Tu & Lei start this podcast out confirming their prediction that the State Council would extend the NEV purchase tax exemption was correct. They then take a few moments to compare and contrast the speed and amount at which announcements and news comes out of the China market vs. the US & European markets.
The conversation moves on to how China EV Inc collectively is investing in vertical integration in order to compete against one another, but to compete globally even if they're not profitable.
Lei moves the discussion over to the XPeng earnings call and some of the notable takeaways from it. Tu then poses a question to Lei - When does he think the China market will reach 50% take rate on NEVs.
Tu and Lei take a few minutes to discuss the launch of the electric Dodge Charger and the controversial artificial engine noise that's digitally produced when the car is accelerating.
Tu and Lei close out the pod by chatting about the Detroit Auto show and where they'll be specifically that they'll be attending a happy hour at The Brakeman off of Woodward Avenue in Detroit on September 12th starting at 5pm.
Tu & Lei start this podcast out confirming their prediction that the State Council would extend the NEV purchase tax exemption was correct. They then take a few moments to compare and contrast the speed and amount at which announcements and news comes out of the China market vs. the US & European markets.
The conversation moves on to how China EV Inc collectively is investing in vertical integration in order to compete against one another, but to compete globally even if they're not profitable.
Lei moves the discussion over to the XPeng earnings call and some of the notable takeaways from it. Tu then poses a question to Lei - When does he think the China market will reach 50% take rate on NEVs.
Tu and Lei take a few minutes to discuss the launch of the electric Dodge Charger and the controversial artificial engine noise that's digitally produced when the car is accelerating.
Tu and Lei close out the pod by chatting about the Detroit Auto show and where they'll be specifically that they'll be attending a happy hour at The Brakeman off of Woodward Avenue in Detroit on September 12th starting at 5pm.
CEM #80
Recorded August 25, 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 of course tune in again next week.
My name is Tu Le. I am 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, good evening. Can you please introduce yourself?
Lei Xing:
Good evening. This is your co-host Lei Xing, former chief editor of China Auto Review. And this is episode number, big, fat, 80.
Tu Le:
Eight zero, baby. Eight zero.
Lei Xing:
I like the numbers, number eight, just you know. How's life in the U.S.? Are you all adjusted to the time zones now?
Tu Le:
I’ve adjusted to the time zones, but I’m still not adjusted to the size of the portions and in Michigan at least, the amount of construction on the roads, the road construction is just life sucking. I've been in a car in the last week more than I’ve been in a car in the last 8 months in China probably. So lots of different experiences. And it's amazing how you forget about things after not being here for 2.5 years, right, so.
Lei Xing:
Well they all come back.
Tu Le:
Yes, sir.
Lei Xing:
Soon enough. So when we got off last week, the State Council meeting had basically confirmed the extension of the NEV purchase tax exemption policy.
Tu Le:
Yes Nostradamus, good call on that.
Lei Xing:
End of 2023, as we predicted, right, correct?
Tu Le:
Yes sir.
Lei Xing:
And one number that was thrown out was the expected exemption of around RMB100 billion in taxes. A simple calculation is, averaging RMB10,000 per car, that's 10 million NEVs. It's over simplification, but it kind of tells you the level and what numbers were looking at.
Tu Le:
And we look at that two ways, right? We look at it as the volume that you've just mentioned of 10 million units. But also we look at it as the sacrifice the Chinese government is willing to make for tax revenue. And it tells you how important the sector is to the Chinese government.
Lei Xing:
And I actually think we've arrived at a point where by the end of 2023, the subsidies will be gone, the purchase tax exemption will be gone. But by then, we're looking at annual sales of close to double digit million units, and probably it'll reach probably more than a third in terms of penetration rate, that's what we're looking at. So after 2023, when 2024 comes around, I think we've done enough education and cultivation of the NEV market where these incentive policies will no longer play, even currently they play a role, but I think a lot of the purchases, if we talk about especially the smart EV startups, which has quite a high price premium, right? It's not really playing a role. I don't think.
Tu Le:
It’ll be a law of diminishing returns for sure.
Lei Xing:
Yeah, that's a way to put it. I think we've arrived at a point where it'll become a post-policy, purely market driven.
Tu Le:
But I think Lei, I think it's really important to remember that this is not just a single market phenomenon in 23, 24, 25. A lot of how the Chinese government reacts is going to be based on how the U.S. market and the European market in the EV space is doing, right, so. Because they want to maintain their leadership position for sure, right?
Lei Xing:
And I want to add this interesting Wuling Xincheng, a hybrid that was, right, this is silently going to be probably another blockbuster model following the Wuling Hongguang MINIEV that nobody's paying attention.
Tu Le:
They got the formula. They got the formula, right?
Lei Xing:
It seems that Wuling is going backwards, sort of, right? Because they're good on the MINIEVs. But now they're going back to hybrids, but still right, we say one-third of the market, but there's two-thirds of the market are still being addressed. I was looking at some numbers, the MINIEV, that segment is already close to 100% NEVs in China. It's pretty crazy, there's no, you won't get MINIEV style modeled now that's an ICE, whether, there's the QQ Ice Cream, Benben, and all these other ones, they are all NEVs.
Tu Le:
Let me add to that because, really quickly, that's because the addressable market for the MINIEVs is significantly larger in China than it is in probably the rest of the world combined.
Lei Xing:
And on Tuesday, so Xpeng earnings, we talk about that in a bit, but just continuing with some the headlines. I was putting these headlines together and I felt like for every 10 blockbuster headlines that are happening in China, there's one or two happening elsewhere, and that one or two being the Volkswagen Mercedes Canada play. And just today, the CARB voted to put that into regulation, the California 2035 ban on ICEs, right? These are kind of the big news, but a few NIO news, right? The ET7s are being shipped to their delivery centers, no, Sweden! And the ES7s are being, I'm getting crossed up. So the ES7s are being delivered to the delivery centers for delivery on Sunday.
Tu Le:
to Chinese customers.
Lei Xing:
Chinese customers and ET7s are heading over to Europe, they're already there, right? The trucks delivering ET7s, so those countries and the ET5 pre-production rolling off and the latest rumors on NIO doing their own batteries, right?
Tu Le:
And also going a little bit further on their mass market brand as well, so.
Lei Xing:
And a few new models, the Denza D9. We saw that RMB400,000, basically, model with over 30,000 units ordered.
Tu Le:
Let me take a bit of time here, really quickly kind of compare and contrast what's going on in the U.S. and Europe versus China. The other thing that is readily apparent is that these Chinese EV companies, they're not taking a breather, right? It's just a constant stream of updates and news and new projects announcements. Whereas Ford announced the F-150, Ford announced the Mach-E. Ford announced 3,000 people getting laid off, but they're not really. There's not this constant stream of new news coming out of the western legacy automakers. And I think that the velocity at which things happen at a brand and product and OEM level is also significantly different in China versus the rest of the world, so.
Lei Xing:
And what's going on as we speak. The Chengdu Motor Show is going to be tons of news coming out of that.
Tu Le:
And I piggybacked off your tweet about the Detroit Auto Show, how it's seem to be bare bones. You see what I wrote?
Lei Xing:
It's like, is this an auto show anymore? It’s a little bit underwhelming.
Tu Le:
I don't know if you saw my tweet. Basically I piggybacked off you by saying the last auto show I was that I had to run, I had to wear running shoes, and happened to have somebody dancing on top of a Tesla, so.
Lei Xing:
Yes. I remember that!
Tu Le:
I think we're actually going to be able to breathe a little bit at the Detroit Auto Show which is not a bad thing. We'll meet up with some old friends. So.
Lei Xing:
Yeah, and I was thinking this whole year for China, for the NEV market, it's been a, I think it's in some way it can be defined as a year of “black swan” events. So first we had the Shanghai lockdown, before that, we had all these disruptions. And now this power crunch and the city of Chongqing is facing a quadruple whammy: the mountain fire, the power crunch, the high heat, the COVID, all of these things yet…
Tu Le:
Despite that.
Lei Xing:
It seems that the market still remaining strong, although we are seeing the seasonality of it. And this was especially evident, I think, for the second earnings call in a row, we've heard management kind of admit, this time Xpeng, that they're facing some, not cannibalization like Li Auto, but some hesitation among the consumer’s part when a new vehicle comes out, there's this kind of wait and see attitude. So a lot of the chatter is on the G9.
Tu Le:
I think they are just shell shocked Lei. I don't think the EV startups, the big players, right? China's Big 3, I don't think they are prepared for how much bombardment from competitors there is either, right? So that's why I feel you see this hesitancy, right? They want to be aggressive and keep on launching new products and new vehicles and new services. But like they feel like they try to play offense, but they end up playing defense, right?
Lei Xing:
And remember, so I just looked this up, Xpeng, they lost so RMB2.7 billion in Q2. And their cumulative losses are already over RMB20 billion over all these years. And yet, going back to NIO a little bit on their 4680, rumored their independently planned battery based on that LatePost report. Speaking to a source within NIO, I can confirm all the names in that report, all the executives being put in charge incomes of R&D, also manufacturing, they're all correct. Other details of the, other details might be different. But I think there's no, what I’m hearing is for these smart EV startups, like what GAC announced today, investing over RMB10 billion into their own battery entity, that these smart EV startups are vertically integrating very much. This is continued investment outside of all these losses that they're racking up.
Tu Le:
We should emphasize that not every EV company, whether it's American, German, French, Italian, or Chinese, is going to be successful when investing in chip design or battery cell R&D . So to your point about losing money, this could be throwing good money after bad. So these are risks that these guys are taking, right?
Lei Xing:
There's a lot of bets involved. There's a lot of risk taking involved. And NIO, you can bet that they're not standing on the sidelines and looking at Volkswagen Group and Mercedes going to Canada. They're planning to, they already are moving, I'm telling you, on this upstream minerals, raw materials, based on, they're going to be in the U.S., right? What are they going to do in terms of meeting some of the requirements?
Tu Le:
So piggy backing off your NIO comment, anecdotally, I know four people in the last 3 months that have gotten hired, like pretty significant hires, not management level, but pretty close. They're hiring like crazy. NIO is hiring like crazy.
Lei Xing:
And besides William Li being in the U.S., there's other high-up’s that are all also in the U.S. and look for announcements regarding upstream raw materials, plants, because…
Tu Le:
They're trying to show us that they can walk and chew gum at the same time, right?
Lei Xing:
Yeah, if you look at the size of the investments, GAC was over RMB10 billion, the CATL’s Hungarian plan was 7.5 billion Euros. The source from NIO tells me, typically, this investment is 2 to 3 times the kind of a vehicle manufacturing entity. So it's still huge investments that they are, you want to call it, risking or…
Tu Le:
At a company level, this is the funny thing Lei, because this is like playing chess. Any major announcement made by what you perceive to be either a partner or competitor. Your strategy team is assessing it and trying to make your next move and reassessing what your plan was, and whether or not should be altered, improved, or changed because of the move from competitor X, Y or Z. So it's pretty funny because these numbers, the investment numbers are pretty intimidating for many of the smaller players. You don't have that type of capital, right? But despite all these constraints that the smaller players have, they still need to perform, right? So.
Lei Xing:
And yet, we're still seeing brands emerging. And it's not done.
Tu Le:
And they might be the ones that have the best advantage of them all, right?
Lei Xing:
We have the Yuan Hang Auto from Aayun, right? We have BYD’s high-end supposedly Star brand yet to be announced, in Q4, supposedly. We're still not done.
Tu Le:
Well we still have to see Xiaomi’s product.
Lei Xing:
Yeah, but what I’m saying, those that are still not announced. Xiaomi we know that was announced. And all a while in the recent weeks looking at the Li Auto and Xpeng earnings announcements and what the management perspectives. It looks like, yeah, it looks like, when we talked about this 10K club being persistent, being there every month, we're seeing this fluctuation I think that was unexpected, because you put these models out, and it's not just A plus B plus C plus D will give you, your consistent 10K.
Tu Le:
Li Auto thought it was at least for a few months.
Lei Xing:
Right. And let's go to the Xpeng earnings call a bit. I think a lot of the call was revolving around the G9, right? What they're doing with that model, but based on these initial reviews that are coming out, G9, I think there was some issues comparing it to the Li L9, although it's a five-seater versus kind of a seven-seater.
Tu Le:
That's a head scratcher.
Lei Xing:
I think the G9, some of the material finish wasn't as well done based on what I’ve seen in the reviews.
Tu Le:
I can personally a test Lei that you'd be pretty impressed with the fit and finish of the pre- production L9 that Mark and I got to test drive. So let me just say that.
Lei Xing:
Also, again, there was in the earnings call, there was a lot of discussion on that city-NGP and they're still fine tuning it, after all this time on the P5, when exactly it's going to be launched in limited locations. So it's difficult, right? It's been more than one and a half years.
Tu Le:
Their share price got hammered after the earnings. So.
Lei Xing:
You have Brian Gu basically saying that wait and see attitude that they're seeing from the consumers.
Tu Le:
He's saying that the markets a bit cyclical, we will be on the upswing when we have our two new products in 2023 in addition to G9, right?
Lei Xing:
Right, and then there's a refreshed P7 that'll have the same supposedly the same, 800V architecture, right? And then the two models I had tweeted that it will be a Model Y competitor in the B-segment. I guess it will be called the G5. The other one, Brian said it was a new segment that they're not addressing now. So I guessed it was the MPV, because he also said it's going to be in limited, it's more premium, it’s going to be in limited, they're expecting limited in terms of sales.
Tu Le:
And that segment isn't crowded at all. Jesus. That segment has what, two or three new products, not new, but two or three products that were just launched this week, right?
Lei Xing:
Right, and that they're not cheap, so.
Tu Le:
Somebody’s going to pay for that grille, right? You got to pay for that grille somehow. But..
Lei Xing:
The other thing just dogging, I think, Xpeng is this margin, gross margin was, right? It's basically half of what NIO and Li Auto’s are, right? Because they're addressing kind of a lower market positioning. So around 10% versus the over 20% for the other two and the guidance, right? The Q3 guidance, again, similar to Li Auto, was kind of a bummer, right?
Tu Le:
And what this tells me Lei, is that our prediction that, or our recommendation that these companies need to be in the 20,000 a month by the end of this year in order for the market to hit 6 million units, what we're seeing is that 20,000 a month is not as easy as they think it is, right? Because they are still around 10,000 units a month.
Lei Xing:
The four companies that are consistent so far, BYD, Tesla, Wuling and GAC AION. Those are the only companies I think.
Tu Le:
So it's the ceiling that they need to shatter before they can really, really start to take off because yeah, you can just see them learning as they go and some of these mistakes are really expensive.
Lei Xing:
And now you have He Xiaopeng sort of say, well, Xpeng before, they were over emphasizing on the smart, on the driver assistance part of it. Now they're trying to move ahead equally on all fronts, on the EV side of it, right, on architecture.
Tu Le:
Not to mention their e-VTOL, right?
Lei Xing:
The robots, whatever, and I mean similar for NIO, right, that horizontally, there's so many things going on, right? The CEO’s in the U.S., they're exporting to Europe, ET5 starting production soon, ES7 starting deliveries, their battery play.
Tu Le:
And we should mention even that top group that you had mentioned, BYD, Tesla, AION and Wuling, BYD is not immune. There are a ton of backlash on the BYT ATTO 3 for this warranty that they had initially articulated, and then they bait and switched the warranty. So.
Lei Xing:
Obviously, I hope there wasn't a misunderstanding, first of all. Second, that's based on that guy who put up that video, but still, let's hope that BYD did not mess up. Otherwise, this is such turnoff, I mean, your first model.
Tu Le:
And it had so much positive energy, right, into Australia. There was like sight unseen people were willing to buy this thing, right?
Lei Xing:
Yeah, and then the other thing was on, I think also on Xpeng’s latest super charging footprint. I mean that's still going to take, I think at least 2 years, for it to kind of, like we said last time, whatever they showed in that video, adding 200, what, some kilometers in 5 minutes. That's under, right, we didn't put up the asterisks, right? That's under ideal conditions. Same for the city-NGP, whatever videos you're seeing. Once their mass rolled out, then it might be something different. So these are the things I think that are dogging these companies what you're promising versus what and when you deliver, I think these are the, consumers are sensitive to that.
Tu Le:
But this is the market. There's constant pressure being placed on what we would consider the favorites by sometimes lesser brands, sometimes competitors that we think are on equal footing.
Lei Xing:
And this sort of goes back to Ren Zhengfei’s, what he wrote in that internal letter, right? That we should no longer focus on scale, we should focus on profitability, those type of things, right? I it's easy for us to talk about 6 million units, 10 million units, the 20K club. But I mean these companies are still bleeding.
Tu Le:
Our job is, our job on the show is to talk about companies, brands, products, and a lot of different things, strategy, operations, but in the grand scheme of things, the China market for NEVs is going to be 60% of the global market for 2022. They're still crushing it compared to everybody else. But yes, relatively they're going to be more than half of all NEVs sold in the world in 2022. Full stop. So impressive.
Lei Xing:
The other one was this Haval, Great Wall motor’s Haval SUV brand announcing plans to be all electric by 2030, right? All-NEV, not all-electric, all-NEV.
Tu Le:
And Hinan Island also was the first Chinese province. And they said that all public and service vehicles by 2025 will be swapped, so symbolic because Hainan Island vehicle sales is not super significant, but it is the first Province. So they are setting the bar for the rest of China. And you had mentioned that California, we knew about that, but they actually put pen to paper now they made a vote. What's significant? There's a New York Times article that I kind of referenced in this week's newsletter about California normally forcing the domestic or not domestic, but the automakers that sell in the U.S. to upgrade or change their products, because California is the largest market in the U.S. And rather than build a car for California and a car for the rest of the U.S., they just end up going with whatever normally it's more stringent, either mileage or CAFE standards or emission standards. And normally, also, there are 12 to 14 other states that piggyback off of California's policies. It's not just a California thing. This is a significant chain for the U.S.. There's going to be battles in the courts to really push back on it. But at the end of the day, California is leading the U.S. into the EV future for sure.
Lei Xing:
And I’m thinking China probably should update that 2025 20% target because it's going to be smashed this year.
Tu Le:
I think so.
Lei Xing:
For sure, if not 25%, at least 20%, just kind of this competition going on.
Tu Le:
So I’ve spoken with a journalist on a background for a story, and he asked me an interesting question and I’ll ask it to you Lei, when do you think China will reach 50% take rate?
Lei Xing:
So I said next year, it'll be over a third. So I wouldn't be surprised by 2025.
Tu Le:
Really?!
Lei Xing:
Or earlier.
Tu Le:
Really? Man, dude. Okay.
Lei Xing:
But the thing is we need to come back down to earth a little bit. What's been happening in Cichuan and Chongqing? I think it's a wakeup call. I had Tanner Brown asking me for a few comments. It's once you put all these EVs on the roads, you're going to, what does that do to the grid? How can I be handled? I think this is something that needs to be looked at, you know?
Tu Le:
You'd mentioned these black swan events. I don't think this is a one-off year where all these things, I think there's, I think moving forward there's going to be these amazing challenges put ahead of us. So a friend of SinoAuto Insights, Patty Fog, who's a journalist, he tweeted a picture of China’s largest freshwater lake called Puoyang. And it is basically a desert. So these black swan like I mentioned the black swan events and they're not over for the rest of this year, right? Because the other thing that could be very significant and this has nothing to do with natural disasters. But if the Chinese companies get booted off of the U.S. exchanges, that's going to be a black swan event too. So.
Lei Xing:
Right. You have all three, right, so Li Auto, all three Big 3, vertically integrating, putting up their superchargers, Li Auto’s just done a production facility for the silicon carbide, right, in Changzhou, plus all the existing, however many public and private chargers that are already available. Now, this is, I think we're heading to the next stage of these new problems in support of a huge volume of market, right? The tipping point has already passed, but now we need to worry about other things. It's no longer why or if China can sell 10 million NEVs a year, or whether you can reach 50% by 2025.
Tu Le:
I actually think my answer to the journalists was before 2028, because I think sales will flatten out a little bit and growth will not be so aggressive or you know, because obviously we're going to have a larger base, right? So.
Lei Xing:
Yeah, my expectation was that starting 2024, there will be no incentives for NEVs, no subsidies, no tax a breaks. So I don't know.
Tu Le:
I'm going to put an asterisk on that. And I agree with you with an asterisk. I think it depends on how well the U.S. market is doing. If it's doing really, really, really well in 2024, 2025. I just don't think that Chinese government will sit there and not do anything to try to keep the momentum going in the domestic market. I don't know if it'll be subsidies, but it'll be some sort of catalyst that they'll try to provide.
Lei Xing:
So I kind of look at it this way. So when we talk about the Chinese NEV market, we have to look at it different perspective. So one phenomenon that is going on is China EV Inc. expanding globally. I think that will happen faster. And I’m not talking about the U.S. and North America, but let's say Europe and potentially North America, that's going to happen a lot faster than people think. On the other hand, the Volkswagen Mercedes Canada, and what the U.S. is trying to do with IRA, I think it's going to happen a lot slower than what people think. So that's my take.
Tu Le:
We had a great conversation and we'll just throw it out there with Henry Sanderson yesterday. And hopefully our technical difficulties recording that podcast, because I thought it was such an educational discussion with Henry, who just wrote a book called Volt Rush. That was one of the reasons we wanted to get him on. That'll be launching in September in the U.S., already selling in Europe. He works for Benchmark Minerals, but was a journalist for the FT covering raw materials and minerals. And so..
Lei Xing:
And he had spent quite a few years in China.
Tu Le:
So 7 years or something like that in Beijing. And so great conversation. And he had a lot of insight into the particulars. And he also said that mining will be difficult in North America, but refining could be a lot easier, and that could be the way to get the IRA requirements met.
Lei Xing:
The percentage requirements right?
Tu Le:
So I didn't think of it like that, right? And so he made me think of things a little bit differently, because maybe those stringent requirements aren't impossible to meet. So we'll see. It was an interesting conversation, but he did say point blank, the Korean battery manufacturers are having the most heartburn with the IRA for building in the us so.
Lei Xing:
Because they already have the battery cell done, right? All these Tennessee, Kentucky plants, right? But then it's the upstream requirements that's going to…
Tu Le:
Yes sir. So hopefully, in the next 2.5 weeks, I know we're a little bit late on our last MAX episode. I'll try to get that out next week. And now that I’m firmly in the U.S. for a while, hopefully my schedule gets back to normal pretty soon here.
Lei Xing:
So Henry is our 10th MAX episode guest. And hopefully we'll talk to a couple more when we're in Detroit, hopefully.
Tu Le:
Yes. We should, do you want to do that at the end? The housekeeping?
Lei Xing:
Yeah. I think we've probably covered pretty much all the headlines. If you have anything, you want to…
Tu Le:
Yeah, so my quick takes. So ZEEKR is looking at an IPO in the U.S. or Hong Kong. I think they are throwing out feelers to see what valuation they're looking at. So they joined LeapMotor, who's also looking at IPO, probably by the end of this year or before the beginning of next, what did you think of the Dodge Charger EV launch Lei?
Lei Xing:
I think a lot of the chatter was on that noise thing on that.
Tu Le:
What did you think about that? Do you think that's necessary? Or?
Lei Xing:
I mean zoom zoom, right? If you want to retain your kind of brand or model signature, then do it. Although people say the EVs in the first place are quiet, but you know that's.
Tu Le:
I thought that the concept car looked great, but I thought the sound thing was a little bit cheesy.
Lei Xing:
And then just Ford confirming the job cuts and plus the raising prices for the Mach-E.
Tu Le:
$47,000 is the starting price. So the one thing that I also wanted to talk about that I forgot to mention it at the very beginning was going to the Woodward Dream Cruise. On Saturday, I thought it was July, but it's August. Prior to COVID, there's a road in Michigan, metro Detroit, called Woodward Avenue and it takes you all the way down to Detroit. And it goes from the burbs out into Detroit and they have an event called the Woodward Dream Cruise. And I remember when it started 28, 30 years ago, and it was just 20, 30 cars that were just making a bunch of noises. Chirp of the tires, burning some rubber on Woodward Avenue and it's become such a huge event. It was cool. It reminded me of growing up in Detroit, seeing cars, and seeing a lot of, it’s a cultural and it's a community event. So that was the coolest part. The crazy thing. And this is the funny part. Jay Leno was there, and he was invited by Ford Motor Company. They had blocked the northbound side of Woodward Avenue for 10 minutes in order to get some F-150 Lightnings on the road. It was just completely annoying because Ford effectively kind of sponsored it, which is kind of lame. But I've seen some cars and I was like, man, I want to get that car. One of my favorite cars in the world is a Pontiac LeMans GTO, love it. And there were a couple of Italian exotics, not many, but a few Teslas out there, but pretty much a lot of Detroit muscle and some Cadillacs and some Lincolns so super cool.
Lei Xing:
Right and then there was the Pebble Beach, Monterey, Quail, all that’s going on. Yeah. And just to add the CATL’s H1 report, you kind of saw, I think was their profit was still pretty good, but it took a hit because the upstream Tianqi Lithium, right? They smashed their report because of this rising prices, that was interesting I thought which I think we talked with Henry a little bit. And then just the EQE making that the headline from the CNEVpost report I thought was funny: give me a reason to not want a NIO or something?
Tu Le:
$90,000 for the EQE, $90,000. Holy cow. I tweeted it about I was like you can't sell it for $90,000, are you kidding me, so.
Lei Xing:
But then for that positioning, there's no way Mercedes is going to put it under a certain price point. There is just no way. They'll address certain customer base, but…
Tu Le:
That market is shrinking, right? You agree with that, right? The Chinese consumer wanting a Mercedes just because it's a Mercedes, that's a dying breed. I think the logo is less meaningful than the features and how compelling the brand messaging is, right?
Lei Xing:
Yeah, I think what's really interesting is let's look beyond the SUV market and the sedan market. So the two segments that are really developing, interestingly, one is the electric high-end MPV market. That's going to be crowded. And the other one is the off-road, high-end brands. And there's yet another brand announcing, I think next week, which is the M brand from Dongfeng. So the sister brand to the VOYAH, right? So it's called Mengshi, which means, I don't know what the English for it is, but it's positioned as a premium electric off-road brand. And we already have RADAR, which is much more below, I think. And we're going to have TANK, Great Wall Motor’s TANK, they're going to move into the NEV pretty soon like what Haval did.
Tu Le:
Quickly, I think any type of advertisement for an ICE brand is kind of dead on arrival. I just don't know how many Chinese consumers really, really are like, dude, I think, generally speaking, they're expecting NEVs, right, so.
Lei Xing:
And BYD and company, the Denza Inception concept, one of the new Ocean series, the Frigate 07, what the heck is a Frigate?
Tu Le:
I think it's a boat, no? A ship?
Lei Xing:
It's a military ship that’s being unveiled. So we will talk about Chengdu next week and there's this weekend, there's the World New Energy Vehicle Conference which CATL’s going to announce the first customers for their Qilin batteries. And next week is the one of the Mengshi’s unveil. And then next week we talk about August sales.
Tu Le:
Which should be interesting.
Lei Xing:
Because some of the preliminary numbers were don't look that well.
Tu Le:
At least not for Li Auto and a couple of others/
Lei Xing:
Crunch time.
Tu Le:
So one of the housekeeping items that you and I wanted to mention was that Monday September 12 in Detroit for anyone that is going to be at the auto show, Lei and I will be co-hosting a happy hour at The Brakeman in Detroit, right behind the Shinola Hotel off of Woodward. So if anyone is going to be in Detroit and is interested in a meeting up with Lei or I, we will be there slightly inebriated and happy to meet with you.
Lei Xing:
I think these are, rather than the auto show. I think there's some events happening. I'll do some sightseeing, just being there, and meet you, and probably do an episode together.
Tu Le:
Lions game, baby, Lions game!
Lei Xing:
Yeah. I think those are probably more important than the auto show itself, I think.
Tu Le:
Because there's not much going on at the auto show according to that schedule.
Lei Xing:
According to that schedule as of today.
Tu Le:
So and there's going to be that battery show, too.
Lei Xing:
Battery show hopefully will have time to check it out.
Tu Le:
There’s going to be at least a handful of people we know, journalists, executives that were interested in meeting with and talking with, so.
Lei Xing:
For me it’s just to touch and feel more than anything else, because we've been talking about China EVs & More for the last 1.5 years without me being on the ground, which I feel like I’m 10% not qualified to do it, but so, it’s just seeing these things, seeing the products. I think you can relate to it is much more valuable than anything else.
Tu Le:
I think what's important and cool for us is that you and I have seen progression and evolution and learning from all of these, not just Chinese companies, right? Because the western companies in China have also improved or have also evolved. And so just seeing them and then seeing their newest products to see how they've learned from the past is really significant.
Lei Xing:
Really important. And this is all happened within, since the pandemic began, basically end of 2019. The way I describe is what's changed over the last 20 years and what's changed over the last 2 years and what’s changed over the last 2 months. 2 weeks.
Tu Le:
Joe Biden in a speech 2 years ago was it, did say that we'll see more technological change in the next 10 years than we did in the last 50. So that's basically what you're saying.
Lei Xing:
And now, just right, T-Mobile teaming up with SpaceX offering that director to cell service.
Tu Le:
That's crazy, right? That's awesome, right? That's awesome.
Lei Xing:
And hopefully we'll kind of put out a notice or something.
Tu Le:
We will. We will.
Lei Xing:
We'll come up with something.
Tu Le:
For those that are interested in learning more about our whereabouts in Detroit during the auto show week, you can DM us. We will be happy to let you know the events that we plan to attend.
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.