China EVs & More

Episode 101 - More help from Chinese Govt (?), Who's Next to Cut Prices, Export Growth from China

• Tu Le & Lei Xing

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Tu and Lei start out this pod with a brief discussion on China's economy and what the govt may do after Chinese New Year (CNY) to stimulate the economy if they see any signs of weakness including re-upping on subsidies for NEVs. 

They then spend a few minutes reminiscing about their earlier days in China and the wild CNY celebrations that included many fireworks usually in the middle of high traffic'd roads. 

The conversation moves to speculation about who else may follow Tesla to slash the pricing of their products. 

Lei takes a few minutes to explain all of the different sales numbers that are being used to describe 2022 China NEV sales since it's a bit confusing to many people. 

The pod ends with a brief discussion of the growth of exports coming out of China likely to grow significantly into the EU with a big exporter likely to be BYD. 

CEM #101 Transcript
Recorded 1/19/23

Tu Le:
Hi everyone and welcome to China EVs & More where my co-host Lei Xing and I will go over the week's most important and interesting news coming out of the China EV, AV and mobility sectors. What Lei and I discuss today is based on our opinions and should not be taken as investment advice. If you enjoy this room, please help us get the word out 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 afternoon, Lei, please introduce yourself.

Lei Xing:
Good afternoon! This is your co-host Lei Xing, former chief editor of China Auto Review. This is episode #101, the last episode of the Uear of the Tiger. And, we can take it easy. Let’s start…

Tu Le:
For a week. We get a week off.

Lei Xing:
We get our annual week off.

Tu Le:
Like a Chinese restaurant. We are like a Chinese restaurant. Always working. Always working.

Lei Xing:
Yeah, so let's start out by talking about the economy. Some of the sights and sounds from Davos, We heard Vice Premier Liu He kind of gave his opinion, views on where China's going. We heard about the population drop, very significant I think, for implications for longer term car sales, NEV sales, even, and policy wise, there's been some chatter about supportive policies to come. It's very vague, but maybe we combine those and kind of look at our crystal ball on what might happen in 2023.

Tu Le:
Let's be clear, supportive policies means that He Xiaopeng, Li Bin, Li Xiang, all those guys, Li Shufu, Wang Chuanfu, they are lobbying to get help from the Chinese government for 2023. So let's be clear about that.

Lei Xing:
And the help, the so-called help is not, what, it's not equivalent for everybody, right?

Tu Le:
Yeah, exactly.

Lei Xing:
Some needs more than others. I don't know if BYD needs help at all to tell you the truth.

Tu Le:
Well. It's, for BYD, it's as much about losing momentum as it is, or it's more so about losing general momentum than it is about competition or needing some subsidies or some sort of push, right?

Lei Xing:
Yeah, I mean, they have their targets. It's difficult to double against last year's already high 1.8, 1.9 million units. But that's their goal, right? Anything less than that would be a failure.

Tu Le:
So if we are, if I am correct, they have close to 3.5 million units of capacity that is available for them, roughly, “chabuduo” (roughly). 

Lei Xing:
Let's move away from the auto market for a moment and really look at the economy. 3% GDP growth, and then population drop for the first time in 61 years.

Tu Le:
By 850,000 people.

Lei Xing:
Yeah, and that could continue in the years to come. We already know that what India is already No. 1 now, I guess?

Tu Le:
They will be. Well, officially, it will be by the end of this year. But I believe it's already No. 1.

Lei Xing:
Yeah, and if we look at the State Information Office, they've been holding press conferences the last two days. So we had the MIIT official speak, we had the Ministry of Commerce official speak, and both pointed to the auto sector as a pillar of the economy. And they are studying the so-called what kind of support policies that would come out to support consumption, really the consumption not, NEVs, but just consumption of vehicles overall.

Tu Le:
So if I'm guessing Lei, there's likely 45-50 million units of capacity in China for automotive manufacturing. If you include up the supply chain, tier one, tier two, tier three, there's probably hundreds of millions of jobs that the automotive sector employs.

Lei Xing:
The rough rule of thumb is you just multiply or double the industry production and sales. That's the capacity, roughly. But I think it's really refreshing to see, at least from you and from my side, if you look at our WeChat moments, people are traveling, people are going back home. 

Tu Le:
Unleashed!

Lei Xing:
Hustling and bustling again. And we have not seen that in 3 years. So at least…

Tu Le:
And, no more complaints about COVID, no more horror stories, everyone's much more hopeful. So.

Lei Xing:
That's the word that it's more hopeful. And it's great to see, I mean, and what Liu He said, at least what he's trying to get across at Davos, that it will be back to normal growth, again.

Tu Le:
And his, part of the Chinese government's job is to try to stimulate growth by creating policies that will encourage all the trillions of RMB that have been on the sidelines for the last 3 years to be consumed in China, okay?

Lei Xing:
Right. This again, if we look into the crystal ball, this is one of those things, where do people consume once China opens, would this be a negative for car sales? It could.

Tu Le:
I think with nothing being done, it will be because I know a lot of people that are travelling abroad. 

Lei Xing:
Right. It feels like half the people you see on moments that they're already outside of where they live. There are already on vacation mode.

Tu Le:
This being the anomaly because it's Chinese New Year, so they're going to their hometown. I can't believe it's Chinese New Year. It’s…

Lei Xing:
It was just new year New Year like yesterday it felt like, and now it's Chinese New Year next Monday, so.

Tu Le:
I got to tell you a funny story. So being old, when I was young, I used to live for New Years because I would go and party and go to a club. For 9 years straight I was in a different country celebrating New Year’s. Now that I'm old and have kids, I feel like New Year's Eve is like nothing, but Chinese New Year, I always really look forward to it because got to roll and wrap some dumplings, got to boil them, got to hang out with some really cool people that I considered my family. And so, this is I can feel your challenge Lei over the last couple of years because here at least it's hard to find longevity noodles, it's hard to find a dumpling place. It's hard to find a place to have decent Chinese food. And for my wife, it's really a big deal and…

Lei Xing:
It is. We've being keeping the tradition. So to give you an example, today is the 28th of the lunar, lunar, not the new year, but the 28th of the last month of the lunar year. And the tradition is to make “mantous” (Chinese buns). And my wife is doing that right now because the flour is being prepared and which means when the flour expands, it means “fa”, “fa” means to make money.

Tu Le:
There's a lot of symbolism. And I think what's important for Westerners to understand who don't have a deep understanding of Chinese New Year. So I'm Vietnamese, but we celebrate Chinese New Year. The lunar or the Lunar New Year. And it's actually a week. So it's Spring Festival. And so although it's a day, Chinese New Year, it's a week. And when I first moved to Beijing Lei, I would drive with my wife to her Grandparents’ home in north third ring. For Chinese New Year's eve, we would watch that CCTV show.

Lei Xing:
Same here.

Tu Le:
And when we drove back at 12:30, 1:00 am it was a war zone because everybody had fireworks all over the street. And you had to have remember in 2008 and 2009, all that stuff. People were staying up all night with boxes full of fireworks. And it was on third ring road. People are on third ring road, firing off fireworks, and I had to avoid them in my car. And that's all changed. They pushed it out past sixth ring road, right, but..

Lei Xing:
You can bet this year people will be wanting to burn off some of those fireworks anyway they can, just to kick the bad luck of the last 3 years out of the way, right?

Tu Le:
And I and I feel hopeful as well for them. Because I was part of the community for so long that your emotions get tied to a lot of the things that are happening. So.

Lei Xing:
So I think we can at least, we don't know the exact policies, but I imagine, first of all, this price war brewing. It's already, the dominoes have fallen. And then it's just a matter of incentivizing the purchase of NEVs not through subsidies, but through…

Tu Le:
Through competition.

Lei Xing:
Yeah through use, through maybe, I was thinking incentives for you to maybe trade-in your older vehicle, things like that. So.

Tu Le:
Here's an ominous number that should freak people out about 2022. And I had written this in my just sent newsletter, 81% of all EV sales, so not NEV, EVsales in China in 2022 were bought from Chinese domestic EV makers.

Lei Xing:
Basically 80:20, that’s the…

Tu Le:
Four or five. Staggering number. 

Lei Xing:
So 80:20 Chinese foreign share basically in the NEV and most of those foreign are Tesla. And we can….

Tu Le:
Because they're not Volkswagen.

Lei Xing:
Right. Well Volkswagen is relatively better among the foreign camp. But we move on to this price cut. And who's next? Who do you think is the next to give in?

Tu Le:
Well I think there's a bunch of SOEs that we don't track that closely that are probably going to shave some pricing.

Lei Xing:
ID. Mustang Mach-E, these type of.

Tu Le:
I don't think there's any question that the foreign automakers.

Lei Xing:
RMB200,000-300,000 range, which is very painful. The thing is, I think Tesla has the pricing power and the cost competitiveness and the capacity. Once you drop prices, when the demand goes up, you can produce, it's not something everybody else can do, at least for the short term.

Tu Le:
This is the thing I hope that Tesla management doesn't believe they can raise prices when it gets a little bit better, because I just don't see that ability unless they add new features or change the vehicle or the product substantially or enough so that people feel value in order to pay more for a Model 3 or a Model Y.

Lei Xing:
Yeah, the only way it's going to go is even lower.

Tu Le:
Yes. At least in ‘23.

Lei Xing:
So look, for this is a, I don't know if you've made this prediction, but look for a Tesla model below RMB 200,000 at some point this year. We'll just say that.

Tu Le:
Remember when we first started this podcast, I told you that I could see Tesla selling eventually close to cost and selling services to make up for that difference. And so I thought we were still years away from that. Man. We, because at the end of the day, their play, long-term play, is services and data. And so the capacity thing and the manufacturing thing, it's kind of a nuisance, but in order to get to most of those vehicles out on the road, in order to sell them services. And Tesla is the closest to actually making that a business model. Because I've spoken with some executives here now, U.S. legacies. I don't get the warm and fuzzy that they know what they're doing yet, and they don't, we see that right? They're experimenting. They are not, I think they've learned from BMW that you don't turn around and sell heated seats when they were part of the vehicle a day before, but they're racking their brains and they're looking at startups and they're trying to transform everything. But the mindset is still the box that they're playing in is still the automotive box. So they need to get completely out of that automotive box because they can't think straight otherwise. So, yeah, let's go over, Lei. AITO, Xpeng, Tesla has reduced pricing, right? Xpeng substantially, so.

Lei Xing:
Yeap, but I mean they have to get that out because they're launching that updated P7 right? And look what they reduced prices on, the P7, right?

Tu Le:
I could also see like Geometry, Geely, LYNK & CO also kind of reducing prices as well. Stable of Geely brands.

Lei Xing:
We'll see what BYD does because BYD raised prices. One of the first ones to announce that they would raise prices, not by a lot, but one thing to look forward to.

Tu Le:
But I feel that holding firm on price is almost like, it's almost like cutting price a little bit.

Lei Xing:
Yeah, right. And I think one thing to look forward to is what Tesla will announce on the Investor Day, any upcoming new models or refreshed models for either China or the U.S. market, right? That's something to look forward to.

Tu Le:
I hope that more analysts really dig deep into Tesla’s global footprint, as opposed to what they're doing in Europe and the United States only, because to me, the China market is the lynchpin. It's 1.2 million units of capacity for them and in order for them to get anywhere close to 20 million vehicles sold a year, China is probably going to have to be 30-35% of that, I would think. So. 

Lei Xing:
Yeah, so moving on to Faraday Future finding a new home.

Tu Le:
I have no idea what they did. I'm clueless. I read it and I was like, “tingbudong” (don’t get it). 

Lei Xing:
I hear you. I'm “tingbudong” as well.

Tu Le:
So “tingbudong” means I don't understand.

Lei Xing:
Yeah, see they have this setup, right? They have this FFIE, which is the actual EV company. They have this FF Top, which is a subsidiary of FF Global Partners, which is made up of their management, at least from the presser. And Huanggang is picking up the pieces left over by WM Motor.

Tu Le:
I've never been to Huanggang. Have you been to Huanggang? I've never even heard of it.

Lei Xing:
No. No.

Tu Le:
It’s probably some tier-4 city with 5 million people in it, right?

Lei Xing:
And I think it's really the local government with this asset finding somebody to work together. And it is so happened that Faraday Future needs this.

Tu Le:
I think it's important to explain that the Provincial leaders, they are Communist Party members, and in order to show and get promoted, they need to show economic development. That's why these deals get inked, because they want to show to their leadership, but also to other corporations that, hey, we're building something here. Why don't you come along?

Lei Xing:
It's important to mention this, because a few days ago, there was a huge saga of this company called a Leting (Leiding). You must have heard about it, they became national news, not only in the EV or within the auto industry, it became like headline, national headline, because of what this founder put up in a video, saying that the local leader of the local county basically asked the company to artificially report profit, but like I don't know RMB4 billion or something to make them look good and he was looking for money and he's saying this official is not helping and there's all kinds of back and forth. He said, she said, like this is one of, there's many Letins, there's many FFs.

Tu Le:
So many. This to me reminds me of what Freeman did with WM and that Apollo. I think…

Lei Xing:
Exactly.

Tu Le:
To me. So when I worked in finance, we would say it's the same pants, it's just a different pair of pockets or different pockets. So meaning that it's still the same company, right? And we do know that in the United States, they are very low on capital, although they say they're going to make job one by march. I don't see that happening, so.

Lei Xing:
So the plan is interesting. They worded start of production at the end of March with the first ones rolling off the lines in early April, which is like, what do you mean, SOP is SOP, how can you spend that?

Tu Le:
And if I were a buyer looking at a $150,000 vehicle, I would make sure that spec sheet is, has the latest technology because the car is like 5 years old now.

Lei Xing:
It's $180,000, I believe.

Tu Le:
Yeah, $180, sorry.

Lei Xing:
So I was at CES and actually sat in it and there's this guy in the driver’s seat showing people. It was interesting to see, always piggybacking at CES, Faraday Future on…I mean these companies are they're just getting life support, but they're not leaving the bed, right? They are not leaving their hospital bed.

Tu Le:
You know, the funny thing is, in LA, there are so many Faraday, Byton alums that have gone on to other startups or battery startups, or it's kind of a badge of honor, almost that you spent some time at a Byton or a NIO in southern California, or even Silicon Valley, right? So, man. I, one of my predictions was Faraday finding and closing its doors in 2023. That was one of my bolder ones. That was one of my bolder predictions.

Lei Xing:
I mean they've had what, 99 lives, 98 lives, one more left or something?

Tu Le:
Yeah. And see, this is the other part. YT is still pulling the strings. So whether they're successful or not, it's completely, you can give him the credit or you can give him the blame. So that's how I see it.

Lei Xing:
And speaking, this so Faraday Future was exhibiting at a LiDAR supplier Innovusion, which supplies NIO. And in the LiDAR, very big news was Hesai filing papers for U.S. IPO on NASDAQ. So I think there's a Chinese saying called there's a tiger in the mountain, but you know there's a tiger in the mountain, but you still, you know that Chinese saying, that you're still going up the mountain. I think this is what Hesai is doing and like many probably other ones that are planning to IPO.

Tu Le:
I think, the United States is still the most liquid market in the world, capital market in the world. So it makes sense.

Lei Xing:
It was so interesting to read some of the stuff that they showed in the prospectus. He’s, David Li, one of the founders, the three founders, only in their 30s. They've only been out of college for, let's say, a decade at most. And they started out as a laser sensor provider for natural gas industry, and then pivoted to mechanical LiDARs for robotaxis. And then pivoted again to these so-called hybrid solid-state LiDARs for passenger vehicles. So some of their customers, Li Auto, right, JIDU, Lotus, to name a few?

Tu Le:
The LiDAR space is going to be, it’s going to be brutal in China. So it's going to be even more brutal for non-chinese companies.

Lei Xing:
One of the interesting things I didn't share in two episodes ago in the CES recap was that I was at Hesai’s booth. And over there, I saw the founder David speaking to the founder of Innovusion. And along with Tony Han of WeRide which uses Hesai LiDARs, what they were discussing, they were discussing who was truly the number one Chinese LiDAR last year in terms of production and delivery. And they had some debates and disagreements. And finally, they agreed that Innovusion, in terms of the final insurance registration of passenger EVs with LiDARs was the number one. But Hesai in terms of overall, including other mechanical LiDARs, was the number one. So that was an interesting exchange.

Tu Le:
When I visited WeRide in 2019 right before COVID. I talked to Li Jiang, who's the COO, he was the COO i think he's even higher now, but he effectively told me that they were swapping everything over to Chinese suppliers, because they were using Velodyne prior to, so.

Lei Xing:
Exactly. And speaking of WeRide, they just announced the strategic cooperation with Horizon Robotics just today and guess what, I saw Tony speaking with one of the VPs of Horizon Robotics at CES so I’m like they must have been talking about this deal back then. And now it's finalized.

Tu Le:
There's a lot of pressure on Horizon to perform. So they're not going to be able to compete in the next 5, 6, 7 years with an NVIDIA. Their clients or customer see progress. Is that going to be enough to stay with them? Because what Horizon is doing is they're sending samples to these customers and these clients. And they're testing them. And if they're able to, the system on chip that Horizon is fabbing, if it's able to compete with the Qualcomms and NVIDIAs, maybe they'll swap over. But there's no guarantee of that. And it only guarantees Horizon if they have an acceptable chip to be the China supplier for the chip, not the rest of the world supplier. So I think that's important. And Volkswagen strategy is bifurcated by saying Qualcomm rest of the world, Horizon China, so.

Lei Xing:
Yeah. You saw that Herbert Diess posting a selfie with Yu Kai on LinkedIn right? And I wrote something about that deal being the blockbuster deal that we voted. And then, I guess, other, oh, CATL, a few worthy news: one is the NIO 5-year new strategic deal, new projects and products in the next 5 years. And then they also announced this CICC factory in Yichun. I think, which is very important, because this is their what cell-to-chassis assembly line.

Tu Le:
This is where you just see the foreign tear-1s and the legacies becoming much more irrelevant in the China market, right?

Lei Xing:
Less irrelevant.

Tu Le:
And because you're not seeing a ton of announcements coming out of a Bosch, coming out of a Conti, so.

Lei Xing:
But then again, I repeat what I said two episodes ago is NIO’s steer-by-wire (SBW) from ZF starting in 2025 on their next set of new models, right? So these are some things still where the tier-1s play a role. But other than that, I think I'm good. I wanted to share a couple of numbers. Which I thought was very significant from the MIIT guy in the press conference. He said China had 5.21 million EV charging piles at the end of 2022, and 2.593 million were added in 2022 alone, if there was no typo. But I was like, I think the U.S. wants to build 150,000 charging stations by whichever year. And China has 2.5 million.

Tu Le:
Let’s be clear: charging piles aren't charging stations.

Lei Xing:
Right. I understand that. Sure, but still it's a, it's just unfathomable number that are built in one year.

Tu Le:
So China had made that requirement for any new building that had a parking structure, 20% had to have charging capabilities. And so that's why the charging piles versus the charging stations, right? But that's, you know my story, man. I live in a mid-rise. It's a building with eight floors in Troy, Michigan that was built less than 5 or 6 years ago. In the retail parking lot, there are no charging stations. In the parking structure attached to my apartment, there are no charging stations. And this is Troy, Michigan, which is about 8 miles from the Warren Tech Center, GM Headquarters and about 8 or 9 miles from Stellantis, FCA, not FCA, but Chrysler headquarters and Auburn Hills. We're not in the boonies and we're 18 miles from Detroit proper. We are way way behind. California is the bogey that the rest of the United States needs to emulate. But then even with all an increased number of charging piles, unless there's some maintenance program, there's some sort of automatic check and balance to make sure that the charging stations are in working order, and not only in working order to be able to be charged, but to be able to use your credit card or whatever in order to pay for charging. Because I’ve been told that sometimes credit cards don't get taken. Even if it looks like it's working, you still have payment issues. The CX on charging in the United States is horrible. So horrible.

Lei Xing:
Yeah, and back to the China NEV sales, this is where customers are already buying these NEVs, not for the subsidies, but for the fact that they are becoming household items, you don't have this kind of worry that you just described anymore, at least not compared to the years before. So with the understanding that the infrastructure is there. 

Tu Le:
Here's a funny story. So I’m in a ton of car guy group chats in WeChat. And a few of the guys are high-end car enthusiasts. And they're like, man, I need to buy my high priced, exotic now, because when EVs take over the price of the Ferrari blah Tributo, is going to go 3, 4, 5X and I'm just like holy shit, how funny? Because like Ferraris on the used car market in China are just ridiculously priced. I saw one for $800,000. And just like, so. One thing that I did want to also mention is that we had talked about our forecast. I'm quoted, I've predicted over 9, I think you're around 9. CPCA guy predicted 8.6, I think. And anyways.

Lei Xing:
What we need to stress is we're talking when we talk about these NEV sales, we talked about this last episode, there's two different numbers we must make clear is the CAAM numbers, the 6.8, 6.9 million includes export and the inventory, not the final…

Tu Le:
Shipped, sell through.

Lei Xing:
End-user sales, or registered. So that number last year was 5.35, registered, from the Ministry of Public Security. So when we talk about these forecasted numbers, we need to point out what they actually mean, so for me, when I say 2023, 10 million, my prediction, it includes export. But domestic, it probably will not reach 10 million based on the 5.35 million number, right? 30%, 40% growth, 50% growth, you're not going to get to 10 million. So we need to point that out.

Tu Le:
And I still, so for the export, I still think BYD and Tesla are going to throw out the lion’s share on the, percentage wise, anyway, I believe BYD is looking at 300,000 in exports for next year.

Lei Xing:
So roughly 10% of their total expected.

Tu Le:
Yes. So huge number, I would think a lot of that is going to end up in Europe.

Lei Xing:
They just shipped 10,000 units, to Thailand, was it ATTO 3?

Tu Le:
And so if there is competition and a lot of pressure to continue in China in 2023, you can expect that export number to bulge as the Chinese automakers look for ways to still sell product, because the competition is higher and more intense in China. They'll look to export to be that pressure release valve in order to keep utilization rates high. So.

Lei Xing:
I mean last year, total export of NEVs was around 700,000 units. This year we would expect at least 1 million.

Tu Le:
Without question and a good portion of those going to Europe, but not from Tesla.

Lei Xing:
Tesla is still, right, I mean if you look at some of the numbers being reported, there was several days in a row where there was more than 10,000 units sold per day, if I heard it right, or if I read it correctly.

Tu Le:
You are talking about Tesla, right? 

Lei Xing:
Yeah. That's pretty crazy, right? I mean we're talking about 10K per day, and these startups are doing 10K a month.

Tu Le:
That is going to wear those people that's going to wear away pretty quickly, right? And think of it this way. I don't know if they're going to double sales, let's say, for instance, they cut prices 2 or 3 times this year and sales increases significantly. Does that put a lot of pressure on their charging infrastructure or, I don't know what the ratio should be. And so it could actually increase customer complaints. It could increase customer dissatisfaction because of so many different things, right? So I think they also have to be careful about that as well, because we know that over the last couple of years before last year, they had prioritized growth over customer engagement. And so I don't believe that they addressed customer satisfaction in 2022 either. So.

Lei Xing:
That's why we say that these price cuts, Tesla needs to be careful where in a longer term, it might bite back in some ways. We don't know yet. In the short term, they're still…

Tu Le:
Yeah. They are king until they're not, right?

Lei Xing:
Yeah, they're still the king. I mean people have to watch what Tesla does to really dictate, their actions are really dictated by what Tesla does still.

Tu Le:
So anything else?

Lei Xing:
That's all from, I think the news cycle is dying down a little bit in China. All I see is these companies putting out digital branded red pockets for WeChat.

Tu Le:
And there's going to be a lot of gifts being sent. So kuadi and stuff like that. Let me throw a couple of stats out, but I also want to open the broom up. It is 3:45. So for anyone who has any questions or comments, please raise your hand. We'll pull you up and let you ask your question. I think it's important to also note that last year, 10% globally of all vehicles sold were electric in all over the world. So that take rate in China was 19% and ended up around 19% Lei. Germany was 25%. The U.S. went from 3.2% in 2021 to 5.8 in 2022. So important increases. The total global sales volume went, was about 80 million units and for the United States, we actually shrank. The only company that grew at all really was GM in the United States market. So everybody else kind of shrank, but NEVs were the good news. And the other thing that I think is important is that you guys at Volvo are building a minivan. And I'm hoping that it's not going to be a re-skinned ZEEKR 009. I hope they can do better than that. The last thing, and I think you'd mentioned it in the tweet was that DiDi is back.

Lei Xing:
Right. And then, oh right, since you mentioned DiDi, about that Strong National Transport app.

Tu Le:
Yeah what is that?

Lei Xing:
It turns out that the Ministry of Transport has nothing to do with it. It's not endorsed by the Ministry of Transport.

Tu Le:
Can you explain to people what it is?

Lei Xing:
It looks like there's been some newer reports that this is a company based out of Beijing that were started out by two reporters, okay? It's some kind of information technology company. There's still not a final say whether this is a legitimate app that will actually be launched. But the story is that it seemed that the Ministry of Transport had endorsed this.

Tu Le:
It's probably premature for them to do that.

Lei Xing:
To aggregate different ride hailing, cargo transport, delivery platforms. But it looks like it's to be decided. 

Tu Le:
It made too much sense and so they backed away.

Lei Xing:
But DiDi, that was, man1

Tu Le:
18 months of detention.

Lei Xing:
July 2021 was when they were kind of told to back down, right?

Tu Le:
Basically a week after IPO and I still have a few friends that are that are paying for it, because they thought that DiDi was a sure thing. And so they're like, do you think I should, do you think I should invest? I'm like, dude, I'm not your financial advisor, but I think there could be some troubles and then next thing they get, they get thrown in the box and my buddy’s like, man, I should listen to you. I’m like I'm not a financial advisor, but I think it's going to be really hard for them to turn around and get to that level of significance. Again, I still think it's a very, very relevant app in China. And I still have a bunch of people, bunch of friends that use it. But man, they, I'm surprised nobody got thrown in jail. And I'm surprised that Cheng Wei.

Lei Xing:
Cheng Wei and Jean Liu, they've been awfully quiet the last months, if not years.

Tu Le:
Oh man, they've been like Jack Ma quiet.

Lei Xing:
Yeah.

Tu Le:
But yeah, man, that's really all I had as well so.

Lei Xing:
And just one more thing. Auto Shanghai is less than 3 months away. I can't believe it.

Tu Le:
Man. Yeah, I was kind of looking at my calendar for this year. And there's like two or three international shows that I want to go to. Some of them aren't completely about automobiles. We're already, January is almost over, so.

Lei Xing:
It’s almost, yeah, because just time flies.

Tu Le:
So that is all I had. If no one has any questions, I guess we can close up the room. You do the housekeeping, because next week we're not on, right?

Lei Xing:
Next week we have a break, so the next episode will be, live episode will be on February 2, which we will see the January numbers by then. And it's supposed to be not good, but Tesla might be a different story based on the price cuts.

Tu Le:
The Chinese government is going to look very closely at these numbers, I think so. Because it'll determine whether or not, it's a binary decision, but not only binary, but the degree of help that the automotive sector might need. So and let's be clear Lei, the current 10% sales tax waiver is gone, right? And the subsidies.

Lei Xing:
Well the 10% is still in place, for NEVs. That’s still in place.

Tu Le:
For, just for NEVs.

Lei Xing:
Just for NEVs.

Tu Le:
But the waiver for all vehicle sales is gone.

Lei Xing:
That's gone, right, that was only the second half of 2022.

Tu Le:
Right. So and the subsidies, they are still, they are, got smaller or they're completely gone now?

Lei Xing;
They are gone. No more.

Tu Le:
That's what I thought, too. All right, man, so no more questions. So why don't we close up shop? Thanks again everyone for listening. Good morning, good afternoon, good evening, and please have a happy and safe Chinese New Year. Xin Nian Kuai Le. Xin Nian Kuai Le.

Lei Xing:
Same to you, it's been certainly a tigerish year. Hopefully we're looking at a more toned down rabbitish year.

Tu Le:
The Year of the “Tuzi” (rabbit). Cool man, I”ll catch you on WeChat. See you.

Lei Xing:
Alright catch you in the New Year. 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.