Episode #183 - Unpacking Tesla's We Robot event, Foxconn Seems Serious, No Rest During Golden Week

In this episode of the China EVs & More podcast, Tu Le and Lei Xing provide a comprehensive analysis of recent developments in the global EV and mobility sectors, with a spotlight on Tesla’s “We Robot” event and China’s growing influence in the global EV market. The duo delves into autonomous driving technologies, China’s aggressive EV strategies, and the impact of trade tensions between China and the EU.

Key Topics Covered:

•Tesla’s “We Robot” Event: A breakdown of Tesla’s announcements, including the Cybercab and Robo-van, and their implications for the U.S. and global markets.

•China EV Trends: BYD’s rise as the top automaker in China, surpassing SAIC, and the competitive dynamics during China’s Golden Week sales.

•Global Trade and Policy: Discussion on China’s potential retaliatory tariffs and their impact on the EU and U.S. markets.

•Foxconn’s EV Expansion: Analysis of Foxconn’s new vehicles and their strategies for entering the U.S. market.

This episode blends industry insights with engaging conversations on the future of EVs, autonomy, and geopolitical challenges shaping the auto industry.

List of Mentioned Companies

Automakers:

1.Tesla

2.BYD

3.Xpeng

4.LeapMotor

5.NIO

6.GAC Aion

7.Lynk & Co

8.General Motors (GM)

9.Ford

10.Volkswagen

11.Rivian

12.SAIC

13.Mercedes-Benz

14.BMW

15.Porsche

16.Audi

17.Cadillac

18.Chevrolet

19.Buick

20.Skywell

Suppliers and Technology Companies:

1.Foxconn (Foxtron)

2.CATL

3.Gotion

4.WeLion

5.Electrion

6.Witricity

7.Valeo

Startups and Smaller Firms:

1.Lyten (Sulfur Battery Startup)

2.LiBRIDGE (Battery Advocacy Group)

Others:

1.Uber

2.Cruise

3.Waymo

4.LG Chem

5.Pininfarina (Design Firm)

6.Bloomberg (Media)

7.Reuters (Media)

Transcript

CEM #183 Transcript
Recorded 10/11/24

Tu Le:
Welcome to the China EVs and More podcast. We are broadcasting live for those interested in making some comments or asking any questions. We will open the room up at around the 40-minute mark to anyone who's keen to ask us any questions. 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, welcome back. We ask that you smash that subscribe button so you don't miss anything from us in the future. Let us know what you think. And for those that enjoy the show, please hit that like button and help us get the word out about this podcast to others. 

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 of course I encourage you all to do. My friend Lei, my good friend Lei, on the way to Paris, Lei. Can you please introduce yourself?

Lei Xing:

And an underwhelmed Lei. We'll get to that point. This is your co-host, Lei Xing, former chief editor of China Auto Review. And this is episode #183, I believe. No, I think it's 183. Yes. So.

Tu Le:

Four. 183? Yeah, okay, 183.

Lei Xing:

So. We Robot? We Late? We Flop? Did you watch the, that's why I said I was little bit underwhelmed.

Tu Le:

The Robo-van, I watched the Robo-van.

Lei Xing:

Robo-van, not the Robovan. On a scale, I don't know whether you watched the live stream. 

Tu Le:
I did not.

Lei Xing:
On a scale, well, I mean, I'm sure you've went back and saw some of the news that came out. 

Tu Le:
So I saw some of the highlights.

Lei Xing:
Yeah, on a scale of 0 to 10 with zero being extremely underwhelming and 10 extremely overwhelming. How would you rate it? You didn't watch it, but I watched it. 

Tu Le:
I'd give it a 6. I'd give it a 6.

Lei Xing:
I'll tell you. you. Wow. I gave it a 4.

Tu Le:

So how I define that is nothing super surprising but Elon, I always keep in the back of my mind and try to be objective and his quirkiness, a lot of people don't like some of the things that he's doing recently, but I always have to think about SpaceX and all the things he's accomplished. Whether Tesla is currently underwhelming, they really, globally brought EVs to the space. And so, as he's gotten richer, he's gotten a bit more bold with his timelines and everything. Even he admitted that in the broadcast. So I thought it was just average. That's what I meant by 5. What about you?

Lei Xing:

Yeah, well, I gave it a 4 from 0 to 10. I gave it a 4. I think there were certainly highlights. The vision that he painted, it wasn't new. And some of those vision, some of those future is happening in China. And the reason we began today with this We Robot topic, even though it might not be China EV per se, but we look at this from a China lens, right? Because of the kind of the NOA track and the Robotaxi track in China, and we look at that and compare where the U.S. is and what Tesla is trying to do. Because now we have in the U.S. side of things, Waymo, Cruise, and maybe you add number three Tesla into the fray. But I think the reason it was underwhelming for me, and I think for a lot of people is because going into it, the hype that went into it. And then when he said 2026 production starts for the Cybercab, I think it was a lot later than what people wanted to have it happen. Maybe next year already, right? I think that was part of the reason, I tweeted that, that was the first moment I was like, gulp. And he said he tend to overpromise a little bit. 

Tu Le:

So that means 27.

Lei Xing:
Who knows, maybe he'll, yeah, so, or they over deliver and moves it ahead of time, but who knows? And I mean, the utopia he painted. I mean, GM had the zero zero zero, right? Uber for I remember Uber Travis in 2015. He went to China in Beijing. I don't know if you remember. He had a press conference. And yeah, and he talked about this utopia then, right? Hello, are you there?

Tu Le:

Yeah, I'm still here man.

Lei Xing:

So, I mean, I think the long vision people kind of knew what it wanted to be, it’s just the short-term expectations that's a little bit slightly off. I think that's why you see today, pre-market Tesla is down about 7%. And Uber is up 5%. So, and for the foreseeable future, with now lack of new products, this bet on AI, on autonomy. We have this kind of the grace period where how can Tesla grow with this two-year time lack of new products. And that's what I think what the street is looking at, right? And why it's a bit underwhelming for me.

Tu Le:

And you know, and I know that ‘26 in China terms is a lifetime away. And a lot of different things can happen because when I put my operations and manufacturing hat on that vehicle isn't that difficult to manufacture. It's probably very simple to manufacture. Now, why it takes so long to get to production or get to job one is kind of not lost on me and obviously not the street. And this is likely going to be a hit in the United States if it's a sub-$30,000 vehicle, if it's the 20 cent operating costs, 30, 40% price that he had mentioned.

Lei Xing:

30, 40 cents.

Tu Le:
Yeah, 30, 40 cents. Yep. And then the challenge that I have, and this has nothing to do with Tesla, is that it's still an individual car with likely an individual person in the vehicle. So it doesn't really help with congestion, even if it's smaller. Now, could cities restrict private passenger vehicles so that you'd be forced to use a Cyber taxi or some variant of that from a different manufacturer? That would create huge opportunities for a Waymo and a Tesla, and an Uber, for that matter. And that's why you're seeing that. And I've always thought, and you know this, Lei, that the traditional automotive companies were going to have to end up fighting and battling against the technology companies. And what we're seeing is that the street is starting to recognize that too, especially with Uber having announced we're partnering with WeRide. We're partnering with Waymo…

Lei Xing:

BYD.

Tu Le:

Because Cruise has kind of lost its way. And so, and then to your point, you had just mentioned BYD, how easy would it be for them to build something like that?

Lei Xing:

Yeah. And I think the long-term, the Cybercab, it's not something that we've never seen. So 10 years ago, Google had the Firefly, which kind of was demonstrating the capability of a fully driverless, no steering wheel, no pedals vehicle. And 10 years later, we have the Cybercab. I'll give it to Elon, I mean, right, 20 of these vehicles were running around in that complex, though it's probably geo-fenced and we take it with a grain of salt. And 30 other 3s and Ys, probably mostly Ys, running with that unsupervised FSD, which, for me, I think the short-term thing that we look at, is this unsupervised FSD being available in Texas and California next year. And that's basically, if you look at it, it's Level 3 everywhere because unsupervised basically means eyes off. But there's still a driver sitting in the driver's seat. You just don't have to look at the vehicle anymore. You can do other things, right?

Tu Le:

Sure.

Lei Xing:

That's kind of a step toward this fully autonomy future. So what happens there? Can they do it next year? And then the longer term, the robotaxi. And the business model, right? He talked about, it wasn't that clear whether he talked about this Uber, if you're on an Uber platform, you could be a shepherd, right? Running like a dozen vehicles at the same time, which means do you still depend on those third party ridet-hailing platforms or do you operate everything on your own? That wasn't clear. 

Tu Le:

As an independent contractor.

Lei Xing:
So yeah, so I think that the reasoning was underwhelming because it lacked many details. It fell rushed a little bit for some reason. 

Tu Le:

After a two-month delay, it felt rushed.

Lei Xing:

Yeah, yeah. So I think that's why, and I think quite a few analysts actually have predicted the same thing, that it was long on vision and short on maybe the short-term juice and meat, right? We didn't see that, but it was cool. I mean, it was cool that we finally saw this thing that was in the Walter Isaacson's book and right, still.

It's very cool, very cyber, very Tesla-esque. And the Robovan, Robo-van, I mean, to us, it's nothing new, to tell you the truth.

Tu Le:

As our good friend from Snowbull Capital tweets a picture of an RT-6, so as Tesla, you know, this just goes back, as Tesla's kind of talking about it, Waymo's doing it, other entities in China are doing it. So an important note is that in order for that to hit the roads, the U.S. government's going to have to approve it or the DOT or, or whatever, right? And so this could be where NHTSA has some teeth maybe and gives Tesla a bit more of a hard time on getting that to market. And I don't think the people over in China are that impressed either. So if this is a U.S. and potentially European market opportunity, then effectively half the world is going to be shut out because the, will the Chinese government allow that? Right now, I think it's 50-50.

Lei Xing:

And also the Cruise, or GM, had killed that they showed quite many years ago, they showed that picture of the Bolt without the steering wheel and the pedals. That thing was killed, right? That thing never happened. And now we have the Cybercab.

Tu Le:

It's on the shelf, but I wouldn't say it's dead, like dead dead. It could be a zombie. It could come back to life.

Lei Xing:

Yeah, so you know I'll give it to you know Tesla for having this thing now running, showing, demonstrating at least that it is possible but it likely isn't going to be the tech or the product but more the regulatory scrutiny and what is being allowed or not allowed, insurance, and how you operate it. I mean there's a lot goes into it right. Kyle Vogt, he tweeted a long list of things to look at.

Tu Le:

What's important Lei, is that the OEMs were taking notes. They were watching and taking notes because Elon could quickly launch this in ‘26 or ‘27 and undercut the market substantially. He just makes it so cheap. And I had mentioned this years ago. I said, Elon will sell almost at cost to get more vehicles on the road. And I truly believe that.

Lei Xing:

And, you know, one thing that was alluded was the 25,000 Model 2. He kind of hinted that you can buy this thing for under $30,000, but is it for personal use? Is it an investment into his utopian business model? That wasn't clear as well. And the inductive charging part of it was interesting.

Tu Le:

Inductive charging is basically wireless charging for the folks that are wondering.

Lei Xing:

Yeah and I think we know many companies, Witricity, I think Volvo is doing some demonstration in Sweden on this technology. And that remains to be seen.

Tu Le:

There's a company, Israeli company, I believe called Electrion that has about a half a mile on the east side of New Lab where I work out of a couple of days a week. They're doing wireless charging under the road sponsored by or funded by the Michigan government. So that is happening. It's incredibly slow and it's something that will take a lot of capital investment, but there's a future there. And we should always look at the different ways of charging as an and, not an or. You can charge, you can inductive charge and you can charge at home and you can swap, not an or, in China, or at least with NIO and you can swap. So, or in the United States if Ample gains traction and you can swap.

Lei Xing:

Yeah, and that's basically NIO’s message, right? Swappable, upgradable, rechargeable. It is and. And the optimist part of it, I mean, he said it was the biggest product of any kind. I don't know.

Tu Le:

They have these movies recently Lei, of these androids that are like murdering families. It's crazy and what I thought was really important that I don't know how many people actually kind of caught is that, he said the power electronics, the AI it's all the same except for Optimus has legs instead of wheels so they're getting a lot of mileage out of the investment that they're making on the data centers and the machine learning, training and all that stuff. And so that's important because this is where the legacies are truly behind because they're only starting to really understand how to gather the data, how to store the data, how to analyze the data, try to squeeze out insights. And Tesla, number one, their employees are all ex-Apple, ex-Google. And so that's that they live and breathe that it's not something they need to learn. Almost every employee on the engineering side brings that to the table already. And so you know, I was at the battery show this week, so we can talk about that a little bit later. 

Lei Xing:

Sure. Yeah.

Tu Le:

But, you know, whether it's underwhelming or not, he's taking a step forward. That can't be said for every legacy auto.

Lei Xing:
You're being nice to Tesla today. Yeah.

Tu Le:

So to be honest with you, and we're on DMs with a good friend, and I'm still looking at a Model Y. Because number one, you and I are analysts in the space. So analyzing FSD is part and parcel of what we do. And they have 0% financing right now for 72 months, as long as you buy FSD and you have good credit rating. and then if you're eligible for the $7,500 and so and then to your point, I've driven the Blazer. It's not a smooth drive. The Polestar 2 is a great car. And if it was a little bit larger, the price that they were offering for it a month ago was a steal, it was like 500 bucks a month lease, but it's just too small for, for a family of four with two boys that are eating the house down and growing and have sports equipment and all this other stuff. and so Tesla is Tesla. I can separate Elon from Tesla and the experience I had with the Lucid for that 10 days and the charging in and around my area. Now the rest of the United States, I have not experienced that, but in and around my area, I don't have a charger in my garage yet, but it was painful.

Lei Xing:

Yeah, and just, you know, just summarizing this We Robot, I think going into it, it felt like the biggest day in the history of the auto industry, to some extent, right? Because of what this hype going into it. But afterwards, you kind of realize reality bites. And again, even for someone like a Elon, even for someone like a Tesla, autonomy is not a light switch. It's a step-by-step process, right? And, you know, it's not next year. It's the year after. It's 2027 or maybe later. Production goes, production starts before 2027. Having these things mass, you know, scale, scaling of these things, we can look probably, you know, beyond 2030 to be honest.

Tu Le:

The one thing that I will point out before we move on to some other news is that Nori, our friend Nori, Nori Shirouzu from Reuters, they dropped a piece about Tesla's black box on the autonomy, and so that's enough. So we have this assumption that it works. It will work in ‘27 and ‘28, but there's still a huge debate on that. and how safe it will be. So for those that have not read it or are just hearing about it from me, I recommend that article. Nori doesn't really do newswire stuff for Reuters. He does more of long reads. And so he's very, very, very thoughtful on his pieces. And so it's eye-opening because Tesla, how they're approaching autonomy is a lot different than most others. And so it's worth keeping an eye on how effective their method is versus everyone else's.

Lei Xing:

Yeah, so just coming from our perspective, having experienced China EV, AV, Inc., the ADAS, Level 4, Robotaxi, from that perspective, I think that's part of the reason why it was underwhelming, because we've had that experience. And congrats to Tesla.

Tu Le:

Yeah, we had three days worth of it, I mean, technically it was Level 2+.

Lei Xing:

That's FSD supervised basically.

Tu Le:

But 90% of the time we weren't driving. We were supervising, but we weren't driving.

Lei Xing:
Yeah. Yeah. And, no. Yeah. And then, you know, the robotaxis that we've been on, and, I was going to say congrats to Tesla Giga Shanghai. They just did their three millionth production today. So kudos. 

Tu Le:

It's a monster number. Monster number.

Lei Xing:
That's probably half of what Tesla has sold, right? Probably roughly.

Tu Le:
So a little bit of history. Shanghai Giga broke ground in January of 2019. Job one rolls off December ’19 I believe. 

Lei Xing:
‘19. Yep, December ‘19.

Tu Le:

It got, well, I actually think it broke ground a little bit earlier, but not much more than a year earlier. And a year later, job one rolls off. So they've only building, they've only been building in China since effectively January of 2020. They are at 3 million.

Lei Xing:

2020 yeah. So roughly just slightly under four years, three million units, so yeah.

Tu Le:

And let's say 60, 70% of that production has probably been domestically consumed.

Lei Xing:

Shall we move on?

Tu Le:

So congrats on that. Yeah, so let's talk about these EV trends that you're seeing.

Lei Xing:
Well, I mean, some of the recent launches, order intake numbers out of the National Day holiday, good and the bad. There were huge numbers. I mean, some of it represented certain brands, half of the certain brands monthly sales. So, and then Xpeng just revealed the P7+, right?

Tu Le:

So let's remind everybody, Golden Week is the first week of October every week, every year. And October 1 is China's July 4th. And so they celebrate it by taking a week off. Can you tell them why it's called Golden Week? So no one's working that week. And normally sales aren't that robust.

Lei Xing:

Well, you can be sure these China EV Inc. they're working that week. No break, right? I mean, at least it's from the sales side of it.

Tu Le:

Yeah, yeah. We'll get to see some of them in Paris, but we'll get to that.

Lei Xing:

Yeah, sure. And I think in China, the competitive dynamics is forcing you to be so much fixated on this weekly sales numbers. And you tend to draw conclusions from it.

Tu Le:

It was instigated by Li Auto, wasn't it?

Lei Xing:

Yeah, and I tend to say, you know, don't draw too many conclusions. If Tesla only had 1,800 units of sales in the first week of October compared to other companies. It's not panic button time to me, based on one week's worth of numbers. 

Tu Le:

And you guys, and you've been following this forever, you know that they manipulate those numbers.

Lei Xing:

Yeah. And some of the other brands were quite out there. I think reports of BYD, 160,000 or something or 16,000. I forget the number but it was huge for a week's worth of sale.

Tu Le:

Are they going to hit 4 million, do you think?

Lei Xing:

I think they will. I think they most likely will, based on the current trends. 

Tu Le:

I think so too.

Lei Xing:

And by the way, historical milestone reached, or actually a new, I tweeted that king, new king at the top. BYD surpassed Shanghai Auto Industry Corporation Group sales cumulative for the first time since 2006.

Tu Le:

My goodness, SAIC!

Lei Xing:

18 years. For 18 years, SAIC has been China's largest automaker group sales, including joint ventures. And now BYD has…

Tu Le:

For those wondering, SAIC has Volkswagen and General Motors as their joint ventures.

Lei Xing:

And most of the reduction in sales came out of those joint ventures. And hence.

Tu Le:

Yes. So as the foreign legacies struggle, BYD is likely the recipient of a disproportionate amount of those lost sales.

Lei Xing:

Yeah, and we've seen the Mercedes numbers, BMW numbers, Porsche numbers just came out, 30% down, right?

Tu Le:

So here's a startling number for you BMW followers. They have re-entered the price war, number one, and they put, they discounted the i7 in China by $74,000.

Lei Xing:

Dollars. Dollars.

Tu Le:

Almost 40%, $70, like half a million RMB. It's unbelievable. So if you're seeing these sales numbers from BMW, Mercedes and Audi and you're like, man, they seem to be okay. They're losing a little bit, but they're keeping up. The only way they're keeping up is by discounting these vehicles. And they saw that once they held pricing, sales fell to the floor. So they're back to discounting because it is not pretty specifically for the premium German brands and the sports brands. So.

Lei Xing:

Yeah. And then to General Motors, they had the Investor Day this past week and the latest numbers they reported. Basically, two things are really help holding up GM in China. It's the SAIC-GM-Wuling joint venture and their host of EV models. And second, really in terms of branding, Buick GL8 is the only, of the product out there that's really when you think of GM in China when you think of Buick, Cadillac, Chevrolet GL8 is really the star model. I can't think of any other model that's relevant, and 77% of Q3 sales in China from GM were from Wuling. The rest of it, mostly SGM.

Tu Le:

Which only sells vehicles under RMB200,000.

Lei Xing:

Yeah, and from the investor they look.

Tu Le:

Maybe less than RMB150,000? Do they sell anything over RMB150?

Lei Xing:

Yeah. Well, I mean, the Envision Plus that went on sale during the national day, right, RMB169,000, like RMB50,000, RMB60,000 off. 

Tu Le:

But that's a Buick.

Lei Xing:

Yeah, that's a Buick, right. Chevrolet, mostly, I don't know, RMB100,000s probably. And I think Mary Barra  in that Investor Day, she was, actually talked about, you know, they'll have a shareholder meeting for the joint venture SGM later this month and their aim is to really cut inventory and rightsizing, right sizing that joint venture. It seemed though that they were confident that they would kind climb back a bit, but the numbers were disastrous to be honest. Especially with Chevrolet, 8,000 units in Q3, 8,000 units, three months. That's scary.

Tu Le:

That's like if you're running a factory at 1,000 jobs a day, let's say 500 jobs a day. And let's assume that there's 20 days in a month. So one quarter is 60 days of production. And let's say this is a slow factory, 500 jobs a day. You've worked 16 of the 60 days, 16 of the 60 days. So what's everybody doing on those other 44 days? I shouldn’t laugh because it's very concerning. It's very concerning.

Lei Xing:

Yeah, the other news coming out is that Volkswagen China import, they have an entity. They're cutting employees, they're cutting jobs because they mostly import the Tuareg. That was started during the Weiming Soh's tenure. There's VGIC responsible for importing Volkswagen branded vehicles, I mean imports are down anyways, right? And now you have this possible retaliatory tariffs from China on the import of 2.5L and above. And you can think of the consequences.

Tu Le:

Talk about that. So when did that happen and what are they considering? Can you detail that a little bit more?

Lei Xing:

Well, this is part of the kind of the back and forth, you know, beef, if you will, between China. 

Tu Le:

The negotiations.

Lei Xing:
Yeah, negotiation, beef, between China and the EU following that vote that got passed. 

Tu Le:

If the carrot doesn't work, that's their stick.

Lei Xing:
Yeah, so Brandy, first of all, right. And then they hinted, think Ministry of Commerce hinted that they are considering this import tariffs on high displacement vehicles. 

Tu Le:
Pork.

Lei Xing:
Pork, yep. So this is playing out. I mean right this is…

Tu Le:

And you better believe there's a direct correlation between the countries that voted for the tariff and some of the retaliatory measures from the Chinese government.

Lei Xing:
Yeah, and all of this happening.

Tu Le:

Meaning that the countries that voted for the tariffs are likely going to get retaliated against with some of their commodities that they export to China.

Lei Xing:

So all of this, what we've talked about today, this is backdrop, the We Robot, right? The autonomy, China EV Inc. running away, the trade dispute. All of this happening as we head over to Paris, where it's pretty much the China Motor Show, not the Paris Motor Show. And at the same time, we know that Stellantis, which is investing to LeapMotor, Carlos Tavares is going to be out in about a year's time because of the disastrous performance that they have, right? They just had a huge house cleaning or something, right? CFO is out, the CEO for North America is out. All of this happening as you head into Paris and China EV Inc. pouncing despite the tariffs. They're showing Xpeng P7+, just revealed. The LeapMotor B10. BYD is showing a new model. Some of the other ones. Skywell.

Tu Le:

Skywell.

Lei Xing:

Skywell, they have a new vehicle debut in Paris.

Tu Le:

The refrigerator maker.

Lei Xing:

Yeah, and I think there's at least 10 brands, China EV Inc. brands exhibiting in Paris. So all of this happening and it's an interesting time.

Tu Le:

I've never been to the Paris Motor Show. I'm looking forward to it. There's obviously that China flavor. So there's going to be a number of people and media events that you and I will attend to find out, you know, BYD is really going to have a huge opportunity in Europe just because there is no additional tariffs on the PHEVs. And so they know that it's going to take some time, but I…

Lei Xing:
They just launched in Poland, I think. There was another exhibition in Greece. I mean, they can just bring all the cars over right to Paris, right? So I'm already there. It's not like they're new. They're already there. They're pretty well established.

Tu Le:

So one thing, Lei, that I wanted to talk about very quickly is Foxconn also had their Tech Day this week. And it's become an annual thing that my friend Louise Watt at Taiwan Plus covers their Tech Day. She's a Brit that lives in Taiwan, in Taipei. She reached out and wanted to get my thoughts on Foxconn and lo and behold, they launch a bus and they launch an MPV. The MPV, I don't know what Mark Rainford is talking about. It looks nothing like the Xpeng MPV at all. We're looking at totally different things, Mark.

Lei Xing:

I thought you were being serious for a second.

Tu Le:

So Mark Rainford is Inside China Auto’s, I think, right? So follow him on Twitter. But hear me out. Foxconn has the MIH platform, Motion in Harmony, right? Mobility in Harmony or Motion in Harmony? So it is a coalition of tier-ones, Chinese, American, German, European on the supplier side to help build out knowledge base, expertise, and so they lead that. Jack Cheng leads that, right? And Foxconn is also selling their own vehicles under the Foxtron brand in Taiwan. So for those that are thinking, Foxconn doesn't want to sell cars. I've always said they want to move up market. And now they have three or four Foxtron vehicles, Model C, Model B, all these different models. So here's my thought. They have a huge factory in Lordstown, half million units of capacity, small car factory. The four partnerships that they had to be contract manufacturer all blew up: Lordstown, Indi Motors.

Lei Xing:

Fisker, right?

Tu Le:

Fisker, and Monarch. I think Monarch still could be going, but they have a ex-GM factory-sized asset or liability on their balance sheet that's really doing nothing. And we know that there's 100% tariff on Chinese EVs in the United States. We know that the Biden administration is looking to restrict Chinese software on connected vehicles in the United States. To me, that creates amazingly direct paths to entry into the U.S. because half the problem is where are we going to build it? The other half is Chinese technology. Well, guess what? They've vetted or at least reached out to hundreds of suppliers using the MIH platform. So they can evaluate very quickly. So poke holes in it, man. What do you think?

Lei Xing:

I just looked at the Model D. By the way, it was designed by Pinninfarina. And Pinninfarina has for many years helped design, helped Chinese brands design vehicles. VinFast, Vietnamese VinFast. But JAC, Brilliance, I mean, over the years they've helped the Chinese brands design their vehicles. I don't know, it just doesn't feel relevant to me how global those vehicles will be compared to the Chinese.

Tu Le:

Yeah, but if Foxconn in the next five years can sell tens of thousands a month, that's a win in the United States for them. Always remember, the U.S. is the second largest market in the world. So 15.5, likely getting to 16 million units this year. It's not, the other thing about the U.S. market Lei, is that I don't really see a lot of competitors still.

Lei Xing:

No, exactly. And speaking of the largest, yeah.

Tu Le:

And I should really quickly Lei, I just checked LinkedIn. Roger Atkins is watching. So what's going on, Roger? Thanks for watching.

Lei Xing:

Thank you!

Tu Le:

So LinkedIn actually has one or two. But sorry, go ahead.

Lei Xing:

Well, you know, now I was going to say, speaking of the largest market in the world for the short term, the frontier is definitely in the Middle East and North Africa. Case in point, NIO and CYVN setting up that joint venture, right? GAC AION just launched in the UAE I believe, Xpeng’s there. The money is coming out of there and the China EVs are going in there. You know, considering what's going on in the EU, it's like a backyard, right, almost, that China EV will be happy to go into.

Tu Le:

Well, and honestly, it's a friendlier environment for them than Europe, than a lot of countries in Europe. And if you think about it, Lei, the North Africa, the Middle East, it is almost like equidistant to Europe and other parts of Asia. So strategically, from a geography standpoint, it makes sense. And it is 9:50, so we can open it up. You guys can throw some comments out there. But one thing I really wanted to do really quickly was talk about the battery show.

Lei Xing:

Talk about your recent events in Motown.

Tu Le:

Man, so Michigan Tech Week was last week, super busy, but talked about that a little bit. This week was the battery show. It moved from Novi in the summer. Was it in the summer? I forget. 

Lei Xing:

It was in September.

Tu Le:
Yeah, it was in September. So it moved from September in Novi, which is about 40, 30 minutes from downtown Detroit to old Cobo where the auto show is. It outgrew Novi, so that's why it moved down to Detroit. And yesterday I was on a panel. Yesterday also had the Tigers playoff game, the Red Wings hockey team season opener, and Donald Trump doing a speech at the Detroit Economic Club. And he talked about how crappy Detroit was. So that was not very well received in Detroit. And so three huge events.

Lei Xing:

Yeah, he was talking about the taxes.

Tu Le:

I was sitting on a panel effectively talking about how the United States could become more globally competitive. The other folks on the panel were Gabriella Coppola, Bloomberg journalist, Selena, I forget her name and I couldn't say it anyways, but she is a stud, ex-Tesla battery engineer, ex-Uber battery executive, ex-Panasonic manufacturing vice president. And then she now is the CEO or CTO of Lighten, which is a sulfur battery startup based in Northern California, Silicon Valley. And there were two other gentlemen, Michael, there's a, there's an advocacy group called LiBRIDGE that talks about how we can partner with companies, including Chinese. And then there was another person who works for Evion, which is a French company. And so for an hour, we just talked about how deep and far behind the U.S. is, but we ended it with what can be done. We need to change the language. Gabby brought up a great point. We need to have a long-term view. And then there needs to be much more capital from the government to, to really boost the mining, the refining and the battery manufacturing, because a $2, $3, $4 billion check doesn't really move the needle. And, it was probably one of the better panels that I think was going on during the battery show. And I shouldn't forget that Bob Galleon introduced us all.

Lei Xing:

Cool, the former CTO of CATL. Any Chinese battery Inc.? I think Gotion was there.

Tu Le:

Man, so I don't know if you're able to see that bag, but there's a bag that's hanging on my door. It says, Go Innovation. And the GO and the T-I-O-N are in a different color.

Lei Xing:

Highlight it.

Tu Le:

So, WeLion was there, Gotion, was there, CATL was there, Lishen was there. I walked. I didn't talk to anybody. I just walked up and down and just looked. Okay? And next year you'll have to come. But all the players are here. Like, you know, I think they just want a shot. They just want a shot. You know, they just want an opportunity. But what's funny, and you know this, like as you've been to the Battery Show, it's one of the most international conferences you'll ever attend. There's Korean being spoken, there's Japanese being spoken, there's Mandarin being spoken, there's German being spoken. So to me, that stands out. It's one of the most international conferences and shows in the world, I think.

Lei Xing:

Yeah, Japanese, Asians. And remember these companies, Gotion and others, there's another huge opportunity in the battery storage, ESS space here in the U.S. And actually Gotion has a brand. They have actually a specific brand in that space for the U.S. market. So they're already here. So don't just talk about EV batteries. There's other opportunities. We talked about charging.

Tu Le:

I actually think the power wall and the commercial size energy storage systems, especially with Hurricane Milton, is it Milton? So I was concerned. My brother lives in Tampa and my nephew lives in Tampa. We have family down there. They actually had to go up north in Florida. The power is out, but luckily from the sounds of it, they're okay. Their homes are okay, it seems, but man, it's tragic. I don't know if you saw where the Marlins play. I think the Marlins, the roof was blown off of the stadium.

Lei Xing:

The Rays, Tampa Bay Rays.

Tu Le:

Yeah, the Tropicana Field, I think it's called. So, energy storage, whether it's commercial grid level storage or power walls, those are going to be part and parcel of hopefully real estate development and new homes for people because these generators, they work great, but again, a lot of them are gas powered, so it should be the local governments of every city, every state should make it much simpler to really buy one or two of these power walls. Because it's not cheap, but I'm looking at trying to put solar on my roof and a power wall in my garage, because in Michigan, the grid is not super reliable either, during bad weather. But you make a great point, Lei. And energy storage systems, you don't need automotive grade for those cells and the packaging and the enclosures.

Lei Xing:

Yeah.

Tu Le:

But, anything else?

Lei Xing:

No, I think maybe the last thing I just want to point out is some of the latest and the greatest, forget to mention, well, we did, but the Xpeng P7+ had its reveal yesterday on 10/10 China time. And will go on pre-sale when it reveals at the Paris Motor Show. That's very interesting. And then the LYNK & CO Z20 debuted in Italy. So these China EVs, these reveals, launches, they're not happening in China. They're happening all over the world. That shows, you know, we'll have the B10 from LeapMotor and some other ones in Paris. You know, like I said, it's becoming lot more global despite the headwinds, despite the beef, you know.

Tu Le:

I think we can largely credit BYD for launching their pickup truck in Mexico to kind of knocking down one of those initial dominoes and then having these other Chinese EV companies really have the confidence and boldness to do that and follow them outside of the China market.

Lei Xing:

Yeah, Firefly, we've heard about Firefly at the NIO Day later this year. Yeah, it's and the new Han, BYD Han is launching tomorrow.

Tu Le:                       

Hey. I don't know how they freaking do it, man. Honestly. So one last thing before we had off. Rivian. It was revealed that there's a component that they are short of that's causing the production bottleneck. And then you compare and contrast to BYD, who’s at 4 million units this year potentially and you don't hear a peep about supply chain issues. So it's just a head scratcher and I posted because you know, like I in my prior life, I chased parts. I was a sourcing guy. I was a logistics guy. And so my first job as many who follow the newsletter and the podcast know, was at Orion Assembly. In particular, I worked in the material office, meaning that that office was responsible for getting every single part to the factory on time, at the line, ready for production. Any delays, the material department was responsible for making sure parts were expedited to make sure. So the factory would not stop. And then I was the commodity manager at Apple. I chased parts there too. And these parts were NVIDIA chips, were ATi chips. And so I chased those parts from Taiwan to Shenzhen. And let me tell you, automotive, the legacy's very good at keeping factories running. Apple, probably one of the best in the business. But that's why the operations team at a lot of these tech companies is high turnover, because it's a boiler room. It is six days a week, 18 hours a day, tracking parts. And so not only do you have to make sure the parts arrive, but the prototype parts, you got to get them approved by engineering, by quality. And so there's a lot of different things that you can appreciate the sourcing teams, but...

Lei Xing:

And while…

Tu Le:

I don't know what... Go ahead, sorry.

Lei Xing:
Yeah, GM and Ford are showing signs of life on the EV side of it, right, based on the recent numbers that came out. again, the Investor Day, right, GM. So, yeah, it's dynamics, it's a bit different over here than in China.

Tu Le:

The last thing I'll do, Lay, is that Kurt Kelty presented. He's the battery guy at GM. And our good friend, Steve LeVine, he wrote a great article. The subscription's still way too expensive, so I don't subscribe. Steve, if you're listening, you got to reduce that price so more people can read your stuff. He had written about how GM seems to be going away from Ultium. They're going away from their partnership from LG. And Kurt also said that they're looking to engage with startups in the battery space earlier. They're going to be more open to that. So we're seeing less rigidness, at least at GM, which I think is a huge, huge, huge plus.

Lei Xing:

What I got out of the Investor Day was really two things, the software side of it and the battery side of it. And from Kurt, he basically said the diversification, not only in terms of chemistry, but form factor. GM was big on pouch, but look at now they're going to prismatic, right? That's number one. And then the software side, I forget the guy's name, Richardson or something. He said, it's really about, you know,

Tu Le:

David Richardson?

Lei Xing:

Yeah, the optimization of processes on the software side of things is really important. How you catch certain things ahead of time. I think that was interesting to hear. So, I mean, you have these new guys that are trying to change kind of the culture, and that's hard to do. But it was good to hear.

Tu Le:

And importantly, they're communicating that as opposed to like a Tesla where it's so secretive that you kind of hear rumors and then people run with these rumors that end up not being true. Anyways, hey, I'll see you in Paris.

Lei Xing:

Tomorrow. Actually, Sunday. Yeah. Yes.

Tu Le:

So, Sunday morning, France time. So, yeah, man, I'm looking forward to it. What's just there, Paris, amazing city.

Lei Xing:

It's fun. It'll be my third time. So I was there first time in 2016 when Mercedes announced EQ brand, if you remember, at the Paris Motor Show. And I went in ‘22. And that was the first time I traveled internationally since the pandemic. And Paris, by the way, is becoming a city of bicycles. That's the first thing that will jar you when you go into the city. Yeah.

Tu Le:

Yeah, so the mayor of Paris, for those that are wondering, they're investing 300 million Euros in restricting private passenger vehicles into the Champs-Elysees and the Arc de Triomphe. So they are encouraging bicycling in city center. And I think it could be a model for a lot of other cities around the world, hopefully a model for Detroit. I've been using a lot of, so I park when I go downtown, I park at Corktown and then I take a micro, I take a scooter to all these other places and hopefully more people do it. But yeah.

Lei Xing:

France, I mean, we just had the Paris Olympics, voted no. France voted for the tariffs. And at the same time, you have these China EV Inc. going into Paris, showing their next latest and the greatest. It's fun.

Tu Le:

Yeah, so yeah, I think I was I was obviously in Paris in the summer just before the Olympics and Loved it. The kids loved it, wifey loved it. And so looking forward to it and catching up with some old friends including you. So safe travels Lei. Everyone. 

Lei Xing:

You too.

Tu Le:

Good morning. Good afternoon. Good evening. We will find a time to do this next week either in Paris or back in the United States because I think we both arrive back into the U.S. before Friday.

Lei Xing:

I will head to China right afterwards. So for a few days, 10 days. And then, so we might have to do this on two continents.

Lei Xing:

okay. Okay, so. Well, you need to make sure that you've renewed your subscription to You Know What.

Lei Xing:

Yeah, yeah, I'm certainly aware of it.

Tu Le:

Okay. Hey everyone, we would talk with you all next week.

Lei Xing:

Au revoir? Au revoir? Is that the French way of saying it? Au revoir?

Tu Le:

Au revoir. Au revoir.