MAX Episode #10 - John Voelcker, Contributing Editor - Car and Driver

In this latest MAX episode, Tu & Lei chat with John Voelcker, one of the most well-known & respected US journos and one of the first to cover hybrids and EVs in the US while he was  Editor in Chief of Green Car Reports for over 9 years.

John talks about car reviews, EV test drives, domestic & foreign competition, China EV Inc coming to the US and his newest venture, the Tempting Fate Tours. 

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Transcript

CEM MAX Episode #10 John Voelcker
Recorded on July 27, 2022

Tu Le:
Hi all, Tu Le here, one half of the China EVs & More duo. Lei and I have been brainstorming about different ways to bring you, our audience, relevant and compelling content about the China EV, AV and mobility sectors. Especially now that a number of companies that we’ve tracked over the 80+ China EVs & More episodes have become global phenomenon. 

 So I’m very pleased to introduce our latest China EVs & More MAX episode, where we bring you conversations we’ve had with special guests from the EV, AV and mobility space. 

In MAX Episode 10, Lei and I had the pleasure of speaking with John Voelcker, one of the most respected U.S.-focused automotive journalists. John is the former editor in chief of Green Car Reports, one of the first U.S. media outlets that focused on clean energy vehicles. He is currently Car and Driver’s contributing editor, and one of just 60 jurors for the North American Car & Truck of the Year awards, and who, in his next career, aspires to be an international man of mystery. Here’s our chat with John.

Tu Le:
Hi, John. Thank you for joining us. I think this is going to be a fun MAX episode. Lei and I have a ton of respect for you. We've been following you on Twitter obviously. And I started following you because I thought I saw a couple of tweets, and I said he's pretty balanced, not very opinionated, I like this guy. So, your Green Car Reports bio says you cover advanced auto tech and energy policy. So I have no idea what that means, so you’ll have to tell us about that as we go along through this conversation, and it also says you've written 12,000 articles. That's a lot of words, John. I want this to be interactive, Lei and I are pretty formidable when it comes to the China and Asia regions. Our expertise is beginning to invade and cross borders, and will go from a small trickle to a full gush within the next 5 years in Europe and the U.S. I don't say automotive anymore, I say mobility and transportation because it's all starting to bleed together.

So first, John, can you please introduce yourself to our audience? We have a pretty global audience. So quite a few of our audiences are in Asia, in Europe as well who might not be as familiar. So go as far as deep as you want to go with your introduction.

John Voelcker:
Thank you kindly for that gracious introduction. I'm honored to be here. And one of the reasons that I’m excited to do this is I have known for a while I needed to learn about the Chinese auto market much more than I did, which I think reflected a lot of North Americans and sadly probably still reflects some of the North American auto press. It's a very large place. It's confusing. It's way over there. We don't see any of those products here at this moment. So you know, ok, yeah, someone should think about it sometime. 

But to my background, my so-called career has been lumpy, but I suppose you'd say most of it has been in media, I trained as an engineer, and it's probably a good thing for the world that no one ever paid me to engineer anything. But I ended up getting into media, a technology magazine in the mid 80s, got into the management side. Back in the days when people were searching around for expertise on how to convert to desktop publishing. Remember Macintoshes, that whole thing, that was my sort of selling point for a while in the 90s. I helped start up This Old House magazine, and I built my first website in 1995 for that magazine, along with something that is now lost in history called Pathfinder, which was Time Inc. New Media’s website for all of its very powerful than magazine brands. And that taught me essentially about the internet. They actually built the first ad server. They built the first content management system, because this stuff just didn't exist. Unfortunately, they were doing it in a really expensive Rockefeller Center office space, which is not a good business model, as I say, in the beginning phase of the technology. But I learned a lot, bounced around, ran a startup that didn't work, and what we now call social media, bounced around some more, spend a year at Yahoo as a product manager. 

Around age 50, it was sort of you know, I've always loved cars. If I’m ever going to go freelance and become an automotive journalist, this is the time to do it. Things are mostly paid off. I just got laid off again. And so why not? I was lucky enough to get hired to be the editor of Green Car Reports, which was essentially a shell of a site owned by a company called High Gear Media. And for 9 years I ran that. I didn't actually write 12,000 articles. I only wrote 4,600. It gets easier after the first 2,000, I swear. So after a while, we were lucky, it's the only startup I worked for where we actually ended up on the positive side of the ledger. We found a home for the company. And I was kind of wiped after 9 years, said, hey, I’d like to take a little sabbatical. The new corporate overlord said, well if you read page 74 of the personnel manual you signed for 3.5 years ago, you would know that that's impossible. So with the blessing and my boss, I resigned, took a long road trip all around the country via a used car filled with full of old car parts, visited friends. And now since then I’m a freelance writer. And the big thing has been that about a year and a half ago, Car & Driver made me a contributing editor, which is a really big name here in North America, which has helped me.

Tu Le:
I have no idea what that means. What does that mean?

John Voelcker:
Contributing editor is a fancy word for, yeah, he freelances for us regularly, but important part is, you get on the masthead. So I can legitimately say John Voelcker, contributing editor, Car & Driver, which has helped with a lot of stuff. I do still go on new car drives, the conventional cars, but really all of my focus, all of my interest, and the articles I write and sort of presentations that I give and whatnot are really all about electric cars. The story that I tell is in 2009, when I joined Green Car Reports, our two key search terms were hybrid and Prius. When I left 9 years later, the two key search terms were EV and Tesla. So in that sense, it's involved fast I'd say in the last months, in the last year or 18 months, it's evolved faster than even I may have expected. So it's a very exciting time. And obviously, we have this set of new entrants into the market, first, American companies, but we're going to see companies from outside North America, entering the U.S. market, seeing an opportunity to build new brands.

Tu Le:
We’d like to think that where Lei and I have our expertise, is kind of been a catalyst for that last 18 to 20 months, right? So let's go back to this Green Car Reports. Did you have this vision that electric vehicles and clean energy vehicles were going to be a thing eventually or in the near future? Is that why you took on this role with the Green Car Reports?

John Voelcker:
I don't know if I could have predicted 15 years ago where we are today, but it was clear that hybrids were a growing piece of the market, that's electrification right there, proper battery, and an electric motor somewhere in the drivetrain. There was virtually no decent journalism on the topic. You could have a few sort of technically oriented things about this is how it works. But it looks weird and it's not very much fun to drive. I have a friend in Detroit who I remind every couple of years, because I was 50, right? I am going to go in and try to be an automotive journalist against a whole bunch of scrappy 22-year-olds who actually have racing credentials. This is a challenge. So I needed a schtick, right? I needed a thing. And so I decided there really wasn't good journalism about electrified vehicles. So that might be a niche. And I started editing for hybridcars.com and eventually got hired into Green Car. Green Car is a terrible term, because most people don't buy the cars that fall into that bucket because they're green, many of them do, but most of them want to either save money or have a cool car. Save money is mostly Prius. 50 miles a gallon in the U.S., plus or minus. Cool car, obviously the first 5 years of Teslas, right? So I got into it at a point I’d already actually had a ride in a Tesla. I was lucky enough to get a ride in the second ever Tesla Roadster in 2006 through complicated circumstances. But I was sort of, it's badly built because it's British and it creaks. But this is really remarkable because we just accelerated from 0 to 70 miles an hour on a city street in about three and a half seconds. That's cool. And so obviously there's something there.

And it migrated once, I mean the Tesla Roadster was fine, but it was expensive, limited production and didn't really register. And Elon Musk wasn't quite as musty as he is today. But once it became clear that GM and Nissan were going to introduce, quote, mass market EVs, then all of a sudden it became a thing that deserved more coverage. They had their issues, both of them, plug-in hybrids no one understands, and salespeople have very little interest in explaining them. Plus there's no guarantee they’ll ever get plugged in. So what you bought is an expensive hybrid with a plug that never gets used, maybe. And 74 miles is simply irrelevant in the North American market. So the Leaf was very limited at first. But think of the progress we've made in 10 years, it was only 11.5 years ago that the first Nissan Leaf went on sale. And now we've got 200, 300, 400-mile EVs at a variety of price points, and globally, this enormous array plus a huge regulatory push.

So green cars is sort of the least worst way to say we're writing about fuel efficient cars. Most of them have electric motors somewhere. We're writing about these new things called electric cars. And by the way, there's a whole bunch of policy stuff. And when you plug in your car, it turns out you get interested in where the energy comes from. So I ended up learning way more than I ever expected about electric utilities, power generation, coal reversal, combined cycle, natural gas, etc. Because the readers turned out to be interested in that. One footnote is carmakers still talk a lot about recycled materials. Ford had ground up blue jeans for ceiling insulation or something. My readers at least could not have cared less. Those articles got zero traffic and I mean, zero. But you go where the traffic is. So I wrote a lot about Tesla, big surprise. In the end, we built it into a site that had a substantial seven figure audience that got regular advertising, from those budgets for the marketing.

Tu Le:
So we can credit or blame you for the Tesla stans or at least catalyzing that group of people.

John Voelcker:
Nah, I serve as a frequent target. I am clearly, I mean the way I put it is this. If I’m being criticized for being totally in the pocket and paid off by fossil fuel companies to continue belching hazardous CO2 into the atmosphere until we all die, about the same amount, as I’m being credited for being a completely unrealistic, unicorn riding, glitter eschewing idiot, who has no idea how business of the auto industry works. Those are about equal. I'm probably in the right place. It's just that the Tesla stans fall into one particular religious subset.

Tu Le:
And they're on the extreme end, of that, there's no cross section of them.

Lei Xing:
You know John, you remind me, that 2009 is actually the year that China kicked off of this strategic path toward EVs, believe it or not. And one of my first experiences driving an EV was in, at the end of 2008 when BYD launched the F3DM, so one of the first plug-in hybrids. And then I got to test drive the Leaf actually in 2010 in Tianjin. So I had those experiences, I remember those. So speaking of EVs, tell us some of the latest EVs that you've test driven and what are your thoughts on what's hot, what's not?

John Voelcker: 
With a couple of exceptions, this largely applies to cars available in the North American market. But I have test driven probably 80% of the EVs on the market. My favorite, hands down, is still the Porsche Taycan, just because it's so lovely to drive, but I’m, don't have Porsche money.

Tu Le:
But we can admit that it's not really an EV, I mean it's a poor example of an EV because of the range, right?

John Voelcker:
Yeah, I mean my grudge is more that they have no one-pedal driving. There is no re-gen when you lift off the accelerator, all the re-gen comes through the brake pedal. There is this sort of approach, I think, found most in German makers where you need to make an EV but you don't want to scare anyone. So you essentially duplicate what you have in a gasoline car, and sometimes that goes to silly lengths, most people who get familiar with one-pedal driving, love it, and it takes a little bit of learning, but the fact that it's not even offered in the Taycan is kind of regrettable. That said, it's still a wonderful car. It took me about 90 seconds to figure out that it had more power and more road holding than I have courage, and that was fine. I had a lovely day drive after that. I think in terms of mass market cars, the one that I continue to find impressive is the Hyundai IONIQ 5. I wrote an article a couple of years ago saying essentially Hyundai Kia is the one to watch in electric cars. Simply because if you look at how quickly they have risen in the U.S. and global markets, with some exceptions, the improvement generation on generation is striking. I've now driven and reviewed four generations of, let's say, a Hyundai Elantra. The first one I drove was, okay, bottom of the market, sub-compact sedan. The new one is nice. I think it's more stylish than a comparable Toyota. Hyundai has finally grappled with some of its handling problems. They have a better warranty in this country than pretty much anyone else. So just that getting to where they are, but then the IONIQ 5 all of a sudden, I prefer it over the Volkswagen ID.4, probably a dead heat with the Mustang Mach-E. Model wise, comparisons are always tough because there's the supercharger network above and beyond everything, which is such a defining selling point. And it's also expensive now. You can't get a Model Y these for under 70 grand new, so different price point than the rest. But I at this point, if I were to buy an EV, I would seriously consider the IONIQ 5, depending on what else was selling. Drove the Lucid Air, which is lovely, very smart engineers there. I hope that continues to get up and running. Ditto the Rivians.

Tu Le:
You thought the Lucid was a bit of a work in progress still or?

John Voelcker:
Getting a car company from your first few hand-built production cars to regular production of X hundred a week is the work in progress really. I think the car is probably fine, they have some user interface quirks like everybody else, so does Rivian. I'm on record frequently whining about the fact that in the Rivian, if I just want to change the direction of an air vent, because I decide I’m hot or cold, you have to go into the screen, click down three levels, and then move a diagram. That seems to me counterintuitive, if not dangerous. But they also change things pretty quickly. They’ve backpaddled on a price rise in response to anger from their depositors. And they did that quick, which is good. So I think all those companies are learning. But when I look at the market, I wrote an article what, 2014, so 8 years ago, saying Elon Musk had to make 6 million cars to make history. Because if he does that once you've scaled up the market to make the numbers compare, he will be the first person since Walter B. Chrysler in 1924 to start a car company from scratch, from the ground up, whose brand is still with us today. Because one of the great industrialists of the 20th century, Henry J. Kaiser, tried it, started a car company right after World War II, built 700,000 or 800,000 cars, but couldn't make it work. Kaiser was the last great startup, never mind the Deloreans and all of that stuff. Tesla’s volume, I think they will get to 6 million.

Tu Le:
I was just going to say Kaiser didn't have a 24 million vehicle market in China when he was around, did he? So.

John Voelcker:
That is correct. Although he did have, because he had built Liberty ships for World War II, was better connections to the steel allocation board in DC than any other person in America. But it's an interesting story. It's rapidly receding into the ebb & flow of history. But I think now Tesla will get bigger. And if Tesla can start a new car company, why can't Rivian and Lucid? And why can't BYD and Xpeng and so on, take products they already have in their home market and bring them to North America as well.

Tu Le:
What I was going to mention John was, it's actually easier now to build a car company. I bet you the three of us if we raised half a billion bucks, brought in Foxconn or Magna, and some UX designers, we could Frankenstein a car together for probably half a billion dollars, right? I think it's the factory and the manufacturing is really the complicated part, number one, and then also the capital intensive part. So I think hopefully, because one of the challenges I see with the U.S. market, when compared with what's going on here, is that just the number of new players is still very small, Lucid, Rivian, you'd mentioned those two already. 

John Voelcker: 
Handful. 

Tu Le:
Canoo, they're struggling. They'll continue to struggle. We saw yesterday that Faraday needs to raise another $300 or $400 million.

John Voelcker: 
My comment on Faraday, I thought they were dead.

Tu Le:
Man. Lei knows this. We've been following this guy for 5 years now, and he was a scammer in China. So it is unfortunate because when you look on LinkedIn at some of the NIO employees, at some of these companies up in Silicon Valley that are primarily Chinese, they'll have spent probably 1 or 2 years at Faraday and then jumped to NIO or jumped to another company or Tesla or something like that. And so let me ask you this, John, when you're reviewing EVs now, how do you approach it differently than the dozens of ICEs you've reviewed in the past?

John Voelcker:
In general, I look for most of the same things with a few added EV specific things. One of them is things like brake blending and that applies to hybrids too. Can, have the designers of the vehicle seamlessly blended regenerative and friction breaking, which Hyundai learned was much harder than they thought it was. And then just threw effort at it until they got it. Another one is charging speed. Another one is sort of practical shape of charging curves. I continue to be irritated when a carmaker will say, and then all the advertising and PR will regurgitate, add 80 miles in 18 minutes or something, because there's about six asterisks applying to that. You have to have a charging station that can go that high. Your home one can't. It has to be operating properly. The battery has to be at the right temperature. The ambient temperature has to be right. The battery has to be almost but not completely depleted, etc., etc., etc. With luck, I hope over time these things will become more general knowledge. But I try to couch those things, and I’ll just take it to your random fast charging station, plug it in and see what happens. There's the difference between EPA rated range and what range I get and what efficiency I get on a, I’m not scrupulous like any Car & Driver or Motor Trend where they have test tracks and all that. But I have a fairly regular route I cover in different weather, and I can get a feel after say 500 miles on what the real-life performance of the thing is. But I have always approached reviews that I’m not writing for the EV fan boy. I'm not writing for the person who's already had two EVs. I'm really looking at it as an EV as how does this fit into a variety of, quote “average American” life cycles, duties, uses, your 2.4 vehicle suburban household. How would this slot into that? If I go back and read my review, the first Leaf, it may have been a little overly rosy compared to that. But now we have 200-350 mile EVs. And so we can just say, okay, should you buy a Tesla Model Y, a Hyundai IONIQ 5 or VW ID.4, or should you buy any one of these dozen compact crossovers with gasoline?

Lei Xing:
So, John, what do you think about this disruption that are, this tidal wave that's coming? It feels like it's coming, but it also feels like we're still a bit far away. You talked about in the last what, one, two years or a couple of years, how things have rapidly changed. What's different now with this, disruption than past, let's say, 2009 or 2010 after the financial crisis.

John Voelcker:
It's a great question. I think there's a saying, I think it was Bill Gates that “change always comes more slowly than people predict it will, until all of a sudden, it comes way faster than anyone believes.” I think we may be seeing some of that cycle. Let's be real. A 74-mile Nissan Leaf is not a viable vehicle for 95% of the market. It may fit within 85% of their duty cycle, but especially in America, there is no viable mass transit, the country has spent 70 years building highly dispersed, very, very low-density suburbs and exurbs that are separated by law, by miles from the nearest place to buy a quart of milk, when the nearest place to work. You have to have a car and many of these suburbs, you'll starve to death. Insert note about ride hailing, but whatever. So Americans buy cars based on worst possible use case. My kid gets sick at 3:00 in the morning and I have to drive that kid 88 miles to the hospital quickly. Well, if my EV is at 40%, can it do that, etc. So there are a lot of use cases. Now, the vast majority people don't fall into those, but it's not how we think. So, that's one challenge. That said, Tesla really kicked the entire global industry in the backside by introducing a range of cars that was from the start, not only long range, which at that point was 250 miles or more, but good looking, cool, tech forward and sexy. And that got them their foothold in the early adopters and the tech community. I've always been amused that Tesla owners do not index high on environmental issues, just not all that interested, some of them, but not the bulk of them. So, you know…

Tu Le:
But that's the brilliance of Tesla, though, no?

John Voelcker:
Oh absolutely! I always say Tesla did it the traditional way in the auto industry. You start at the top and you migrate down into more affordable vehicles. Every automotive innovation except hybrids came in either in luxury vehicles or in racing vehicles. Think electric self-starters, automatic transmissions, disc brakes, turbos, whatever, they all came in at the top and then filtered down as they got smaller, less costly, more reliable. That's what auto engineers do. So Tesla followed a very traditional path. GM and Nissan did not. They tried to echo the Prius, which I think was a wrong lesson, but that's a different topic. So I think there is a gradually increasing acceptance that climate change is real. I can't speak to what Chinese car buyers think, but I do think that many Americans who were on the fence for a while are starting to kick over with all of these insanely hot summers, wildfires and whatnot. And the regulatory push can't be denied, especially in Europe for environmental reasons, and in China, for industrial competitiveness and domination reasons. And in that sense, I think North America is behind, but the fact that there are now compelling electric cars that suit people's needs, Americans are also much less brand loyal than virtually any European country. So we're willing to shift. That said you had asked, Lei, about the coming speed of transition. If the three of us, we're going to start that car company you talked about.

Tu Le:
Let's do it.

John Voelcker:
We would need not only $1 billion soup to nuts just to get the first product into Foxconn. We would need another $1 billion just to get the brand recognized in North America. And this actually comes from when the Japanese makers started their luxury brands, Toyota with Lexus, Nissan with Infiniti, Mazda with Amati, which never happened, they pulled the plug at the last minute. It was said back then you need $1 billion to get your target audience in America aware of your brand. Let's say, $2 billion today, maybe minus a discount for more targeted media and popup events and whatnot, but still, yeah, you got to design it, you got to have the battery capacity, which I think is where China has a significant advantage. You got to be able to build it. I remain agnostic about volume production of vehicles by contractors. Before he died, I spoke to Jim Harbor, the famous auto production guru, who said essentially, there's a sweet spot for car assembly, where it makes way more sense for an OEM to contract it out. He said a standard car line running one shift, full tilt, 120,000 vehicles a year at max. He said, anything below 80% of that, you're better off giving it out to Magna or Valmet, or whoever, Foxconn wasn't a factor then. He said something like the Pontiac Solstice, Saturn Sky, Opel GT should absolutely have been built buy a subcontractor.

Tu Le:
But John, do you think he would feel that way still from a number standpoint, because the EVs have a lot less complexity, a lot less part numbers. I actually think that the OEMs need to keep that as long as they can while they're transitioning into the mobility space. Because one or two of these OEMs are going to lose value very quickly, become a $2 or $3 billion brand that Google is going to take a flyer on and make them a contract manufacturer inhouse effectively, right? At $2 billion why not? They have $250 billion, $300 billion in the bank. Get rid of the marketing teams and the administrative teams, just keep the manufacturing, and then build their Waymo or Go or whatever. In today's EV, if that volume is still a valid, 120 that you're talking about, still a valid number, I guess?

John Voelcker:
The data I’ve seen says that an EV in a comparable class has about 30% fewer parts. We're not talking 80% fewer. So 30 is a substantial cut. I think one of the bigger challenges for the automakers is that a much greater amount of the value chain is not made by them. Any OEM on its own has to have an engine line, even if they cooperate on transmissions, they all are going to make their own engines. I think more broadly, I agree that not every OEM that's around today will be around in 5 years, but I mean that's been the history of the industry. There used to be a Chrysler, and a Fiat, and a Peugeot, and a Citroën. Now that collection of 68 brands or however many it is, is called Stellantis. And I think that will continue. When the U.S. industry went bankrupt in 2009, the White House Task Force felt that it was idiotic to keep Chrysler going, just sort of mashing into GM, and then you had two U.S. automakers. But they essentially gave it to Sergio for free. 

The other thing, in addition to the issue of contract manufacturing where the numbers lie, I don't have data. If you do, I’d love to see it. Is that OEMs are terrified of being disintermediated, obviously. They've already essentially figured out that batteries are going to be a problem. And so they are sort of joint venturing or some of them are joint venturing with battery companies. They obviously are worried about losing their dashboard to Google or Apple.

Tu Le:
Most of them will, I think.

John Voelcker:
Very possibly. I guess people are always shocked when I tell them Tesla doesn't actually have Apple CarPlay or Android Auto, because they think their stuff is way way better. We'll see. That may work for tech adopters. I can make the case that it might work for regular car buyers, who knows? I do however, it's been interesting talking to you and reading your stuff and listening over the 18 months since I met Lei. Because it makes me realize that North Americans do use their cars differently from what I understand Chinese buyers to do. Despite your Lincoln ad of a lovely luxury SUV being a place where mom can drive home, but just not go in and deal with the kids. I don't know that Americans want to spend personal time in their cars as a place. They clearly want to use vehicles with wheels to get from point A to point B. But the whole idea that I want to sit in my car and play video games, watch a movie, gamble, talk to social media, I'm not convinced about that. Those maybe sort of ancillary things, distracted driving is real. But I’m not sure that there is the same business model for dashboards here that there appears that people appear to believe there is in China. Convince me I’m wrong.

Tu Le:
So let me unpack that really quickly and then Lei you add on to it, because this is absolutely a China thing, because most Chinese consumers have really only been driving for 35 years, right? And so the digital natives, those born after 1990 (Gen Zs), their connected life is they were born into it, right? And for people like me, the last 5 years in Beijing has really seen an improvement in the pollution. This is also car companies, whether you're Chinese, whether you're European, whether you're American, trying to create new use cases, right? Because I joke around and say that automakers are the best marketers, because they've convinced us to spend $40, $50, $60, $70,000 on a product we use 5% of the time, right? So they're making up new ways in order to try to sell you that service. I agree, I’m not sure that people want to go live in a car for a weekend, but in China, it's still this hopeful, yuppie kind of outdoorsy thing that's very new to them. And there's one child, not many families in China have two and three kids. And so it's absolutely an age thing, a family thing, number of family members, but also a really really digitally forward community or country. So Lei, go ahead.

Lei Xing:
I’m just going to say that Chinese buyers buying an EV they no longer look at things like range. I don't think it's on top of their list, but rather, how fast the HMI is, how fast the response is, what kind of ADAS, how autonomously capable your car is, I think they buy, and how well you're served, this pampering that they're looking for these things, rather than, let's say, range. Because I think one of the reasons being that the infrastructure is much more well developed than, let's say, in the U.S., so what they're looking at is much different I think nowadays, that's why we call it the smart EV, so it's really the smart part, but not really the EV part I think that's kind of the condition on the ground.

John Voelcker:
I'm curious, though, this whole idea, I have watched the whole autonomous cars will be driving us everywhere by 2020 bubble, crest and fall. We may now be in the point where it's going to come faster than we think. I remain to be convinced because here we have tort lawyers. So autonomous vehicles have to be measured against perfection, not against human drivers, which in most cases they already exceed, but the first telegenic upper income family that gets wiped out by an autonomous vehicle becomes a big enough deal where it sets back technology. But this whole idea from OEMs that they're going to make huge bundles of money by charging people by the month or by the year, for stuff that's built into their car that they thought they bought, but got a three year free trial, I will be curious to see how that works. Remember BMW tried to charge to activate CarPlay, and after enormous amounts of shrieking and yelling, they finally decided that their customers didn't like that and they stopped. There's a screen that went around last…

Tu Le:
Full stop, John, BMW was just stupid, right? It's not a feature that is only on a BMW right? So it was just dumb for them to do that.

John Voelcker:
Heated seats, adaptive cruise control, the list of features that are relatively technical or require added equipment that it may be easier just to build into everything, and then turn on or off through software. What do people get pissed off about having to pay for unless they get the base car at the base price and turn everything on and off? Cadillac had its first round of super cruise people in 2019, I think, suddenly discover they had to pay $24.95 a month to keep the thing going. I don't actually know how that worked out, because surprise none of them talk about retention rates. Although I do see GM periodically having, hey were you a former OnStar customer? Did you let it lapse? Come back to us. We love you all over again, and it'll be cheaper, for a while. I'm not sure the retention rates on a lot of that stuff are particularly good. But the whole idea that you're going to get an extra $100 a month out of my wallet for all these features, I remain highly skeptical of.

Tu Le:
But I want to give the OEMs credit, right? Because that's AB testing, right? Let's try this, let's try this. And then to your point, right? I think Tesla basically builds the same car for a lot of maybe not the long range or standard range but some of the other technical features, and then they just have them off, right? Until you decide to do the service or pay for the service. But so Dan Amman said ride hailing was going be a $5 trillion industry and when autonomous vehicles enter the marketplace, right, point to point robotaxis. So this is where I feel the technology companies have a distinct advantage because they don't need to learn how to build recurring revenue via services. They already do it. Legacies have not. So if I’m using an iPhone and I already have Apple Music. Is Apple going to give GM a piece of that pie? Just so that they can play it in their GM vehicle? I don't know how that's going to work, right? It'll be interesting to see because no one's really kind of cornered the market on that. Even FSD, $12,000 for you BETA testing and potentially killing yourself or someone else on their behalf is, seems really dangerous to me, but I don't know what you think Lei?

John Voelcker:
But I think you started out by saying AB testing, auto companies have now finally caught onto AB testing. I would argue that at least in this market, people paying 40 grand for a product, don't want to be tested on. They don't want to find out that we made a choice, but you just picked the wrong bucket, or you got put into the wrong segment. We want by and large cars that get us from point A to point B without any question at all, which is why Toyota sell so many cars here, despite them being, in many cases, not particularly stylish, not particularly nice materials inside, etc., because they are dead nuts reliable, or at least that is their…

Tu Le:
Well-earned reputation.

John Voelcker:
Largely, I think back by data, maybe people the new generation who are buying smart EVs, are willing to be Beta testers in their vehicle. But I don't see that necessarily here. On the other hand, I'm 64 and I’m hardly representative of a 22-year-old car buyer, although cynical people in my industry will tell me, yeah, none of them have any money to buy cars anyway.

Lei Xing:
That's the conundrum.

Tu Le:
Ah, jeez.

John Voelcker:
So it's people about halfway in between us who are actually the sweet spot in the market. If you're a family with teenagers plus you have three of them, live further out in the burbs and have to drive 48 miles every day to, you don't want to be beta tested up. You don't want to have to think about a feature that you had on your last five cars and now you have to pay for it, so.

Tu Le:
Yeah, I agree, I think creating services revenue for the legacy OEMs is going to be, and the EV first companies, but especially the legacies is going to be pretty challenging, especially in the numbers that they are forecasting that they're going to have as part of their global revenues overall. But it goes back to that creating new habits and changing habits, right? Because the biggest habit that people need to change is going to the gas station, right? And I think we're starting to see that slowly into your point about what Bill Gates said super-fast now, right? I think we're starting to see that hockey stick in the United States, because I’m getting contacted more and more by western journalists now about what's going on here, especially about BYD, like oh my god where did this company come from, right? You know what, guys, they've been here all the time? They've been the whole time, man.

John Voelcker:
They were shown in Detroit several years running for god's sakes.

Lei Xing:
Here's a good place where I wanted to get this very important question across, which is speaking of BYD, the Chinese EVs are coming to the U.S., that's a foregone conclusion. So my question is, what is your reaction when you hear that? And when it's inevitable, they're coming, and especially considering, so BYD is exhibiting at CES in 6 months. And you can bet they will make a huge announcement regarding the North American market. What is your reaction?

Tu Le:
You sent me that message that they entered Japan, right? So I mean they are going to have tentacles all over the place for sure.

Lei Xing:
Going back to history, we knew that BYD exhibited in Detroit several years in the early part of the last decade, following Geely’s appearance in 2006, long time ago. What do you think? When as an American journalist, automotive journalist, what do you think personally? And what do you think the industry reaction is? Do you think that's a threat? Do you think it would help the industry? What, can you tell us your reaction?

John Voelcker:
I think given the structure of the global industry, which all three of us know, it is inevitable. The interesting thing about Chinese makers, if you look at the structure of imports into North America, the British actually invented importing cars, because they desperately needed hard currency to pay their war debts. So they sent 90% of their postwar production overseas, including a whole bunch of cars to North America. Company called Austin sold 14,000 cars in North America in 2 years, which in 1947 and 8, because people were so starved. That curve ended as the American makers got ramped back up by the early 50s, then came Volkswagen, which had a much bigger row to hoe, but did a very smart thing. They said, you can sell Volkswagens, but you got to buy $50,000 of spare parts first, which none of the Brits had done. By the late 50s, first import wave. You had the French, some Italians, some British. Then you had the Japanese come in the late 60s, first to California, starting to spread through. And by 1980, they had eaten enough shares where there was a combination of trade pressure, political protests, and so on. And they started opening factories here. The idea has come to be accepted that if you were selling substantial numbers of cars in a market, you probably put a factory there at some point. That's how the Japanese now have a huge footprint in North America, make one of the most American-content cars sold here, etc. All of those countries that I’ve just named, their home market was not enough to scale globally. A British car, Britain had the second largest auto industry in the world but that we're talking an order of magnitude lower if not to China. The Chinese home market for a long time was probably sufficient for the larger companies. The Geelys, the BYDs, etc., to SAIC, to build a car company. They don't need to come to North America.

So let me flip the question back to you. Why are they coming to North America, which is the lowest priced market, the most demanding, very large in geographic area, often irrational and obsessed with 3-ton pickup trucks. Why are the Chinese EV makers coming to North America?

Tu Le:
John, I think it’s a reflection of what's going on in the world, I think that they see Tesla, they see Elon, they see valuation, and I think that they are enamored by all of that, right? Because these founders are as ambitious, Li Shufu, Wang Chuanfu, they're all as ambitious as Elon, number one. And then number two, outside of a handful of Chinese companies that have really been able to penetrate the U.S. market, and I’m thinking Tik Tok and I’m thinking like a DJI and consumer drones. There's not that many, right? So these Chinese companies still want that “I made it in the U.S.” kind of thing. I think those two things are the reasons that they want to enter the U.S. market and they want to sell more than then GM and Ford and all those guys too, at the end of the day. So Lei, what do you think?

Lei Xing:
My answers are simple. One, you're not global if you don't sell or produce in North America and two, quality wise, I think Chinese brands have proven themselves not in the auto industry, Tu just mentioned companies like DJI in terms of Chinese brands’ product quality, I think it's much different nowadays, the perception of Chinese products and brands and especially in the smart EV space, I think they are very credible quality wise. This perception has changed. So those are two opportunities. And that it's a natural next step for them to be global. You have to be elsewhere not only in China. That's the simple answer.

Tu Le:
And the point that I made about valuation, Li Shufu was really, really trying to chase Tesla valuation with Geely for sure. I've been told that by at least a handful of people. What are your thoughts on software eating the world? Can the legacies succeed without writing their own code? Can they buy that stuff and still be pretty formidable in the future?

John Voelcker:
I think the jury’s out on that one. I am really, I happen to like voice interaction with vehicles. It's the safest. And 10 years of OEMs utterly failing to provide it in any workable way. Really, I think not understanding some of the basic principles of UI design, made me somewhat skeptical. I think. I think Google eats a large number of dashboards. We'll see what Apple does. I still don't believe they're going into the car business. The margins aren't there. We'll see.

Tu Le:
I believe that most management at legacy OEMs didn't know what UX or UI meant 4 years ago, number one, and I wrote in my newsletter this week that most of the management didn't know what buggy software was, because they probably had an iPhone or an Android phone, and it was pretty seamless for them, right? And so for them to manage teams and have software just be so buggy, that must have been quite a revelation for them, right? So anyways, please continue, John, I’m sorry.

John Voelcker:
I hope my basic take on OEM executives is, instead of giving them beautifully polished, brand new examples of the cars that their company builds every 3 months, they have to drive 5 year old ones.

Tu Le:
I think if they got into an ID.4 and drove it every day, they would see the difference between how an iPhone and its latency in the UX is much different than an ID.4, right? And then they get it. So I absolutely agree with you on that. Let me ask you another way. Do you think the legacies will be able to get to be serviceable at software development and UX and UI design in the next 5 years, because that's how much time they really have, right? They don't have a lot of it.

John Voelcker:
I think some of them will be, I’m not going to place bets on which ones, but I think many of them are aware, especially the larger ones who have the funding to think about these things. I'm not particularly a fan of Mazda software, which hasn't changed in about 8 years. Mazda has bigger problems than UX.

Tu Le:
But they've always kind of designed nice cars, nice looking anyways. But anyways.

John Voelcker:
Indeed, if you believe actually that small life cars that handle are something the market really cares about.

Tu Le:
Yeah.

John Voelcker:
And a small portion of the market does, however.

 Lei Xing:
That's what I was following up on my last question. So what do you think it's critical for the Chinese brands to be successful in the U.S. and I’m talking about specifically EV brands because I don't think there will be any Chinese brands launching ICE vehicles in the U.S., that's just not going to happen. What do you think of are the success factors for them?

John Voelcker:
Send your teams to North America 3 years before you plan to deliver your first vehicle and send them all across the country to live with American families and understand what they actually do with the vehicles. There is a precedent for this because VW did the same thing with a load of executives I think in the early 2010s, when they had this goal under however many CEOs back it was, that they were going to take as a group 8% of the U.S. market by 2018. Didn't happen, in part, because they had the entirely wrong lineup of cars for North America. And the attitude was, if North American buyers were smarter, they would buy our cars. You don't make it that way. So understanding how North Americans and Canadians are slightly different in some ways, use cars, what they put in the car seats, the regulations on car seats are horrifying. The kinds of things that lead a family to say all right, you know what, let's go visit aunt Mary, sure, She's 220 miles away, but we can do that in about 4 hours. That is not a use case that a lot of other countries have in vehicles as large as ours. And we are used to cheap gas. Nobody knows what electricity costs here, but electric cars are not even going to be as expensive as gasoline cars for the same miles.

So understanding the kinds of things we do with our cars, because if you try to send C and D segment sedans over, that's a declining segment, C and D segment SUVs, good start. But is there a Chinese company that makes a proper North American sized three-row, D-segment SUV, and why do Americans buy so many of those when they're impractical in cities in much of the rest of the world? You really have to understand the market and then have the clout to tailor the products that are being sent here and presumably built here to this market. The result of that Volkswagen executive road trip across America was the VW Atlas, their first three-row SUV, the largest MQB extension of the platform you could make, because they didn't have demand for that anywhere else in the world. North America, the dealers desperately needed it and they're selling a bunch of them.

Tu Le:
I see a few of them here. They're not called Atlas, they're called something else.

Lei Xing:
Every car I see here, I'm in Massachusetts. Every other car I see is a Hyundai Palisade, or a Kia Telluride, right? Or Toyota Highlander, those type of cars here.

John Voelcker:
The Kia that you just mentioned, the Telluride in particular, absolutely stunned. I think the North American market and certainly my counterparts in the auto press, it's just so good. It's stylish, was a good value for money until they realized that they had twice as much demand as they could build, it ticked all the boxes. So I don't know how this would play. But my other advice to the Chinese companies is look at what Hyundai and Kia have done. Yes, look at Toyota and relentless refinement and improvement. The machine that changed the world very important book, but look more recently in the U.S. market at what Hyundai and Kia have done.

Tu Le:
Let me take one fun one. You had a business trip last week, so you were offline, off the grid for a few days. I think it was for this Tempting Fate Tours side hustle. Can you tell us a little bit more about this?

John Voelcker:
There's actually at least two side hustles, but Tempting Fate Tours, find us on Youtube/tempting fatetours. We're just about to start a new one. The idea is my friend Tom and I got really antsy last February and we decided we should go somewhere and buy, am I allowed to say shitboxes on this podcast, buy a couple of shitboxes and drive them somewhere and then hopefully sell them. We bought two 30-year-old Anglo-Japanese mongrels, which actually made it a total of 5,800 miles to Radwood Austin, except that got canceled while we were in New Mexico or postponed. So there was actually a little hitch there, but it's basically just road trips through America to see what happens when you buy really cheap, unreliable cars and take them places. Last week's thing was actually a group of Isuzu owners. Isuzu used to make cars. I have one. Getting together and driving to Tennessee for a combination birthday party, barbeque and Isuzu meet up. As what does. You got to have fun with the cars.

Tu Le:
How people showed up?

John Voelcker:
24, I think. Nine cars, and we took them, there's a thing called the Snake, which has 389 curves in 33 miles

Tu Le:
Right, right, yeah.

John Voelcker:
We took the cars down that. I have photos, but it's, Americans do wacky car trips, not as often as they would like to think they do, but it's still part of the American dream. Freedom used to be an automobile for Americans. Now freedom is one of these. I'm waving a cell phone in the air, but there is still a set of people who are sort of like, yeah you know what, screw it. Let's take the weekend and drive to Florida. I sense the Chinese market is not so much like that.

Lei Xing:
It's becoming more like that.

Tu Le:
There's just not a ton of nostalgia with cars yet, just because there's only been a vehicle market for 35 years, right? And so when we see and Lei knows this, when we see an old Buick from the early 2000s, like look at that thing, right? Because and a lot of these cars are…

John Voelcker:
Old Buick from the early 2000s

Tu Le:
Because they get trashed. I think it's 15 years, is it 15 years Lei before they got to get...

Lei Xing:
Yeah, scrapped.

Tu Le:
Anyways, so, John, thank you for spending this hour with us.

John Voelcker:
Thank you! This is, I was just going to say, I apologize for the time constraint, but should we do this again at some point in the future? I'll bring questions for you guys.

Tu Le:
Very good.

Lei Xing:
Sure. We'll have a part two. 

Tu Le:
Yeah, we can do that, but we will see you live. May we'll do it live in September during the auto show or something?

Lei Xing:
Yeah, Detroit. 

John Voelcker: 
That would be fun. You kids in your Spaces.

Tu Le:
You're the one with the million Twitter followers, so you're the social media god, man, we're just learning from you, dude.

John Voelcker:
Yeah, like 20,000 or however many, but they're all very special.

Tu Le:
They're like your children.

John Voelcker:
Every single one of them is special to me, exactly, all 20,000 of them.

OUTRO:
This is your co-host Lei Xing.  It was super fun talking to John and listening to his humorous takes of his perspectives on all things EVs over here in the U.S. John gave a super practical recommendation, one that might often be overlooked, for Chinese EV brands preparing to enter the North American market, especially the U.S. market, one of the most politically charged, unique and demanding markets in the world. So executives out there from China EV Inc. like NIO, BYD, Xpeng and others that have those ambitions, if you are listening, you should take John’s recommendation to heart, since it comes from one of the most respected and knowledgeable industry journalist who has covered EVs for years. We thank John again for his candid insights and perspectives.

Tu Le:
Lei and I will be sharing more of our conversations with the men & women around the world moving the EV/AV mobility sectors forward as part of this China EVs & More MAX series. Some folks will be instantly recognizable, but some will just be people that are doing amazing things in the space that we think deserve to be highlighted. Don’t worry though, Lei and I will continue to host our live weekly China EVs & More Twitter Spaces room that summarizes that week’s most important news coming out of the China EV, AV and mobility space. For those that can’t catch the live show, you can find the China EVs & More pod on all major platforms or wherever you normally get your podcasts. 

As EV adoption reaches its global tipping point, it’ll be even more important to stay updated on everything that’s happening here. Lei and I are confident that China EVs & More is the best resource to do that. Until next time, as always, thanks for listening!