Tu and Lei start this podcast out with a brief discussion about the Chengdu Motor show. Both comment on the trend towards plug-in hybrids and MPVs which includes the Li Auto MEGA that was announced that week.
Tu and Lei then have a broader discussion about how hybrids weren't being focused on until Li Auto's success and now there are EREVs being launched by BYD's Yangwang, JAC, GAC, Geely and others.
Tu briefly talks about WeRide's ambitions to IPO in the US and the current status of their application and then moeves onto the announcement that BYD is looking to partner with a Korean company to build battery cells in South Korea.
This week's pod ends with Tu talking about the potential for EVs in the Indian market and a discussion about what they are looking forward to when they both head to Munich for IAA Mobility.
Tu and Lei start this podcast out with a brief discussion about the Chengdu Motor show. Both comment on the trend towards plug-in hybrids and MPVs which includes the Li Auto MEGA that was announced that week.
Tu and Lei then have a broader discussion about how hybrids weren't being focused on until Li Auto's success and now there are EREVs being launched by BYD's Yangwang, JAC, GAC, Geely and others.
Tu briefly talks about WeRide's ambitions to IPO in the US and the current status of their application and then moeves onto the announcement that BYD is looking to partner with a Korean company to build battery cells in South Korea.
This week's pod ends with Tu talking about the potential for EVs in the Indian market and a discussion about what they are looking forward to when they both head to Munich for IAA Mobility.
CEM #130 Transcript
Recorded 8/25/23
Tu Le:
Hi everyone and welcome to China EVs & More where my co-host Lei Xing, a repatriated 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 I thought was a slow week has really rallied into a lot of news to cover this week. What Lei and I discuss today is based on our opinions and should not be taken as investment advice. For those that are new to the show, welcome! And to those loyal listeners, welcome back. We ask that you please help us get the word out about this podcast to other enthusiasts. And of course, 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 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 of course I encourage you all to do. A tremendously long layovered Lei in France. Can you please introduce yourself?
Lei Xing:
Good morning from the countryside.
Tu Le:
Both of us have the mornings now.
Lei Xing:
Good morning from the countryside. This is your co-host, a jet lagged, technical difficulty challenged Lei Xing, former chief editor of China Auto Review. And this is episode #130. 130.
Tu Le:
That trip you took was basically like three trips, back and forth to or like back and forth and back to China with that 50-hour total trip. So. Crazy…
Lei Xing:
Yeah, I booked my ticket back in March and you know, the return trip required a kind of an overnight stay. So we stayed at the transit hotel in the Z Terminal inside the Frankfurt airport. So that's the thing because you arrive in the afternoon, but the flight to JFK leaves in the morning, right? But anyways, so where do we begin? I mean it's weird coming back because everything feels, like I tweeted, right? Everything feels outdated. Whether it's the Tesla I rented again on Hertz or coming into the terminal and then picking up your luggage. You have to pay either cash or credit card for the cart, $6 for the cart. I'm like, oh god. And JFK, lot of renovation going on. Coming back to like a third world country, after what I've experienced the last 2 months, right?
Tu Le:
Yeah dude, I, it is, when I moved back, it was a different experience just getting in the car all the time now. But you know, it is what it is. I think that especially now because the Chengdu… that's a good segway, maybe we begin with talking about the Chengdu Motor Show.
Lei Xing:
So I completely missed it because I was on the road driving when this was all happening last night, right? Which was morning time, Chengdu local time. And I did a quick research this morning like at 5, 6 am with the jet lag. I don't know what you found, but I see this huge trend toward two things: plug-in hybrids and plug-in hybrid MPVs and SUVs. And we can talk about a little bit later on, the Rox Motor, the Ji Shi, right? That's what I found to be interesting at the Chengdu Motor Show.
Tu Le:
I think it's a good appetizer for IAA and Detroit, I think it's on par with those two. I still think that Beijing and Shanghai are the world's best auto shows and it's probably, and if we count Beijing and Shanghai as one auto show, then I think that's really the only one that matters. I think IAA is going to do its best to make some news, but NIO is not going to have a booth at IAA, they're having separate events outside and Detroit, I looked at the kind of participants and there doesn't seem to be that much going on, although because you and I are just nerds, we're going to be attending both. And then we'll probably end the year with the LA Auto Show. So and for us, it's almost as much about seeing the people that we DM all the time and know, and inquire, ask questions and emails to see them in person and kind of trade rumors. I think that's the fun part for me. And I think for you as well. So yeah, you know Chengdu I kind of looked at everything. And I mean, there are some announcements. Li Auto announced that their MEGA, BEV MEGA is going to be starting delivery early next year, like January or February. So that means that they're running pilots right now, we've seen pictures of some of the mules that were already manufactured, the prototypes. So it's going to be a huge departure for Li Auto, because the marketing has been pretty consistent because the L7, L8 and L9 are basically identical triplets. So let's see how the MEGA is received by the Chinese community. And then the other thing, I don't know, were there any significant announcements that stuck out to you at Chengdu?
Lei Xing:
So to add on the MEGA, they're trying to position it as the best-selling vehicle of any kind, ICE or BEV, or EREV, SUV, car, MPV, any kind, priced above RMB500,000. That's a big, bold statement that they're putting out.
Tu Le:
Let me stop you right there, Lei. RMB500,000 is about $80,000.
Lei Xing:
$80,000, yeah. $75,000 or $80,000.
Tu Le:
So it's not a cheap MPV.
Lei Xing:
No. So a pretty lofty target on that. And then in parallel, they are rolling out this city level, what's the English term? It's kind of like to and from work NOA. I don't know the correct English name but there must be one but they're rolling this out, not depending on high-def maps like in several cities.
Tu Le:
So no one, I think everyone's moving away, and we kind of alluded to this in the last, everyone's getting away from high-def maps. Because that's a huge constraint for getting into L3, L4 level capabilities.
Lei Xing:
And then the other model I thought was interesting, was, I just tweeted just now, the Kia EV5, which is kind of a dedicated, I wouldn't say China only model, but it had its global debut in China and it looks like this is going to be one of those models that will be made in China for the world and launching in China first. The pricing, I feel like it's pretty competitive starting RMB160,000, so $30, roughly $30,000, ID.4.
Tu Le:
And this points to, because I think two weeks ago was the one-year anniversary of the Inflation Reduction Act. So this points to a decision that Kia had made prior to the IRA becoming law. And they probably would take it back, maybe, because at $30,000 adding 27.5% tariff to it, in addition to the logistics costs that they would have had to pay, anyways, that might make it uncompetitive unless they eat a lot of that tariff. And so that's one of the things that we'll see that the IRA has affected negatively, because this follows in the footsteps of the Polestar 2, which is built in Wuhan and shipped to the world and GM, or not GM, but Volkswagen has talked about building ID. series vehicles in China by 2024, shipping them to Europe. And then finally, Ford has also talked about, and this is an ICE, shipping Lincoln Nautiluses starting in 2024 from China to the U.S., and so what we're seeing is this retrenching a little bit of the OEM saying that yes manufacturing in China is cheaper and scale, quality reliability, all of those different factors that intersect, makes sense for more than one OEM, and many of them are not Chinese. So I think that has to play into local governments, U.S. government, European Union, and individual country level governments, like a Germany, like a France, like a Spain, because it's going to be these cheaper models that enter those markets from China.
Lei Xing:
The Kia EV6, which is the World Car of the Year. I think this is the imported version, were also launched with the GT version in the RMB300,000 to high RMB400,000 range. I don't know how this car will do in China. There's been a lot of marketing on this car recently, test drives. So that would be an interesting move. And then let me run off a few models that are all PHEVs. And look at, the JAC Refine RF8 PHEV MPV, the GAC Trumpchi ES9 PHEV MPV, the MAXUS 7 PHEV MPV, and then there's a few sedans, Geely Galaxy L6 PHEV that's hitting on the Qin Plus, the BYD Seal DM-i and then there's some others. These are all PHEVs, even the Meng Shi. Did you see the Meng Shi 917?
Tu Le:
Yeah I saw that.
Lei Xing:
Comes out with the EREV priced at RBM637,000, so that's upwards of close to what, $90,000, $100,000? And then the Yang Wang U8 luxury edition is hitting the market in September and the BYD Song L, the production version, finally debuted. And the Bao 5 is accepting this, what is it called, the blind orders? RMB300,000 to RMB400,000.
Tu Le:
So I want to unpack this a little bit, Lei. First of all, Toyota got hammered for leaning into PHEVs. Now they seem to be validated a little bit. And some of this, and I’d love your thoughts on my quick analysis. Some of this has to do with the price war, because these companies are broadening their product line in order to try to create more sales opportunities. Because on the BEV side, they're seeing a small small small competitive set of brands in China. And they're getting boxed out of it. And so I think they're going into PHEVs to broaden their product line, but also to mitigate some of the volatility in the battery pricing. So that I think there's more predictability in margins and revenues. So this is likely going to become a global trend where instead of going from ICE straight to BEV, there could be this smaller transition, and we had talked about this last year. That was likely going to be the case. But I didn't realize there was going to be a dozen, two dozen brands that were also going to start launching PHEVs.
Lei Xing:
Then the other one that was making big bold statements was the IM LS6. I think they put up a slide on comparing with the ES6, the AVATR 11, and saying that they've got the best features even on their top trim under RMB300,000, where the other ones are priced much higher than RMB300,000. You see these, and quite a few of these models are launched, like we said before, price cut on launch. So these newer refreshed versions are cheaper than the previous older versions or you launch the PHEV versions at a relatively lower price. I think that's a play that we're seeing.
Tu Le:
So I think another way to say that what Lei is saying is that they sharpened their pencil. They might have initially had a price point before the price war that they were going to launch at, but then they reassessed the current conditions in the market and cut pricing before even launching the vehicle in order to try to make it competitive at launch. So.
Lei Xing:
And the other talk of the town or model that we should mention is the Polestar 4, accepting, starting pre-sale and offering this, first of all, the Mobileye’s SuperVision based ADAS from the start and then the fine print says, Mobileye Chauffeur with eyes off point to point autonomous driving on highways. I tweeted that this looks to me to be L3-capable. So far we know that only BMW and Mercedes are localizing this, trying to localize this feature in China. It's already available in Germany and California and Nevada, I believe.
Tu Le:
Honda has L3 capable available in Japan.
Lei Xing:
Yeah, so that's an interesting route that Polestar 4 is taking while the Polestar 3 is going with a completely different set up, right, the Luminar LiDAR. And this is purely vision based building off of Mobileye. So that's interesting.
Tu Le:
Let me ask you Lei when they originally launched the Polestar 4, or unveiled the, I should say more properly unveiled the Polestar 4, they said that that would have standard ADAS features, but there would be a premium feature called Pilot Assist. Are they changing the name now in featuring Mobileye as their partner brand or was Pilot Assist always this, this Mobileye. That's what's confusing to me a little bit. So I'll need to find out or we'll need to find out more about how that's going to work. Or if they change directions a little bit.
Lei Xing:
Yeah I'm not sure, but it looks like this time, it’s a mutual effort to market this ADAS technology.
Tu Le:
So there's a lot of anticipation because the Polestar 2 has been a decent seller in Europe, not very good in the United States or China, they feel that the Polestar 4 could be one of the high runners to kind of replace the, not replace, because the Polestar 2 would still be for sale, but I think they see an opportunity with the 4 starting at $60,000. And it's going to be manufactured in Hangzhou. So the current product that Polestar is going to be shipping from the United States and from China is the Polestar 3, which is the premium SUV.
Lei Xing:
And Polestar 4 will be also kind of like the Kia EV5. This is a very China specific model.
Tu Le:
With the potentially controversial no rear window. But the rear camera, I like it…
Lei Xing:
And it’s also, it's utilizing ECARX to integrate this system, which is kind of interesting for this model. So you're seeing this entire Geely ecosystem at play here. And we can also talk about JIDU, which is now JIYUE.
Tu Le:
Was it, but it's not Moon, it's not Moon Yue, It's…
Lei Xing:
Surpass. Yeah Chao Yue which is surpass.
Tu Le:
Guo. Yeah. For those that are wondering, ECARX is Geely’s CARIAD. I think that's the best way to…
Lei Xing:
Kind of, sort of.
Tu Le:
Yeah, it's a bit more advanced than CARIAD and they have Mercedes as a customer as well.
Lei Xing:
And it's also more hardware than CARIAD which is purely software, I believe, right?
Tu Le:
ECARX is a publicly traded company, and they boast hundreds of millions of dollars in revenue all with either Geely partner companies or Geely affiliated companies. Mercedes is 9% owned by Geely, so Mercedes is using some of ECARX’s stack. And Polestar is obviously a Volvo company which is controlled by Geely as well.
Lei Xing:
And then the JIYUE, I think you have mentioned this on a few episodes ago that they had faced this issue of getting the manufacturing permit. And so this time, in order to get it, I guess there was kind of a, you know JIDU was a 55:45 Baidu Geely joint venture, but now JIYUE is a joint venture between a company under Geely that has 65% stake. And now Baidu owning 35% stake in order to get the production license. So it's complicated, but looks like they get the green light.
Tu Le:
Speaking of manufacturing license, Lei Jun has been active on Twitter.
Lei Xing:
Xiaomi. Yes I knew exactly where you were going.
Tu Le:
So he has been on local, Chinese social implying that their vehicles being tested in the desert, it's being tested in all these different places. And so I've written in this week's newsletter that JIYUE, I have to get used to saying that Lei, JIYUE, is that sisheng? Is that 4th tone? So I have to get used to JIYUE, or JIYUE and Xiaomi are going to be two of the first tech companies that are launching products. There are a couple of technology experienced founders like a NIUTRON, but they're struggling to get their manufacturing license as well. So it looks like Xiaomi, which is actually going to be launching a sedan for less than RMB300,000, or is it RMB200,000? RMB300,000, about $45,000? And the JIYUE ROBO-01 is more like a Model Y. So looks like they could be launching around the same time Lei, which would be very interesting.
Lei Xing:
Yeah Xiaomi will be a bit later. And for Xiaomi, what they got is there's two doors kind of they have to go through, so they get the clearing on the first door, which is NDRC and NDRC has this thing called Administrative Regulations on Newly Established Battery Electric Passenger Vehicle Manufacturers. They got this. So this is sort of like a kind of like your birth certificate. Then they have to get their identity card from the MIIT which is based on this thing called Entry Regulations on NEVs. I suppose it's only a matter of time that they get it, because the identity card, once you get the birth certificate, is relatively easier.
Tu Le:
Tai fu za (too complicated).
Lei Xing:
It's complicated, but the NDRC and MIIT are basically the two organs that you have to get approval. So it looks like Xiaomi will, at least they can, unlike NIUTRON, which is kind of a premature death right?
Tu Le:
Yeah I think there's still, their heartbeat, but it's faint…
Lei Xing:
Which, since we're talking about approval, we can talk about Rox Motors, Ji Shi, which their, if you saw the CNEVPost article mentioning that their English website is Polestones.com. So Polestar is “Ji Xing” and now we have a Polestone. It just cracks you up, right? I mean with this thing, right? When I looked at this announcement, this SUV that was released or revealed, I was like, this is like a Li Auto wannabe, this is a Rivian wannabe. I mean it’s just…
Tu Le:
I mean it'll likely never see the light of day in the United States or Europe.
Lei Xing:
And it's got the Yang Wang or the Fang Chengbao exterior and Li Auto interior.
Tu Le:
So there are about ten versions of a or Chinese versions of the G500 Mercedes SUV and the Land Rover Defender.
Lei Xing:
This is a segment that has recently been getting a lot of traction with multiple brands and models launching this.
Tu Le:
And it's weird Lei, because from a Chinese domestic standpoint, Great Wall is the one that led that originally 22 years ago.
Lei Xing:
Three years ago, it was like TANK was like the only model that was kind of that this offroad, outdoor lifestyle type of, now there's just a bunch more…
Tu Le:
What’s going on with Great Wall? Have you heard anything? They've just been so quiet.
Lei Xing:
I think they have some problems with these different brands and models trying to figure out positioning. I think that they're going through some restructuring, right?
Tu Le:
I'd heard, I’ve heard about that, too, for the folks that are wondering, Great Wall Motors is one of the three independently owned motor companies in China, the other two being Geely and BYD.
Lei Xing:
So I’d say that Rox Motors or Ji Shi Polestone, see all these different names, like which is which, I mean there's a company name, there's a brand name, there's a model name, called the Ji Shi 01.
Tu Le:
We should just start an advisory firm Lei about brand names. And it doesn't have to be about cars. It can be about anything.
Lei Xing:
And the guy behind it, this is similar to what's his name? Li Yifan of NIU, NIU, not NIO, but NIU founding the same company, two different companies, but completely separate, right? So this founder Chang Jing is the founder of the Robo Rock vacuum robot company. And then he later founded this Rox Motors. One of the founders is the former CTO of WM Motor.
Tu Le:
Not named Freeman Shen.
Lei Xing:
No, it’s Yan Lan. I think that's his name. And speaking of getting approval, they're using BAW which is Beijing Automotive Works as a kind of a contract manufacturer akin to JAC NIO. And one of the other highlights for this car is the world's first vehicle using Hesai’s F120 solid-state LiDAR. So even Hesai is taking a bet, is taking a risk, giving this company, this customer the spotlight for using their first time that their solid-state LiDARs are being used.
Tu Le:
Speaking of companies that are broadening their horizons. You tweeted about WeRide.
Lei Xing:
I mean that was just a matter of time, right?
Tu Le:
No but, so I was reading that it wasn't approval from the regulation. It was acknowledgment that they received the paperwork, right?
Lei Xing:
Paperwork.
Tu Le:
So I think that's an important distinction because WeRide is a, what was it called before? Shoot, I forget what was called before.
Lei Xing:
Yeah it was a different name before.
Tu Le:
Anyways, WeRide is one of the largest autonomous vehicle companies or startups in China along with a Pony, Momenta and a few others, Qcraft. And then Baidu is kind of the 800-pound gorilla. WeRide has applied to IPO in the U.S. I think on the NASDAQ. So they're one of the more promising companies. I think they're launched in 25 cities in five countries. They said they're in five countries. So big moves, broad footprint. When I think of this, I'm looking at the challenges between the U.S. and China relationship. And I'm like what challenges?
Lei Xing:
I looked at the screen shot I had. It is a notice on receiving the paperwork.
Tu Le:
Yeah.
Lei Xing:
So basically pointing to that you can be listed either on NYSE or NASDAQ.
Tu Le:
I'm a little bit thrown off because our timing normally I'm like looking at the clock to make sure it's like 9:45 or something. But.
Lei Xing:
Yeah, we started at 9:20.
Tu Le:
So we've been talking for about 30 minutes.
Lei Xing:
And you mentioned the BYD Korea. I saw the headlines, but I didn't read into the details. Maybe you can.
Tu Le:
There is a local Chinese company or a local South Korean OEM called Ssangyong.
Lei Xing:
Which SAIC owned.
Tu Le:
Yes. Exactly.
Lei Xing:
Are you talking about Ssangyong Motors?
Tu Le:
They are looking to partner with BYD to build cells in South Korea. These to me. So South Korea is a pretty decent-sized market, first and foremost, there's strategic value in building locally for South Korea, but South Korea also is a friendly country to the United States. And my thought is that they're definitely trying to do an end around on the IRA to get themselves into vehicles in the U.S. because you and I know this as of earlier this year, late last year, middle of last year, we knew that BYD was aggressively going to move in the United States. And late last year, their philosophy changed on that. But we all know that Wang Chuanfu and Stella Li's ambitions are still very global. And that includes being a big part of the U.S. market in the next 3, 5, 7 years. Now, I still believe long-term, they're going to build a factory as close as they can to Mexico City Giga to take advantage of the supply base, because there's already a number of Chinese suppliers that have said they're going to be entering Mexico to support Tesla, makes a ton of sense. And with BYD they can build cells for their own vehicles in Mexico. And they can build cells for other companies, including Tesla, who they also supply to. If we think about BYD from a product standpoint, it makes total sense because they live and breathe in the sub-RMB250,000, RMB300,000 price point. That would be from a mass market and volume standpoint would be the only breathing room, or that would be the huge opportunity for them in Mexico and Latin America, because those countries their per capita incomes are much lower than a U.S. or Germany. So there is a lot of strategic value in being in Mexico, but this could be their way of entering the United States to supply companies. And we know that South Korea has really pushed back on the inflation, the South Korean government has pushed back on the Inflation Reduction Act. These are the types of loopholes that you can expect to see or try to get exploited from companies. And so I don't know yet. I've spoken, I speak to people quite often about the Inflation Reduction Act. And I don't know how aggressively the U.S. government is going to be at trying to close these loopholes. But that's an interesting take. What, do you think that they're also looking at potentially trying to go around the IRA by building cells in South Korea, Lei?
Lei Xing:
Anything is possible. And anytime you can find a way, I mean the CATL Ford is a way, right? Although it's facing push back.
Tu Le:
It's far from approval. Let me say that, it’s far from being approved, I still think eventually it's going to get approved. But right now there's a couple of things going on Lei, the Detroit Auto Show and the UAW negotiation.
Lei Xing:
That's right.
Tu Le:
So Shawn Fain, who is the UAW President, the new UAW President, who effectively, the UAW members didn't really want him, because he only won by like 1%. He's trying to establish himself with Mary, with Jim Farley, with Tavares. And he famously is negotiating through social media, a first time for a UAW President. And he, so Stellantis had sent over basically a proposal. And on social media, he threw it in the trash. And he's like this proposal is trash. And he said that.
Lei Xing:
He did a Speaker Pelosi moment.
Tu Le:
He's just bad mouthing the OEMs. John McElRoy, friend of the show, friend of ours, good friend of ours, very knowledgeable, very objective. I have a ton of respect for him. He did an 8-minute video talking about how dangerous that is to be bad mouthing who you're going to be working with. It creates animosity. It creates ill will. I unfortunately, because contracts are negotiated every 4 years. September 15th, I think is when the current 4-year contract ends, you're going to be in and around Detroit at around that time.
Lei Xing:
Are we looking at a potential strike or something?
Tu Le:
With the Detroit Auto Show in the backdrop? Potentially.
Lei Xing:
Yeah, that would be interesting.
Tu Le:
So there's a study. I think I mentioned this last week. There's a study done by a consulting company that 10 days of strike would cost $5 billion of damage.
Lei Xing:
Anyway, speaking of Stellantis, and speaking of partnering together, we add LeapMotor into that equation, because there's been some chatter about Stellantis trying to work with LeapMotor and LeapMotor is already rumored of working with JETTA right? Again, these things are popping up, and LeapMotor is announcing something in Munich.
Tu Le:
And it's important to note that these companies, sometimes I'm not saying Leap is doing it, but I'm kind of saying that they're doing it, that they're kind of negotiating through the public, maybe to push negotiations a bit further. So kudos to the Bloomberg team, we're friends with Danny, we're friends with Linda. And on this side of the world, Gabby Kappala, she does good stuff. She did that A123 article a couple of months back. So kudos to them to kind of digging that out. I didn't see that coming, but if you take a step back, Lei, it makes a ton of sense. But their most recognizable brand is Jeep. Peugeot is struggling, Citroen is struggling. So if they're using a LeapMotor platform, which brand would it be for? Because LeapMotor, their platform is for small mass market vehicles.
Lei Xing:
I think it would be a French band.
Tu Le:
Which is weird because they're not doing well, right? So you would think that they would want to partner with somebody with a platform that would match one of their more favorable brands. So kind of doesn't make sense, but again, maybe LeapMotor is trying to negotiate in saying, hey, JETTA, if you don't join with us, we got other customers, right?
Lei Xing:
Again, these companies were talking about NIO, we're talking about LeapMotor, we're talking about Xpeng. These companies are trying to branch out from purely a smart EV startup into, let's say, a smart platform supplier, smart technology supplier. And that's what's potentially are happening.
Tu Le:
I'll add to that Lei: they're trying to get when the getting’s good, because the foreign OEMs, they know they're in a pickle, because they don't have the capabilities yet to create these platforms themselves. But they know that eventually they will. And so they are trying to create these opportunities for themselves when they know there's a need for them.
Lei Xing:
It goes back to your build or buy decision, right? Is that your…
Tu Le:
Yes, make or buy.
Lei Xing:
Make or buy.
Tu Le:
Yes, it's very very interesting. And then I think one of the things that I wanted to bring up, I because I follow the Indian market pretty closely. And so there was a great article from CNN that highlighted the Indian EV market. It's forecasted to become by 2030 like a $100 billion market. The eye opener is that and I've always known this, that a lot of that is going to be driven by two and three wheeled EVs. And we’ve said this before, I've said this before in past episodes, but, so China was able to get rid, generally speaking, right, because the 2 months you were in Beijing Lei, the pollution wasn't really that big of an issue, right?
Lei Xing:
No, it wasn't.
Tu Le:
But in 2012, 2013, 2014, it was pretty bad, right?
Lei Xing:
We all lived through it.
Tu Le:
Beijing was able to clean up the air in a short period of time in 4 or 5 years. So that was just amazing to me. And India is in a similar situation currently. And so what, because remember that India is a democratic country. So if Modi wants to stay in power, the first thing, so people, the citizens of a country sometimes don't touch, feel, see, experience some of the changes in laws that are being implemented by their governments, but you can see, you can touch, you can feel, you can taste the pollution, right? When it's really bad. And so if he wants to stay in power, he's going to have to make really really broad changes. And so。
Lei Xing:
Now I’m wondering because Xi is in South Africa for the BRICS meeting, and supposedly he's met Modi, right? And the two countries are not on good terms recently. So don't know what will come out of that meeting, but China is going to play a role, perhaps.
Tu Le:
China is going to play a role, the United States is going to play a role.
Lei Xing:
And India.
Tu Le:
To more detail about your point about the challenge in relationship. So most of the social media apps from China, TikTok, things like that are banned in India. I think 6 or 8 months ago, maybe a year ago, the Indian government also implemented or passed a law that said neighboring countries or bordering countries. If their companies wanted to do business in India, they would need to find a JV partner.
Lei Xing:
Yeah, we talked about that.
Tu Le:
There's basically only one bordering country. So and few weeks ago, BYD was rebuffed on their $1 billion investment proposal into India. So India is going to be a player. And I’m not saying that they're going to be a hugely significant player in the EV space, like at least in four wheels in the next 3, 4 or 5 years, but they will influence a lot of what's going on over the next several years.
Lei Xing:
I mean the priorities is probably getting these India EV Inc., if you will, get them up and running, I mean these could be the traditional, the TATAs, the Marutis, even some of the two-wheeler players.
Tu Le:
Mahindra.
Lei Xing:
Yeah before I mean the Chinese makes a presence, right? So I think that’s…
Tu Le:
There's a, so we might think of India as a smaller country with regards to passenger vehicles, but they're the third largest market. We always think of EU as one entity. But if we break it down into the 27, 29 countries, there's a bunch of smaller markets, whereas India, so it goes China, United States, India, with India at around 4.3 million units last year. Small percentage of those are EVs. India sold more than 5 million two-wheel vehicles. So with a growing portion of those being electric. And so we'll see the same types of challenges, a bit more extreme in India than we will in China, Europe, and the United States, because the grid is not great. And the infrastructure, the roads, the roads just aren't there yet. In a lot of places.
Lei Xing:
That's what I said at the beginning, even the U.S. that the first impression once you land, right? And then going through the airport and all the construction going on is like infrastructure is really behind.
Tu Le:
Yeah, all you need to do is visit one time and you just know simply that there's a lot of improvement that needs to happen in order.
Lei Xing:
And I'm also talking about payment infrastructure, which X is trying to, they're trying to do something on that front.
Tu Le:
And I'll say this. There is an article in the Atlantic written by Ronan Pharaoh about Elon Musk that if true was very eye opening and it's worth a read to our listeners. If you get a chance, whether you're a fan or not of Elon and Twitter and Tesla, it's just pretty eye opening.
Lei Xing:
Perhaps we can look ahead to Munich.
Tu Le:
Let's do it.
Lei Xing:
So you and I will be on the road. So I'll be leaving on Thursday, next Thursday, arriving early on the 1st. And you'll be leaving on Friday, arrive early on the 2nd. Is that correct?
Tu Le:
That's right.
Lei Xing:
So we got to figure out what to do next week for CEM, that's one thing. And then the other thing is looking ahead into IAA Munich Mobility. I think it's going to become the IAA China EV, AV Mobility 2023. Because look at who's going there. So we know NIO is not exhibiting, but…
Tu Le:
They're going to have a presence.
Lei Xing
Li Bin will be on the same panel as Ola of a well-known automaker that's rumored to be working with NIO. Xpeng will be there. They'll do some, I think Brian will be there. They'll do some test drives. LeapMotor will be there. BYD will be there, Hesai will be there, DeepRoute will be there. And there's some other Chinese companies.
Tu Le:
I'm just going to call it, I’m going to call IAA Munich and no one's called it, no one’s called it yet, so I’m going to take credit for this Lei, I'm going to call it Beijing Auto Show West. That's what I’m going to call it.
Lei Xing:
The Beijing Auto Show European Edition.
Tu Le:
Just Beijing Auto Show West.
Lei Xing:
German Edition. Yeah. West.
Tu Le:
I’d like to see the foot traffic at these booths. Specifically BYD, specifically Polestar and things like that because I expect a lot of foot traffic coming into those booths for sure. There's one media day, there's the 4th and that's when we normally have our running shoes on, because we're just freaking running back and forth.
Lei Xing:
But then and the way this IAA Mobility set up is that they have IAA Summit, which is the show grounds in the Messe, right, the exhibition ground and they also have the Open Space inside the city, which will have some booths of let's say one company in particular: AVATR, is global debuting in their 12, because AVATR has their design based in Munich. Likewise NIO, NIO has their design based in Munich.
Tu Le:
What's important to note Lei, is that you just rattled off 3, 4, 5 Chinese brands that will have a prominent spot in IAA Munich, crickets on the Detroit Auto Show side. So that should tell you where their emphasis, where their tension is from a China EV Inc. standpoint.
Lei Xing:
It's pretty obvious.
Tu Le:
If anybody was wondering because I don't know, and I've looked as of two days ago, I didn't see any Chinese presence at the Detroit Auto Show, not significant. Not from an OEM standpoint because our friends at Hesai the LiDAR companies, Cepton, well, Cepton is American. Let me say that.
Lei Xing:
RoboSense.
Tu Le:
RoboSense. They're all going to be there, but no significant OEM presence. Now, around the corner is going to be the LA Auto Show and CES, will we see any of them there?
Lei Xing:
Perhaps?
Tu Le:
Maybe they don't feel Detroit is going to be very friendly for them, but that's never deterred Stella for sure, so.
Lei Xing:
Well Detroit used to be the Beijing Auto Show West, right around the financial crisis time when BYD and all these companies would exhibit.
Tu Le:
But their vehicles at that time were complete trash.
Lei Xing:
Compared to now, my goodness.
Tu Le:
And so there's a few people that are coming in from the U.S. Lei, that if I get an opportunity to kind of give them a tour of some of the Chinese EV booths, they've never experienced, touched, felt, seen a Chinese electric vehicle yet.
Lei Xing:
That's the thing, for a lot of these people going from the West to Europe is much simpler, than going from the West to China. So this is a huge opportunity, right? So.
Tu Le:
Until 2024 when Americans will also need a freaking visa, I don't know what, you Europeans listening what's up with that man? I thought we are friends, man, what's going on with that visa stuff, so.
Lei Xing:
Yeah, right? So Xpeng recently launched the P7, was it, P7 in Europe, right? And then ZEEKR shipped the 001s to Europe, right? So they're coming and they've been coming. And we will be posting our conversation with Philipp from carwow Germany right before IAA. He had tremendous insights into the dynamics of buying car and the perception of China EV Inc. in Germany.
Tu Le:
And he points out a few missteps that some of China EV Inc. have done in Europe.
Lei Xing:
We'll be looking forward to joining their happy hour, I guess?
Tu Le:
Yes. They're having an event on the 7th, the evening of the 7th.
Lei Xing:
So you and I will kind of.
Tu Le:
We'll figure it out.
Lei Xing:
We'll figure it out. You probably attend some events that I won't be able to attend. So.
Tu Le:
Yeah, the calendar is getting full, too, because I wrote in my newsletter…
Lei Xing:
Will be roughly a week in Munich.
Tu Le:
Yeah, man, I'm looking forward. I've never been to Munich.
Lei Xing:
And then come back. So I come back on the 9th. I believe you come back on the 8th, rest a few days, and I'll be in Detroit.
Tu Le:
So for any of our listeners, if you plan to be in Munich or Detroit for the auto shows, please get in touch, Lei and I last year had a happy hour. We're going to be hosting again likely at the same place in Detroit. Man, if you and I could coordinate schedules, I would love to host a small little, happy hour in Munich. You're going to be too busy, man. You're too important.
Lei Xing:
I still need to pin down some of the details of my whereabouts.
Tu Le:
Maybe we can do it Saturday night in Munich city center or something.
Lei Xing:
When you're saying Saturday, you're saying…
Tu Le:
Second. Because the 2nd is Saturday, the 3rd is Sunday.
Lei Xing:
You arrive on the morning of the 2nd, right? We'll see the next few days.
Tu Le:
You know, rookie mistake. I wrote in my newsletter two weeks ago, let's have a beer, let's go have a pint. One of the readers like now, man, they don't drink pints there. It's…
Lei Xing:
What's the German term? A pils?
Tu Le:
Ein Moss? Ein pils? So rookie mistake, my apologies.
Lei Xing:
So I think it's your first time to Munich, right? It's not my first time in Munich, but it is my first time spending significant amount of time at an auto show in Munich. So looking forward to it, really looking forward to it.
Tu Le:
The number one thing that I’ll ask for recommendations.
Lei Xing:
BMW Welt. Got to be a visit.
Tu Le:
I'm going to be in like heaven, like BMW Museum is just going to be amazing, I think.
Lei Xing:
Yeah, I've been to the Merc museum, I've been to the Porsche museum. So there'll be a bucket list.
Tu Le:
Man so I've been to Porsche, never been to Merc. That is definitely one I need to go. I was down in Italy, took the boys to Lamborghini, took the boys to Ferrari, took them to Ducati.
Lei Xing:
The Motor Valley.
Tu Le:
I said it was for me, but they weren't that interested. I said it was for the boys. I told my wife, I'm taking them to the museum, so they can see this stuff. That was more for me anyways. I don't really have anything else Lei.
Lei Xing:
I don't either man, so just rest a few days and then get ready for Munich.
Tu Le:
Yeah, man, let's rumble. But…
Lei Xing:
I just came back from Germany. So.
Tu Le:
Oh jeez. That's right. So everyone, thanks for joining us. We will catch you all next week. Have a good morning, afternoon evening.
Lei Xing:
Somewhere next week, somewhere in the world. Probably not in the U.S. But we'll talk to you next time. Bye bye.
Tu Le:
See you.
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.