Episode #119 - China Policy Updates, NIO's ET5 Touring Launch and Ford's Situation in China

Tu and Lei discuss the recent policy announcements in China to encourage the purchase of an NEV in the lower tier cities. This includes forecasts for higher numbers of PHEVs sold in the coming months. 

Tu moves the conversation onto the NIO ET5 Touring that’s aimed squarely at the Zeekr 001 customers. Lei and Tu agree that folks should be looking out for Zeekr sales numbers getting a boost in the coming months now that the Zeekr X Job #1 has rolled off the line. Tu anticipates that the Zeekr X could do some damage in Europe as well. 

Topic of discussion moves to Ford in China. Tu heard that layoffs started happening but this starts a discussion about what Ford products will still be sold in China including the Bronco and Ranger. 

Lei & Tu touch on the Volvo X30 being recently unveiled and share their thoughts on it. 

Tu closes the show with a few of the articles he highlighted in his newsletter this week. 

Transcript

CEM #119 Transcript
Recorded 6/8/23

Hi everyone and welcome to China EVs & More where my co-host 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. I'm 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 spaces. I wrote a free weekly newsletter that we pull many of our discussion topics from. You can sign up for it at sinoautoinsights.com, which I encourage you all to do. Lei, in a smoggy Massachusetts. Can you please introduce yourself。

Lei Xing:
Good afternoon from a hazy, rainy, cold Massachusetts. Not as bad as New York City or Philly, but this is your co-host Lei Xing, former chief editor of China Auto Review. This is episode #119. Happy 75th birthday to a sports car manufacturer with the name that starts with the letter P and ends with orsche.

Tu Le:
Ends with orsche.

Lei Xing:
Porsche. A brand that can do no wrong in China, and China does not want the NEV market to go wrong as evidenced by the latest policy announcement from MOFCOM.

Tu Le:
It's a delicate situation currently, so.

Lei Xing:
Yes and we're combining this with the may EV sales. That's our first topic of the day. Yeah that policy has an interesting name. It's called a “100 city, 1,000 county and 10,000 village” campaign.

Tu Le:
Everything's big. You think everything's big in Texas, everything's bigger in China.

Lei Xing:
So there was no details as far as how much is being given or allocated. But I mean this is following the 6B delay and following earlier in the week, when the Premier Li Qiang had that executive meeting, which in fact, the official readout said China will extend the NEV purchase tax exemption. No time frame was given, but it's going to be extended. It was originally going to be expiring at the end of this year. Two of the three major policies that we were, we've often talked about, these carrots, have been confirmed. So that's kind of the state of the policy side supporting NEV sales.

Tu Le:
Let me comment on the why real quick Lei. I look at it to which is still struggling. So I think that's an important umbrella statement to make, because as the economy goes, as EV sector will go. And when they see this, and in honor of the NBA finals, I will say full-court press on keeping attention and excitement for the NEV sector in China when you bleed into the tier-2 s and tier-3 s, I read that, Lei, and I know that with China, you always got to read between the lines. The government is likely seeing some over saturation potentially in the tier-1s. So they want to start paying attention to the lower-tier cities to get EV penetration into those and keep the momentum going on EV sales. So that's my crystal ball look into why this whole 1,000 city, blah, blah, blah, was announced. So do you agree? Disagree? There can only be so many EVs or NEVs sold in the four tier-1 cities, right?

Lei Xing:
I think this is a matter of economy, not so much NEV or the auto industry itself, but in fact, the auto industry is the pillar of the economy, so.

Tu Le:
Manufacturing.

Lei Xing:
Yeah. So they need to keep these going right? And specifically for these lower tier cities and regions, the stimuli is not only on supporting purchase, but really charging. Even though we may think that China leads, I mean how many charging, the numbers for charging stations and swap stations, you find nowhere in the world. But there's still these supportive policies trying to drive the momentum. Full-cour press, as you said, and usually May and June are when these policies come out. So this MOFCOM thing is actually going to go on for the remainder the year and the purchase tax exception, I figure if not 4 years which was rumored, it’s going to be least 2 years, let's say, by mid-decade. So 2025 is a nice round number to have that end, maybe. So.

Tu Le:
And as this is happening, I can't help but think that this creates a huge, tremendous opportunity for BYD because if we're getting into lower-tier cities, the average price point for a vehicle is going to be lower as well. And so BYD really can fill those lower-tier cities with their mass market, aggressively priced Seagull, Song, you name it. And then if we take another step back and Tesla is able to aggressively price the refresh Model 3, and let's say within 12, 14 months Lei, launch a Model 2, the lower-tier cities would eat that thing up too. So I'm not saying that I've heard the Model 2 will come out anytime soon, but if there's an emphasis on building out charging infrastructure, throughout the rest of China, lower-tier cities and encouraging consumption, the sale, and the purchase of NEVs in the tier-2s and tier-3s. Then this is a huge opportunity for the guys that are winning already. And let me quickly remind everyone that China has over 145 or 150 cities with a million people in it. So the opportunity is pretty much endless for these companies.

Lei Xing:
And let’s also remind it's not the Teslas, or the NIOs or the BYDs. It's also these micro, light electric trucks, buses that are specifically being written into this new campaign, which may be more suited for the countryside usage, scenarios. So China, and China does not only make new energy passenger vehicles, but commercial vehicles.

Tu Le:
The leader. We should say that BYD is still part of that commercial side too.

Lei Xing:
Yeah, sure. So for the CPCA announced the sales today, basically there's a few, I kind of summarized that if you look at the market share in terms of the players, BYD alone is 35%, BATL (adding AION, Tesla and Li Auto together) the four accounts for 58% of the NEV sales and the top 12.

Tu Le:
That’s a massive number, 58%.

Lei Xing:
Yeah. Top 12 accounts for 83%. And then you have, let's say close to a hundred brands may be fighting for that remaining 17%.

Tu Le:
They're fighting for scraps.

Lei Xing:
Yeah, not brands but make, OEMs.

Tu Le:
And the top 12 are effectively above the fray. A little bit.

Lei Xing:
Yeah. The 12 are basically doing 10K, the ones that are over 10K a month. 

Tu Le:
Chabuduo. Chabuduo. Because NIO’s not quite there, but.

Lei Xing:
And then I think May sales was not by any means extraordinary. It was up on April, but it wasn't out of this world, 670 some thousand units wholesale, roughly 100,000 those exported. So that's a basic. It's growing at around 40% to 50% year on year. So still pretty significant. But.

Tu Le:
But, I won't, inflated is probably not the right word, but supplemented by a price war. So this is not normal times is effectively what I'm trying to say.

Lei Xing:
We also have to remember these percentage growth comparing to May, April and May of last year was, May, Shanghai came out of that lockdown, right? So there's still a little bit of caveat comparing the year on year growths. But again the penetration is still pretty high, a third, over a third NEVs. And then again the Chinese brands, half, luxury brands, a third and the mainstream joint venture, 4%. And actually, so north and south Volkswagen joint ventures, they sold 17,000 NEVs. And they alone accounted for 58% of the joint venture, the mainstream mass volume brand joint venture BEVs.

Tu Le:
But let's remember, that 17,000 is an anemic number. It's a very small number. So.

Lei Xing:
Still respectable, cause when you talk about the foreign brands, right? The ones that besides Tesla to have any significant volume is, in fact Volkswagen.

Tu Le:
Yes because we just saw that the Mach-E is selling a few hundred units a month.

Lei Xing:
And then right now, I know you were asking about some of the export numbers. So roughly 30% of PV exports in May were NEVs, that roughly 100,000 units exported.

Tu Le:
It is going to be an interesting rest of the year, because we're getting into the summer months and lot of lull in sales also gets into the summer months and then a mad dash, as we get towards the end of August into September, so.

Lei Xing:
And interestingly enough, among the Chinese brand premium battery electric SUVs, guess who's leading at the top? 

Tu Le:
Who is this?

Lei Xing:
It's the AVATR 11, believe it or not. 

Tu Le:
But AVATR 11 is a PHEV, right? Or EREV?

Lei Xing:
No, it's a BEV.

Tu Le:
It’s a BEV.

Lei Xing
No. it's a BEV. Yes. It’s a BEV.

Tu Le:
And which makes me think one of the other interesting things about May was the WEY Lanshan, I think, sold over 6,000 units in its first month, and actually really helped Great Wall Motor increase their monthly volume, because it wasn't that well before, but this shows you one model could change everything. And this WEY Lanshan is directly competing with the Li Auto SUVs. So there's still, right, you can still take market away, market share away, or if you have the right product on the market. I thought that was interesting. 

Tu Le:
That's an anomaly. That's pretty surprising, right? So.

Lei Xing:
I tweeted out some stuff from the Chongqing forum, right? I read that this PHEV including EREVs are going to grow significantly, let's say, twice the growth rate of BEVs because of these new EREVs and BYD DM-is.

Tu Le:
There's just more products.

Lei Xing:
Some of these executives, there are predicting a kind of a 343 or 433 ratio of ICEs, PHEVs, and BEVs going forward. So still significant, I think this PHEV growth.

Tu Le:
If that ratio comes true, then the battery suppliers would really take a decent hit on the…

Lei Xing:
CATL did. 

Tu Le:
So I think we have to remember that because there, as we've seen, lithium pricing has gone down significantly. And so the battery companies could be struggling. And we also saw that a few of the EV companies are looking to dual source to not be so reliant on CATL and so this could create a lot of opportunities for the SVOLTs, the CALBs, the Gotions, and the one other company, BYD is also kind of up there with CATL, but I think this is where being so big is probably going against them.

Lei Xing:
So that's all I have for the EV sales. And June coming up, I guess if we talk about NIO, NIO is doing their earnings tomorrow, right? And then upcoming the ET5 Touring is launching next week.

Tu Le:
Well, they've already shipped some to the retail stores and pictures have leaked, I think there's going to be some event that officially announces it on the 15th, I heard. Let's really quickly tell everyone it is targeting ZEEKR 001 customers specifically. But I like how it looks. I really think it's a great looking car, but I can't help but to think that when I squint, it looks a little bit like a Porsche.

Lei Xing:
Yeah and the model to watch in the coming month is definitely the ZEEKR X, which just had their job number one.

Tu Le:
I saw that. Did you see my tweet right before we jumped on?

Lei Xing:
Yeah. So this is a lot of pressure, I think, on the X, I mean the expectation is pretty high, I think.

Tu Le:
Just for everyone, for you followers, for you listeners that don't follow me, shame on you, number one. And I just tweeted out that article about the ZEEKR X job one coming off the line yesterday and said that if the ZEEKR X can fulfill the promises that it made at the Shanghai Auto Show, earlier last month or 2 months ago, then European legacy auto is going to have a lot of headaches. I put … in Europe. So I think that the X could be really successful in Europe, which would again, infringe and take from the ID. series vehicles, Renault, it would take from who else is, MG, who's selling in Europe.

Lei Xing:
So my expectations for the X, so just job number one, which means they probably will have really the remaining 6 months, the last half of the year, my expectations is at least 10,000 a month. I wouldn't expect anything less. Out of the 140,000 ZEEKR plans to do this year, I think ZEEKR X will take up probably two-thirds, if not more.

Tu Le:
I was going to say 60%. So I think you and I are in the same wavelength.

Lei Xing:
So I mean 10,000 units is underestimating that. That will be my expectation.

Tu Le:
I'll put a, because I didn't do this on the on the tweet. I'll put a big asterisk on that statement I just made because we still don't know, do we, I can't remember now. We still don't know what the pricing will be in Europe. So we do know it's extremely aggressive pricing in China under RMB190,000.

Lei Xing:
Yes. Starting. Yes.

Tu Le:
That's a $28,000 car. That is a hatchback, decent amount of technology, good looking car. I think it looks good. Fit and finish at the show seemed to be high and that the show car had to be super close to production ready? And I remember that there were long lines, long waits to actually go sit in a $28,000 car, so.

Lei Xing:
Yes I couldn't get in.

Tu Le:
So there was a lot of excitement. Do you think that was kind of a trendy feature? Or do you think that it'll stick and others will copycat? First of all, it's China. So others will copycat nonetheless, but the center screen can move to the passenger side. Do you think that's a cool feature? Do you think that's like, ah, whatever.

Lei Xing:
I don't know. 

Tu Le:
I thought that was cool.

Lei Xing:
I'm not sure if you want to do that during driving.

Tu Le:
But that's the thing I think you would have to lock it in if you were to sell it in Europe, I think that would need to be locked that you couldn't do that while you're driving. In China, I don't know if they would put that into place as a law requiring you to lock it. So.

Lei Xing:
And speaking of a model that's having really a fervor at the show, did you also read that the Mustang Mach-E, they are moving employees back into for China. So that kind of the unit or division.

Tu Le:
Let's have you give them background on what happened? When they launched the E.

Lei Xing:
The reason I'm mentioning this because of the Zhu Jiang move to Lucid, to Lucid in preparation for their entry into China, because he was…

Tu Le:
Do you know him? 

Lei Xing:
No. I don't know him personally, but I mean he's done his revolving door or what do you call it, right?

Tu Le:
He's got all the brand names on his CV, that's for sure.

Lei Xing:
NIO, Ford, Lexus, JIDU. So basically, the background was for Mustang Mach-E was one of the most talked about reveals, the locally produced, at the 2021 Shanghai Auto Show, lots of fervor from both the media and the industry. And now it's basically failed, I think in the China market.

Tu Le:
I don't think there's any way you can, any other way you can put it, right? It’s selling in the hundreds.

Lei Xing:
That's the kind of the sad thing. And then you have to pivot, right?

Tu Le:
So what was before? What did they do? And then why are they moving it back to the way it was?

Lei Xing:
Well, they had a separate division or unit running the model, Mustang Mach-E sales and marketing. Now that this model is not, 

Tu Le:
And they were going to use it to run their electric vehicle.

Lei Xing:
It's kind of like the model e division. I think that may have been what Zhu Jiang brought to the table. But now they scrap that and just bring everybody back to Ford China and regroup.

Tu Le:
I guess. So I've been told layoffs have started to happen at Ford in China.

Lei Xing:
So we talked about a few episodes ago, right? Was it 3,000?

Tu Le:
Was it that high?

Lei Xing:
So or a 1,000?

Tu Le:
I thought it was like 1,200. I think it was like 1,200.

Lei Xing:
Maybe 1,000. So not surprising, right? So regroup. I mean Jim already talked about that strategy, right? Focus and be lean, and that's what you have to do.

Tu Le:
Effectively exit the market. Now they're going to still sell products because they have existing capacity and probably of very little demand but from a Ford vehicle standpoint, I don't see them really selling that many. Maybe still some Lincolns you know.

Lei Xing:
The Bronco is going to be produced in China. The other pickup, smaller pickup, Ranger was it? That was going to be produced in China. I mean the Bronco could be something, niche. but don't bring the Bronco Sport.

Tu Le:
I don't like the Bronco Sport, I don't think it looks good at all. Do you think that the Bronco was worrying Great Wall?

Lei Xing:
No, I don't think so. I think these Chinese brands they don't really take these foreign brands anymore. They, right? Who cares? They're just doing their own thing.

Tu Le:
And you and I, I think you agree that you can't build a recovery on the backs of a Bronco type of vehicle. It needs to be more mainstream like a midsize crossover SUV. I think the Bronco could do pretty well from a sales standpoint, but you're not going to be able to build a recovery or kind of resurgence in the China market off of the back of the Bronco. That's for sure.

Lei Xing:
Yeah. So Lucid, what do you think about Lucid going to China?

Tu Le:
It's funny.

Lei Xing:
Because you seem to be bullish or positive.

Tu Le:
I think that I'm more worried about their production. And I think that Lucid should do okay, again, we're talking a premium vehicle. So 1,000 units a month is a success to me for Lucid. I think that the S, the new 7 Series on the interior looks pretty nice, the exterior looks awful. The EQS it's just really kind of ugly. And I think the Lucid it's still a really good looking car. I think it integrates hardware and software, the best of those premium flagship vehicle. So I do see a certain demographic in China gravitating towards it. What do you think?

Lei Xing:
I'm the opposite. To be honest, I'm quite pessimistic, because I think for Lucid, they have to get at least the U.S. market, right? This guy, Zhu Jiang I mean he's been at three or four different companies, the last, during the pandemic. So I’m not sure about him. It could just be another a bullet point on the resume, let's say this. So I think Lucid has to get their act, get it done in the U.S., it's distinctive, it is a nice vehicle, but I don't know. I think any of these U.S. EV Inc., the new startups that are trying to enter China without having had a strong foothold or momentum here. I just don't know. That’s my concern.

Tu Le:
I should explain my logic a little bit more clearly. I think you're right. I was a little bit concerned about Zhu Jiang as the executive in charge of launching the brand, because I don't see a significant track record of success from him. And I see him going for short stints at these companies. And they're almost like the company of the month kind of thing, right?

Lei Xing:
And look at BeyonCa. What's happening to them? Nothing, right? It's not easy, it’s not easy in the U.S., it can't be easier in China.

Tu Le:
Raising capital right now for an EV maker is really, really close to impossible. What we're seeing is a BeyonCa, a Foxconn kind of with their pants down a little bit because they made such huge splashes when they were announced that they were getting established, but there is nothing of significance getting built in Lordstown for Foxconn right now. I don't know. I haven't heard anything the people that I know at you know where, at BeyonCa, they're kind of ghosting me, so.

Lei Xing:
So not surprising. So EX30, I put that on the topic. I wanted to ask you this question: by having that a $35,000 Volvo BEV, does that still make Volvo a premium brand? The reason I'm asking is one, GM’s Mary Barra said they can't make a profit selling $30,000 EVs; Two, Tesla, that how they got the $7,500 for all the models is still a mystery, but there are specifically touting that you can get a Model 3 for under $20,000 after all incentives and savings. So Volvo moving in with a smaller $35,000 EV, what do you think? 

Tu Le:
So here's my take. I think that we are putting our traditional automotive analyst hats on and kind of shoehorn products that don't clearly fit into these traditional segments. And I think that if you look at Tesla, Tesla doesn't, they've never argued we are premium where we're not premium, they just do. Okay? And maybe that won't work for a traditional brand that's been known for X Y and Z for so long. But if they have a $35,000 car that still has the fit and finish of, it's simpler, right? Simple doesn't need to be cheap. So the interior can be simple. And the other part is that they have that single console, just like the Model 3. If you look at the interior of the EX30, there's not an instrument panel on in front of the driver. There's probably some HUD, head up display. But if the interior still feels substantial, it will always be simple because it's coming from Volvo. But if it still feels substantial, I wouldn't take that moniker away from them, but again, I would also not be so concerned about premium or not premium at the end of the day. $35,000 is a significant price in a good way. And Volvo was selling 600,000, 700,000 cars globally a year last year I think this is going to be their high runner and I like the looks of it, I think it looks good. And if they can make a profit or eat out a profit or at least break even on a $35,000 EV, 67 kWh, 250 miles of range, I think it's a perfect vehicle for, especially if it maintains the safety standard, I would buy that for my college kid if they wanted a car, you know…

Lei Xing:
Not yourself, college kid.

Tu Le:
I still want my Targa.

Lei Xing:
Oh right, so still saving up. The size of it. Is that like a BYD 3 size or…

Tu Le:
I think it's about an ATTO 3 size, maybe a little bit…

Lei Xing:
Smaller than the ID.4?

Tu Le:
I think so. But I, we should look at the dimensions to be sure, but it's a little boxier right? So I think there's a bit more space because it's boxier.

Lei Xing:
So here's the China factor for the EX30. It's going to be made in China, and it's going to be built in Zhangjiakou.

Tu Le:
Near Beijing. No, sorry.

Lei Xing:
In northern Hebei province where I think the S90 is built if I remember correctly and exported back to Europe, and the battery suppliers for the 69-kWh, I read, there are two different ones. One is from Sunwoda and the other one’s from CALB. So that’s interesting.

Tu Le:
Eerily silent or eerily absent is CATL, this points back to the dual source, right?

Lei Xing:
The comparison of competitors in Europe is this is right above the MG4 below the starting price, below the Opel Mokka and the smart #1 in terms of pricing.

Tu Le:
This is getting really interesting because BYD is pulling everybody down to where they live. It should strengthen BYD but it should also eliminate weaker players, but then give opportunities for those players that are brave enough to go head to head in segments that BYD has traditionally been strongest. Maybe Volvo is different enough to where they can kind of carve out their own little niche within the mass market small SUV crossover segment. It's a little bit, so it's the sub-RMB300,000 so we knew, we do know that's the most cutthroat segment in China, but I also think that this is a perfect vehicle for the European market.

Lei Xing:
Yeah size wise and price wise.

Tu Le:
But again, this points back to, Lei, are we going to see an equivalent IRA from Europe? Because we're seeing European brands and now Chinese brands, or Chinese manufacturers with the European brand, say they're going to ship a lot of their cars from China. So this week and you probably saw a lot of them, too. There was a lot of articles about how exports have grown. And it's always weird, right? Because we knew that China overtook Japan like a month ago, but the articles are just starting to come home about how now China is the number one exporter for passenger vehicles. I want to say, I think you said it right, almost 40% of all passenger vehicles that were shipped out, 30% of all passenger vehicles exported from China were NEVs, that number is going to get bigger, but a lot of them will still have MG as the logo, Volvo as the logo, Volkswagen as the logo, Lincoln as the logo. So how is Europe going to play that? Because Volkswagen has to be working, and Frankfurt behind the scenes, with the EU, to say, do not slap huge tariffs on finished goods coming out of China. And the crazy thing is Lei, you and I talked about this several times, I believe in past shows, is that as the competition gets more intense and sales starts to falter for some of these substantial brands, there's going to be even higher pressure to move that capacity somewhere. So the pressure to export for the weaker players in the China market is going to be extremely high. The other thing too Lei is that you know the GMs, the Volkswagens are looking at this long term and saying, if my production hub is going to be China, I'm going to start shipping more cars out to the foreign markets. They're going to use this as a strategy. And so Ford already said they are going to do it, right?

Lei Xing:
Yeah Ford specifically.

Tu Le:
And to remind everyone Polestar’s already doing with the 2 in the United States. And GM is already doing it with the Buick Envision, so that bridge has already been crossed, that bridge has already been crossed. Dacia Spring, like you said, right? So these are the really, that issue is part diplomatic, part economic. The United States has already put the Inflation Reduction Act in place, and it caused a lot of anguish among the European partners, the Japanese partners, and the Korean partners, but they're getting around to the idea of the protectionist measures by the U.S. and again, it did what it was supposed to do, scared off the Chinese for at least another year, right?

Lei Xing:
And speaking of the IRA, I haven't seen, you probably have not either, explanation on how Model 3s now have the $7,500 access to this credit.

Tu Le:
So I was thinking about this, like, maybe they promise to move production over. Someone had offered that up to me as an explanation why they are taking all of the $7,500 subsidy.

Lei Xing:
I mean we talked about that and said that it was the mineral, critical mineral that got the $3,750, not the battery components, which means the only explanation I can think of is it they don't have the CATL or the LFP battery anymore. But I didn't see that. So.

Tu Le:
I didn't either.

Lei Xing:
So I don't know how they got it.

Tu Le:
We will have to work with our battery mole, our one specific battery mole, because he'll get down, he'll get to the bottom of it for sure.

Lei Xing:
Or maybe it doesn't have to do with anything with batteries.

Tu Le:
I think the lobbyists for Ford, Tesla and CATL did a bang up job.

Lei Xing:
That's probably the best explanation.

Tu Le:
Because now it's a shared interest across multiple brands and OEMs. Okay?

Lei Xing:
If Tesla can do this, we can do it too, right? So.

Tu Le:
They have to and now the U.S. government is kind of created, they created a small hole in the dam that's turned into a faucet. So anything else you want to talk about, man?

Lei Xing:
That’s it from my side.

Tu Le:
A couple of things on my side. F brand from BYD is launching very soon. Do we know why? It's because they created a Weibo account. I will highlight a couple of articles that I read this week that I think are very significant. One I sent you this morning. One is the Bloomberg article.

Lei Xing:
That was great article, reading.

Tu Le:
Yeah, right? One is the Bloomberg article about Tesla, or not Tesla, but of BYD, I think Danny Lee and company Linda Lu, I think they did a really good job. The other article that I'm talking about is from Gabby Cupla, she wrote about A123, the lack of an industrial policy from the U.S. and how it turned out to be to China's benefit. And we're seeing that a little bit with CATL and BYD again, from the Bloomberg team, really worth a read. She spent 6 months researching on this, and remember, Nick Torke, Lei, from Our Next Energy, because there's a big part of the article dedicated to Mujeeb IJaz? I didn't know how significant of a player he was. I knew he worked at A123, but I didn't, obviously, when we sat down with Mujeeb it was more talking about batteries, not his life and experience. If you want to know more about what the U.S. is doing now, from a battery innovation standpoint, when Mujeeb Ijaz is really one of the people that are leading the way with his company, with the startup Our Next Energy. And then anything else from my newsletter?

Lei Xing:
I know you're trying to do some road trips. So good luck with that. And I can recommend you some road trips that are…

Tu Le:
We're going to be going, next week, we'll drive down to Durham, North Carolina. I told you, I think my sons both really enjoyed playing basketball, and they both really enjoy playing lacrosse. At least, I’m projecting that they love to do these things, because I’m not going to have them sit inside all summer and watch iPad or play Switch. So this is our first real summer in the United States. I wanted to take a couple of road trips. We will be driving down to Durham, North Carolina, to have them go to a Duke basketball, and then a Duke lacrosse camp. They're gonna be tired because it's a 3-day lacrosse camp and a 4-day basketball camp. And in the morning, it's basketball. And in the evening, it's lacrosse the same day. So they're going to be exhausted. It should be fun for them. Then the other thing I wanted to point out back to EVs is I wrote in jest on my newsletter, should we be calling Tesla, the new Government Motors? Because who was it, it was Dana Hall had written that Benchmark Minerals is forecasting that Tesla will receive $7.5 billion in tax subsidies for the sale of their vehicles because of the production credits that they're going to get. Okay. So let's explain this to people. There are two separate things going on when it comes to the Inflation Reduction Act. If you're the OEM, you get a discount on the manufacturing of vehicles, because you're using domestically sourced, manufactured or via ally, parts, components. And then on the consumer side, you and I if we decide to buy vehicle that has been primarily manufactured in the U.S. or and all the components in EV anyways, we get $7,500 to reduce our taxable income for the year. So the United States government is really and this is where some of the Republicans are really upset, because the original forecast was like it's a $600 billion investment, but who was it? Goldman said that it's closer to $1.2 or $1.3 trillion before it's all said and done. That's why on the production side, the OEMs will get a tax credit, and then on the purchase side, the individual purchases the vehicle will get a tax credit. And those are different. So I think it's worth mentioning. And so I've written that when GM was bailed out in 2009, there was a joke that said that GM stood for Government Motors. I said in jest that should we call Tesla Government Motors, because in the article, it also said that GM was only forecasted to receive about $500 million. And then Ford was not going to get anything because they are building insignificant numbers of NEVs in the United States right now. 

That's really all I had. Let's open it up to the room. If anyone has any questions, we can pull you up and answer any questions you have. And the last thing I think it's worth mentioning is that Morgan Stanley looked at foot traffic for NIO retail stores, and I think they pulled orders and said that the ET, the new ES6 has really shown promise, at least in the first month since it's been launched. So I speculated that could NIO be turning a corner, a sales corner? But one month is not going to create the trend that NIO needs. So we'll revisit that in a month to make sure that we're still seeing growth in positive sales for the ES6 and likely some of the ET5, too.

Lei Xing:
Yeah, the earnings numbers probably will be bad because it's on Q1. Benefit of the doubt, benefit of the doubt.

Tu Le:
We're not expecting too much. So I think that it’s kind of blunt the disappointment. So anyways, doesn't look like anybody has any questions Lei, So I'm ready to go, man.

Lei Xing:
Same here, ready to. It’s by the way, it's 10 days before I leave for China again. So I'm no longer as anxious or compared to the last time for the Shanghai Auto Show. But still, this time I'm taking, the whole family's going back.

Tu Le:
So the irony is Lei, that unless something changes, you'll probably have better air there than you do in Mass.

Lei Xing:
That's the joke. I've seen Taylor posting some stuff on, dunking on…

Tu Le:
And then Bill Bishop posted a picture from 2023 and then in Beijing and then a picture from 2013. 

Lei Xing:
I remember those times. I was in the hospital for 2-3 months in that entire time. I was lucky because I couldn't get out, but it was the worst of the times, 700, 600, 700, compared to 160 here. It's nothing, it'll be a good day. 

Tu Le:
I felt so helpless. Back in those days, man, I felt so helpless.

Lei Xing:
We still have the air purifiers what they call it filters.

Tu Le:
Kongqi Jinghua Qi.

Lei Xing:
Yeah, still a couple of those in my dad's apartment.

Tu Le:
You got to man, because even Beijing still has bad days here and there. So, anyways, thanks everyone for joining. Good morning, good afternoon, good evening. We will see you all next week.

Lei Xing:
Likewise, bye bye, talk to you next week.

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.