China EVs & More

Episode #131 - Unpacking XPeng's Moves, BYD Adds to its Manufacturing footprint, NIO Sales Revamp

September 12, 2023 Tu Le & Lei Xing
Episode #131 - Unpacking XPeng's Moves, BYD Adds to its Manufacturing footprint, NIO Sales Revamp
China EVs & More
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China EVs & More
Episode #131 - Unpacking XPeng's Moves, BYD Adds to its Manufacturing footprint, NIO Sales Revamp
Sep 12, 2023
Tu Le & Lei Xing

Tu and Lei begin with a discussion about all the recent moves made by XPeng and whether it moves the needle for them or not. 

They turn their attention to August sales, specifically the top of the leaderboard which sits Li Auto, XPeng and NIO, the three US publicly traded Chinese EV companies who also happen to get the most attention by western media. 

The conversation moves over to the significance and reasoning behind BYD's acquisition of Jabil's Singaporean operations which includes two factories in China. 

Lei then looks back at his visits to Li Auto and NIO retail locations to compare and contrast the atmospheres and highlights the 'no pressure' environment of the NIO Houses, which could be a reason they are revamping their sales teams and tactics. 

The pod ends with a discussion about the appropriate number of NIO swapping stations in the EU and how to determine that appropriate number. 

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Show Notes Transcript Chapter Markers

Tu and Lei begin with a discussion about all the recent moves made by XPeng and whether it moves the needle for them or not. 

They turn their attention to August sales, specifically the top of the leaderboard which sits Li Auto, XPeng and NIO, the three US publicly traded Chinese EV companies who also happen to get the most attention by western media. 

The conversation moves over to the significance and reasoning behind BYD's acquisition of Jabil's Singaporean operations which includes two factories in China. 

Lei then looks back at his visits to Li Auto and NIO retail locations to compare and contrast the atmospheres and highlights the 'no pressure' environment of the NIO Houses, which could be a reason they are revamping their sales teams and tactics. 

The pod ends with a discussion about the appropriate number of NIO swapping stations in the EU and how to determine that appropriate number. 

Climate Confident
With a new episode every Wed morning, the Climate Confident podcast is weekly podcast...

Listen on: Apple Podcasts   Spotify

CEM #131 Transcript
Recorded 8/30/23

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. For those that are new to the show, welcome. And to our loyal listeners, welcome back. We ask that you help us please get the word out about this podcast to other enthusiasts and of course tune in again next week, where we hopefully will be back to Friday. I don't know if that's going to be possible though.

My name is Tu Le. 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. A packing for Munich Lei. Can you please introduce yourself?

Lei Xing:
Yes, sir, in about 24 hours, I start my trip. So good morning from my side. This is your co-host Lei Xing speaking, former chief editor of China Auto Review. And this is episode #131. How do you top the blockbuster news of the century that shook the automotive world? Well you follow it up with another blockbuster move. And I'm speaking of Xpeng. So a month after the Volkswagen investment into Xpeng and the platform collaboration, Xpeng announced the strategic partnership with DiDi. What's your initial reaction?

Tu Le:
So Xpeng has been a busy beaver the last few months, or last 12, 18 months, because these discussions probably started over a year ago with Volkswagen and DiDi. And we point back to what everybody thought the price war going to push consolidation. And what we're seeing is less about consolidation and more about ridding assets, so that the balance sheets look a little bit better for some of these companies. And for the Volkswagen Xpeng transaction, it was a desperate move for Volkswagen, but Xpeng seems to be really trying to broaden itself a little bit and diversifying some of that risk into just out of just buying and selling cars, but then creating other brands and things like that. BYD has started a trend. NIO is going to be launching multiple brands. So I think this makes a ton of sense. You?

Lei Xing:
Well, the first few reactions I had was, first of all, on the DiDi EV itself I mean how much that was under the radar? Because Xpeng tweeted an interview with Brian Gu, and the first thing he said on the interview was how almost complete this MONA is. And barring the current environment, the entry regulations, we could have been seeing a DiDi EV or DiDi EV Inc. That's number one. And second is the way this was structured, right? I think this is, you don't see this anywhere else or we haven't seen this in other cases, is this sort of valuation adjustment mechanism, I don't know if that's the right financial term for it. Basically, I have to sell a certain number of vehicles in order to receive the as high as 5% share in Xpeng. So I think these are the two interesting things. And then the other one is just what you mentioned that, what the heck, Xpeng is going with a multi-brand strategy? I didn't think that they were going to, we know they were going to launch a RMB150,000, let's say a model, but we didn't know that they were going to do this through a different brand. And utilizing actually DiDi’s vehicle development. So I thought that was interesting.

Tu Le:
This points back to now we're getting into much more of the traditional automotive kind of levers and pulleys, because scale is where you get cost advantages. And so with Xpeng struggling to get to 15,000, 20,000 units a month, and hundreds of thousands of units of capacity hanging over their heads. And this is not just an Xpeng thing, there are many EV startups in China that have hundreds of thousands of units of excess capacity that they need to do something with, I think, selling some of that capacity effectively to Volkswagen and then diversifying out into the mass market where you had mentioned RMB150,000 that's in direct competition with BYD by the way. So at RMB150,000, we know that that's where the volume is, so they're trying to utilize or they're trying to get into the mass market to get rid of some of that or not get rid of. But let's just say, sell some of that capacity to the market so that they can likely focus on the Xpeng brand to be a bit more premium, higher margin and vehicle services, connected services. So this is where if you are an automaker, it doesn't matter if you're an EV maker or an ICE maker, scale is extremely important to profitability. So.

Lei Xing:
And using DiDi’s vast mobility ride-hailing network as a leverage or a scale. I think that's one of the things. But…

Tu Le:
And you had mentioned the sales volume thing, the 5% thing, right? To me, that's a formality because there's so many DiDi drivers, and eventually they're going to have to get electrified. So it seems like that was more of a formality, kind of clause than anything else.

Lei Xing:
Yeah the clause is basically they get 3.25% issued by, A-share issued by Xpeng. And upon SOP they get another, I guess, trench. And then once you get to the first stage which is like 13 months after SOP, you needed to get like 100,000 units. And then another 12 months after that, once those are completed, you get to that 5%. I think that was in the, then that's worth about $744 million.

Tu Le:
I think, which brings me to this curious point or intriguing point. Isn’t DiDi working with Toyota on the autonomous stuff? I thought they were.

Lei Xing:
No. I think they're working with Volvo.

Tu Le:
Volvo. Ok.

Lei Xing:
On autonomous stuff and they spun off the KargoBot, which is the trucking autonomous.

Tu Le:
Because it still makes strange bedfellows now because Xpeng is tied to Volkswagen, is tied to DiDi, and so, yeah, it creates potentially in the future of some tension between all these different brands with Xpeng being the common denominator. So, something to look out for and keep an eye out for.

Lei Xing:
Yeah, and it’ll also be interesting if DiDi would in fact be using Xpeng’s G9 robotaxi that they've been testing. That's another possible collaboration which will be kind of in conflict with what they're doing with Volvo.

Tu Le:
So there's, like I said, I think they are playing to, they are fighting for tomorrow, and maybe that's to the detriment of long-term strategy, because now Xpeng is dealing with multiple entities, some that are not Chinese, and that thins out management, kind of being able to manage this diverse set of not only products and services, but manage relationships. I believe He Xiaopeng and Brian Gu are amazing managers, but I mean there comes a point where they're starting to spread themselves a bit too thin, I think.

Lei Xing:
Yeah I think for DiDi on Cheng Wei’s part, it's probably get this burden off my shoulder. And so that's kind of the…

Tu Le:
A quick reminder to everyone that DiDi was in the doghouse for about a year and a half. So even if they were working behind the scenes and back in the lab on amazing amazing services products, partnerships.

Lei Xing:
They have 2,000 people work on this car.

Tu Le:
Yeah. It goes to show because and there's probably mostly a software thing, well, I think, kind of integrating it into. And I'm jumping around. So I apologize. But this is kind of sort of what, in another sense, what a DeepRoute and a WeRide is doing with the SOEs that they're working with. They are converging into providing hardware and ADAS services to traditional OEMs and SOEs in order to scale their businesses.

Lei Xing:
I had tweeted this is like one of those, killing many what, birds with one stone, right? I mean the multi-brand strategy, the asset, the development, RD& asset, the car itself, Xpeng’s multi-brand strategy, scaling, volume effects. So I guess it worked out for the two parties.

Tu Le:
Just really quickly because I'd love to get your thoughts. The one thing that is a bit challenging for me is that RMB150,000 price point, because the G6 and the G9, I've not seen the interior of the G6, but the G9 and some of the Xpeng vehicles, the fit and finish on the interior is okay. It's not $45,000 level, in my opinion.

Lei Xing:
No. It's suddenly not NIO or Li Auto. Let’s just say that.

Tu Le:
How they reconcile that RMB150,000 versus the RMB250,000 is going to be interesting. Is it a software feature thing or is it interior? Because the current interiors aren't super great. So how much lower can you get, right?

Lei Xing:
Yeah so I don't know. And also looking forward, what exactly this RMB150,000, A-class, smart EV, what is it going to do? Like I had pondered whether this is going to be some kind of a consumer AV type of vehicle that can be used on both the 2B, the ride- hailing network for the drivers and also for 2C to the private consumers. It looks like He Xiaopeng said that he expects 100,000-units volume on the 2C alone. So I guess that's a move downward into that, as you said, the BYD range.

Tu Le:
Because there's pressure for them to build more factories.

Lei Xing:
Well they already have three, right?

Tu Le:
Yeah, but they can't sell that capacity yet. And with Tesla looking at trying to increase capacity, BYD increasing battery capacity and manufacturing capacity. Xpeng, NIO, Li Auto, they all have pressure to build more factories, even though they can't sell all of their capacity yet.

Lei Xing:
And it's good to see the latest rankings released by Li Auto, it was good to see that WeiXiaoLi (NIO, Xpeng, Li Auto) now again at the top among the startups at least, and kind of like the Li Auto reducing prices today, cutting prices, not cutting prices, but giving the insurance subsidy.

Tu Le:
A non-price reduction price reduction.

Lei Xing:
Showing that, like, everybody's get sucked into it, right?

Tu Le:
The Tesla stans are talking about, well, Tesla hasn't reduced price, but they're offering insurance subsidies, so same same. But I don't want to beat the dead horse. Volkswagen again, is reducing price. And so, and the price war is not going to end anytime soon.

Lei Xing:
I think the fine print in the, let's just stay “XiaoDi” partnership. 

Tu Le:
XiaoDi? DiPeng?

Lei Xing:
360,000 for two years, that's significant volume, which we are waiting to see whether that can be achieved, right? It looks good, easy on paper, but considering the D1 on the DiDi platform is a flop. Remember that? The volume was not so great and then they changed it to a 2C vehicle and that didn’t sell that much. This is only what, two or three years ago, 2021, right? So.

Tu Le:
It is like a unicorn, right? You see one on the street, and you take a picture of it, because you might not see another one for a while. So.

Lei Xing:
The potential is great. Potential is great. Looks good on paper, win win. But we'll see.

Tu Le:
So I saw this statistic that China is at around a 38% take rate on NEVs last quarter. So if we are, last year, we hit 22 million vehicles in China, so 40% of 22 is close to 9 million units. I'm just trying to create perspective on this 300,000-unit number that you're talking about. So it's in the grand scheme of things. It's not a ton of share in the China market. But I think for companies like Xpeng, it's more important to look at growth month over month, year over year, as opposed to total volumes. Because first of all, they probably have half a million units, total of capacity. So they need to be consistently over 70%, 80% before they can comfortably add more capacity, because you shouldn't be really adding capacity if you're at a utilization rate, from a factory level at around 50%, less than 50%, right? So that's going to and these companies are publicly traded. So we interact with the Xpeng stans, the NIO stans all day long on Twitter, right? So.

Lei Xing:
And Xpeng, I mean before mid-decade, they still have like 4 and 4 to 5 models that they'll launch under the Xpeng brand plus at least one, I mean this MONA comes on next year and there's probably more after that, that will support a kind of the capacity, right? Hopefully. 

Tu Le:
Yeah and this is, in stark contrast with the traditional product life cycle for the traditional automotive sector, which is normally between 3 and 5 years. And for companies like a Volkswagen or a GM for a high runner, you might sell 1, 2, 3 million units of a product before you do any type of major update or major refresh. Normally it's a few hundred parts every year until the 3rd, 4th or 5th year until you get into a major refresh. So these companies are really changing the game, and it's forcing the traditional automakers to throw out all of their current processes and policies and all their old ways of thinking in order to just try to keep up with the number of updates, because in the last 12 months, NIO will have updated or refreshed their entire vehicle lineup.

Lei Xing:
Yeah, you mentioned a good point, speaking of way of doing things. Given the current market environment, I'm talking about the policy environment, which is really the window is closing and you've seen that play out, right? JIDU now becoming JIYUE exactly because of that. And then DiDi, really through this partnership really letting that EV project go to Xpeng’s hands. And Huawei is kind of playing on the outside, inside, they're kind of like, and then Xiaomi, right? That's it. If you look at these outside, tech companies really it’s Baidu and Xiaomi that are really the only ones left doing it on their own almost, right?

Tu Le:
Huawei is straddling, they don’t want to be an automaker, but I don't think the brands that they've partnered with the exception of maybe AVATR, I don't know, like SERES is not going to really be a high runner, a big sales brand for Huawei. So in order for them to succeed, they need their products, hardware, software stack in millions of cars. That's how I look at it.

Lei Xing:
But this “XiaoDi” partnership is the first in which an R&D project of one partner is taken over, sort of, by the other partner, and the share is contingent on vehicle sales volumes, right? So this has never been done in the industry, that the way how this is being partnered.

Tu Le:
And it's important to remember that DiDi prior to the Chinese government putting them in the box, they had global ambitions, they wanted to crush Uber. And so when they came up or launched this vehicle idea, I'm sure they were looking at the IPO, they were trying to strategize how they could really become a global brand. And the constraint of not being able to generate new customers, because DiDi was limited in how they can add users while they were in the doghouse. And so for a year and a half, they were kind of in limbo. So maybe they didn't have enough capital to follow through on execution of this branding. And they just looked at Xpeng being a natural partner to allow them to do that. So let's move on. I talked to Reuters this week about the BYD Jabil transaction. 

Lei Xing:
Huge.

Tu Le:
Jabil is U.S.-based contract manufacturer that makes final assembly and parts for companies like an Apple. So, the U.S. version of a Foxconn, much smaller and not as ambitious, but they've sold two factories to BYD, one in Wuxi, one in Chengdu is it? 

Lei Xing:
Chengdu, yes.

Tu Le:
For just over $2 billion.

Lei Xing:
For the Jabil Circuit Singapore entity.

Tu Le:
And they make PCBs. So PCB is the printed circuit board. So it's the green resin board that has transistors, resistors. It could be 3, 4, 5, 6 layers. Thoughts? What do you think? You said it's huge.

Lei Xing:
First of all, this is the biggest acquisition by BYD to date. And it trumps the previous, I think this one was $2.2 billion, right? The previous was only RMB3.5 billion, which is like what, $500 million?

Tu Le:
Yeah that's half a billion dollars, maybe.

Lei Xing:
So this is number one. Second, as you said, right? We have BYD as more than an EV company, like the electronics is a huge part of not only on cars, but on the phone side of it. 

Tu Le:
That's their roots. 

Lei Xing:
Yeah, that's their roots. And similar, I think to what the “XiaoDi” partnership is other people's burden becomes, one person's burden becomes the other person's treasure, right? Sort of.

Tu Le:
Yeah, because of the price war, probably bank accounts are low. And BYD, this transaction doesn't seem cheap. But maybe they're starting to see assets that they can now afford that they couldn't have before. But I can't help but to think that BYD looks at this as may be a potentially something that will help them converge the mobile electronics into the actual EV so I think there's more to it than just I'm going to build out my electronics business, right?

Lei Xing:
And then the geopolitical factor. This thing is, okay. Again, this is an American company now. It's right? BYD has bought part of its assets outside of China, outside of the U.S., so.

Tu Le:
This is with the backdrop of Raimondo, the commerce secretary in China right now talking and meeting with diplomats and Chinese diplomats about trade. So that shouldn't be lost. And then the other thing that was big news this week was NIO earnings. So maybe we can talk about that a little bit. I know that you had tweeted something. So what do you think about that? The NIO earnings.

Lei Xing:
NIO we knew financially the numbers were bad for Q2.

Tu Le:
They were worse than the analysts thought, though.

Lei Xing:
Right. I mean they still have positive margins which was, compared to Xpeng’s negative margins and comparing their premium positioning and compare, they are, right, they were much better off. And then they threw out this guidance on Q3, which is going to be all time high. And then the small details of what's happening with their product planning and delivery. Something that William Li mentioned, I thought was interesting was the desire to hire more sales people to reach the so called sales capability of 30,000 a month to do to deliver 20,000+ a month. I thought that was kind of interesting.

Tu Le:
I read that Lei, as the retail stores aren't doing a good enough job of selling the product. That's how I read that.

Lei Xing:
Yeah I mean, if you look at the Li Auto earnings, and if you heard the NIO earnings, even though they are, the BBAs are still a benchmark in certain aspects that they're trying to copy, right? So again, William Li mentioned about how in terms of sales and touch points, I think one thing he mentioned was in Anhui Province like Hefei takes up 80 to 90% of sales of NIO, whereas the BBAs is much more spread out. And that's why he wants to expand the touch points to balance it out a little bit. So it looks like this SG&A is going to continue to go up.

Tu Le:
We should remember that with NIO, in particular, it's not just, let me find a mall with an open retail location, because once you move into tier-two, tier-three, you got to bring the charging infrastructure. You got to bring in the swapping stations.

Lei Xing:
I'll tell you this from a direct being in China for 2 months. I went to quite a few NIO stores and Li Auto stores. Comparatively, the Li Auto stores definitely have many, more sales associates compared to NIO. NIO has done a good job in terms of deliveries. But as William Li mentioned, I guess they need more sales fellows.

Tu Le:
NIO retail stores are like laissez faire. You just go in there, no pressure. They have that coffee shop vibes, but that nobody's bugging you, but sales is…

Lei Xing:
Yeah I'd say that's a fair point. And he did say there's much more delivery service, let's say the power swap stations, these service-related personnel are much more higher than the other competitors.

Tu Le:
Remember, when you open new retail stores and hire new sales agents or sales associates, then there's a training component that needs to be also thought through and considered and paid for. So when you, so Tesla, they've opened retail stores. They never really focused on the service side of things. And so I think that's one of the things that a Li Auto and Xpeng and a NIO need to really take on and have it be a part of their branding. With NIO specifically, because they're probably the most customer friendly brand. Li Auto is very family oriented. But NIO kind of leans into, we're a customer brand, right? We're a consumer brand. So if you don't have that on aftersales service, then it's kind of hollowed out. So.

Lei Xing:
Yeah and then the other information revealed on the product side is one, no new products next year for the NIO brand. Two…

Tu Le:
Tat's a risk. 

Lei Xing:
Yeah, well, I mean, the Alps, the first verification build of the Alps brand has rolled off and they're launching, planning to launch that second half of next year. And the phone is coming end of September.

Tu Le:
And the refreshed EC6 as well.

Lei Xing:
EC6 is also end of September. So that's on the product side. And then our good friend Edison asked the question about partnerships. So it remains, I mean it's a very, what you call it, the answers we've all heard before, right? They said there are…

Tu Le:
No comment.

Lei Xing:
In discussions, right, with OEMs, and they're open. I think the upside is, there's, for NIO to become kind of a supplier, there's three things. So the power swap, who's going to be the third party utilizing the power swap. NIO is building their own battery. So the BF1 is under construction. The EDS electric drive system is another potential for a third-party OEM to buy. So these are the kind of the things that we can look forward to, but nothing official yet.

Tu Le:
And we have to remember that if these don't generate significant revenue streams then they are kind of distractions like the phone, if the phone is not successful, and let's say its first year it's going to be really, really difficult for Li Bin to justify and rationalize that to his investors. So.

Lei Xing:
He said he's not expecting his phone to compete with other phone companies, it’s just a kind of an add on or complementary to the NIO user. So I guess we'll see what the take rate is for the…

Tu Le:
Has pricing been announced?

Lei Xing:
No, not yet. But I figure it’ll be, I don't know, RMB5,000, RMB6,000, that's my guess.

Tu Le:
Because I can see Lei Jun being like, dude, you want to compete in phones, I'm going to compete in EVs. So.

Lei Xing:
Yeah. And then the other thing was the 100,000 customers take rate of the NOP+. That's interesting.

Tu Le:
What do you know about Chang'an Qiyuan?

Lei Xing:
The only thing I know about it is that it looks like an Xpeng P7. The name even has a number seven in it.

Tu Le:
And the front fascia, the front end is almost exact. So, but they want to sell a million and a half units by 2030.

Lei Xing:
Those numbers are really lofty.

Tu Le:
Some analysts predict that the China market could hit 28 to 30 million units by 2030.

Lei Xing:
You're talking about the NEVs.

Tu Le:
No, yeah just the passenger vehicle market. So if NEVs hit 60, 70% by 2030, then we would be talking about 15 million NEVs in 2030 and 3, 4, 5 million.

Lei Xing:
It just sounds small. 15 million, because we're going to get to 8, 9 million this year. In 7 years, we're only going to get to 15 million?

Tu Le:
But you know how that is, the first 20% is easy. And then we, so because we have to remember that China's largest companies are oil companies. So they're not going to really want. I think they're towing the line because the Chinese government is pushing for NEV adoption. But if they don't have an alternate business that can generate the types of revenues that they've been generating, which make them the largest companies in the world, then they're likely just paying lip service and trying to figure out ways to extend that runway for themselves. That's how I look at it. And I'm talking about CNOOC, SINOPEC, and those companies Lei, but let's do this. We've been talking for it looks like about 37 minutes. And because we're in a short week, I think we have less topics. So let's go ahead and open it up. If anyone has any questions and I can keep on talking. If anyone has any questions, please raise your hand. We'll bring you up. And you can ask it.

Lei Xing:
The other thing I wanted to bring to NIO, that this is, I think people probably when they talk about NIO, they think about battery swapping, but NIO announced some additional numbers on their charging network. And they are actually the brand that has the most charging piles set up in China and right, 80% of the electricity charged through their charging network is to non-NIO brands. And they're planning to build, they already have 3,000 charging stations in China and they are planning to add 10,000 charging piles this year alone. Most of that, I guess are through the dual, the charging and the swap stations, right? And then, oh, also BYD right? BYD announced their earnings as well. And the two things I thought were, stood out for me was their R&D spending investment and their vehicle margins are both higher than Tesla in the first half of 2023.

Tu Le:
So and their growth in profit was 205%. They made $1.5 billion in the first half of this year, they sold about 1.25 million cars. And you and I know that the second half of every year in China is the rally, sales rally half. So they can get to easily over 3 million units this year, they're likely going to be outselling Volkswagen brand. We mentioned that before this year in China, and I just don't know what's going to stop them. 

Lei Xing:
Yeah basically the numbers are 3 million and 300,000, total sales and export. That's what we're looking at this year for BYD. So a tenth, a tenth of sales are exported.

Tu Le:
It's weird, though, Lei, because we hear these CEOs. NIO talking about the good news, second half of the year, 55 to 57,000 units, BYD’s crushing it. We don't expect any hiccups from them. Xpeng is, looks like, like you said, what did you say? 

Lei Xing:
XiaoDi?

Tu Le:
No the three Xpeng, Li Auto. And what did you call them? 

Lei Xing:
WeiXiaoLi.

Tu Le:
WeiXiaoLi. They are the top three where it seems like they should be like you'd mentioned, but what's hanging over the economy and uncertainty. So I'm still waiting for an announcement from the Chinese government to increase some sort of stimulus, man. With the way the economy is going and the current price war, which is just battering companies. I don't know… 

Lei Xing:
BYD. I mean they're ready to cut prices. I'll tell you that.

Tu Le:
Yeah, I don't know how we get to the 8.5-9 million, right? Without more stimulus. Do you agree with that?

Lei Xing:
I'm currently, I'm less optimistic than I was earlier in the year that we're going to get the 9 million units. That's.

Tu Le:
Well you said nine with about a million in exports.

Lei Xing:
Yeah exports, including export.

Tu Le:
So we have a question Lei, and I’m going to read it and you can answer it first. Potential buyers in Europe are stepping out only because the lack of new infrastructure. I'm not sure what stepping out means, why there is not a priority to build more swap stations around Europe.

Lei Xing:
The numbers, I don't remember the latest numbers, but they just opened one in the Netherlands and they have like 25ish in Europe now, swap stations. That's pretty significant already, I think. But given the actual volumes versus the number of swap stations, I think the ratio is much lower than in China. I would guess. 

Tu Le:
Without question. I think there's a few different things going on here. I think there's a chicken and the egg because they're not selling many units yet. So they are still unsure of how many swap stations are necessary, where they should be strategically placed. And I think there's ton more friction because now we're talking, because as you mentioned, Europe, but as a European, there's 27, 29 countries right in Europe. So the regs are different, partners are going to be different. So the level of complexity when compared to China and adding swapping stations in Provinces in China, has to be much higher. And so they have to find partners, too, that will help them. So they have partnered with Shell, I believe, and Total Energy to help them with swapping stations and charging infrastructure. But I think it's those two things. I think it's the chicken and the egg. We don't have a lot of vehicles, so we're going to, we're going to slow our swap station rollouts. And then when they enter each of these countries, there's a lot more complex issues at hand versus what, I think they are easily able to handle in China now. So.

Lei Xing:
Yeah, it's not as fast and convenient and easy as in China. 

Tu Le:
I think folks are looking at how fast things happen in China, and they're like, why can't that happen in the U.S., why can't that happen in Europe? I know that it would never be that fast in the United States or Europe. So thanks for the question, simplementay. Anything else, brother? Let's do this. What are you looking forward to in Munich since you and I will be, I'm taking off on Friday afternoon. You're taking off tomorrow.

Lei Xing:
Tomorrow at about this time. So in about 24 hours.

Tu Le:
Do you have a long layover?

Lei Xing:
I'm leaving out of Charlotte. I hope the Idalia doesn't affect the flights. I don't think so. But…

Tu Le:
So you fly from Logan to Charlotte to Munich?

Lei Xing:
No, I fly from Hartford to Charlotte and then to Munich.

Tu Le:
You have a 17 hour layover or something?

Lei Xing:
No, like more like 3 or 4 hours.

Tu Le:
Ok good.

Lei Xing:
So I get into Munich on Friday at 7 am in the morning, local time.

Tu Le:
You shenme shier (anything going on)?

Lei Xing:
So I'll probably have some free time on Friday, probably do some sightseeing.

Tu Le:
So I wrote this in my newsletter, I think I told you this I was like let's have a pint. I was corrected by my German friend: ein mass.

Lei Xing:
Now I'm looking forward to it, obviously two things. The German legacies because they're announcing a huge next generation EV platforms, right? The MMA and the Neue Klasse from Mercedes and BMW and obviously, the China EV Inc., let's just say the China Inc., not only EVs, because some of the chip, LiDAR, AV companies will be there as well. So Horizon, Hesai, DeepRoute, ECARX, and then besides that, I mean just the, LeapMotor, Xpeng, BYD, LeapMotor.

Tu Le:
NIO is going to have a presence, but not going to be at IAA, so.

Lei Xing:
Right, they are, William Li will be there, he's speaking. Yeah, and then maybe just to test out some of the vehicles if we have time, right? There's some test drives. And just to experience how really this IAA Mobility is in terms of the format, right? Because there's the show itself in the exhibition grounds, and then there's the Open Space in the city, right?

Tu Le:
Yeah, so I'm the same way, I've never been to Munich, looking forward to it. I'm coming on Friday, and arrive on Saturday. So I could get rid of some of my jet lag. I wanted to be, I want to hit the ground running on Monday.

Lei Xing:
Speaking of jet lag right now, I have a European jet lag. So I wake up pretty early every morning, this week.

Tu Le:
Dude, I woke up at 4 o'clock yesterday to get on a 7 am flight. Yeah. And then, so I had this event from 4 o'clock till about 10 o'clock, and it's a 20-minute walk to my hotel downtown like around 25th and Lexington. And then CNBC emailed me during that morning during the day. And they were like, would you like to be interviewed at 11:15? And so I’m like sweating because I was just walking. Then I was like so then I had to kind of get like cleaned up. This hotel, the lights are terrible, so it looks like I'm in this dark room. If you guys see it and don't make fun of me too much, because I believe I tried to do the lighting a little bit better and so anyways. But hey, so if you listeners are in Munich, get in touch, because I think one or two of the things is there's a couple of people that subscribe to the newsletter that want to meet up. So I’m going to meet up with some folks. I think that's the other thing, too, because we had so much fun in in Shanghai, meeting up with all the people we interact with but never met, right Lei? Then last year in Detroit, you had a ton of fun and we met with a bunch of people too that we've either spoken with but never met. So I think those are the best parts, right? Because I’m curious about BMW and Mercedes, but I almost feel like I can predict what they're going to say a little bit. I don't think there's going to be too many surprises from the Chinese EV companies. I think they're going to expand on their plans for European market.

Lei Xing:
And then the biggest suspense, at least whether we're going to see some type of announcement between, let's say, a German company and a Chinese company. That's the biggest suspense.

Tu Le:
I think there will be some sort of partnership. But I don't know how much of a sizzle there's going to be. I think it will be more hype than anything. So anyways, that's all I had, sir.

Lei Xing:
I'll see you in Munich.

Tu Le:
Everyone. Thanks for joining us early this week, and we will try to sort out as early as possible. When we will be broadcasting next week, hopefully we can broadcast, we can say, will broadcast from Munich because I think that would be really fun, but thanks again for joining us. Good morning, good afternoon, good evening. We will talk with you all next week.

Lei Xing:
Or next time. Bye bye

Tu Le:
Next time, next time. Bye bye.

Lei Xing:
To be announced. 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.

(Cont.) Episode #131 - Unpacking XPeng's Moves, BYD Adds to its Manufacturing footprint, NIO Sales Revamp