Episode #116 - VW & Huawei, What's Next for Tesla, China - Global Export King

Tu and Lei recap all of the big, 'watershed' moments of the last few weeks with the latest being VW rumored to be in talks with Huawei about a potential partnership in China. 

The convo then moves onto the latest news about Tesla and a larger conversation about what's next for them besides the Cybertruck, where will it happen and how much will it cost? If Model 2, how will it do now that BYD will be a significant competitor in most of the markets they'd likely launch the MIC M2 in?

Tu and Lei then briefly discuss how China became the #1 passenger vehicle exporter in the world in CQ1'23 overtaking Japan. 

Will battery swapping work in the US - Tu and Lei compare NIO battery swapping to Ample, a startup that's champion of battery swapping for the US, who just intro'd their latest generation battery swap station. 

Tu closes the podcast with his concerns about EV adoption stalling out in the US due to the lack of viable, competitively priced EV products for the foreseeable future. 

Transcript

CEM #116 Transcript
Recorded 5/18/23

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. Lei, can you please introduce yourself?

Lei Xing:
Good afternoon to a little bit rattled Tu.

Tu Le:
A little divided attention here.

Lei Xing:
This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode #116. So it's already been a month since Auto Shanghai.

Tu Le:
Is that right? 

Lei Xing:
Time flies. And the remnants of what we both said was a watershed moment is still or are still playing out. So we had this whole shuffle at Volkswagen’s CARIAD, we had Jim Farley kind of lean or trying to be lean and leaning toward the JMC commercial vehicle, as a result of, I think what happened over at Auto Shanghai and the latest, Volkswagen rumor to be, again, working with Huawei on software. So I'll let you start commenting on that. And I'll tell you about my thoughts.

Tu Le:
So I think you heard about that, too. When I was in Shanghai had spoken to several people, and it was kind of all the same thing. It makes a ton of sense. They're a bit in desperation mode because of what has been going on with CARIAD since its inception, if we're being accurate and frank. I think there has been a lot of stops and starts and re-prioritizing. I think Diess who launched CARIAD had good intentions, but again, when you put car guys in charge of technology, this is what happens. And we see with Ford with Doug Field’s hire, and GM recently, two weeks ago, I want to say, with Mike Abbott’s hire that they've thrown in the towel and are letting tech guys or at least experienced automotive and tech people in the case of Doug Field, take over. I think that's an important distinction because it closes a chapter of a book, and with CARIAD that hasn't happened. And since 50% of their profits come from China, we're talking at the group level, it's important that they stopped the bleeding on the Volkswagen brand side. Now they've already announced the delay of the e-tron Q6, right? And the Porsche Macan due to software, VW brand is 9th place on the EV side with 2% share, 2% might as well be a rounding error. And again, they're denying that they're in discussions, but if you are Volkswagen Group, if you're GM, you're talking to everybody, it's not unusual to be talking to multiple technology partners to see what's going on, where you may complement with one another. Now, whether any of that turns into an actual transaction or a partnership is still up in the air, but they're definitely talking to Huawei. So.

Lei Xing:
I think in fact, Volkswagen Group said that they are talking to several or multiple partners in China. And so here's my view: I think you had said in your FT comment, I think you used the word legitimizing. Am I correct? I think that was your quote. I think that's a great way to put it, because I want to bring a little bit of historical perspective into this Volkswagen Huawei, because it's not something that recently happened. Volkswagen Group has been legitimizing Huawei since 2015. This has been going on for 8 years. So starting off, when they announced the LTE module collaboration at CES Asia in, and that was the first time CES was held in Asia, in 2015. That was with Audi, and then three years later in 2018, Audi signed the MOU with Huawei on, again, the LTE_V kind of the vehicle to everything infrastructure. I think they even ran some demos in Wuxi in Jiangsu Province. And then since CARIAD was founded, I think pretty much during the pandemic, and since we've been doing this pod, there have been several rumors that didn't end up going anywhere. There was one rumor that Volkswagen was acquiring Huawei’s autonomous driving business.

Tu Le:
Yeah, I remember that.

Lei Xing:
Remember that? And there was a rumor that they were setting up a joint venture between CARIAD and Huawei. And this is all happened, right before Diess stepped down. Once he did, it kind of ended, right? There was nothing, and now for this…

Tu Le:
Everything got put on hold, basically, right? No final decisions on these major…

Lei Xing:
So for this now to appear again. So first of all, it's not surprising because we've been kind of seeing when it is going to be legitimized. But to use an analogy from The Matrix, I think Volkswagen is going deeper and deeper down the Rabbit Hole. Because for software.

Tu Le:
So you think they're taking it, the blue pill, then?

Lei Xing:
That's what I was going to say. So either you take the blue pill, you do it yourself, or you take the red pill, you work with partners. And I think during at least the almost a year that Oliver Blume’s at the CEO position, I think he's a little bit more, I guess, open to these collaborations, rather than CARIAD still being kind of late.

Tu Le:
But let me ask you this Lei, let me ask you this. How much time are we going to give Blume before we start?

Lei Xing:
Not much.

Tu Le:
Like, yeah, ok, because he needs to really accelerate what's going on.

Lei Xing:
That is the point. And to do that, you work with Horizon Robotics, you work with Thundersoft.

Tu Le:
But the reality is they're trying to do both. They're trying to create something in-house while they're partnering with Huawei, potentially, ok?

Lei Xing:
What I mean by going down the Rabbit Hole is, I think at least in China, there's no way getting around it, being dependent on these local players. And despite what Richard Yu said, he had that famous comment where he said, the NIOs, Xpengs and Li Autos don't want us, the foreign companies, they don't want us, because we're sanctioned. The state-owned companies don't want us, because they are afraid of losing their soul. And so for this to happen, I think it's, the VW Huawei is, if it happens, that’s…

Tu Le:
I also think there's an important distinction with the earlier partnerships that you had articulated with in 2015, 2016, because they are known historically as an telecommunications infrastructure company. So partnering on the V2X that makes a ton of sense.

Lei Xing:
And Ford is doing that as well.

Tu Le:
Really quickly, but because of the sanctions, they've moved upstream into the ADAS, into the infotainment, into the operating system with the HI (Huawei Inside). So I would argue that there's a difference between Volkswagen partnering in 2015 and the potential of them partnering because the fact of the matter is, if they do partner with Huawei now, it's going to be the face of their software for at least 3, 4 or 5 years.

Lei Xing:
What I'm saying is Huawei is not a stranger to Volkswagen Group, that's what I’m saying. And if you remember, in our episode with Stephan Wöllenstein, he actually did mention Huawei as a company that of this Chinese ecosystem, and he alluded to it by saying that they were talking to multiple Chinese tech companies. This was what, two years ago or early last year? And you mentioned that Huawei is kind of, the transformation or leaning toward automotive stuff. And that if you remember a few episodes ago, when Huawei announced their earnings, right? That is still an infinitesimal amount of what Huawei is, right?

Tu Le:
Yes. And that hence the urgency to try to legitimize the technology via partnership with a foreign brand.

Lei Xing:
I think what you said in that comment, quote, is also important, because Huawei is currently working with these smaller, less prominent China brands, Chinese players, so ARCFOX, SERES, right? AITO. Whereas if they get Volkswagen, it’s such a legitimizing event for them. So I agree with you.

Tu Le:
Let's unpack this a little bit more on the VW side, because let's set aside all the potential diplomatic controversies with using Huawei. If I am creating two separate strategies, one for China, one for the rest of the world when it comes to my hardware/software stack, and I've written a $2.5 billion check and committed it to Horizon Robotics in the event that they are able to come close in the next 5-6 years with new silicon that can compete with NVIDIA and Qualcomm. So that's settled if I do end up with some local Chinese partners, because if we think about it, the HD mapping needs to be localized. So they're not likely going to use Baidu maps or Gaode or whatever outside of China. And so the risk is also from a complexity standpoint, just from a hardware and software standpoint. So the user experience for an Apple ecosystem or an Apple Mac or an iPhone is the same if you buy it in China versus buying it in the United States. That is actually pretty hard to do. And it's like Starbucks, it's like McDonald's, it's like Kentucky Fried Chicken, whether you like those brands or not, you buy it in Turkey, you buy it in UK, you buy it in China, it tastes pretty much the same. But, and this has as much to do with VW’s inexperience creating a digital, a compelling digital experience. Digital experience to me means the hardware, the sensors, the haptic responses, and the latency, all matches in China and the United States and in Europe. They don't have a ton of experience doing that. And we know that their first effort was pretty poor if we look at videos from the ID.3 and stuff like that. So it really does, in a time where everybody should be simplifying and moving faster, it feels like they're creating even more complexity on the back end and the digital stuff, so.

Lei Xing:
Well I mean this is probably true for all the foreign automakers because there's no way to get around it, because there's a China version, and then there's a rest of the world version, let's just put it that way. There's no way to get around it, right?

Tu Le:
I guess for me, it's just that they created this CARIAD and highlighted as this difference maker for them. And in three years of being in existence, it's just been wheel spinning with actually not much progress.

Lei Xing:
Right. So we move on, what's next, Tesla a little bit because it's somewhat related because Tesla I think recently there was a news about them using, was it Baidu?

Tu Le:
Yes. Maps for the maps, for the medium definition, I think it was medium definition maps.

Lei Xing:
And then in relation to this long-awaited next generation of products, whatever you want to call them, that was shared at the shareholder meeting. And Elon’s kind of, I thought his answer on the China Taiwan question was rather, I don't know what's the word to describe it, it’s pretty smart how he answered it I think, that was on the CNBC, but anyways, and one thing I think was striking when he kept talking in that CNBC interview that there's no demand problem in China. I'm not sure I agree with that.

Tu Le:
He didn't finish the statement. There's no demand problem after we cut prices four times.

Lei Xing:
Yeah, it's almost the same thing as Volkswagen saying we're strong in China. But I mean there's no question how important that next generation, whether it's a $25,000 Model 2 or refreshed Model 3. That's, what do you think?

Tu Le:
Let’s take a step back Lei, because we both agree, and I don't want to put words in your mouth. So you tell me if you do or not. We don't believe the Cybertruck will have any significant sales in Europe or China, right? 

Lei Xing:
No.

Tu Le:
So that's going to be a regional play for the United States. It could sell in the tens of thousands no problem. Let's assume that. It doesn't move the needle that much for them from an overall volume standpoint. Let's say the refreshed Model 3 is significant enough to where, ok, now we're back at the more robust levels of demand for the refresh Model 3 for 12 to 14 months. But remember, it's a sedan. So 60% of all cars or all vehicles sold in China, I think, are SUVs or crossovers, so.

Lei Xing:
Well, so we don't know exactly yet because so now it looks like it's going to be a hatchback and a smaller SUV, or something in between, I don't know. But I think the psychological thing is if and when Tesla launches this below the RMB200,000 mark, it's a huge psychological jolt to the entire market over there. Do you agree?

Tu Le:
You know, I don't, because BYD is kind of blunt that really, I think the launch will be muted because, it’ll do well, but there are a lot of, think of the ZEEKR X at RMB190,000 or RMB180,000, that's a pretty significant car. And again, I think it'll crush in the U.S., I think it'll crush in Latin America. And but whenever we're talking about these markets now, remember, BYD is in 52 markets, and they have multiple products. So it's not a one on one, it’s not a mono-e-mono contest. It's going to be ATTO 3, it’s going to be Song. It's so they're going to come at Tesla on this Model 2 with multiple offerings. And will Tesla be successful with the Model 2 at less than $30,000? Of course they will. But it's not as cut and dry I think as some people think.

Lei Xing:
I think you and I can agree that we were or have been looking forward to a Tesla below RMB200,000. I think that we can agree, right, whether it's a new model, whether it's a refresh, I think it's a matter of time before this will be announced. And when that does, I think you mentioned ZEEKR X, ZEEKR is not going to have the capacity whereas Tesla remember also they applied to expand capacity to 1.75 (million).They probably will use Shanghai to export many of these Model 2s, refreshed Model 3s, whatever.

Tu Le:
But this is the key, and this is the question Lei, because I agree with you, but they need to balance that out. If there's robust demand for it in China, they have to satisfy the domestic market, right?

Lei Xing:
I can see why Tesla Model 3 prices were raised or at least they have not been going down. This is in preparation for that cheaper Model. 

Tu Le:
I agree. I’d mentioned that earlier, remember they need to have separation between the 2 and the 3.

Lei Xing:
I think they do what 70,000, 70,000 units, 80,000 units a month out of Giga Shanghai, it's still pretty good, right? Half and half, domestic and export. I think this could be a huge jolt. And we were already seeing I mean BYD has been playing, you can call it offense or defense, right, launching the Champion additions because the other…

Tu Le:
And the face lifted Han or Tang.

Lei Xing:
Because, so next will be for the Song. Because the other day Haval launched the Xiaolong MAX, which starting at the RMB130,000 and that model is directly competing against the Song PLUS DM-i, so right and it's already getting very close to the RMB100,000-mark. Qin is already below RMB100,000, so.

Tu Le:
And this is where I was interviewed for Business Insider article and we talked about battery tech.

Lei Xing:
The batteries. Yes. 

Tu Le:
One of the other comments I had made was that every market that Tesla enters with that Model 2, there's going to be two or three BYD at that price point. So Tesla is going to have a shadow or vice versa, and it's, so to me…

Lei Xing:
It's not immune.

Tu Le:
And it's not, they're not predestined to this 20 million units.

Lei Xing:
Yeah but of this moment, I think Tesla still holds that advantage in terms of brand equity. For now, I think.

Tu Le:
They do, but to me, if they can push Shanghai Giga to 2 million, 2.2, 2.3 in the next three years, then they can compete on a lot of the export markets that BYD is competing it. But if they can't do that, then we're going to see BYD get entrenched in these markets and make it more difficult, the longer it takes Tesla to ship those 2s out.

Lei Xing:
Yeah you know what, I think the magic pricing point for a Tesla really to put a jolt on the market is at the RMB150,000. If this new model starts at RMB150,000, my goodness.

Tu Le:
And remember it's not a coincidence that their next factory’s in Mexico. So.

Lei Xing:
Right. I think we're just waiting for this to play out. And probably there will be another watershed moment coming later this year. Who knows.

Tu Le:
Anything at or above RMB200,000, the 3 and the 2 will cannibalize sales from each other. 

Lei Xing:
Right. So I'm thinking RMB150,000 to RMB200,000, this is what they're going to price that new model.

Tu Le:
And he didn't say anything about the product, but he alluded to the cost savings via the new manufacturing, the battery stuff. So he feels there's a pathway to this RMB150,000-200,000 vehicle. I think that's important.

Lei Xing:
Anything else that stood out for you or?

Tu Le:
You know he made a bunch of comments, kind of, I think that the Taiwan comment didn't really ingratiate him to too many folks here in the United States or anyone in Taiwan. That's for sure.

Lei Xing:
But he asked it intelligently, I think. That’s…

Tu Le:
I mean you're giving him credit for dancing around the freaking, the answer. And that's fine. If I was a major shareholder and some of those answers, just like, oh my god, dude.

Lei Xing:
Yeah the other ones are….

Tu Le:
It's not your freaking money. It's not all your money.

Lei Xing:
Offer me this, offer me that, I don't care, right?

Tu Le:
Yeah, you give him credit for giving an hour of time with CNBC and I don’t think, I think they were fair questions. I don't think they were softballs or lobbing softballs for him to answer.

Lei Xing:
I think he got testy for a few or couple of minutes. 

Tu Le:
And so I think outside of Elon, Farley is probably the closest to talking, and Tavares are probably the closest to talking matter of factly.

Lei Xing:
Yeah, I used the word straight. I meant matter of factly, like be real.

Tu Le:
Yeah, well, you never know with Elon because he can say one thing and then 6 months later say he's saying completely different thing. 

Lei Xing:
Anything he says, for example, the qualifier “looks like.”

Tu Le:
Yeah, so, hey, you had posted on LinkedIn, I believe, or Twitter, the export numbers and the years it took. Can you articulate that?

Lei Xing:
Yeah, I think that's been circulated chatter, but I didn't realize that this happened in such a, because it was stuck or even went below one million units for some years. And then the last couple of years was just, right, you add one million every year almost. And I think you had corrected on Twitter that somebody posted that China is going to surpass Japan or to be the number one. In fact, it already has. And so I just thought you know, now three things: so largest auto market, largest NEV market.

Tu Le:
Let' say this Lei, largest auto market since 2009, they've always been the largest NEV market.

Lei Xing:
NEV market since whatever.

Tu Le:
Yes since inception.

Lei Xing:
And then for the first time, this year, 4 million units that’s projected. So a huge part of that is the BYDs, is the Teslas, is the NEVs. I think a big reason for that is there's the demand outside of China and there's products from China, quality products. I think that's…

Tu Le:
But to tell the complete story, the number one exporter is SAIC.

Lei Xing:
Yeah, well, and within SAIC guess which brand is number one. MG, right?

Tu Le:
A British brand. 

Lei Xing:
Yeah. So there's these kind of caveats, but still.

Tu Le:
So for our European audience, MG does not sell well in China at all, relatively and they are fleet vehicles and just aren't super popular. You see them in Shanghai because SAIC builds them, which SAIC, for those that aren't familiar is Shanghai Automotive Group or Shanghai Automotive International (Industry) Corporation.

Lei Xing:
Yeah, MG is one of those brands were the reputation outside of China is much better, or sales outside of China is much better than in China.

Tu Le:
Now let me ask you this, like, did they just never focus on trying to build that brand in China or Chinese people just never really resonated, it just never really resonated with the Chinese consumer?

Lei Xing:
They have. I say this is probably has to go back to the British heritage and they probably use that better as a, for the export markets trying to utilize that heritage. Whereas in China, there's much more competition. There's, you don't get that people relating to it as much as it is outside of China. I think that's the reason.

Tu Le:
This is where I’m completely American. I don't really know, outside of Land Rover, Jaguar, Aston Martin.

Lei Xing:
Speaking of Aston Martin, right?

Tu Le:
Segway. But I don't know too many heritage, British heritage brands outside of those two or three that we spoke about, or Lotus, I know about Lotus.

Lei Xing:
Quite a few British brands are now owned by Chinese companies, you just mentioned one.

Tu Le:
Partly and in full. Where is Geely getting all this money, this capital? Ash must be, Ash must be paid pretty well I think then. 17% Aston, they raised their…

Lei Xing:
So all of that 4 million projected. It'll be interesting to see the NEV export numbers. I don't know the numbers for the first 4 months, but I would imagine at least one-third or I don't know, 40% of that 4 million will be NEVs, if not more.

Tu Le:
With Tesla and BYD being the lion share of that percentage.

Lei Xing:
I think BYD is in the first 4 months exported as many as they did all of last year.

Tu Le:
Wasn't it 85,000?

Lei Xing:
I could be wrong, but I think I saw this somewhere.

Tu Le:
And this is where BYD, part of the reason they were so aggressive with their export expansion was they wanted first mover advantage, because it's just going to be tougher to unseat them if they've been in the market for several months already and you enter later. For instance, they are number one EV brand in Thailand, they're the number one EV brand in Israel. They're one of the top EV brands in Brazil I want to say, or number one EV brand in Brazil. So, man, it's going to take a lot of marketing dollars in each of those markets. And to your point, Tesla won't need to spend as much marketing.

Lei Xing:
They will try, try to do some advertising.

Tu Le:
And he did say during his interview that they will start advertising, right? It's good that he admits that now. The first mover advantage, I feel is huge for BYD and that's why they did that. And for Southeast Asia, they did it not only to get there first before a Tesla and the Model 2 or Model 1.5, but they did it because the Japanese are sitting on their hands. And Japanese traditionally dominate Southeast Asia. If you go to Thailand, and we mentioned this before, you go to Thailand and Indonesia, you see nothing but Toyota trucks and cars. Oh, man tangled web.

Lei Xing:
And within China. So I just saw this morning that Chengdu launched a huge RMB100 million stimulus. So they're giving RMB8,000 for 12,500 spots, so basically vehicles or NEVs, toward the purchase of NEVs. And this is going to last from May 20 to July 20, first come first serve, which I thought it was interesting. And this followed on the NDRC announcement of pushing more infrastructure support in the rural areas and NEV purchase, right? This came out a couple of days ago. So.

Tu Le:
Yeah, because they're seeing a bit of saturation on the NEVs in the tier-one cities.

Lei Xing:
Then the other, Apple, ex-Apple employee. It's a little.

Tu Le:
What are your thoughts?

Lei Xing:
My thoughts is this couldn't have happened at a worse time for JIDU, because they are right now in the execution phase. And for this to come out, it's kind of demoralizing a bit, I think, very sensitive, right? And why in the first place, when you have Baidu?

Tu Le:
I kind of feel this is an own goal a little bit. And if they knew this, about this, I think his name is Wang Wenguo?

Lei Xing:
Weibao Wang or something.

Tu Le:
If they knew this about him, but they kept him on the payroll that is definitely an own goal. And it likely makes JIDU Auto for the foreseeable future a China only brand.

Lei Xing:
I mean and JIDU has been quiet, but you visited recently, it's crunch time, right? They’ve done talk the talk, now let's walk the walk.

Tu Le:
It's an exciting time for them. And so if Baidu was always 55% owner of the joint venture, and you knew that you were going to use their AV system…

Lei Xing:
Source code or something?

Tu Le:
Yeah, and it's actually really peculiar too and this is kind of an aside Lei is that the three people that have been arrested or two people that have been arrested, one that left the day of the raid on his home. They all worked at Apple. So does Apple have the best code for autonomy? Why didn't they like hire somebody, like an ex-Waymo guy? You know what I mean like, why is it all Apple? So.

Lei Xing:
I mean, a bunch of these China AV Inc., many of their employees.

Tu Le:
Yeah, ex-Baidu or Waymo.

Lei Xing:
Or ex.., yeah, so.

Tu Le:
Then what else? Let’s talk Ample. 

Lei Xing:
Yeah, that’s…

Tu Le:
I think it's pretty significant. And it's worth a mention. We know Levi Tillemann, who's vice president for policy at Ample, which is an important role. So for those that do not know who Ample is, they are the United States version of a battery swapping startup. They are a Silicon Valley startup that has swapping stations in, multiple swapping stations in San Francisco. They just launched their Gen-3 swapping station. So similar to NIO swapping station, you can swap out batteries in about 3 minutes. And for those that don't know, Ample has received about $270 million since they started, I want to say, in 2016 or 2017, and with a mixture of funding and grants from the government.

Lei Xing:
Well they were in stealth for many years before coming out of it in 2021, I think. So they're kind of like the American Better Place. Better Place is Israleli, right? Is that correct? So they are the American Better Place trying to be like NIO, almost. But their business model is different. First, they only cater to fleets. Second, they cater to multiple models. And third, in that video they showed, they swap out modules, not the entire packs. So I think the only thing that I'm not clear about is this standardization working with different car models and brands.

Tu Le:
They are trying to push standardization across multiple OEMs, which is at this point time like herding cats. Because I feel that every OEM at this point, at least in the United States, still feels that they have a shot at being a player in the EV space. Whereas in China, the foreign OEMs are a little bit more desperate. We talked about this at the beginning, VW and Huawei. So if VW was in the driver's seat on the EV side, they would not be looking at Huawei. And just so we understand in context and numbers wise, Ample’s press release said after thousands of battery swaps, they developed their Gen-3 based on the data that derived from their thousands of swaps.

Lei Xing:
And only in San Francisco, I believe, nowhere else. 

Tu Le:
So I did a quick little Google search. And NIO on April 3 of this year reached 20 million battery swaps.

Lei Xing:
That's all private customers.

Tu Le:
It took them 4 years to get to 10 million, and then 9 months more to get to 20. We're talking about orders of magnitude, different between Ample and NIO. And this is a reflection of not only NIO's persistence and insistence that battery swapping is a viable charging option, but also the scale and the size of the China market. It will take, regardless of how popular Ample is, it will take them a very, very long time to get to 10 million swaps. Much longer than 4 years. Which creates less opportunity to amortize the capital cost of these stations and the battery inventory, cause you need to hold inventory of batteries in each of these stations in order for that to work. And so where NIO in China has created an entity that they, where the batteries sit from an accounting standpoint. So they're not sitting on NIO’s books.So I'd like to see Ample succeed, because I do believe that there are use cases for battery swapping all over the world, regardless of the number of transactions or the number of battery swaps.

Lei Xing:
Well it's a pain point for the fleets, for the Uber and Lyft drivers. And is it's a pain point that needs to be solved. And so there's a business case. Same as Wendy's, what they're trying to do with the underground food delivery thing. You saw that, right? So people just want to be fast, right? They want to get their stuff and go on with their lives. That's a pain point that everybody's trying to solve.

Tu Le:
I think currently, the latest gen Tesla superchargers can do 250 miles within 15 minutes?

Lei Xing:
Right. And then Li Auto’s 4C is 10 minutes 400 kilometers. I mean it's already pretty good.

Tu Le:
400 km for you Americans, and I'm American, but I've lived abroad for so long. It's about 240 miles.

Lei Xing:
That's still pretty good, right? 10 minutes, on paper.

Tu Le:
It is very good, but I’m hopeful that Ample can find at least a handful of OEMs to create a critical mass for that standardization of the battery pack or the module. At least, I would love to have hint, hint, and this is a hint for our audience. I'd love to have Levi on a MAX episode Lei.

Lei Xing:
Yeah so that will be good, because we have a lot of questions of understanding how exactly this swap works and the business model, right? So it'll be good.

Tu Le:
Does each OEM still manage their own BMS or does Ample license the BMS to them? A BMS meaning a battery management system. So one of the ways that Tesla is head and shoulders above most OEMs on the battery stuff is because they have their own in house battery management system. And a terrific battery management system can eke out another 8-10% of range, because it's constantly monitoring the temperature of the batteries and kind of optimizing for the immediate situation at hand of the vehicle. Is it going uphill? Is it going downhill? And so that and kind of the re-gen braking helps with charging the battery and stuff like that. And so Tesla’s battery management system is in house. They've worked on it since day one. So it's, dare I say, best in class, which helps them create the range they're able to get from their battery packs. So any other, let me see here. What else did you write?

Lei Xing:
I think we covered pretty much everything.

Tu Le:
Yeah, let's do this because you and I have a hard stop at 4 o'clock. Does anyone have any questions? Please raise your hand. We're happy to have a discussion, talk to you about any questions that you have. Let me actually look at my newsletter Lei. Was there anything that stuck out to you in the newsletter this week?

Lei Xing:
Well I mean the battery stuff, maybe it was right, a lot of batteries. So I was looking at that. So the BMW Brilliance 20-year anniversary, in the Chinese press release, there's actually stuff that talked about the three suppliers, so CATL, EVE, and ENVISION AESC, so these are all three Chinese companies that are working with BMW Group, I think, on the next generation cylindrical cells. And they had a number of that the gigawatt hours, I forgot, but it's a big number globally for BMW Group, is something that stood out to me, other than that, is just whether they're producing the Neue Klasse in 2026. They're producing the 6th-Gen battery, high voltage battery locally. And there's no other place like Shenyang for a foreign automaker, because Shenyang is BMW country. They, the joint venture alone provides 90% of the city's tax revenues.

Tu Le:
Shenyang for the folks that are trying to imagine where it is in China, it’s in Dongbei, which is northeast, which is one of the coldest areas of China. And it's what, it's several hours north of, like a 2 or 3 hour plane ride from Beijing. It's not that close, but kind of close to the North Korean border. The one thing that I will talk about is the New York Times. I will highlight for those that…

Lei Xing:
Oh yeah that battery. 

Tu Le:
That was a great article. 

Lei Xing:
How much China controls percentage of all the processes and stuff, right?

Tu Le:
But it's also while I was really impressed with the infographic or the interactive visual, because you can kind of see, yeah, for those wanting to learn about battery tech and rare earth metals. There's a New York Times article that was written by Keith Bradsher and team. Keith is the Beijing bureau chief for the New York Times, he wrote this article earlier this week, and…

Lei Xing:
We had a pleasure meeting him in Shanghai.

Tu Le:
Yeah, that's right. It's great. It's perfect and then VinFast, all of the reviews of the VinFast VF 8 came out in the consensus by all of the journalists is that it is not ready for…

Lei Xing:
Return to sender.

Tu Le:
Yes. Oh, man, I spoke to several people that were like, I've not seen a vehicle get just trashed across the board by every journalist.

Lei Xing:
I don't want to put you on the spot, but being Vietnamese and me, being Chinese. I don't know what you feel, like if this was a NIO or somebody else, I’d feel very, I don't know what to say this, right? Reputational wise?

Tu Le:
I've separated myself, I’ve separated myself.

Lei Xing:
You're an American. But so, this is, the Chinese should really take this as a caution of when and if they launch in the U.S., they do not want this to happen. Hell no.

Tu Le:
Oh man, because here would be an element of us against them, too. With the Vietnamese, there does not seem to, even though it's also a communist country, there does not seem to be this underlying theme written into the articles. It’s just, but it's exasperating, but for this is what worries me Lei. And let me rant for two minutes. We have Rivian, we have Lucid, we have Fisker.

Lei Xing:
Lordstown. 

Tu Le:
And let's say Lordstown. None of them are competitive. So we have to rely on GM, Ford, Stellantis to a lesser extent, to come through and Hyundai Kia. And I'm talking, I'm leaving BMW out of there, I'm leaving Mercedes out of there. They need to come strong on the $50,000 and under EVs. And they can't…

Lei Xing:
It’s still Tesla and everybody else, right?

Tu Le:
I guess, I’m, Tesla is just kind of understood, right? Tesla is fine, but Tesla can't own 80% of the market in perpetuity. There needs to be competition. And unfortunately, the only way that I see the United States really getting to 20, 30, 40, 50% take rates on EVs.

Lei Xing:
Is these incumbents? Is that what you're saying, right?

Tu Le:
No. I’'m saying they need to step up even more to get to the 30, 40, 50. Otherwise, the only way that's going to happen is China EV Inc. coming in. There's just not enough product across all market segments. And if you look at the plans of these legacy OEMs, because let's just say BMW is out because they're premium, Merc’s out because they're premium. I'm talking $50,000 and below. The Dodge Ram, we'd launched the or we dropped Episode #111. I was listening to it. You talked about the Dodge Ram, that thing's going to be $80, $90,000.

Lei Xing:
And then Chrysler just killed the Airflow for some reason.

Tu Le:
So it's concerning because we have a ton of investment, but not. There's no startups to fill in blanks, unfortunately. And the current set of three or four startups that we always hear about in the United States, they are struggling with operations, with demand. So.

Lei Xing:
Let's just say Rivian is a relatively better among the half a dozen or so, right? But still.

Tu Le:
So I was listening to Joe White. He said what you said, but he qualified it by saying, it's like the Detroit Tigers, they're not a very good team, but they're in a division where everybody sucks. So they look better than they actually are. So anyways no questions and so I'm good man, I'm good to go.

Lei Xing:
I’m good as well. Just before we leave, I think one thing I wanted to mention is May 20 is our second anniversary of pushing out our first podcast. So I just want to take an opportunity to thank you for first coming out with this idea. It’s been interesting, fast and furious two years. And I think you said this all the time that the rest of the world is finally waking up, right? And hopefully we've done our job.

Tu Le:
 Yes! We’ve seen a spike in downloads. That's for sure.

Lei Xing:
And we'll try some new things going forward. So stay tuned. But other than that, I'm good. So just want to throw it out there.

Tu Le:
Yeah man who would have thought that this crazy idea turns into two years and consistent, weekly live shows.

Lei Xing:
It just keeps us kind of focused and trying to follow all that's going on. And we're not only China, but globally, everywhere, right? So.

Tu Le:
Cool, man, all right, everyone. Thanks for listening. Good morning, good afternoon and good evening. We will speak with you all next week. 

Lei Xing:
Likewise, 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.