Tu and Lei begin their 100th episode with a discussion on the muted Guanzhou auto show and how it was affected by COVID.
After a long discussion about all the happenings at the Guangzhou auto show, Tu and Lei move onto a discussion about NIO Day and how NIO seems to be one of the few automakers outside of BYD that is looking forward to 2023.
After a chat about NIO, Tu and Lei give out their end-of-the-year awards to the good, bad and ugly companies that made news throughout 2022.
Tu and Lei close out the room by answering some questions from listeners of the live show.
Tu and Lei begin their 100th episode with a discussion on the muted Guanzhou auto show and how it was affected by COVID.
After a long discussion about all the happenings at the Guangzhou auto show, Tu and Lei move onto a discussion about NIO Day and how NIO seems to be one of the few automakers outside of BYD that is looking forward to 2023.
After a chat about NIO, Tu and Lei give out their end-of-the-year awards to the good, bad and ugly companies that made news throughout 2022.
Tu and Lei close out the room by answering some questions from listeners of the live show.
CEM #98 Transcript
Recorded 12/30/22
Tu Le:
Hi everyone and welcome to China EVs & More where my co-host Lei Xing and I will go over the week's most important and interesting news coming out of the China EV, AV and mobility sectors. What Lei and I discuss today is based on our opinions and should not be taken as investment advice. If you enjoy this room, please help us get the word out to other enthusiasts and tune in again next week.
My name is Tu Le. Happy New Year everyone. And I am the managing director at Sino Auto Insights, a global 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.
Xin Nian Hao, Lei, can you please introduce yourself?
Lei Xing:
Xin Nian Hao! This is your co-host, Lei Xing, former chief editor of China Auto Review. This is episode #98, a happy Friday, special Friday edition. Last working day of 2022, last episode of 2022.
Tu Le:
It's unbelievable that it's the end of 2022 already.
Lei Xing:
And we should pat ourselves on the back. This is episode #98, but once we get the Zach Anderson MAX episode out…
Tu Le:
That's on me. So apologies for that. Lei, apology.
Lei Xing:
So this will actually be the 100th episode that will be published, if all works according to plan. So…
Tu Le:
Congratulations Lei. I think it's quite an accomplishment, man.
Lei Xing:
We're going to be going into our third year of doing this, hard to fathom.
Tu Le:
I still think between you and I, I don't think there's anyone else in the world that covers the market, the Chinese EV companies, mobility companies, chip companies, battery companies, and how they've invaded Europe and the United States, the rest of the world anyways, better than we do.
Lei Xing:
It's been a weekly ritual right? So, topics today. Where do you want to start? So Guangzhou Auto Show, NIO Day, awards.
Tu Le:
Let's start with. So I thought and I'd sent you these about a couple weeks ago, some awards, end of the year awards that will have a little fun with you. You and I can debate because there are a couple that I would say are a little bit different from my opinion versus yours, but yeah let's start with the Guangzhou Auto Show and then talk about NIO Day a little bit and then move into the year, end of the year awards and then we can reflect on some of the larger events or happenings during the course of the year, that kind of shaped 2022 and what will shape in 2023. Part of my newsletter was kind of a year in review, so we can do that.
Lei Xing:
So Guangzhou Auto Show, I'd summarize it as “hot and cold.” Hot being , it got off to a fiery start with that company that until two days ago, nobody probably haven't even heard of the Beijing-based design/engineering firm IAT, had one of their concepts caught on fire. That was so that was the hot part. And then the cold part is, this is the first time the Guangzhou Auto Show is being held in late December. And luckily, it was held after a delay, and cold, literally and figuratively, I think from what I've seen in the media posts, crowd was not that great. From a media perspective.
Tu Le:
I think everybody's in Sanya dude, everybody's on vacation.
Lei Xing:
There were some no shows of some of the new models that were expected.
Tu Le:
This is no surprise, right? It's the last week of the year. And for everyone to hustle when half of their team, if you're based in Shanghai, Beijing, or one of the larger tier-2 cities, you're likely, half of your team is, does have COVID, right? The other half is on vacation.
Lei Xing:
And this is the first time ever that an auto show crosses a year, first auto show since China announced the opening up on the 26th. I think it was toned down in terms of kind of the type of press conferences, reveals. So they were only a handful, right? Obviously, JIDU was, everybody was looking forward to JIDU ROBO-01.
Tu Le:
And they showed up.
Lei Xing:
Too, yeah, the mass production model, so in addition to the Lunar Edition. And then the ROBO-02 kind of the sports coupe style sedan.
Tu Le:
You and I are on a group chat with one of the JIDU executives and it's refreshing to see that number one, they are in a country that is known for its speed, China speed. They are just all pedal to the metal and just getting it done from a product launch standpoint. And it's drama free, no issues about capital, no issues about IP, it's really, really refreshing. And it's nice to see that I think they're going to be a major player. They're going to push a lot of new features, a lot of new technologies, and a lot of their competitors into that next level of EV design, feature set capabilities. And with Baidu as their technology partner, they're clearly going to be a leader in that space in China.
Lei Xing:
It's breaking boundaries, I think, no door handles on both the 01 and the 02, A-to-A pillar screen, almost, right? So right now it's just about execution more than anything else? Joe said it's day 669, so less than two years after official formation, right? Next step is deliveries in Q1 (correction: should be Q3), perhaps next year. And 02 will be for 2024, I guess.
Tu Le:
They've doubled the book on the Lunar Edition of the ROBO-01 from 1,000 to 2,000 units, right?
Lei Xing:
I think the 02, the ROBO-02 is directly, I know we talk to our contact at JIDU, but it's definitely gunning for the Model 3, ET5, BYD Seal type of segment I think.
Tu Le:
If you look at both of the products, they are a crossover SUV and a premium sedan, right? So what is the current two product lineup for Tesla? It's the Model 3 and the Model Y which are both long in the tooth. We will see an acceleration of sales decline and demand slack from Tesla because of these companies that are gunning directly for them with these new products in 2023.
Lei Xing:
We'll talk about Tesla. But certainly it's, the 01 is the Model Y and the 02 is the Model 3 for JIDU. Basically, so yeah I actually, I think it was, actually just not too much, I guess. I wouldn't say fanfare, but it was a kind of normal press conference, right? No drama.
Tu Le:
Which builds up CES and it builds up the Shanghai Auto Show in April of next year.
Lei Xing:
Yeah. Done with JIDU, but right off the bat, Li Auto stole the spotlight by announcing they are delivering 20,000 vehicles, 10,000 each for the L9 and L8, at the Guangzhou Auto Show. So I think that was a big news.
Tu Le:
Congratulations to Li Auto. That's a big number and in a very challenging environment. So.
Lei Xing:
Yeah, they had, and the L7 is launching on February 8 I believe that's coming next year and then plus their first BEV model. So.
Tu Le:
That is going to be big for them. The BEV model is going to be big.
Lei Xing:
See, even without, that's how you make noises, right? Even without a new reveal, you can still make announcements that we're like, throwing down the gauntlet, right? We're 20,000 and NETA. NETA, they, I think they did not show the NETA E, the kind of the sports coupe, right? But they did announce that they're going to deliver over 150,000, becoming the first smart EV startup to get to that annual threshold. So that's important. And then I think the only models that was making a lot of noises or dunking on other people was the AION Hyper GT, a lot of dunking on the Model 3. And then that car is actually going into production, I believe with the price point of about RMB300,000.
Tu Le:
That’s that killer market that owns 92% of all NEV sales, RMB300,000 and below.
Lei Xing:
Yeah and I think that model is actually a direct competitor of the ROBO-02, almost, based on the size and the styling, I think.
Tu Le:
I think we'll see a lot of copycats of the ROBO-01 and ROBO-02 in 2023 and 2024, where there will be full screens for the front console, no physical door knobs. I think we'll just see a lot of copycats.
Lei Xing:
Yeah, so Jay is in the room, maybe in a few minutes we can pull Jay up. He was there, first time actually, attending an auto show. So stay with us, Jay, And then I guess just some of the announcements on longer term. So GAC AION announced they want to sell 1.5 million NEVs a year by 2030. The entire parent company, GAC Group, is eyeing a trillion RMB revenue and 4.75 million sales by 2030.
Tu Le:
Wow. So let's remind everybody the auto show is in Guangzhou and GAC is based in Guangzhou, so it's an important, if not…
Lei Xing:
Home court!
Tu Le:
Yeah that's what I meant to say.
Lei Xing:
And then HYCAN is also part of GAC. They unveiled the V09 MPV, the electric MPV, that's another one of those weird looking, crazy looking e-MPVs on the market in addition to the Denza D9, ZEEKR 009.
Tu Le:
The bananas thing about the China market is you can launch a crazy vehicle and still sell a few thousand a month, no problem, because China is such a large market.
Lei Xing:
Yeah, and it's interesting they're all calling these MPVs “9”s for some reason. You see that right? Even the Maxus MIFA 9, it's also a “9.” So that's interesting.
Tu Le:
I don't know what the numbers, I don't know whatever.
Lei Xing:
And then other than that, Tesla had their Model S/X Plaids, but they said they're going to announce pricing on January 6. Other than that, there were a couple of PHEV models from Great Wall Motor and really nothing. Well, if we count Venucia. Venucia is a unique brand, it’s what we call the Chinese JV independent brand, one of maybe only two remaining other than Baojun, right? It's from Dongfeng Nissan. And an interesting part of the Venucia Ve Concept is it previews a model that's launching in 2023 that will utilize Horizon Robotics Journey 3 chip.
So, we're now seeing Horizon seeping into these kind of foreign joint venture brands, right? So.
Tu Le:
They're starting to be a major part of product road maps, technology and feature product roadmaps for many automakers in China. And in 2023, we will likely see more announcements for Horizon chips in German, Volkswagen products too.
Lei Xing:
Yeah, I mean Volkswagen obviously being a shareholder, investor that's coming in some of the new ID. models. I think other than that, that's pretty much it. Even compared to 2021, the number of reveals, kind of debuts, I think were at least cut in half, if not more.
Tu Le:
And I am still dealing with a bit of whiplash because talking to friends on the ground there, some are sick, some are on vacation, some are like screw it, I'm just going to go because a few journalists contacted me, asked me my thoughts about the Guangzhou Auto Show. They're like, I'm just kind of going because we haven't traveled in so long and I kind of want some Guangdong cai (cuisine), right? Like Cantonese food. So..
Lei Xing:
It's the dim sum, we call it the dim sum auto show, whereas the Chengdu Motor Show is the hot pot. So I think, the sentiment I saw some of the press conferences on live stream. A word that was used was challenging. I think it was for everybody in 2022, but it was important to have this show kind of to have some kind of an impetus now that China is opened up. But it's going to get worse before it gets better in terms of COVID restrictions or people getting sick and not being able to work. So case in point, BYD face that right? Tesla somewhat. So I think this was, show, I think always Guangzhou is the show at the end of the year that kind of gives you hope for the coming year, and that's what it tried to do.
Tu Le:
We should remind folks in the west that in China normally pre-COVID. Christmas was a western thing, so expats celebrated it, but Chinese New Year is the big one. So everybody's normally still working, not really taking time off at this time of year, local Chinese is what I mean. And then they take two or three weeks off at Chinese New Year. So this is why it's a little bit surprising to Lei and I that they don't seem to be as like normal working. And so that's a little weird to us.
Lei Xing:
Also interesting today is the “Laba” holiday. So on the Lunar calendar it’s the 8th of the last month. Yeah, it's kind of signals, kind of the start of Chinese New Year.
Tu Le:
The season.
Lei Xing:
Actually, this year, we have two “Labas,” because the previous “Laba” was in January. And with the early Chinese New Year. I think we would expect pretty bad numbers in January.
Tu Le:
I think Q1 is going to be pretty challenging just in general.
Lei Xing:
I think that's the consensus on the industry. Hopefully it’ll get better as the year goes on.
Tu Le:
An early indicator as well. I read an article just before I jumped on that said TSMC has gotten some cancellations from their tier-1 clients, meaning that the GMs and the Volkswagens are reducing their order book for at least the early part of the year. So that likely means they're seeing a bit of softness in demand on the sales side as well globally.
Lei Xing:
The only other new launch was, from the foreign brands at least, was the Audi, the imported RS e-tron GT. It was close to RMB1.5 million, but that's, right?
Tu Le:
No news, and it gets no news.
Lei Xing:
Yeah, so still Chinese dominate all the headlines, pretty much.
Tu Le:
Which is, I have to say still surprising. I would hope that the legacies by 2023 will be able to speed their operations up to keep up with the velocity of announcements, products, brands that launch in China. But till now, the second to the last day of 2022. So for the better part of 3 years, they have not been able to revise operations in order to quickly move along with the market here in China or the market in China. So it's still a struggle for the legacies.
Lei Xing:
This decade is shaping up to be the golden decade for Chinese EVs, and 2023 will be another difficult year because ICE sales will be down, it will be down big. And that will be a nightmare for the foreign brands.
Tu Le:
Oh man, it'll keep Blume up, it'll keep Mary up, it'll keep well Tavares. I think he sleeps pretty well. But, keeping Farley up for sure, because they are trying to make aggressive moves, Ford is trying to make aggressive moves in China, but it's just not working out. They've just not had a lot of good luck over the last couple of years, right? The Mach-E has been very disappointing here. And to give you in a sense of how bad the ICE market is, retail passenger vehicle sales were down 9% in November. It's the first time since 2008 where it's two consecutive years, or two consecutive months of decline, this late in the year, sales decline. So October and November sales declined for passenger vehicles. So if we subtract the growth of NEVs, that means that sales of ICEs were down big.
Lei Xing:
The sales of ICE passenger vehicles are expected to be down double digits in 2023. But NEV sales will still be up double digits, not 100%, but…
Tu Le:
If we're saying that, let's say China market in 2023 is flat. So that's probably about 23 million units. If NEVs will account and we're saying that growth could be…
Lei Xing:
Over a third.
Tu Le:
Yeah, let's say growth is 40%, so we're talking over 10 million vehicles, right? So that means 13 million vehicles will be ICEs, chabuduo (almost). And so that pie is getting smaller and smaller for all these legacies because, and that means customer acquisition costs on the ICE side is going to be higher. The operation costs for running those ICE factories is going to be higher because now we're selling less vehicles. So everything gets tougher for the legacies operating in China, specifically.
Lei Xing:
The other thing I thought was interesting was this Crown, Toyota Crown Cross Sport that was launched in the RBM300,000-RMB400,000 RMB and it’s an ICE, it's a hybrid, a little bit perplexing. So Toyota is holding on to the hybrid hybridization very dearly.
Tu Le:
The PHEVs, at least for BYD they're doing well, right? For the legacies, they're not doing that well, right? Toyota. The PHEVs for Toyota aren't selling that well in China. But, the, which BYD, the Seal, is it the Seal? The BYD PHEV, the one that's selling like 60,000 a month? Anyways, I forget the name, but BYD is selling a lot of PHEVs. That's for sure.
Lei Xing:
And BYD is smart enough to do that Yang Wang brand launch as a standalone event, rather than doing something at the Guangzhou Auto Show.
Tu Le:
Yes. As the legacies worry more and more each day, the Chinese domestic EV brands get bolder and bolder, right? We're talking new products, we're talking new brands, and we're talking growing sales, right? A prime example is the L8, L9 at 10,000 units each. NIO is going to have a great quarter with a terrific December, not as good as they had anticipated, but still better, right?
Lei Xing:
Yeah, maybe we go on to NIO, because NIO came out with that updated projection, which kind of is a bummer.
Tu Le:
And again, it's an operational thing with NIO. It is not a product thing, and it's not a customer interest thing. It's an operational thing.
Lei Xing:
NIO just can't catch a break it seems. But overall, I think from the NIO Day I think what we're seeing these pieces starting to come together. The way I would summarize NIO Day is four new products, two easter eggs and some good old dunking on ABB. Plus, Li Bin said later that they want to surpass Lexus. That's the first little mountain that they got to climb over. And then it's the ABBs.
Tu Le:
That sounded like, he made it sound like that was a done deal like it's going to happen, it’s not an if, it’s a when. So that's the level of confidence that he's showing, right?
Lei Xing:
The thing is Lexus is, their sales is on its way down. They're facing some issues as the other premium foreign premium brands.
Tu Le:
Right now, the best premium brand in China is NIO, full stop, from a momentum standpoint, from a strength of product standpoint, from a customer engagement and loyalty standpoint. I think it's, all cylinders, firing on all cylinders. So.
Lei Xing:
Yeah, my personal favorite was, I liked the All-New ES8 better than the EC7, one. And then I thought, I think people might be overlooking the fact that when we talk about NIO, people think NIO is a battery swapping brand, but it's not, because of that new, ultra-fast charger that they announced, and that complements their next, the third generation of swapping stations is part of their whole energy…
Tu Le:
This is that fine line they need to tread, right? Because they're building out swapping stations. I think they've gotten eight now in Europe. So…
Lei Xing:
10 I think.
Tu Le:
Yeah, 10, sorry. But which one is the priority? Because investing in both seems like a burden that they should not try to take on. Let's get to our Best of the Year, Worst of the Year awards. What do you think?
Lei Xing:
Yeah sure, so how do you want to do this?
Tu Le:
So, you gave me that list. Let's just go through it. You go through one, I'll go through the other. And then I'll tell you if I agree or disagree, or I have a different take.
Lei Xing:
Ok. So we start with EV company/brand of the year. Who else?
Tu Le:
It's got to be BYD, I completely agree. They've taken over, in my opinion, for Toyota as the global machine, automotive machine that just keeps on humming, keeps on moving along. I think 2023, they'll finally be recognized globally. One of our friends on Twitter, I forget his name, but he had openly tweeted why aren't the automotive analysts in the west covering BYD.
Lei Xing:
They are now, I think more so.
Tu Le:
Yeah, more so. But I don't know if they have any interests in going to China, right, to check everything out. And so unfortunately that's probably going to be their downfall because all the western auto analysts, three in particular that I talk about regularly just kind of really suck, but their job is to sell reports, not to be actually very good at analyzing the auto market globally. So I agree with you 100%, BYD, company of the year. Now EV design of the year, who did you have?
Lei Xing:
I had JIDU ROBO-01 simply for breaking boundaries, literally.
Tu Le:
I agree. I think that they are the first company to go. It brings me back to Byton, right? That coast to coast screen, Frank had really, really emphasized that it's actually not three screens put together. It's one large screen. I think that's a major differentiator. And I got to see the prototype, no physical buttons. So will it be?
Lei Xing:
No door handles.
Tu Le:
Yeah. And no buttons, no door handles. Will it be polarizing to some, not as many in China as probably the rest of the world, but it is pushing boundaries for sure.
Lei Xing:
Yeah, and also just to add back to the auto show, one of the important features is this thing called PPA, which is point to point autopilot. That's basically ANP3.0 and that will compete with Xpeng’s city-NGP, the Huawei’s NCA, these type of city environment, driving point to point, Level 2+ ADAS. So that's important.
Tu Le:
And remember also Lei that it's going to be the back end data that it's using is going to be Baidu’s. So it's going to be a pretty mature dataset and hardware software stack. So JIDU is going to come out of the gates pretty mature on that side of it. So.
Lei Xing:
Then EV product of the year I had ET5 because so much is riding on this one single vehicle. And it's the only model among NIO's lineup that is less than RMB400,000, by the way.
Tu Le:
I completely agree with that.
Lei Xing:
We've just seen there are still people that ordered this, I think at the very beginning starting to take deliveries. So ET5 is a model that we are all expecting to be above 10K a month sometime next year. It's, a lot is riding on this vehicle, I think.
Tu Le:
I'm saying end of the year it could be close to 20. I saw on that lead times are now down to 9 weeks, 9-10 weeks on the ET5. So the next is EV person of the year. And I agree with you here. Wang Chuanfu, who is the founder, CEO of BYD. We'd mentioned company brands. So this makes a ton of sense that Wang Chuanfu would be the executive of the year, or person of the year.
Lei Xing:
Person of the year. And then we have the EV executive of the year. I had Tom Zhu because how he was thrusted into the spotlight from the PingWest article. But how, I don't think there's one other person that's more important to a company in terms of operations and manufacturing than him.
Tu Le:
I will, so we did not draw the box or agree on the box to draw to play in. So I'm going to say Doug Field of Ford as the EV executive of the year. Because to me, Tom is not going to help Tesla as existentially. Doug Field is really trying to change a culture. He's trying to change how Ford does things, the products that it launches, so that's how I looked at that.
Lei Xing:
Because I thought we're only talking about China, only Chinese companies or foreign companies in China.
Tu Le:
Next time we'll draw the box.
Lei Xing:
But also noting that recently Tom Zhu was, he's no longer the legal representative.
Tu Le:
For China.
Lei Xing:
Right, but I think I don't know, I think he's still going to play a very crucial role in some of these production ramps.
Tu Le:
Because right now there's just a ton of slack in demand supply, at least in China, which throws off all of the other factories. So EV product of the year, no, product pivot of the year.
Lei Xing:
EV product pivot of the year.
Tu Le:
From the Li ONE to the Li L8 in just a few months. So, agree with that.
Lei Xing:
That's a no brainer.
Tu Le:
Yes, but they shot themselves in the foot on that one, right?
Lei Xing:
The most disappointing EV flop, or most disappointing EV, EV flop of the year, I had two models to Xpeng P5 and the Mustang Mach-E. Which one would you?
Tu Le:
I would say the Mach-E is a bigger flop.
Lei Xing:
I think so, too.
Tu Le:
I don’t’ know, excuse me, I still don't know how many they're selling a month, which tells me that…
Lei Xing:
It's probably three digits.
Tu Le:
Yes. That's my assumption, too.
Lei Xing:
I think also, I remember you'll probably do as well going back to the April 2021 Shanghai Auto Show, the fervor. Whether it's from the industry or from the media about this made in China Mach-E. That was so high, the expectations. And now, you know…
Tu Le:
I do remember way back in April 21 when I was at Shanghai, that seems like forever ago, by the way, the buzz at the Ford booth was pretty high, because not only of that Mach-E, but the EVOS and the ZEPHR Reflection, but they were both ICE vehicles. And so that's how quickly the excitement went away, because the momentum from the Mach-E and getting to production took so long. I think it lost a lot of wind in its sales, so.
Lei Xing:
I mean that shows if an excitement for a product like a Li ONE can go away in an instant, then, right?
Tu Le:
Oh my god, yeah. But for, that was to your point that, and we go back to the pivot, but the Li ONE went from like selling 10,000 to selling zero in like two months, right? Breakout EV brand of the year. You have ZEEKR.
Lei Xing:
They got to 70,000 units ahead of time.
Tu Le:
And yeah, for one car.
Lei Xing:
For 001, for a car that had an upgrade, OTA upgrade on the chip.
Tu Le:
So I kind of want to say NETA a little bit, but I don't have visibility into who they're selling these cars to. So I think you might also believe of good portion of NETA sales are to fleet. And so if that is truly the case, then ZEEKR or sure.
Lei Xing:
The thing is, they are also in complete different segments. Because NETA are the RMB100,000, RMB200,000 segment, whereas ZEEKR is well over RMB300,000.
Tu Le:
You would call the ZEEKR 001 a crossover, or more of a sports coupe?
Lei Xing:
It's hard to pinpoint exact.
Tu Le:
Maybe that's why it's sells wll, because it crosses into both?
Lei Xing:
It’s almost like a shooting brake style, wagon, stretched hatchback.
Tu Le:
If it was clearly a sports coupe, I think it would sell less. So I think being able to kind of straddle those two segments is very important for ZEEKR’s success. EV product outside of China that will make an impact. What did you have?
Lei Xing:
I had BYD ATTO3, since they are now in so many markets already, or launching in so many markets.
Tu Le:
So BYD, I guess, is in 35 markets now.
Lei Xing:
Something like that.
Tu Le:
I had said what, two episodes ago that I could see, barring any production or any export issues or the choice by BYD, that the ATTO3 could become a Top 5 selling vehicle in Europe in the next 20 months. I hung my hat on that. And yes I think that it's the perfect combination of feature set, price and attractiveness. So I don't think it's that polarizing to a lot of people, it is attractive to abroad audience. And so who did you have for EV zombie of the year?
Lei Xing:
They're not so much a zombie yet, but they're on the edge. I had WM Motor and Hengchi. And I know there's quite a few more, for example, Yudo. Companies like Yudo, Singulato. That's right. But I think WM Motor is the most in danger of going down in 2023.
Tu Le:
Just three years ago, they were one of the most high profile China EV company.
Lei Xing:
Because they stopped publishing sales data I don't know how many months ago.
Tu Le:
Well Lei, they stopped paying their employees or at least paying them fully, so.
Lei Xing:
Right. And they were in that lawsuit with Geely. So, tons of problems. So that's my vote for the walking dead.
Tu Le:
And there will be more in 2023 as the economy, recession around the world, higher interest rates, sales get a little bit tougher. We'll see a few companies that we probably talked about over the last 10 months here, kind of struggle.
Lei Xing:
Right, so it will either be death or pull out. So an example will be Skoda, it won’t the first it won't be the last of the foreign brands to kind of pull out it, e.g. Jeep, right? And then there will be quite a few startups as well that would be in trouble.
Tu Le:
2023 is going to be a pivotal year for Ford in China, full stop.
Lei Xing:
And for many others as well.
Tu Le:
AV product of the year.
Lei Xing:
I had the Baidu RT6.
Tu Le:
RMB250,000, eight-LiDAR Robotaxi. And we still do not know who's going to be manufacturing it, but it is supposed to hit the road sometime in 2023, likely second half of 2023, I did break some rules and jumped in it when I was at the depot in Yizhuang. And it is pretty impressive for a $37,000 vehicle. Now, how many they're going to sell, I don't know, or how many they're going to put on the road we'll see, but.
Lei Xing:
Speaking of Baidu we did hear about their latest update on the AV roll out, so they got that fully driverless license in the Beijing Yizhuang testing area and they plan to have 200 robotaxis added in 2023 covering 100 km total in China.
Tu Le:
We have a couple more check boxes Lei, we got to go back to China, try out DeepRoute, try out QCraft, try out Baidu again, ReRide. And then we got to go back to San Francisco.
Lei Xing:
You know I'm looking back, I'm looking at ticket prices. It's going to be my constant thing to do from now and out.
Tu Le:
Battery company of the year, who did you have?
Lei Xing:
It's almost a no brainer as well: CATL, right? They just got their Time magazine, what, the…
Tu Le:
The Qilin battery, right?
Lei Xing:
Yeah the Qilin battery that got an award, right? What, a design or something of the year. And ZEEKR 001 is going to have that, the 620 mile, 1,000 kilometer…
Tu Le:
The 009 you mean?
Lei Xing:
No, 001. And also their global expansion, right? CATL in Hungary, in Germany Thuringa, we talk about that last…
Tu Le:
And potentially in Michigan?
Lei Xing:
Right, and how many deals they've done, battery swapping their EVOGO brand. Just I think it's just overwhelming.
Tu Le:
And then blockbuster deal of the year. I agree with you. Volkswagen invests in Horizon Robotics, 2.4 billion euro, 1.2 billion euro into the JV, and 1.2 billion into Horizon. So Volkswagen probably owns at least 20% of Horizon Robotics right now.
Lei Xing:
It's a huge bet, I think on Volkswagens part.
Tu Le:
And it's, I'm reading between the lines. It's carrying favor with the Chinese government. Chip company of the year, you had…
Tu Le:
Horizon. Who else?
Tu Le:
I have Intel. I think that the moves that they made in the United States to ingratiate themselves with the U.S. government investments in Ohio. I think they really want to be a player in the mobility space. And so they've been behind quite a bit over the last several years with NVIDIA, Qualcomm, and they're playing catch up, and I think they're doing it, trying to do it in a big way.
Lei Xing:
Yeah, also with the Mobileye, right, working with ZEEKR on SuperVision and NIO robotaxis globally.
Tu Le:
EV sleeper brand, who did you have?
Lei Xing:
I had AITO, I think it was quite surprising, their run, obviously a big support they had was the Huawei’s channels, thousands of stores that they had. And obviously they're going with the EREV route. So same as Li Auto. But I think their sales surprised many people.
Tu Le:
This is where I differentiated with you Lei. I want to say Leap. I'm still very impressed with their, because I think this time last year, we had kind of talked about them being on the ropes too, right? Or was it a year ago? Because let's say two years ago, they were on the ropes. They were close to closing up shop.
Lei Xing:
Yes, 2020. Yeah.
Tu Le:
And so for them to continue to launch new products that are selling, and it's very impressive because I thought they were just going to go away pretty quickly, but not only did they, so when we talk about these zombie brands, what normally happens is they struggle to stay open, but they stay open. With Leap, they didn't struggle, stay open, they thrived, and they doubled down and they are launching products, increasing sales. So very impressive to me.
Lei Xing:
LiDAR company of the year I had Hesai, they delivered over 100,000 LiDARs already, including 80,000 alone this year. I mean we're no longer talking about this, what, we're talking about execution. We're talking about manufacturing, deliveries.
Tu Le:
I think 2023 will be the year of the LiDAR, where almost every company launches a vehicle with LiDAR on it.
Lei Xing:
Then second, after Hesai, was Innovusion, mostly on the NIO models they delivered over 50,000.
Tu Le:
And the craziness with LiDAR, the sector and the companies is that there is a lot of cross pollination where Chinese companies are working with foreign brands. Because in other, and I'll say somewhat sensitive sectors, LiDAR, because it collects data because it maps areas of cities could be construed as a fairly sensitive technology. But LiDAR is also where you see a lot of this cross pollination, where American companies like Luminar trying to work with Chinese companies, vice versa. So it'll be an interesting sector to follow in 2023. It's going to go mainstream, because we've seen some green shoots of everything going mainstream with Hesai delivering so many LiDAR this year. But, we’ll be much more familiar with companies like Innovusion, Hesai, Luminar, any others? Huawei, I think.
Lei Xing:
Cepton.
Tu Le:
So there's all these LiDAR companies that are going to compete against one another. They're going to align themselves with individual brands and entire companies like a GM or Volkswagen Group. Tech company of the year who did you have?
Lei Xing:
I had Huawei.
Tu Le:
That man, I was like. So, ok, go ahead.
Lei Xing:
Because right, we mentioned they are the closest of being an EV maker without being an EV maker.
Tu Le:
Yes, for sure, tech company of the year.
Lei Xing:
The type of strategic cooperation that they've signed so far this year, there are tons, right? Chey.
Tu Le:
Yes.
Tu Le:
And their business model, kind of three different business models, right?
Tu Le:
They're covering all bases, right? Because this is, because their existence is being threatened, because of what's happened in their mobile phone side. And so in order for them to continue to grow and thrive, they need to be a major player on the system side for electric vehicles. So I agree with that. Let's quickly move into the last two, the most consistent EV brand of the year.
Lei Xing:
GAC AION, or Wuling, maybe a tie.
Tu Le:
I think you could set your watch to 30,000 units being sold by Wuling every month, right? But…
Lei Xing:
50, maybe.
Tu Le:
I could say BYD, most consistent EV brand of the year too.
Lei Xing:
Well, we already had awards for BYD.
Tu Le:
So you and I had to come up with this last award, the name of it.
Lei Xing:
No, no, one more. There's oddest, I had this oddest launch of the year.
Tu Le:
Oddets, okay.
Lei Xing:
Being the NIUTRON NV. The reason being is that they launched it, they took orders and then later they said, we can't manufacture, and we can't deliver, so they will return your money.
Tu Le:
They had a take back.
Lei Xing:
So I think that's definitely the oddest launch.
Tu Le:
I agree with that. And then
Lei Xing:
The last but not the least.
Tu Le:
The flameout of the year.
Lei Xing:
We had to have an award for Tesla.
Tu Le:
Yeah, so because as you guys heard for the last 15 minutes, we haven't said Tesla once, but the biggest flameout of the year, it has to be Tesla, 70% down share price. They're still the most valuable automotive company in the world. But it has been a tough year for Tesla shareholders, not only because the controversies that Elon has created when he acquired Twitter, but we all know now it's common knowledge that there is softness in demand for their vehicles globally, not just in China now. So 2023 will be a pivotal year because we have to see what refreshes they have, whether they get Cybertruck on the road and 4680 into mass production. I think if we see that there's some upside. So.
Lei Xing:
And also interesting looking to look forward is this new IRS language that was published yesterday, on how some of these vehicles can get that $7,500 credit. And you have the Tesla Model Y in different tears, the $80,000 cap and the $55,000 cap, depending on the 5-seater or 7-seater. So that was kind of weird. And what kind of credits that they can get or whether we'll see a price reduction in order to meet. But we still need wait until March to see the final kind of wording, right?
Tu Le:
So it is 12:57 Lei. We've spent an hour talking to each other, so let's open the room up. And we can go over some of my big news of the year in review newsletter, but we also, I forget to check this, but we also got some questions in the chat or DMs so if anybody has any questions, feel free to raise your hand, we can bring you up. Answer any questions that you have. But let me take a look at this here. Swapping is DOA. I think NIO would argue against that, but and I don't know swapping is DOA in China, either, by the way. What website can check EU auto sales by model? I am not sure to be honest with you. There is a couple of, Mathias Schmidt. I think if you follow him on Twitter, I think he has sales in Europe on a monthly basis that he posts. What is the reason…
Lei Xing:
We kind of talked about it, right? Yeah. So reason for NIO not selling 10K per month. It's coming. I think just matter of getting over those hurdles.
Tu Le:
Any special message from NIO in Guangzhou auto show, there are largely quiet because of NIO Day.
Lei Xing:
I think they've given out all their messages, either at the NIO Day or post in some of the post interviews of the trajectory and that statement on December deliveries.
Tu Le:
So let me just summarize some of the notable news this year that I wrote in the newsletter. I think that big news coming out of the United States was the Inflation Reduction Act that you and I are helping pay for as U.S. taxpayers Lei, it is going to be at least a half a trillion dollar, $528 billion. But it'll likely reach the $1 trillion, $1.2, $1.4 before it's all said and done. This includes $7,500 in subsidies for and that you know that I'm looking for anEV right now in the U.S. market. And it includes a $7,500 subsidy from the U.S. government for North American manufactured electric vehicles. So.
Lei Xing:
If I read it correctly is if you lease an EV you could theoretically receive that credit even on a model that's not assembled in North America.
Tu Le:
It is a little bit confusing.
Lei Xing:
Right? I think you've seen some of the reports out already that because there's been behind the doors lobbying from these EU, and Japanese and Koreans right? So that will be interesting to see.
Tu Le:
And the language will not be frozen until March now. So I think that lobbying is continuing to happen. It was supposed to be frozen by January 1. But I think that's still trying to be sorted out. The other, a couple of important news that I thought was pretty significant. VW Group announced that it's going to begin exporting Chinese made cars to Europe, starting in 2024. So it kind of puts protectionism on its head, because now that Volkswagen Group is going to start shipping from China. What do we do here? Do we protect for domestically made vehicles like the inflation reduction act? Because if so, Ford's not going to be very, or Volkswagen Group is not going to be very happy about that. TSMC, who has been in the news throughout this year, they have announced that they're going to be investing $24 billion in Arizona to build two fabs, and they're going to be building smaller than 4 and 3 and 2 nanometer, 2.5 nanometer size chips. I think that's pretty important. Lastly, I thought the news about TuSimple and the drama over the last 6 months has been, well more than 6 months because they had their accident in April. And then a lot of trouble started late summer, was it Lei, with the announcement that they are being investigated by the SEC and the FBI and that the board had fired Xiaodi Hou or Hou Xiaodi, the founder, CEO, and then he turned around and went gangster on them kicked out the entire board with Chen Mo, who was the China head? And now they brought Cheng Lu back to be the CEO and they're likely going to reduce staff by about half in order to kind of correct and write the ship and likely look for external funding sometime in 2023.
So we talked about a few of the other things already Lei, so I won't talk about them, but this is the scorecard for market cap on or most valuable automotive companies. Tesla still number one, Toyota still number two at around $200 billion. BYD is $140 billion company or something like that. Porsche is number four, and Volkswagen Group is number five. So Volkswagen Group was number three at the beginning of this year. Porsche was not on the list. So lots of changes from the beginning of the year to the end of the year, and there's likely going to be even more in 2023. So what, I'm all set, I don't have, any other questions?
Lei Xing:
So Tesla, I don't know they lost what $700 to $800 billion in value in the last how many months. And then the only other thing we should mention is the VinFast and the furious. I thought that was, they're starting to deliver vehicles. They're supposed to start delivering vehicles by the end of the year. And we only have what, 25, 24, 36 hours left in 2022. And we'll see how that plays out because…
Tu Le:
They are a big-time wildcard, because no telling, there's that really nasty review by the Jalopnik guy. And so, we were driven in one in the auto show, but we didn't get to drive one. So I think that's a huge difference that I'll look to try to drive when in Q1 of 2023 to see how it drives and will let you know.
Lei Xing:
And something else look forward to. I think these are maybe the China EV Inc. or AV Mobility Inc. IPOing, more of those, either in the U.S. or elsewhere. Maybe we'll see more of that. Because ZEEKR is on deck, right? VinFast is on deck. Maybe the environment will be more favorable, perhaps.
Tu Le:
I think the political environment will be more favorable, but the financial environment might not.
Lei Xing:
Yes, speaking of political. So Qing Gang, he got promoted to be the Foreign Minister. Which is interesting because he had a lot to say about Tesla, right? In his tweets. I was lucky enough to speak to him at the Detroit Auto Show.
Tu Le:
Elon is very effusive of China, so that needs to play itself out in 2023 as well.
Lei Xing:
But, I guess if we can summarize maybe the full year China, seeing out of all the black swan events, this latest opening up play and just a total canceling of the zero-COVID policy, I think it was the biggest black swan event of the year.
Tu Le:
That is, I should have mentioned that, but it was like we kind of talk about it all the time, so it's like.
Lei Xing:
I think it trumps everything else.
Tu Le:
The other thing that I think is very important is that the United States doubled down and restricted more chips from being sold to Chinese companies. They restricted U.S. citizens, green card holders and permanent residents from working. So I'm sure that's in the back of the Chinese government's mind. And whether there will be a retaliation or not, will likely happen in 2023. So we'll have to see about that. But let me say this Lei because when we speak next, at least with our audience, it'll be in the New Year. So wish you a Happy New Year, wish our audience Happy New Year. Thank you for listening, everyone.
Lei Xing:
And just a few things from my side. So I will be at CES next week. It's a pity you're not going. We'll figure something out because I’ll be there pretty much the whole week. So figure out how we do our next episode. The latest news as you've seen from Bill in the chat group is CES is requiring those that are entering from China Mainland, Hong Kong to have a PCR test upon arrival if you arrive on January 1 or later, that's…
Tu Le:
There's no telling right now that you would get results from, if you got tested in China, there's no telling if you would actually get your results in time to get your flight.
Lei Xing:
But I heard that you don't have to get it in China. You can get it once you arrive. So that's good. But January 8, China opens up officially.
Tu Le:
Wow, that is nutty. But anyways, everyone, thanks again for listening. And we will talk with you all in the New Year.
Lei Xing:
Yeah, 2023 sounds exciting mostly because we have at least a chance to go back. I'm looking forward to attending an auto show and other events in China.
Tu Le:
Good morning, good afternoon and good evening. We will talk with you guys next week.
Lei Xing:
Yeah, same here, Happy New Year. We'll talk to you next year. Bye bye.
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.