China EVs & More

Episode #154 - BYD Leading the Price cuts, When tech is too tech, Thoughts on the next couple MAX episodes

February 28, 2024 Tu Le & Lei Xing
Episode #154 - BYD Leading the Price cuts, When tech is too tech, Thoughts on the next couple MAX episodes
China EVs & More
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China EVs & More
Episode #154 - BYD Leading the Price cuts, When tech is too tech, Thoughts on the next couple MAX episodes
Feb 28, 2024
Tu Le & Lei Xing

Tu begins the podcast talking about how the price war still has legs and will likely last through the end of this year into 2025. BYD has been leading the way with price cuts on their more popular vehicles daring their competitors to do the same. 

Tu then talks about the Buick Electra E5 EV that has just gone on sale for ~$23K and wonders out loud why they can't sell that in the US for a similar price. 

The discussion shifts to the technology companies that have entered the EV competition, in particular Huawei, Xiaomi and Baidu via Jiyue. With Jiyue's sales struggles, they openly wonder what is too much technology and whether Xiaomi can come up with the 'just right' approach to stuffing their EV with tech features. 

They then point out how many legacy automakers have announced dialing back its EV ambitions and the challenges they still have to overcome. They focus on the German automakers and reveal that one of their next MAX guests is Daniel Kirchert, former BMW executive who also co-founded BYTON.

The podcast ends with Tu hoping that there's another price cut for the Model Y in the US since it may put him over the top for buying it himself. 

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Show Notes Transcript Chapter Markers

Tu begins the podcast talking about how the price war still has legs and will likely last through the end of this year into 2025. BYD has been leading the way with price cuts on their more popular vehicles daring their competitors to do the same. 

Tu then talks about the Buick Electra E5 EV that has just gone on sale for ~$23K and wonders out loud why they can't sell that in the US for a similar price. 

The discussion shifts to the technology companies that have entered the EV competition, in particular Huawei, Xiaomi and Baidu via Jiyue. With Jiyue's sales struggles, they openly wonder what is too much technology and whether Xiaomi can come up with the 'just right' approach to stuffing their EV with tech features. 

They then point out how many legacy automakers have announced dialing back its EV ambitions and the challenges they still have to overcome. They focus on the German automakers and reveal that one of their next MAX guests is Daniel Kirchert, former BMW executive who also co-founded BYTON.

The podcast ends with Tu hoping that there's another price cut for the Model Y in the US since it may put him over the top for buying it himself. 

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

Listen on: Apple Podcasts   Spotify

CEM #154 Transcript
Recorded 2/23/24

Tu Le:
Hi everyone and welcome to China EVs & More where my co-host, volleyball dad Lei Xing and I will go over the week's most important and interesting news coming out of the China EV or 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 about this podcast to other enthusiasts and tune in again next week. 

My name is Tu Le. I am the managing director at Sino Auto Insights, a global management consultancy that helps organizations bring innovative and tech-focused products and services to the transportation and mobility sectors. I write a free weekly newsletter that we pull many of our discussion topics from. You can sign up for it at sinoautoinsights.com, which I encourage you all to do. Good morning, Lei. Can you please introduce yourself?

Lei Xing:
Good morning from Boston. This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode number 154. Welcome back, from our annual break. We're still technically in Chinese New Year because tomorrow is the Lantern Festival, and a lot of people they don't go back to work until after that holiday. So, the Year of the Dragon or the Loong as someone would argue, started not off, not with the bang, but with a bloodbath. You remember, we talked about Long Xing Dada, the dragons flying, well the prices they're flying off everywhere.

Tu Le:
Well they're slashing everywhere.

Lei Xing:
Slashing everywhere. My goodness. You thought, we've seen it all, we haven't seen it all. I mean starting last year, Tesla was the culprit. This year BYD was like, you know what, we are “bi you di” or cheaper than gas. I’m like, that cracked me up so much because it's a good, who would have known, right? Bi you di, is BYD.

Tu Le:
We are not even into March yet. And we know, you and I both talked about how this is going to last well into 2024. This doesn't surprise anyone, but for BYD to lead the way, that is a little bit of a different tact, I guess, because this is telling the market that you people need to keep up, because we're taking share from the, we're going to push out, and we're going to take your share. That's what they're telling people.

Lei Xing:
They are, you know, 4 million units, right? They got to get there somehow. And one way is through price cut. Basically, I mean, this is, because as I was thinking, it's not one model, it's not that one Qin Plus DM-i Honor. It's a series of models that are launching, right? They just launched the Dolphin Honor at the RMB100,000.

Tu Le:
Lei, when you say DM-i, that's basically their hybrid.

Lei Xing:
The plug-in, yeah, that's BYD’s, one of BYD’s tech. There's the, there's quite a few models, L, coming. I think they're relaunching the Han and the Tang with the L I believe, and they are launching the Qin L, it's a full wave coming, right? And we're two weeks into the Year of the Dragon. 

Tu Le:
Clearly, BYD’s strategy, we have a flavor for every taste in the market. Tesla, are you listening? Because an easy way to make that Model 2, cut the rear end off the Model 3. Because that's what an L version is, right? You're just adding maybe half a meter of length and Audi and BMW, 10, 12, 15 years ago, they created these L versions of their vehicles. Now, their mainstay of the product portfolio, at least in the China market. So I’m over simplifying this, but Tesla, how do we get to a Model 2 at $25,000? We take out the rear end of the Model 3 or if they do not get to a Model 2 by mid-2025, China market is likely going to be a huge issue for them because I'm assuming that 2024 they can still hold off and maintain the right, or let's say, close to what they have from a shared standpoint, but I don't know if they can do it for 2 years straight. So.

Lei Xing:
It's probably not going to be the $25,000 model, cut that price in half, $11,000, $12,000, and that's what the Qin Plus Honor edition costs, right? $11,000.

Tu Le:
That's what's really important to note Lei because the Model 2 is just another car in China. It's a huge huge victory for them in EU and the U.S. at $25,000. But at $25,000 in China is overpriced.

Lei Xing:
Yeah, I mean when you talk about certain segments, right? It feels like the RMB79,000, 80,000, I mean, I could, it's like pocket change.

Tu Le:
Yeah.

Lei Xing:
It feels like that way. And I could just we're all going back to China. I could just buy one. But obviously you need to have the license plate lottery. But still, I mean that's.

Tu Le:
I still have not, I still have not won that. And that was what, about 10 years in.

Lei Xing:
And the chain reaction that followed is, right, all these posters being, right, that the Mazda 3 at the RMB90,000. That's an ICE and Mazda 3 I mean that's a pretty good, nice, damn nice car. And you won't get that in the U.S. for that type of money.

Tu Le:
Well, the other thing too Lei, I think that's really important to mention is that Buick came out with the Electra 4?

Lei Xing:
Yeah the E4 and the E5 at cheaper prices.

Tu Le:
So for those wondering, if legacy auto can come up with cheap vehicles, look at the ID.4, look at the ID.3 in China pricing wise, look at them in Europe and then look at the United States. With GM, they're having problems, making a $45,000 car or EV in the U.S., but the Electra E4 is $23,000 car in China.

Lei Xing:
It's not a small car, it's like a mid to large SUV. It's probably a Blazer sized EV.

Tu Le:
The unfortunate thing is that 10 years ago that would have sold well because the Buick brand was strong. But you had mentioned last week that now Cadillac is Buick, Buick is now Chevrolet. And Chevrolet is just not even in the conversation.

Lei Xing:
And Buick is basically a business, GL8, pretty much, the other sedan models are not resonating.

Tu Le:
Yeah dude. I'm actually looking really forward to going in April because I have a list of cars. I want to go check out, drive, visit some people, see how they're doing, cause they're, nothing beats actually talking to employees and checking out morale, see how pumped up they are, see how worried they are. I think you and I are kind of uniquely suited to do that because we do know the people at a lot of the companies that we're talking about.

Lei Xing:
I mean there's what, you talk about the Li Auto MEGA which will launch in a week. The X9 I'm looking forward to maybe try it out and Xiaomi, just checking out Xiaomi SU7, they're making announcement there. And Xiaomi is really under a lot of pressure just from one single competitor, which is Geely. There's a bunch of models Geely recently launched that's giving Xiaomi a lot of run for their money. Pricing wise, how do they price the SU7? That's a lot of headache.

Tu Le:
You think that, see, I still think it's going to be very or much cheaper, but you're still thinking it's going to be over RMB300,000, right?

Lei Xing:
No I mean Lei Jun said it's not going to be RMB99, RMB149, RMB199. It’s going to start probably in the RMB200s, mid to high 200. That's what I'm expecting. But that could change. Who knows? You show, they are Xiaomi, right?

Tu Le:
I think if it's not under RMB250, it doesn't stand a chance.

Lei Xing:
Because Lei Jun, he keeps saying that we're, please forgive us that we're going to price this high, but when they launch it, hey, who knows? They might put up a surprise given the current bloodbath.

Tu Le:
Come on, man, you know that he's one of the biggest showmen in China. 

Lei Xing:
Exactly. 

Tu Le:
So he's setting the table basically.

Lei Xing:
And look at how active he is on Twitter and somebody else is obviously running that. But he's posting most of the EV stuff, right? Because he recently gave part of his responsibilities to the other guy on the phone part of it, right? He’s like, I’m going to be in charge for the EV.

Tu Le:
Just as an aside to tell our audience how everything is kind of sort of interconnected, Shou Zi Chew, used to be the head of international for Xiaomi in Beijing. Now, he is the CEO of TikTok. And he moved back to Singapore. So all of these executives, they know each other. And you and I had a great conversation with Daniel Kirchert about him knowing William Li or Li Bin and Li Xiang and He Xiaopeng. So the EV executive in China relationship or “guangxi” is actually, that network is actually very, very small and it extends out to consumer tech and things like that. So.

Lei Xing:
And mentioning, speaking of it, this rivalry between actually Geely and Xiaomi also stems from that, because when Lei Jun, I think he visited a bunch of kind of the incumbents, right, 3 years ago when he started this research into building the EV business, and he poached the director of the R&D Institute of Geely to one of the capital arms. I think it was Shunwei Capital, which is under Xiaomi. And so there's that kind of a beef actually going on I think, you can sense it through the recent social media, at least from the model competitive point of view. So, it's from all, not only from the price war, but from all points. Now I was on, talking on CGTN yesterday, and I said now, the biggest change we're seeing is that now we're seeing this tide receding and some of the boats capsizing, one being HiPhi, the good times are over.

Tu Le:
I think this points back to, this is where Xiaomi needs to be very, very careful. We look at the JIYUE, we look at the HiPhi which were very technology focused to an extreme. We're seeing them not be very successful in the market. Now, HiPhi was also premium. So there's likely a pricing challenge or an issue with them, the X was over RMB1,000,000 or RMB800,000. It was $100,000. It was a cool, kitschy cool car. I think it was very niche, because again, it had lights that you could program to write things. I thought it was kind of cool, but you need to have a derivative that kind of took out some of the kitschy cool stuff and more mainstream that would have cut the price in half. And I think maybe they had a chance. But if you're not building within a year, 10, 12, 15,000 units a month, then you are in a lot of trouble because you're just draining your capital. So. 

Lei Xing:
It's pretty much a scale and cost advantage game from here on out, right? I mean after BYD, after Tesla, who is the next closest to having that kind of scale and cost advantage?

Tu Le:
I'm going to make it easy for folks Lei. Let me explain it this way. And you tell me if you agree or not, look at their total capacity, multiply that by 80%, maybe 75%. If they're not at 75% and consistently at 75%, they're likely going to be in trouble in the next quarter, the next 6 months. And then for companies like, let's say the companies that are trying to get towards the BYD and the Tesla numbers, they need to get to 60, 70, 80,000 units a month, 80,000 units to be profitable. So those kind of the simple back of the envelope math, in my opinion.

Lei Xing:
So Li Auto, they right, last year, a couple of months, they did 50,000 units, and this year they have 800,000 units goal for the year. You can do the math, right, if they get there. I think Li Auto, or HiPhi, Ding Lei came out, we’ve seen reports coming out that he held a meeting with the employees and one of the things he said, I thought was really interesting pertaining to one of the tweets that I tweeted, all of these ones that are failing had these founders, and we talked about this with Daniel, with founders who had experience working at the legacy automakers. It could have been a coincidence or there's some bad karma, but he said this, Ding Leii, he said that my way, traditional operational thinking, we could not beat the kind of the internet companies or the founders. That's what he said. Although product wise, it was very internet thinking, but maybe operationally or managing wise, there were issues, product planning. I mean you talked about cutting that price in half. They did, they had the HiPhi Y and they were coming out with HiPhi A, but it didn't resonate for some reason, because there's the other RMB300,000, RMB400,000 range that are already taken, let's say, by Li Auto, right? That you succumb to that competition.

Tu Le:
And you raise a great point. And let's just throw it out there. So we've interviewed Kristen Lee and Daniel Kirchert. We're going to be launching a video version of our MAX episode on YouTube very soon. So stay tuned for that. And I think we could use that, what we talked about, how in the tech companies, how those founders are struggling, but not out of business. Whereas the companies or the EV startups that were started by automotive executives have all, not all, but largely failed. If we talk about WM Motor, we talk about HiPhi, Freeman, ex-auto, the HiPhis that so maybe that's a warning to the western automakers. You better bring some strong technology chops and think through your traditional automotive mindset and process and policy driven strategies and just think about things differently. And look at that because that stands out. Daniel even said it, right? We brought this automotive mindset to BYTON and ultimately that's probably one of the reasons it failed. So.

Lei Xing:
Yeah and the key reason is the ability to raise capital. I think that's a great point that the traditional guys, I guess, in that perspective couldn't compete with the William Lis and Li Xiangs and He Xiaopengs, right? They all, also, I think he mentioned a great point that they all had their own capital invested.

Tu Le:
Yes.

Lei Xing:
Into these companies initially.

Tu Le:
So they had their own skin in the game.

Lei Xing:
Yeah. Although I mean, we say to this day, the Li Autos, the NIOs, the Xpengs they are not out of the woods by any stretch of imagination.

Tu Le:
Oh yeah we can point to NIO needing a bailout, and Xpeng getting a lot of help. But I'd mentioned during our conversation that if you're a tech entrepreneur and you IPO, the banks are happy to help you if you're in a new venture because you made them a ton of money before. So I think that's also part of the reason because I think Daniel is doing very well for himself, but he'd be the first to tell you, he didn't have $100 million to put into BYTON himself, right? So I think he made a great point right there when we talked to him about that stuff.

Lei Xing:
What else is going on? We talked about HiPhi. So basically Ding Lei, he said we have, at most, 3 months to turn this around and you had raised a great point a couple of episodes ago about now it’s the time to kick the tires. I think they are looking at possibly being acquired, is definitely one route to go. I think there's some chatter on that who's going to take up whatever assets is good from HiPhi. So if it doesn't survive, maybe it'll be part of somebody else.

Tu Le:
I think that's the important thing because we talked about this Stellantis Renault potential merger, but I didn't see any quick or clear synergies, except for just bigger, because Stellantis now has a lifeline via LeapMotor, but Renault doesn't have any such lifeline. So it's important that these companies, whether you are GM, Ford, HiPhi has the small network already established in China, had some credibility. It's time to find out if they have any real IP and try to extract value off the cheap. Because if you recall, they were number one, the HiPhi X was number one in a challenge, an annual challenge or range rating in Norway. So that would indicate to me that the better technology is either pretty significant or their BMS, so I would definitely look into that to try to act, at least try to extract some of that value.

Lei Xing:
And there's talent, right? Where do these employees, where do they go? There's probably already poaching going on right now. One of the casualties, as many casualties that we're going to be seeing.

Tu Le:
Let me see here. Did you, you probably didn't, but there was a great article by former MAX episode guest, John Volcker for Insideevs about the fiasco that is gm Ultium.

Lei Xing:
I didn't read it, but I saw your tweet, and basically a big part of it, still the culture part of it, right? Is that correct?

Tu Le:
Well, I think, because we have to remember that GM, these guys, Ford and stuff, they have dozens if not hundreds of hydrogen engineers, battery engineers already. Are they at the level of Tesla engineers or companies like Panasonic and LG? Probably not, but, you know that I have some moles in GM or some contacts there and there's a lot of arrogance. Our good friend Alfred is invested in a company that you and I know that helps package battery packs. And GM is using them for Wuling in China, but they decided to go it alone in the U.S. with the Ultium. So this is like egg on people's face. And there have been some fairly high level. Scott Miller got fired. And I think one of the major reasons for that, Mike Abbott is kind of cleaning house, generally speaking, is what I’ve been told. And it sounds a lot like what Doug Field has done at Ford. Is it fast enough? Is it deep enough? And are they hiring replacements that are significant enough to move the needle? Because to your point earlier, Lei, culture is just a really, really onerous thing to change. When you're a 120-year-old company that's always done things a certain way. So I feel that the Volkswagen Groups, the General Motors, the Toyotas, the rank and file are talented enough. Now, let's set aside the software part for a second, but on the battery stuff, I think there's enough talent there to get things, right? But the culture thing seems almost as daunting from a challenge standpoint as or changing it or altering it or evolving it. However, you want to say that because man, I'm in Detroit, I talk to freaking car guys every day. I talk to car guys that think they're actually pretty progressive. I say guys, because it's always guys. And I look at them and they know I'm skeptical. But I never really show my full hands, because I think that's a little bit disrespectful, because I think they're trying to make a difference, right? But unless you're making major decisions that these companies how much change can you affect?

Lei Xing:
At the same time, the recent trends that we've seen starting out with yesterday, Mercedes-Benz dialing back their 2030 going all-electric where market conditions allow. Luckily, they had that qualifier, otherwise, right? We can dunk on them, we can still dunk on them. 

Tu Le:
But we should dunk on them because why was that comment even made it didn't need to be made.

Lei Xing:
Yeah. But what I'm saying is look at, its Mercedes dialing back, it’s Ford dialing back, it’s GM dialing back. Every, it seems like everywhere else in the world, there's this, including China, because the way I describe it will be China was going at 100 miles an hour while the rest of the world were going at 50 miles an hour. Now China is probably going at 80 miles an hour while the other ones are now stopped. That's the sense that you get right. All of a sudden, where in China this bloodbath is continue on at all costs. And Jim Farley said you know, we're not going to participate, we're not going to be in that bloodbath, we are going to go somewhere else.

Tu Le:
But Lei, they haven't been participating for the better part of 4 or 5 years.

Lei Xing:
That's the excuse part of it right? However you want to spin it. And Mercedes had the excuse of also right of, we're continuing to where market demand is. We have to be tactical. 

Tu Le:
So a couple of things that stand out to me now that you talk about Mercedes. During our conversation with Daniel. He said that they were selling hundreds of vehicles a month when he came to BMW in China to lead that team, the sales team or whatever, and they were at 3 or 400,000 when he left.

Lei Xing:
So that was in the mid to late 2000s, maybe. So like 20 years ago, roughly.

Tu Le:
And he and he led a decent turnaround at Infiniti before he moved over to BYTON. And so to give you all the sense of where ABB is, ABB stands for Audi Beamer Benz. They're consistently at around 7, 800,000 units annually, and they take 40% of their profits from the China market. So when Ola said, I don't know if you saw my tweet. He had been interviewed by Tom Mackenzie, a friend, because Tom Mackenzie, I don't know if you remember, or if you know him Lei, but he used to live in Beijing. And he used to do that show. Right. Yep. Now he's in the UK he's in London, but he was interviewing Ola. And Ola said, and it just stood out: value over volume. And I want us to revisit that at end of this year. Let's see. Because we have to separate the ICE sales for ABB from the EV sales.

Lei Xing:
In reality, in China it’s difficult to do that because we already know the Mercedes and the BMW and Audi dealers, the discounts are pretty significant. The final transactional pricing.

Tu Le:
On the EV side. Because this is the thing, they, Mercedes can't execute on their strategy globally without a strong China market, just like VW Group.

Lei Xing:
And more than likely that next generation MMA, the MB.OS, I think they're probably betting on that. And really the EQ is in the rearview mirror, whatever performance that they had. That's history, I think. But and then you have also Audi cleaning house right, headquarters even in China. So.

Tu Le:
But you still think they're not moving fast enough, correct? I think.

Lei Xing:
In China, they're trying to be fast. I mean Volkswagen, right? Speaking of China speed, that's all we talk about. In China for China.

Tu Le:
So let's do this because Volkswagen Group and I know we're kind of getting off topic from the weekly standpoint, but I think it's important to note this Volkswagen Group has about or Volkswagen brand has about 4% share. Let's say Volkswagen Group has 4% share in the United States. They have about 10% in China, and very strong in Europe. But if we look at the pillars of their strength, Europe and China, they're very threatened from by China EV Inc. And so if we're thinking about that 80% utilization rate that I'm telling you guys about, then any further significant sales decrease anywhere in Europe, or in China, because they don't have the U.S. market to fall back on. They're in a ton of trouble. And I really want to emphasize this because I feel like people are starting or journalists are starting to come around to understand the seriousness of Mercedes, of Volkswagen are having on China market. 

Lei Xing:
I'm nodding my head.

Tu Le:
Cause I don't know, man, I've been talking about this for several years. You as well about the exposure they have because of the China market. It's starting to come. It clearly come to investors and not only that, but that there is a ton of pressure on Volkswagen Group to divest out of Xinjiang, right? The crazy thing is this is coming from the institutions. The shareholders are selling.

Lei Xing:
Volkswagen Group does not get that 2%, 3% growth last year in China without the price reductions. They likely will have to do the same this year, because BYD is already shown away, throwing down the gauntlet that's squarely aimed at the Lavidas, the Sagitars, these type of sedans, right? The Volkswagen, actually they sell a lot of those. I think in January, actually, in that A-segment market, I think Lavida is like still number one or two. So think about that, right? And then, as we are speaking, Lotus just, $LOT just rang the bell of NASDAQ. One of Li Shufu’s babies IPOs. ZEEKR is next. smart is coming.

Tu Le:
Lotus is for, good friend of China EVs & More, I won't say who it is, but he had gotten an early Lotus in the UK, wasn't very satisfied with it. Let me just say that. So the other really quickly, there's a Bloomberg article that's great. Yeah.

Lei Xing:
You tweeted I tweeted as well of the dependency on China, right?

Tu Le:
And it's just the facts. It's not a position. It's not, it was, because if you look at the byline, there's a Korean journalist, there's an American journalist, there's an European journalist, American journalist. So they really did aa good job of kind of articulating and then with the interactive graphics, I thought that was really cool. And this should clearly indicate that the U.S. and Europe can't make affordable EVs without China through 2030. How they're going to reconcile that politically is the question.

Lei Xing:
And then also just yesterday, I think NETA had a media launch in Mexico. So the other key word, I think this year, besides bloodbath, is definitely MXICO, did I spell that right? 

Tu Le:
MEX. MEX. 

Lei Xing:
MEXICO. You're starting. 

Tu Le:
It's not just that, it’s not just that. The battery companies, I was told, are looking at every single country that has a free trade agreement with the United States and are looking at maybe starting operations in those countries. Everyone. So no stone is being unturned by China Battery Inc. in order to supply what they know will be probably. If we're at 8% last year, we get to 30, 40, 50% over the next 15 years, we're talking 10 million cars, 8, 7, 6, 7, 8, 9 million cars a year coming out of the United States that are clean energy. Now, they're going to have to, this puts the domestic battery cell manufacturers, the Panasonics and LGs who have committed billions of dollars to increase capacity in the United States, this puts them at a huge disadvantage, right? How that plays out is going to be part political, part capitalist. Don't know, because we don't know if the Inflation Reduction Act is going to stay the way it is past 2024 until we find out who our next president is. So still a lot of uncertainty, right?

Lei Xing:
Yeah, so the infographic was great showing especially that part on the Korean, how much of China % share from the Korean, right? You saw that, right?

Tu Le:
Almost everything was in the 90s. Every, almost everything was at 90% or over 90%.

Lei Xing:
How do you perceive that, right, from an IRA point of view?

Tu Le:
Let's do this Lei, it's 9:42. We will open the room up to any questions or comments. Lei and I are kind of wiping the Chinese New Year out of our eyes. And one thing I wrote in today's newsletter that I press send about 10 minutes before I started the show, is that we're seeing so much news coming out of the U.S. now. It's just really, really challenging. It's quite challenging to keep up, but we have to because it all fits together like a puzzle, but you can't understand the global market unless what's happening in the U.S., in China, Europe. I think…

Lei Xing:
Southeast Asia is, speaking of, EMEA region, Xpeng launching in the UAE. 

Tu Le:
For those that aren't sure EMEA stands for Europe, Middle East, Africa. That's what EMEA stands for.

Lei Xing:
And that's where the capital are coming from nowadays. I think there was another investment. I forget which company that just gotten money from that region, right?

Tu Le:
Yes, HiPhi’s deal with…

Lei Xing:
And speaking of HiPhi, right? That never went…

Tu Le:
That fell through.

Lei Xing:
Never went through. So.

Tu Le:
I'm curious to see how the G6 and G9 will be received in Europe specifically and how aggressive they're going to be on pricing for those products, because the Middle East is an emerging market. Vehicle sales aren't that significant like in the grand scheme of things from a moving the needle standpoint. Now, if you're an Xpeng or a NIO, couple thousand more units a month is actually pretty significant, especially in a foreign country. But, do, or does Xpeng bring the price war mentality to Europe and aggressively price their halo vehicles? That'll be the question.

Lei Xing:
I think the price war is, at least here in the U.S., it's already. U.S. has gotten that fever, right? The price cutting, the Mach-E, F150s, Lucids.

Tu Le:
Residuals are getting trashed, by the way.

Lei Xing:
It's all over the world. Now.

Tu Le:
Here’s my bold statement, Lei, if the Model Y in the United States gets reduced any further, I'm going to get one.

Lei Xing:
Action speaks louder than words, man.

Tu Le:
I know, because like it's right on the cusp of being at the price I wanted to be at. And so it's an interesting time because I could get one of those Hertz Model 3s..

Lei Xing:
You're going to lease or you're going to buy, because if you lease, you get the $7,500.

Tu Le:
I probably lease, I probably lease. And then drive it for a couple of years. 

Lei Xing:
You know, I'm paying $550 a month for my Santa Fe Hybrid. You can get a, what, theoretically Tesla for what? $329 a month?

Tu Le:
Yeah, so that's with like $3,500 down and all this other stuff.

Lei Xing:
I’m paying off a loan. So I'm not leasing. But, still.

Tu Le:
I have employee discount at Stellantis and GM, I can get supplier discount at Ford. So I'm looking at pricing a little bit differently than you are, right? But you let me know if you need discounts at any of those companies, maybe we can figure something out for you. Anyways, the other last thing that I kind of wanted to mention, Scout.

Lei Xing:
Yeah, we haven’t, they just broke ground, right? So we haven't heard much.

Tu Le:
Let me read this to you real quick. My little statement here: can Scout go where VW hasn't. This is what I wrote in the newsletter: while China has dedicated NEV brands, and I might need to take a breath while I'm reading this, while China has dedicated NEV brands like NIO, Xpeng, Li Auto, BYD, AITO, Fang Cheng Bao, JIYUE, Lotus, ZEEKR, GAC AION, Yang Wang, LeapMotor, AVATR, SERES, VOYAH, Shenlan, Geometry, Wuling, Polestar, just to name a few off the top of my head. The U.S. has Rivian, Lucid, and Tesla.

Lei Xing:
Fisker, which is, well. 

Tu Le:
So I mean just think of that contrast, right? And I thought of those companies literally like just as I was typing, I didn't do any research like where are all these companies just off the top my head. So we definitely need more competition. I just don't know. Because if there's been a lot of conversations about Gen Z, Gen Alpha, they don't know who Scout is. And Volkswagen Group, as I said before, they have 4% share in the United States, Scout is not going to double their share. Volkswagen brand is probably the only way they get to 10%, that goal of 10% that they've had by 2030 that they've articulated. But the only way they get to that 10% is if they start selling $25,000, $30,000 ID.3s, and ID.4s, which they are not currently. So doesn't look like there's any questions, Lei and I don't really have anything else.

Lei Xing:
Well, then just the housekeeping, we mentioned Kristen Lee and Daniel Kirchert, so respectively, Kristen Lee is the what, transportation editor for Motor Trend?

Tu Le:
Senior video

Lei Xing:
Let's just say an editor.

Tu Le:
Senior editor or something like that.

Lei Xing:
Which recently put out a documentary on China EVs, autos for that matter, in Mexico. And we talked to her. And after that, we, two days ago, we spoke to Daniel, Dr. Daniel Kirchert. The…

Tu Le:
It was so nice talking to him, so nice talking to him.

Lei Xing:
He's the founder of BYTON, one of the casualties, early casualties. He's still in the China EV movement, involved. So stay tuned for those MAX episodes.

Tu Le:
I know you listeners are all EV nerds, so Daniel is, he speaks the truth in the good and the bad of what's going on. And he's gone and done it. He's one of the people that launched an EV brand in China. One of the first, he's an OG, and he should be much more recognized than he is. Part of the reason you and I reached out to Kristen and Daniel. First of all, Daniel is a friend. So anytime we talk to him is great. They're out there, getting it done. Kristen spent 3 days or 4 days in Mexico meeting with all these people. She told us a story about how the flight was delayed. Just like you and me Lei, we're out there getting it done, we're out there, visiting, we're out there, driving, we're out there, talking. We're out there, traveling to places. And so it's important to separate the people like me, you, Daniel and Kristen from the people that are just sitting on the sidelines reading what we write, listening to what we say and then getting quoted off of their quote unquote, thoughts. I think it's important to separate those two. So that's why we stood them up, number one, because they're interesting, they have a perspective and a story to tell and number two, they're out there really getting it done. I'm jumping off my soapbox, enjoy the rest of Lunar New Year, Chinese New Year, Lantern Festival and the Boston volleyball tournament volleyball dad.

Lei Xing:
Three days man.

Tu Le:
We will try to get out Kristen’s video and podcast next week, and that's all for me.

Lei Xing:
Yep, and looking forward. So this weekend, actually next Monday is the Geneva Motor Show and there will be MG and BYD, Renault in some sense, the new Dacia Spring, all China related we will talk about that. And then next Friday, which is March 1, is when Li Auto launches and probably delivers the MEGA. And I think there is another, one of these Big 3s is having their Q4 earnings call. Could be Li Xiang, I think, next week. We'll talk about those.

Tu Le:
And Li Auto has had some pretty interesting advert, social media to promote the MEGA. So it's pretty cool. I want to see it in real life because it is definitely a wedge shape. So think of almost like a Cybertruck and a Prius had a baby.

Lei Xing:
And they're doing test drives in Sanya right now. And the videos I've seen, these things are low riders. They're very low to the ground for some reason, but.

Tu Le:
That's because they're BEVs, right? Everyone, thanks for joining, good morning, good afternoon, good evening. We will talk with you all next week. 

Lei Xing:
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 #154 - BYD Leading the Price cuts, When tech is too tech, Thoughts on the next couple MAX episodes