Episode #173 - China AV Inc US IPOs, Windrose the first Domino, Cheap Batteries for EVs

Tu and Lei begin the podcast talking about the US IPO announcements for Pony AI and WeRide, two Chinese autonomous vehicle (robotaxi) startups. This leads to a broader discussion about autonomous vehicles and regulation in the US and China. 

Tu then moves on asking Lei what he knows about Windrose, the Chinese electric semi-truck manufacturer that plans to build semis in the US. Tu posits that this could be push that opens the door for more Chinese players to mannufacture in the US. 

Tu then speculates that should Kamala Harris win the election she may want to develop her own set of policies toward Chinese EVs, specifically on the manufacturing in the US side. 

Tu brings up a post in his newsletter about battery pricing below $100 in China where OEMs can build EVs profitably. 

Tu closes out the show with his brief experience riding in a Lucid Air Sapphire and it's absolutely ridiculous acceleration. 

Transcript

CEM #173 Transcript
Recorded 7/26/24 

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 global EV, AV and mobility sectors. What Lei and I discuss today is based on our opinions and should not be taken as investment advice. For those that are new to the show, welcome. To our loyal listeners, welcome back. We ask that you please help us get the word out about this podcast to other enthusiasts and tune in again next week. 

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

Lei Xing:
Bonjour de mon côté

Tu Le:
Opening ceremonies tonight, right? So.

Lei Xing:
Pardon my French. Good morning from my side. That's what I said. This is your co-host Lei Xing, former chief editor of China Auto Review. This is episode #173. Welcome to a special Olympics opening ceremony episode of China EVs & More and guess who's making headlines in Paris. Xiaomi SU7 with that popup, right?

Tu Le:
Yes. Yes.

Lei Xing:
We're trying to find all EV factors we can. Definitely AVs are making headlines because of the few and EVs for that matter, IPO, potential IPOs in the U.S. Shall we start there?

Tu Le:
Yeah. Let's do that. There are two in particular that we're talking about, correct?

Lei Xing:
You must be referring to one, Pony and the other one Windrose. Is that what you're thinking of?

Tu Le:
I was thinking WeRide.

Lei Xing:
WeRide, the two AV companies and then Windrose we’ll probably get into, they also have ambitions on the AV part of it, autonomous trucking.

Tu Le:
This is where I wanted to ask you because we'd heard of them. I don't know that much about them, unfortunately, which is surprising, because normally I learn about these companies pretty quickly. So I’m going to tap your knowledge about them, but let's do this. Let's start with the immediate news about Pony and potentially IPOing next month or in September.

Lei Xing:
Yeah, I guess we're looking at possibly two IPOs coming by the end of the year of two of the Big 3 I would say of the China AV Inc.: Pony and WeRide.

Tu Le:
The OGs, by the way.

Lei Xing:
The OGs. And these, the two of them together with Baidu are what I refer to as the Big 3. They're often side by side when it comes to getting these permits in these different cities. And I think Pony is, maybe it's not the only one, but it's one that has gotten permits to demonstrate fully driverless ride hail robotaxis in all four tier-one cities. I don't remember what the case is for the other two, but Pony I think in early July just got the permit for Shanghai.

Tu Le:
My experience with a safety driver and lack of a safety driver. It is different. I look at the ride quite differently than I would if for a safety driverless robotaxi. So these are big deals because it creates that awareness, it creates that branding. And it gets people used to new technology. So if I had to guess, people have asked me as well, how many robotaxis total are riding around China? And I know that Baidu has about 500 in Wuhan alone, but the rest of the robotaxis that they have in the rest of China don't add up to 500. So if I had to guess and I would love your guess as well Lei, I would say less than 1,000 total robotaxis are roaming around China, some with safety drivers, some with without.

Lei Xing:
I'd say it's at least 1,000, that would be my, I wouldn't say thousands, but at least 1,000. So that's the guesstimate. Because Baidu, right, you mentioned alone in Wuhan. It's about 500. And not all of them are fully driverless, right? Many of these which I've ridden recently have the safety driver.

Tu Le:
And compare and contrast that because Tesla recently had their earnings and Elon wanted us to focus on the AI aspects of Tesla.

Lei Xing:
Autonomy.

Tu Le:
Now, so Tesla currently has around 6 million cars on the roads all over the world. And let's assume that they're getting data from all 6 million of these vehicles. So they have a huge huge lead when it comes to gathering the data. But, and this is where it gets a little dicey. And you and I aren't financial analysts. So I don't want to get into the share price and everything. If you can't sell more cars, then your lead is going to quickly disappear, because we also have to remember that BYD is putting around 4 million cars this year on the road. And so the lead is huge, but not insurmountable, especially if Tesla doesn't come up with new products and continue to increase demand of their products and sales. So.

Lei Xing:
Well, the utopia, let's say, in a perfect world is first of all, I think a lot of people may have said this, is that we don't need that many cars on the road if all of them can be utilized, right? It's all butts, it's all about seats, right? Number of seats almost like airlines and you don't want to leave them open. Is the auto industry going that way as well, which means that you don't need that many cars in the world. If you can just hail one and go anywhere you want, I think that's kind of where Tesla is or Elon is trying to go toward.

Tu Le:
And you make a key point Lei because Tesla is willing to concede sales if they can get these robotaxis on the road and start generating revenue. Whereas the legacies are still very traditionally minded with sales. 

Lei Xing:
And then He Xiaopeng, he just posted something, a comment about Elon’s model where they are both deploying the technology as well as the fleets. I guess the fleets are not I mean their own. Are they technically owned by Tesla or they are Tesla owners? So how do you look at it? Whereas Xpeng strategy is they're also working on that G9 robotaxi, but I think they're trying to put it in the fleet, but not, have someone else operate it.

Tu Le:
Ultimately Lei, it's going to be your car. You opt in to sharing that data with Tesla to build up and train the algorithm. And then you can send it out when you're not using the vehicle and it can make money for you. And then Tesla takes a piece of that. That's how ultimately you can generate incremental revenue with the vehicle and Tesla, because they're providing the service or at least the technology. They take a bit off the top from you. So.

Lei Xing:
I think there's also the regulatory part of it that has been talked about on the earnings and Elon kind of dunked on Mary, the Origin of being suspended, because nobody has talked about what happens if these Tesla robotaxis get into accidents, who's responsible, right?

Tu Le:
And that's how he likes it.

Lei Xing:
Right. So. I mean. 

Tu Le:
The only guideline we have is that once we and this is kind of a semantics thing, which is crazy.
Once we move to Level 3 or OEM says this is a Level 3+ system, the responsibility for the accident shifts to the OEM so that's why Tesla is still saying it's a Level 2+ system that they currently have. And because the traditional automakers are just ultra conservative, and Tesla is happy to use us as beta testers. I think that's the major difference in mindset.

Lei Xing:
Exactly. And China has, in recent months, I think, issued guidelines on specifically on these type of, let's say, higher levels of autonomous driving and who's responsible under what conditions. It's quite clear the requirements are in place, but I don't see that as clear as in the U.S., yet.

Tu Le:
And let's also note that China is also making it up as they go along, because you remember when Meituan had in Shunyi had that autonomous delivery vehicle hit a car turning right. 

Lei Xing:
Yeah they are everywhere. 

Tu Le:
So they settled on who was responsible for it. But these are kind of one-offs. And they need to be enterprise wide and policies that are bought off by the private sector but enforced by the public sector. So and whereas China can really do a top down. And this is where another advantage for the Chinese autonomous vehicle companies, at least inside China. In the United States, everything is a state by state regulatory environment, which creates huge complications because now we bring in politics.

Lei Xing:
Exactly. And at least also a Pony has gotten that kind of approval, receipt of documents for their listing, either on NASDAQ or NYSE, they got that approval from the CSRC in April. So I think it's just a matter of time.

Tu Le:
So I tweeted, Lei, I tweeted that, or I Xed, or how do you even say it now. I said that China EV Inc., AV Inc., they want into the U.S. market. They want to sell things to Americans. They either want to sell shares or they want to sell electric vehicles.

Lei Xing:
Yeah, and I don't know if I mean you recently met, saw James Peng, right? I don't know if you got any sense of that IPO in the air. But

Tu Le:
The other thing that I wanted to mention Lei is that they are so unsure about who the next president is going to be and what their policies will be that they're pulling in this IPO and they'd rather do it now than next year when it could be unfriendlier, at least the environment and the market.

Lei Xing:
Yeah, I guess so there's a bit of both kind of race to do something, whereas on the EV side of it, it's kind of wait and see a bit. Maybe that's the way you look at it.

Tu Le:
And you know this but all these companies, DeepRoute, Baidu, Pony, WeRide. They all have research development centers in Silicon Valley, in Sunnyvale, in San Jose and Milpitas. So they're right here, too.

Lei Xing:
Yeah, they've been running. I've seen quite a few, you probably as well.

Tu Le:
Since day one, since like since day one. So it's not like they recently opened these offices.

Lei Xing:
I think in terms of this window of opportunity is also because in the past few years of that investigation, from the SEC on the Chinese, the Zhong Gai Gu, the Chinese stocks, right? That's been kind of in the rearview mirror now. I guess you sense this opportunity and try to find the best time to do it. 

Tu Le:
I think James, I think the leadership at WeRide, they've been around for so long that they're just ready to try to cash out. I think the investors are looking to cash out and it sounds like last raise Pony was at an $8 billion valuation, I want to say, so.

Lei Xing:
$8.5 billion, I think, that's right.

Tu Le:
So I don't want to speculate yet on what they're targeting, but I think it's going to be oversubscribed. I think there's going to be plenty of people interested in the IPO so. Because remember, Li Zhang, who's a co-founder at WeRide. Hey I was asking someone yesterday, what was WeRide’s original name? Do you remember?

Lei Xing:
Oh, yeah.

Tu Le:
It was a Chinese name, but I forget.

Lei Xing:
It was a Chinese name. Exactly. I can’t remember, but it did have a different name.

Tu Le:
I need to look at my notes. Yeah,

Lei Xing:
Jingchi. I think it was called Jingchi.

Tu Le:
Yeah, but so I remember so Li Zhang has actually moved on.

Lei Xing:
To the humanoid robot. He is the one of the founders there.

Tu Le:
So we should anticipate, to summarize, we should anticipate Pony by September and WeRide around that time. If I were WeRide, I would try to do it much earlier than the November election date.

Lei Xing:
Something to look forward to in the next few weeks. As a matter of fact, we have the Big 3 of China EVs, now I mean Baidu is already listed, right? So then next comes the other two. There's a bunch of others, smaller ones that are, that we don't talk about.

Tu Le:
So I think QCraft raised a little bit of capital. I know DeepRoute. Let me say this again. They're always looking for capital for sure. But they do see the Middle East as an alternative for raising funding. But again, the U.S. capital markets are the most liquid and they're going to get the highest valuation out of the U.S. exchanges. So.

Lei Xing:
Out of the other options, Hong Kong or China board.

Tu Le:
You wanted to talk about, what was the next thing you wanted to talk about?

Lei Xing:
Windrose.

Tu Le:
Yeah. Please.

Lei Xing:
It's kind of funny that they've kind of suddenly popped up. And I mean they, it's a 2.5 year old company founded in March 2022

Tu Le:
For those that don't know who Windrose is, they are designing and engineering a semi-truck,
battery powered. So an electric semi-truck. So think Tesla semi.

Lei Xing:
Yeah, semi in both the GEV version and a fuel cell version. And they also have this…

Tu Le:
Do you know the CEO? Do you know him?

Lei Xing:
No, I don't know him, but I mean everything about this company is exactly if we talk about Windrose, it's the CEO. I think he's the reason behind this really meteoric rise, just this last, I guess few months.

Tu Le:
So they announced that they are looking to, at least to final assembly. They haven't really clearly indicated if they're manufacturing in the United States, or if they're doing final assembly. So there's a big difference here. And I think it'll depend on how the tariffs affect the products, but they have an order book of 6,000 trucks that are mostly U.S. customers. So I think his name is Wen Hao?

Lei Xing:
Han Wen, or Wen Han. 

Tu Le:
Wen Han, that’s right. He basically said, hey, we want to be close to our customers. So didn't say how much they're investing, didn't really describe how large the facility is. And what in particular they'd be doing, who's the battery supplier, very very, unless you saw more specific information on the Chinese internet, I didn't see anything.

Lei Xing:
No, I didn't see anything other than the fact that they're currently using JAC’s, funny enough, JAC’s heavy-duty truck division for contract manufacturing. That's what's been open. And I think the really a significant factor about this company is really this founder, post 90s, worked at the Bridgewater Associates, right? The largest hedge fund. GSR Ventures, which invested in Plus.ai which Han was the CFO of.

Tu Le:
Ah, see, I didn't know that. 

Lei Xing:
See that? So why? And GSR Ventures is, in fact, an early investor in Windrose. So if you connect the dots, this is a finance guy, so he was the CFO of Plus.ai for a while. And then the other founder of Windrose is the general manager of Dayun heavy-duty truck, which has been like the number seven or eight heavy-duty truck manufacturer in China. So I think the investment community likes this kind of tag team. So one has really good finance and connections, right? And the other guy is the tech guy.

Tu Le:
Think He Xiaopeng and Brian Gu.

Lei Xing:
Exactly. Yeah. So if you connect the dots, it's not surprising that they've gotten this. I think they recently got the $200 million investment from a Belgian wealth, sovereign wealth fund. You don't see that happen very often, right, for a Chinese startup. So this guy has the connections. Finance, at least in finance.

Tu Le:
This is what I’m wondering though, Lei. Like, did, wondering if he got blessings from the Chinese government to kind of make these investments or I'm assuming he did, but because this is a weird time to be announcing this in my opinion. So.

Lei Xing:
Yeah, and also I guess if you look at it from an investment point of view, it's scarce, right? It's unlike the competition is not as cutthroat or bloodbath in the truck, heavy truck segment, the electrification and autonomization of the heavy-duty truck segment. And then you have right the other one Deepway, there's a bunch of others, but I think it's all about this guy's financial, capital market connections.

Tu Le:
So maybe some money grab. But like first of all, it's a B2B so it's less sexy than passenger vehicles. The next thing is, if there's a lot of labor in the United States for assembly and manufacturing of these Windrose semis, you're not going to get that cost advantage that you have in China for sure. So these customers, they must feel pretty comfortable with the politics of or how it looks, at least. So. Yeah, it's just a very interesting time, right?

Lei Xing:
And in the U.S. if you talk about competition this side of the game, it's a handful, less than a handful.

Tu Le:
There’s Nikola.

Lei Xing:
Nikola. There's tesla. Who else? There's, I don't see anyone else.

Tu Le:
Well I know that Peterbuilt, Navistar, they're all looking at.

Lei Xing:
But they are truck makers to begin with, right? They're established truck makers.

Tu Le:
I guarantee you that most of those guys, so I think Navistar’s based out of Chicago. I guarantee you they were shocked, surprised to hear this.

Lei Xing:
Exactly. I kind of see a Cheng Lu in this for some reason of TuSimple, because Cheng Lu is also a finance guy, and he took TuSimple to IPO, right? 

Tu Le:
But remember, the product is not in production yet. So.

Lei Xing:
No, and.

Tu Le:
A bit of speculation on this.

Lei Xing:
It's an EV truck to begin with. It's not an AV truck. Unlike TuSimple or Plus, I mean you look at it as the NIO or the Xpeng in the truck space, right?

Tu Le:
It's a, somebody asked me, do you know, in particular, where in Georgia, they're going to build this factory?

Lei Xing:
No clue.

Tu Le:
Me neither. So. But the other thing that's important to note is that Brian Kemp is the governor, he's a republican. So I’m sure his economic development team set this up. So.

Lei Xing:
And with the Hyundai Kia plant about to or maybe already starting production right, of EVs there. And Ravin has one right, in Georgia

Tu Le:
Well Rivian pushed it out and it doesn't sound like, I don't know if they're actually going to build that factory in Georgia because the Illinois factory is quite large. Why I bring up the whole Brian Kemp republican thing is because I get a decent number of questions about isn't this too radioactive to have a Chinese electric vehicle company produce or build a factory in X state or Y state. And I said, I tell them, I'm like, man, if NIO, Xpeng, BYD go to the governor of Mississippi, Alabama, Louisiana, and say, I’m going to write $2.5 billion check. I'm going to employ 10,000 people. Are we good? How many of these governors are going to say no?.

Lei Xing:
They got to think about it, right? You're not going to say no upfront. So.

Tu Le:
I look at that as Brian Kemp, so Brian Kemp doesn't have a great relationship with Trump. He's a republican, so he's probably not going to do and fall in line with the policies of the Biden administration. He's just he's looking out for his state, which I think is important. I think that there's a lot of self-interest, especially post January 2025 when the new president gets sworn in, and we're going to get much more practical with where some of these Chinese EV companies in North America are going to produce vehicles. So.

Lei Xing:
Which actually speaking of the election right, speaking of presidential election, it's all of a sudden it's not so much one sided I feel like, because now that…

Tu Le:
It's whiplash. It went from completely one side to now almost balanced. 

Lei Xing:
You put…Yeah almost balanced. 

Tu Le:
Competitive.

Lei Xing;
That is a question mark. So who knows? You know?

Tu Le:
What's important is the uncertainty that people have, because if Biden was to be reelected, we know the trajectory of the policies towards Chinese EV companies and battery companies. With Kamala, she's going to want to create her own policies. And so is she going to be a more business friendly president versus Biden? Maybe we've heard Trump and there's always uncertainty with Trump. Whenever he says anything anyways.

Lei Xing:
Not so clear from Harris, from Kamala. So.

Tu Le:
Yes. Which we'd mentioned this or I’d mentioned this in past podcast that it's not about the tariffs or the protectionism. It's about the uncertainty that creates the anxiety for our friends, right? Like the Chinese EV companies, the battery companies, they just want some clarity. So they can move forward with their strategies, their global expansion strategies. And so with Kamala now being the democratic representative, I think they are going to have to, let's say, reorient their lobbyists in Washington.

Lei Xing:
And I think regardless of the outcome of the election, I think what Jim Farley said in the earnings call I mean he was pretty straight. I mean he said, right, the fitness of the Chinese NEVs will wash over every region of the world, right?

Tu Le:
That's effectively what I've been saying for seven years.

Lei Xing:
We've probably been having that message for a number years now.

Tu Le:
I don't have the gravitas of a Jim Farley, but that's effectively what…

Lei Xing:
But it's interesting to see that he kind of hinted that he doesn't see, at least Ford is not going the way of Volkswagen Xpeng style partnership, but they are focusing on the CATL, the supply chain part of it, to do it and looks like he's betting on the skunk works. And I don't know how he's going to do it and I don't see it happening when he said the only way that we can beat the small China EV small cars is through that skunk works team. I put a question mark on that.

Tu Le:
So he's saying the quiet part out loud because Mary still hasn't articulated. First of all, GM backed off.

Lei Xing:
Well they have the Bolt, they have the Bolt which is okay, I think? Ford doesn't have anything.

Tu Le:
The Equinox and the Blazer seemed to be doing better now that the software has been updated. Mary has pushed out the Orion assembly plant to build EVs. They've backed away from the million-unit production capacity for EVs by 2025. And that's all fine and good. They were never realistic to begin with. I don't know why she felt the need to articulate these aggressive strategies when they didn't know who they're going to get their batteries from, they didn't know that there's going to be an Inflation Reduction Act. They didn't know that there were going to be 30, 40, 50 Chinese EV companies vying for market share in the China market. So again, why she would make these proclamations 3 years ago or 4 years ago, it boggles my mind.

Lei Xing:
Now, look at it. Everybody's putting that qualifiers on those targets. Porsche, right? Kind of like the “where market conditions allow” type of qualifier. And the consensus, right, is that the customers make the decision. Whereas I think China, the customers have already made the decision, right? We're past that point.

Tu Le:
The Chinese government, the IRA, I've repeated this a couple times to people ,the IRA’s less than 2 years old. The Chinese government started investing, the Chinese government started investing in the space in 2009. We know that things happen much faster in China. It's a different time, because now there are a lot of viable Chinese EVs. They're starting to have more viable foreign EVs. And currently, there are some sick deals Lei for leasing electric vehicles, because I don't think anyone wants to buy them because of the residual craziness. But man, I mean the Polestar 2s. And I was told the launch edition. So the launch edition because I'm looking for used vehicles on Carvana and Cargurus. It's still not that cheap, it's like $30,000 for a ‘22 Polestar 2. But the range is like 260 miles. I was told that a 2024 or 2025 Polestar 2 now has over 300 miles of range. So software improvement, battery management, system improvements. So maybe it's time man, maybe it's time buddy. When does your lease end?

Lei Xing:
No. I don't have a lease, I have a loan on the hybrid. Ends next summer. So one more year.

Tu Le:
So you bought it.

Lei Xing:
So it’s 36 months, so I'm paying $500 a month for the Santa Fe Hybrid.

Tu Le:
That's awesome. Because right now, I mean the Santa Fe Hybrid is pretty affordable anyways, but right now, to borrow $30,000 is probably $800 payment.

Lei Xing:
Yeah so, and then after that, I'm going to just keep driving it until…

Tu Le:
The wheels fall off?

Lei Xing:
Until the Rivian R2 comes out. Cause I do have it on order, right?

Tu Le:
Oh yeah. One thing, I don't know if you saw this Lei, but I posted that currently LFP pricing at the cell level is $53/kWh in China, so I think it's worth having a couple of minutes, chat about that. 

Lei Xing:
It's been coming down, right? 

Tu Le:
I’ve been told by a couple of people now that Chinese government does not want CATL BYD to build any more capacity in China. Because of this, because it's creating unhealthy environment for all of the battery makers. Because CATL and BYD are the 800-pound gorillas. They're squeezing out the other players, which is what happens when you have intense competition. But in China, it's just a little bit different, because…

Lei Xing:
So CATL just another announced their half year results. I think they were 46.4 % of the China battery installation in the first half of the year, 46.4%, and globally in the first 5 months, they were at 37.5%. So also number one.

Tu Le:
So here's the reality of it. CATL supplies almost every automaker foreign or Chinese. And 46% just means that every two cells that are built or rolled, if they're cylindrical, one of them is a CATL battery. That’s crazy. And they have an 8-GWh factory in Germany. They're going to build a 13-GWh factory in Michigan with Ford.

Lei Xing:
Also in Hungary, that is being built.

Tu Le:
So the pressure for them to grow outside of China is going to be immense.

Lei Xing:
It is.

Tu Le:
And if they can't play the price war game in China too much more, they will play it outside of China in order to gain leverage and customers. So they already have OEM customers, like I said, legacy, whether you're U.S., whether you're Chinese, French, Italian, or German, but a lot of those companies supply or CATL supplies a lot of those companies only in China. Now CATL has relationships, but they, and this is the basics of automotive. And the car guys on this call or on this in the pod will nod their heads. They don't want to give any supplier, OEMs never want to give any supplier that type of leverage. So they would probably prefer to have another source outside of China than CATL. But at $53/kWh. Let's say a Panasonic and an LG, and I’m making these numbers up. They can't get close to that. Maybe they're $70. Because at the pack level. So what's important to explain as well and I’m jumping around so my apologies. At the cell level, it's $53, whether it's a cylindrical cell, a prismatic cell, or a pouch cell, what happens is the cells get put into modules, and battery pack might have 6, 8, 10 modules. At the pack level, there are other things going on. And so the sell level and the pack level are going to have two different pricing. And the Bloomberg article said at the pack level, it's about $70 something dollars.

Lei Xing:
Yeah.

Tu Le:
And we've always, or common wisdom was always $100 at the pack level per kWh, below that price, companies are making money. If we're at $75, there's an opportunity to make money if you have a Chinese EV, a Chinese battery supplier, and they're able to supply you outside of China. Because inside China the price war is putting a ceiling on pricing. In most companies, outside that most companies that aren't named BYD and Tesla are holding on for dear life in the China market.

Lei Xing:
Yeah. And speaking of the price war, I think the price war seems to be waning a little bit. Because of some of these, the ABBs have, I wouldn't say raised prices, their prices going back to normal.

Tu Le:
Come on, Lei, just say it, man, they were like no mas.

Lei Xing:
Yeah, we already said talked about that last episode and then now it's right, the country is really really looking at it as, not, the automakers, they did their job, right? They whatever the price cuts the 0%. Now the country’s giving a hand by doubling the trade-in subsidies or incentives. I mean.

Tu Le:
So they doubled down. So the Chinese government doubled down on subsidies, again.

Lei Xing:
I mean this is not only on the passenger NEVs, it’s on public transport buses getting like RMB60,000, almost $10,000 a pop, old trucks getting RMB80,000, right? These are, I mean just trying to find ways to really push consumption,

Tu Le:
Which strengthens BYD, which strengthens BYD, because they're one of the largest electric bus manufacturers as well. But, one thing, and you say that the price war might end, but you and I know that coming into September and October, there's going to be some desperate Chinese EV companies that lower price even further. So how disciplined can these German automakers and on the premium side be? That's the question because they'll continue to lose market share through ‘24. You believe that right?

Lei Xing:
I think they know as well.

Tu Le:
I don't know if their projections go far enough, because I'll be quite frank. I don't think Porsche in ‘23 thought they were going to lose 15% of their sales and then an additional 33% in the first 6 months of this year. To your point, they knew that the market was softening for their products. But were that severe? I wouldn't have guessed that much. I'm kind of the traditional western mindset where I thought Porsche’s brand and their logo and their crust was kind of bulletproof, but it’s not. So. That’s all I have man.

Lei Xing:
Then you see Tesla extending that 0%, 0%, right? To end of August.

Tu Le:
So none price cut price cut.

Lei Xing:
Yeah and people will use different methods to tweak pricing going forward, definitely.

Tu Le:
Free charging, free service, whatever. The one thing Lei that we should mention about the CATL thing that we talked about for a few minutes is that there are a lot, there is a lot of focus from the Japanese and Koreans on the next innovation. And the Chinese battery makers still have the evolution moving towards sodium ion. That's not going to be a fit for every single EV moving forward. It's probably going to be more for the mass market, mass market, cheaper vehicles that will have lower range, but it should be noted that was it SK? And then Tesla, over the last couple of weeks, there have been articles about the dry coating process on the cathode and how that could drop pricing. So there could be within the next 3, 4, 5 years, likely 4 or 5 years, a huge innovation that drops the cost of battery prices further.

Lei Xing:
Even further, yeah.

Tu Le:
That's not dictated by CATL or BYD if that's the case, and CATL BYD takes some time to develop that technology in house themselves. It's going to be wide open. There's going to be a ton of even more overcapacity. If the lines, if you can't switch over the current lines, and a ton of investment needs to be made to upgrade, change over your factory lines for at least at the cell level, right? So I think it's important to kind of note that because it seems like the Korean companies and Tesla are able to do them, but not mass produce them yet. That's the biggest challenge, but it seems like they're getting closer.

Lei Xing:
Yeah.

Tu Le:
The last thing I wanted to talk about Lei was my ride in the Lucid Air Sapphire.

Lei Xing:
Now that’s the top version or?

Tu Le:
$249,000,

Lei Xing:
That's the top, right? The 1.8, 1.9?

Tu Le:
Oh my god dude, so we know the newly appointed head of global communications.

Lei Xing:
I wonder whatever became of ONE. Nobody talks about them…

Tu Le:
They're grinding. They're still looking to raise capital, but they've been humbled. 

Lei Xing:
So Lucid.

Tu Le:
So Nick, he used to live in Ann Arbor when he was working for Our Next Energy. But I think he's kind of, Newark, California, near Fremont, California, right off the 84, if you're familiar with Silicon Valley. That's where Newark and Newark is. Fremont is, obviously where Tesla is headquartered. So Newark is the city next to Fremont. And so Lucid is there. And so he came back to Ann Arbor for some meetings and picked me up in the Air Sapphire. Blue, beautiful car, understated because at $250, I'm not sure what I was expecting from an interior standpoint, but not much different from normal Air. The IP looks great. The center console looks great to me. Anyways. It's very simple, but then we were at a red light and he just mashed it and it’s like a roller coaster ride Lei. I, my stomach was still at the red light, 3 seconds later. And the g forces it was, but you know how…

Lei Xing:
Made you a little nauseous.

Tu Le:
It made me nauseous. You'd been kind of like your Taycan ride.

Lei Xing:
Yeah, exactly.

Tu Le:
Wow. I just wasn't, because in my mind, I can't fathom what 0 to 60 and 1.8 seconds feels like. And so and he did it again. And I was like, dude, you got to stop. I'm going to throw up. And but he just wanted to show me the capability and it was crazy and good luck to Nick. He's a good dude. So obviously, you and I are rooting for him. So.

Lei Xing:
Yeah, it looks like he's doing a great job.

Tu Le:
Yeah I've seen a couple of posts where it's like the best thing that Lucid was hire him. So I think he's going to do a great job.

Lei Xing:
Very proactive.

Tu Le:
Helping Peter be Peter’s mouthpiece, but also kind of yeah, like and then one of the guys that I met at NIO through Jeffrey, when I was in California last time, he moved over to Lucid. So. I promise everyone that we're going to move to video, hopefully next week.

Lei Xing:
We'll try that. And but other than that, no, going to watch some Olympics, seeing some, because first time on the Seine, right? Instead of a stadium. So I wonder how that's going to look like. And also Toyota is, the I guess, exclusive automotive sponsor for the Olympics. So they'll be running some Mirais, EVs, PHEVs, HEVs. But I wonder, right? The next Olympics, the next Olympics after that, whether we'll see a BYD or somebody else, right? Who knows?

Tu Le:
I did see. I was just in Paris, obviously, that like 3 weeks ago, 2 weeks ago, and there's a lot of BYD stuff. So they seem to be quite bullish on the European market. But I also looked at French pricing for some of their products, BYD in particular, and they're not cheap.

Lei Xing:
Not cheap. No. Exactly.

Tu Le:
We're talking 70,000, 80,000 euro expensive. So don't know how long that's going to last, because let there's not 90,000 euro value, 80,000 euro value in the BYD, full stop. The other two things like cause we should touch on, Ford reaching, Ford share price reaching its lowest point since 2009. For those that don't remember, 2009 was when the financial crisis happened, they wrote an $800 million check I want to say $800 million for warranty cost. So. Bascially the vehicles that they build over the last 3 or 4 years has been crushed.

Lei Xing:
It’s shocking, shocking that this would still bog them that this warranty cost I mean this day and age.

Tu Le:
The other thing, too, is this is pre-Tavares, pre-Stellantis, but Stellantis paid half a billion or $400 million and fines from the EPA because they didn't meet their CAFÉ targets. These guys are almost writing $1 billion check, because they didn't hit their targets. And this was FCA not Stellantis. Significant hits to pocketbooks and bank accounts for the legacy OEMs. You almost see this as an own goal, because they need every ounce of profits to reinvest towards their future. But and I knew that these companies were going to have really, really difficult times. In order to make that transition, some will be more successful than others. But this is just part and parcel of transforming the industry, transforming and them trying to keep up with it. 

Hey, everyone. Thanks again for joining. We will talk with you all next week. Hopefully we will see some of you, because we'll try to launch that channel. Have a good morning, afternoon, evening, and we will talk 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.