Tu and Lei start out the podcast with a final recap of August sales and the 16 EV makers that made up a large percentage of total sales. The broader lesson is that the EV sector keeps chugging along despite all of the continuing challenges with BYD leading the way into a likely record 4Q.
They then move to NIO earnings and the disappointing guidance for 3Q but the extremely upbeat 4Q sales forecast. NIO is looking at ~70K 4th quarter. Tu is skeptical and believes that Bin Li is calling on his Ops/Manufacturing team to step up and deliver NIO a recording setting quarter driven by ET5 sales.
As an aside, Tu & Lei unpack the surprise announcement by Mobileye using NIO ES8s to test in Detroit and all of the implications of that announcement happening on the eve of the Detroit Auto show.
Tu then switches over to a discussion about GM’s new import division that’s launching the Durant Guild in the Chinese market.
Lei closes out the pod by talking about his upcoming trip to Detroit and being able to meet Tu for the first time in real life!
Tu and Lei start out the podcast with a final recap of August sales and the 16 EV makers that made up a large percentage of total sales. The broader lesson is that the EV sector keeps chugging along despite all of the continuing challenges with BYD leading the way into a likely record 4Q.
They then move to NIO earnings and the disappointing guidance for 3Q but the extremely upbeat 4Q sales forecast. NIO is looking at ~70K 4th quarter. Tu is skeptical and believes that Bin Li is calling on his Ops/Manufacturing team to step up and deliver NIO a recording setting quarter driven by ET5 sales.
As an aside, Tu & Lei unpack the surprise announcement by Mobileye using NIO ES8s to test in Detroit and all of the implications of that announcement happening on the eve of the Detroit Auto show.
Tu then switches over to a discussion about GM’s new import division that’s launching the Durant Guild in the Chinese market.
Lei closes out the pod by talking about his upcoming trip to Detroit and being able to meet Tu for the first time in real life!
CEM #82
Recorded 9/8/22
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 the China EV, AV and mobility sectors. What we 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 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 that at sinoautoinsights.com, which I encourage you all to do. Lei, good evening. Can you please introduce yourself?
Lei Xing:
Good evening from my side, I am your co-host Lei Xing, former chief editor of China Auto Review. This is episode #82. What an exciting day and what a sad day. So hail to the queen. What can you say, she’s the one and only, right?
Tu Le:
70 years, right?
Lei Xing:
Yeah, that's crazy. And I heard they're doing 10 days of mourning.
Tu Le:
This is like Thailand, then.
Lei Xing:
Yeah, so this is a huge deal, but anyways, back to the exciting day part of it. So just kind of recap today, alone, NIO is coming to the U.S., baby! Not directly though.
Tu Le:
They found their way.
Lei Xing:
Yeah, they found their way. Jeep’s got that all new EV plan, the Mercedes Rivian tie-up and the Chevrolet Equinox $30,000 EV, actually it's tempting, somebody's got to come out with a $30,000 EV! And then BYD with that big news, their first overseas passenger vehicle plant in Thailand and record breaking August from CPCA numbers in terms of new energy PV sales. And the other big thing is, obviously, the NIO earnings yesterday and Apple new iPhone, all those gadgets launch not car related, but it's kind of related.
Tu Le:
We're both getting 14Pros, I guess?
Lei Xing:
I'm due because I’m still using a XR. What do you want to get into first, you want to talk about the sales?
Tu Le:
Yeah, let's just talk sales because we’ve touched on them in the last couple episodes. But to summarize the couple of high profile EV makers that are listed in the U.S. have kind of fallen down a little bit, having some troubles, but some of their lesser known domestic counterparts are taking up some of that slack, ZEEKR’s taking full advantage of opportunities to take share, right?
Lei Xing:
So there was that list of 16 passenger vehicle manufacturers that did 10K or more. And they combined accounted for roughly 84% of the sales, which were 632,000, wholesale, which is a record, which is, I think, exceeded our expectations in August. What's supposed to be the lowest, one of the lowest months of the year, right? And against all of those black swan events, that's number one. And then number two, that Model Y getting into the number one spot, although that includes export, but still, right, 60 some thousand units.
Tu Le:
That shows Tesla's resilience.
Lei Xing:
Yeah and it looks like you've seen the rumor or expectations that they're going to do five, half a million in Q4 globally. And half of those are coming from China, Giga Shanghai alone.
Tu Le:
We had talked about this, I think last time as well that if the world is going to buy just over 10 million units, 60 something percent of them are going to come out of China, right? So not surprising.
Lei Xing:
Yeah, no, not surprising. I think Tesla what we're seeing, July wasn't as well. But all of a sudden this, August was a record, I think, right? And also they are, I think they are, production wise, you've seen all these delivery times being shortened. I think in a way that kind of reflects Giga Shanghai, what they have been doing. So it's, what do you think, it's one thing, it’s production. The other thing is demand.
Tu Le:
And what shouldn't be lost among all of this stuff about the 16 brands that make up the lion’s share is that BYD beginning to produce passenger vehicles outside of China along with Tesla that creates a lot of flexibility for them, where their domestic competitors, whether it's NIO, whether it's Xpeng, they're still struggling to kind of dial in and optimize manufacturing. These guys are just, it's like printing money because they just keep on doing more and more and more. It's like setting your watch, you can set your watch to the fact that the rest of this year BYD is going to probably beat every other month that they sell cars and Tesla too, right? So.
Lei Xing:
BYD, speaking of BYD, one number I saw from the CPCA numbers that stood out was BYD accounted for 70% of the PHEV market.
Tu Le:
I didn't see that.
Lei Xing:
So the PHEVs were about 130,000 units. And based on BYD’s number, they did half of 170,000 that they did were PHEVs, so you know, if you do the math, that’s lion’s share.
Tu Le:
And we've talked about this for several months now, that dark cloud is still lingering. It's over Chengdu, severely right now. It's in Shenzhen as well. So I haven't heard that Shenzhen being that severe. I've heard Chengdu being pretty severe with the lockdown.
Lei Xing:
It's been in many places, some severe, some not so severe, but, like we say, whack a mole, it could be your city next, but despite all of these, just chugging along, I think the EV sales. And if we look at the entire PV market, including ICEs, it was up close to 30% year on year. And that's the highest growth in the past 10 years. So that was something interesting.
Tu Le:
And that's say something.
Lei Xing:
In terms of, again, the penetration, the Chinese brands roughly 30% are now NEVs, within, in the entire PV market, 30% are NEVs and within the Chinese brand, it's over half, and for the JVs, it’s 5%.
Tu Le:
The one thing I do want to point out about the improvement in lead times to Tesla is also looking at this as almost their defensive play, too, because in a market like this, it's not tight, but there's not a lot of slack in it either. So if anybody has double the lead time than their nearest competitor does when it comes to vehicle delivery time, then they're probably going to go to a competitor. They're not going to wait, because there's so much product out there, and a lot of it is quality product where it could be replaced or a competitor. And you'd still feel pretty good about purchasing that vehicle, right? You wouldn't feel like you're getting second place because you didn't want to wait eight weeks, right?
Lei Xing:
And Giga Shanghai right now is the go to factory for many markets in the world, including Europe, still.
Tu Le:
I haven't heard a peep out of what's going on in Europe, not a peep. So.
Lei Xing:
That's why they've been doing this upgrade in the last few months. And now it looks like they're just right, just everything's clicking.
Tu Le:
They're setting the pace, them and BYD. BYD should be at 300,000 units a month now, right? Because we passed August. So that could mean that their, that Q4 is likely going to be 1 million, almost 1,000,000-unit quarter for them.
Lei Xing:
That’s crazy. Because we were only talking about 1 million quarters for the entire market like, just. So basically our friends at Snowbull, they did this chart, right? BYD’s market share, basically, if you look at it, holistically, 6 million units, 2 million will be BYDs that's what we're looking at just how things have.
Tu Le:
And this is the thing. And this is a football term, or a sports term. It's: the best ability is availability because if they can't build those cars, they don't sell those cars. So they should also be applauded for being super efficient. And utilization rates at their factories are just sky high, probably in the low 90s, right?
Lei Xing:
And the only foreign brand, aside from SGMW, in that 16 companies is the two joint ventures from Volkswagen. So 22,000 units. And that accounts for over 60% of all the EVs from JVs. The other ones we haven't seen much, if we're talking about a 10K club, they're nowhere near that.
Tu Le:
It's really setting the table for a mad, crazy Q4 because let's move on to NIO earnings. They basically gave us a disappointing Q3 forecast.
Lei Xing:
Yeah. And William didn't hold back on Q4, right?
Tu Le:
He didn't say that they're going to go 45,000 on ET5s, but he said they're going to go 45,000 on ET5s.
Lei Xing:
So what we are looking at is the number that's been out there a little bit is 150,000 units that is supposed to be their target, this is not confirmed, but from January to August, they did based on all these latest numbers. I think they did just over 80,000 units, right? Which means if they want to get to that number. In Q4 alone, I think they have to do more than six if I got the number right, like 68,000 units in Q4 alone, which means more than 20K a month average. Can they do it?
Tu Le:
I think the demand’s there. I don't know if they're operationally efficient enough to do it yet.
Lei Xing:
It sounds though from William that it's going to be a breakout quarter and something that we've all been waiting for a long time that when are they going to get there?
Tu Le:
But, Lei, this is also this CEO psychology, right? He's basically calling out his operations team, right? He's saying we have the sales. Can you guys support it? That's effectively what he's challenging his team to do, right?
Lei Xing:
And his supply base as well?
Tu Le:
Yes, and its contract manufacturer, right?
Lei Xing:
Yeah. But one number I wanted to throw out is the Big 3, including NIO. They've lost close to RMB10 billion in the first half of 2022. So what we've seen from the recent, the earnings from the Big 3 is one, the gross margins fell because of the battery costs and chip cost, issues, net loss, right? I mean they're still bleeding. When, I remember William talking about breaking even at some point. But maybe not. But it's like, when are we going to get there?
Tu Le:
We'll will eventually be profitable is basically what he's saying, right?
Lei Xing:
Right. But really the gross margins were taken a hit. And really, it's all these three earnings. It's kind of like, I call it a bummer, I call it probably forgettable. So that's why we hear so much looking forward to Q4. Because of these products pipelines are kind of going in. They're coming up.
Tu Le:
You know that Li Auto and Xpeng are also looking forward to Q4 as well. Because…
Lei Xing:
The reason I’m saying this is because of what's going on with the iPhone. We've been trading messages on the new iPhone. So I said Li Auto pulled a new iPhone with the ONE, three years and gone. Now they have the “TWO”o which is the L8.
Tu Le:
But that was a bit, and then I wrote you back: but Apple plans for that stuff.
Lei Xing:
So just I think the other important piece of news that William shared, our good friend Edison asked about the question on the battery, and he said it's delayed, the 150 kWh hybrid battery is delayed a few months. So there's one piece.
Tu Le:
And what's peculiarly missing out of the NIO news is anything really about anything significant about the ET7, right? They talked mainly about the ET5. And so that's where all the excitement is, right?
Lei Xing:
Yeah ET5 is going to be the driver, forr sure, their star model in terms of volume.
Tu Le:
It looks the part too, right?
Lei Xing:
Yeah, the ABB killer. There's so many names, so many..
Tu Le:
That was the other thing about Edison’s tweet, right? He asked who's probably in the worst position versus the ET5. And I think you and I agreed that it’s Beamer, right?
Lei Xing:
Well, Qin Lihong, he already said, we're going to beat the 3 Series in about a year.
Tu Le:
So for folks that are wondering, when we talk sedan in China, it's not super significant. It's less…
Lei Xing:
If you talk about EVs, right?
Tu Le:
It's less than a million unit market annually, probably 1 millionish. And BMW with the 3 Series. Now we're talking small sedans, small premium sedans. They sold around 170,000 last year. I think Mercedes sold about 140,000 C-Class, and Audi sold maybe a 120,000 or something like that. And then Tesla sold what, 130, I think, right? So there are all these kinds of rumors about 200,000 unit backlog and stuff like that for the ET5. I think you and I agree that number seems a bit inflated. But anything close would be an amazing get for NIO.
Lei Xing:
These three models from ABB, they are, regulars, right? They get more than 10K a month. And that's what ET5 is trying to do alone, possibly.
Tu Le:
And I don't I think you and I think that's not going to be a problem for it either, right?
Lei Xing:
It shouldn't be, I don't see that 200,000 order as real, but.
Tu Le:
Me neither. But I'm skeptical because of the operational issues. So if they can get everything running together smoothly, then perhaps we'll see that consistent 20, 30, 40,000 units a month, right?
Lei Xing:
I think what was revealed in the earnings call was William’s confidence in the ET5, because it's the only model produce at the NEO Park right now. So they can focus on that plant, on the specific model alone. And he said they've learned, they've had the learning curve on plant one. So supposedly, it should be a lot more smoother. That's why the confidence in him saying every month in Q4 will break records.
Tu Le:
Let's not forget that he's giving himself 3 months to get to that optimal space, right? NEO Park’s going to ramp in 3 months and then come Q4 they're going to be cooking with fire, right? So it's not like he's going to snap his fingers and then it's going to have 25,000 units a month of the ET5 come out of NEO Park. It's still going to take 3 months ramp according to NIO, right? Because they effectively forecasted at around 35,000 unit sales for Q3, which is about 11,000 a month, right? So.
Lei Xing:
Yeah, 31 to 33 was the guidance, right?
Tu Le:
But since we're talking NIO, we should talk about that tweet about Mobileye, that Mobileye sent out earlier today, that was pretty funny.
Lei Xing:
Yeah, that was a bit surprising because I didn't expect…
Tu Le:
It was a huge surprise.
Lei Xing:
Yeah, I didn't expect them to be in the U.S. first of all, on that AV front, because it was originally, the announcement was in Germany and Israel, so and it looks like about 50 units, not a small fleet.
Tu Le:
I'm disappointed by Michigan moles didn't tell me about this beforehand because the fleet, the 50 units must be within what hundred miles of me, so.
Lei Xing:
Yeah, this is based on a deal that was signed in November 2019. By the way, it did say in that presser that this is something for China and the rest of the world. So.
Tu Le:
And we should note that Mobileye is actually struggling a bit. So this is really good news for them.
Lei Xing:
Correct. They're struggling a bit in terms of being a what, tier-one or two supplier in the ADAS.
Tu Le:
1.5 I think.
Lei Xing:
ADAS market losing to some the domestic Chinese players and especially Horizon and those type of companies. That's correct. But at least this is, I mean this is essentially, it's globalization at its best, right? And we also saw Luminar retweet that news because they are the LiDAR partner.
Tu Le:
I think what's important here is NIO did a similar thing to what CATL did. They had cover fire because Mobileye made the announcement, not themselves. When CATL, Ford made that announcement and gave CATL cover fire, right?
Lei Xing:
This is actually coming at a very sensitive time, right?
Tu Le:
Very sensitive.
Lei Xing:
So it's both good and bad, but I think any, like for me like anytime it's exciting, right? Because it's kind of like last time I touched the NIO was how many years ago and now we probably going to at least have a chance to see it.
Tu Le:
So I’m going to, can I tell you about two lunches I had, one yesterday and one today, both with autonomous vehicle and functional safety folks that are very cynical about autonomous vehicles, very bearish. And so for NIO to make that announcement in Detroit the week before, or Mobileye, however you want to frame it, the week before the auto show, what, 3 days before Cruise Automation’s big event on Monday night in San Francisco. That's pretty bold, I applaud them for that. It's probably not going to land very well because of the auto show, but you never know, I’ll be quite frank. I still don't know if most of the folks in Detroit know who NIO is.
Lei Xing:
Yeah, and we shouldn't forget that. William said this, they've been studying entering the U.S. market what since 5 or 6 years ago, 2017.
Tu Le:
Basically since they started, right?
Lei Xing:
So this deal that was signed with Mobileye in 2019. This is actually part of that, I think, even though it's a global thing, but right, at least it gets the vehicle out in front of the public.
Tu Le:
It was strategic because Mobileye is basically Intel, right?
Lei Xing:
Yeah.
Tu Le:
So this wouldn't have happened if it was a Chinese partner.
Lei Xing:
So many entities involved and at the sensitive time.
Tu Le:
But if you look a couple layers down, right? Because like you said, it's a Chinese company with an Israeli partner that's using American equipment, right?
Lei Xing:
And remember, oh, by the way, congrats to our friend Omer on getting that Asian win, probably one of the Japanese Big 3, because he said he was going to Japan…
Tu Le:
I’m thinking it’s, you think it's Japan? I thought I was thinking maybe Hyundai.
Lei Xing:
I think it might be Honda, because it said L3, I don't know, I’m just guessing, but so they are an Israeli company that’s setting up shop in China, I remember he talked about that deal with Volkswagen that could have, there's part of that in China as well, because Volkswagen is in China. So think about that.
Tu Le:
You know, these guys, the LiDAR guys, they are, like Omer, he's a dude that's hard not to like. And so he doesn't want to deal with the politics of that stuff, right? So unfortunately, that's just kind of nature of what it is, but he's also not an OEM so maybe he doesn't or Innoviz doesn't have to deal with that directly, right?
Lei Xing:
Yeah, no, I'm just saying, exciting also in the sense that it's all over the world, right? Just in one day, all of these things happening. I don't know.
Tu Le:
That was, that Mobileye thing was a bit of surprise because, what was surprising to me was the Detroit part of it.
Lei Xing:
Which is perfect as leading up to my trip, something to look forward to.
Tu Le:
So if there are any listeners that are Mobileye employees that can help us get a ride while Lei’s in Detroit because I’m determined whether Lei’s here or not in the next few weeks, maybe months, to get a ride in one of these and I probably will, I’ll probably have to make a few phone calls to figure out who do I need to talk to about it, but..
Lei Xing:
Yeah, I'm doing that as well.
Tu Le:
So if we could do that next week, I think it would be great because there are other guests that you and I will be kind of hosting as well. And then Taylor and Jack, if you guys are bored in Bean Town, you guys should come to Detroit for a couple days next week. If nothing else have some square pizza, right? Have some Detroit style pizza in Detroit with your China EVs & More buddies, right? But what else do we want to talk about?
Lei Xing:
There's other, speaking of BYD in Thailand. Did you see that NETA opened their first overseas NETA Space in Bangkok earlier in the week or last week.
Tu Le:
They're going to be fighting it out for, they're going to be pushing out the Japanese number one, in Thailand. And Thailand is going to be a jumping off point for the rest of Southeast Asia from a manufacturing standpoint. And so can NETA out-BYD BYD? That's the question.
Lei Xing:
Going back to the sales a bit, the other really big phenomenon this year is really the export of EVs. That's accounting for increasing share of that sales number. And that's why you see these moves, and that former MIIT Minister Miao Wei, he kind of agrees with me, that China is going to reach that target three years ahead of time, well over that target.
Tu Le:
The other thing too, was CNEVPost had that article about that analyst or the research firm that said that 2023 we're going to get to 10 million units. Remember, we said that about a month ago, right? We said that was possible, right?
Lei Xing:
This year, based on the current, so CPCA’s secretary general, he's predicting 6.5 based on the August numbers, and based on seasonality, based on the ending of the subsidies, I think we're going to have a Q4 that’s going to be a massive number. I'm talking about a couple of million units. So at current rate, I think the issue is not going to be whether we'll get to 6.5. The issue is going to be how much over that. And a simple rule of thumb is every month when you see the numbers, the growth rate has been over 100%. So last year was 3.5. This year 7 million units. It's not out of the question.
Tu Le:
The one thing that should not be lost on this is that the Chinese government really sees how important this is, the EV sector. And so they're doing everything they can to support and maintain the growth, right? They're not, despite the black swan events, despite the COVID, despite supply chain issues. Without their help, it doesn't get to 6 million units, right? This just goes to show how important this sector is, whether it's batteries, whether it's actual OEMs. It's these are pillar industries that are going to be lynchpin to China still being able to maintain its economy, right?
Lei Xing:
Right. I mean over here we've seen all these EV announcements, launches, but the numbers are still really compared to the Chinese market, is just so small and insignificant.
Tu Le:
But I will say this Lei, you know the IRA still hasn't really trickled out from the effects of the IRA still haven't solidified yet. But I do think that like on the ground in Detroit, there are entities and organizations that are very hopeful. But sure, part of my conversation with my lunch dates was whether or not they can just get, the legacies can they get the job done, right? Because Rivian isn't here. They have a presence here, but they're not here. And Lucid isn't here. I saw my first Lucid today, by the way, anyways. Cool.
Lei Xing:
Rivian got a stamp of approval from Mercedes, at least that was interesting, in the vans part of it. I never thought Mercedes would team of up with Rivian for the van.
Tu Le:
But that was actually that was kind of cool though, because that reinforces my theory that everybody's talking to everybody. And for Rivian it's a win because they get to attached their, to your point they get a stamp of approval, right? They have a Mercedes, we are partners with them. They vetted us and they proved. And so this is when Arrival is falling down, this is when all these other commercial trucking companies are being challenged as well, right? And semis, electric semis are still a ways away, I think. So.
Lei Xing:
We still have the AITO right, earlier the week, AITO M5 EV talking the talk, everything is better than the Model Y? But right, Model Y is doing 60,000 units, let's see if AITO get to that point.
Tu Le:
I said to Jill, that SERES and ZEEKR, they're kind of pseudo startups because they got support from these huge entities, Huawei selling via Huawei stores where you already have a huge footprint throughout China is such an advantage for a SERES. So let's pat them on the back for the job well done, but let's also acknowledge that their job was already half done for them, at least on the distribution side. And with ZEEKR, it's Geely. So they also have massive support. And Geely is going to be juggling a lot of balls, come 2023, whether it's RADAR, whether it's ZEEKR with the MPV whether it's Volvo, Polestar, their ECARX IPO, there's a lot going on for them. So god bless them because most of it is really positive news, but it just becomes can they execute now, right?
Lei Xing:
Yeah, and speaking of Geely, so NIO, with Mobileye in the U.S., now that's the second time that there's been an involvement of a Chinese EV startup working with kind of a not directly U.S. company, but through Intel after the ZEEKR and Waymo thing that was announced last year, right? So those are the interesting plays.
Tu Le:
And let's point that out, rght? These companies entered the U.S. market, full stop. They didn't do it by passenger vehicle sales, but they entered the market, right? So they went through the back door, okay? Because they imported 50 cars. And or NIO imported 50 cars, exported 50 cars, and now they're going to be driving around the U.S., right? Good for them.
Lei Xing:
Probably Mobileye or Intel took care of all those issues, right? Not NIO per se, but I mean NIO is just providing the…
Tu Le:
But you know what I mean like, but the end result is the same. They have cars in the U.S. that Americans will now be able to see, touch, feel, create the brand awareness, create curiosity, and then yeah.
Lei Xing:
Smart move.
Tu Le:
I totally agree, and it was like a gangster move, right? Because we're doing into Detroit right before the auto show, that’s gangster.
Lei Xing:
And it’s like, look at me, the Detroit Big 3, right? It's like why is Mobileye not working with any of those three players.
Tu Le:
I'm wondering Lei, how if that caught Mary and Jim flat footed.
Lei Xing:
We know NIO’s been in the U.S. since many years ago with their San Jose office, right?
Tu Le:
So it's not unusual to see a NIO in San Jose, right? But in Detroit, that's for a lot of folks here that still are drinking the kool aid about Detroit Motor City, this is hallow ground, right?
Lei Xing:
It's a win for Motown as well, right?
Tu Le:
So I would argue that a lot of people wouldn't think that. I wouldn't see it that way, but I agree with you.
Lei Xing:
Yeah, we got NIO, we got Motown. What a combination?
Tu Le:
And at the end of the day, this really ups the ante for the Big 3 to step up. So.
Lei Xing:
Well they are, Jeep, finally.
Tu Le:
That was actually that was actually better late than never. So Jeep is launching four new EVs by 2025, correct? Is that what it is?
Lei Xing:
In the, in North America and Europe, one dedicated to Europe, the Avenger, I think.
Tu Le:
And they'll import them into China eventually, probably.
Lei Xing:
That's their move as they no longer are producing in China, which is maybe is good for them for now.
Tu Le:
So the reality is set in to all of the foreign legacies, not just Volkswagen, GM and Ford, but all the foreign legacies now are fully embracing the transition over to electric vehicles. I don't think the Japanese are still a bit more conservative, but they are also transitioning.
Lei Xing:
They're the last in line, what, though Toyota announced that updated what 3.55 million EVs globally by, was it 2030? That was the announcement last year, right?
Tu Le:
And they're writing that $5.8 billion check.
Lei Xing:
They're doing that partially through BYD right? That th bZ3 model that's launching later this year. So different tactics playing out. And that's why it's exciting, right? To see these news and events. Now the other thing was just that Hongqi announcing their target of selling half a million NEVs by 2030 with 13 new products. And that three new concepts, EV concepts, they did in metaverse as well.
Tu Le:
That half a million sounds a bit conservative to me, to be quiet frank, by 2030.
Lei Xing:
It does sound conservative if it had said half a million by 2025, then it would have been bold.
Tu Le:
Right. One thing I did want to ask you, since you didn't bring it up is what do you think of this? Did you read that article that Nori wrote about the Durant Guild from GM, the imports?
Lei Xing:
Yeah, I saw that presser, I didn't read his article, but I saw the presser, which is again, it's that import strategy of these U.S. companies, right? Jeep and GM.
Tu Le:
So Nori, being the sly fox that he is actually interviewed Julian Blissett, who is the GM China head. And a little bit of background for folks about GM in china. Over the last 5 years, they've lost 33% of sales. And I think last year they were at 1.3 million units. And so importing Tahoes, Corvettes, electric Hummers is not really going to move that needle, but I understand the logic because they're halo vehicles and it gives a better, it provides a better light for the cars that mere mortals in China can buy from Chevrolet, from Buick, from GMC, so I think it's just a few years late. I think it's an okay idea, but I just think it's a few years late.
Lei Xing:
I mean there's still a market for these when you and I lived in China, the grey market imports of these pickups. And we talked about this a few times and it's a niche. Now with this Guild thing that just trying to have this branding around it, kind of like the Lincoln Way that kind of help Lincoln have this aura, sense of service wise, branding wise.
Tu Le:
I was joking with Nori that Chinese people aren't going to even know who Durant is, right? He was like they're going to think he's Kevin Durant, the basketball player.
Lei Xing:
Who by the way, is more famous than the GM Durant in China.
Tu Le:
For those that are wondering, I forget his first name, but Durant is the founder of GM. So these are supposed to be
Lei Xing:
Who basically pulled all the brands together.
Tu Le:
Exactly. He kind of created the whole vertical integration, right? Because you're going to be in a GM vehicle for your entire life. You start out in a Pontiac, you get a raise, you move to Chevy. And ultimately you end up when you're an executive 20 years later in a Cadillac, that was his whole thing.
Lei Xing:
But I mean GM in China besides Wuling, the MINIEV, besides the Cadillac LYRIQ and the Buick they've shown a couple months ago, other than that there's not much chatter, on their EV path in China.
Tu Le:
The brands, Chevy, Buick, they're all kind of on a downward trend like Nori said, right?
Lei Xing:
Right and as others.
Tu Le:
Exactly. So they're not, so GM is not, doesn't have this problem in isolation. Every foreign brand is really being challenged right now by their domestic Chinese counterparts. The other thing that I wanted just a couple things. Mullen acquired a majority stake in Bollinger Motors. Did you see that? So it's a cash, and cash and stock transaction. It's about $145 million investment. Mullen, I just looked, it's only valued at $362 million itself. So it's two struggling companies that maybe think that coming together could create a superpower. But.
Lei Xing:
Take Faraday with them.
Tu Le:
Well, Faraday might be a little bit more Scheizer, right? You give Mullen and Bollinger, the benefit of the doubt but Faraday, they just kind of like what other scandal do they have. But and there's not much about not much meat on the bones, but obviously Porsche is going to be IPOing later this year. And i think that's going to be up to $80 billion, $85 billion. The one thing that I read was the Porsche family was going to take the voting shares. I think that's kind of just kind of a mistake, but that's what is that.
Lei Xing:
I think 12.5% was being floated for retail, is that correct, and also the concern on Oliver Blume, being a dual CEO right? Which is, but it's exciting, it’s what, it's the biggest IPO since so a long time, in Europe, right?
Tu Le:
The crazy thing is, Porsche is generally the most profitable car company in the world, right? And they only really make hits.
Lei Xing:
I did see a Taycan for the first time in my neck of woods today.
Tu Le:
Did you buy one?
Lei Xing:
Not very often you see one. I've seen some Panameras, but that looks.
Tu Le:
So I forget how rich people in Michigan are, because I’ve seen so many M, M7s or M8s or whatever, like these cars, couple hundred thousand and like and these trucks, right? As in Michigan. Everyone has an F-150 like a $90,000, not the cheap one, the $90,000, F-150 Raptor, the Eldorado or whatever, like even my nephew, who is 17 years old, he has a Denali Canyon. So it’s just like, I just looked at my brothers like, what? So anyways.
Lei Xing:
Ask them how much they pay a month. You see that viral video? Oh I'm paying $1,200, or $1,300 a month.
Tu Le:
I saw that I did see that, and I was like, wow!
Lei Xing:
I'm paying $500 a month for mine.
Tu Le:
So I just kept wondering, do they work for Taylor Ogan at Snowball or how can they afford that stuff? But we'll talk housekeeping right now. You're excited about going to be in Detroit.
Lei Xing:
Yeah so I’ll see you on Saturday man.
Tu Le:
Yes. We will be waking up early and watching the Lions beat the Philadelphia Eagles. Then our friend Steve LeVine is going to be flying in.
Lei Xing:
The schedule is firming up. It looks to be an, exciting will be the understatement.
Tu Le:
Because I think you and I are going to like, it's going to be a lot of the day of will probably get to do some cool stuff for the day before we'll find out about something cool. It's going to culminate on next Friday. You and I getting in some penguin suits, right?
Lei Xing:
And just seeing some old friends from way back, even the 90s, whom I knew.
Tu Le:
Lei, for me, it's just going to be seeing friends, not on zoom, meeting them for the first time.
Lei Xing:
And I was talking to someone in China, a British guy, and then he's asking, how's the COVID situation in the U.S., I'm like, who talks about COVID anymore? Nobody cares anymore and that's kind of right, and what's happening on the ground in China as we speak, so. But anyhow we say it, I miss China wholeheartedly and hopefully we'll go back sometime. And the other housekeeping issue is this fall into the winter, next year there's quite a few events industry related. So next up there's the MOVE America, which is in Austin toward the end of September. We are, China EVs & More is a media partner. We have some discount codes, if you are interested to attend, let us know, you probably want to throw out one of those PR docs. Next, there's some events, there is the LA Auto Show, CES next year and some other events hopefully that we’ll get to check out or travel around.
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.