China EVs & More

Episode #135 - BYD Moving Up the Charts, Foreign Legacies Chose to Enter China, Tesla Selling Online in China

October 03, 2023 Tu Le & Lei Xing
Episode #135 - BYD Moving Up the Charts, Foreign Legacies Chose to Enter China, Tesla Selling Online in China
China EVs & More
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China EVs & More
Episode #135 - BYD Moving Up the Charts, Foreign Legacies Chose to Enter China, Tesla Selling Online in China
Oct 03, 2023
Tu Le & Lei Xing

This week's podcast begins with BYD jumping Ford to become the 4th best-selling automotive brand in the world for the month of July which should be a wake-up call to Ford management, if they've not been woken up yet.

Tu jumps on his soapbox to explain how the narrative about the foreign legacies entering the China market is incorrect and does his best to set the record straight about the real risks & rewards for the legacies that did decide to enter decades ago.

Their chat briefly revisits the Merc NIO collaboration and why it's folly for the automakers to think that they can become really good at SW development without some help. Tu emphasizes that good is one thing, but to be able to compete with Apple, Google, Amazon and the Chinese EV & tech companies is on an entirely different level. 

Tu gives his take on who to look out for in 2024 for both good and bad reasons. 

The podcast ends with Tu and Lei discussing the Tesla announcement that they will begin to sell their vehicles on e-commerce platforms in China in order to expand their reach and Tu talks about who is better positioned in the US to lead the EV transition. 

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Show Notes Transcript Chapter Markers

This week's podcast begins with BYD jumping Ford to become the 4th best-selling automotive brand in the world for the month of July which should be a wake-up call to Ford management, if they've not been woken up yet.

Tu jumps on his soapbox to explain how the narrative about the foreign legacies entering the China market is incorrect and does his best to set the record straight about the real risks & rewards for the legacies that did decide to enter decades ago.

Their chat briefly revisits the Merc NIO collaboration and why it's folly for the automakers to think that they can become really good at SW development without some help. Tu emphasizes that good is one thing, but to be able to compete with Apple, Google, Amazon and the Chinese EV & tech companies is on an entirely different level. 

Tu gives his take on who to look out for in 2024 for both good and bad reasons. 

The podcast ends with Tu and Lei discussing the Tesla announcement that they will begin to sell their vehicles on e-commerce platforms in China in order to expand their reach and Tu talks about who is better positioned in the US to lead the EV transition. 

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

Listen on: Apple Podcasts   Spotify

CEM #135 Transcript
Recorded 9/29/23

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 please help us get the word out about this podcast 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 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. Lei, as I said, before we started the show, happy Mid-Autumn Festival to you and your family. Can you please introduce yourself?

Lei Xing:
Thank you. Likewise, good morning, this is your co-host Lei Xing speaking, former chief editor of China Auto Review, and this is episode #135. Yes. Happy Mid-Autumn Festival. And also the China National Day coming up in just 2 days.

Tu Le:
Yes. That's like our 4th of July.

Lei Xing:
Yes. So in China everybody's saying Shuang Jie Quaile which means happy double holiday transliterally

Tu Le:
Yeah. And mooncakes, mooncakes are all over the place.

Lei Xing:
I've been eating mooncakes since I came back from Detroit. So.

Tu Le:
Man, when we were there, I remember when you would just get like just bombed with mooncakes.

Lei Xing:
So China is kind of on break. The U.S. government is about to shut down or in danger of shutting down. The UAW strike now into its third week, nowhere near ending. And we have some EV news. I just rattled off some headlines. So NIO Merc, BYD No. 4, Li Auto 500,000th, Hui Ka Yan in custody, EU Commission EVP on China EV anti-subsidy probe, Ford CATL plan pause, Mitsubishi done in China, Xpeng G9 deliveries in Sweden and FF executive shuffle. Where should we begin?

Tu Le:
Let me add one very important bullet point, other item, Tesla hit 5 million vehicles this week, built. It was a made in China refreshed Highland Model 3 that rolled off the line that was the 5 millionth, so very appropriate. We don't need to talk about NIO Mercedes again, do we now? So let's start with the UAW because what we're starting to see Lei, is more and more articles that are peeling the layers of that onion back about how American and European automakers got to this point. And a big part of what's going on with the UAW is also the highlighting of the Ford CATL partnership, which is in real jeopardy. And there was a great article on the Wall Street Journal this week posted. And GM basically said this is no bueno, and Farley must be completely upset because the one thing that I will say and I posted something on LinkedIn which is probably not going to be a very popular post, that happened this week as well, as August sales made BYD brand the 4th largest automaker in the world surpassing Ford Motor Company. That should not be underestimated. So I'll let you chime in.

Lei Xing:
So BYD was NO. 5in July. 

Tu Le:
Yeah, now number four.

Lei Xing:
No. 5 in July, and they went up a spot to number four in August based on that TrendForce market share. And they're just 1/10 of a percentage point behind Honda, which means they probably will likely get to number three behind Toyota and Volkswagen. And at the same time, BYD market cap is also number three behind, I believe, behind Toyota, Tesla and Toyota.

Tu Le:
Let me be clear so there's no confusion, Lei. This is the brand, not the company. So Honda also has Acura, Toyota also has Lexus. So we're just talking about Ford brand and BYD brand. Significant nonetheless, alright?

Lei Xing:
Yeah, so I think this is just a matter of time before BYD climbs further because as they are, and they are getting it done in China and outside of China, whereas the other brands they are facing a bit of domestically and in China, right? We don't even have to talk about China of the foreign legacy autos, Mitsubishi being one example. They're done, they're no longer producing, any production.

Tu Le:
Come on Lei. They were done. They were cooked years ago. They just officially said it out loud this week. 

Lei Xing:
Yeah. That was a Nikkei report. So it's such a contrast of what's happening.

Tu Le:
What's important to note Lei, is that companies like BYD, and it's only BYD, the only company that's doing this, it's not only Ford losing 6% of sales month over month from the U.S. and in Europe, but it's BYD growing its sales. So it's a squeeze on both sides of it, which indicates that distance is not likely going to get closed anytime soon between those two brands, meaning that over the next several months, BYD will likely distance itself further from Ford Motor Company.

Lei Xing:
So that's the kind of reality setting in, as I said, right? It's a reckoning moment, as I said, in the video, right, that we posted, there's going to be a lot more reckoning moments coming.

Tu Le:
And I got to, there's a post on LinkedIn, and there's gentlemen that effectively said that. So here's let me I have a bone to pick and I'm going to get on my soapbox, okay? Bear with me, Lei, because I'd love your thoughts on this as well. He posted a comment that said, effectively, China forced these OEMs when they entered China into a joint venture. That's the narrative that the Europeans want to make in their minds to rationalize the protectionism that they want for their market. But let me be clear here. Volkswagen chose to enter the market that was the requirement to enter the market. They could have not entered the market. Mercedes, BMW, they could have decided we don't want to enter this market, but the requirement, so no one was forced, okay? I can't be any clearer on that. They decided to enter the market, knowing that that was a requirement. And fast forward 40 years, they wouldn't be the companies that they are without the China market. I don't think Volkswagen or Toyota gets to 10 million units per year, 3 or 4 years ago without the China market, okay? The second thing that people talk about is this forced tech transfer. If it wasn't for the swift shift in EVs and demand for EVs in China, I think Volkswagen and GM would still be doing, okay, they would still be leaders in the China market. Where did this ICE tech transfer happen? Because Ford and Volkswagen and GM they don't have EV IP, it's not like these Chinese companies took IP from them, the legacy companies, to build EVs. So this tech transfer thing, this forced tech transfer thing, it never materialized. That was a ghost that people were pointing at. So two things that I don't believe happened. I was there, you were there for a very long time. These are the things that people point to, but again, Volkswagen, most of their profits come out of China. Without China, they would not be who they are, Mercedes, Audi, Porsche, you can say all these companies. So I'll let you comment, but I’m jumping off my soapbox now.

Lei Xing:
We already talked about this last episode, so I don't have anything more to say other than I agree with you. So, the foreign automakers benefited from the market. However, with the rules in place, but they benefited, right? They participated. So whether it's forced or not, right? They've already reaped the profits or the benefits. Right now, it's a completely new game, right? So which is a good segway into this EU Commissioner, the Executive VP, Dombrovskis. He was in China for that China EU dialogue earlier this week. I thought what was interesting was at the press conference on the very last day, I think it was on September 26, he basically mentioned two points on the anti-subsidy, EV anti-subsidy probe. One is that it's on the presence of production-side subsidies, not consumer side of subsidies. And then the other point he mentioned was the risk of injury to the EU industry. After that, he said EU does not pursue a protectionist policy and also does not have any policy forcing local production. I thought he kind of contradicted himself because he said there's a risk of injury, but if it was an open and fair market, what injury? That they're just competing, if you can't compete, you lose market share. So that's, I thought that was interesting.

Tu Le:
Yeah, I don't understand half the things that politicians say anyways. And I believe that there's probably a lot more bark than bite, but I do think that throwing that out into the open, maybe forces some of these Chinese companies to think less aggressively about the European market, if only to not be able to get pointed at to say, look, see, see, this is what's happening. I don't think BYD cares. I think this is more of a concern for other automakers, Chinese EV automakers that are maybe struggling in China or not doing as well as they like, and really do need Europe as a pressure release valve for their capacity or excess capacity. So it'll be interesting to see, I'm not sure because all the politicians previously had been very, very vocal on this change over to electric vehicles. Europe has done pretty well over the last few years. And from a growth standpoint, UK not so much, but the UK, they're not incentivizing purchase of EVs either. The United States, I think the Inflation Reduction Act, unless it gets, unless the new president in 2024, starting in 2025, decides that's not good for the American people.

Lei Xing:
Trump said EVs are too expensive.

Tu Le:
That's the entire point. This is what I'm talking about. That's the entire point for the Inflation Reduction Act, because yes, they acknowledge that they are too expensive.

Lei Xing:
Without CATL LFP, they're going to remain expensive. And you mentioned earlier the no bueno for GM which is actually, I think their stance is, maybe all of the automakers stance is that because there's still no clear explanation of this entity of concern, what is it called? The, right? And these jargon? And what will constitute, like these are not very clear in the in the current format. That's why I think GM is also kind of waiting, although they are no bueno, but who knows? If the CATL goes through, then, you know, right?

Tu Le:
Well, and this is the important caveat or note between what's happening, because it's not the Ford CATL partnership, and it's not CATL as an individual entity. It's the fact that it will open the floodgates. And other automakers will do the same thing with a Chinese battery partner. And that's the risk.

Lei Xing:
We haven't heard any pushback at least not yet on the Gotion’s Illinois plant, whereas the Ford CATL has been such a scrutiny, right?

Tu Le:
Well, there is rumblings of the Gotion factory locally. It's not a national thing because the UAW strike shines a spotlight on that, because they've not conceded that these employees should be UAW employees, right? So the Gotion factory is, there's a lot of local controversy. It's not national, but it's also very controversial. So.

Lei Xing:
Yeah, and going back to the even though the NIO Merc is not really news news, but one thing I want to stress is that the precarious thing is that Mercedes already, their biggest shareholders are who? Chinese owned. So I have no doubt that the Mercedes are talking to the NIOs.

Tu Le:
I think Mercedes probably talking to more than NIO. I think NIO is talking to more than Mercedes.

Lei Xing:
So that's the point. So at the end of the day is, what is it? I mean Ola has been on the record saying that they will not consider putting a Mercedes badge on someone else's platform. He's been on the record saying that. So what could happen? Why would they want to invest in NIO? Based on this report, right? And right now, there's no, NIO has denied it, right?

Tu Le:
What's really rich, though, Lei, is that some of the insiders, and I think the board members are concerned that NIO, a NIO partnership might tarnish the Mercedes brand. So.

Lei Xing:
Yeah so lots of factors at play

Tu Le:
This is ignorant pride from an 80-year-old vice president who knows nothing about how technology works, because Mercedes is in real trouble. All of the legacies are in real real trouble, because if they believe in the next 10 years, they can get really good in software development, just this point alone, and being good at software development is one thing Lei, in the next 10 years, being good enough to compete against an Apple or a Tesla, a whole different ball game. So think about that. That's just like you and me saying what we're going to build this digital consumer products company and we're going to compete against Apple in the next 10 or 12 years, because that's what they're pushing up against.

Lei Xing:
We'll see, I mean at least Merc is relatively more nimble, because they only focus on that brand. And they've given away basically smart to Geely, right? Focusing on Mercedes, focusing on that new concept, MB.OS, we'll see how that plays out whether they'll have the same issue with CARIAD that's been delaying the Porsches and the Audis, rght?

Tu Le:
But to me, the complexity of Volkswagen, I said that it's less about a tech advantage, it's more about poor management and ill fitting culture or risk averseness, the wrong skill sets. It's almost everything, but not being able to code to me. It's a willingness to put it out there and risk. And this is to me the attitude when I read that about the Mercedes insiders were pushing back about tarnishing a brand. They risk relevancy, that's what I'm talking about. It's the same, we can't risk this, we're going to be conservative with this. That's what Volkswagen did. And they painted themselves into a corner which forced them to acquire 5% of Xpeng. Because at the end of the day, you do this partnership, and if nothing happens, then nothing happens because nobody cares about Geely owning 9% of Mercedes, except for the Germans, right? It's crazy to think that I mean NIO is a very well established brand. It's a well-respected brand. Their perception needs to catch up, the reality needs to catch up to some of that perception. And it's a startup man. It's an automotive startup, so they're going to have lumps, hills, valleys, but to say that NIO is going to tarnish the Mercedes brand, in what market? Your most important market, NIO probably has a better brand perception than Mercedes, in China, right?

Lei Xing:
Seems that way.

Tu Le:
So the irony is not lost on me that these people are still in complete denial that they will not be able to compete against Apple if they continue to think they can make things in house, they can't compete against a Tesla. They will not. I'm sorry, so I don't know, man, I’m a little fired up this morning. I don't know why.

Lei Xing:
Maybe it’s the mooncakes.

Tu Le:
I should be happy. The Lions won, they crushed the Green Bay Packers last night, but man, I’m fired up.

Lei Xing:
That’s the reason. They can beat anyone, right?

Tu Le:
Oh Man, yeah so I'm fired up, man, I just, it is exhausting. No, I'll take that back. This week I met with some potential clients in Detroit. My heart started racing a little bit because we're just talking in circles, because I'm asking questions, they're answering them with this attitude that we can eventually get that done in house. We can eventually get that done. We will build that expertise. I had to bite my tongue. I was like, because I didn't want to ask when, because did you just see that Ford lost? I mean Ford is on its way down from a brand standpoint globally, it's getting beat by a company that builds its own batteries and fabs its own chips. When are you going to get this done? So anyways, let's move on.

Lei Xing:
Yeah. So, what else? Li Auto speed, right? So the half millionth comes just, so in March, they did their 300,000th. And in July, they did their 400,000th. Before the end of the year, they're going to do the 600,000th. And within a year, they're going to do another half a million.

Tu Le:
And their share prices is kind of flattening out. So.

Lei Xing:
So, I mean what gives?

Tu Le:
It's a single market, it’s a single market, it’s EREV, and the vehicles are effectively the same thing.

Lei Xing:
Yeah. That's the perplexing part that a lot of people still don't understand why can EREVs be such a successful. And Li Auto made a big bet, right? A pivot, and they won.

Tu Le:
And the truly amazing thing is that these vehicles are starting at $50,000, $60,000, so they're not cheap. Even the L7 is fairly expensive. So it is considered a premium automaker, premium new energy vehicle brand in China. And so it's competing indirectly with NIO, it's competing indirectly with a Porsche, with a Mercedes, with an Audi. And this should be very, very concerning for ABB for sure.

Lei Xing:
I’m seeing, so Audi is probably already irrelevant. I'm seeing some people posting, it’s the BBLs. I’m like, Audi, man, that's a dunking, that it's already becoming irrelevant. It's right, this is, we're losing that letter to L, from the A to the L, and next year basically it’s going to be L alone at the top. That's what they want to do.

Tu Le:
Everyone I’m going to tell you right now in 2024, keep an eye out for Porsche, keep an eye out for their sales, because they're going to deal with Li Auto, NIO, Yang Wang, Lotus, Volvo, and Polestar, so.

Lei Xing:
So speaking of Yang Wang, right? They opened a showroom on the Bund at the House of Roosevelt.

Tu Le:
Wai Tan.

Lei Xing:
That's the most expensive property you can find on the Bund I think. I mean, they're, man…

Tu Le:
When I pretended to be this big time dude, I would go to House of Roosevelt on the deck and drink some nice whiskey, eat some steaks. What a beautiful view of Pudong, right?

Lei Xing:
And the Yang Wang is perfectly because you Yang Wang (look up to the sky), right? You yang wang the stars right?

Tu Le:
So they plan on doing, the only equivalent that I can think of is like Nike stores, so they have the flagship stores. So this Wai Tan is like a flagship experience center. And then they're going to pepper China, 90 by the end of this year with retail locations where I think it's more about selling the vehicle than trying to create a brand experience. But for those that have never been to Shanghai, the House of Roosevelt is basically in the middle of the Bund. And there's a deck.

Lei Xing:
Golden spot. Golden spot.

Tu Le:
There's several really great restaurants and bars on the Bund that give you a tremendous view of Pudong. But House of Roosevelt is one of the most famous for the expats anyways. It's a steak place, so lots of wine, lots of whiskey. And it's one of these mahogany wood, old school restaurants. And man. So that gives you an idea of who, so they're trying to also make it a tourist attraction. So there's this twofold because anytime you're on the Bund, you play a role in trying to attach your brand to a premium, but also creating a tourist attraction.

Lei Xing:
I mean NIO House basically started this thing, right? NIO House took over Audi, the first ever NIO House in Oriental Plaza right, took over an Audi showroom.

Tu Le:
Oh yeah. So for our listeners now we're talking about Beijing. 

Lei Xing:
Yeah, Beijing. Now you're seeing this right, type of retail format popping up in these places.

Tu Le:
So, to give. Let me try to give the history lesson, Lei, this time for the first time ever. I lived in CBD which was a few blocks from Chang’an Jie, which is the same road that Tiananmen Square, the Forbidden City is on. CBD is probably a mile or a mile and a half, a couple kilometers away from the Forbidden City. So basically you could ride your bike from East 3rd Ring Road to Forbidden City in no time, a lot of people wake up really early and watch the flag raised in Tiananmen Square. And so along the way to Forbidden City, there's this Oriental Plaza that's attached to this huge mall. And Oriental Plaza is a mixed use. So it also has office buildings. In the front on the corner, used to be an Audi, of this mall, used to be an Audi brand store. And NIO took over for it. And so you couldn't get any closer to the Forbidden City, like the center of China effectively, right? Because Forbidden City is there and just down the road was Zhong Nanhai, right? Just to give you a picture of how ambitious these companies are, the two most iconic areas of or the most iconic areas of Beijing and Shanghai is where a NIO brand store is and now in Shanghai at least a Yang Wang store. So, yeah, so they don't lack in ambition for sure, right? This would be like, this would be like retail store, right in Times Square, in Beverly Hills or downtown Manhattan on Park Avenue, right next to the Ferrari dealership basically. So.

Lei Xing:
So Hui Ka Yan, Evergrande ever gone, what do you think? I think they put him in custody so that to keep him safe. That's all I think it is.

Tu Le:
This is a real, so real estate is 25% of the Chinese economy and Evergrande in 2016 or 2017, the founder and CEO, who's now in custody, like you had said, he was the richest person in China. And Evergrande has over $300 billion of debt. And so the Chinese government encouraged, not encouraged, I won't say encouraged, the Chinese government allowed for this debt to accumulate. And with the economy in a downturn puts downward pressure on real estate. And so Evergrande has not been able to service its interest payments on that debt. And how we relate it back to the EV sector, Evergrande is the company that launched Hengchi, which we thought or I thought was a land play. Because 5 or 6 years ago…

Lei Xing:
It was.

Tu Le:
Yeah. If you started an EV company, provinces would welcome you because they wanted you to open a manufacturing facility in their location, which Evergrande would have used to build, mixed use buildings, would have built more retail locations, more properties for individuals. So there is a real danger in certain cities where there's a lot of oversupply. So it's a real risk to the economy for sure.

Lei Xing:
For this to come out right before the holiday break. I think Bloomberg reported it first like a few days ago, and it was right confirmed all the China media. Not surprising, I think, for there's so much ambitions when they announced all that deals in back in 2019, how much money they spent? And it just sounded like too good to be true.

Tu Le:
If you think about it, all the major, I won't say all, that's a terrible. Some of the major CEOs, richest people in China. The Wanda guy, right, remember? He built this movie…

Lei Xing:
He has a son, famous son, right?

Tu Le:
The son drives like Ferraris and goes to clubs and does stupid stuff on social media. The Wanda guy, obviously Jack Ma, and now the Evergrande guy, they yeah, it is. Anyways. But one thing I do want to mention is that it sounds like some of the relationship between the U.S. and China is trying to thaw a little bit.

Lei Xing:
Seems that way from the Wall Street Journal article.

Tu Le:
So I think it's the, leading up to the November meeting in San Francisco.

Lei Xing:
Right, APEC is in the U.S. this year, right?

Tu Le:
So I think both countries and leadership of the countries know that where we can agree on things. We should try to hammer those details out. So.

Lei Xing:
So remember a few weeks ago about the Apple being, restricted use of Apple. That was nothing, right? Never… Now the latest is that they are trying to get rid of these apps, so-called foreign apps for the app store in China, right? That's been discussed. So for example X or Twitter, right? 

Tu Le:
So Apple did meet with the ministry, I want to say, that's in charge of all that stuff, I think, to kind of clear, figure all that stuff out, but man, so what else what are we talking about next?

Lei Xing:
Hui Ka Yan, right? He once tried to invest into Faraday Future and that kind of bummed out. Now Faraday Future has had recently a few executive shuffles, right? They switched the global CEO which went on like a year ago, and they delivered three FF 91s in Q3. 

Tu Le:
Lei, I'm going to ask a favor of you, because my contacts at FF have left.

Lei Xing:
I still have some.

Tu Le:
So maybe I would love to drive an FF 91 if you can arrange that in LA maybe.

Lei Xing:
In November. Yeah.

Tu Le:
Ke Yi Ma (can you do it)? Even if we can't take pictures? I'd love to just check it out. So.

Lei Xing:
I'll put that on the things to do list. 

Tu Le:
Actually I lied. I lied. I do have one contact still. So if you're listening to the podcast, you know who you are, hook a brother up. But I'm trying to recruit a few people that you know of as well that we've spoken with, but couple of them I've never met. So it could be a little bit of a party in LA man. So I’m looking forward to it and I am not going to Tokyo. It's just too rushed. Too many things going on here.

Lei Xing:
Too far away.

Tu Le:
Anything else? What did I write in my newsletter? Let me check. Let me take a look at that real quickly.

Lei Xing:
Mostly on the U.S. UAW Ford stuff which we talked about.

Tu Le:
Yeah, well, I think it's important. Gavin Newsome, Governor Gavin Newsome vetoed a bill that would have banned commercial trucking autonomous pilots on the roads. California used to be a leader in all that stuff. But now it's clearly China that's really trying to push that forward. So.

Lei Xing:
Yes, speaking of, so WeRide became I think the third after Baidu and Pony to get the permit to test their fully driverless robotaxis on highways, on a Beijing expressway leading to the Daxing airport. 

Tu Le:
So the other thing that I wanted to point to Lei is, what did you think of the Selina Cheng story Wall Street Journal about the Mach-E launch in China?

Lei Xing:
Yeah, I mean that spelled out I mean the Ford, right? Besides the Mach-E, you said it best, there's no strategy. There haven't been a clear strategy ever. So if that one product fails, it fails. Then there's no other, there's nothing they and then also the part about really the retail strategy right, their, they just formed a new company, I think, joint venture for selling, I think, going back to the dealer model, which Xpeng is also doing sort of.

Tu Le:
It's just really half baked, right? We're going to do direct consumer, but none of our staff have this experience. And so, but if NIO can do it and Tesla can do it, then we can do it. It's like what? In the most difficult market, one of the most difficult automotive markets in the world, you're just like willy nilly. Let's try this.

Lei Xing:
It simply comes down to the product availability when you have the models, when, it's a really competitive product when it was launched. But there's this tsunami of all different kind of models coming from the China EV brands every single day. 

Tu Le:
Everyday. That’s not an exaggeration. Everyday.

Lei Xing:
Then from a consumer perspective, like I have so much to choose from, why would I wait, right? You're in the sea of models, competing models. 

Tu Le:
There has been no real updates to the Mach-E since 2021 in China. So not only do you get behind, but then you just get forgotten because your refresh timeline is so slow. Because I believe if Ford could refresh the Mach-E, I think it would have a chance. But it's got a, number one, it probably needs an LFP battery in China. Then number two, the connected features need to be dialed up to 50 relative to what it's capable of now and that, those are just qualifiers right, Lei? Because I don't think Chinese consumers see the Mach-E as this premium thing, which that's why they need to reduce the price by swapping out the NCM battery. 

Lei Xing:
Yeah. The only thing they had was the Mustang brand, I guess, which does have a good following in China.

Tu Le:
And had that controversy with the naming rights. But yeah, the last thing I want to ask you about Lei, is, so can you tell us a little bit? I can do it too, but I want to put you on the spot, tell everybody what JD.com is.

Lei Xing:
I mean that's where I get all my stuff, right? I’ll tell you this when I was in China in the summer. So basically Taobao, Tmall and JD.com were probably the three most online platform. So basically the China Amazon.com where you get all kinds of things deliverer to you.

Tu Le:
So JD stands for Jing Dong.

Lei Xing:
Jing Dong, yeah, which is “Beijing East” or something.

Tu Le:
And it used to be, when it launched right around the time Alibaba launched, Tmall, it used to…

Lei Xing:
I think it launched 20 years ago during the SARS. Yeah.

Tu Le:
And it used to focus on technology products sales, e-commerce website for technology products sales.

Lei Xing:
Electronics. Yeah.

Tu Le:
So Alibaba and Tmall or Alibaba, Tianmao (Tmall) and JD are the OGs for e-commerce in China. There is now the social…

Lei Xing;
Pinduoduo.

Tu Le:
Yeah Pinduoduo, there are now the Meituan. So there are now more social media or social commerce apps that kind of ape it in certain specialties. But Alibaba and JD are the OGs and Mercedes and you correct me if I'm wrong, Mercedes, Audi, tey have brand websites on Alibaba, on Tmall. And they have brand websites.

Lei Xing:
Almost every brand has their…

Tu Le:
Yes. And now Tesla joins. So the retail store strategy is not working out as they like. They need to expand their footprint in a very simple, easy way. This will push them into the lower-tier cities a little bit easier, at least from an outreach and engagement standpoint. They'll still need to build service centers and supercharging stations in those lower-tier cities to really address any spikes in demand. But even Tesla is playing the game in China now, right?

Lei Xing:
Yeah, it has to play any game that's, that’s a localization.

Tu Le:
We'll wait the outcome of the next several months to see…

Lei Xing:
Also on the Model Y versus the new, what is it called Model 3+? How that kind of changes the dynamic between the two models in terms of share of sales, right? Because Model Y is getting steep competition, right? We have the JIYUE 01 and some others that are coming into play in that market.

Tu Le:
EC6, ES6, L7.

Lei Xing:
L6, and 5 coming.

Tu Le:
So I think our audience listens to us because we have this deeper knowledge of like a lot of different products that we know about. And at least half of them we've actually driven, right? So I think let me assure you all that the competition in China, when it comes to midsize crossovers and SUVs is, you have any choice you want, the SOEs have their own brands and products. The Chinese EV startups, you name it. There's an SUV out there that will fit what exactly you need.

Lei Xing:
Then one of the latest products launched was that Baojun Yunduo using the DJI kind of assistant driving stack which…so it sells for RMB120,000 which is less than $20,000, which gives you pretty sophisticated NOA capabilities, vision-based, for that price range. And then we kind of tweeted about the Xpeng P5 now without LiDAR, this refreshed 2024 version decided to get rid of the LiDAR. And that was such a departure from the original launch.

Tu Le:
It's the pendulum swinging, right? It's the pendulum swinging. We are at 9:50 Lei. So.

Lei Xing:
I'm good man. 

Tu Le:
So let's open the room up and see if anyone has any questions, and Will’s back on. Will, if you're listening and you have a few minutes, I’d love to hear your thoughts on the Cyberster, the MG? I think your video popped up or at least a teaser video. So if you want to tell us about that experience, then if anyone has any other questions, please raise your hand. My prediction Lei, is that Ford is going to probably be the first company to sign a contract with the UAW. Now for those non-Americans, Ford has the largest UAW, number of employees with the UAW. Stellantis is much more international. GM is more international as well. They actually build quite a few vehicles in China, GM does. So, this is the stuff, man, it's a shutdown, and then the strike. And it's like just head scratching. We just shoot ourselves in the foot. And I don't know, I was pinging a few people, a few of our friends trying to, because if you read that Wall Street Journal article, GM doesn't want the U.S. government to recognize that partnership between Ford and CATL to take any of the subsidies, right?

Lei Xing:
It sounded that way, right? It sounded there's a kind of a…

Tu Le:
So which makes me wonder, and I'm going to try to figure this out talking to a few people next week, GM must believe they have a path to profitability without Chinese batteries, right?

Lei Xing:
Must be.

Tu Le:
I've talked to a lot of people we respect, I don't know what that path is and I’d love to learn more about that. So I'm going to dig and just because I’m curious, just because I need to know because it is going to be really tough. I think that GM is better positioned than Ford because Ford again,  and this is their China strategy. For the U.S, we're going to have two vehicles. Now in 2025, they're supposed to launch a few more EVs, obviously, but they really need some home runs and triples with these EVs, because the Mach-E is a little bit older now, and honestly Lei, if you're looking at a new EV in the United States, I'm thinking I'm getting a Kia, I'm not getting that Mach-E, but the Mach-E does get the discount, and the Kia EV6 does not, or the EV7, so.

Lei Xing:
So the EV9 is coming out and they're racing to produce, I think that vehicle in Georgia right, next year. And then this honda Prologue, which is, I think based on the Ultium, or they worked with GM on this vehicle, is coming out. So there's more, but it just pales in comparison, right, in terms of the offerings that are in China.

Tu Le:
And this is us being spoiled, right? Because we pay special attention to what's being launched in China. I don't think. And I don't think you believe this either that the number of products will ever match what's happening in China, but there needs to be a critical mass in order to get more attention. And that critical mass needs to be across many price points. I think GM with the Equinox that's going to launch later this year starting at $30,000. They announced that it's starting at $30,000 whether it actually starts at $30,000 at launch is another thing and guess what Lei, if it does launch around $30, who's going to be looking at it? I'm going to be looking at it, because.

Lei Xing:
Yeah you are a hometown boy, you will have to be.

Tu Le:
And I’m lucky enough to have family members that have retired from GM so hopefully that gives me a little bit a of a price advantage as well. I mean because they saw the demand for the Bolt was consistent or continued at least at $27,000. And it's not 20, 30, 40, 50, 60,000 units a month, but guess what guys, if you learn to make it and stop building these cells by hand, and you can make more than a few thousand a month, I think you'd sell them easily. No questions. Let's just end it, brother, please tell everyone about that two-minute teaser video, those that have not seen it. I think it's pretty funny. I know a way to improve the video now next time we do it. So maybe, maybe in November Lei, we can do it in the FF 91.

Lei Xing:
That’ll be interesting. Let's put that on the…

Tu Le:
Wish list. 

Lei Xing:
That will be interesting. 

Tu Le:
Everyone, thank you for joining. We've caught up now with all of our back episodes for those that have missed and weren't able to join any of our live spaces. So please check out our website for all those back episodes and have a good Mid-Autumn Festival. We will talk with you all next week, good morning, good afternoon and good evening.

Lei Xing:
Yep we'll talk about sales, September sales next week and have a good holiday break for those that listen from China and we will 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.

(Cont.) Episode #135 - BYD Moving Up the Charts, Foreign Legacies Chose to Enter China, Tesla Selling Online in China