Episode #163 - Tu & Lei headed to Shenzhen in a G9, Elon visits Beijing (but not for the show)

First, Tu and Lei recorded this episode while driving from Beijing to Shenzhen in an XPeng G9 Performance. XPeng kindly lent it to them for the three day trip where they stopped into Zhengzhou & Changsha before hitting their final stop - Shenzhen.

For most of the trip (>90% of the miles which were a total of ~1.5K), they used XPeng's intelligent driving system called X-NGP. The purpose of the trip was to test the X-NGP system and get a feel for the charging infrastructure in China. 

They also recorded a video of their conversation and posted it to their newly launched YouTube channel: https://www.youtube.com/channel/UCnQkkMqjpoFs0yHmqmKitNQ

Tu and Lei spend a few minutes talking about Elon's visit and rewind back to just arriving to China and what they've been up to since they arrived. The two also give some of their initial impressions and takes on the auto show. 

They then move to their trip so far, talk in more detail about the EV they're driving and their experience with charging. 

**Tu and Lei were NOT paid by XPeng to do the trip and XPeng had no editorial control over anything they posted or said.**

The podcast ends with their thoughts on the connected vehicle world bifurcating with the possibility of EV companies needing a tech stack for China and a tech stack for the rest of the world. 

Transcript

CEM #163 Transcript
Recorded 4/29/24 in an Xpeng G9

Tu Le:
So we are looking at a special edition of China EVs & More episode #163, Lei and I have not been recording for the last couple of weeks. So apologies. And we haven't been sending the latest episodes. So we're going to do that in the next week or so, but he and I are currently on the road,  G4 highway headed to Changsha in an Xpeng G9 Performance version. And we spent yesterday going from Beijing to Zhengzhou and for the majority of this drive, we've been using Xpeng’s NGP ADAS system. And it's worked out quite well, but that's one of the things we're going to be talking about today, among other things. Our trip back to China. I started in Shanghai, Lei, went directly to Beijing. I spent a few days doing a few things before heading to Beijing. We'll talk about the auto show and lastly…

Lei Xing:
Let me stop you right there. Yep here’s hard braking, but here's some Xiaomi vehicles. 

Tu Le:
Is this the same ones? Got to be the same thing.

Lei Xing:
 Yep the same ones that we just passed earlier. Do continue.

Tu Le:
We'll also be talking about the biggest news from yesterday: Elon making his way to China on Sunday night, and I think he's going to be visiting the auto show, but his most important visit today or his most important visit was to Li Qiang. It sounds like he is working, trying to work his magic as we drive over some rumble strips as Elon is trying to work his magic in order to get FSD or full self driving rolled out to compete against services like Xpeng’s NGP. Now, whether or not that's going to be successful, we still don't know. I speculate that there will be a limited FSD roll out later this year likely. Now how that shapes out, still not sure, but we can unpack that during this drive. So Lei.

Lei Xing:
So, yeah here, well let's go into, we can talk about this trip, but since we're talking about FSD let's point to one important news that happened as Elon made his way into China, which is there's this national data security or safety requirement that Tesla just got approved on the day that he arrived, which means what we've heard previously news that some of these Teslas are not allowed into certain compounds. Well, no more.

Tu Le:
Primarily military?

Lei Xing:
Right. There's no more of that stuff, they can be anywhere. So I think in that sense, it's almost like Elon’s here thanking the Chinese government for that to happen and then meeting his old pal Li Qiang, which was pretty much the person that gave them the approval for Gga Shanghai when he was the kind of the mayor, then plus FSD that Tu talked about, and we'll see that news perhaps develop over the coming weeks and months.

Tu Le:
Remember that Elon got Sanghai Giga up and running within less than a year or about a year. So that wouldn't have happened without some of Li Qiang’s help and I think they still carry on a pretty favorable relationship with each other. So very, very public visit from Elon. It was in Chinese media, it was in Western media as well. So I think it was important public display for both sides and during the auto show. So if and when Elon meets up with Lei Jun today Lei, the automotive internet is going to blow up because Lei Jun was an absolute rock star in the two days that I was at the auto show.

Lei Xing:
You were there two days, I was there are three days. And I mean, even on the third day, there were visits by the deputy minister of industry and information technology, Xin Guobin into different booths. And Li Qiang was visiting the show yesterday, checking out booths, visiting Li Shufu, Xiaopeng. So this I mean this auto show has basically turned into a pageantry of all of these big shots. 

Tu Le:
It's a love fest!

LeiXing:
And it almost feels like nobody cared about the cars. And because Xiaomi and Lei Jun had been breaking the internet for the last month since the SU7 launched. And just today, they produced 10,000th unit of that SU7 in like 30 days, and you were pointing to. I was very much looking to news come out of Beijing Auto Show that Elon shakes the hands of Lei Jun somewhere at the show and it's like how it started, how it's going because Lei Jun visited Elon 11 years ago, and that's probably when he kind of, that seed was planted in his head that he would maybe one day produce an EV and now the SU7 has been constantly in the headlines, online traffic, at the show. 

Tu Le:
You’ve heard Elon earlier about talking about how if there wasn't some protectionism, then the Chinese EV brands would pretty much demolish the foreign brands. So there's admittedly a lot of mutual respect between each of these entrepreneurs, these Chinese and American entrepreneurs. So I also think that there are selfish reasons. Elon wants to check out the competition as well. Anytime he can create some sort of buzz around Tesla, primarily through coming and visiting, I think that's also helpful.

Lei Xing:
We're slowing down a little bit because the speed limit went down to 100 km/h. So this is all connected. So, do we want to talk about this trip a little bit?

Tu Le:
So why don't you start with when you got here and what you did for the first couple of days, because the media days didn't start until last this past Thursday (25th). And I came to Shanghai almost a week before that and you came a few days before media day started on Thursday. So.

Lei Xing:
So I left the U.S. on Saturday afternoon the weekend before and arrived into Beijing on the afternoon of the next Monday, the coming, next, following Monday. It's a 34-hour trip for me. Arrived, got some rest. And then the next day, I went to check out, the first thing I did was went to check out the Xiaomi SU7 at the Oriental Plaza, which has quite a few showrooms. NIO’s there, Yang Wang there has a store. Hyundai has a store, kind of showroom. And what I learned was two things. The sales associate told me that if you had ordered an SU7 that day, it would take 6-8 months before it can be delivered. And second, if you wanted to sign up for a test drive, it was two weeks out. And the third thing he told me on a significant day, during let's say, a weekend day where there's more traffic, they can receive upwards of 6,000 people visiting that store in one day. That's how much the fervor the SU7 has gotten. And yesterday, you can tell the audience what happened?

Tu Le:
So there's no doubt about it. If you were at the Beijing Auto Show on Thursday and Friday, there was genuine excitement. At the Xiaomi booth, half an hour wait to get in, look at all the eight different colors that are currently available. But yesterday, as we stopped for.

Lei Xing:
Ooh, here’s a situation where I need to take over, because there's a flat tire on the road. This truck here is probably just gotten a flat tire.

Tu Le:
You know that warning keeps on. It gives you the warning because you're blocking the DMS…

Lei Xing:
That's all right. 

Tu Le:
I’m just saying, that’s why it's, but, I was going to say, so yesterday, it was our second stop for recharging. And we saw an SU7. It was the standard version. You went over and chatted with the gentleman, nice enough, had his wife and small child with him. And he’s…

Lei Xing:
Typical family.

Tu Le:
And he had said that he bought it from a flipper.

Lei Xing:
Well, I asked him what version was this, and he said it's the base version, standard, which is the 219,000 edition. And then I asked him, oh, when did you order? And then when did you get it delivered? Then what he said was…

Tu Le:
He bought it on the second hand market. He paid an extra RMB30,000 for it. It was. So MSRP of the standard version is RMB219,000 and an additional RMB30,000 is 250. So it was about $35,00 or the price of a current Model 3 in China. There are a lot of speculators that were, I won't say a lot. There seems to be some speculators for the SU7 as well. So I haven't looked at the secondary market for SU7s in China, but.

Lei Xing:
I’m sure people are benefiting from those that are flipping this.

Tu Le:
There's always…

Lei Xing:
Who ordered it and then decided to flip it. And this guy, this family is not the first one, I’m sure.

Tu Le:
And the one thing that's readily apparent about the show was that Wang Chuanfu is Wang chuanfu. He walked around a little bit, got a lot of attention as well, but he's not all about trying to make a scene, trying to make a big splash. He doesn't do the presentations for the press as he lets his general managers do that, but he's front row center. Just like ypical BYD, they were just grinding it out and get the work done.

Lei Xing:
He even got into one of William Li’s selfie videos talking about when the EV production in Anhui province are going to double. So in Anhui, there's NIO, BYD produces in Hefei, there's Chang'an. And then Volkswagen Anhui is about to start production of this ID.UNYX later this year plus the Cupra Tavascan that's supposed to be exported. So that’s that but…

Tu Le:
The things that stood out to me initially were the number of foreign press.

Lei Xing:
I think this is the biggest difference. One of the biggest differences if we compare Beijing this year versus Shanghai last year.

Tu Le:
And the other important thing is that it's a reminder that Beijing is not Shanghai and Shanghai is not Beijing, because last year in Shanghai, NIO booth was twice as large, Porsche had a pretty extravagant booth. This year, they had a few vehicles they were showing, and then ended up only displaying the e-Macan. And generally speaking, the booths were smaller, but it's just a different type of atmosphere. And what you saw from the foreign press, not a lot of Americans, but a lot of Latin Americans, a lot of South American press.

Lei Xing:
Europeans and Japanese, Koreans, I would say.

Tu Le:
Yeah specifically at the BYD presser, tons of Latin American press, so that should tell you something and indicate something to you. I was told that Germany has now an exemption for visas entering into China. So I heard a lot of Germans they definitely took advantage of the 14 days of visas.

Lei Xing:
XNGP just did an automatic lane change to pass this little truck up here.

Tu Le:
I wonder why there's so many rumble strips. There weren't that many before, right?

Lei Xing:
We're actually entering, I don't know, like a mountainous  area. It's been flat land. So we're currently driving, I think we're into Hubei Province. This is on our second day of the trip from Beijing to Shenzhen. We started in Zhengzhou last night. Today our destination is Changsha, where we're going to meet our good friend Will from China Driven. So we still have about little bit less than 500 km to go and 6 hours, so get there in the evening time, but it's all been XNGP, so we can kind of get a help from the NGP for us to record this thing. Otherwise, I still have to pay attention. So.

Tu Le:
It's not as tiring, but it's still pretty tiring, the long drives. And we're looking at averaging around 9 hours a day on the road.

Lei Xing:
8-9 hours. 

Tu Le:
We should get to Shenzhen tomorrow around 7:00 pm.

Lei Xing:
So back to the auto show, you talked about the kind of the international feel. Chery alone invited 3,000 overseas partners, including dealers, media, chartered two high speed rail trains to take them over from like I don't know wherever, Beijing or Shanghai, Shanghai or somewhere else into Beijing and another one back to, I think they're doing events in Wuhu right now for these people. And they brought them over to the booth, the Chery press conference. I mean it was bananas.  I'm not sure if total Shanghai last year had 3,000 foreign media, Chery alone…

Tu Le:
I’m so glad that I only did the first two days because it was quite crowded. And it wasn't even open to the press yet, or the public yet. So.

Lei Xing:
So I was there three days. Here's how I would describe my three days in simple terms. The first day was seeing people not the cars because Lei Jun broke wherever the hall that Xiaomi was at with all his entourage and all these big shots kind of visiting each other. The second day, the first day also at the press conferences. So kind of ran around. The second day was really a day that I got to really see the vehicles, experience it, feel it, and kind of compare who's better this or that. The third day I visited some of the suppliers. So I mean for me and for you, it's our home auto show since we lived here many years. I've attended the Beijing Auto Show at least 10 times, right? So I wanted to spend some time to, one, to just see it through my own eyes and second, reconnect with all those people that I knew for those many years, right?

Tu Le:
And it's the same people.

Lei Xing:
but maybe at different companies.

Tu Le:
and or different positions.

Lei Xing:
Or some of the media I knew, they are now in the companies working as marketing.

Tu Le:
And I think that one of the biggest differences between auto shows of past years and current, there are so many KOLs. There are so many influencers.

Lei Xing:
Oh right. That's something worth to point out.

Tu Le:
And so traditional media are really fighting for clicks with a lot of those KOLs. After all, the pressers on Thursday, about 1 or 2 o'clock, they all started creeping out of the woodwork. There were so many mobile phones, there are so many live streams. People just talking and talking and talking, even during the press conferences. So it's just a different type of atmosphere, different vibes, and how things are presented to the media.

Lei Xing:
I think one of the biggest changes, we talked about the international fell of foreign media, but also how media and content is consumed, has totally changed. I mean I was in traditional media, we published China Auto Review like print magazines back in the days. Now this year, all you saw was people holding up, not one phone, but two phones streaming. One is for the script, the other one is streaming. 

Tu Le:
There's a guy with six microphones. 

Lei Xing:
Yeah, I posted that. And then because they had different platforms, this was one of the CEOs from a Chinese automaker. And there's probably people holding out their cameras for you. There's these, I don't know, ladies and guys…

Tu Le:
Well, importantly Lei, is that there are 30 year old, 25 year old influencers that Li Bin is interviewing with on the floor, that would likely not happen at the U.S. auto show, some 25 year old kid gets time with Li Bin in front of a camera, with millions of eyeballs on it.

Lei Xing:
And one of the things, if you went through the, at least for the Chinese media, if you went through the application process, they actually asked you to show proof how many fans or how many views your platform have, like there's a certain threshold that you have to meet in order to get a media pass. So I mean this never happened before, right? You needed a kind of a letter or you needed to have a certain visa or a chop to show that you are legitimate. But, at the end of the day, we always figured it out. We got our passes, we got in.

Tu Le:
So I will say one thing we, on Tuesday before the auto show, you and I sponsored a happy hour at Jing A in CBD in Beijing. We scheduled it very last minute, sent out the flyer on Sunday, hoping and as a welcome to the folks that were coming in from out of town, whether it's from another city in China or from another country. So people like Roger Atkins stopped by, said hello, drank, shared a beer with us. Simon Wright from The Economist was there as well, Elliot from Fully Charged. So a lot of our friends showed up so always always good, as you had mentioned earlier, Lei, to catch up with those folks, because we don't ever really get an opportunity to outside of the show circuit. And Roger had made a good comment to me about his status. He is not an influencer because he doesn't get paid by the brands. He is a content creator. One of the things that have, a few folks have asked me recently over the last day and a half because of this drive that you and I are doing in this G9, Xpeng G9, is whether we're getting paid. And we're not, for the sake of full disclosure. We are not.

Lei Xing:
So a little story on this. I had, I think it was about a couple of months ago. Oops. Somehow we just turn this.. A couple of months ago. Ok. A couple of months ago I had kind of texted Tu and came up with a idea. Right after the Beijing Auto Show, I needed to go to Shenzhen because to attend the, to attend to meet my dad who's opened up a golf museum at one of these golf clubs in Shenzhen that's organizing the Volvo China Open during the May holidays. And I asked Tu, hey, I have an idea, we have three days. Why don't we find a China EV and drive down and just, what I wanted to experience was first, the range, the connectivity, the ADAS, which we're using right now and the charging infrastructure, I think, which is one of the most important things that's making China EV penetration hitting that 50% pretty soon, probably by next year, and how the XNGP works on the highways, locally. I thought it would be a once in a lifetime experience that probably not many people get to do because of our connections we have. And the trust that people have on us to kind of offer our perspectives. It is our kind of adventure. I didn't plan this. All I did, thought about, think about was we could take three days. First day when stop at this city, second day this city, third day we arrive in Shenzhen. Everything else we'll just see as we go.

Tu Le:
And very quickly, if people are wondering, Beijing to Shenzhen is not a normal road trip for most people in China, number one. Number two, it's about 1,350 miles. So quite a long journey, we are averaging about 120 km/h on the highway or gaosu, which is about 63, 64 mph. So we're not going super fast.

Lei Xing:
So yesterday we covered about 700 km. We left Beijing. I picked up Tu at around 9:30, 10nish, and we got into Shenzhen around 6:00 pm so it was 8 hours.

Tu Le:
We are going to Zhengzhou.

Lei Xing:
Zhengzhou. So it was about 8 hours and today we're planning a little bit more, because it's slightly over 800 km. We left early, but plan to get into Changsha around 6, 6:30, which is what we expected.

Tu Le:
If we get in before 7, I’ll be feeling pretty good.

Lei Xing:
And this includes charging. So we just completed a charging session. I think it was 37 minutes. We got from 25% to 90%, which is not bad at all, because we were doing all the other things and it kind of flew by if you think about it.

Tu Le:
So the vehicle doesn't recommend that you power up to 100%. So that's why we're looking at 90%. And it when you're at 90%, you're at over 500 km. Now, really quickly, let's just talk about the G9. I'm very impressed fit and finish quality. I don't have any real complaints about that.

Lei Xing:
So this is a G9 650 performance, MAX performance edition, which I looked in the app, it sells for RMB359,000. So the fit and finish, it is pretty good, but it is a higher trim version of the G9, which is, actually the starting price is in the RMB200,000s right now, I think underappreciated. But..

Tu Le:
This is a pool car with, it looks like around 10,000 km.

Lei Xing:
Yeah we started this car at just under 10,000, right now, it's at 11,000. So we've driven over 1,000 km, so far.

Tu Le:
And we had posted on Twitter about this car, although we are we're driving it down, it looks like Elliot from Fully Charged and Roger Atkins had borrowed this car for a day, right before we did. So again, it's pretty impressive. RMB359,000 is right around $50,000 ish. So not cheap, but this is the high-end trim. 

Lei Xing:
It's an SUV. 

Tu Le:
So it's a large SUV, it's probably the size of a Cayenne, I would think. And it's a 5-seater. There is no seven seat passengers, but we are still in the process of evaluating it. And we'll give our full evaluation, probably next week's China EVs & More. But that's going to be inclusive of the NGP so stay tuned for that. But let me ask you, Lei, from a vehicle standpoint, from a brand standpoint, what stuck out to you at the Beijing Auto Show in the three days that you were there?

Lei Xing:
So, you know we finally get to talk about the cars which is the important, which is what an auto show is all about, but in Beijing this year it was all about these online traffic, but again the Chinese brands are, if we think back right? If you think all the cars we've seen, the Chinese brands stand out, and a few that I can name that I think will be my top 10 sort of, the JIYUE 07. Let's see if this car’s, okay, the JIYUE 07, the Denza Z9 GT, I really liked the BYD Ocean-M the small kind of the hot hatch.

Tu Le:
Which was at the time still pre-production.

Lei Xing:
And the Qiyuan E07, which is this kind of, we're joking it’s China's Cybertruck, but that's just for joking purposes. It's kind of a new EV I think there's a plug-in hybrid, where there's this bed that can open up and change it into a pickup. There are a few from the foreign ones that I liked, especially the Mazda EZ6. I think it's very Mazda, but it's a Mazda in the new EV age finally. I kind of like the ID.CODE that Volkswagen, we can talk a little bit of Volkswagen because, it's an important year. The ID.CODE basically previews the next generation of EVs that'll come out of both the, not both, but all three joint ventures of Shanghai Volkswagen, FAW-Volkswagen and the Volkswagen Anhui, future EVs that will come out, post-2026.

Tu Le:
So when you mentioned the ID.CODE, that was more about design language, design direction than an actual vehicle. I got to speak with the head of design for the ID.CODE. I forget his name, 

Lei Xing:
Andreas Mindt. I talked to him as well.

Tu Le:
And he seemed very hopeful. And he seemed very focused on really working with the joint venture brands to try to collaborate and come up with solutions that will satisfy each of them. Again, a seemingly impossible task. But, the one thing that I'll add to the brands and products that you said were your best of show. I will also say that the foreign automakers showed up. Last year pretty much silent in Shanghai. So GM they launched the Buick, or the Cadillac OPTIQ, which is smaller than the LYRIQ. It's going to hit around RMB249,000, I believe. Then they launched the Buick GL8 PHEV, and I was told that that's got a pretty warm reception and then third they launched a Chevy PHEV as well. 

Lei Xing:
Equinox.

Tu Le:
Yeah Equinox. So they're not taking things sitting down or lying down anymore. I happen to be at the Chevy stand meeting with Eunice Yun from CNBC to do an interview and it was whispered in my ear that Mary Barra was going to be at the stand in the next 45 minutes. And so Eunice and I recorded the interview. She stuck around to see if Mary would want to make any cool comments, but she did not make any comments to the international press. They were actually super low key about her being there too.

Lei Xing:
Oh my goodness, I mean compared to Lei Jun and all the entourage, all the commotion. I mean she, to be honest, Mary Barra looked like a “Da Ma” in Chinese, which means, I don't know what's a good English name.

Tu Le:
I don't know I’ll let you translate.

Lei Xing:
Almost lik, you know she was just low key. She was wearing a handbag on the shoulder and with Mark Reuss.

Tu Le:
Mark Reuss was there too.

Lei Xing:
Wearing a white shirt with the khakis and sneakers. Very understated. Like if you didn't know them, you would just think they're just some kind of foreigner. But they were there checking it out. And speaking of, I think it's important to point out. I think Jim Farley, besides Jim Farley and Carlos Tavares, most everybody, maybe some of the Japanese CEOs, I think everybody else came. Oliver Blume, Luca de Meo. They're not even exhibiting, came to JIYUE’s booth. Jose Munoz, who is the CEO of Hyundai Motor North America? I saw him at the LeapMotor booth.

Tu Le:
He was at the LA Auto Show.

Lei Xing:
He was at the New York auto show. I just met him like a month ago. He used to be in charge of the China business back in 2018, which was his last time attending the Beijing Auto Show having unveiled the Sylphy EV at the Beijing Auto Show that year. That's what he told me. And I met him and I sent him an email. He was like he gave me his business card, says, I'm a Hyundai Santa Fe Hybrid owner, and I told him I'm very happy with it. I bought it at Gary Rome, it was the dealer of the year, and he's like, I gave you my card. Any problem, issues just send me a message. I wrote him an email, and he replied the next morning. And in it, there was a line, he said, after 6 years, I am shocked, just like I was shocked last year in Shanghai and imagine, he's not even in charge of the China business and he's here to see, right? He's in charge of North America. And this is, right?

Tu Le:
This should put to bed the thought that the automotive sector is not a global game. And the folks and the executives that aren't here, it actually speaks volumes because Farley, with Ford, they had unveiled the locally built Ford Bronco which should did well, but it's an ICE.

Lei Xing:
I think Bronco is going to do really well. Yeah. It's starting below RMB300,000. But that's Ford’s kind of the pivot into this, forget about EVs for now. We're going to, speaking of products, I think this year the macho kind of the off-roadie styled SUVs was hot. Quite a few brands have like Chery iCAR, TANK, very.

Tu Le:
Very G wagonish and Defenderish. And so that's where Great Wall really leans into, right? So.

Lei Xing:
Could be proven to be a right strategy.

Tu Le:
And here's a funny anecdote. Our friend Ash who works at Geely. He tweeted that he wanted one, he wanted a Bronco, so that should tell you, this was his personal account, so, on Twitter, but that should tell you all you need to know that.

Lei Xing:
Speaking of Geely, I thought the ZEEKR MIX was the, one of my pick, not because of the car, but because of it's based on the same platform as that M-Vision robotaxi that we’ve seen quite a few times.

Tu Le:
That's right. 

Lei Xing:
But the way how the interior seating can be rearranged. This kind of smaller MPV, at the same time, this same brand ZEEKR has a RMB729,800 009 Grand MPV that they launched a few days ago, which you went to.

Tu Le:
Yes so, I took a fast train from Shanghai to I forget what city now, but…

Lei Xing:
It’s Wu Zhen.

Tu Le:
Which is the Venice of China.

Lei Xing:
Home of the World Internet Conference.

Tu Le:
Yeah World Internet Conference. It was a spectacular event. It was a huge launch event. It's an MPV that's four seats. So the back seats, it's like for executives. You can fully recline almost in the backseat, and it's going up against. And this is where the China market in general, creates a lot of challenges for the traditional automakers because they're used to very clear cut segmenting of the vehicles and passenger vehicle side, but this MPV it's going to be competing against 7 Series, S-Class vehicles and A8s. What do you do with that? Because the back seat comes with a 43-inch screen, and there are all these amenities, it has granite in it.

Lei Xing:
So basically imagine you're sitting in the back seat. And this whole screen is where you're looking at. That's what the Grand was basically, the screen like about this size.

Tu Le:
And it was a really, really well thought through event. And they spared no expense because there were hundreds of people there. The facility was beautiful, it was a little rainy, but then I came back and then ultimately went to the auto show. So what else did. Obviously, one company that was absent who had attended 4 years ago was Tesla. And if you recall, 4 years ago, when they attended, someone famously danced…

Lei Xing:
Three years ago. 2021. Odd year.

Tu Le:
So they famously danced on top of his car, a Model 3. And there was a huge controversy from that. But Tesla made up for it by Elon coming on Sunday night to push FSD into the China market and notifying as long as real time updates. I've not heard anything else since, except that he was supposed to come to the auto show today.

Lei Xing:
He's probably there right now, as we speak.

Tu Le:
And I would think it's absolutely bananas. And when he's there, and I would have mentioned that the CEOs of these EV companies that are still in Beijing are likely going to pay him respect by being there at their booths to see and meet and talk with him. So, yeah.

Lei Xing:
And another kind of the headline or topic we're talking about is these cars and the designers behind them. I got to meet Klaus Ziocyra, who is now the head of design for Chang’an Group. And he used to be Volkswagen Group’s head of the design. I got to meet Stefan Sielaff, the head of design for ZEEKR, who used to be the head of design for Bentley. There's another person, Joseph Kaban, who was previously the Volkswagen brand’s head of design, he is now head of designer at MG. So three designers from Volkswagen Group basically have, how would you call it, capitulated or they moved.

Tu Le:
I must also give Detroit a shout out because Frank Wu and Colln, I forget his last name who is a designer at NIO. They're both CCS grads. CCS is a design school in Detroit. So.

Lei Xing:
NIO, Li Auto, probably Xpeng, Wolfgang Egger from BYD, the Xiaomi designers, all of them they worked at these German premiums before. Call it the copycat of Taycan all you want, right? But it's definitely some influence of course, but, and GAC right, the head of designer at GAC used to be a Mercedes designer Zhang Fan. And the Chen Zheng, who was the head of design for Geely’s Galaxy used to be from Chang’an and he was head of Chang'an’s design center in Italy before.

Tu Le:
All this is to say that they saw their weakness in vehicle design and hired who they thought were going to be people that could help put their vehicle design over the top. Now, there were some western journalists that it looks like, it appears that and more on the automotive journalist side than the mainstream media journalism, but these car guys come to China and they're like, man, all these cars look similar.

Lei Xing:
I don't disagree with them. 

Tu Le:
No, I don't. But to me that's missing the plot because you don't need to come to the show to know. You can look at the pictures and say they're similar, but remember you're coming to China. Most of these brands are shipping products in China, so these products are for Chinese consumers, okay, so don't bring your bias here saying they're not up to western standards because it's not for the west. This is what Journalists and people just need to remember, China is the largest market in the world. European, American, Italian, French brands are now bending to the will of the Chinese customer, number one. Exterior design, although it's important for a Chinese consumer, you know what's more important is connectivity and advanced driving assist. So these traditional journalists have no idea how to rate or judge that. So guess what? They're bitter betty, because all these cars look the same, guess what that's not important to the Chinese consumer. So why don't you instead of complaining about what isn't there try to learn about the largest car market in the world and what's important to those consumers? I think and I'm jumping on my soapbox, but I'll let you add to it, but this is where, again: don't come to a foreign market and expect products to look like the ones that are in your market.

Lei Xing:
So I said, I did agree with that in a sense that there is some homogeneity of what a China smart EV will look like, styling wise, right? If you look at the Xiaomi, it's kind of a Taycan. Or if you look at some of these SUVs, they kind of look the same.

Tu Le:
For sure. 

Lei Xing:
But to me, I think at least at this Beijing Auto Show, one metric that I would pick as my top models on display would be how innovative these design thinking were different from some of these homogenous models. That's why I said the ZEEKR Mix was one of them, because there were some different elements. I would have picked Chery’s iCAR V23, which actually was had input from the CEO who founded Zhi Mi, which is a Xiaomi invested, kind of an ecosystem appliance maker. And it looks, it's different, right? So there are, having this homogeneity, there are different takes on the styling part of it, so.

Tu Le:
And Will from China Driven. He tweeted a good point. He said, HiPhi came out, and people bashed that. So it's…

Lei Xing:
Speaking of HiPhi, looks like they may be getting a lifeline, FAW or something. Latest news. Well somehow, this Xpeng’s AI assistant, is listening and just spoke English, but anyways, continue. We were talking about HiPhi.

Tu Le:
So Will just brought up the point that, okay, if you want some of avant garde design, HiPhi had it, but nobody liked that either. So I again, to your point, Lei, agree totally that, and I'm the one that made fun of it before, right? That said, if you squint, they all kind of look alike.

Lei Xing:
I think it was a little bit, too much, personally.

Tu Le:
But again, we're not even talking about the features for the China market that are the most important to the consumer. It's a foreign journalist talking about car design.

Lei Xing:
And another metric that I would, one of the models I selected was the MINI Acemn, not because the model itself, but because of the significance of the company making it, which is the Spotlight Automotive, joint venture from BMW and Great Wall Motor that was inaugurated in 2019, obviously, because of pandemic and other reasons, kind of got delayed a little bit now or 5 years later. And finally, this is one of the first locally produced MINI EV in China.

Tu Le:
And all MINIs are going to be Chinese built.

Lei Xing:
Some will be built in UK.

Tu Le:
But anything else that we're talking about?

Lei Xing:
Aside, I think we can talk about kind of these if we put these foreign automakers into the buckets, right? I think the most aggressive ones are definitely the Germans be it Volkswagen Group, be it BMW, be it Mercedes. We're hearing them talk about in China for China, China speed, doing things locally, developing locally, hiring important talent locally. And one person is, for example, would be Frank Han, he’s the new head of CARIAD China, and he came over from Chang'an and he helped kind of develop Chang'an’s software side of the things. And these like the Germans, they have a lot interest in China. China is their biggest market, Scholz, German Chancellor Scholz. I mean he just came over to China before the auto show. These guys, Mercedes. 

Tu Le:
As well as Antony Blinken.

Lei Xing:
Yeah, Mercedes they probably stayed all this time since the Shanghai Formula 1. These board members and tell you what, Volkswagen Group another big significance is they're celebrating 40 years in China. I can even say without the early Volkswagen going into China, investing into China, making that Santana in 1983, there probably is not a China auto industry today. They have 50 million customers in China.

Tu Le:
To piggyback off of that Lei, I think if Tesla doesn't come in 2019 and build a factory in Shanghai.

Lei Xing:
There's no smart EV of today.

Tu Le:
Not an 8.5 million units. There's no way that happens.

Lei Xing:
Well then, from another side, I would argue that, well, you know, that was thanks to China opening up, right? If I'm, cause Xi Jinping, he had announced officially in April 2018 that the joint venture rule is abolished, 50:50. And BMW I think, was one of the first to increase their joint venture stakeholder stake to 75%. And Tesla was the first 100% operated, the first 100% owned vehicle manufacturing facility in China.

Tu Le:
So now if people are wondering why the GMs, the Volkswagen Groups don't buy out their joint venture partners and go on their own, because remember, these relationships go back decades, number one. Number two, they have distribution that the foreign brands will not have. So Tesla started from zero effectively. They had the retail store strategy. So how they're laid out is completely different. So the reliance on these joint venture partners is still significant. I would argue that Volkswagen and General Motors have done well for themselves in the China market, largely because SAIC has been a decent partner of theirs, or you compare and contrast that to Chang'an and Ford and then GAC with Jeep and there's been some challenges. It's no coincidence. They also have problems with vehicles and sales and products in China market.

Lei Xing:
So Carlos (Tavares) did not come, but his deputy, the guy in charge of China, Gregoire Olivier, he was at the LeapMotor press conference, so I think he's on the board of that joint venture sales company that Stellantis and LeapMotor has.

Tu Le:
So Lei we are going towards an hour. Let's talk about the elephant in the room and let me start and then I'll let you rif on.

Lei Xing:
And all this time, by the way, this vehicle has been on NPG so I'm just holding the wheel and paying attention.

Tu Le:
And we moved from three and four lane road highway to two lane highway.

Lei Xing:
And it did a few automatic lane changes.

Tu Le:
Now there seems to be a lot of large tractors and trailers. So…

Lei Xing:
What was the elephant in the room?

Tu Le:
Tesla and FSD. So here's my take because I've gotten pinged numerous times now about it. Again, I'd mentioned earlier great photo op for both sides. China has been kind of talking out of both sides of his mouth a little bit with its policies and some of the things that are happening with foreign companies in China. So this is a great opportunity. Again, to your point about Xi Jinping saying it back when Tesla came, we're abolishing the joint venture requirement. This could be another opportunity for the Chinese government to say we are open to foreign business because we are allowing FSD to be launched in the China market.

Lei Xing:
Also a little bit of historical, kind of not, Elon, the first time I Elon in person was 2015, and there was an event at Tsinghua University, October 2015. And at that event, he had already mentioned about the possibility of producing the Model 3 in China. And so that discussion had been long going way before 2018, I believe, and that was the kind of the catfish effect that you kind of alluded to, right? If there was no Tesla, no Giga Shanghai, and what happened.

Tu Le:
The rest of the industry doesn't get fit, doesn't get more competitive. Now, this should also indicate Elon coming for the auto show that he realizes selling a Model 2 without some sort of differentiation because you and I having just been to the Beijing Auto Show, we've seen numerous feature-packed vehicles for sub $30,000.

Lei Xing:
In fact, what are we doing now? This NGP both the highway and the city is generally is called NOA, navigate on autopilot, this Level 2+++ feature that…

Tu Le:
Which almost every major EV brand has a version of.

Lei Xing:
Yeah that’s one of the most competitive race tracks in China and Tesla does not currently offer an equivalent or I mean they have the autopilot, but it's, the simple comparison is if the Level, if autopilot is Level 2, then the rest of the players they're already offering Level…

Tu Le:
2.9999

Lei Xing:
It's not the right way to put it, but, I don't know what's going on here. I think there's construction. Yeah, so they, I mean aside from new models, they need to have, it's not even differentiator anymore. 

Tu Le:
It’s a qualifier.

Lei Xing:
Looking on the highway. This thing works, but we got to be fair. And what we're seeing here on the Xpeng is not exclusive to Xpeng. Other people are doing this as well. It’s…

Tu Le:
So in the U.S. there's Blue Cruise or Super Cruise. There's, Hyundai has a version, right? NIO has a version, Huawei, which is…

Lei Xing:
Because of the construction I guess.

Tu Le:
with several local Chinese state-owned brands.

Lei Xing:
Mostly on the AITO.

Tu Le:
And Huawei system is supposed to be top notch as well.

Lei Xing:
Didn't someone say Huawei now is kind of number one ahead of Xpeng?

Tu Le:
So they said that it was number two.

Lei Xing:
Benchmark. 

Tu Le:
And I, they said the ARCFOX was pretty impressive.

Lei Xing:
That has the Huawei.

Tu Le:
Now, where was I, but there's implications to this because if Tesla capitulate to Chinese requirements for FSD use in the China market, it should be, my guess, would be pretty restrictive versus what's going on in the European and U.S. markets. 

Lei Xing:
Well the thing, the important thing is whether they can get the data outside of China.

Tu Le:
These are just foundational questions, because if they cannot, do they have two FSDs? And does that create a huge disadvantage now? Because the data that they collect in China can only be used for the China market.

Lei Xing:
Speaking of which, going back to Volkswagen a little bit, the two ICE vehicles, refresh that they launched, the new Magotan, the new Tiguan L Pro, they're calling them the smartest ICE on the market, smartest being, they're using DJI Automotive to supply the ADAS kind of the capabilities. And so think about that.

Tu Le:
And this goes back to the larger point of, and things we talked about, the bifurcation of the connected vehicle market in China versus the rest of the world, because Toyota also recently announced a partnership with Tencent. So you're looking at foreign brands, partnering with local technology providers. And that's likely not going to be crossing any borders. Those partnerships aren't likely going to be crossing any borders. So we might have for many foreign automakers, two separate hardware software stacks, one for China, one for the rest of the world. It's getting more and more like a likelihood as opposed to speculation. Because in my estimation, I don't see the United States or European Union letting up on that stuff, because now we're talking about silicon, we're talking about data, we're talking data privacy, data security. And we're talking about is you're looking at some of the protectionism that's being discussed, the Chinese brands overtaking. And this is where Europe is the odd man out because of the lack of technology, really high technology in their culture. So I can't name you one European chip designer that's at the level of NVIDIA. Now there are chip design, Infineon, and they do memory and things like that. But I can't name any specific. And if I'm wrong, or if there are some, please let me know, I'll be educated. I don't mind making those types of mistakes, but there's no Apple in Europe. There's no Google in Europe. So there's all these challenges for Europe. And that's likely why they're the first to split off and partner locally with some of the Chinese partners.

Lei Xing:
Yeah, speaking, so on the third day, I checked out Horizon Robotics, Sesame, Black Sesame, the LiDAR players. And just, the point was, to learn, but actually talk to those people at those different companies and see what they say about their competitors. That's an interesting part. Talking to Horizon Robotics, they said the Black Sesame people, there really have good hardware on the chip, but the algo and the computing side of it is the weakness. Whereas both are trying to do this thing called one chip for smart cockpit and smart driving. Whereas currently it's NVIDIA Orin and Qualcomm 8155 or 8295. But in fact, I talked about, I talked to Horizon people and Black Sesame, we’ll never, the aura of NVIDIA, because NVIDIA is not automotive. NVIDIA is AI right? Horizon Robotics, currently, they're just automotive, right? They're not at the point of AI right? And the LiDAR companies, it’s all about like…

Tu Le:
So this is, you raise a great point Lei because right now what runs the infotainment systems in many of the better connected vehicles are Qualcomm Snapdragon chips.

Lei Xing:
At least one, some two, and same with Orin.

Tu Le:
And then to run the AI and the autonomous functions, you're looking at NVIDIA. So truly 
NVIDIA has no peer when it comes to AI, and I’ve been told by several people that the Chinese chip designers are still several years behind when it comes to trying to play catch up. So that creates actually a risk for China.

Lei Xing:
So it's like what Horizon Robotics did is they launched this J6 or Journey 6, but they launched within this J6, they launched six different tiers of this J6. So they have the lettering system, so they have the kind of the E, M, L, whoa, let's see what this does. Now. It's going way too quick, basically like entry, mid, like premium. They launched six different versions to address different customer needs, right? Diversification. Then, LiDAR companies, they're getting this. I saw this a great concept where LiDAR is being integrated into the headlight. And because the pure reason for doing that is because now the LiDAR is getting smaller and more affordable.

Tu Le:
So, but there's definitely a fork in the road between those using vision only.

Lei Xing:
JIYUE for example.

Tu Le:
JIYUE  is on the Tesla game.

Lei Xing:
Xpeng, who knows? Xpeng, I think they're talking about this end to end large model application.

Tu Le:
Because the one thing that's really important to remember is that AI and autonomous, we’re still in the infancy stage.

Lei Xing:
Early stages, yeah, exactly. And so they're still trying to optimize and understand what hardware technology can help provide from a solution standpoint. Because as hardware gets better, you create more opportunities to maximize or optimize its usage. So I'm not a technical person, and I don't know enough to know definitively whether LiDAR hardware software stack is better or a vision only. But currently, as Hesai, RoboSense, all these other companies battle it out to get more market share on the connected vehicle side. We're just seeing prices slammed down on solid state LiDAR, and they get smaller and more advanced.

Lei Xing:
Speaking of, I briefly walked by a few battery suppliers. So EVE, CALB, and one other, they all showed their SSB samples. So plus the regulars, the cylindricals, the pouch, the prismatic, NCM, LFP, I mean it was. But I don't think that not many people were paying attention because it was all Lei Jun, right?

Tu Le:
But it was all B2B too.

Lei Xing:
So they said these suppliers said, the first two days they actually got some good proud, but on the third day I went to, which was the first public day, they actually didn't get that many crowd, because all the people, they were interested in the cars. One of the suppliers I spoke to was they no longer want to participate in Beijing. Because, right, I mean except like Bosch, the other thing about this year’s auto show is because of the venue size, Bosch is the regular inside the normal OEM halls, but if you wanted to get into the OEM hall, which Black Sesame did, the PR lady I talked to, she said, for four straight days, she had to stay up in the morning to kind of fight for it. Because the current exhibition venue is not enough to host that many brands.

Tu Le:
Could you imagine, Lei, go ahead.

Lei Xing:
When we talk about auto shows in China, these new suppliers, Horizon, Black Sesame, RoboSense, Hesai, they are becoming prominent brands almost in the consumer face. So they want bigger attention and before that, you don't, right, it was all about the car brands.

Tu Le:
Honestly with the price war, like I actually feel that they want some attention because they're fighting for survival as well. Because as the price war pinches prices on OEMs, that goes downhill, Hesai, RoboSense, they're all getting pushed and pinched by the OEMs now, too.

Lei Xing:
Yeah, talking to one of those big three LiDAR companies, I think they were saying, I won't name which one, but one of them just recently had some job cuts.

Tu Le:
So I think everybody's getting job cuts. One of our friends has talked about the NIO potential NIO job cuts, but I don't see that being a surprise anyone, even if you're a healthy company, you might not be able to be as large as you are because of this price war. So I still anticipate the price pressure, downward pressure to continue through 2024.

Tu Le:
So that's why I would summarize this year's Beijing Auto Show as kind of a party in a bloodbath, which means people for a few days can forget about that bloodbath and the price competition and just right, and all these online traffic and then once the show is over, it's back to bloodbath.

Tu Le:
And the European OEMs. The shock and awe of Shanghai turn into a realization that we need to get on board. We need to change.

Lei Xing:
It was actually great. I got kind of emotional at the Volkswagen Group Night because the way that they did it. Starting off that event, Ralph Brandstatter said in Chinese that we've been friends with China and the Chinese people for 40 years to start off the event.

Tu Le:
And that's called pandering, that's called pandering.

Lei Xing:
I know. But and then the second part they had a conversation with, between Ralph and He Xiaopeng, like 10 minutes. And then I heard it was unscripted. And He Xiaopeng said, I'm in my 40s, so all these 40 some years, I've been growing up with Volkswagen, and today I'm standing on a bootth, on the stand of the Volkswagen Group Night, and talking to Ralph and my company being now an important part of Volkswagen Group’s ecosystem in China. I mean he was like who would have thought, right, 40 years ago that this day will come. So I think that was kind a…

Tu Le:
So first of all, I don't have all that history like you do.

Lei Xing:
Nostalgia, like sentimental. I understand.

Tu Le:
And I don't like, I look at that as. It's completely pandering. I look that as reflecting to paying respects to people, because they're in a moment of weakness, they are at a point of weakness. 

Lei Xing:
Yeah I mean that was a great Volkswagen Group Night, and then afterwards talking to Frank (Han), talking to Andreas.

Tu Le:
And this is my counterpoint. The reason I still feel that kind of edgy towards it is because I did speak to several Europeans at the show. They still seem in denile. They still seem like we can catch up, no problem, we're focused.

Lei Xing:
I think part of it is also this bet, which is what I told Sarah from Reuters that Volkswagen Group is betting in the next two years before they execute, while they execute the strategy for 2026, that many of these players will capitulate because of the price war. That's what they're betting on. And we'll see, right?

Tu Le:
So that's the…

Lei Xing:
Which is in part true, because I believe there will be capitulations.

Tu Le:
But this is the crazy thing, Lei, worry about making great product.

Lei Xing:
I think they are.

Tu Le:
Ah, no, dude, you just said that they are worried about freaking.

Lei Xing:
They are, through this new tactic of working with Xpeng, Horizon, ThunderSoft, who else, right? These local companies, DJ Automotive.

Tu Le:
You know that's a formula for disaster, right? Working with all these different partners. I mean at the end of the day, 

Lei Xing:
And having all these platforms right?

Tu Le:
At the end of the day, they're a project manager now.

Lei Xing:
MEB, CMP, PPE, SSP in future.

Tu Le:
And always remember, if Porsche doesn't do well, the rest of Volkswagen group doesn't matter.

Lei Xing:
But on the flip side, I think, rather than not doing anything, at least Volkswagen is trying to do something, right?

Tu Le:
No, I get that, but again.

Lei Xing:
You even praised them.

Tu Le:
But this is the thing. And speaking with some of these people at the Beijing Auto Show, I still feel that they're not taking seriously enough the degree of seriousness that the things that they need to do. Let's just say that, I can't articulate it the right way right now.

Lei Xing:
I think they understand what's at stake, but the way to get there probably is debatable. And also, what they believe to be happening is currently from 24 to 25, they describe this current phase as the stabilization phase. And then starting from 2026 is when they start with a new offensive building off of these new partnerships, right, with the B SUV from Xpeng, which is based on this vehicle, by the way.

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.