’s branding is a bit confusing, right? Because the pricing says more mass market, they can be the smartest EV in the market, no problem, but the pricing dictates mass market. And so when He Xiaopeng says where the smartest in the premium segment and we are the most premium in the smart segment, whatever, it's a bit confusing. But now he's trying to pull the Xpeng brand into the premium section, and you can't do that just by raising price. It has to be an upgrade on the actual interior. It's got to be an upgrade on the actual feature. So that fast charging, could that be a premium feature? I don't know.
Lei Xing:
Again, I think the problem for Xpeng is what I've seen they do, I think the issue is a little bit of with overpromising and under delivering or delaying delivering, right? So case in point the P5, the city NGP, it won't be ready until later this year. And this was something that was marketed in April of 2021 with the LiDAR and everything. Right now, it's been, right, I guess lukewarm is the word that you used. Hopefully, these are all great features, but they're also great, they are great promises, but they're also great responsibilities that, right? How customers, ZEEKR, for example, the revolt turned into a freed upgrade to the 8155, right? So Xpeng needs to deliver on that point. It's going to be some sometime a way to actually have these super chargers up and running and being able to do it.
Tu Le:
Yes, and they need to be up and running before the G9 starts delivering on mass, right?
Lei Xing:
Yeah, and from what I've heard, this has also been an issue with the AVATR 11, the response I've heard as also lukewarm, because such a long lead time ‘till the December and early next year deliveries. I think that turned off some people. And the price, I think price positioning also turned some people away, I heard, because they did not offer features that some other competitors had at that price point.
Tu Le:
I saw the, you saw the newsletter that I checked out the AVATR, kicked the tires a little bit.
Lei Xing:
Yeah and that weird dark studio setup, right?
Tu Le:
You saw the pictures, right? Like it was like a club. I walked in because sunny 95 degrees outside. I'm walking out outside in front of the Inter Con, right, where the old Book Worm is and get to the corner and there's this pop up AVATR, and it's kind of cool, little industrial, then you get in everything's black. Even the car, every salesperson is like wearing black t-shirts and like what's going on here. So anyways the interior was mamahuhu (so so) so that's probably another reason why it's lukewarm, the reception for that, because it was very nondescript, wasn't very unique. And it didn't seem super premium, right?
Lei Xing:
Also, they had that special edition which was utilizing one of those what's his name, one of those fashion designer guys that worked on a 011, right? That charges RMB600,000 special additions, 500 of them. I think the design is, okay, it's a bit.
Tu Le:
Exterior design.
Lei Xing:
A bit unorthodox, I think it's a way to describe it compared to some of the other ones, let's say, the G9 or the ES7, it's a bit unorthodox, especially with rear kind of a spoiler, rectangular window, and a what's the word hatchback, not the hatchback, but fast back styling.
Tu Le:
Almost like a la ZEEKR 001.
Lei Xing:
This is the model that's got that CHN stamp on it. That's got these, it's interesting to have these three guys, the chairmen from the three companies that they’ve become this threesome now for this brand. Basically, there is the Huawei, this is the CATL, all utilizing their latest CTP, Huawei’s everything, Huawei’ motors, 3-in-1 electric drive system, NDC computing platform, cockpit, right? This is…
Tu Le:
And it should be noted that CATL basically took over for NIO being like the second largest shareholder.
Lei Xing:
So I think this is difficult because kind of like VOYAH, I think VOYAH of Dongfeng is similar to right, we talk about these state-owned premium brands, is whether you can operate this premium level. It's very new to Chang’an.
Tu Le:
I think it's new and it's uncomfortable for them, I think.
Lei Xing:
Yes that's exactly the word. And putting Huawei, putting this CHN stamp is, I don't know, it's almost like, you're not confident enough, maybe that you have to have this stamp or looked at the other way, is really Huawei and CATL’s play trying to be more kind of downstream being an OEM player, sort of, being involved. I think it's starting off. I think it's tough and we'll see.
Tu Le:
The reality is Lei, is that I don't see how these domestic SOE premium brands resonate outside of China at all.
Lei Xing:
And also the video that they showed of this AVATR 11 doing some of the autonomous driving on the streets. The video, if you watched the video, it didn't look as smooth or as normal, let's say, as some of the other ones. Let's say even Xiaomi, that the ones they showed, it felt like it was over prepared. And for the sake of it, rather than just showing, right, the footage. But any of these videos, right, we take it with a grain of salt.
Tu Le:
I think we mentioned this last week, but I do have to give, and this is kind of an aside, but I give DeepRoute props for that 8-minute Youtube video that they posted a few weeks ago had coincided with Shenzhen announcement.
Lei Xing:
That's what I was taught referring to. There's always a robotaxi, but.
Tu Le:
I loved how there's they didn't have to make this woman's voice computeristic like this. But I thought it was cool that it was explaining everything. I think that was huge, so.
Lei Xing:
Now over to the P7 accident, I just think you know how P7 and some the other models that they have this driver training, you have to go through that video before you can actually use the system. And there's part of it that specifically says that some of the perception cannot detect stationary vehicles or these, right, there was that warning in that set of lessons. And after this seeing this happening, and especially with that driver saying that he kind of looked away or not dozing off, but he wasn't paying attention. So is that abusing this system? We don't know, but this is, I think the issue that's going to come up again and again. Still an L2 and I think L2 meaning that driver still is responsible for everything. You got to keep your eye on the road and if you look away and it's driver’s fall, right? This is the L2. We're going to talk about this new regulations that right from the L3 to L5, but regardless of any regulations, the driver is going to be at fault because you hit someone from behind. And that's in the rules, that's in the rule books, traffic rules, regardless of L2 or not.
Tu Le:
And we don't have the full complete story yet, right? Did the guy, the driver could be lying unless the highway was on a hill. He should have seen the cars on the side of the road. So he either he was not paying attention for a prolonged period of time, but we should also comment Lei, that it is not unusual for Chinese people to be walking on the side of the road like that, you see it, not often, but you see it enough to where it's not, who, what's that person doing, right?
Lei Xing:
I do that. One year I was driving on the 3rd-ring, you take a ramp onto the Capital Expressway, right? So when I get on the ramp, I looked to the left on the ring road. And a taxi has stopped on the ramp, right in front of me, I hit the taxi. I do that.
Tu Le:
Jeez, man. So these things, it seemed they look like there's two guys walking around. One car was broken down, but and there's no excuse for the driver.
Lei Xing:
Right. I think what you're getting into is this owning a car and knowing what to do in certain situations, right? I think that's what you're getting at. So the two persons with the car, right? I don't know it's yeah.
Tu Le:
And remember for our listeners, in China, there's really only been about 30 years worth of driving history and experience collectively. So everything is new still, okay? And then with new technology, there's new experiences and new learning opportunities and new mistakes to be made. So I wouldn't recommend watching the video because it's pretty horrific, but you can't, if Xpeng has that disclaimer, you can't just not pay attention, dude.
Lei Xing:
Let me ask you a question. How do we prevent this from happening again? Do you have an answer? I doubt it.
Tu Le:
No, I, that's the thing, because if this guy gets a wrist lap, then it will happen again, right?
Lei Xing:
The only way to not have this happen again, either the OEMs, in this case, Xpeng doing something that's very extreme or making sure that the hardware and the software that needs to work or, but, we can debate this forever, I think.
Tu Le:
So there's one thing that is completely unclear to me. And I forgot to mention this. The DMS, the driver monitoring system. If the guy wasn't looking down or the guy wasn't looking at the road, he didn't have his hands on the wheel. What's the fail safe, right?
Lei Xing:
Exactly. Even with the DMS, let's say it happened at the last moment that this guy looked away. How fast can the system respond?
Tu Le:
Fair enough. And our friend Taylor, who's arguing with the Tesla stans. He's kind of talking about this all the time, right? Where the software is not great for the FSD right?
Lei Xing:
It's either software, it's either whether it's 2.5, 3.0, 3.5, or you have the hardware capabilities that make sure this at a certain speed and detecting vehicles, stationary vehicles, right? Things like that to make sure it doesn't happen again. And how do you prevent drivers from abusing the system? That's another issue that we can debate forever.
Tu Le:
And a quick reminder Innoviz just signed the deal with Volkswagen Group to be a tier one supplier. And they're probably going to put 4-8 million LiDAR on Volkswagen vehicles. So more and more cars around the world are going to have L2 capabilities.
Lei Xing:
Supposedly millions by 2025. So that's their, according to their deck that they showed. But this is unfortunate. Hopefully, let's see how it develops, what comes sort of this.
The only other thing is Xiaomi. I mean, I just want to say Lei Jun is a likable guy, because the whole, this annual speech thing is a great marketing move, because every time he's being presented as this guy who's been through so much, who's been through early years of starting these other companies, trials and tribulations. So people like him, especially with his accent, he's just a lovable guy and when he introduces these, the CyberOne and these details you just love him. So it's great for Xiaomi, and also, I think one thing that showed was, they've been making acquisitions on the EV front. So this is DeepMotion Tech was one of them. That's where they got to where there are today. All he talked about was these autonomous driving being among the leaders. That's a clue on how important this second half of the smart EV game is. So not so much about the EV but more about the smart, again, proven by what Xiaomi has shown today.
Tu Le:
Let me give a couple of my quick takes for the week. BYD in July caught up with, not caught up, but is gaining on CATL for install base capacity for batteries in China. And they're working to catch up to them globally as well with this Tesla confirmation that they're going to be supplying blade batteries to the Model Y in Berlin.
Lei Xing:
Well it hasn’t confirmed, yet?
Tu Le:
So rumor has it. They'll be coming off the line in the next month or. Hongqi aunched its own version of an Escalde, or Navigator, have you seen that monster?
Lei Xing:
Yeah I saw that.
Tu Le:
And it's only got four seats. It's as big as an Escalade. It's only got four seats, right?
Lei Xing:
And oh right, that AVATR was also interesting that two sort of captain bucket seats in the back. So it's a four seater, not a five seater so that was…
Tu Le:
It can come with a bench seat in the back or you can order it as a kind of four-seater. So this Hongqi LS7, it's a petrol engine vehicle, so we normally don't promote too many petrol engine vehicles, but I wanted to bring this up because it's over $200,000. And it's not the bestlooking large SUV, premium SUV, but it's a Hongqi, so there's gonna be a number of people, number of rich, probably “tuhaos” and stuff like that that’ll buy it. What did you think of the ZEEKR 009? Because I don't see any resemblance to the ZEEKR 001.
Lei Xing:
First, I said it was from another planet. And second, I said it was Rolls Roycey.
Tu Le:
Yeah, you see, I love how you're so optimistic about things, because at first I thought cheese grater, and then I remembered, so I went to Japan and love fresh Wasabi. It's really hard to find. But I bought, while I was in Japan 3 years ago, I bought like a real wasabi grater. If you google it, the front grill of the 009 looks like a wasabi grater. And but man, it's so extreme and this what makes me think that these companies, Chinese companies’ premium brands will not work outside of China because they're too extreme, so.
Lei Xing:
I guess it's one after the other or it's just become more and more extreme and weird looking is the smart e-MPVs. And actually the VOYAH Dreamer, not bad, right? They did 1,000 units already.
Tu Le:
Yeah.
Lei Xing:
so there's a market, definitely a market.
Tu Le:
The last thing I'll do is I'll spend a couple minutes or a minute or two talking about the Lotus ELETRE. So they had a little pop up kiosk in Guomao next to Shake Shack. And I had a premium feel, like the whole setup, people were dressed in suits, kind of greeting you. I had to download an app, add somebody on WeChat. They got my WeChat ID and so now they're sending me messages and updates. So I have an AVATR WeChat account or WeChat friend now and my Lotus WeChat friend. But I liked it, but I didn't love it. And it's a little bit non-descript, a little bit plain to be competing on the premium side. And whether performance wise it lives up to the Lotus, lightweight, fast, quick handles. It's an SUV so I don't know. And they're kind of in a precarious, weird situation positioning. Because although one agency I talked to that I've worked on projects with, they said that the Lotus ELETRE is going after Lamborghini Urus buyers. We're talking orders of magnitude difference in price, right? So I was told the ELETRE is going to, I don't know what you've heard, it's going to be about RMB600,000.
Lei Xing:
Let's put it this way: the ELETRE will be the Lamborghini Urus for the masses, right?
Tu Le:
But do you, I know you've only seen it in pictures, but do you think that's a more of a woman's friendly car that will be attracted to or that women will resonate towards?
Lei Xing:
I think in general, females, especially single older females, will be a new kind of sub-segment that needs to be looked into regardless of the vehicle model and brand. We know that, for example, Porsdche Macan and even some of the Cayennes are bought by females in China.
Tu Le:
A lot of them.
Lei Xing:
Every week is eventful and busy.
Tu Le:
But what is really apparent and I think we'll probably start covering it a little bit more as well, is what's going on with the IRA, what's going on with the infrastructure bill, and everybody bitching, every western U.S. OEM bitching about how it effectively limits their vehicles.
Lei Xing:
In a sense, I think the IRA and also the CHIPS Act, holistically looking at it, it’s early years in China, when how CATL, how these domestic battery suppliers beat the Koreans. Because there was that unwritten rule that you had to have domestic cells in your vehicles, it's almost similar to what the IRA is doing. I think the U.S. just wants to kind of, as Biden puts it, rght, we don't want, we want to compete with China. We don't want China in a leadership, we can be in the leadership. And through these, I think, the overall directions, I think OEMs, at least the statements they put out, the U.S. OEMs in particular uh, is that they like it, they support it. But based on what these announcements that Lucid and Rivian have been making, you can see, and also for brands like Hyundai IONIQ 5, they will be out of that tax credit because they're not made locally. So really good timing for the Volkswagen ID.4 to kind of start local manufacturing. I think it's the only none, one of the few non-U.S. brands, EV models being produced locally in the U.S., right, that can enjoy…
Tu Le:
Yeah, but the much more stringent content requirements are going to be grandfathered in. So it's not zero to 100 miles an hour in a day.
Lei Xing:
So see what happens tomorrow, in the House, because once this puts into law, some of the industry experts say there's not that many EVs are going to be having credits because they don't meet the requirements.
Tu Le:
Which indicates to me that, let's say for a couple years, there could be carveouts for legacy auto, right? In order to get them, to meet it, it might take them a couple years to meet those requirements. And so there could be carve outs if there's not enough vehicles that qualify for the current credits and subsidies.
Lei Xing:
I think in the perspective of the EV transition, adopting EVs and having these choices that you can enjoy these tax breaks, this is a backward move, I think. Though protecting domestic interests, I think in the long term, that's what the U.S. want. So now these NIOs, the BYDs, I'm sure they're looking at this and tweaking what they want to do, right?
Tu Le:
Without question. Cause and I haven't heard anything about the tariff being lifted yet either for Chinese imports into the U.S., so that's kind of a constraint and an incentive again, an additional incentive for the Chinese OEMs to build locally, right? I feel pretty good about my updates unless you want to talk about anything else.
Lei Xing:
No, I'm good. Just a few housekeeping. I think we're publishing couple of episodes or working on the quality, some of the quality issues. So sorry for the delay, we will be posting them, correct? on the official podcast platforms. And then next week I think Li Auto is one of the first to announce Q2 earnings. And then once you are in Detroit probably will do a, that'll be interesting.
Tu Le:
Maybe we'll do a one-off Twitter Spaces with a couple different people, we’ll just get like three or four microphones or whatever.
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.