Episode #185 - Lei in China, Tesla Earnings, Tu's Reuter's Conference Experience

The podcast starts with Lei seeing Tesla - all over Shanghai. Tu goes a step further saying that the Tesla brand is stronger in China than the Porsche brand. 

The conversation broadens out to a brief discussion about the Tesla earnings call and what analysts expect Tesla sales numbers to be in Q4 and whether or not they can match their sales from 2023. 

Tu moves on to congratulate WeRide for IPO'ing on the NASDAQ something they'd plan on doing much sooner. They discuss who is still up to IPO in the US later this year or early next. 

The conversation switches to Jim Farley's comments about driving the Xiaomi SU7 for the last 6 months and not wanting to give it up. Tu speculates that its his way of rallying the troops - Herbert Diess style. 

Lei then takes a few moments to discuss why he's over in China and some of the companies he's visited on this trip. 

The podcast closes out with Tu talking about his participation in the Reuters Automotive event held in Detroit and a brief discussion about how the price war has continued and still doesn't seem to be ending anytime soon.

Rumi.ai
All-in-one meeting tool with real-time transcription & searchable Meeting Memory™

Chapters

• 14:36 [Ad] Rumi.ai
• 15:26 (Cont.) Episode #185

Transcript

CEM #185 Transcript
Recorded 10/25/24

Tu Le:

Welcome to the live China EVs and More podcast. We will open the room up at around the 40-minute mark to anyone who's keen to ask us any questions. So please feel free to post them into X or YouTube. In the next hour or so, 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. And to our loyal listeners and viewers, welcome back. We ask that you smash those subscribe and like buttons so you don't miss anything from us in the future. Also, I'm confident that Lei and I are two of the best in the world to do this. So help us get the word out to other enthusiasts. 

My name is Tu Le. I'm the managing director at Sino Auto Insights, a global management consultancy that helps organizations bring innovative and tech-focused products and services to the mobility and transportation 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 of course I encourage you all to do. A Middle Kingdom Lei, can you please introduce yourself?

Lei Xing:

Yes sir, good evening, live from Shanghai. Two days left in my China trip before heading back to the U.S. This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode #185. Actually quite an eventful week. Where do you want to start? We can talk about our respective week. But I think there's many news that came out of this week. Tesla I think they had their second biggest growth in terms of share price ever on Thursday after they reported earnings on Wednesday. Maybe we start off there a little bit and talk about Tesla. And I'm coming to you from, let me, in Shanghai, and there's just Teslas everywhere. I'm surprised that I hadn't noticed that before, but at the hotel I'm staying. 

Tu Le:

Hen Pian Yi (very cheap!).

Lei Xing:
Yeah. In the lobby, outside the lobby, there's about eight or nine Teslas.

Tu Le:

Where in Shanghai are you, Lei?

Lei Xing:
I'm in the Changning district.

Tu Le:

Changning okay.

Lei Xing:

Changning district. I don't know where exactly.

Tu Le:

So not downtown.

Lei Xing:

No, not downtown, but there's about eight or nine Teslas parked in the lobby. I mean, I think Tesla in Shanghai is almost like the Santanas, Volkswagen Santanas. Yeah, what they used to be, right, is all you see is Santanas in the 90s and the 2000s. Now all you see is Teslas.

Tu Le:

It's like Buick.

Lei Xing:

I mean, that's how it is. And Tesla still remaining strong. I think that was basically what the Q3 results, I think surprised a lot of people.

Tu Le:

Driven by China and the United States, I think.

Lei Xing:

Driven by China and sure and I think one thing was interesting was they had record regulatory credits that they received. Imagine how bad the other players are that they have to keep buying from Tesla.

Tu Le:

Well, outside of Kia and GM this quarter, in Q3 anyways, I think everyone is struggling in the U.S.

Lei Xing:

Yeah, I mean, the record the regulatory credits and gross margins going back closer to 20%, despite this bloodbath that the price war in China. And in the first nine months of 2024, the Model Y is still the top selling model in China despite all the killers, the Model Y killers that are launching, we be a Tesla stan for a few minutes.

Tu Le:

So I would argue that the Tesla brand in China is probably stronger than the Porsche brand. 

Lei Xing:

Without a doubt, yeah.

Tu Le:
The resiliency of the Tesla brand, is that controversial of me saying that?

Lei Xing:

No, that's, that's true.

Tu Le:

So maybe not to you and I, maybe that, but that's blasphemy too, I think a lot of the Germans that listen to us, I think, right? So, that's going to be, so on top of that, the Model Y last year was the number one EV, number one selling EV in the world. This year, I believe it's going to take the crown of number one V in the world. Number one,vehicle. Number one selling vehicle. So.

Lei Xing:

Wasn't Model Y, wait, wait, wait, wait. Wasn't Model Y the number one vehicle in the world last year? Not EV, not only EVs? No? 

Tu Le:

I thought it was EV. I could be wrong, but okay. I'll, I'll.

Lei Xing:
I think it was everything, no? We got to double check that. But, you know, for...

Tu Le:

Let me ask ChatGPT. You keep talking.

Lei Xing:

No, I'm just saying for Tesla to be as resilient as they are, and I'm hearing that Elon Musk is not spending too much time at Tesla these days. Given the current election going on, given the SpaceX, I'm hearing from some sources that he's really not spending time, too much time at Tesla. And for them to be as resilient, given the China, given really outside of China, there's no competition, given that they just announced the 0% APR, which I think go ahead you can pull the trigger Tu for your Model Y. You don't have to buy FSD.

Tu Le:

So. I know, but I want to. the earlier deal was actually better for me because I could have financed FSD at 0%. But friend of the show, Sam Shapiro, who's the founder of Grounded RVs, who does the retrofitting of BrightDrop electric commercial vans into RVs, he and I were direct messaging each other for the last couple of weeks and I sent him a link to inventory, Tesla inventory in the United States because you get an additional couple, three grand off. If you don't order, you buy off of inventory. And then my friend Enzo had given us a code, a referral code. So another thousand dollars off. And last night I saw Sam's Model Y. So people are definitely still interested at the prices and the promotions that are being held by Tesla in the United States at least and obviously in China as well.

Lei Xing:

I think there's still a couple of tricks that Tesla will pull in the remainder couple of more months or so to get to that half a million-unit Q4 that they need to, in the earnings deck they said they will have slight growth this year which means over half a million units in Q4 and you just wait right, they'll pull a couple tricks.

Tu Le:

So they, believe the bullishness on their share price was because of their Q4 and 2025 projections. And.

Lei Xing:

Cheaper Yeah, yeah, and also the cheaper still the cheaper model coming out, I guess.

Tu Le:

No details, but yes. So a couple of things with their earnings call, they said, analysts were looking at 490ish thousand in Q4. Tesla said 515, 520 or something like that. So to your point, half a million units, but that's going to be hard to do as you know, Lei, without either continuing the current promotions or enticing customers in another way. Then they said that there's going to be 20 to 30% volume growth in 2025, which is I think a head scratcher. We don't know where that's going to come from unless they cut the price of the 3 and the Y by 20%. So.

Lei Xing:

Well, let's see that the slew of these Model Y killers that have recently come out in China versus we know the new Model Y, refresh, kind of the refreshed Model Y. What is it called? The Juniper?

Tu Le:

Yes, I think so.

Lei Xing:
Or what was the code name that's coming out? That's coming out in China pretty soon. How that will counte the attack from the China EV consortium, right? All of the EV brands competing brands. That'll be interesting to watch. And then plus the cheaper, the so-called the cheaper, not the Model 2, but maybe a cheaper version of the Y or the 3 that's coming out. I think that's going to drive sales. And plus given still the lack of really competing, competition. I think that's what we're looking at that they are saying it’s 20 to 30% growth on top of 1.8 million. And, you know, those are the things to watch.

Tu Le:
And a couple of other things about the Tesla earnings call, they have an internal ride hailing app that they're using in California for employees. So now we look back at the Uber Waymo partnership and it seems to make much more sense. It looked like Uber was playing offense, but it seems that they're playing defense because I'm sure Dara, CEO of Uber knew that Tesla was looking at an internal or testing an internal app. It looks like they may try to launch that app in 2025. So another opportunity to create services revenue for Tesla and a lot of mysteries, man. They are a resilient brand though. So kudos to those folks because Elon is really focused on the election, I think, and he thinks he's focused on a lot of different things. He's not focused on product development, or at least Tesla doesn't seem to be focused that much on product development. And the bold statements about, and he knows this moves the markets, the bold statement about FSD being better than the human driver by mid-2025. You know, those are going to move the market, those types of comments. And so it must be super frustrating for the Chinese EV makers who know they have better features and value vehicles on the roads in China and still not being able to take significant sales from them. Must be frustrating.

Lei Xing:

And I think, at the end of the day, it's a profitability game. It's a cost game. It's a scale game. And Tesla has those. And they showed their COGS. 

Tu Le:

There's no two better companies in the business than BYD and Tesla.

Lei Xing:
I think they show their COGS. Yeah, the COGS of $35,000 right, for the whole company. So we know where they're at. So those are the things that.

Tu Le:

Their margins creeped up, their margins creeped up, so that was a good thing.

Lei Xing:
Yeah, so I think the street looks for these types of details that show where they are and hence the stock market was rewarded. But.

Tu Le:
One thing, let's move on, but one thing we should do really quickly, Lei, is congratulate WeRide for IPOing, raising about $450 million in capital. That was in concert with their public, them going public, but also private placement or basically selling bonds. And I know it's been a long journey for Li Zhang. I know him personally, so congratulations to Li Zhang. He's now the CEO of an Android company, LimX, I think. so he's going to have some, his bank account is going to be a little larger now. But yeah. And then we are still waiting on Pony and Momenta, correct?

Lei Xing:

Yeah. Yep, so Pony should be coming within days and weeks. Because I think WeRide submitted this, started this process a little bit earlier than Pony. Yeah, Momenta and also, yeah. Also earlier.

Tu Le:

Right. No, I'm just saying that this is a, I think a last ditch opportunity from those pioneers because they were the first wave. And WeRide and Pony, those two companies started in the United States. WeRide actually started in China, but Pony actually started in the United States. And they've been around quite some time.

Lei Xing:

Yeah, I mean two of the big three, right? Adding Baidu into it. But also this was an eventful week on the IPO circuit because Horizon Robotics also IPOed in Hong Kong. Nine years after Yu Kai started the company, Dr. Yu Kai.

Tu Le:

Keep a careful eye on Horizon, everyone, because they seem to be China's greatest hope to be NVIDIA for China. That's a lot of pressure. I know they have OEM partnerships with I think Volkswagen and a bunch of Chinese EV companies, NIO, but for now NVIDIA is the class of silicon for intelligent driving, training servers, further machine learning. And I know that Horizon is looking to, or the Chinese government would like Black Sesame, Horizon, one of those types of companies to try to replace them.

Lei Xing:

Sure, sure. And I think for some time to come, it's going to be complementary. So you're going to have the Horizon Robotics. You're going to have the Black Sesame's addressing different tiers, different cost based EVs. And you're also going to have Qualcomm, let's say, on the, now they just announced this cockpit and ride elite chips that's going into Li Auto and Great Wall Motor. They had two representatives speaking at their SnapDragon Summit earlier this week, plus Mercedes obviously with the CLA coming out next year. Really they're trying to go the high end, but more affordable, more basic featured vehicles, they probably will use the Horizon Robotics Journey chips or the Black Sesame chips. For some time to come, I think those will be complementary. It'll be interesting to watch who really dominate the market in a few years. But I think at the same time, everybody is just launching the next iterations of better performance, smart driving and smart cockpit chips and that's driven by the competition in China.

Tu Le:

And Lei, I think it's important to also recognize that there are a lot of Silicon design players in the West that the Chinese startups or upstarts, however you want to call them, are really trying to compete against. And I'm talking Texas Instruments, I'm talking Renessas, I'm talking NXP Semiconductors. They also sell thousands of chips to the automotive sector. And I would argue that they're as important just because of the diversity of the silicon that they are selling into the automotive space. But there are, you better believe, and I can't name that many off the top of my head, but there are a number of Chinese that are looking to take share away from those companies as well.

Lei Xing:

Yeah, definitely.

Tu Le:

So man, why don't you, let's change gears and tell us what you've been doing for the last week. And then I'll tell you what I've been up to.

Lei Xing:

So I've been attending to some personal matters, one of the things I came back this time is for the I'm doing this investor tour in collaboration with TechBuzz China. And actually just ended like just literally a few minutes ago with the last dinner. And this whole week, starting on Sunday night with the dinner in Beijing with the investors, we had Tom van Dillen, our good burger buddy and someone who's lived in China for I don't know 26 years I think that's what he said it feels like he's in China forever, but he does you know consulting.

Tu Le:
So long story short, Tom is a dear friend of mine. My wife and his wife are very good friends as well. I think you had met him before, but then we brought you into the Burger Group and you now are very good friends with Tom.

Lei Xing:

Yeah, yeah. So the long story short is he found my business card from many, many, stacked somewhere that we exchanged many, many years ago. And that's a small circle, right? Then I didn't know that he knew you, but maybe I knew him earlier than you knew him. Who knows?

Tu Le:

I'm sure you did. The one thing that I'll give Tom a lot of credit for was he runs a small consultancy. And I did agency work for him in Beijing. And that's kind of sort of how I started Sino Auto Insights because he focused more on the Europeans. And at the time, this was probably seven, eight years ago, eight, nine years ago, I knew eventually I would be heading back to the United States. And during these projects that I did or helped Tom with in these meetings, just saw this gap of understanding that I thought I could help fill with correct knowledge and hence the newsletter, hence the podcast a few years later. So, so yeah, Tom and I, we've done some crazy stuff together. I've known him since what, 2012, 2013, really, really good dude. His wife is an automotive, German automotive executive as well in Beijing. So we're just nerds. He's a tech nerd, but he's also a car nerd. yeah, so that's cool. What else? What else happened?

Lei Xing:

Yeah, and really wealth of knowledge about being really, you know, living in China and maybe half of his life of how the peculiarities of living in China and understanding of those. I think that was good perspective. Then we started off on Monday at the Xiaomi factory and we actually did, you know, toured the body shop assembly. And then they had a showroom and a little, outside the factory, there's a little track that me and Tom, were, I'm sure you've seen the videos that he posted. We were in a Xiaomi SU7 MAX and it was going in the boost Kuang Bao mode which transliterated was boost berserk mode, 0-100 km/h in 2.78 seconds. So as, I mean, not so much for us, but really for the investors that were here, for them to really see and experience and feel the ecosystem of Xiaomi, not only digitally, but the hardware and the accessories, the Zhou Bian, which means the accessories that come with the car, phone holders, and how 

Tu Le:

Or that you could buy via the app, store or their website.

Lei Xing:
The vehicles interior are designed to fit those accessories. The thinking is really far ahead of time. And that's why this, we got to mention Jim Farley's comments on a video with Robert, right? The Fully Charged podcast or show. It was interesting. This video went viral in the Chinese social media first. And now it's gotten viral, before the U.S. That was so interesting.

Tu Le:

Before the U.S. So Lei, obviously I saw it because you and I are nerds and we are up random times at night and we're looking at social and then I saw it. And then by the time I woke up, a bunch of my Chinese contacts forwarded it to me. And then like three days later, a bunch of my American contacts forwarded it to me. So I was like, dude, I knew, I know about.

Lei Xing:

I mean, that was, just the way he described Xiaomi as a juggernaut, right? The way he described he doesn't want to give up driving the Xiaomi SU7. For me, it's like sometimes I don't want to leave China because the ecosystem, the EVs that you get to drive and experience are just so much more advanced and ahead. And why does Trump say the U.S. is a third world country? The EVs is one big example. And that's why you have the comment on Jim Farley, right?

Tu Le:

But man, the, the, the. But Farley is definitely going to the Herbert Diess School of Employee Motivation. 

Lei Xing:

Yeah, that's a good way of putting it.

Tu Le:
Because like, because if you recall, Diess was pretty effusive about his praise about Chinese companies and when he was the CEO of Volkswagen Group. And I think that got taken not too kindly and well from the employees at Volkswagen Group and some of the folks back in Germany. But that's the only way I can describe Jim openly, so affectionately talking about a particular Chinese electric vehicle that he's been driving for six months. And we also have to remind folks that Jim is a race car driver. So he's not some soccer dad driving around in a minivan, he knows the driving dynamics, the speed, the quality, fit and finish, everything. He's definitely a car guy, car CEO, car guy. And for him to say that so openly, I don't know if he's trying to put some of his Ford employees on notice or trying to motivate them, but let's see how they react.

Lei Xing:

Yeah, and you know, whether he's kissing up or who knows, but I mean, it felt genuine, right? I mean, that's from a nerd, from a car nerd. And then I think you'll.

Tu Le:

One thing I don't think Jim Farley is, I don't think he has a filter like that where he's very like PRy, if that's a word. I think he's very blunt. So.

Lei Xing:

I think it shows really the contrast of him and Mary Barra. Somehow. I think Mary could be a little bit more politically correct, whereas Jim is more straight to the point. I think that was kind of.

Tu Le:

You mean that Mary could be more straight to the point as opposed to being so political.

Lei Xing:

Well, yeah, and.

Tu Le:

I think Mary has an edge too, but doesn't speak as openly and freely as Jim Farley for sure. 

Lei Xing:

Yeah, yeah, so that shows a different style.

Tu Le:
And I will, once I talk about my part of the week, then I'll tell you a little story. But.

Lei Xing:

Sure, sure. so, and I think, I think he mentioned something very important that Xiaomi comes with a huge fan base. Unlike the NIOs, the Xpengs and the Li Autos, they didn't have that fan base. They established fan base. And I think that's a very important factor in the current success. Xiaomi and the ability to bring their original ecosystem into this final missing piece of the human car home ecosystem. 

After the Xiaomi, we visited UISEE, a good friend of mine, Wu Gansha, who's done the walk the walk in terms of not the passenger carrying robotaxis, but driverless vehicles operating commercially. He's done it. And we kind of spoke to him and discussed about his strategy and what he's doing in several parts of the world, in Hong Kong, in the Middle East. And it's good to experience also their kind of the robotaxi that testing they're doing in Fangshan, which is southwest of Beijing. It's also a kind of a hub. And then on Tuesday, we visited two more companies in Beijing. One, VanJEE, IOT/LiDAR startup. And they actually just celebrated the 30-year in China. They're one of the lesser known companies, but more on the transport V2X side of things. They're more active there. And then in the afternoon visiting Enpower Green Tech. It's a solid-state battery startup in Beijing. They're saying that they're one of the leaders. And recently we've heard about some additional solid-state battery headlines. I think Stellantis just announced something with the Factorial that they're going ahead to going into the next stage of development. And then we took the high-speed rail to Shanghai on Tuesday evening. Wednesday, we visited SenseAuto. It's a Chinese smart cockpit, AI, ADAS tech startup under SenseTime, one of China's big four AI companies. They're active in DMS or OMS in the cockpit. And then afternoon, ECARX, is a U.S. listed chip

Tu Le:

Zeeker or Geely.

Lei Xing:
Domain control, and smart driving cockpit startup under the Geely Group. They have this FlyMe Auto integrated with the Meizu. Meizu is a phone, lesser known, but on the edge, kind of the smaller player in the mobile phone, smartphone segment, smart cockpit. They also do ADAS, primarily supplying the right now the LYNK & CO 08 and also the Polestar 4, believe it or not. This is within the Geely kind of the ecosystem. And then we headed over to Hangzhou to attend actually one of the latest and the greatest and the most interesting product that was launched, the ZEEKR MIX with the rotating front seats they call it the Baobao Bashi which means the baby bus just one of the ways to have different form factors in these EVs. I mean people are trying to be different trying to be unique and the ZEEKR is doing that and we ended up visiting ZEEKR on Thursday at their new headquarters that tall building with a ZEEKR logo on the top It was a penthouse man. The headquarters penthouse up on the 52nd floor. I didn't get to see Yilei. Yilei was with CEO An Conghui somewhere else. Good friend of ours. He used to be with Reuters, but he went over to Geely.

Tu Le:

That dude owes me dinner, so, and a beer.

Lei Xing:

ZEEKR and we met the capital markets people and in the afternoon we headed back to Shanghai to visit UPower. It's a skateboard chassis startup by a former Conti executive. They're working with King Long. They're working with some other startup OEMs in the U.S. actually, providing the standard chassis for light vans. And then today was visiting ZDrive, an autonomous driving company under Chery, who the founder is this lady, Dr. Gu Junli, she used to be at Tesla. And then she went over to Epeng in charge of autonomous driving. And now she's at the startup under Chery trying to provide what they call the Pilot 2.0, 3.0, 4.0,, basically higher levels of NOA to be featured on additional Chery vehicles. And then we ended the day today visiting ZEEDA Energy, the number one home AC charger provider in China. The Chinese name is called Zhida. And talked with one of their actually the assistant…

Tu Le:

Like a charging station, you mean? Like a home charging station.

Lei Xing:

Not the charging station, but the chargers. And this guy actually he worked with Tom Zhu back in Tesla. So I mean, it's a really a small world and then we just had dinner. I mean, this trip we visited just a few of the companies along the EV-AV supply chain, the value chain. And along every one of those companies, there's competitors. But I think we saw the kind of the startup environment. I think visiting ZDrive, you go into the office and you see people, this whole open space, people discussing. And they were telling me that by the time it gets to 10 pm, 12 am, it's even more crowded. And that's how China works at these startup companies. JIYUE, our good friend, Frank Wu, he just posted CEO Zhou Xia, he's going to do a live stream, 24 hour live stream driving their JIYUE vehicle from Chengdu to some other city to test out their ADAS, the vision-only ADAS capabilities. If you remember, he recently did a 16-hour live stream. So, I mean, we talk about China's speed. This is where China's speed come from. These companies, they're relentless.

Tu Le:

Have you seen any 07s on the road?

Lei Xing:

No, I haven't. But it looks like they're targeting pretty soon to get to 5,000 a month, which is not high if we go by the NIOs and Xpeng standard or Li Auto standard of 20,000, 30,000, 50,000.

Tu Le:

Well, it's also not a $20,000 car either, so.

Lei Xing:

Yeah, so I think it was great for, one of the comments that these investors, they said was rather than look at the earnings reports, you talk to these companies, to these people and see the action on the ground, give you a completely different perspective of how these companies operate. 

Tu Le:

Without question.

Lei Xing:

Yeah, so I think that's why you know, you and I, I'm just lucky to be able to, this is my third trip this year coming back. And every time coming back, I feel there's some difference. K think also given the recent, at the end of September, the stimulus that China just announced, and just a few days ago, they reduced the loan prime rate again for the real estate. I think trying to inject some confidence into the consumers and seeing competition on the ground. How ZEEKR does a launch event. I mean these people, they've never seen this before. What kind of features they market, kind of the stunts that these companies do and how they operate, gives you a perspective of the competitive environment. And that's the value.

Tu Le:

Yeah, because I was at the, what's the ZEEKR MPV called again? The nine, 09? 

Lei Xing:

The 009? You were at one of the launch events, right? Yeah.

Tu Le:
Yeah, so I was, remember I was, yeah, I was at the April launch event before the Beijing Auto Show and there were like thousand people, several hundred people in a huge auditorium. And it was one of the biggest launch events I've ever been to. And I've been to Apple events as well. volume-wise, number of media, number of personalities, it was unprecedented for me. So yeah, I think that part of your trip sounds like it was a unique experience for the investors. And it's weird to think…

Lei Xing:

And it was still learning for me. I think I don't know everything and I learn a lot.

Tu Le:

Yeah, yeah, for sure. And that's part of the reason I love to go to factories because, you know, I've been to hundreds of factories, whether OEM assembly plants down to little foam suppliers that just, you know, cut little pieces of foam for door, for door deadening and sound deadening and stuff. You know, Chinese factories are some of the most cutting edge. So being able to step into…

Lei Xing:

And the future is here. The future is here. You've got to be here to, you know.

Tu Le:

Yeah, yeah. And I don't want to rain on your parade too much, but unfortunately, due to the nature of the U.S.-China relationship and how the U.S. government sees Chinese technology, we might never see any of those companies that you visited, unfortunately, in the United States or competing in the United States. But yeah, man, sounds like a very, very, very cool, cool trip for you. And I wish I was there, but yeah, my week was busy as well.

Lei Xing:

Yeah. Yeah, talk about your, the Reuters event, right? The automotive USA. Is that what it's called?

Tu Le:

Yeah, so Reuters has an automotive event in all the regions every year. Detroit happened Monday to Wednesday. Monday is more of like a welcome kickoff. And Peter Rawlinson was one of the featured speakers on the kickoff. And I was roped into moderating a panel and a few workshops. Workshops meaning they wanted the sessions to be much more interactive. And they had these conference rooms typically where chairs are stood side by side, but also there were some round tables, five, six round tables in the front of the conference room. And people that sat at the round tables, we would pose a question to them and then give them an opportunity to discuss the question, I would walk around, poke and prod a little bit as you know, I want to do. The most interesting one, Lei, was a pretty provocative title of the workshop. It was China EV Inc.: are they leaving Detroit in the dust? So,

Lei Xing:

So far, yes.

Tu Le:

I, and when I didn't know, and the Reuters team didn't know who was going to come, who wasn't going to come because it was stacked. There were multiple rooms and some of the other.

Lei Xing:

Concurrent events going on, right?

 Tu Le:

Yeah, some of the other traditional panel discussions, one or two of them seemed pretty, pretty interesting and they overlapped the workshop. But by the end of the session, almost every seat was taken. People were having lively discussions. I would say 80, 90, 100 people were in there. And the first question was, hey, is this real? Should we take this seriously? And as we were discussing, Sandy Munroe, who now I've gotten to know pretty well, we're friends. I'd like to think he thinks we're friends. And so he and I are talking about, I'm going to go visit him at a certain point in time in Auburn Hills to check out his facility. But man, guy's just crazy busy. And then I asked the audience if there was any comments or questions and he grabs the mic and he talked about seeing and being alive when the Japanese, and he said specifically, and this is kind of funny, Kind of like everybody kind of looked back and you're like, I remember when the Japanese invaded the United States and you know, this is and then everybody just kind of like look back and he was referring to car companies, of course. And surprisingly, the Reuters because, you know, you look at the badges and it says your name and company, but I'm not really looking at that from the stage level. But the Reuters guys told me there were bunch of Ford people, a bunch of GM people, a bunch of Stellantis people. And so for some of them, it was really, really an eye-opener. Some of the things that I had articulated because, you know this, Lei, you've talked to me enough where it's like, we're just dropping facts. I'm not telling you my opinion. I'm just telling you straight up numbers. This is how it's been. These are the brands. These are the segments. These are the price points. And there were some incredulousness and in this particular and so you know I did a total of four probably too many of these moderating panels and workshops but you know the consensus was people getting defensive which is natural okay because but that was part of my role as a moderator to kind of be a bit out there.

And so again, but it wasn't like I was saying provocative things. I was just throwing out numbers, you know what I mean? So it wasn't like I was lying or making things up, but there was a bit of defensiveness. There was a bit of, but they're playing unfairly, there was a bit of resignation from some people, meaning, you I don't know if we can ever catch up. But bottom line, when, what Sandy said was we need that competition from the Chinese competitors in order for the GMs and the Fords and the Tesla's to be quite frank, to step up because he really does believe in these companies. And so that was heartening. That was very heartening for me to hear from Sandy because you and I have talked to him pretty off the record, you know, pretty frankly, and he's effusive of his praise of the Chinese electric vehicles for sure. And then, you know, one thing I will say, Lei, Joe White, who's our mutual friend, he is now retired. He's a veteran automotive journalist, like well decorated. I think Pulitzer Prize winning automotive journalist. He did a one on one with Danny Shapiro, who is the head of NVIDIA Auto. And so right before they went on stage, the three of us were talking right outside the conference room. And I'll tell you what, Lei, Danny said exactly what I've said to you and to everybody else years ago, where I said, you know, why do they call it a software defined vehicle? You know how I always tell you that just frustrates the heck out of me? And Danny was like, yeah, we don't call it a software defined phone. We don't call it a. And so I just smiled ear to ear. Was like, Danny, I wish I could have recorded that. But, but this guy, you know, he has 20 something years with NVIDIA, I think. And so he's seen how NVIDIA went from. We're just doing infotainment to now we're training servers. We're working with the automotive companies and collaborating on software. And, one thing that he said that was really kind of hit home was that in China, in the United States, automakers traditionally just want to drive down costs. How cheap can I get it? And I'm making broad statements here. And then Danny was like in China, they want to know how can I get the most out of this silicon? And that really, really stood out to me in our conversations. So, that was three days. And then there was also Assembly Ventures, which is one of the prominent mobility venture capital firms with an office in Detroit, Munich, and Silicon Valley. They had their, like a demo day summit. And the first panel discussion was about geopolitics of mobility. And there was a, I think, Chinese American lawyer. His name is Ben, Benjamin. And I had met him at a Forbes China event in New York City that I was on a panel discussion. And we looked at each other. And then I came late to the summit. And three people saw me and was like, hey, were you there for the first talk? I was like, I wasn't. And they're like, you got to meet Ben. And like after the third person, third person walks, walks me over to Ben, I'm like, hey, what's going on, man? We know each other. And he was like, yeah, hey, too. What's going on? And so it's starting to happen. It's starting to happen. People are starting to really recognize and try to get at least more than a surface level understanding of what's really going on. And it's not just about the innovation. It's about, again, and you and I talk about this without pointing it out, but yeah, the political side of what's happening. Okay. And I think that's one of the things that because we've spent so much time in China, because we still have dear friends in China, we're still very close to that pulse. So.

Lei Xing:

And I like to share an anecdote. Part of the trip in Beijing was I had visited in the summer the Hopson One in Chaoyang, where on the fifth floor, there's this market of, let's say, probably, I don't know, a dozen or more brands with the booths right next to each other. So I took the investors to see them and this is my second time going and looking at all of these latest and the greatest. There's the AVATR 07, there's the new ZEEKR MIX, there's ID.UNYX, there's the ONVO, there's the ONVO L60, there's the P7+. And all of these vehicles in the same place, like a supermarket. And I walk around and I look at these vehicles. The weird thing is none of them stand out.

Tu Le:
None.

Lei Xing:

No, but they're the latest and the greatest. But maybe to the Western audience who have not seen, my God, look at this, you know, the ZEEKR 7X. But they all, think for the good and the bad, they all were, you know, the fit and finish were great. The styling was great. The quality looked great, but none of them stood out and they're all in the RMB200,000 range. I mean, that just shows you the competition. It's so hard for a consumer. Which one do I choose?

Tu Le:

Well, let me switch gears on you, Lei. If you squint, these Scout Motors vehicles look a little bit like somebody else's vehicles, don't they?

Lei Xing:

Yeah. But there are also some other brands on that floor, Yuanhang for example. 

Tu Le:

Don't stand a chance. Don't stand a chance.

Lei Xing:
 Yeah, some of them probably not going to be around but and then I did also this trip, I did have a chance to test drive the MONA M03, the ID.UNYX, the ONVO, some of it was really quick because I went into the showrooms and just say you know, hey, can I get a test drive? ONVO L60. There's another one and they're all different animals, actually, if you test drive them, the way they drive, the way they handle, some of the ADAS features, you can tell the difference. But I tweeted something about the MONA MO3 being the RMB100,000 premium EV, which is an oxymoron. Again that shows…

Tu Le:

Not in China, not in China it's not.

Lei Xing:

Competition across but also within and this is something that Geely is facing, this is something that Xpeng is facing. This G6 feels old because now we have a cheaper and feels even better the MONA M03. Where is this headed? I don't know. But I think for the foreign automakers, they want to see people exit due to this type of Ola Kallenius he calls it the Darwinian competition. And you know…

Tu Le:

I'm going to throw out something potentially pretty controversial here, Lei, and it goes back to Jim Farley's video. Maybe he's courting Lei Jun.

Lei Xing:

Who knows? And also, we also should establish the fact it's not only Jim Farley is driving these vehicles. All of these European CEOs, I'm sure the top people at GM and any of these, Stellantis, foreign automakers, Renault, they've driven these Chinese vehicles. I am 100%.

Tu Le:

I would bet you a bunch of money that Luca de Meo benchmark a bunch of Chinese EVs to get that Renault 5 and 4 on the road. So there's no doubt in my mind, no doubt in my mind because the Chinese EVs, what they're really good at also is kind of the balance, the weight balance and the handling. And you know, I just had a conversation with a reporter from a media outlet and we talked about this definition of premium. And I won't spoil the article, but let's just say that I pointed back to you and I talking about how the China market has redefined what premium is, at least to the younger buyers. And so...

Lei Xing:

And this ZEEKR MIX that just launched is the latest example of what I call space selling, which means right now the customization of the interior cockpit is pretty important right now. ZEEKR MIX being one, ONVO L60 being one, how you rearrange the seats to give you a setting. This is something.

Tu Le:

You know, Lei, it's just, it's just their attempt at differentiating themselves, but within six or seven months, there's going to be another product that does the exact same thing. That's the craziness of the China market. And it's just so difficult to stand out because with this price war, with this number of brands and unfortunately, the price war is likely to continue until we see significant brands leave, a significant number of brands leave that market. I don't, I can't believe it's lasted this long, Lei. January 2023 is when it started because of Tesla.

Lei Xing:

Almost two years.

Tu Le:
And so I think you and I thought it would be longer than a year. We're well into the second year and I don't see it changing significantly until at least summer of ‘25 now. So because remember that BMW, the Germans a month and a half ago said no mass. Now they're back in it because they still haven't seen that bottom. you know, we'll be there in March, April of next year, Lei, and hopefully I'll plan a little bit better so I get to drive a few more of these cars. We'll do another road trip, I'm certain. We need to figure out who we're going to ask. 

Lei Xing:

And which route?

Tu Le:

And so, yes, because I don't want to go back down to Shenzhen. Maybe two days instead of three, but anyways, that's all I had, buddy. I know it's a little bit later for you and I know you've had a long week. I've had a long week too, so.

Lei Xing:

No, it's cool, it's cool. I think this is the only time I really have time to do this show. So anyways.

Tu Le:

And things seem like they held up, so that's good. But…

Lei Xing:

Yeah, yeah, I'm at a hotel. The internet seems to be okay.

Tu Le:

Anything else or you want to close it out?

Lei Xing:

No, I think we're good. Just, no, I mean, I think we've talked about pretty much. Oh the EU tariffs, I think they just put out a statement that they'll continue to talk. There's technical talks of so what's going to happen in the next remaining what a week of October. Yeah.

TU Le:
So Lei, my read is that it's not just about tariffs, it's about the EU, the Chinese government not wanting the EU to follow the connected software and hardware restrictions. That's my read.

Lei Xing:

Yeah. Yeah. Yeah. And then other than that, Tim Cook has been in China for the whole week doing his tour. He met the Commerce Minister today. you know, because Apple, they're still trying to get approved for that new feature, right? The AI feature, I think, on iPhones. Yeah.

Tu Le:

Yep. And the last thing I'll say is because I just had that interview, joint interview with Jack Wiest of Intel Auto, they seem to be in a little bit of trouble potentially in China. I don't know too many details about it yet, but I, so.

Lei Xing:

I think Intel, Mobileye are extreme headwinds in the NOA game, in the ADAS.

Tu Le:

Yes. So that you hit the nail on the head. I'd heard, and this is completely, I won't mention it. I'll tell you, but we'll talk about it after. So everyone, thanks for joining us. I know I'm behind. I know we're behind on updating the podcasts, the audio podcast. So we'll get to that. And…

Lei Xing:

I mean, there's just so much happening. I mean, you and I, you, right, in different parts of the world, there's a lot of action that we need to, that happen to be in the midst of these events. It's just difficult to balance. And I have other projects as well. You have other projects, so it's, yeah.

Tu Le:

Yeah. So, but hey, alright, well next time we do this, think you'll be back in the United States.

Lei Xing:

Yeah, I'll be back. I'll be back on Monday. Yeah.

Tu Le:

So everyone, thanks for joining us. Good morning, good afternoon, good evening. We will talk with you all next week.

Lei Xing:

Bye bye.