Episode #139 - Stellantis + LeapMotor, Geely Related Events in SH / BJ, Cruise Troubles

Tu and Lei start out with the big news of the week. Stellantis acquiring a stake in Chinese EV / EREV maker - LeapMotor. Tu asks Lei to give a brief history lesson of DaimlerChrysler / FCA / Stellantis.

They then both dive into the transaction, giving more background about LeapMotor and the opportunities and challenges ahead for both sides. 

The conversation shifts over to the events happening in Beijing / Shanghai at the time of the live show hosted by Zeekr and Jiyue, one company a Geely brand and the other, Jiyue using Geely as a contract manufacturer. 

Lei shifts gear to discuss the latest on the UAW negotiations with the US Three. Tu goes over what is an estimate of hourly costs for a typical UAW worker. This discussion evolves into why the US is having difficulty selling EVs vs. China. 

The podcast closes out with the accident by a Cruise robotaxi in SF that injured a bystander. 

Transcript

CEM #139 Transcript
Recorded 10/27/23

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. We will open the room up and around the 40-minute mark to anyone who's keen to ask us any questions. What Lei and I discuss today is based on our opinions and should not be taken as investment advice. For those that are new to the show, welcome. And to our loyal listeners, welcome back. We ask that you please help us get the word out about this podcast to other enthusiasts and tune in again next week. 

My name is Tu Le. I am the managing director at Sino Auto Insights, a global management consultancy that helps organizations bring innovative and tech-focused products and services to the transportation and mobility sectors. I write a free weekly newsletter that I just sent out 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, in great weather. Can you please introduce yourself.

Lei Xing:
Yes, back to summer. Good morning. This is your co-host Lei Xing, former chief editor of China Auto Review. This is episode #139. Let's get right into it. Stellantis LeapMotor. We've been hearing rumors about it for months, and the way it came out was slightly surprising given the Xpeng VW deal before it, it was structured differently. But man, I guess the word that comes up would be bang, Stellantis was done and then they come right back with this deal. Kind of, you know, like we're in it again almost.

Tu Le:
So let's give a history lesson Lei. Can you talk a little bit about…

Lei Xing:
Well, how far do we go back? 

Tu Le:
Let's do this. Yeah, that's what I'm saying. It's actually pretty important, though, right, like…

Lei Xing:
It is.

Tu Le:
Because we can talk about FCA a little bit and then how that turned into Stellantis and then Tavares taking over at Stellantis and then kind of the GAC, so can you give us a bit of a history lesson on that stuff?

Lei Xing:
Well, for as long as I can remember Stellantis is the “stumblellantis” in China.

Tu Le:
In China. In China.

Lei Xing:
“Stumblellantis” because they've stumbled…

Tu Le:
Let me stop you there. Let me stop you there. It's Citroen, Peugeot, Jeep, what other brands do they sell?

Lei Xing:
Fiat.

Tu Le:
Fiat.

Lei Xing:
Lancia, RAM, Maserati.

Tu Le:
No, no, that sell in China.

Lei Xing:
Well, yeah, Maserati sells in China. But I mean, if we go back to AMC, Chrysler, Jeep, Fiat, Fiat Chrysler, and then merging with PSA to become Stellantis, the only operations they have is DPCA which is the Dongfeng Peugeot Citroen joint venture, still producing Citroens and Peugeots. That’s it.

Tu Le:
And they officially stopped building Jeeps like two weeks ago or last week.

Lei Xing:
A few months ago, I guess, or even was it last year, or…

Tu Le:
I think they announced it, but I think they actually like shut it down recent.

Lei Xing:
Yeah, so from that perspective, that's what I said Stellantis is done in China, but then this deal proves kind of, you know what, you don't have to be in China or even produce in China to play the smart EV game in China. I thought that was the interesting thing about this. I said this is a brilliant chess move by Carlos. 

Tu Le:
But that’s only recent, right? Because historically, you did have to be there, you did have to build locally. And so this is a new wrinkle with how business has evolved. And we can talk a little bit about this later, but I'm in disagreement, one of the few times you and I will vigorously disagree about a subject, but let me also add that FCA because of the situation with Sergio Marchionne and the potential merger between FCA and PSA Group, that took a while. So there wasn't a ton of investment, new products that were launched into China. And the Chinese partner was getting a bit upset, GAC, and then when it was announced that the new Stellantis CEO would be Carlos Tavares, they were not thrilled because his reputation in the industry is purely as a cost cutter. And so…

Lei Xing:
He's Carlos Ghosn’s scion or protégé, right? So.

Tu Le:
Yeah, so the first thing that he did was, the first major thing was try to acquire a larger share of the joint venture. And GAC balked at that. And you know this story Lei, GAC was so unhappy that they refused to change the joint venture name.

Lei Xing:
Yeah, it just wasn't in sync. I mean it was, yeah, disastrous, basically, what happened.

Tu Le:
And so it used to be called GAC-FCA joint venture basically, and they didn't want to change it to GAC-Stellantis, and back to, they wanted to actually double down. And GAC was like, no, you can't do that. You didn't tell us you wanted to do that. You just made this announcement. So I don't think GAC thought they were going to pull out of the market, but then Carlos Tavares and team basically said, okay, wel, if we can't acquire more, then we'll just leave the market. And so that was a little over a year ago. And Carlos, throughout this year, has been pretty vocal about the threat of Chinese EVs in Europe. He’d never called them cheap or subsidized. He just called them, he just I think he was very honest about that.

Lei Xing:
Well, I mean this time he called it the Chinese offensive. That's what he called it. So.

Tu Le:
I would like to think that he's had conversations with Macron's administration, and that's part of the reason why the EU or one of the reasons there could be many, but one of the reasons the EU set up this anti, what's it called? 

Lei Xing:
Anti-subsidy probe.

Tu Le:
Anti-subsidy probe was because of the French government's objections to allowing free reign of Chinese, China EV Inc. into the European market, okay? That gets us to two days ago. You and I had heard several times that there were European companies Stellantis, Mercedes, in particular, that were kicking the tires on some Chinese EV companies. And so with Mercedes, it's a NIO tie-up, but with Stellantis, I had heard a couple of different companies, LeapMotor being one of them. As of two weeks ago, Lei, you and I had heard that announcement was imminent. So the announcement was late a week by my prediction, but it still happened. So, let me ask you to 20%, too much, not enough, just right. What do you think about that?

Lei Xing:
It's actually 21.3 % for 1.5 billion, whatever it is, I don't look at it too much or not enough right now they're the second biggest shareholder behind Zhu Jiangming and his wife and some other guy, I think they hold 27.46%.

Tu Le:
We should also let everyone know that LeapMotor is a publicly traded company in Hong Kong.

Lei Xing:
Yes, Hong Kong-listed. And also before the transaction, Dahua, which is the security surveillance company that Zhu Jiangming is chairman of, had the second biggest share, shareholder. So Dahua is out. Now it's Stellantis as, or what Carlos calls the reference shareholder.

Tu Le:
That's his original company and startup that allowed him to launch LeapMotor.

Lei Xing:
Yeah. So from that perspective, I mean if you compare to the VW Xpeng 4.99%, that’s much more aggressive. And LeapMotor at the same time, I think it's willing to give that up in order to get the, I think there's compromise is made or I think if you look at it, it's not only the desperation on the Stellantis side, but it could also be a desperation on LeapMotor’s side that made this happen. So you know, if it was 20% or majority stake, I think it's difficult at the beginning to have a foreign company taking a majority stake in a Chinese pure EV startup, that will be unprecedented, right? So that's how I look it.

Tu Le:
Let me double down on that Lei, because I think that this transaction obviously needed to be blessed by the Chinese government. They were probably going to have a say in how much of the company could be acquired, right? So I don't know if there was any input from the Chinese government about this 21.6% or whatever you said.

Lei Xing:
21.3%

Tu Le:
Yeah so let's just say that they both settled on that number and felt comfortable with that. Now, we should also note that LeapMotor sold 14,000 vehicles or 15,000 vehicles in September, so they're not one of the better players. Their vehicles are, the most expensive vehicle is around RMB250,000 I think, the cheapest is around RMB140, which makes it about a $15,000 car and a $40,000 car. So they play in the mass market.

Lei Xing:
Yeah, so let's say among the four listed companies, startups, they play in the most affordable segment.

Tu Le:
Most brutal. 

Lei Xing:
RMB100,000, right? And actually, I think in that conference call, Carlos said they rank number four in the pure NEV startup and they are breathing on number three. So I don't know what ranking he was referring to, but come to think of it out of these four companies, publicly listed, I think, I was saying in the other chat group that LeapMotor was really the only candidate or option based on their playing in the affordability segment. And also, I mean NIO is right, is too much, Xpeng is already, Volkswagen already has Xpeng. Li Auto is not a BEV.

Tu le:
Is too much.

Lei Xing:
Yeah, so that only leaves LeapMotor. And LeapMotor is looking to expand globally, is looking for capital and Stellantis at the same time is trying to find a way back to being relevant, maybe not in China, but having a brand, as Carlos said it best that we need to “take on the Chinese with a Chinese brand.” That's why, after seeing his explanation, hearing his explanation, I kind of became a fan of Carlos purely for this business strategy.

Tu Le:
But I mean there's, there's precedent, right? Like Tesla is killing it and they're not a Chinese brand. So you can be successful in China and not be a Chinese brand in the future. I think that I just have a hard time with his...

Lei Xing:
Rationale or?

Tu Le:
No, his rationale is solid. I guess it's a trust thing for me. It's a be careful of what you say, because he said really extreme things. It’s not, it wasn't, you weren't wondering what he thought.

Lei Xing:
I think it was back around CES or earlier this year that he kind of hinted that Europe needed to place tariffs or additional kind of restriction on the China EVs, because he again said there are 30% more cost competitive. And even with the 10% tariff, they can still eat that up and compete in Europe.

Tu Le:
But that's nothing to them. That's, to China EV Inc. 10% tariff is nothing.

Lei Xing:
Exactly. And I think the other two things that I really liked that Carlos said was one, the western automakers are going south in China and they are playing with the plug and play western formula in China, which is going nowhere. So I love the fact that he said that where the other ones are still in denial.

Tu Le:
You basically love it because he is talking…

Lei Xing:
He’s blunt. I like his, yeah!

Tu Le:
He is saying what we've been saying for the last two years basically, that's why you liked it.

Lei Xing:
And then the other one is really recognizing the competitiveness, not only cost competitiveness, but technology, battery, energy management system, all of those that which still others are also in denial, maybe.

Tu Le:
The denial part is definitely becoming less of an issue because and we'll jump back to talking about Stellantis because we're not done, but GM this week acknowledged that they're going to be putting LFP batteries in the next gen Chevy Bolt that is going to use the Ultium platform. So effectively, that's a plea to the U.S. government. I look at that as a plea to the U.S. government about sorting out the trade policy for the Inflation Reduction Act on the LFP side. But anyways, the history with LeapMotor, they started out with a very small coupe that was about $15,000 or $18,000. It sold nothing.

Lei Xing:
I remember that launch event very clearly. January 2019, yeah, at the Water Cube..

Tu Le:
So recently, yeah recently, they got into EREVs. And it creates a lot more flexibility for them. And subsequently, you saw an increase in sales because they now have, and I don't know.

Lei Xing:
And also better margins.

Tu Le:
Yeah. Is that, is that C02 still on sale? Because I don't think it is, right?

Lei Xing:
Which one, the coupe? 

Tu Le:
The coupe, the first coupe?

Lei Xing:
No, I think it’s called the S01 or something. They have the T03, which is the small hatchback. And then the C01 sedan and the C11 SUV, and then the C10 is coming out later this year, which was at the Munich (motor show).

Tu Le:
It should be noted that there are very famous mergers and transactions in automotive history that never amounted to anything. The most recent mega failure is probably DaimlerChrysler.

Lei Xing:
Well, Denza, BYD, Denza, Mercedes, it’s not a failure, but, Mercedes I don't know what they got out of it, so.

Tu Le:
So when you look at LeapMotor sales, for the people that are the sticklers to BEVs versus EREVs versus hybrids, the sales number is a combination of EREVs and BEVs for LeapMotor.

Lei Xing:
So for LeapMotor, I listened to a little bit on their Q3 earnings call to catch up on information and they want to do 30K a month next year. They're seeing 18,000 in Q4. So they have a lot of ambitions. And then the other perspective that makes this interesting is because of Stellantis’ exposure to Latin America, Africa & Middle East, which is seeing this Chinese offensive. So Stellantis is trying to use, leverages LeapMotor to defend that Chinese offensive, basically. And I think that's... Now I’m just saying that the international JV which Stellantis is majority owned. Basically, Stellantis is taking over the international operations of LeapMotor. That's a simple way you look at it, which was really surprising to me.

Tu Le:
Well I look at it like Stellantis is the international operations of LeapMotor.

Lei Xing:
Yeah, exactly. The way it came out was a bit surprising because all of us thought Stellantis was going to use one of their platforms to do a car or something.

Tu Le:
I think they’ll do both.

Lei Xing:
Yeah, that wasn't explicitly said in the announcement. So.

Tu Le:
I don't think at this point in time that's politically tenable. I don't think that with the EU probe kind of overshadowing this announcement, because the only way this makes sense is if Stellantis, like to completely unlock the value of this 1.5 billion dollar transaction, euro transaction is to license that those platforms, now that creates another challenge, because now Tavares needs to answer to not only likely importing a Chinese brand into the European market.

Lei Xing:
And he has his skin in the game, because right?

Tu Le:
But there's a high likelihood that these LeapMotor cars will undercut Citroen, Lancia, Peugeot vehicles. Now, the only way this makes sense is licensing these platforms, EREV, or the BEV platform, or it's one platform that is flexible to for Peugeot and Citroen to use. So he's still got some political land mines in 2024 that he's going to have to deal with. But it automatically catapults Stellantis into future contender and long-lasting legacy automaker. But we also need to see these numbers come to life or come to fruition for LeapMotor to get to 18 and then to 30. Because remember, next year is probably going to be over 10, 11, 12,000 or 12 million NEVs sold in China. And 300,000 is actually a pretty insignificant, 360,000 if they get to 30,000 a month, right? That's 360,000 units on a base of 11 million vehicles, is not really a winner and that's not sustainable if you're going to be a healthy car company in China. So.

Lei Xing:
Yeah, so that's why this is both a, in my mind, is both a steal and a huge bet on LeapMotor being successful in getting to that level of relevancy in China. History will tell, right?

Tu Le:
I admire Tavares for swallowing his pride and kind of ignoring his previous comments. That's fine, but he'd be a hard person to trust for sure, if I was a business partner of his.

Lei Xing:
He kind of said in that conference call that he wasn’t, he stressed, he was adamant that Stellantis wasn’t the instigator, wasn’t the advocate for that anti-subsidy probe. And he's like whether we have it or not, we're going to face the Chinese offensive. So we take offensive, we take a step early to confront that offensive by basically putting LeapMotor as their 15th brand. That's what it is.

Tu Le:
Yeah, so two European legacy automakers now have invested decent amounts of capital into Chinese EV companies. Can we, let's put this to bed, not you and me, but everyone else has put this to bed, Chinese EV technology is as like world class.

Lei Xing:
I think it's recognition that the key word is just recognition and recognizing that they have to somehow utilize this.

Tu Le:
If I’m, I’m going to throw out there something for you to chew on. If I'm BYD, I'm cutting margins in my emerging markets and in China to squeeze LeapMotor. That's what I’m doing. I’m specifically creating marketing to compare my vehicles to theirs. I'm squeezing it.

Lei Xing:
Speaking of BYD, I think I just saw this, BYD, SAIC Motor and Geely, are the first three companies that the EU Commission is investigating with that probe. Not surprising because SAIC Motor has MG, BYD is expanding tremendously. Geely, right, they have their bunch of their brands in Europe. So we'll see what happens there. 

Tu Le:
Speaking of ZEEKR, they're having a huge event right now in Beijing at the…

Lei Xing:
ZEEKR and JIYUE, two Geely brands.

Tu Le:
It's at the Bird's Nest. I'm sure you've seen pictures. I've seen pictures.

Lei Xing:
I just treated some stuff, yeah, the FF, FR, 001 FR.

Tu Le:
And the key, you know, what's the race driver's name? Kiki Raikkonen?

Lei Xing:
Kimi Raikkonen.

Tu Le:
Yeah so he's now a brand ambassador. He’s…

Lei Xing:
Chief Performance Advisor, CPA.

Tu Le:
He's a ex-Formula One race car driver. So there, this is the schizophrenia of ZEEKR. The 001 is this super performance coupe. Then they have a ZEEKR X that is kind of a mass market, small vehicle, then they have an MPV.

Lei Xing:
Now their, the pricing coverage of ZEEKR goes from like roughly RMB180,000 all the way to RMB769,000 for the FR, that's a huge I mean delta for one brand.

Tu Le:
And Porsche doesn't even need to see the vehicle. They just need to see that price and feel threat.

Lei Xing:
Yeah, I was thinking exactly you know.

Tu Le:
Because there's going to be buyers for it. And Porsche should feel very threatened and that ZEEKR’s looking into the RMB600,000, RMB700,000 price range. So RMB700,000 for our audience is about $100,000. So, yeah, let me see, what else did you want to talk about, man?

Lei Xing:
No, I think the UAW strike was, we had some progress which it kind of came early a little bit. I think you had predicted some time before Thanksgiving and after Halloween, at least we got Ford to a tentative agreement, but.

Tu Le:
Let me kind of break that down and summarize that for a second. Top ay, hourly rate was around $32. It's going to get to over $40 by the end of the 4-year contract. And then on top of that, we have to calculate fringe. So in the finance world, in order to forecast salaries and employee costs, we normally add 25% of whatever the hourly rate is. That's the fringe that includes health benefits and any other non-salary benefits. So these guys are getting paid over $50 an hour, which ends up being around $85,000 a year without overtime. So UAW workers are very, very well paid relative to average salary of a U.S. citizen, which is closer to $35,000, $40,000, I think, so.

Lei Xing:
Well paid is exactly the key word.

Tu Le:
I'm not saying and let me be clear, I think you and I must be clear, we're not saying the work is easy, but $80,000, $90,000 is, I think there's going to be a lot of people that want to be auto workers once they see that big number, okay? And for the sake of full disclosure, my father, 27.5 years in GM assembly plants and GM factory. So he was a UAW guy.

Lei Xing:
It wasn't surprising to see Ford get that done, because Ford had the most, I guess, membership, right, in the first place. But I thought the interesting bigger picture here is seeing the recent, there's a few things that happened. So Honda scrapped that affordable EV deal with GM, Ford is pulling back $12 billion of investment in EVs, and GM is…

Tu Le:
Because they don't have it, Lei.

Lei Xing:
Right. So, that's the taking two steps back now in the U.S. that the EV penetration take rate is flat and they're seeing these inventory increasing and people not buying EVs, which is that that momentum is gone, all of a sudden.

Tu Le:
I have to point to my newsletter that I just sent out this morning. I had to jump on my soapbox moment about some of these articles that I'm seeing lately about EVs aren't working, blah, blah, blah. Now, Jim Farley and Mary Barra and those guys were lying from the very beginning. They were never going to get the number of vehicles, number of EVs that they said they were going to get. Okay. So they created this false reality that people and I get it, the media needs to just kind of report on what's being said. But you and I who follow this daily and understand that how the China market works, knew that those numbers, the hundreds of thousands of units by X date was never, never realistic, never realistic. So the whole thing about it and the U.S. is not going to be China, the Europe is not going to be China. Things aren't going to happen as fast. There's going to be ups and downs, but we should be holding these CEOs accountable. And Toyoda, yeah he was right. It's going to be lumpy. And we said this all along, but that doesn't change the fact that these CEOs need to do their best to make this transition work. Okay? Because it's happening. And the reality is like, even just Tesla in the U.S. market, even if China EV Inc. takes 3, 4, 5, 6 years to enter the U.S. market, Tesla is going to push them.

Lei Xing:
Yeah. At the end of the day, it's affordability and we do not have that in the U.S.

Tu Le:
Full stop. Full stop. Let me read a paragraph I wrote in the newsletter. Let me start by asking who is going to buy a 9,000-lb Hummer for $120,000. Also, hand building battery cells, modules and packs doesn't make for an efficient manufacturing process. And then next, EVs seem to be working just fine in China so much so that two of the largest European automakers bought stakes in two Chinese EV companies. So what are they doing right? Or maybe the question needs to be, what are we doing wrong? So I'll stop at that, but that was my soapbox moment Lei. And it just needed to be said that they created this unrealistic EV future, and it's harder than they've ever imagined it would be because they are getting squeezed on both sides. And the ICE side is not because of the economic conditions here, right? The economy seems to be doing good. It's a little schizophrenic, but interest rates are super high. So car buying is going to be down lower on the totem pole. And EV inventories are up. But we still have a lot of challenges ahead of us, reassuring some cell capacity, whether or not we're going to allow Chinese EVs into the market and at what price that creates a lot of uncertainty for the OEM management. This is great for us because we talk about it every week, right? So it's never boring.

Lei Xing:
I think here in the U.S. kind of the double whammy that you talked about affordability from a cost competitive point of view is not there. And then from the kind of the economic interest rate environment is not there. Actually, have you seen the gas prices actually have been coming down the last few days or a week or so? That doesn't help EVs, right? But so are you still thinking pulling that trigger? Model Y prices went up by $500.

Tu Le:
I fixed my car because it was, there's a check engine light on, so I fixed it. And so I just want to get it through winter and reassess. But if I need to pull the trigger in December, I will do that, still fairly affordable. Did you, speaking of the T company? Did you see that bp is buying $100 million for the chargers from Tesla? The strong getting stronger. Because now, when even if you have a Ford or a Kia, you go to an EV station and you see a Tesla charger, it kind of reinforces the Tesla brand. So maybe your next car is going to be a Tesla EV now instead of a Kia or Ford or GM so I don't know how many chargers because they didn’t specify the per unit price, but that's a big win. And hopefully it injects some, let's say, urgency into these charging hardware providers, because studies, research says that most of the chargers in the U.S. in the foreseeable future are going to be Level 2 chargers, and the super chargers that Tesla have are Level 3. So there's still an opportunity, but with Li Auto and now ZEEKR going with the 800V charging capabilities with their vehicles. It's only going to be a matter of time where charging times are going to be much lower than they currently are.

Lei Xing:
Yeah saw those are Li Auto MEGA charging speeds, 500 kW. 

Tu Le:
It's amazing. The battery will probably last about two years, but that's okay. 

Lei Xing:
You know, there is this saying called the second half of this smart EV game in China. I think it's now entering the second half of the second half whereas probably the foreign legacies are still in the first half or warm up stage. That’s how you look at it. And now the other thing was important that happened was the Xpeng’s 1024 Tech Day with X9. I think a lot of it was announcing the target for XNGP deployment, 25 cities by the end of November, 50 by yearend, and X9 is actually one more smart EV using the 8295 chip. They're actually getting two radars, getting rid of two corner radars, everything including JIYUE 01 that just launched, everything is moving toward this kind of vision based, BEV+transformer ADAS, advanced ADAS. So that kind of creates an interesting dilemma for the LiDAR companies. Right? So it seems like people are ditching LiDARs.

Tu Le:
It's a jump, right? Because what, a year ago you and I were talking, how LiDAR is going to be commoditized, but it jumped one or two technology cycles where now we don't even need it. Because there is sensor fusion going on, sensor fusion being that all of the information is kind of stitched together from the different, 30, 40, 50 different sensors to create a virtual environment that the planning algo looks at and then uses to make decisions of which way to, what to do as the environment basically updates hundreds of thousands of times each second. So, man, what's going to happen Lei, is by the end of 2024, western automakers are going to have pretty significant ADAS features that are going to be standard in western vehicles. And so they're going to, again, force feed us because of the China market with hope they're also going to try to charge us for it. Whether that will work is up for debate. But so let's do this. It is 9:43 Lei. We can talk about a couple of other things that I wanted to bring up, but let's open up the room to anyone who has any questions, would love anyone's thoughts on the Stellantis LeapMotor deal, even if you don't have a question, would love to hear other people's opinions about that big move by Stellantis this week. So anything else that, what did, let's do this because I asked you this last week and I think it's a good thing. What are some of the things that you tweeted about this week? I think you can talk about a little bit.

Lei Xing:
One thing come to mind is the Cruise. They're pulling all their, well they are pausing all their robottaxi fleet after that accident. And it looked as if there might be some ethical problems involved of what they showed in terms of the video that they did not show the full extent of what happened. I mean if that's the case, then it's not a technical issue, it's an ethical issue. Isn't it? That they're trying to hide something? That's why I thought this is another huge step backward. When we had that nice experience last year and now to see this happen, and I mean Cruise is still losing I don't know how many billions of dollars. But…

Tu Le:
So for those wondering, a little bit background, Cruise Automation, which is an autonomous vehicle company that's owned by General Motors, has a driverless robotaxi pilot in San Francisco and they had, I want to say 1,000 robotaxis roaming around that you could call and pay to get ridden around the city of San Francisco. Several weeks ago, let's say 5 or 6 weeks ago, there was an accident on Market Street, a hit and run. The person that got hit ended up getting thrown into the next lane, the lane to the right of the vehicle. And it just so happened that Cruise robotaxi was in the opposite lane and so the robotaxi hit or ran over this person and…

Lei Xing:
And stopped, and then it did that maneuver to pull over which dragged the pedestrian. So I think that was the part that you know, what do you do in that moment? That right, the corner case.

Tu Le:
So the default in 90, I'm making this percentage up, in 85, 90% of the time, pulling over is probably the right thing to do. But this is probably, again, an edge case that has never come up, even probably in the simulations, right? So the pedestrian that got run over is I think still in the hospital and the department of, or the California DMV said that so they pulled Cruise’s license this week for driverless robotaxis in San Francisco. They can still do pilots using a safety driver, but they cannot do driverless anymore. And for the foreseeable future, that it wasn't clear, because to your point, there is some controversy about the data sharing, whether or not all the data was shared with the California DMV by Cruise. And so we'll figure out more of that. Luckily, this pedestrian was not killed, and I’m hoping that there's no permanent injuries, but the Bolt is a heavy car, got a huge battery in it. So getting run over and then drag 20 feet is, at 7 miles an hour, so it was going 7 miles an hour as it was dragging. So wasn't like it got, it ran over this person and then really quickly, it was like very slow and probably very painful, unfortunately. But it's, to your point, it's one step forward, two steps back. And this while Xpeng talks about launching in 10 cities by the end of this year, 50 cities by the end of 2024, their city NGP and this is effectively what that is, right? I mean the driver is the safety driver, but we aren't hearing much about ADAS rollouts in the United States. So it's a huge contrast, I think, between the U.S.sand China how Baidu seems to be making announcements with Apollo, new pilots, more partnerships, Pony, same thing. WeRide is about to go IPO and then Cruise and Waymo the two most notable U.S. AV companies. Waymo is actually being very, very quiet. Whereas Cruise took the opposite, and they were print, they were taking full page ads out in New York Times, talking about how drivers suck and robotaxis are better.

Lei Xing:
Now that's kind of backfired a little bit. After all of this.

Tu Le:
That's a little bit of the whole Silicon Valley thing, right? Like in your face.

Lei Xing:
It's kind of true. But when you have something like this happen, then you kind of.

Tu Le:
Yeah, I, we have to take this seriously. I hope that there's a more robust framework around some of this that the U.S. government kind of puts in place, Department of Transportation, so that we can still continue progress. Commercial side, I think commercial trucking, they're still piloting some of these autonomous robotrucks, but yeah, dude, it's a far cry from you and I spending time in China earlier this year and getting in 3, 4, 5 robotaxis and just kind of enjoying the capabilities, right? So.

Lei Xing:
A couple of investments out of Saudi Arabia, one for Pony, and the other one for a company we haven’t heard in ages: BeyonCa. Not investment but a strategic cooperation, kind of, all of a sudden, this is Saudi Arabia investment. It's becoming a recurring theme for some of the China EV and AV companies.

Tu Le:
We should also note that I think Cruise has a pilot in Abu Dhabi I want to say, or Dubai, one of the two? And then WeRide has something.

Lei Xing:
WeRide I think was also in Saudi Arabia this week.

Tu Le:
And I think what we're seeing is Saudi Arabia really trying to diversify out of oil. I think it's going to be pretty hard for them to do that. And we're also seeing India try to play both sides between some of the diplomatic and business challenges that the U.S. has with China or and vice versa. So let me take a look at my newsletter Lei, see if there's anything worth talking about.

Lei Xing:
And then BYD in Japan, right? The only thing I'll say about the Japan Mobility Show is it felt like all those Japanese brands, what they showed, the concept EVs, they all looked the same to me. And then BYD front and center with the U8 doing its turntable thing. Tank turn, that’s what it’s called.

Tu Le:
That's cool. So I saw like one or two tweet that were like, I didn't realize that it wasn't on a turntable.

Lei Xing:
So that's funny. And then California Governor Gavin Newsom.

Tu Le:
That's huge news actually.

Lei Xing:
It's looks like he's having a great time in China.

Tu Le:
All the ubiquitous photo ops, right? On the Great Wall, talking toXi Jinping on stage, I mean that was huge, right? Meeting with Xi was huge.

Lei Xing:
Yeah visiting and also checking out the U8, looks like he was trying to bring two of them back.

Tu Le:
Drive, going down to Shenzhen visiting BYD, and so.

Lei Xing:
I think he's ending the trip by visiting Tesla Shanghai Giga, which is a California company, right? So.

Tu Le:
It’s actually Texas.

Lei Xing:
Texas company but formerly.

Tu Le:
Yeah, so anyway, that's all I had man. I think we did a good job unpacking the Stellantis. There'll be more, we'll learn more and we'll talk more.

Lei Xing:
Oh yeah. It’s the start of, like I said, this is a whole new ball game, and you trying different ways to play and make bets and investments.

Tu Le:
And I should note that I didn't get to drive a LeapMotor car, but I went to a couple of malls where a LeapMotor retail store was and I got in, all these, a little iffy, not, it's okay. But again, remember, it's relative to the price of the vehicle which in China is about a $15,000 car. So the coupe was super small and smaller than, for Americans, smaller than a Civic, like a Civic hatchback, much smaller than that, bigger than a Hongguang MINIEV, but really small. And coupes don't sell that well in China. So it was a strange first vehicle to launch. But then they hit their stride when they launched that SUV and then sales went down, and then they started selling the EREV and sales shut up again. And so it's been a rocky road for LeapMotor, so good for them, for getting that check from Stellantis. Hopefully this creates an easier path for them, for growth and opportunity. So.

Lei Xing:
Yeah, we keep a list, so two of them is done. So see who's coming next, right? So what was the Volkswagen, was $740 million investment. You add the two together, it's over $2.2, $2.3 billion, almost $2.5 billion in investment into two Chinese companies already, so.

Tu Le:
There's going to be a lot of cultural challenges, like OB, organizational behavior challenges that I think will be hearing about behind the scenes probably. So we'll let you all know if and what we hear. So everyone, thanks for joining again this week. Good morning, good afternoon and good evening. We will talk with you all later.

Lei Xing:
Yeah, and then we talk October sales next time. Talk to you later. 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.