Episode #178 - XPeng MONA M03, BYD 50% Global, Vauxhall Goes Low (£24K LOW)

The podcast starts with Tu and Lei's thoughts on the XPeng's Mona M03 and the aggressive pricing that was announced for the vehicle. This evolves into a recap of XPeng history on product launches and the hope that this launch can be more successful than their past ones. 

Tu mentions that there are bad takes out there and emphasizes that price doesn't automatically dictate the segment in China anymore since the Chinese EV makers are offering tremendous value during this price war.

The two switch topics over to the Chengdu Motor show and give a brief history lesson on the Chinese auto show hierarchy and what they expect from Chengdu. This discussion moves onto Tesla news about offering a 7-seat Model Y for China and their current promotions that have allowed them to keep production high in China. 

Lei mentions Tu's LinkedIn post that got a bit of attention referring to BYD's forecast of 50% of sales in the future will be ex-China. They then discuss the possibillity of and the scenarios that would help them achieve that goal. 

The podcast ends with a discussion on the recently announced Vauxhall Frontera EV being offered in the UK for £24K ($28K) and why other legacy automakers aren't able to get to that price. 

Transcript

CEM #178 Transcript
Recorded 8/30/24

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. An early edition this week. 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, subscribe, comment on this podcast and send it 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.substack.com, which I encourage you all to do. Lei, a back from Banff, Canada Lei. Can you please introduce yourself?

Lei Xing:
Yeah. Back home, good morning from my side. This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode #178. From the MONA M03, Xpeng MONA M03 early in the week to the Chengdu Motor Show today, the last week of August, and everything in between have provided the latest what I tweeted “fireworks or shock waves” into the upcoming fall, which is in the China realm known as the “Golden September Silver October.” “Jin Jiu Yin Shi” it’s meant to…

Tu Le:
We're just getting started.

Lei Xing:
Yeah cause the way they use that term because it's the season of harvesting, right? The kids are back in school, I guess, all over the world, in China, in the U.S., at least in the public schools at least. And which means…

Tu Le:
My kids go back this week. 

Lei Xing:
Which means you know the summer kind of the lull turns into this mini, as you would tuerm, mad dash, before the final mad dash at the end of the year. This was certainly a busy week, and we probably start off with MONA M03. Your initial thoughts, what comes to mind?

Tu Le:
You got me mid coffee drink. $16,800 for a pretty full-featured EV and man, that hit like a brick around the world. I think there was, I feel pretty good for Xpeng that they were able to get a lot of attention from this. And there was a comment out there on Twitter by one of the analysts that you and I know, I think he has a decent number of bad takes, but he said that the MONA is half the price of a 3, so how can it compete? The Chinese don't look at it that way. I guarantee you that a Chinese consumer was looking at a 3. They can also look at the MONA M03. So it's not just it's not a pricing thing. I think this is where the west kind of gets it wrong. They're trying to put their mindset on the Chinese consumer. It's all about excitement. It's almost like a fashion statement that you get the latest car, now that they're so affordable, it makes it easier, and which is a weird thing to say, right, Lei? Because it is competing against the 3. In your opinion, no?

Lei Xing:
I said it would be a not only a Model 3 killer, but it’ll be a BYD killer, it’ll be a Xiaomi killer. Because one thing comes to mind is the MONA M03 did what the Xiaomi SU7 couldn't do, which is price the vehicle at that price range. And then second, what comes to mind is for the first time in the 10-year history of Xpeng, they finally have a blockbuster model in terms of the 48 hours getting 30,000 orders, all of their previous models, it wasn't like this. Obviously, the pricing has something to do with it, but I mean you could, watching the press conference, watching the 10-year at the launch. He Xiaopeng definitely channeled Lei Jun’s and Xiaomi’s kind of the vibe. So I think I mean throwing down a gauntlet and whether good for the bad and a sign really, and I said, it's kicking off this latest round of bloodbath, right? And we go from there and my expectation, and Brian said in the earnings that the first full month of launch, they plan to achieve a new record for deliveries, for a new model in the first month of launch. So I'm expecting 10,000, nothing less than 10,000 based on that drone footage they showed of all the parked MONA M03, being delivered to their dealerships or showrooms or delivery centers. Again, high high high expectations. 

Tu Le:
And this is where I hope He Xiaopeng and Brian Gu have learned their lessons from the past launches, but also are looking at playing more chess than checkers, anticipating that likely going to be a response from a lot of players, including BYD, including Tesla. They're able to weather that storm, because in the past the P5, the P7, the G6, they've all seemed to get initial coverage, positive coverage, and then just fall off completely, right? And the only thing I can think of Lei, that has been sustained marketing blitz is Xiaomi with the SU7 or the SU7. And I believe that's largely because Lei Jun is out front. Now, he seems to be a lot more personable on social than He Xiaopeng or Brian Gu would be. But I just hope that they've thought this through and are able to kind of weather the initial storm that will come, especially now that the Chengdu Motor Show and will likely hear a lot. You and I always hear rumors, but will likely hear real news coming out of the show.

Lei Xing:
Yeah, going to the criticism a little bit for Xpeng, to this day, I think you and I probably feel a good analogy for Xpeng, I think more than any one else of these smart EV startups is, they've been like a 1 year, 2 year old kid learning to walk. And they somehow keep falling down and then get back up and then keep falling down. And to this moment seems they've learned how to walk with the MONMA M03. Because it's the first time, like I said, that they've gotten this much order in such a short time period making it a blockbuster. But the issue going forward is what I feel for Xpeng, how can they make this sustainable? That it’s not just one model, new model, replacing a previous model to be the blockbuster. Whereas a Li Auto would have these L7/8/9, 6/7/8/9, all selling good volumes, right? You see what I'm trying to compare? That's the thing we need to watch going forward, right? They're not home free yet. And the caveat of the two of the trims of the MONA M03, the cheaper trims is that they don't have XNGP, remember that, they don't have XNGP. Only the MAX version has the XNGP. So they're certainly trying to address the kind of the segment where the bang for the buck, RMB100,000, these type of consumers, really probably the BYD Qin, they are certainly going to be different from the consumers that buy, let's say, the Li Autos, right? And we heard about Li Auto really trying to drive home the message of their end to end (E2E) vision large model (VLM) approach to smart driving. And you still have to wait until early next year to get the MAX version. So that's the caveat, right? But initially, it looks like they're selling off the lots, right? They are….

Tu Le:
Yeah and I think you make a great point. They're making a calculated risk. They're taking a calculated risk by saying that the people that, let's say, the buyers under RMB200,000 aren't that keen to have the XNGP feature perhaps.

Lei Xing:
Yeah, well at the same time, Xpeng has said, He Xiaopeng himself has said on different occasions that they are trying to democratize, that their, that's their USP, right? That this smartification, the driving, smart driving into more mass market, into more TAM, right? So I guess right now the RMB150,000 or the two, roughly the $20,000, is that line, right, seems to be that line right now, with the XNGP.

Tu Le:
But that just tells you Lei that there will be another company that offers all these things for 16, 17 grand, because that's how the competition has been working in the China market for the last 3 years. My expectation has always been that BYD would democratize Level 2+ intelligent driving and offer it as like standard, because again, to your point, Li Auto is a premium automaker. Let's make no mistakes about that, make no mistake about that. And so we need to look at Xpeng. We need to look at, you know, Xiaomi is more of a value. I don't. That's a tough one for me to call them premium. But what do you think? Do you clearly see them as premium or a kind of a hybrid?

Lei Xing:
Xiaomi is like a Tesla? Hard to define, it's hard to define. And I think in the RMB200,000 range, it's, I don't see it as that premium. I think it's more, yeah, RMB300,000 and above should be.

Tu Le:
Let's relate this to the United States. Rivian is being lauded for their R2, which is still going to be a $45,000 bare bones R2. That is the estimated MSRP. What it comes out at in a year might be different, but they're being lauded by launching a $45,000 EV and so that illustrates clearly to me the difference between the U.S. market for EVs and the China market for EVs. And I also want to say this: the 20 year old me or the 20 years ago, I wouldn't have cared about a $16,000 car regardless of who was manufacturing it. I was all about the cool A6s and all the cool cars from the premium guys. But now I'm more curious about getting in this $16,000 car, looking at the fit and finish, feel how it drives than I am about some of these more expensive, much more expensive products. So there's a bit of irony that's not lost to me that makes me smile a little bit, because the most interesting sector or segment in the China EV spaces, the mass market stuff, because they're packing so much stuff under $25,000.

Lei Xing:
Which is why that line between premium, luxury, mass market is very blurred. What you can get for the RMB100,000 range and the RMB200,000 range. Compare what you can get for BBA in the RMB400,000, RMB500,000 range is getting blurred. Comfort, feature, tech, material, finish, right? That's the thing why also looking at the Chengdu Motor Show I just see legacies being further left in a dust for now.

Tu Le:
And that's precisely why I said what I said at the beginning of the show. You can’t, price is not the way you segment products anymore, not in China.

Lei Xing:
It's what you get for that price, right?

Tu Le:
And so this, it just indicates like a very surface level understanding of what's actually happening in the China market. Do you agree with that?

Lei Xing:
Yeah.

Tu Le:
And again, that's very western way to look at it. This watch can't compete against a Rolex because it's only $500. Well, you know, very affluent people are buying Xiaomis. Very affluent people are buying more of the mass market brands because it fits their lifestyle and what they want. And it has a lot of features that they appreciate. So price is a factor. I'm not trying to underestimate the importance of price, but I keep on coming back to value. Your point about the legacy is getting further and further behind is because they can't provide value.

Lei Xing:
Now just one more thing on the Xpeng MONA is that I am a little bit worried. Now we have this MONA M03 in this price range. Further ahead, long-term, how does that affect the brand premium or the brand, the ability to price the cars higher? The expectation of ok Xpeng is cheap, not cheap cheap, but because they were selling in the RMB200,000 range and even higher, the P7s, right? The G9s are over RMB300,000, how will that affect their ability to have that price range, coverage? It’s something to watch. Are they going to be launching future models all in this price range? I don't know. Does that deteriorate the brand image, the brand positioning? These are some things to be watched, right?

Tu Le:
And you can point directly back to, you can point directly back to BYD with its challenges. Now, the Han and the Tang aren't premium, but if you go to Europe, they've priced them premium. So they're having problems, obviously, selling the Han. And the time they'll need to adjust pricing there, but they decided to launch two new brands. So is that in the cards for Xpeng? Because we also have to remember that they are 5% owned by Volkswagen Group. And so there's going to be some influence from Volkswagen Group when it comes to that stuff. I think that they're probably freer to take risk because they have Volkswagen as their backstop or their backer. So.

Lei Xing:
One more data just to compare MONA M03, 48 hours, 30,000 firm orders, Xiaomi SU7 in 24 hours, they got over 80,000 “firm orders.” So just to compare.

Tu Le:
And what's important, we can move on after this, but this was MONA M03 taking the mantle from the SU7, the SU7 created the floor for full featured value EVs. And now I think the floor is now $16,800 for a decently ranged, full featured with the exception of L2+ intelligent driving. It's significant because BYD is almost old hat that they ship so many products sub-$20,000. 

Lei Xing:
One more extra to mention Xpeng has BYD to thank for. Why? FinDreams. We got to emphasize that: it's BYD inside the MONA M03. I mean cost wise, right? They get the leverage.

Tu Le:
Yeah, so it's frenemies.

Lei Xing:
Yeah, frenemies. And no LiDAR, right? That goes into the cost.

Tu Le:
But LiDAR, I think is now almost, intelligent driving services aren't really, I don't know.

Lei Xing:
Yeah, I mean He Xiaopeng seems to be veering away from LiDAR. As does Li Auto, perhaps, I know JIYUE does it? There's increasing sentiment. And the increasing use, as I've mentioned, the end to end and the large model approach. We're going to see that also bifurcate a little bit.

Tu Le:
So let's do this. Let's move on to Chengdu Auto Show. I know you had posted about a couple of vehicle launches.

Lei Xing:
Yeah I was following it last night while the thing, the show was going on. Some of the observations, most of the new let’s say…

Tu Le:
Let me stop you right there Lei. Can we, we do this every year, but I think it's very important because we also pick up new listeners. Can you talk a little bit about the Chengdu Motor Show and how it fits into the Guangzhou, Beijing, Shanghai motor show kind of hierarchy.

Lei Xing:
So the Chengdu Motor Show slots between usually the Beijing and Shanghai in April,

Tu Le:
Oh it’s the third, you think it's the third?

Lei Xing:
No, I think. Yeah, no, I think it's probably fourth.

Tu Le:
Or second.

Lei Xing:
Well third if we combine Beijing and Shanghai into one, number one, Guangzhou will be number two, Chengdu number three. So it slots between…

Tu Le:
So that's what I thought too.

Lei Xing:
Yeah so in terms of timing it slots between Beijing/Shanghai and Guangzhou which is in November, the significance of Chengdu also is believe it or not, Chengdu is I think if I remember correctly the number one city in China in terms of the number of, let's say vehicle parc, number is well over 6 million units and the western region in the summer, right? Hot pot, and while and by the way…

Tu Le:
So Chengdu is in Sichuan Province. Chongqing is the capital, but Chengdu is the sister city. It's a great town, amazing cool city.

Lei Xing:
While the auto show is going on, Chengdu currently has electricity restrictions going on. That's something of another topic that it's, maybe it's related to…

Tu Le:
We could also say Chengdu is home of the pandas.

Lei Xing:
Home of the pandas, Volkswagen’s plant there, quite a few others.

Tu Le:
And it's a technology hub. There's a lot of tech companies there too.

Lei Xing:
Yeah and traditionally the Chengdu Motor Show is more of let's say a shopping center more than an auto show, because when I went there, the first media days, their sales people will line up next to the booth and hawk at you on the media day. This usually doesn't happen in Beijing or Shanghai. But Chengdu is more of a sales kind of a setting.

Tu Le:
And famously back in the day, and it's not just Chengdu, but there are other car or car shows smaller ones, but there used to be these guys. It's normally older men from lower-tier cities that would just bring bags of money, bags of RMB, you've seen that right?

Lei Xing:
Then the other thing, obviously you touched upon it, BYD bullying others. BYD had their own hall of all their brands. So that's something new. And then one observation.

Tu Le:
So we should say Lei that it's the Chengdu/BYD Motor Show.

Lei Xing:
The BYD bullying show, because BYD also put up a kind of a street, BYD smartification, their, they put up a pool where Yang Wang they can put in a Yang Wang and have it turned into a boat.

Tu Le:
Not only that. So you and I have been to BYD headquarters. We can say that. And then they have that wall of patents, and they have that in Chengdu now, too. So.

Lei Xing:
Yeah. So back to the observations, the type of vehicles launched, I find it interesting, except the new long range Macan, e-Macan, which was just under RMB600,000 or $80/90,000. All of the cars that were either launched, unveiled or went on presale, were either the RMB200,000 range or below. There were quite a few Model Y killers, those with the 7s in their model names, we had the ZEEKR 7X, it's a global model. We had the AVATR 07. We had the LUXEED R7, a bunch of other 7s. And then one model I tweeted was this, Tharu, Shanghai Volkswagen, which is a compact SUV below the Tiguan, went on flash sale, starting at RMB79,000. So I think besides that, I think it was obviously again, we said BYD, all the other Chinese brands that were making news basically. And the other one basically BMW the new generation of the X3L and that's pretty much it, I think.

Tu Le:
Do you know if Tesla is there? I didn't ask.

Lei Xing:
I think Tesla was there if I remember correctly.

Tu Le:
It should be noted that Tesla also this week is rumored to be launching a refreshed Model Y. Now refresh to Tesla means that they update a couple of front facial aspects and maybe do a couple more cosmetic things on interior. But I just don't know if that's going to move the needle and neither do I think the 7-seat Model Y for the China market is going to move the needle that much, but I point to utilization rate at Shanghai Giga being a pressure point for them, a negative downward pressure point for them, that there's pressure for them to find new ways to sell more vehicles in order to keep that factory running above 60%, 70%, 80%

Lei Xing:
For the time being the 5-year no interest financing has actually worked wonders for Tesla, for the time being, and they're losing market share, but they've kind of maintained that 60,000, 70,000-unit shipment out of the Shanghai Giga, right? So it's matter of perspective, the pie is getting obviously bigger and they're obviously losing market share. And you have these Model Y killers, Model 3 killers coming full front. It's only going to get, the pressure is only going to get deeper.

Tu Le:
You raise a great point. There's only 9% tariff. So total of 19 point something percent tariff into the EU.

Lei Xing:
19%.

Tu Le:
The 7-seater is going to be probably very limited demand out of the EU, but anything that allows them to keep the factory running and ship them, because the Model Y refresh that's coming for China is also probably going to be shipping to the EU and as domestic demand in China continues to slowly decrease, you're probably going to see more exports from Tesla into other markets from Shanghai. And the 19% is not going to dissuade them from trying to ship more to the EU, I don't see Berlin Giga taking on the refreshed Model Y for a little bit, from a production standpoint.

Lei Xing:
If you're trying to maintain margins, I think that's the, zero percent, no interest financing is a leverage to play.

Tu Le:
Hey man, 1.99 in the, 1.99 in the U.S.

Lei Xing:
And also in Canada, right? I think they just launched the…

Tu Le:
And so let's, anything else on the Chengdu Motor Show?

Lei Xing:
The only other thing I wanted to mention on Chengu Motor Show is that Li Auto, at their press conference announced something interesting, they call it, “you jiandu zidong jiashi” which means supervised autonomous driving. I don't know what that means. It almost sounds like the current NOA XNGP as if they're not supervised, which is not right. Obviously, they need to be surprised which is L2, but they showed this one button push parking space to parking space, autonomous driving capability in a video, which means if you have a fixed parking space at home and where you work, you can basically do a parking space to parking space. I think it's still ADAS, right, with the push of a button. I thought that was interesting and still need to explore a little bit what exactly the supervised autonomous driving mean. I think Li Xiang, he mentioned earlier this year that they're trying to go into L3 capability by the end of this year or early next year. So it's kind of blurry of what exactly is they want to achieve. But it looks like it's the next iteration of this NOA game. They just pushed out 6.2. These are happening lightning fast, the capabilities of, and also the Huawei, I think you also mentioned in the newsletter, the Huawei Qiankun 3.0 I think now is going into different vehicles, even BYD, right, signed the deal with the Huawei Qiankun to catch up. 

Tu Le:
I think what's important, I think what's important Lei about He Xiaopeng, Level 3, pushing in the Level 3? It's not up to them. I just want to let the audience know that's going to take a lot of city approvals, state level approvals, provincial, but…

Lei Xing:
Same for the Tesla robotaxi, right? It's more complicated than it is.

Tu Le:
Yeah so, I wouldn't be surprised if Elon takes another trip to China before the end of the year, because the longer it takes for them to get FSD launched, even if it's limited, it just becomes more irrelevant, I think.

Lei Xing:
Yeah so word on the street is that local China FSD testing has been delayed? I think I saw a tweet somewhere. 

Tu Le:
That's what I heard too.

Lei Xing:
Yeah so it's not easy.

Tu Le:
This. Well, I won't say who, but there's probably some CEOs talking out of both sides of their mouths, where they say they welcome FSD but behind the scenes, they might be pushing for restricting it or pushing the launch, trying to push the launch date. But that just means that Tesla is probably working very closely with the Shanghai government, the local Shanghai government to help them get it launched. And I think it's going to look completely different than what it is in the United States at least, in Europe. So will it be as effective with a lot of these changes or restrictions? I don't know. There's the actual software, but then there's the data part. And in order to feed the beast, the Chinese data needs to be sent over to the U.S. and so a lot of negotiations behind the scenes I'm certain.

Lei Xing:
Yeah, I think for the next 6 to 12 months depending on when that new Model Y, I mean, Tesla has their work cut out for them in the China market, they have limited number of levers to play with either price cuts or that financing game in lieu of no new models and competitive, cheaper priced models.

Tu Le:
And we could be Lei, we could be going into uncharted territory starting in 2025, because I think you and I both assume that the price war will continue through the end of this year. In January 2025, we'll have a 2-year anniversary on the price war that was started by Tesla. And I know having spoken probably daily, weekly with our friends still in China, that the economy is not great.

Lei Xing:
It's not something to celebrate about, what you said, two-year anniversary of the price war.

Tu Le:
It's crazy that I don't look at the MONA M03 as a price cut, but it's just almost a reset of the market. 

Lei Xing:
That’s the other thing I called it He Xiaopeng pulls a price cut on launch trick. But…

Tu Le:
So cause I think it shouldn't be lost on people that all of this flurry of excitement and anxiety is almost masking the fact that the Chinese economy is as not nearly as strong as it's been historically the last 30 years.

Lei Xing:
No. Food and beverage. I saw that chart that you put up.

Tu Le:
But that's huge because I don't have to tell you this, but you remember in 2016, 2015 that you go to these new places and it would be mostly foreigners. And then a year later it's all Chinese people.

Lei Xing:
Even Pinduoduo was losing money or something. I think I saw someone…

Tu Le:
So it's, and a lot of my friends are in F&B, so I hear it from them firsthand.

Lei Xing:
Sure. And on the flip side, right? We saw, I know you have posted some stuff on LinkedIn on BYD, half of their sales global, eventually. And then their latest earnings.

Tu Le:
Did you agree with that post?

Lei Xing:
I think we can debate a little bit. I agree because He Xiaopeng also said their sales, half of sales will be overseas. And it's likely BYD will be one of those seven mainstream brands that will remain in the next 10 years, which He Xiaopeng predicted, right? And he certainly likes to be one of those seven. But a question mark on that more than BYD so, but still, I think it was interesting to see BYD maintain kind of the margins that they could do despite you call it a price cut, launch these models at really ultra-low prices, but their volumes went up, made up for it. So I mean 20% margins, right, for BYD still, despite the kind of the, which shows you the cost advantage that they play with.

Tu Le:
Yeah it’s, this should point to, before we get to the 50% conversation for BYD, Roger posting, Roger Atkins, friend of ours, friend of the show he had posted about the Vauxhall. He's a Brit.

Lei Xing:
Frontera.

Tu Le:
Vauxhall Frontera, 24,000 pounds.

Lei Xing:
25, let's say, 25,000 Euors.

Tu Le:
Yeah, $28,000, $29,000, it starts at 24,000 pounds, 25,000 pounds, 45-kWh battery. And he basically said, if Stellantis can do it, then why can't others? And this is the whole thing. I don't know what Tavares’ accounting is, but I know that smart car platform, I did a little research. It is going to be that platform is going to be used for 3, 4, 5 different brands that Stellantis has. So I love that Stellantis and Tavares are leading the way, because if the foreign legacies weren't taking or were not going to try to compete against China EV Inc., Stellantis, they have no presence in China effectively, except for LeapMotor. Now, they're trying to grow it and they will. But Stellantis is right in your backyard, buddy. They're going to be here in the United States, here in the United States, and they're huge in Europe. If you look at Latin America, Fiat, the number one brand in Brazil. So I love what Stellantis is doing. They seem to really, really be aggressively moving. I think they're trying to balance things with some of their still ICE vehicles, but 25,000 pounds, they're lowering the floor on the legacy side.

Lei Xing:
That's something that the China EV Inc. has to watch for, because they are not, it's not they're just going to take over, because you're going to have these type of Frontera models that will fight back. That'll be their own China EV Inc., right?

Tu Le:
You make a great point Lei, because I didn't think about, I don’t know about you. I'd love your thoughts. But let me finish this. I didn't think about any Europeans or American companies being able to compete against China EV Inc. Now, I've thought about that for the first time in probably 18 months. And that's why you make a great point, because at least one legacy automaker is like, you are not, I'm not going to take let you take this without a huge fight.

Lei Xing:
That's what the 100% tariff is there for, to give this time for someone like a Ford to launch a similar, let's say, a Frontera or something similar, for GM that I think they still have the new Bolt coming, which is the $30,000, right? So give them some time and see whether they can launch the type of more affordable EVs.

Tu Le:
Now. So this goes back to our earlier conversation where in the Europe, it's still a price thing, because we haven't reached saturation from a brand or product standpoint. And so the first thing your eye moves to is the price. And because if you look at the specs, a $30,000 or 25,000-pound Frontera is not going to be able to compete at that price in China from a feature standpoint, and they seem, Stellantis seems to be really, at least from a product rollout standpoint, moving aggressively to try to take share from the legacy automakers that they normally compete with in Europe and the UK and the United States. Because I take the back, in the United States, I think the Equinox and the Blazer are getting a bit of traction, the EVs from General Motors, so kudos to GM. They also hired the third ex-Amazon employee that work, that's working out of Mountain View. Now I forget his name, but he works under Barris and David Williams. So I'd mentioned that, what, 5 years ago Lei that these people are going to have to hire executives from the tech industry. And Jim is finally doing that quietly, but it's happening. And so we're starting to see it a little bit. But and maybe I'll wait till next week, but with my charging experience while I was driving the Lucid, it was horrible. So we can talk about that a little bit next week.

Lei Xing:
I don't want to be in your position. So let’s just say that.

Tu Le: 
I think you are smart to buy the hybrid.

Lei Xing:
No, I mean it's my transition, right? So especially here in the U.S., I think hybrid is pretty popular. And speaking of hybrid, we got to mention this, speaking of Hyundai, they are going to start producing EREVs in Europe and in China in 2026. Think about that. And one of the reasons is because Hyundai, I think, has a pretty good hybridization platform. I mean mine, the Santa FE Hybrid drives pretty good and the system seems, the mileage is pretty good. So I think that's the China influence, right? They, at the Chengdu Motor Show, it was also interesting. They launched the 5th generation that boxy Santa Fe at the starting price point of under RMB200,000…

Tu Le:
Ni Xi Huan Ma (do you like it)?

Lei Xing:
It’s like a Cybertruck. It's kind of ugly, but it's cool.

Tu Le:
But it’s not as extreme as the Cybertruck. Cybertruck is so extreme. 

Lei Xing:
No, but I'm saying they launched this Beijing Hyundai, this 5th generation boxy Santa Fe at under RMB200,000 starting price, which I thought was, when I first bought the Tucson in 2006, in Beijing, the first SUV produced at the Beijing-Hyundai joint venture. It was RMB200,000.

Tu Le:
I didn’t think you were so loyal to Hyundai. I forgot about that.

Lei Xing:
I didn't know that. And then at the same time, they launched the IONIQ 5N, the imported at RMB388,000. So it looks like they're playing into these different niche markets trying to claw back. So it would be interesting to see how that plays out, the EREVs.

Tu Le:
I love that they're not giving up on the China market. But you and I know that there are other things at play there.

Lei Xing:
You know who was at the Hyundai Way, their CEO Investor Day, Jose Munoz. And remember I met him at the Beijing Auto Show. I'm sure he's, once after the show, he was back home doing some homework, right?

Tu Le:
I'm glad you brought that up, because so we should give Hyundai more credit on their hybrid technology, because we, most of the world seems to only talk about Toyota, you and I talk about Toyota and BYD. But there are others.

Lei Xing:
But I think Hyundai Kia outside of the Chinese market, they're just different, on a different level.

Tu Le:
Different level.

Lei Xing:
And then they are the number, I knew we're going to get to this. They're the number 3, right? Behind Volkswagen, Toyota and Volkswagen in global sales, around 7 million. Let me ask you, I know we kind of posted this on LinkedIn as well.

Tu Le:
So let's do this Lei, it is 9:26. We're going to open up the room up for questions or comments, and then you and I can talk about this 50% from BYD.

Lei Xing:
Yeah, so I don't doubt it. Second, let me ask you this question. I kind of hinted at it. Is it too far-fetched to say that BYD can become the number one automaker in the world once this decade turns, is it too far-fetched to say? I know you had predicted number two.

Tu Le:
I think a lot needs to. So here's the thing with that Lei. To me it’s not a product bottleneck. It's a CAPEX, speed to market, from a…

Lei Xing:
Regulatory. Geopolitical.

Tu Le:
Yeah, if they could ship everything from China, they could build the battery factories faster, fast enough, they could build the car factories fast enough because they don't have 10 million units of capacity. So we know because of the politics involved, they have to build factories outside of China now where timing speed is not in their control. It's actually probably working against them.

Lei Xing:
There's at least half a dozen factories online or being planned, right? At least half a dozen, outside of China.

Tu Le:
And but again, this is where I feel because I'm putting my supply chain hat on from in a prior life. So let's say they have 5 million units of capacity in China. They would need to build 5 million units of capacity outside of China, or some number like that, to be able to do that by 2030 in Europe, in Southeast Asia, in South Asia, I think that would just not allow them to get to the capacity number that they would need to in order to become the number one, not by 2030. Now, if they had a long horizon, then I could see them becoming the number one automaker for sure.

Tu Le:
Would it be fair to say that capacity in China for BYD, I don't sense that they will add any significant more to it. So let's say, currently, let's say, 5 million. This year, if they do 4 million, it's 80%, right? Which is very good, which means if they want to get to number one globally bench marking the 10 million with Volkswagen, Toyota, they would need what, another 5 million units of capacity outside of China. Am I making the math reasonable?

Tu Le:
Yeah cause and assume that this is the thing. They assume that a factory, a non-chinese factory is normally around 300,000 units. But the other thing Lei is that it's not as simple as building an assembly plant and building a standpoint, because they need to build battery plants. Now they need to employ people. And so in China, they have a lot more control. Shenzhen is a friend. Changsha is a friend.

Lei Xing:
Hefei. Xi'an.

Tu Le:
Xi’an is a friend, Hefei. So this makes it. And so I don't believe the constraint would be on BYD side is what I’m saying. You just have to look at it like, what is Toyota's footprint look like? The other huge constraint Lei is that I don't see the 100% tariffs being lifted in the United States. And if you can't sell into the U.S. getting doubling sales or more than doubling sales in 6 years, is probably an impossible task, without the U.S., that's what I'm saying, because they would, if you think about it, let's say China, they get to 4.5 million units, 5 million units, 6 million units, okay? Let's say they're able to get to 6 million by 2030. They would need to ship 4 million units, because the EU is the third largest market and the United States second largest market, they would probably have to do at least 20% of their sales in the United States, cause the math doesn't work with 100% tariff from the United States. Let's just say that.

Lei Xing:
So for reference, based on the first half year report, 1.6+ million units, 200,000 exported, which is about what, 12%, 13%. And we can expect both of those numbers to increase

Tu Le:
Significantly.

Lei Xing:
Yes, in the coming years. I mean at 4 million unit will put BYD this year, at least a top 10. Not a top 8, they're already the top 10. You only imagine that they will climb that ladder further in the coming years, but it's going to be a lot harder. They have the 88 countries, they have the footprint, they have the markets, they are planning these factories.

Tu Le:
What's important also Lei is that Toyota has had this resurgence because of hybrids, to unseat them is going to be extremely difficult just because Toyota is a strong player, Volkswagen weak, Hyundai strong. And so I don't underestimate Toyota's capabilities to compete outside of China. And I'd love to see them do battle mono e mono, because to me, man, Volkswagen. I don't know if, but it is just hard for me to think that the best days are behind them. It's saddens me to say that.

Lei Xing:
That's the other perspective. How, and if you're still able to maintain that 10 million unit a year rate is also a question Mark.

Tu Le:
That's what makes Toyota amazing, because they are a machine, okay? They're able to sell significantly. They don't sell that much in Europe, but in the United States, Japan, China, they do pretty well. Man, it's an exciting time. So for those that were wondering what we're talking about, there's an article Stella Li was interviewed because they had earnings this week. She had said that in the future 50% of their sales will come from abroad, ex-China. So I had posted, here's some simple math. They get to 4 million units this year, just under 4 million units this year. Let's double that, right? Because that'll be 50%. That means there are at 8 million units. And that would make them based on 20 23 sales numbers, the third largest automaker in the world. And my thought was that's a possible that's possibly reachable before 2030. Now, we just talked about in more detail, Lei, all these things that need to happen. And so that's a bit of an ideal state, because politics do get involved and stuff like that.

Lei Xing:
And going back to BYD bullying at the Chengdu Motor Show, they launched a new MPV Xia, which means Summer from the Dynasty. And that's just another play, it’s basically a sister model to the Denza D9, but yeah, much cheaper. Then the Seal 06 GT at the RMB150,000-200,000 range. They have more coming in the last quarter. They still have the bigger Tang, I think L and MAX coming. It seems this year that BYD has launched new models almost every other week, and it's just continuous.

Tu Le:
It's impossible to keep up.

Lei Xing:
If they wanted to get to 4 million, they are at just under 2 million in the seven, first seven months. They'd have to do 400,000 units, the rest of the way per month to get 4 million. So you're right. I think it's probably going to be a little bit under 4 million units for the year.

Tu Le:
My fear Lei is that come 2025. This EV surge that has been 3, 4 years running in China, that balloon is going to deflate unless we see a lot better results from the overall Chinese economy.

Lei Xing:
Yeah, good point. But I think August numbers predicting to be, I saw some numbers saying it’s 55%. I don't know whether that was the CPCA prediction or, it's only going to increase, I think, the rest of the way or maintain at the 50% level, right? Yeah. And just a matter of the right products and whether like a MONA M03 is one example. And then you have the upcoming the ONVO L60 still yet to launch, which is another Model Y killer and that product with that product with BaaS is also probably going to have starting at around the RMB150,000 range. Most likely.

Tu Le:
It’s exhausting. It's, I love it, because you and I are just kind of nerds. And this is personal for us, because we know these people. We know these companies. It's not like we're reading research reports from the sidelines. And so I feel engaged because of that. I don't want any losers, unfortunately. You and I try to be as objective as possible. I'm unfortunately not one of those people that are trying to write titles that are too click baity and maybe that's why we have a great audience. It's but we're not pandering either, right?

Lei Xing:
And then seeing He Xiaopeng, seeing Joe Li (CEO of JIYUE) tearing up in their press events that shows you the pressure of what they're against in this market environment.

Tu Le:
And Joe is a successful entrepreneur, multi-millionaire. And he cares.

Lei Xing:
He just revealed some data that we knew. It was right, very.

Tu Le:
I'm going to do this Lei, Will or Jiri, if you guys are listening and want to jump on and have a chat, Will and Jiri, are you at Chengdu? If so, maybe you can jump on for a few minutes for listening. Cause you should be paying attention Will and Jiri. But anyway, so let's give them 30 seconds to see if they.

Lei Xing:
Yeah, Will just reviewed the MONA M03, right? I think so.

Tu Le:
So you bring up JIYUE. We should also mentioned that the 07 has opened up orders. I was reading that the supply chain has started to be filled with vehicles. And so I think they should be shipping them very, very soon. I'm a big fan of that car. Again, this car is what $30,000, I think Lei, but I'm super excited about the chance, getting a chance to drive it. It's like…

Lei Xing:
Yeah, and then Li Auto had earnings. And I was predicting maybe they are about 520,000…

Tu Le:
Their share price got hammered.

Lei Xing:
Because one of the reasons is because their product mix, the L6 was kind of the driver in Q2 I believe. And L6 is their cheapest priced model. And now they're trying to kind of work with that their autonomous driving capabilities, which actually take rates pretty high on their higher the 789 models. So, but I mean…

Tu Le:
What do you think of that Q4 e-tron social media post that has the price at $20,000.

Lei Xing:
First of all, I think that was earlier in the year. It's not a recent one, but still…

Tu Le:
Okay. I didn't check the date.

Lei Xing:
But it's one of those things. It's like the Tharu, right? You put up a price point and then you put a slash on it. You put a much lower price below that. And it's a fire sale.

Tu Le:
Yeah, I, because somebody had responded or commented and I was like, this is the I can't give it away price. So.

Lei Xing:
Yeah, take it.

Tu Le:
Anyways. Hey, man, have a good Labor Day weekend, and we are rounding third into the final stretch of 2024. I can't believe we are into September. 

Lei Xing:
The Shanghai auto show is less than 8 months away. Just a reminder, still fresh from last year, man, the shock that I had.

Tu Le:
Oh yea, that’s right. Because yeah…

Lei Xing:
The shock that I had the first time.

Tu Le:
It's always a different flavor, Shanghai and Beijing always different flavors.

Lei Xing:
And they have a beef going on between the organizers, the CCPIT Auto, is no longer listed as an organizer. And there's been a beef going on, for Shanghai.

Tu Le:
Anyways, I would expect that Shanghai next year is going to be very, very well attended with the visa free and all these other things going on, these companies, like there's a number of companies that will have likely run out of money, maybe, but I won't speculate. Then and I will get to probably test a bunch of cars. So anyways, hey, have a good Labor Day for all my American, our American listeners, happy Labor Day weekend and for the rest of you all. I think we're finally going to try to go video next week, I promise. So you and I need to do some homework. Good morning, good afternoon, good evening. We will talk with you all next week.

Lei Xing:
 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.