Tu and Lei begin the podcast out with a look back at how Tesla ignited the price war in the beginning of 2023.
They move onto a discussion about Xiaomi and CEO Lei Jun's strategy for entering the market and building up excitement for their first vehicle that's due to launch in the next year and finally making guesses on what their vehicle's price will be once announced.
They move the conversation over to how difficult it is for the legacy automakers to keep up with the constant barrage of new brands, products and endless refreshes in order to not lose pace in the China market. They acknowledge that most automakers aren't able to keep up which could lead to even more challenges in the future.
Tu and Lei briefly discuss making sure to follow the people that are out there getting it done and visiting the countries, trying out the vehicles and meeting with the executives.
They end the podcast with their review of 2023 and a discussion about which events shaped the year.
Tu and Lei begin the podcast out with a look back at how Tesla ignited the price war in the beginning of 2023.
They move onto a discussion about Xiaomi and CEO Lei Jun's strategy for entering the market and building up excitement for their first vehicle that's due to launch in the next year and finally making guesses on what their vehicle's price will be once announced.
They move the conversation over to how difficult it is for the legacy automakers to keep up with the constant barrage of new brands, products and endless refreshes in order to not lose pace in the China market. They acknowledge that most automakers aren't able to keep up which could lead to even more challenges in the future.
Tu and Lei briefly discuss making sure to follow the people that are out there getting it done and visiting the countries, trying out the vehicles and meeting with the executives.
They end the podcast with their review of 2023 and a discussion about which events shaped the year.
CEM #147 Transcript
Recorded 12/29/223
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.
Lei Xing:
The year’s…
Tu Le:
Yes, the year’s most important and interesting news coming out of the global 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. To our loyal listeners, welcome back. We ask that you please help us get the word out to other enthusiasts about this podcast and of course tune in again in 2024.
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 was missing for 3 weeks, but I just sent out yesterday's or I just sent out this week's yesterday that we pull many of our discussion topics from. You can sign up for it at sinoautoinsights.com, which of course I encourage you all to do. Lei, Xin Nian Hao, can you please introduce yourself?
Lei Xing:
Yes sir, good morning for the final time I guess in 2023. This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode #147, and the final episode of 2023. The last week, I tweeted that really has been the epitome of what was in 2023 in the China EV space. And boy, I mean, so the year started out with Tesla cutting prices and is ending with Chery announcing the latest price cut into 2024.
Tu Le:
Let me do this Lei, because that was one of my highlights or at least my things, the Tesla, price war kind of initiated by Tesla. So let's go over really quickly. In January 1 of 2023, the Model 3 rear wheel drive LFP version was RMB276,000 or RMB277,000 RMB, and they reduced it mid- January to RMB229.
Lei Xing:
January 6. Infamous date.
Tu Le:
So to RMB229. So down almost RMB47,000 which is like $8,000. And today we have a refreshed Highland Model 3 that's priced at RMB261,000. So it's cheaper than when the year started, but more expensive than the original price cut. Now, the other thing that you and I always have to deal with when we're dealing with China and the U.S. because we’ve as Americans living abroad, is the exchange rate. January, the FX rate was, so I could buy RMB6.7 for $1. I can buy RMB7.08 for $1 today. So the currency has softened a little bit. So overall, the Tesla vehicles are cheaper than they were still starting on January 1, but not as cheap as they were during the course of this year.
Lei Xing:
Yeah, well, let's for the sake of simplicity, just use 7, which is easy, but I think that price cut really set off the tsunami or the dominoes following. If you haven't cut prices, something wrong is probably wrong with you, right? I mean everybody has done it one way or another. That was one of the themes of 2023.
Tu Le:
And I think we can safely say that the foreign automakers, whether their premium or mass market, in general terms, cut pricing more than their domestic counterparts.
Lei Xing:
Yeah I mean, for the legacy, let's say, especially premium, the EVs, they've been cutting prices behind the scenes at dealerships.
Tu Le:
For two years, not just this year.
Lei Xing:
And it's still not competitive, except maybe for ID.3, which worked. Now, ID.7 is really facing the same exact problem as the ID.3. And speaking of, we can talk about the memorable moments, but were there, I said it was all China EVs, I couldn't think of a, one legacy, foreign legacy EV model that really stood out throughout this year. I can't remember a single one. That's how I felt. I don't know if it's the same for you?
Tu Le:
MG in Europe.
Lei Xing:
Well, come on.
Tu Le:
I’m just, yeah I'm kidding. The only thing I can think of is the Highland version of the Model 3 and I’m trying to stretch because you're absolutely right.
Lei Xing:
Except Tesla, right? So I mean even that is kind of subdued a little bit because of all the traffic that these other newbees are really getting, Xiaomi, being the latest example. I mean, right?
Tu Le:
It's getting a bit hammered in, and this is Chinese internet, this is not Western internet for looking like a Lincoln, looking like a McLaren and looking like Taycan.
Lei Xing:
But look at the coverage on, even on X, of Xiaomi being mentioned, tweeted by all these KOLs.
Tu Le:
Well he did livestream on X, so.
Lei Xing:
Yeah, so this is and god, I mean.
Tu Le:
But Ash, friend of China EVs & More, he tweeted that that's still more than 12 months away from going into production. So in China terms, that's like 5 years for a west, for the west, because they didn't announce the price or they did not announce pricing, but this vehicle is the size of a Model S so it's not small. It's a large sedan. It's likely going to be slotted just below their flagship, whatever their flagship it is, like the NIO ET9. And I find it peculiar why they, we have a garbage truck day, this is garbage day. So if you heard the garbage truck, but, I find it peculiar that again, they launched with a sedan. Is that in your opinion, or what do you think the reason for that is because let me say this one last thing, China is like the U.S., it's a crossover SUV country. Most vehicles sold are going to be a crossover or an SUV, so why sedan?
Lei Xing:
One of the reasons, I believe is Lei Jun himself. And if we look at the whole press conference, the 3 hours, all he talked about was the Taycan, the Model S, and those are sedans. And I think it's him personally wanting to benchmark and come out with the first model. There's this joke, right, that this is, the Xiaomi SU7 is the Taycan for the young people, for the Chinese young people or the Porsche. So I think there's one reason there. But the thing is, everything is benching on Taycan and Model S, in reality, he is trying to compete with the rest of the China EV Inc., forget about Taycan, forget about Model S, they're not I mean they're not big volume models in China anyways. And I mean all he wants to do is to either lead or be number one or have the best at what, he said 100 features. So to me, I think it was a little bit overkill.
Tu Le:
I do too. I think it was the kitchen sink approach.
Lei Xing:
And that in fact, that overkill, that involution is the other, besides the price cut, was the theme for 2023. And you look at the final week of 2023, the ET9, the M9, the 007.
Tu Le:
The JIYUE 07.
Lei Xing:
Yeah, every single one of those models had some type of overkill features where they try to lead in certain aspects of technology. If you don't do that, then you're just another also-ran, right?
Tu Le:
We're seeing a bit of desperation from automakers. And again, I'll say this again. Some automakers are taking the kitchen sink approach where we're going to throw everything at our next gen products to see what sticks. And at the end of the day, as long as the price war cloud looms over their head, I think most Chinese consumers, I won't say most, I'll say a large portion of Chinese consumers are going to move to Tesla and BYD, trusted brands. NIO has to get past this psychology of the Chinese consumer that loves the brand but doesn't necessarily want to cross over into purchasing a product. Now, I don't know what is causing that force shield or that blockage, but they need to get past that. We haven't heard from Xpeng, although that they are going to be launching a flagship vehicle as well. Anyways.
Lei Xing:
Well NIO’s solution for that will be to go down to the Alps positioning. And, right?
Tu Le:
But it doesn't help their NIO brand. That's the challenge.
Lei Xing:
So, for, the only suspense remaining with the Xiaomi SU7 is the pricing. So let me ask you, why don't the two of us give our own predictions on the starting price? What do you think? Lei Jun already said it, it's not going to be RMB99,000, it’s not going to be RMB149,000. He said it’s going to be a lot more expensive than you would expect.
Tu Le:
So, I gave a little bit of a background on what Xiaomi is to the Chinese consumer, because I think western consumers aren't that familiar with Xiaomi? So Xiaomi started as a handset, a mobile phone brand that used android as its software. And it quickly gained traction because when I moved to China in 2009, it didn't exist. The brand didn't exist. It built a huge headquarters in Beijing. They hired Hugo Barra from Google to help with the software. And it became ubiquitous. They had these artificial lines for the Xiaomi phones when they launched. And then they had gained a market cap, so they were able to use their capital to acquire small Chinese companies that had nothing to do with mobile phones that are more like lifestyle. And then they re-branded these products and these companies and created this Xiaomi lifestyle ecosystem. And so, you remember, in Shimao Tianjie, there used to be a Xiaomi store. Once a week I would just go in there to check out what was new. It had computers, it had purifiers, it had rice cookers, it had batteries. And so it really became this lifestyle brand. But for the western audience, it is not Apple.
Lei Xing:
No. It competes with Apple but it’s, positioning wise it’s definitely not Apple.
Tu Le:
It’s priced very, very affordable. So want to be clear with that. But to answer your question, Lei, I think it's going to be probably RMB279,000, between 279 and 329 maybe.
Lei Xing:
Okay, so Xiaomi definitely is a lot more Apple now than they were 10 years ago.
Tu Le:
They're trying to be. They're trying to be.
Lei Xing:
Yes, but they're definitely not Apple. And I think the other really is just Lei Jun himself. He's just a lovable guy, right?
Tu Le:
He's got this weird accent.
Lei Xing:
Weird accent. He's been ridiculed, he's been mocked. I mean Xiaomi is just really, we talked about the handsets. It's a no frill kind of Apple wannabe brand that resonated with a lot of…
Tu Le:
Because it's created loyalty.
Lei Xing:
Yeah. So now that they have this ecosystem, the only thing missing was the car. And now that's complete, right? They call it the human car home ecosystem. This is why that's getting a lot of attention. So my prediction is, now he did mention RMB149,000 was impossible. He did not say RMB199,000 was impossible. So based on some of the chatter and their fans saying that if this was a model in the RMB300,000 range, they probably will not consider it. So I would predict that this will have to be in the same range as the 007. I cannot imagine it to be more than RMB300,000, because it's a Xiaomi, because it's not an Apple.
Tu Le:
That's what I'm battling with, Lei. Because that's why I said between 279 and 329, because I, that RMB300,000 is a psychological ceiling that I don't think Chinese consumers can get over.
Lei Xing:
And Xiaomi, I believe, for they're plowing RMB10 billion right, for the development of this model, I don't think they have any outside what, investment or financing.
Tu Le:
I'm sure they're shopping for external investors, though.
Lei Xing:
Unlike NIO, and NIO got the $2.2 billion from this NYVN or NVYN but I just think that they're throwing down the gauntlet hat this will have to be. It's not a no frills, but like you have to think about your customer base, what they expect.
Tu Le:
That's why there's no pricing, Hai Bu Zhi Dao (we still don’t know).
Lei Xing:
But I really can't imagine it to be above RMB300,000, to be honest.
Tu Le:
I gave myself some wiggle room because I think they're hopeful that by the time, third quarter of 2024 rolls around the price war kind of have faded. And we'll see pricing, at least on the premium side, get pushed up a little bit more, because it's going to be so challenging for the foreign brands that have been dominant on the premium side, because I know the want on the Yang Wang and the Fang Cheng Bao in some of these borderline premium Chinese brands will be to cut pricing in order to gain share because they are new brands, they need to establish themselves, you need to see many more of their vehicles on the road. So it's going to put a ton of pressure on the foreign automakers. And I know Xiaomi doesn't want to get into that price war either with their first vehicle, but I think it's going to be pretty challenging. So I agree with you. But for some reason, I think that they want to move Xiaomi into the premium side, more premium anyways. And then the current brand sits on the lifestyle and technology side. So, yeah, but let's do this Lei. Let's start out with the year in review, and you name your first couple, and then I'll take my turn.
Lei Xing:
I talked about the price cuts, right? I talked about the industry being involuted, “juan,” right? The Chinese word for cutthroat competition. I’d say, looking back, by, I was flipping through my phone photos and looking back at some of our episodes and kind of looking at the really, I think one thing that come to mind is really just the speed that this China speed, that Ralf Brandstatter said or keeps talking about. Xiaomi being one, I mean 1,000 days, right? JIYUE being one and Xpeng launching 52 cities now, their ADAS, city urban XNGP.
Tu Le:
27 to 52.
Lei Xing:
And Volkswagen talking about 36 months for the new CMP and I mean everything just moves extremely faster in China, like you blink an eye, something happens.
Tu Le:
I don't know. What do you think is the percentage of more impactful, the quantity or the speed? The number of brands, number of products, or the speed at which OTA updates come out, new features come out, new products come out. Because to me, I don't know if it's a 50:50 split, but last week, sat down with John McElroy, he said, every day he sees a new product.
Lei Xing:
Not an exaggeration.
Tu Le:
Coming out in China. And so you and I, we are the OGs, I think you and I can kind of say that we are the OGs of kind of the China EV sector. And, I’m very familiar, you're very familiar. I don't know about you. I think you've alluded to this as well. We have a difficult time of keeping up. You're much better than me at the more domestic brands, but it is just really tough. I thought by the end of this year, things would start to die down a little bit, but they have not. But let me ask you, do you think it's more about the speed, or you think it's about this continuous new product onslaught?
Lei Xing:
It's difficult to pick one side. Yeah it's both, I mean it's measured in month if not weeks, right? I mentioned that the Xpeng G6 I test drove in July in Beijing is old because of these new updates, more capabilities. And if you don't do it, somebody else will do it.
Tu Le:
This is where the challenges for the foreign legacies, the speed portion of it is a difficult enough thing to have to deal with. They've never ever in the 40 years that they've been in business in China had to deal with the quantity at this level of quality. Now they might have had to deal with the quantity, but never the level of quality. So their products stood out. Now, it's the same or even more quantity, but the quality is aces. It's, I can sell in Europe today. I can sell in the United States today. I don't need 5 years, 7 years to bring the quality, reliability, safety of these products to match what's in Europe and the United States. And I think that's really kind of the thing that is pushing the CEOs back a bit is that everything seemed to happen so quickly.
Lei Xing:
Yeah, and that brings me to another. I talked to you about some of the keywords that stood out was really this shock for me, too. And that'll be one of my personal moments of the year was stepping off the airplane from Hong Kong to Beijing on April 14, 3 years and 3 months since I was last there and then seeing these vehicles on, EVs on the road. I was like a 10-year-old opening a Christmas gift. It's like, oh wow, oh wow. And then going to Shanghai and then all of these foreign automakers, their board coming and being shocked. And then at the IAA in Munich, another, second time at their home court, that they get another shock of this quantity and quality that you talked about. Right?
Tu Le:
My counterpoint to your point, and let me stress that I don't need anybody's validation, you and I have a ton of respect for each other because guess what? We know a lot of the same people at a lot of the same companies, or you might know somebody else at that company. And I know a person too, so you can check our receipts. But it was kind of like the Munich, the Shanghai Auto Show for me was like, I told you so, I told you this was coming. Nobody wanted to listen now. All of a sudden, the alarm bells started ringing. And so it's just, I think, now that many more people, I just got to, so Eric is listening. Remember, Eric, we met him last year, not this past year, but last year, two years ago at the LA Auto Show, we had drinks with him, Lei, he's in Shanghai and he just DMed me and he said I sat in a couple of NIOs, he’s like these cars are awesome. So he's experiencing it firsthand for the first time as well. And Eric, I would argue that NIO’s quality is probably a little bit better than Teslas, at least the American-made Tesla. So think about that for a second, but again, I don't need any validation from these old analysts that that are kind of meaningless, but it was kind of the you guys didn't listen, I told you this. So.
Lei Xing:
And on the personal side of it, you too, is really just to be on the ground, see, touch, feel, drive, experience everything, all the ecosystem, the cars, the ADAS, the charging, I know you visited JIYUE and BYD and some other places. I drove quite a few EVs, Li Auto, Xpeng, AVATR, ZEEKR X, I rode in three robotaxis, Baidu, Pony and WeRide, I mean those are priceless experience to, after talking about this for almost two years and then seeing it yourself and understanding it. I think that's what I remember from this past year more than anything else, really. That, so I feel very lucky and.
Tu Le:
I'll be quite frank. I want some of these cars here, at these prices, because we have nothing in the United States, the Kia.
Lei Xing:
We have Tesla, I love Tesla.
Tu Le:
I like these Kias. I love the Kias. But man, the western consumer, if they understand the menu of options, the menu of products that are available, they would have a hard time. That's why a Chinese consumer takes 40 hours to research online offline before they actually pull the trigger on the vehicle because there are so many options at almost every single price point. And you don't get the same level of choice in the lower-tier cities. But if you're in Shanghai or Beijing, Shenzhen, absolutely. You see all kinds of, now don't get me wrong, the lion's share of them, they look very similar. It's, unless you see the logo on the front end. Sometimes it's hard to distinguish which brands are which, but the X3s, the i5, the iXs, they get lost in this sea of green plates and distinctive vehicles, right? So Eric, I hope you're enjoying Shanghai. You're doing something fun for New Year’s Eve may be partying on the Bund at the Roosevelt's or something. But the thing that I wanted to talk about, let me see.
Lei Xing:
No I just want to add what Ash tweeted about that all these new brands and cars being priced way above, right, the RMB500,000, the $100,000, $100,000 and you're only relegated to drive the ABBs, that was funny.
Tu Le:
2024, we'll talk about this more next week for our look forward, look ahead show. But…
Lei Xing:
And then the other two things I thought was that the key words were definitely battery swap and EREVs, now again, represented really two of the Big 3, right? NIO and Li Auto. What's happening in the battery swap alliance couple of weeks ago. And really, the EREVs really gaining a lot of traction. Li Auto is doing what? 360, 370,000 this year. And AITO is planning 600,000 probably with majority of those being EREVs in 2024.
Tu Le:
I won't say they're planning, Lei. I say they're hoping. Cause so here, remember, just a refresher for everyone, Tesla and BYD are the only ones, if they're going to do 600,000, that means 50,000 units a month. Tesla and BYD are the only two companies that can consistently do 50,000 a month.
Lei Xing:
Yeah I think I tweeted also the record breaking 2023, part of it is this kind of BYD Tesla rivalry. So globally, we know that the Model Y in all likelihood is going to be the top selling model globally, everything, ICEs and EVs. And Q4 is where we watch whether BYD gets on top for the BEVs.
Tu Le:
Wang Chuanfu and Elon Musk are both eyeing that closely. There's an eventuality there. BYD knows it's going to eventually be the number one BEV, not just clean energy vehicle manufacturer, but BEV, it's going to be number one in BEVs. Now there's going to be a million excuses from the Tesla stans. But at the end of the day.
Lei Xing:
I mean one of them obviously me being a Tesla stan will be well sales is only one measuring stick. And granted that BYD does have a lot of their BEV sales in the lower segments. This is me being a Tesla stan, and profitability wise, BYD and Tesla, they're both profitable, right? But I think in Q3, I think the margins BYD was higher if I remember correctly. I mean there's many ways you can compare it, right? But psychologically, you have these races, sales, whatever.
Tu Le:
In my newsletter yesterday was the year in review and my post on BYD I'll just list them out Lei. 301,000 vehicles sold in November, 170,000 of those were BEVs. It's the biggest brand in China, overtaking Volkswagen brand this year. It's entered 60 markets. Now that's not just in 2023, but the majority of those 60 markets were entered in 2023. It's the second largest battery maker in the world with an almost 16% global market share. It passed Ford brand in September to be the 4th bestselling auto brand in the world. So I don't know if that's still the case, but that's symbolic. It became the 10th largest automaker globally this year. It hit the 6 million vehicle produced milestone in November, launched two new brands, Yang Wang and Fang Cheng Bao. It's going to continue to move aggressively in 2024. And I can't think of any major hiccup in 2023 that BYD could not overcome. Now, you and I know that not every single one of their products is a hit. They have a lot of products, but I want to emphasize BYD's operational efficiency. I just said in November, they sold 300 or they shipped 301,000 cars, to be able to produce that many consistently over the last 11.5 months is an amazing feat. They had in 2022, they had a hiccup for 6 weeks or 5 weeks. And then they just went back at it. And it really, really, there was very, very difficult for other training or for other automakers in 2022 to build in the COVID environment. And it's challenging supply chains and the chip shortages, but BYD, boom, just plow right through. Maybe that's me with my BYD stan hat on. How's that?
Lei Xing:
Speaking of the operational efficiency, when the COVID started and how fast they were able to become the biggest mask producer in the world in like matter of days. That's only one example, I guess, in 2024 and beyond really how high, much higher they can climb on that ladder. So if we look at the top three automakers this year. Toyota, 10 million, Volkswagen, probably 8 to 9 million, Hyundai Kia 6-7 million. When are we going to see BYD up there? Or will we ever? That's the question we…
Tu Le:
The only real way they get theere Lei is if Europe, this is the challenge for BYD because…
Lei Xing:
Being really global.
Tu Le:
Because Europe and American consumers are, European and American consumers are, have choice. It's really competitive in these markets. So it's going to take much more time for BYD to gain significant share. And there's a chance that they will never gain significant share. I think, once they begin to produce locally which they will in Hungary very soon. And so at 3 million+ units this year to double that, it's going to be a bit more challenging. It, especially if 20, 30, 40% of that 6 million comes from Europe or comes from non-chinese sales, because they've entered over 60 markets. Many of them are in Latin America, many of them are Southeast Asia. Those markets are tiny. So they're never going to get to 6 million selling just into Latin America, selling just into Southeast Asia. They need Europe and North America to also drive that volume like China does.
Lei Xing:
And I think you pointed out in the newsletter, an important factor of EU protectionism as compared to the U.S. protectionism is because there's a lot of EU automakers in China, China being their biggest market. That's a delicate balance, right? Whereas I mean a country like France, we talked about that, not giving subsidies, but overall, so that's something to see in 2024 and but beyond and how much more success can these China EV Inc. have in Europe?
Tu Le:
It's something I’m going to ask you next week Lei about EU and tariffs. And I want to get your thoughts on that. But let me see here, you touched on Li Auto and EREVs, the strength of China EV battery, chip, AV Inc. at Munich IAA, one thing that I wanted to point out and I've mentioned this in the past couple of podcasts is Porsche’s 12% drop in sales from Q1 to Q3 of 2023 in China market. Whereas in Europe, in the United States sales has grown in so much so and shrank in China that the United States again became their number one market.
Lei Xing:
Yeah, I think it's both a product planning allocation and also market weakness together playing into why this is happening.
Tu Le:
Just to give you a sense of scale. Porsche from Q1 and Q3 sold about 62,000 cars in China. So not a ton from a volume standpoint, Volkswagen brand will sell over 2 million units in China this year. Just to give you an indication of the sense of scale. And people always ask, is Porsche ever going to build locally in China right now? It doesn't make a ton of sense. Because the volumes are such that for them to build locally in China, I think they're absolutely correct. And being honest.
Lei Xing:
They said they needed 100, at least 100,000 units a year in China to build.
Tu Le:
But I also think that it would kind of, kind of put their brand at a challenging position to Chinese built Porsches, I think that's still something that people need to get over for a second.
Lei Xing:
The other thing was I mentioned a little bit about Xpeng’s NGP is really this whole race on the NOA or navigate on autopilot, these advanced city level, without HD map, assisted driving functions, right? The NCA, XNGP, NOA, whatever, NOH, NOP and what Xiaomi showed right in their press conference that the ability of the car going up this parking structure and summoning it back. These are a minimum maybe to be able to compete. It's fair to say, I guess another key word would be just be Huawei itself, because Huawei owned traffic in the smart EV space this past year, basically. And now we have Xiaomi joining, right? I mean so the big thing to watch is Xiaomi has the similar channel network as Huawei. And I think that's I mean, Huawei itself being a kind of a sensitive topic. And with the Mate Pro 60, this nationalism, whatever, these are their pluses. And that's how they've gotten so much, not only online traffic, but traffic in the showrooms for the what the M7, and M5 and M9. The way that Richard Yu dunks on other competitors, everything, this is what 2023 was about?
Tu Le:
They basically bullied their way into the transportation space, they bullied their way and then 2024 we're really going to see. I think…
Lei Xing:
And two more brands under the HIMA alliance launching in 2024.
Tu Le:
But, and this is a sneak peek into next week's episode, but I think we're going to see the JIYUE, the Xiaomi, and the Huawei, kind of separate themselves on the technology side a little bit, and try to lean into their DNA, coming with JIYUE coming from Baidu and obviously Huawei and Xiaomi. Now, do you, like you said earlier about when you were describing, Xiaomi it was a bit much. Is that going to be too much for the Chinese consumer? Because the JIYUE, great car, very, very technology forward, but it's still struggling with sales a bit. So is that too much technology even for the Chinese consumer? I think we'll start to find that out. And that could be one of the challenges because it seems like that technology forward Chinese consumer, there's not a lot of them. And if JIYUE, Xiaomi and Huawei ecosystem vehicles have to compete with one another, who's going to win out of those three. So cause the SU7 and the JIYUE 07 kind of Cha Bu Duo (almost the same), right? I think the 07, the JIYUE 07 a little bit smaller, but.
Lei Xing:
Yeah, I guess also 2023 would be described as the year in which the consumer electronics where the Xiaomis and the Huaweis, are in, really crossed into the smart EV industry, with NIO launching the phone with MEIZU, Geely’s MEIZU with the FlyOS and all of these, right? NIO's, what was there, their SkyOS, Xiaomi’s HyberOS. Really you see this combination of or the merging of the two industries, as Lei Jun said in an interview. And there's a Wall Street article, a Journal article about beating, I guess, Apple to the punch. I think that was also a highlight of 2023, the merging of the industries. But the jury is still out right of who can really get that ecosystem, get that seamless, so-called human car home right. Nobody knows.
Tu Le:
I got to point to the United States here, because one of the posts I had in the newsletter was that the Blazer EV launched by Chevy has been nothing but a nightmare for the journalists who had an early glimpse and did some road testing. Friend, you know, Kevin Williams. He was supposed to have a Blazer EV for a week. He had it for less than two days. It was so bug ridden that he had to give it back. This is the challenge we talk about the three Chinese brands that we feel are probably the most technology forward. The legacies can't even block and tackle when it comes to software development. Now, Edmunds had bought a Blazer for a long-term testing, had it, I think, three weeks and gave it back to the dealership to fix some bugs. There was 23 error codes. So think about this. Across the board, people are complaining about GM software. Now, the software team let this software out, so they weren't even aware of how buggy it was. Now I I'd written, I didn't write it in the newsletter, because I didn't think of it at the time, but when at Apple, when you're about to send out and we called them products or Apple calls them products, technology company called software products. Most people will think a product is a physical thing, but technology companies products is also software. So what normally happens is we debug or they debug, and then they create a golden master, meaning this is the production version of this software, and we're going to send it out. Now, GM's golden master must have been here with it. It should hit home, not only do the foreign legacies who have CARIAD, who have all these R&D centers in Palo Alto need to learn how to do software, but they need to do it at a level that they can compete consistently with an Apple, Xiaomi, Huawei, a Baidu, Google, and Amazon. I'm thinking they need to learn how to be globally competitive on software development within 5-7 years. Sounds like an impossible task to me.
Lei Xing:
Basically a big fumble. I mean, talk about tackling and blocking. There's none of that, it’s fumbling yourself. That's basically.
Tu Le:
It boggles my mind and I’m not a project manager on software. I've done it before, but I wouldn't say that's one of my core skill sets, but I bet you I could project manage better than some of the people that are doing it on the legacy, in the legacies.
Lei Xing:
Luckily, for somebody like Ford, their 47th straight year with the F Series, as the top seller like 700,000 units, they still have a kind of a like a production for what they are not being able to do on the EV side.
Tu Le:
But think of it this way, Lei. The other thing about these electric vehicles is that now, when it was too intimidating for more, for most car makers to get into the truck, full size truck business in the United States. It's easy now, because it's a platform, a skateboard and a top hat. So that F150 is going to see a ton of competitors in the next 10 years. It already has, right? Now, when we think of United States and full size trucks, we think of the Silverado, we think of the Dodge Ram and the F150. We don't think of the Rivian R1T and Cybertruck. Now, even Toyota builds a full-size truck, Nissan builds a Titan. So they know how lucrative it is. But I think it's going to really be difficult to hold on to the F150 being that number one selling vehicle in the United States. Long term. And one thing that I also wanted to point out is that two vehicles launched or came off the production line this week using sodium-ion batteries. So that's real.
Lei Xing:
That's a thing which I think you and I saw that was unveiled in Auto Shanghai. The first model with the JAC what was the brand, iEV or something? You know speaking of batteries, the other really the competition that we've seen the last week is really on charging speed of charging with the Golden Battery, with the Qilin battery. Now with Xiaomi, I don't know, 15 minutes, 5 minutes, 260 kilometers. It's also that part of the speed. And then the other thing was really, I thought we talked about exports. So in 2023, China will become the biggest vehicle exporter, and most likely the biggest NEV exporter.
Tu Le:
Close to 4 million. And I think about a million half of those were…
Lei Xing:
A quarter of those will be NEVs.
Tu Le:
More than a quarter, I think, about 30%.
Lei Xing:
And then we talked about, one of the memorable moments, I'll say, was us test driving the ZEEKR 001 on U.S. soil. That was a highlight, one of the highlights.
Tu Le:
One of what, 10 people?
Lei Xing:
I never imagined it would happen, like oh! And I’m speaking that because the other keyword would be IPO, so now ZEEKR, Lotus, I think, smart, maybe WeRide, RoboSense. Now the RoboSense, I think it's on, in Hong Kong. Innovusion, now is known as Seyond, quite a few of these EV, AV companies and brands are getting ready to IPO in the U.S. amid this kind of current environment, right? So.
Tu Le:
I see, again, sneak peek into 2024, perhaps. I see huge challenges for these LiDAR companies that want to do business in the United States, or IPO in the United States. I just don't know if there's going to be an appetite, because number one, there's a ton of LiDar companies, Israeli American, Chinese, Hesai, pulling everybody.
Lei Xing:
Hesai is already listed.
Tu Le:
Yeah, so and Hesai’s just really right now, aggressively trying to take share. And this….
Lei Xing:
And Hesai provides for the, supplies for the Xiaomi SU7.
Tu Le:
And then in the midst of carmakers moving away from LiDar, and camera only, low-res maps or low-def maps. So the technology and the philosophies are also shifting with regards to how to define smart and what's needed from a sensor and technology product. So that'll be interesting because that what we plan on doing is getting a bit more knowledgeable about that. So because man, LiDar is just going to be a brutal space, then the other thing too, Lei, the last thing I'll talk about is we kind of hinted at it or at least kind of just talked about it on the surface, but reminder to everyone that European legacies love Chinese EV brands because.
Lei Xing:
I was just going to go there, which will be my final. I made up this word of describing the, so the two things that happened. Volkswagen investing to Xpeng, Stellantis investing into LeapMotor. The word I made up was ChinaEVfication, or ChineseEVfication, meaning in order to play or compete with the Chinese, you have to be the Chinese and that's exactly what happened with Volkswagen and Stellantis, but those are, I think, the two kind of the blockbuster moves of 2023 for the foreign legacies in terms of how they block and tackle, right? And Audi with SAIC to a lesser extent.
Tu Le:
I also think those were two of the more significant occurrences in 2023. I think that they have the possibility of completely changing the landscape for foreign legacies in China. And unfortunately, the European market, as I think the overall trend of foreign legacies building in China shipping abroad is going to widen. We've already heard, and we've already heard Nissan Ford, GM was already doing it, Polestar’s already doing it, Volkswagen is going to be doing it. Shipping Chinese made vehicles overseas to other markets, so that's going to continue to add on. Let me see here. Let me give everyone a recap of market caps. Now, you had mentioned Li Auto, it's a $39 billion company. NIO, as of, this is as of yesterday or two days ago, they are $15.7 billion, Xpeng $13 billion. They lost a bit due to Alibaba selling a huge block of shares, GM’s at a $49.5, Ford’s at $49.5, Rivian at $22, and Lucid is at $9.75. So now Baidu or BYD is, I want to say, $80 something. I should have put that there. And Volkswagen and Tesla are still or Toyota and Tesla are still the number one and, number or number two and number one automotive, market from the largest automotive companies from a market cap standpoint. But it's important to note that that could change in the next 5 years.
Lei Xing:
And then BYD and Porsche are like number three, like roughly the same, I think, right?
Tu Le:
I think we covered a lot. I didn't want to get too into the weeds, I think, broad things. You and I hit on, just about everything.
Lei Xing:
I think I just would add one more like I just realized. Now, both of us have been able to drive a Chinese EV brand EV on three continents this year. So ZEEKR in the U.S., NIO ET7 in Munich. And right, when you were in China, man, when I was in China, we drove different EVs. I mean you can't be that, right? Yeah. And that just reflects how far the Chinese have gone, right? I mean sooner or later, they'll be what, selling near you, right? Hasn’t happen yet, but you're sensing that's starting to happen, although the road will be bumpy. But and then another pseudo-Chinese company with the market cap of just a few million dollars, I think, was Faraday Future. We also drove that, last month.
Tu Le:
Lei and I took the last hour. It wasn't all inclusive. We covered all the bases.
Lei Xing:
We can't be. We can’t be exhaustive. It is it too much.
Tu Le:
But I did want to also note that I witnessed history this week. I went to the Detroit Pistons game and they played…
Lei Xing:
They almost had it last night with the Celtics.
Tu Le:
They are. So they've lost 28 straight now. The season record was 27 and the two-season record, overall record of losses in a rows 28. So we've tied that record. But good news is that the Lions have won the division. So bittersweet for the city of Detroit, I also think that we should applaud the China market were still growing to probably 8.5 million units this year. Wow. There have been hiccups in the U.S. and European markets for EV adoption.
Lei Xing:
Which reminds me of the four numbers really to know about China's NEV market, what transpired, basically 1 million a month unit sales, 3 million a quarter sales, 9+ million including exports and 30%+ penetration. Those are the four numbers to remember. These are CAAM numbers, but yeah.
Tu Le:
I think January and February not only because of Chinese New Year, but and there's going to be an exhale and there's going to be, because things have been going and heating up so much. But so Lei, next time we have our show. It's going to be 2024. So.
Lei Xing:
Next time we have our show, we get to say 2025 is next year. Let that sink in. In 2 days, we get to say 2025 is next year. Anyways.
Tu Le:
Hey everyone. We wish you happy new year, safe new year. Thank you for spending time with us. Almost every Friday or listening to the recorded pods. Also in 2024. We plan on getting back aggressively towards interviewing really interesting folks. So again, thanks for listening and we will talk with you all in 2024. Good morning, good afternoon and good evening.
Tu Le:
Thank you from my side as well, and happy electrifying 2024. Bye bye now. Bye bye now.
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.