China EVs & More

Episode #140 - Zeekr Track Day in the US, Lei's Chat with NIO's Ganesh Iyer, A Mad Dash to Close 2023

November 09, 2023 Tu Le & Lei Xing
Episode #140 - Zeekr Track Day in the US, Lei's Chat with NIO's Ganesh Iyer, A Mad Dash to Close 2023
China EVs & More
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China EVs & More
Episode #140 - Zeekr Track Day in the US, Lei's Chat with NIO's Ganesh Iyer, A Mad Dash to Close 2023
Nov 09, 2023
Tu Le & Lei Xing

Tu and Lei begin this podcast by discussing the layoffs announced at NIO and how this could help them and why it was potentially overdue. 

Tu and Lei educate on what Single's Day in China is and how even EV brands have gotten in on promotions during the biggest digital commerce day in the world. 

Tu and Lei give a quick update on BYD sales for 2023 and posit that they are really the ONLY company that's continuing to grow it's already substantial sales in China and starting to build sales momentum ex-China. 

They both then take a few moments to talk about their experience at a Zeekr Track Day event they both attended just outside of New York City at the Monticello Motor Club. 

In addition to the Track Day, Lei also hosted a fireside chat with Ganesh Iyer, current US Head for NIO later in the week. He discusses a few notable things Ganesh had to say.

The podcast closes out with a chat about what's expected to be a mad dash by all automakers to finish out 2023 with a sales bang. 

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Show Notes Transcript Chapter Markers

Tu and Lei begin this podcast by discussing the layoffs announced at NIO and how this could help them and why it was potentially overdue. 

Tu and Lei educate on what Single's Day in China is and how even EV brands have gotten in on promotions during the biggest digital commerce day in the world. 

Tu and Lei give a quick update on BYD sales for 2023 and posit that they are really the ONLY company that's continuing to grow it's already substantial sales in China and starting to build sales momentum ex-China. 

They both then take a few moments to talk about their experience at a Zeekr Track Day event they both attended just outside of New York City at the Monticello Motor Club. 

In addition to the Track Day, Lei also hosted a fireside chat with Ganesh Iyer, current US Head for NIO later in the week. He discusses a few notable things Ganesh had to say.

The podcast closes out with a chat about what's expected to be a mad dash by all automakers to finish out 2023 with a sales bang. 

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

Listen on: Apple Podcasts   Spotify

CEM #140 Transcript
Recorded 11/3/23

Tu Le:
Hi everyone and welcome to China EVs & More, where my co-host Lei Xing and I, recently visited New York City 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 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 I encourage you all to do. Lei, a tired Lei. Can you please introduce yourself?

Lei Xing:
Good morning. I had to drive back 4 hours from NYC last night, but anyways, this is your co- host Lei Xing speaking, former chief editor of China Auto Review, and this is episode #140, 140 already. Okay, so the news heard around the world: NIO is cutting jobs.

Tu Le:
10%.

Lei Xing:
Well, the stock went up. What do you think? What's your initial reaction?

Tu Le:
I did think that they were running kind of heavy, and I do think that they are doing too many things, and they're not excellent at any one thing yet, outside of swapping, obviously. And so the layoffs were an important kind of signal to the market, but I also think that them talking about non-core businesses, they're kind of either going to divest or stop investing in those. I think that's as important. So good for them. These are tough decisions that unfortunately need to be made, but that's why these guys get paid the big bucks.

Lei Xing:
Yeah, I think, William, I think that coming to the realization that their performance, I mean to us, I think we’ve said this often and many times on the show that you need a kind of a month in, month out consistency in terms of performance, in terms of the volumes. And NIO, I mean it's been a roller coaster. And they've never had that the performance meeting expectations. I mean they knew that internally, and we knew it. We know it, right? I mean these are not something new, needing to improve efficiency and cutting cost. This is what, like a few days ago, Volkswagen admitted to that, right? I think you had tweeted about it. Let's go back to the magnitude of this. So they had about 26,000 employees at the end of 2022. So 10% would mean, you know, you do the math, right? And I remember a few years ago.

Tu Le:
So let me stop you there. I think it's actually closer to 31, 32 now. So.

Lei Xing:
Right. Because of that was at the end of last year, and we're already a year later. So let's say, I don't know roughly 3,000, would you say? 10%, right? Round number. If you remember, when we started this podcast 2.5 years ago or more, there was that initial round of slim down. You remember that, right? They had like over 10,000 and they bought it down to like 7,000, 8,000.

Tu Le:
For the NIO followers, this is right around the time that the bailout happened.

Lei Xing:
Yeah, right. I mean, it's just, coming to realization that, what do you call this, I mean when the going gets tough, the tough gets going, which means cutting jobs. There is no way around it. And given that they just launched the phone, this is kind of interesting.

Tu Le:
Which is the toughest part of it, I think, for the management team, because this phone had a ton of fanfare. There was a lot of build up over about a year and a half's worth of time. And now it looks like the prolonged price war is not helping. The Chinese economy is not helping. Now, we're also starting to see the U.S. not, EV adoption in the U.S. is slowing down as well. And in the United States, a different situation, high interest rates and inflation. So I think there is a little bit of, but kind of the overall EV sector is kind of having this reconciliation in it's affecting everyone except one company. And so my expectation is that we might still see other companies, even an Xpeng who recently, what, 6 months ago reduced staff, that they're either taking very careful or making very careful decisions about hiring and adding to the team. And so this is a little bit schizophrenic because where they might be reducing staff in China, an Xpeng needs to add a ton of staff in Europe, because you and I were in Munich when Brian Gu and the European head talked about entering all these markets by the end of 2024. So I think we should be scrutinizing, maybe not so much the number of staff, but who is getting added and who is getting subtracted from a title standpoint.

Lei Xing:
Exactly. And this comes after the second quarter earnings, which I believe William said that they needed to hire more salespeople, like, and now comes the job cut. You did mention, so comparison of Li Auto and Xpeng, I think these numbers are also end of 2022, I believe. So Li Auto had 19,000 employees, Xpeng 15,000. So NIO among the Big 3, has the most. What do you want to call it, bloated workforce. Let's put it that way, right? One interesting tidbit was the three brands, nine core models. So I guess you could figure out which are the core models for NIO and the upcoming Alps, which is the Toyota like positioning. And then Firefly is like a Fiat, like a Suzuki type of positioning. So.

Tu Le:
The other thing that I'll say Lei is, and I’d love your opinion. This also tells me that they feel the price war is going to last well into 2024.

Lei Xing:
No doubt. And it's even getting more cutthroat right, with the, I tweeted that the Singles Day is coming and that's a golden time to launch, to put out these sales promotions.

Tu Le:
And they're going to be, they're just going to be killer sales promotions because it's going to be like a two-day thing or 40 hour thing and you're going to see this mad dash probably. But can you tell people what Singles Day is in China?

Lei Xing:
What happens every year for the past, I don't know 15 some odd years.

Tu Le:
Has it been 15 years already?

Lei Xing:
Yeah I mean, November 11, when, because it's 1111, right? So it's called the Singles Day. And somehow, I think it was Alibaba or…

Tu Le:
It was Alibaba.

Lei Xing:
That started it, this Singles Day sales promotion and.

Tu Le:
So let me just quickly summarize, it’s basically an anti-valentine's day because it was a day to celebrate being single. That's why they call it Singles Day. And that's why it's represented by 1111.

Lei Xing:
And you splurge on…

Tu Le:
Yourself. 

Lei Xing:
And then, you know, every day of that year, you will see these numbers put out by either JD or TMall in 24 hours the revenues that it, right? It's usually in the hundreds of billions of RMB, tens of billions of RMB.

Tu Le:
The Singles Day would basically make their quarter if not their half year. So many sales would happened within this period of time that we're talking for Alibaba and JD specifically. Sales would be on that day for those Chinese companies would be more than sales for small companies in the United States kind of thing. So.

Lei Xing:
It’s unfortunate, but I think this is just, it's just publicly confirming that this is what needs to be done. And I’m not really that surprised by it. 

Tu Le:
Me neither.

Lei Xing:
You either, I mean the top line or the bottom line, right? You do things to tweak it. And cutting costs by cutting jobs is one way to do it, and you need to do it and do it.

Tu Le:
If it's not clear to everyone yet, the only company that is really making out in China on the EV side is BYD, everyone else is really kind of struggling in month to month. You see, it's weird because it's acting, the market is acting like it’s a mature market where I only win if you lose, right Lei, when we know the market is growing. But the only company that really seems to be taken advantage of that growth is BYD because they've had six consecutive months of growth. And you even see Tesla, their share shrinking a little bit month over month anyways. But they've been able to maintain through a series of price cuts. So you could point to Tesla not struggling, but having a challenging time as well, right?

Lei Xing:
Even BYD going on 3 million, more than 3 million units. I mean it's a done job. It's how much they're going to be over 3 million units, even BYD with that amount of volume, they are launching sales promotions.

Tu Le:
Which has to put a chill, like, if you are an EV CEO, CEO of an EV maker in China, that's not named Tesla or BYD, that just must make your stomach hurt when you see BYD cutting prices.

Lei Xing:
Also speaking of BYD, the two races that BYD is probably going to win this year is the margins game. They were pretty good in Q3, more than Tesla, and then the BEV sales in Q4 that we had kind of discussed a few episodes ago. It looks like BYD is probably gonna take over the crown for BEV sales, given the current momentum.

Tu Le:
Let's also remember that they're going to be the number one vehicle brand sold in China, out selling Volkswagen brand.

Lei Xing:
I think Tesla was a little bit stagnant and the sales out of China, 72,000, was it? I mean it's not bad in an absolute sense, but in order to get to, will need all the help including Tu, yourself, whether you're going to pull the trigger.

Tu Le:
I'm going to think about contributing to Tesla sales number, but it’s, I think we talked about this last week a little bit. I've written about it in the newsletter last week where I'm shaking my head. We knew that this was going to be hard, but the media all of a sudden, especially in the United States, saying even adoption and blah, blah, blah, it's like we knew it was going to be challenging. And we knew that the U.S. three were or at least the U.S. two, Ford and GM were super optimistic with their numbers, with their manufacturing and stuff like that, and then reality hits. And for those that subscribe to the newsletter, there's an article, there's two articles that I referred to. One of them is about the current contract for the next 4 years with the UAW between the U.S. 3, and then how the UAW kind of changed their strategy historically, and got on top of the U.S. 3 and outflanked the management teams of these companies. And so Tesla, there's going to be pressure because not a day or two after the announcement that GM the third OEM to finally tentatively agreed to the UAW contract, Toyota announces that there going to raise wages to like $35 for their factory workers. There's so, if we looking at this Lei, generally speaking, that means that these cost increases are going to be passed through to the consumer. So in the short term, we're going to see higher prices on EVs and vehicle prices in the United States or North America, at least, which is a little bit disappointing. But.

Lei Xing:
Yeah, so completely different situation here in the U.S. and what's going on in China. It's the polar opposite. I feel like.

Tu Le:
So let's talk about why we were in New York City and actually at a motor club, Lei can you tell the audience what we did on Monday.

Lei Xing:
That was specifically, that was the southern Catskills.

Tu Le:
Is that what they were? I had no idea where we were.

Lei Xing:
Yeah, I think you had to, by the way, it was good seeing you and some of the other twitter friends, that was awesome. And of all brands, right, ZEEKR, what the heck is ZEEKR doing in the U.S. I think this is their first event. So they held it at this Monticello Motor Club, it’s a private racetrack, I guess, club. And in the Southern Catskills, so I drove 3 hours from where I am. And that was a great day, Halloween of all the days that they chose, nice, late fall day.

Tu Le:
It's just kind of cool getting together with car nerds and just kind of being able to experience.

Lei Xing:
No, I mean to me, I think, to you as well, it was a little bit jarring to see because to actually be in the U.S. and seeing, I mean this is not the first Chinese brand that is here, or that is trying to make a kind of inroads or trying to do a branding. BYD, NIIO, some others that we’ve... But really, I thought that this was my first time, I’m sure it's yours, to experience a Chinese performance brand on a racetrack in the U.S. and understanding ok, Chinese brands they can do performance especially, with, you know…

Tu Le:
Let me set the table a little bit more detail, so you drove in from Mass. I came from New York City, took a bus from New York City to the Catskills. And then first thing was a presentation by Giovanni Lanfranchi. I think was his name. 

Lei Xing:
Yeap. Italian. 

Tu Le:
And he's effectively the head of digital for ZEEKR. He was an EVP at HERE, which is like a software based mapping company.

Lei Xing:
Mapping company.

Tu Le:
So he presented an overview, a lot of which you and I already knew about, but of course we are the China EV nerds.

Lei Xing:
Even I, think we learned some more, I mean these minute details of what ZEEKR is all about.

Tu Le:
And we should remind folks that ZEEKR is also the CM or the contract manufacturer, for Waymo in their L4 robotaxi. So there was a gentleman, Eric. I forget his last name, Swedish guy, and he was kind of the…

Lei Xing:
Eric Grundberg, I believe.

Tu Le:
Yeah, and he was the kind of the head engineer for designing on top of the SEA platform, the Waymo Level 4 robotaxi that ZEEKR should start producing or manufacturing for Waymo within the next 12-18 months. So then we went outside. They had what, two 001s, and one 009. They did not have an X or they did not have the 001 FR which is the performance version of the 001.

Lei Xing:
So one thing to add on that Giovanni guy, he is also this new CEO of CEVT which is China Euro Vehicle Technology based in Gothenburg. It was funny that he did confirm that it's going to become, the new name is ZEEKR Technology Europe. 

Tu Le:
Did he say, did he confirm that?

Lei Xing:
Yes, he said it in the presentation. 

Tu Le:
You know I had to make a joke.

Lei Xing:
Yeah we joked that it’s ZTE and not many people got it, because they don't know who ZTE is. So do you want to tell the audience who ZTE is? The other ZTE.

Tu Le:
They're basically a telco, like a Cisco that's banned in the United States from, they build routers and connectors for the communication telecommunications space. Yeah, a Chinese company. But, so yeah there was a small little laugh between the two or three people that kind of got it. But yeah, and so I'm not a race car guy, so I didn't really drive it as hard as I could, but Ray, the one hot lap towards the end of the day where you, me…

Lei Xing:
Yeah that made our day, right?

Tu Le:
Man. So Ray was a former Porsche driving instructor who now works at ZEEKR, and he flew in from Shanghai. These guys literally flew in the day before. So I don't even know if they knew whether they were coming or going. But I thought it was done really, really well, very professional. Everyone that was available to us to talk with was really open. Fortunately, for Giovanni, he had only been there 30 days. And so his knowledge, although he knew a lot, he just wasn't there long enough to really get into any deep conversations, but and I know that they're planning to IPO in the United States. So this shouldn't be a surprise that they are kind of showing off their products.

Lei Xing:
One of the funny things was sitting in the back of Ray’s hot lap and getting a little bit on my way driving back. I was like all stomach churned and not feeling like trying almost wanting to throw up, right? I finally felt better after I got back. But the other interesting thing was taking that 009 MPV on the track and almost driving it like a performance, like it, I mean that was crazy.

Tu Le:
It had no roll. It was flat through the curves. It was flat over the hairpins. It was like because I was in the backseat. And obviously I was the in the like first-class airline seat. So I was reclined back, giving you a hard time. So it was a good day, it was a good day, good day.

Lei Xing:
And also with respect to ZEEKR’s kind of their ambitions as far as Europe, U.S., I think they're opening their first stores in over, what were the two cities, Stockholm and Amsterdam, I believe. Then they're launching the 001, they're launching the X, not yet the 009, but here in the U.S. basically not anytime soon, but it's coming via the Waymo ZEEKR branded robotaxi, which is Waymo’s next generation.

Tu Le:
And we are not, I’m not a professional journalist that writes about cars and driving them, but there was a Jalopnik person, there was a Car and Driver person, there was a Motor Trend, and there's a couple independent guys. So I would venture to guess within the next two weeks, there will be some small articles or short articles, because these guys, most of them normally get the car for an entire day. And so unfortunately…

Lei Xing:
Or days.

Tu Le:
Yeah, exactly. But I don't think these cars are street legal in the United States, number one. And then number two, I don't think this is a huge deal, but all of the infotainment was in native mandarin.

Lei Xing:
Chinese. That was funny.

Tu Le:
So, kind of what epitomized getting in that hot lap with Ray. So Ray was in the driver's seat, Yilun was in the passenger seat. You and I were in the backseat, and we were just like holy cow. This is just like a normal performance car and kind of heavy, but like the Gs in the backseat were crazy, right Lei? And at the end, we get out and the brake calipers are smoking. So that kind of goes to show he pushed it pretty hard. And he said, he wasn't very comfortable with the track because he had only driven it a couple of times. So he was actually taking it easy, too.

Lei Xing:
One of the technicians, when I drove the 001, sitting in the passenger seat, he told me whatever you felt on the 001, just multiply it by two, that's what you would feel on the 001 FR, which is almost RMB800,000, over $100,000 vehicle that was just launched in China.

Tu Le:
So this is the crazy thing, right? Like the one we drove and were ridden in, the 001, 0-60 time in about 3.8, right?

Lei Xing:
Yeah, their top, it's called the YOU edition. So they have the ME, WE and YOU. So YOU is their top performance with all the trims?

Tu Le:
And the 001 FR, 0-60 in 2 seconds, so that technician is literally mathematically correct, because acceleration is twice as fast. And so you would think that everything else doubles. So I hope that we get, not we, because you and I, I think when we go to China, we can kind of just test drive any car we want, but I hope that western audiences really get a chance to do this more often.

Lei Xing:
The other thing was that when we get a chance, I love to because there were some discussions on ZEEKR’s NZP which is their advanced ADAS functions. I’d like to try that out because that's part of the race that's going on in China, right, that are cutthroat, but obviously not on the track but they were saying that they're catching up on that part of the competition as well.

Tu Le:
I know, but their crutch is Mobileye. Mobileye is, I just don't know how innovative the Mobileye system is, I'm not hearing great things about it, but there's only one way to find out to your point, right? Let's try it out. But the other thing that I wanted to stress and kind of bring up is how much of the product portfolio Geely brands are using the SEA platform.

Lei Xing:
Yes. As a matter of fact, so the ZEEKR, the robotaxi, the Polestar 4, the JIYUE 01. They're all produced I believe based on the same SEA architecture and at the same plant, if I'm not mistaken in Ningbo. So I think that was what Yilei told us. Yeah, so.

Tu Le:
Yeah, and he also said that they have this joint venture for batteries.

Lei Xing:
Right, with Viridi, which, I, we need to, is complicated as is Geely Holding Group, the whole group is a complicated setup.

Tu Le:
I'm going to hold Yilei and I forget the other guy's name. I'm definitely going to go to Ningbo to check out that factory, would love to see it. Cause me I'm like a factory guy.

Lei Xing:
That's also where Geely they have their R&D headquarters building in the Hangzhou Bay.

Tu Le:
And I don't expect the western journalists to like be in love with the 001, but at least now they know it's legit. And as quirky as western EVs are, this, in my opinion, objectively, you got to say, wow, I've never really ridden in a Chinese EV and now that I have, these guys are where the U.S. EV companies are or at least the legacies that have EVs out there. And one of the Motor Trend guy was talking about to me, I forget his name now, but the Motor Trend guy was talking about how the Blazer was the Car of the Year, right? 

Lei Xing:
Yeah the 2024, was it EV of the year or?

Tu Le:
I think it's just Car the Year, or SUV? Car of the Year. I'm curious to see what they write about it. But I got the impression that they were fairly surprised, but I think a couple of them were kind of prima donnas. I need more time with it, blah, blah, blah. And it's just like whatever.

Lei Xing:
I think it's also surprising that you also have this performance EV brand at the same time doing a robotaxi with Waymo, right? It's kind of, I don't think there's one other case that's like this.

Tu Le:
And it's peculiar. What we should have asked, Lei, is how the Waymo ZEEKR partnership initiated. I would be curious to know that, was that initiated in Silicon Valley? Was that initiated in China that just kind of behind the scene story? I don't know if Yilei would know that, but we should definitely try to find that out.

Lei Xing:
It looks like the CEVT was involved a lot on design and engineering the vehicle.

Tu Le:
So, what Eric told us was that the vehicle specs were a collaborative effort between the CEVT team and the Waymo team. It'll ship from China bare bones, except for the mechanicals. Once it hits U.S. and Waymo gets their hands on it, then they'll install the ADAS or yeah, the specific hardware and software and likely the computer system, the stack to make it a Waymo vehicle. But it's going to be co-branded. So you'll see a ZEEKR logo on it as well as a Waymo logo, which I think is a huge win for them. And then I think they're ready to ship. I think it's going to be Waymo that's probably holding it up because of the current uncertainty in the autonomous vehicle space in the U.S.

Lei Xing:
And that's a specific segment of the robotaxi market akin to the Cruise Origin, which is different than what we're seeing now, right?

Tu Le:
And the Apollo RT6

Lei Xing:
Yeah, right. So that’s that part of the robotaxi.

Tu Le:
Because my first thought when I saw that was the RT6, it wasn't even the Cruise Origin because the RT6 for those that don't know, Baidu, which is China's Google, has an autonomous vehicle arm they've called Apollo and they have a depot in South Beijing that you and I have both visited. We've test ridden in the driverless Level 4 autonomous vehicles that they're piloting in that district. And they have a stand in the depot that has all six versions of the robotaxi and the RT6. That's what the six stands for, it's the 6th version of the robotaxi and so Geely is going to be building that too, right? Yeah, they announced it 12, 14, 18 months ago Lei and the price was going to be RMB250,000.

Lei Xing:
RMB250,000.

Tu Le:
So basically about $40,000.

Lei Xing:
The previous generation is, I think it was like RMB480,000. So.

Tu Le:
For those curious to see, to compare and contrast between the Waymo Level 4 robotaxi and the Baidu RT6, just Google it or look up some of our old DM, or old posts or check out my newsletter. But the difference is that the Waymo looks more like a Cruise Origin, more like a shuttle, the RT6 still has the shape of a large van.

Lei Xing:
Van, MPV or.

Tu Le:
Yeah, there is an optional steering wheel, whereas the Origin and this Waymo does not have a steering wheel, does not have a brake pedal or accelerator pedal. So, man, I took a step back when I was flying back from New York City, and kind of thinking through like these companies with the exception of a BYD and Geely, they are not fully taking advantage of the scale that they need, or they're not able to take advantage of scale, because the volumes are still so low. And with the SEA platform being used to underpin so many different brands within the Geely portfolio, it saves a Lotus so much investment and so much capital. So these guys, you better believe that they have a huge advantage over the EV startups in China, and this puts them on almost equal footing with their foreign competitors in Europe and the United States.

Lei Xing:
And the other important thing to mention is that you and I know and it's public information that ZEEKR is planning an IPO so this event had as much to do with that as anything else. I think because analysts, media, investors, I think it wasn't only that day. I think it was a couple few days that they're doing this.

Tu Le:
I know Yilei was flying to Michigan for a day.

Lei Xing:
And so it's almost like a road show, right?

Tu Le:
I would venture to guess within the next 18 months Lei, there will be more Chinese EV companies that will do similar things, maybe not a track day, but.

Lei Xing:
Which I should talk about my day yesterday at that the China Project conference. You know, I was on a panel or fireside chat with Ganesh Iyer, the CEO of NIO USA, and we, both of us had met him a year ago. So the title of that panel was China's new EV force, new as in new new, NIO’s global ambitions in the race to go electric. One thing I wanted to share was in the audience, there were a lot of investors, also including media and other analysts. And one question that was kept asking was, when are you coming to the U.S., what are you doing? And the only confirmation that Ganesh gave was that going back to the 2021 NIO Day, when William announced that they were going to be in 25 markets in 2025. And one of those, it's the U.S., so that's still there. But…

Tu Le:
They’ve never backed off of that.

Lei Xing:
Right, but we're only 14 months, Tu, away from 2025. Let that sink in. Only 14 months, less than 14 months away from 2025.

Tu Le:
So Ganesh is a busy man.

Lei Xing:
Since NIO Day 2021, too much has happened. The world is in a mess, right? So obviously, you have to think about that 2025, 25 countries in 2025, but I think it's a matter of time. And it was funny because I think I get the sense in the audience, they do not understand the type of competitive dynamics in the Chinese market. So I gave three examples. One is the voice recognition, UI, UX part of it. The other is the NOA ADAS, and the third was the LiDAR, what happened with LiDAR a couple of years ago when everybody was saying I'm going to put 4, 5, and now everybody's saying, I'm not going to put LiDAR to achieve the functionality.

Tu Le:
We don't need it.

Lei Xing:
And the rest of it is just Ganesh telling the business model of NIO, I mean it's not new to me. So I mean he did all, he did pretty much all the talking. And I just facilitated. But it was also surprising that there's a room of about, I don't know, 40-50 people and over 90% knew who NIO was. So definitely a lot of interest and great conference. I think it was more on China.

Tu Le:
Too bad your chat wasn't a day later. Ha ha ha.

Lei Xing:
Actually, I spoke offline to him, we just heard about the job cut, and he was like, it's, it happens, right? So we didn't touch upon that, but yeah that was, and I told him you got to do an event like ZEEKR at the Monticello Motor Club on the east coast. So I get to go. And one funny thing, somehow the conversation turned to phones and I don't know whether there's a plan or not like, and then he pulled out this NIO phone from his pocket, that was kind of cheesy.

Tu Le:
But so he's using it in the U.S.?

Lei Xing:
He's using it, it's a dual sim. There's T-Mobile, I saw, there's a T-Mobile, and then there's another, I think, for China I believe. So he's talking about the phones, basically what you use to control certain functions of the car and that type of stuff. But there's a lot of investors, Goldman in the audience. And they're all, I mean we're here in the U.S. basically one, when you come into the U.S., two the the geopolitical, IRA stuff, that was all the chatter.

Tu Le:
So a bit of history, I know there seems to be some NIO folks here, but NIO also recently moved into a new headquarters in San Jose.

Lei Xing:
Which Ganesh told me it's 50 steps next to the old one, 50 meters or 50 steps. I don't remember, but it's literally next door.

Tu Le:
So when we visited them, it was basically a technical center. And the staff were mostly engineers. But now it's more well-rounded, there are salespeople. I think there are marketing folks. So I think it's more of a regional headquarters, as opposed to a technical center.

Lei Xing:
So a couple of other things to share. So he drives a NIO, I forget which model, but it's only the NIO that they have, I think they have eight or nine models. He drives one to and from work, it can only be driven in California. So that's one. And then second, I asked him about the chicken and egg problem if they were to come to the U.S. and he said infrastructure first. So.

Tu Le:
He was talking about swapping, right? Infrastructure?

Lei Xing:
Yeah, swapping. It was quite a bit of talking on the swapping thing.

Tu Le:
So, we talked a little bit about BYD, they were over 300,000 units for the first time in October with the split being about 165,000 BEVs and 135,000 PHEVs. So they continue to just be the real story in the global EV space. The other thing that I wanted to point out and I'd written this in my newsletter is that in October, Ferrari, 51% of their sales were coming from hybrids, and 49 were coming from ICE engines. Even Ferrari has really taken the mantle. And this doesn't surprise us, because they had appointed as CEO a tech guy. I forget his name. I'm terrible with names, but so that was kind of interesting to read that Ferrari already sells more hybrids than they do ICE engine vehicles. Anything else? So the UAW has now agreed with all three, U.S. 3. Anything else that you wanted to?

Lei Xing:
So BYD 300,000. So Li Auto 40K, Xpeng 20K, now Xpeng, you heard about that their sales thing, trying to give them points. I don't know it's been going on the rumor mills, but they got over 20K, these are very psychological. And Li Auto was the funny what Li Xiang said about 50K a month was a minimum that if he was saying this on Weibo that if they don't do this, he's going to go look for a job like channeling William Li's comment on if they don't do 10K right, that they are going to look for a job.

Tu Le:
If they can't do 50K a month, they can't do 3 million by 2028. So.

Lei Xing:
Right. Leap was higher. I think a lot of these companies that announced the sales, one brand that stood out was AION. It was 10K less. I don't know what happened there. These are so psychological, right? Then people start questioning anytime you have a dip, anytime you, something goes not where you're expecting, then the scrutiny is all over the place. Likewise with NIO, with Xpeng.

Tu Le:
And just for the sake of how, just educating the listeners, November, December, always a mad dash in the automotive sector to finish the year strong, try to pull in sales that might be in January, February, March of next year. China is no different. We should see more incentives, we should see more intensity as the BYDs, the Teslas, the NIOs, the Xpengs try to hit their all-time highs from a monthly sales standpoint and from a quarterly standpoint. And if we're at 8 million, 8.5 million units sold in China, then that shouldn't be a problem for these companies to hit all-time highs from a monthly and a quarterly sales standpoint. If they do not, this is going to be pointing to some serious issues and challenges into 2024 for the companies that aren't able to create these all-time highs from a sales standpoint. What do you think?

Lei Xing:
Yeah I'm just going to say rabbits are coming out of the hat in droves. That's what's happening. In order to get to a certain point.

Tu Le:
There does seem to be more pressure on certain companies versus other companies, right? Because obviously, with NIO and then 10%, they feel the pressure. And the layoffs will be global, too. It's not just going to be primarily China. They're probably going to have to reconfigure some of their staffing in Europe as well. I would think that there might even be a handful of people in the United States that get let go.

Lei Xing:
I mean the Europe numbers haven't been great despite this the wolf is coming kind of cry from Ursula, right? But there are other brands that are doing better. I mean the MGs, right? So.

Tu Le:
Also, BYD in October exported the most, but to your point Lei, the volume is 30,000 units. So it's not this couple hundred thousand unit number that I think they're concerned about, but the overall export number for the industry is much larger. So.

Lei Xing:
Well I mean 30,000 units, don't get me wrong, that's a lot for one company. And all NEVs.

Tu Le:
It was 9,000 a year ago for BYD, so.

Lei Xing:
Yeah so from that perspective, but on the ground, actual volumes, it depends, right? Export is one thing.

Tu Le:
So that's all I had man, anything else? Or are we okay to shut it down?

Lei Xing:
No. I think I mean, nitty gritty stage of trying to compete and I think the word pressure is all over that letter from William. That's what I, you and I see probably, immense pressure to deliver, to meet expectations.

Tu Le:
Beause again, I'll say this, again, for the folks that are wondering how well these companies are doing, look at, not only their growth, but growth versus not only company and sales growth within their brand, but are they growing faster than the China market? That's the important thing, because even if they grow to 20,000 units, and so incremental growth, but the markets growing by higher percentage. They're actually losing pace. So be careful with that. Big numbers, bigger numbers are good, but if they are still not growing faster than the market, it's still a struggle for them. So no, one thing that we need to do more is check our comments and stuff, because last week there are like four or five comments that you and I didn't even acknowledge because we didn't look at the comments. But I just looked, no comments or questions, but okay, hey, everyone, thanks for joining us. Good morning. Good afternoon, good evening. This recording is going to be fun because there's like five freaking, anyways. Cool man. I'll catch you on DMs, Lei.

Lei Xing:
Okay, all right, talk to you and everybody else next week. 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 #140 - Zeekr Track Day in the US, Lei's Chat with NIO's Ganesh Iyer, A Mad Dash to Close 2023