China EVs & More

Episode #193 - End of the Biden Era, Tesla's China Strategy, Tu's Detroit Auto Show Experience

• Tu Le & Lei Xing

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In this episode, hosts Tu Le and Lei Xing discuss the latest developments in the electric vehicle (EV) market, reflecting on the Biden administration's impact on the industry. They analyze the significant growth of new energy vehicles (NEVs) in China, the challenges faced by foreign automakers, and Tesla's strategic positioning in the market. 

The conversation also touches on economic factors influencing the EV sector, including trade-in policies and currency fluctuations, before wrapping up with insights from the recent CES event. In this conversation, Tu Le and Lei Xing discuss their experiences at CES, focusing on the innovations in autonomous vehicles, the impact of geopolitical tensions on the automotive industry, and the significant presence of Chinese companies at the event. 

They reflect on the evolution of CES from a consumer electronics show to a major platform for automotive technology, highlighting key trends and products showcased. The discussion also touches on the Detroit Auto Show and the recognition of various vehicles in the automotive industry.

Companies Mentioned

NIO, Tesla, BYD, XPeng, CATL, Li Auto, Geely, Xiaomi, Volkswagen, Huawei, RoboSense, Horizon Robotics, Ford, General Motors (GM), Stellantis.

Tu Le (00:

13.643) Happy New Year everyone and 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. What Lei and I discussed today is based on our opinions and should not be taken as investment advice. For those that are new to the show, welcome. And to our loyal listeners, welcome back. We ask that you please smash that subscribe and like button. And please, if you have any questions or comments, post them into the YouTube chat or the LinkedIn chat.

Tu Le (01:

10.731) I'm confident that Lei and I are two of the most, and this is where it's really important, Lei, because I think everyone has woken up globally to what's going on in China, especially now that Tesla has their numbers in. So it's our job, more important than ever, to keep everybody up to date. 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 sector. I write a free weekly newsletter that we pull many of our discussion topics from. You can sign up for that at SinoAutoInsights.substack.com, which of course I encourage you all to do. A well-rested Lei from his long trip back from Beijing. Happy New Year.

Tu Le (02:

08.513) Can you please introduce yourself, Lei? Welcome to 2025.

Lei Xing (02:

12.494) Xin Nian Hao. Xin Nian Hao. Happy New Year. This is your co-host Lei Xing, former chief editor of China Auto Review. And this is episode #193. Happy New Year to everyone again. Two weeks. Two weeks. Last time we talked was December 20.

Tu Le (02:

30.881) So we haven't been on for almost three weeks, two and a half weeks, two weeks. So hold on, let me first, before we get to the year in review, I think you made a quick trip to Guangzhou. Can you tell us about that trip?

Lei Xing (02:

49.964) Yeah, just, NIO Day 2024, quite memorable because it was my second time attending this event, which I would call an industry event, really outside of the Beijing Shanghai Auto Shows, it's a pretty darn big event because everybody...

Tu Le (03:

14.807) 22,000 man.

Lei Xing (03:

17.794) What was that?

Tu Le (03:

19.031) 22,000.

Lei Xing (03:

20.43) 22,000 users, supplier representatives, investors, media. I think the media, I think there were around 1,000 media alone. Met some of the China KOLs. Oh, Happy New Year from Jeffrey. So that's pretty good. who, whom I met.

Tu Le (03:

40.417) Hahaha. 45.047) That's a new feature, so I just turned it on and all of sudden it pops up.

Lei Xing (03:

49.134) for the first time, a big fan of NIO obviously, and some of the China KOLs, Elliot, Will, Mark, Toby, Afonso, Marcel. I think, well, you'll be there next time, this year, this year.

Tu Le (04:

07.477) I'm bummed I wasn't there, obviously. See next time. Yes, this year.

Lei Xing (04:

16.322) Yeah, so one of the major events, I say it's major because it's not an overstatement to say that every competitor in the industry in China and globally was tuning in. And especially my Mercedes PR friends, they cringed at the comparison of the NEO ET9 active suspension versus the Maybach, which was shaking violently. And obviously the firefly brand dunking on MINI and Smart. Yeah, I think that was a, and NIO kind of ended the bang with a bang in the, with the, you know, the December delivery numbers, which really, I mean, it's not a surprise that those numbers are ballooned at the end of the year anyways. So what you're gonna see is in January in Q1, there will be a kind of a lull from the high of 2024. But great event to meet and actually to be face to face with Li Bin and Qin Li Hong. I mean, they're probably one of the most approachable CEOs, very patient and very real. I think that the controversy was obviously surrounding the firefly design. They expected that. They expected the kind of slow ramp of ONVO. But I say they're... Yeah, yeah.

Tu Le (06:

09.591) I would say slow, careful ramp.

Lei Xing (06:

13.346) And I say there, you know, I said this was the most important NIO Day to date because the stage is set. They are a three-brand company. They want to double sales this year. They want to break even in 2026. Not easy to achieve given the bloodbath, which is my keyword for 2024. Yeah, quickly, just some of the thoughts.

Tu Le (06:

48.119) So a couple observations that I made. So there were people, engineers, that were saying that this technology, the steady technology from ClearMotion is old Bose technology. It's actually not. It's generated. And so we had interviewed Zack Anderson, the CTO, co-founder of ClearMotion. He has left the company, but we had talked to him extensively about it, you know, none of that technology prior has really been commercialized in a big way. And I expect the ET9 to really be the first car to commercialize that, but then it will trickle down into other vehicles within the NIO family, but then also get copied by the premium brands and then the more mass market brands in a short time frame.

Lei Xing (07:

50.894) Yeah, I think one of the... Actually, if you get into the kind of the top news events of 2024, one of those out of the my top 10 was, we didn't get to talk about this the last time because it hadn't happened yet was CATL's announcement of the kind of the standardized battery packs, #20, #..

Tu Le (08:

18.995) Mm-hmm.

Lei Xing (08:

20.014) 25 and announcement of several, I think it was 10 OEMs. No NIO, at least not yet, but 10 OEMs in the kind of the lower-tiered vehicles, A segment, A0 segment, smaller vehicles. And their plan was humongous. Their long term out

Tu Le (08:

33.504) You

Lei Xing (08:

48.334) was to have 30,000 to 40,000 battery swap stations. And NIO just opened its 3,000th in China. So 10X, 10X of what CATL wanted to do. So one of those Top 10s, yeah.

Tu Le (09:

07.329) And so for those, for our new viewers and listeners, CATL is the largest battery manufacturer in the world, full stop. They control or hold about 37% global market share currently, mostly using LFP batteries. They supply virtually every legacy OEM in China, and they're starting to create a manufacturing footprint in Europe. They have partnerships announced with GM and Ford, although those that are supposed to be stood up in the United States have taken a bit of pushback. So again, for the new listeners, I'd wanted to really push, pull back to some of the basic stuff. So, so you understand what Lei is talking about.

Lei Xing (09:

58.786) Yeah and CATL is a frenemy to NIO because it supplies batteries to NIO. It is an investor in the battery asset company of NIO and it is following NIO's battery swap legacy into expanding its own network. And there's still a question mark on whether they will collaborate on some of the future network. And the sense I got from Li Bin was this is still under discussion, so we're not ruling it out. The possible scenario that these stations, they could be interoperable, but it's something to watch for. So. And that just shows you, I think, the battery swapping sweepstakes. I said that the CATL raises the stakes in the battery swapping sweepstakes by that announcement. A huge announcement.

Tu Le (11:

19.521) We should also note, Lei, that Geely has a battery swapping system as well.

Lei Xing (11:

23.906) Yep, it's called the YiYi Power, which has an extensive network as well in China.

Tu Le (11:

27.105) So. If we think about it and take a step back, that means that there are three major entities, NIO with the ONVO brand, firefly I believe is using a separate swapping system. So, CATL, then Geely. Now, can we live with more than one standardized system in China? Probably. Not sure Europe or the United States could take more than one system. There's a company in the United States called Ample that's trying to commercialize swapping in the U.S. And they're gaining a bit of traction in Japan and have a pilot with Stellantis in Spain, I believe. So to Jeffrey's point, it looks like swapping is here to stay for sure in China and it'll bleed into the rest of the world in some form either through passenger vehicles or commercial vehicles within the next decade.

Lei Xing (12:

34.676) And the way to look at this was the founder CEO of CATL, Robin Zeng, he gave an outlook, basically a third long-term out in China, a third of the infrastructure will be battery swapping, a third will be home charging, and the third will be public charging. So that gives you some idea of where battery swapping in the whole scheme of this kind of the infrastructure, which to me, I explain it as this kind of the main road on the ring roads in Beijing. And there's also the side road for those that live in Beijing and know what I'm talking about. And sometimes those side roads are important because they're faster compared to the main roads. And that side road is what I would put the battery swapping analogy. Yeah.

Tu Le (13:

37.277) Oftentimes, DiDi drivers or Chinese Uber drivers would jump on and off the main road and go to the Fu Lu because it was faster in certain parts of the ring roads.

Lei Xing (13:

48.962) Yeah. Right. Right. Right. So I think that's how I would look at. I don't think it becomes mainstream, but I think it becomes a key important part of the whole infrastructure, charging infrastructure. Yeah.

Tu Le (14:

06.993) And I want to emphasize your point about a third, a third, a third. It's not either or. NIO, you can still charge by plugging it in. Okay, it's just an and. Okay, you can swap and you can charge.

Lei Xing (14:

26.626) Yeah, as a matter of fact, all of their battery swap stations, more often than not, you will see a set of chargers next to it. So that's the way it goes. And then perhaps the other, there's a no brainer on this one. Tesla just announced their year end 2024 numbers. Shrink, shrink, you use the word shrink in the 24.

Tu Le (15:

00.491) That post got a lot of attention.

Lei Xing (15:

05.932) Well, you know, nobody stays on top forever, you know, right?

Tu Le (15:

10.199) So there was one comment in the post that said, you know, that they're basically flat, they didn't shrink. 1.8 to 1.78, okay? So 23 was 1.8, 24 was 1.78.

Lei Xing (15:

27.214) It's a matter of 18,000 units. So 1.8 million, 1%, right? 18,000 units.

Tu Le (15:

33.739) But I contrasted that with 41% growth for BYD, 50% growth for Li Auto. And so when the rest of the world is growing and you're flat, you're not keeping pace. That's the bottom line. And so as the Chinese market, let's not even talk about any of these other markets, Europe, the United States, they both grew too. They grew less than in previous years, but the numbers increased. So globally, clean energy vehicles grew, largely due to BYD. so that's what I wanted to emphasize, just to be clear.

Lei Xing (16:

27.872) And again, the Tesla achieved that result thanks to steep incentives. Non-price cut plus a little bit of price cut at the end of the year, RMB10,000. Which I say really the overall, really my number one news event is really China now is a 10 million NEV a year, 50% take rate. So more than half.

Tu Le (16:

40.895) Non non-price cut incense. 46.421) Yeah, some price cuts.

Lei Xing (17:

06.414) For six straight months, more than half the vehicles sold, including exports out of China, are NEVs. Yeah, and let me just add one more statistic that's mind boggling is since we started this podcast in 2021,

Tu Le (17:

18.551) And let's peel the layers of the onion back. I'm going to give you a couple reasons. Go ahead.

Lei Xing (17:

31.854) 21, 22, 23, and now 24, roughly, roughly, three million NEVs were added to the total annual sales every year. Three million, six million, nine million. This year it's going to be 13 million, including exports. And it seems I've seen some projections for 2025 is I've seen 15 million, I've seen 16 million. So the last four years have just been pretty crazy. Yeah.

Tu Le (18:

17.939) And so the point I'd like to make about your growth numbers is that there are a number of great products at the mass market price level. ONVO and MONA, just to name two. And then that's not talking about the plethora of BYD vehicles under $25,000. And the number of products really make it more attractive than buying an ICE vehicle. In the United States and Europe, there aren't as many products, so it's just not as attractive, or the choices aren't there, and the prices are higher. And so now, do I believe that we're gonna see 90%, like Li Bin said in a couple of years, 90% take rate? I think that's gonna be pretty challenging, but. You know, you can't deny the growth and the third part of that a lot of products at low prices is that the Chinese government also continues to put its thumb on the scale. You had just tweeted that they're going to continue the cash for clunkers. Can you talk about that a little bit?

Lei Xing (19:

29.454) Yep. Most likely. Most likely. Yeah, so I think it's worth mentioning how we got here, especially in 2024, was first of all, the tipping point has long passed. It's becoming very normal for you to consider an NEV. Second, just the availability of a variety of products on the market. Third, very important, is this of the cash for clunkers, incentive that went into play toward the second half of the year. So the latest numbers I've seen is the number of applications submitted for trade-in or scrap. I think it's close to 6 million. Now, not all of those are registered yet, but these combination of reasons and factors just continuing to buoy the market to historical highs. And I think globally China probably accounts roughly more than two thirds of the global sales are NEVs. That's probably a guesstimate. again, the underlying factor is this push to drive consumption and improve the economy. And auto industry is a pillar industry of the economy. So you do see these trading programs and incentives geared toward, I think the two biggest industries are the autos and the electronics and appliances industry. Yeah.

Tu Le (21:

19.399) And this also points to Lei, the Chinese government acknowledging weakness in the Chinese economy from a consumption standpoint.

Lei Xing (21:

27.574) And I felt that. I felt that. I'll give you two examples. On Christmas day, I was in the elevator and I asked a Meituan delivery guy, you know, must be busy the last two days. And he shook his head, no. We had dinner with a bunch of friends from my daughter's kindergarten at Jin Dingxuan. I don't know the English name for it, but it's a popular restaurant chain on a Saturday evening. And they were telling me that it's pretty normal that it was not filled up. Usually it's filled out, but it was kind of lax. so I mean, yeah. Yeah. But

Tu Le (22:

10.347) Here's another anecdote, Good friend of ours. Xin, Ye Xin.

Lei Xing (22:

22.2) Yeah, he's in Beijing, I think.

Tu Le (22:

24.299) So he sent me videos of the Rosewood Hotel. They have a club there. And he was there for New Year's Eve, having a few drinks with some friends. And it was crowded, but it wasn't like years past where it was just chock full of expats. And this is on New Year's Eve. So, and I went to Toronto to visit my friend Christian who's the founder, co-founder of Jing A, that brewery. And he was there for his beer festival, 8 by 8 in October. And I think you were there too, maybe. no, I'm saying, were you in China in October or no? Yeah, so he said that pollution levels when he was there were really high. And so...

Lei Xing (22:

56.92) Mm-hmm. Mm-hmm.

Lei Xing (23:

08.894) I was in Toronto in earlier this year, last year, March. Yes I was. 22.616) Well, this trip I spent about three and a half weeks mostly in Beijing. It was, pollution. I didn't see anything. It was pretty clear every day. October, okay. No, all right.

Tu Le (23:

31.915) No, he was saying in October, And so, but he, he's like us, Lao Beijing, recently moved back to London, or moved to London, but he said that the vibe is different. Now, now Shanghai is much closer to pre-COVID.

Lei Xing (23:

52.201) It was, yes.

Tu Le (24:

00.289) But Beijing is still a ways away from pre-COVID days. That's what I was told. And in April when I was there, I felt it. Shanghai always has a bit more energy.

Lei Xing (24:

03.32) Yeah, yeah, yeah, yeah. 13.877) I think a good way to compare was I think I talked to some people in the industry and they do feel the energy was actually pretty high in Shanghai two years ago, not last year, last year is 2024. But the Shanghai Auto Show 2023, think that was actually pretty energetic because it means

Tu Le (24:

31.799) You 39.376) yeah.

Lei Xing (24:

40.206) right, gotten back and I got to go back and a lot of foreigners got to go back. But and as you see, right, that they're now opening up the visa free to 10 days, 240 hours.

Tu Le (24:

56.075) I was reading that in my friend who works in the travel industry over there was telling me that a lot of South Koreans just come for the weekend to Shanghai now.

Lei Xing (25:

04.984) Yeah, come for the weekend. Yeah, exactly. Yeah, I saw that as well.

Tu Le (25:

09.207) because South Korea to Shanghai is probably 4ish hours. So it'd be like going, yeah, okay. So was it two, two or three? But anyway, what I'm saying is that it's nothing to fly from South Korea to Shanghai. It'd be like, you know, New York to Chicago or something like that. And so for...

Lei Xing (25:

15.522) I think less than that. Probably less than that. So I don't know, two, three hours, yeah.

Tu Le (25:

38.793) When you don't have to deal with the hassle of a visa, going to Shanghai and visiting one of the coolest cities in the world in less than three or four hours flight, it's worth it. So. Hey, so we've spent a half an hour just kind of catching up, almost like personally, let's go to the year in review and your top. didn't rank them. It's look, it looks like you rank them from one to 10.

Lei Xing (26:

05.969) Well, no. Well, I kind of ranked them. So I talked about the market obviously running away. That was my number one. 10 million, 50% take rate. The other one I talked about was CATL raising the stakes in the sweepstakes. So that's two. And then number three, really, what can we say? Xiaomi.

Tu Le (26:

09.782) Okay.

Lei Xing (26:

33.678) I think we have to single out Xiaomi for what they did in 2024. Blew out all kinds of expectations. Blew out Lei Jun's own expectations. 135,000 SU7s. And they announced 300,000 for this year.

Tu Le (26:

58.647) So let me stop you there. In contrast, XPeng, which is a 11-year-old company, sold 190,000 units in 2024.

Lei Xing (27:

10.188) Yeah. The caveat is it's not an apples to apples comparison because Xiaomi has the brand equity, has the user base. I think the more significant thing was not that they did 135,000 in nine months. I think the more significant thing is really Lei Jun went all in. I think he disclosed in a live stream that he spent RMB30 billion to make this happen. The kind of the commitment to do it. I think it's really, I mean, when you put all the efforts, when you put the talent, when you do this in three years.

Tu Le (27:

52.951) That's 4ish billion US dollars.

Lei Xing (28:

09.08) 3.5 years. It's pretty darn amazing.

Tu Le (28:

17.335) And here's one of these things that people bash analysts, that we know. They bash what's going on. They point to subsidies, blah, blah. if you think about just from an operation standpoint, manufacturing standpoint, Lucid said they're not having manufacturing issues, but they slowly, slowly, slowly ramp. Rivian.

Lei Xing (28:

17.4) sorry.

Tu Le (28:

46.867) has had nothing but manufacturing issues, supply chain issues. And they're not building 130,000 units in nine months. So there's lessons to be learned here by the Western automakers from the likes of the Xiaomi. Now, Xiaomi, used to build handsets. They used to have much, much smaller consumer products, less complex. And so that should also be

Lei Xing (29:

12.43) I bought a Xiaomi humidifier for RMB129. So what the heck?

Tu Le (29:

21.889) So, you know, it's, and what amazes me about Xiaomi, it's not about a premium thing, it's about a connected thing. Because all these different products in your life, Xiaomi went from a handset brand to a lifestyle brand, and have successfully moved into lifestyle mobility brand. And so that should be studied. The two things, the three companies at a minimum that should be studied by Western business analysts is how CATL got so big, how BYD became so successful and Xiaomi's and we're talking, Bloomberg had said last year there were 300 brands or 130 brands or something like that, still in China slogging away trying to sell vehicles every month. How come Xiaomi, now set aside the brand, okay? Because yes, the familiarity, but there's a couple things going on and me being the operations guy Lei, I always point to they created the demand and they built to that demand, okay? I think if they could even build more, they would sell more. But, you know, so it's amazing that they're so operationally efficient in such a short period of time, so.

Lei Xing (30:

49.826) Yeah, and I think last year the memorable, I think Lei Jun became the online and offline traffic king of the industry. You know, Beijing Auto Show was a good example. We were there. When they did the press conference, the entire hall that their booth was in was packed. And yeah.

Tu Le (31:

19.914) it was like 50 people deep. Like, they're way back there looking, so.

Lei Xing (31:

25.262) And you know everywhere he went there was commotion, there was an entourage. Yeah, I mean I think those were the memorable moments that we saw.

Tu Le (31:

40.341) And that's also why less so Li Xiang, but He Xiaopeng, Li Bin, you see them more in the forefront on social because they're getting pulled into this because Lei Jun, who has this like ho-hum kind of demeanor, right? But he spits venom, right? I mean, he's like this humble bragging, you know, I would have never thought that we could build 130,000 units, you know, I'm hoping that we can get to 300,000 units in 2025, I mean, he's dropping the hammer in like the nicest way, so.

Lei Xing (32:

19.16) Yeah, yeah, yeah. And yeah, it's definitely something to could be on a case at a business school, right? Because Apple couldn't do it. Xiaomi did it.

Tu Le (32:

33.281) So please continue, please continue.

Lei Xing (32:

36.814) And then which I think translates to the other one of my top 10 would be I said bloodbath is my keyword of 2024 but I mean it to be a state of mind, not only the price war itself. Yeah.

Tu Le (32:

55.991) Actually, let me stop you there Lei, because there were a couple articles that I saw this week that said the price war starting in 2025 because of a leaked internal memo from He Xiaopeng. But that's wrong. The price war started in 2023 by Tesla. It's just a continuation and a dialing up of intensity.

Lei Xing (33:

09.336) Well, close call time, right? Yeah, yeah. 17.144) Three.

Tu Le (33:

24.885) The price war started two years ago now.

Lei Xing (33:

27.81) Yeah. So when I say the bloodbath, it's the price war. It's the state of mind being that these CEOs have to be out in the front to livestream, to sell, and guerrilla marketing, dunking on others like NIO did. Those are very normal. And the interaction among and between the CEOs, He Xiaopeng and Li Bin sharing a bowl of sticky rice balls ahead of the NIO Day, right? Those kinds of things, they're competitors, but they're also friends and they're pushing each other because Guangzhou is the home court of Xpeng.

Tu Le (34:

03.595) Yeah. 17.056) They're pushing each other, I think there's a mutual respect.

Lei Xing (34:

27.278) I think those are all part of what I call the kind of the bloodbath for the good and the bad. The competition is not just on the products, it's not on the pricing, it's on the price wars, but other aspects of how you compete. You don't see that anywhere else in the world. And yeah, no, yeah.

Tu Le (34:

51.553) And you won't. And you will not. There will never be 130 EV brands in the United States or Europe.

Lei Xing (34:

57.134) And the next Top 10 event, because of the bloodbath, in 2024, we saw the sudden death of JIYUE. Unfortunately, very sad story.

Tu Le (35:

13.943) So let me ask you, you were there. Is it done?

Lei Xing (35:

20.172) Yeah, it's, it's done. You can only...

Tu Le (35:

25.685) So there's no trying to raise capital, it's done.

Lei Xing (35:

28.046) No. No. Time to reminisce. NETA have not disclosed monthly delivery numbers for, I don't know, three or four months. The integration of ZEEKR and LYNK & CO. So those, is what I would see as signal to this early innings of industry consolidation because the brand movement is, I think it's nearing the end. And going forward in this year, we're gonna see more integration of possibly brands, additional brands like ZEEKR and LYNK & CO.

Tu Le (36:

14.695) And it's like a virus. So once a few companies close up shop, you'll start to see this. What is going to be interesting is that the first six months of the year in China, they can probably hide their lack of sales because the market is pretty slow. At least, you know, this year, Chinese New Year is on January 29th. So we can expect a very slow February and likely a very slow Q1. And then as we move out of summer, it will start to be exposed the companies that are really, really, really weak. Now, you and I always hear things, but I'm not saying we have the power of Marques Brownlee, but we don't want to speculate too negatively on the rumors that we hear.

Lei Xing (36:

49.262) Q1, always.

Tu Le (37:

14.071) But you know

Lei Xing (37:

15.854) Yeah. And then you had, I mean, in the chart I posted of December and full year of 2024, sales rankings, it was obviously clear scale matters and the strong gets stronger. And if you can't do, I think the minimum for any brand is 10,000 a month, 100,000 a year. If you can't get there, forget it. You might as well just close shop. That's right. Yeah. Yeah. Yeah. Yeah.

Tu Le (37:

49.719) Oh, Lei with the with the NEV sales volume at 15 or 50% take rate, I would say the minimum needs to be about 15 or 20.

Lei Xing (37:

59.022) 15 and 20. You know, NIO got there 30,000 finally, but I think that might be an outlier. I think December, the caveat is you're going to see for a lot of the brands that got to record highs in December, January and February and perhaps March will probably be low. Yeah. Hangover. Yeah. But still,

Tu Le (38:

18.519) There's gonna be a hangover. 24.129) But what will be interesting to see is the ONVO and MONA numbers.

Lei Xing (38:

28.652) Right, These newer brands and a company like Xpeng which had entirely different halves in 2024. Sometimes it's hard to explain, but at the end of the day, when you have the right products, it solves everything, doesn't it?

Tu Le (38:

50.763) Well, to your point, they came out swinging in Paris. And they're going to have a presence at CES. And so please continue. Any other of your top 10?

Lei Xing (38:

55.758) Yeah, yeah.

Lei Xing (39:

08.354) Yeah. One company is a must mention, Huawei. They completed their brand foursome, but the bulk of their sales were the AITO.

Tu Le (39:

17.665) Okay. 25.207) So can you, let's take a step back. Tell everybody what Huawei and HIMA is.

Lei Xing (39:

31.416) So Huawei and HIMA is this called Harmony Intelligent Mobility Alliance, where Huawei participates heavily into the development of these brands. AITO with SERES, LUXEED with Chery, Stelato with BAIC Group, Maextro with JAC Group.

Tu Le (39:

58.707) MAEXTRO, okay. All state-owned enterprises, by the way.

Lei Xing (40:

01.174) And all state-owned enterprises, and the simple way to look at it is these are their contract manufacturers. But Huawei is really the tech inside. And they even go into designing, styling, yeah, of these vehicles. And AITO by far, yeah, yeah, yeah.

Tu Le (40:

11.244) Yes. 19.614) UX Design. 23.573) Which makes it a little weird. Which makes it a little weird.

Lei Xing (40:

30.094) AITO by far accounts for the bulk of the sales because the other three brands are relatively new and Huawei is becoming a formidable player in the extended range EVs and ADAS, the level 2++. They're probably a leader with Li Auto in that respect, the M9.

Tu Le (41:

02.081) Here's an aside that I think we should remind people at the Paris Motor Show, AITO had a huge presence, but did not make any announcements about entering the European market. Now, it's important to note that Huawei has had sanctions slapped on them by the United States government. And so I think there's this, what's the right word to say? Any brands associated with Huawei are really, really probably hesitant to enter any foreign markets currently.

Lei Xing (41:

47.502) And they just, I think they shook the industry the last couple of years, especially last year now with four of these brands. And supposedly there could be more coming to, add into this HIMA Alliance. Who knows? But the...

Tu Le (42:

09.515) Because for Huawei, here's what's important. For Huawei, it's a data play. And so they want as many vehicles on the road, whether they're LUXEED, whether they're MAEXTRO, whether they're AITO. For them, it's just a volume play.

Lei Xing (42:

25.806) But in the back of my mind, I question that every one of these brands will be successful. Because you're looking at Geely and Geely is pulling back because they are a multi-brand group. NIO has become a multi-brand group. BYD, right? I mean, look at BYD. They're...

Tu Le (42:

48.961) BYD, XPeng

Lei Xing (42:

54.702) 4.25 million sold, 2 million came out of the Dynasty network. 1.94 million came out of the Ocean. And the remaining are the other three brands.

Tu Le (43:

10.283) which are rounding errors basically.

Lei Xing (43:

11.682) Rounding errors, right? And then I think it's something operationally and managerially that needs to be looked at.

Tu Le (43:

26.337) But we always knew and BYD always knew that when you get into the more premium side, it takes time to create awareness, to build trust and to dial in your products so that they're competitive with the rest. And especially because outside of China, tastes are different. BYD might have a very good feel for what the Chinese consumer wants in the mass market, a little bit better understanding in the premium market, but it's brand new for them on the mass market and the premium side in Europe and in these other markets. That's why you see BYD being so successful, BYD the brand being so successful in emerging markets because it hits the value proposition really, really on the head. And for Fang Cheng Bao for Yang Wang to be successful in Europe, that could be a 10-year thing.

Lei Xing (44:

27.182) Yeah, and we can't talk about the Chinese auto market without talking about the foreign players. So one of my top 10 was the introduction of the AUDI, not the four ring brand, but the four letter brand, which shows the foreign automakers, they are taking actions to be relevant, to try to be relevant, to try to survive. GM taking the $5 billion hit, Volkswagen announcing the continuation of the Shanghai Volkswagen joint venture. They're making moves to survive, to be relevant, that would be, given what's happening with Nissan and Honda, not because of China, Stellantis.

Tu Le (45:

22.711) Stellantis. 26.975) I had a quick chat with Danny Lee from Bloomberg and I alluded to what you had just said. The legacy automakers are doubling down on the China market. They feel that it's too important of a market for them to just leave and abandon. And so I said to Danny, said, the only real solution long-term is

Lei Xing (45:

28.139) It's.

Tu Le (45:

56.967) great affordable products that provide value to the Chinese consumer. And then I said, and likely new management teams.

Lei Xing (46:

07.662) I think that window is really closing rapidly because for these foreign automakers, these plans won't materialize until 2026, at least from the product side. So this year, we'll continue to see the onslaught of LYNK & CO 900, just one of the new models being launched, that will continue to push every other day.

Tu Le (46:

31.591) And that's the crazy thing. I think the mass market is already really, really crowded. And so you're starting to see, and you and I talked about this, I think we were some of the first two people to talk about this, where price doesn't define premium. The user experience defines premium in China. You know, the fit and finish of materials doesn't really define things because some of these mass market vehicles, man, they like the Xiaomi SU7. It has a premium feel inside. And I don't know how long that'll last from a wear and tear standpoint, but for the folks that have an opportunity to jump inside a SU7 or SU7, a Xiaomi, you're going to, you're going to be impressed that it's a $30,000 car.

Lei Xing (47:

27.724) Yeah, and then quickly my two other ones are AV related. One is the IPO, successive IPOs of Pony and WeRide, plus Horizon Robotics. The Hong Kong IPO and Horizon Robotics is a NVIDIA competitor, and they will reach 10 million chips, ADAS chips, shipped probably by the end of Q1 this year. And the other big, big, I think in my mind that happened in 2024 was this talk of end to end vision language model action being deployed where parking to parking ADAS is being pushed out right now. And more recently there's been, there's a new autonomous driving policy that came out in Beijing, which basically said allowing Level 3 vehicles to be operated on roads. So I think the AVs, the Robotaxi side of it, Level 4, and the ADAS side of it, I think they're forever getting more blurry. Because Li Auto.

Tu Le (48:

55.275) Converging.

Lei Xing (48:

56.974) was talking about launching a personal, as what GM Mary Barra said, personal autonomous vehicle with Level 4 capability. And this was done, Li Xiang, he did a livestream for three days in a row where he said, in December, where he said, Li Auto wants to be an AI company. And they want to, what they want to do is in the future, when you buy a car, when you buy an EV, the goal is not to buy it, to drive it, that's what he said.

Lei Xing (49:

41.198) so, so...

Tu Le (49:

41.751) So in other words, the goal is to be driven in it.

Lei Xing (49:

46.254) Yeah, So that's, yeah. I think that's my Top 10.

Tu Le (49:

48.993) So if you read in between the lines. 55.087) And Lei, to add on to your point about this personal, this is where Elon having such a close relationship with Trump, maybe the United States, really.

Tu Le (50:

14.407) How should I say this? It accelerates the experimentation of L3 ADAS because if Trump defangs NHTSA and the Department of Transportation really creates autonomous vehicle friendly policies, ADAS friendly policies, we could.

Lei Xing (50:

16.352) Accelerate, expedite.

Tu Le (50:

41.333) we could see in the next four years a huge acceleration of that. Because if Tesla really leans into that, let's say the path is paved for more Level 3 pilots and things like that, Tesla's gonna push into it and SuperCruise and Blue Cruise are gonna have to really, really follow suit, okay?

Lei Xing (51:

05.89) Yeah, and then when you look at it, the same thing is going on in the U.S. and China, except Tesla is the only one doing it. Whereas in China, there's multiple Tesla wannabes doing it.

Tu Le (51:

20.757) Multiple and and and this is where it's important because you said and we talked about this in past episodes that convergence means that a DeepRoute that a Pony is also getting into the passenger vehicle side

Lei Xing (51:

31.918) Yeah, this parking space to parking space ADAS feature, there's at least four brands are pushing this out through OTAs, Xiaomi, Xpeng, Li Auto, and Huawei.

Tu Le (51:

46.783) And another way to say that is point to point parking space to park parking space. And then there's that article recently about DJI making a breakthrough in ADAS. And so I made it a point to say that, BYD is one of DJI's major partners on the ADAS stuff. So

Lei Xing (51:

50.85) Point to point, yeah, yeah, yeah, yeah.

Lei Xing (52:

00.536) Mm-hmm. 10.326) And DJI supplies to some of the Volkswagen models. Yeah.

Tu Le (52:

14.037) Yes. Now let me go through my 2024 year in review. A couple of them have to do with BYD. Let's say BYD beats Honda and Ford in global sales. Now those numbers haven't been finalized, but let's assume that BYD at 4.26 million units sold more than Honda and Ford last year. Okay. So they've increased or they've moved up the charts from global sales standpoint. And remember that the majority of Honda and Ford sales are ICE, whereas BYD is all NEV. Cruise blows up. We had just talked about autonomous vehicles. And to your point, Lei, now there's Waymo, there's Tesla, and then everybody else in the United States or North America. And I'd like your help. in adding to this list or giving me some color, I'll just say the losses, quote unquote. GM, Volkswagen, Stellantis with Carlos Tavares, Nissan, now getting bailed out by Honda. JIYUE, Porsche, were there any other companies that we can think of that had major losses that were reconciled?

Lei Xing (53:

29.048) Most we need some.

Tu Le (53:

42.487) or at least acknowledged in 2024. Those were the companies that I thought of on the top of my head.

Lei Xing (53:

49.282) Well, those are the top ones I can think of. NETA, right? And then some others that were already zombies to begin with that we don't even have to mention. But AIAYS, yeah.

Tu Le (53:

53.888) Yep.

Tu Le (54:

00.265) I ways, right? So, my next one, VW and Rivian, that partnership I think is significant. Trump wins. That is really going to affect the global clean energy vehicle space, including batteries and chips.

Lei Xing (54:

12.974) was pretty huge. 23.374) Yeah. of Trump, actually I missed one out of my Top 10 was the, I read it off, EU plus US try to shut the door on China EVs with tariffs, ICV software hardware ban. That was one. The other. More global, yeah. Yeah. Yeah.

Tu Le (54:

30.583) Okay? 43.895) Yeah, so this is where you and I are very much in alignment. Now, to continue my list, EREVs and PEVs emerge, PHEVs emerge, because now, yes.

Lei Xing (54:

58.466) You're more succinct. I tried to tell them more.

Tu Le (55:

03.927) Well, I made these like bullet points so that you and I could discuss them, but you've touched on a lot of them already. And just what you just said, I'll continue, US and EU tariffs, the flood has been temporarily dammed, but can it be stopped? So with the EU, I see a clear path for BYD still via the PHEVs.

Lei Xing (55:

07.746) Yeah.

Tu Le (55:

34.223) And so the U.S., I had already made a prediction and next week's episode, we're going to make our 2025 predictions. but we're going to be in Vegas. But anyways.

Lei Xing (55:

47.746) We may have to do one at CES.

Tu Le (55:

51.155) Yes, yes. Then the Xiaomi breakthrough. We both talked about that. I won't. This is where I'll also need your help, Lei. More brands enter. ONVO, firefly, MONA. Were there any other new brands? Maextro.

Lei Xing (56:

10.186) Maextro Maextro Maextro whatever

Tu Le (56:

13.335) And that's the only four that I could think of that were notable. The U.S. tightens restrictions on Chinese software and the sale of silicon and capital equipment for the build, the fabrication of chips. The records keep falling for BYD. Growth continues for China EV Inc. We had talked about this earlier, BYD +41% year over year, Li Auto +49% year over year, XPeng 34%, NIO 39%, ZEEKR 87%, and LeapMotor 104%. So now, did that keep up with the market? I'm not sure, because we haven't seen the final numbers yet. But you know, the numbers are going the right direction for those companies that I've mentioned.

Lei Xing (57:

10.21) Yeah, so the simple way to look at the market is probably roughly 30% growth in NEVs, but within the NEVs, the PHEV growth is doubling that of BEVs. That's the simple way to look

Tu Le (57:

20.652) Yeah. And so so that makes the Li Auto or that that makes the Xpeng NIO numbers even more impressive because up till now they're only selling BEVs.

Lei Xing (57:

37.518) And I think, you know, an important reminder, I think Li Bin, he understands. NIO is 10 years old, Xiaopeng is, Xpeng is 10 years old, LeapMotor is 9 years old. At a certain point, you gotta make money and you can't keep doing losses. And that's why I say the early innings of and the scale effect will matter. You can't continue playing the bloodbath game at a loss. And I think Li Bin was pretty serious that we're gonna try to break even in 2026. And that's a goal that's pretty set. We can't walk back from it. And the number of these companies and brands that are making money is a handful, is less than a handful. It's an important reminder of 100, 200, 300 brands, there's no way they're going to all survive, that's something to watch, really. Who's going to become the next JIYUE? Who's going to become the next NETA? Who can step up?

Tu Le (59:

02.551) And I think you make a great point, Lei, because 2025, I think is the year that we see a lot of companies fall to the wayside.

Lei Xing (59:

21.122) Yeah, so it's difficult really to recap a year. That's every other day, every hour there's something happening.

Tu Le (59:

21.633) So, so man. 31.703) I, that post that I'd mentioned earlier in the episode, I patted us on the back. Part of my reflection for 2024 is that I think we do good work. I think we are again, two of the best, two of the most accurate. We lack the PT Barnum style, click-baity headlines, but I don't, you know, that.

Lei Xing (01:00:

05.07) Yeah, I think that, yeah, the fact of the matter is we're there. I mean, I went back, I think 2024 was a flash even more faster than 2023 because I went back four times and every time I go back, things somehow just becomes faster because you're, I mean, you're in a city and every time I come back here, things all of a sudden calms down and slows. And that's how it felt. I mean, Beijing Auto Show, we did the trip from Shanghai to Shenzhen in an Xpeng G9, which gave us really great insights of why EVs work in China.

Tu Le (01:00:

54.035) Not only from a range standpoint, but from a, spending 9 hours in the car with me only being able to read certain stuff on the instrument pedal. You know, the user experience, because as an IONIQ 5 owner, I do have issue with the range, I do have, the UX is really clunky. There's a child lock, you know, in the analog cars, the child lock was like a switch on the passenger, the backseat doors. Now the child lock is like a button on the armrest of the door on the driver's side. And I've locked my kids in the car on accident because I don't remember hitting that button, but I must have with my arm. And so my kids are like trying to open the door and like. I don't know what happened. So there's still some clunkiness from a user experience standpoint with legacy auto.

Lei Xing (01:01:

59.33) thing is, every time I went back four times, every time I go back the next time, I always see some kind of improvement. Let's say ADAS, the capabilities of what the vehicle can do through OTAs. It's always refreshing. And we've been to a couple of places outside of China, outside the U.S., Paris Motor Show. I went to...

Tu Le (01:02:

08.373) Yeah! 25.205) We are two of the few people that are truly global. Paris, Beijing, LA, so.

Lei Xing (01:02:

32.014) LA, we tried out the Waymo, right? Got an understanding. I tried out a few Robotaxis in Beijing quite a few times. Paris, we're seeing the China EV Inc. I was in Germany a couple of times. I was at CES earlier last year. You'll be at CES next week. And we'll both be at CES, but think about it.

Tu Le (01:02:

55.125) We'll both be at CES, so... Contact us if you're interested in meeting up.

Lei Xing (01:03:

01.998) Despite the geopolitical uncertainty, the Chinese will be at CES. And this time there will actually be several OEMs. ZEEKR will be officially exhibiting a standalone exhibition. Great Wall Motor will be exhibiting at CES.

Tu Le (01:03:

23.831) They have a presser.

Lei Xing (01:03:

31.726) Xpeng through their AeroHT, the flying car company. The LIDAR, the three LIDAR, Big 3. WeRide will be there. Waymo will be there. ZOOX will be there. Faraday Future will have their FX brand Mule car. They're a pseudo Chinese company, right? Because of YT Jia.

Tu Le (01:03:

47.831) Hahaha 58.315) So.

Lei Xing (01:03:

58.455) The China factor will be huge again, always at CES.

Tu Le (01:04:

03.735) but most people won't know it.

Lei Xing (01:04:

09.875) And before you know it, April comes around. It's Shanghai Auto Show again.

Tu Le (01:04:

16.481) You and I will be there.

Lei Xing (01:04:

19.719) The year just, yeah, it's not that long to be honest. If we, you know.

Tu Le (01:04:

26.783) I want to get an ET9 and drive that thing to freakin' somewhere, man, Chongqing or something.

Lei Xing (01:04:

31.884) Yeah, ET9 is a tech, what do we call it, the tour de force.

Tu Le (01:04:

36.823) No, actually, I'll let you drive me and I'll be in the backseat.

Lei Xing (01:04:

43.342) I'll have to take a spin in a firefly, right? I mean, either, and there's obviously other great cars besides the ones that we mentioned. Too many, too many.

Tu Le (01:04:

43.617) So. 54.647) Too many, too many. So hey, we are at 10.07. I know good friend of the show, Conrad Layson has some comments and I'm looking at the timestamp. We've answered a few of these already, Conrad. Will CATL and NIO arrive at a battery swapping agreement? That's potentially.

Lei Xing (01:05:

16.44) Don't rule that out. From what I got from Li Bin is that they're actively in discussions about, I mean, there'll be standardization issues. Something that Li Bin mentioned was NIO was the #1 battery size, ONVO the #3, and firefly the #5 battery size.

Tu Le (01:05:

18.113) Yeah.

Lei Xing (01:05:

45.556) similar to CATL's #20 and #25. Their internal coding of the battery sizes. But I can't rule out like a firefly, a small vehicle that could utilize CATL network.

Tu Le (01:06:

05.429) And remember that there are a number of local Chinese brands that you'll never see in Western markets that could utilize battery swapping in the China market and be much more convenient.

Lei Xing (01:06:

18.893) And don't even rule out the foreign brands, right? Yeah, I mean, they have to. So yeah, so it's not the possibility is not zero that CTL works with.

Tu Le (01:06:

24.938) without question. 35.915) Well, Lei, think it's important to note you had mentioned the window is closing. You know, we talked about how the opportunity is kind of sailing away from the legacy automakers. That could be a bridge to get them back into play. They're desperate enough to work with CATL to build a swapping vehicle or set of swapping vehicles like a GM or a Stellantis. Well, Stellantis has leapMotor, but maybe Ford. If I am trying to reestablish myself in this market, I am looking at all options, including swapping capabilities in the China market. Because number one, it would make my vehicle very attractive right off the bat, even if the UX or the software isn't great. I think it would make it more relevant very quickly in a short period of time. So let me get back to some of Conrad's questions. Josh, happy new year, sir. Thanks for your post. Conrad says, CATL supplies NIO with LFP. That's right, Conrad. Biggest argument against battery swapping in North America is proprietary swapping systems. Yes. And who's going to own those batteries, Conrad? I think that's another thing.

Lei Xing (01:08:

02.69) Yeah, that's what.

Tu Le (01:08:

02.711) Is Xiaomi the first successful example of a software defined vehicle?

Lei Xing (01:08:

09.549) Mmm. 13.462) I probably wouldn't say they're the first. But I probably will say they're the first from the kind of the IT tech that successfully did it and immediately with scale. I'll probably say that.

Tu Le (01:08:

44.993) Here's my Conrad, man. We're good buddies, but you gotta stop using software-defined, man. Because I was just reading. Yeah, but it's terrible and it's wrong. Because if you talk to, again, I will point back to how come it's not software-defined mobile phone? How come it's not software-defined refrigerator? How come it's not software-defined television?

Lei Xing (01:08:

54.968) But that's the industry jargon nowadays.

Tu Le (01:09:

15.051) Because the key is technology companies know if the software and design is effective, you don't know it's there. And so calling it software defined defeats the whole purpose of being great. And software enables great design. It doesn't define it. And so I'm gonna... I'm going to die on that hill, Lei. I'm going to freaking fight and fight and fight saying that software define is a terrible, terrible term. Anyways.

Lei Xing (01:09:

49.442) Well, you have to coin a new term then.

Tu Le (01:09:

52.543) Well, I'll do that. Next week, I will come up with a try to come up with a catchy term. so Mike, the car geek is 2025. The year we see a large manufacturer fail and do large companies close their doors to get forced to merge with someone else. I think that's already happened. Mike with Nissan. And. I won't say that.

Lei Xing (01:10:

14.542) It's already happening. Nissan Honda, That's, yeah.

Tu Le (01:10:

21.727) Volkswagen is close to closing its doors, but they were forced into this partnership with Rivian after restarting CARIAD four times. And, you know, leaning into their relationship with XPeng for software on the China side. So OEM failures. I'm also going to speculate that if GM and Ford can't turn around their operations in a major way in the next 24 months, could we see Ford and GM merging?

Lei Xing (01:11:

01.034) everything's on the table. Let's just put it that way. Everything's on the table. Everything's on the table. If, I mean, but I think what will happen is I think that the Nissan and Honda clearly, every region there should be a champion that come out of that region.

Tu Le (01:11:

01.633) So it should be. Everything should be on the table.

Lei Xing (01:11:

26.21) BYD is already right at the forefront. Volkswagen still is. Toyota out of Japan, Hyundai Kia out of Korea, US Tesla, right? And then, yeah.

Tu Le (01:11:

48.023) ex-China, Hyundai Kia are firing on all cylinders. And we do have to give some credit

Lei Xing (01:11:

56.248) We are loyal Hyundai customers.

Tu Le (01:12:

00.865) So to give some credit to Volkswagen, they are the best of the worst. They are the biggest selling legacy automakers in EVs. The ID. series of the best selling legacy EVs in China.

Lei Xing (01:12:

19.95) You know, the two joint ventures, think FAW-Volkswagen was over 1.2 million. The Shanghai Volkswagen brand was 900,000. FAW Audi, I tweeted, was over 600,000 units. These are still significant numbers that many of these Chinese brands have not reached. So, you know, yeah.

Tu Le (01:12:

38.55) Yeah! 46.177) That's why I make sure to give credit to the ID. series.

Lei Xing (01:12:

49.55) So they're still selling, but on NEV side. Yeah, sure, sure, sure, sure.

Tu Le (01:12:

52.151) On the backs of price cuts on the back of price cuts. So there's an asterisk there. So This is pretty long episode, so ready to close up shop?

Lei Xing (01:13:

04.472) Sure, well it's the year end review right?

Tu Le (01:13:

07.381) Yeah. So everyone, this is going to be a very interesting 2025. So Lei and I will do our best this year to be more consistent about posting the audio podcasts and doing the video podcasts on YouTube. please, and we don't probably ask this enough of our listeners and followers, but for anyone else interested in your network about learning more about Chinese EVs or global EVs for that matter, please invite them to subscribe, listen, view this show. We'll be here giving you everything we got in the 25. So we will see you all next week. Good, and from Vegas. Good morning, good afternoon, and good evening.

Lei Xing (01:14:

03.446) Likewise, Happy New Year again!