Episode #198 - BYD Does it Again, Understanding China's SOEs, 2025's Bumpy Roads

In this episode, Tu and Lei discuss the latest developments in the electric vehicle (EV) sector, focusing on BYD's recent announcements regarding their smart driving technology, the competitive landscape of the automotive industry, and the implications of state-owned enterprises in China. 

They explore the challenges and opportunities for both domestic and international players in the EV market, emphasizing the significance of technological advancements and market dynamics. 

The conversation also touches on the future of EVs and the evolving regulatory environment.

Transcript

Tu 

Welcome to the China EVs and More live podcast. We will open the room up at around the 40 minute mark to anyone who's keen to ask us any questions. So feel free to post them into X, LinkedIn, or YouTube. In the next hour or so, my co-hosts Lei 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 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 and viewers, welcome back. We ask that you please smash those subscribe and like buttons so you don't miss anything from us in the future. Also, I'm confident that Lei and I are the most, two of the most knowledgeable people about this subject or these subjects. So please help us get the word out about this program. My name is Tu Li. I am the managing director at Sinawata Wind Sites, a global management consultancy that

Lei 

Thanks.

Tu 

helps organizations around the world build... Anyways, I read a free weekly newsletter that I... my God. Anyways, what's going on, Lei? Sorry.

Lei 

Are you having Valentine's Day jitters?

Tu 

Yeah, I just said it. Yeah.

Lei 

That's all right. That's all right. Good morning. This is your co-host, Lei, former chief editor of China Auto Review. And this is episode 198. Welcome to a special Valentine's Day edition of China EVs and More. And let me stay on the love theme for a minute. And here I go for my monologue.

Tu 

And a freeze, sorry.

Lei 

Roses are red, violets are blue. BYD, God's Eye, smart driving, better than you do. No love between Nissan and Honda as they terminate their plan to combine. US automakers not getting a lot of love from Trump. Love is in the air between Chang'an and Dongfeng, China's two centrally administered state-owned automakers.

XBong loves UK and hopes UK love it back. and everybody loves DeepSeq. The number of Chinese automakers integrating DeepSeq is now probably in the dozens already. And just now, Zekker and LincolnCo is officially under one roof. So actually, one of the

Tu 

Mmm.

Lei 

bigger integrations in China's auto industry in recent memory. So there we go. That's the opening monologue.

Tu 

man, so what do want to start like?

Lei 

Well, big story, obviously, with BYD. I I think it's been talked about earlier this week. You've been quoted and you wrote about it. I kind of wrote about it a little bit about this.

Tu 

So let's backtrack for the people that have been busy doing everything else except reading and listening to us. On Monday, BYD had an announcement. This is a one-off because they normally don't have anything like this scheduled during this timeframe, correct? So I bring that up because Apple always brings out the iPhone in the September timeframe. There's always the WWDC.

Lei 

Right here?

Tu 

This is new for BYD. I didn't hear about it until a couple of days before it actually happened. And normally you and I have pretty, pretty reliable moles, but this was something that really, really surprised me. Although I'd written about it a year ago and talked about BYD democratizing this, but can you...

Tell everybody what happened on Monday at 730 local Shenzhen time.

Lei 

I'm trying to pronounce that word correctly.

Democratization, did I pronounce it correctly? Democratization is exactly the key word here of not electrification. BYD has already done it. Democratization of smartification. And that was the message. And hence I tweeted that the new moniker for BYD is better than

you driving BYD. That's their whole point of the conference was they're basically putting this God's eye high levels of assisted driving features into 21 BYD models across the ocean and the dynasty network priced from

roughly 70,000 MMB to 200,000 MMB. I think there were 21 models. God's Eye C, vision-based for free, for free. Meaning for the fourth consecutive year, fourth consecutive year, BYD has done something pretty significant. And let me rewind for the...

three previous year, what they did. In 2022, at about this time, they announced the stop ending of production of pure ICE vehicles. In 2023, they said we're going to have EVs, NEVs, on parity in terms of pricing with ICEVs. In 2024, they said, which means cheaper than gas.

Lei 

And just earlier this week, they said.

Which means smarter driving is better than you driving on your own. So for four years, they've done, announced something that's pretty significant. We were wondering, yeah, we were wondering when they were gonna make a move this year and now they have.

Tu 

Ground baking, earth shattering.

Tu 

So every single one of those major announcements over the last four years that you just mentioned, Lei, they are underestimated by the Western media. Now, again, there were articles written about it, but it didn't bubble up to the top of any feeds, media feeds. so I don't think people realize the significance of this because number one,

when they announced that they're going to stop building ICE vehicles, they're the only, and let's call them a legacy because they're more than 20 years old. They've been around a while, especially in the China automotive space. So they're an OG in the China automotive space. They're the only legacy that's said full stop. We're going to stop building ICE vehicles and they actually did it. Okay. And because there have been

Companies legacies that have announced that they're going to stop doing it, but they haven't yet Okay, and so this falls along the same lines and think about this we're talking level two plus and The reason we call it level two plus is because no one is yet ready to call their system legally l3 and so When you say for free I look at that

in a different way and say it becomes standard. And so this is not an option that you click and it comes with the vehicle. And there are three versions, right? One is the vision only as you had mentioned. So there's no lidar.

Lei 

Mm-hmm.

Lei 

The lowest, yeah, the kind of the entry type of version, yep.

Tu 

which is actually becoming more and more mainstream because Xpeng has a vision only now Baidu has a vision only. And so the B and C versions will have two and three LIDAR. And so during this week, I was doing a little bit of digging and because of our friends RoboSense, Interviewsion and Hussai primarily, we're looking at solid state LIDAR. yeah.

Lei 

So Huawei as well, the big four.

Tu 

we're looking at solid state lidar that's under $400 easily. And so people were wondering how can they do this and make money? And so my take, and I'd love to hear whether you agree or not, is that first of all, on a few of their product lines, they build in-house 70 % of their components. And so...

Lei 

Yep, I will.

Tu 

If you think about 2000, 5000, 7000 parts, most of those being bought or sourced from an external supplier, there's a little margin on every single piece. BYD doesn't give any of that away. Okay. That's number one. So their cost structure is much better when it comes to the bill of materials. And the second part is their scale. And so if I'm buying a LIDAR,

Lei 

Mm-hmm.

Tu 

for four million cars or I'm buying a sensor for four million cars. A LIDAR is probably only gonna be on the maybe 30 % of the vehicles that they sell, right? But if I'm buying sensors and I buy four million of them, my cost structure is gonna be crazy, crazy cheap. And I create leverage with the supplier because...

If I move that business over to somebody else, taking away 4 million units of anything is going to hurt these suppliers. So what are your thoughts on why you think they're able to do this for free?

Lei 

Well, you mentioned two things. You mentioned the vertical integration. You mentioned the scale. And those are obviously intertwined. Sometimes you get this vertical integration, which helps you in a way to get scale. But I want to talk about their ecosystem, and especially in this case, the HSI, the Horizon Robotics, or even the Amidius, the Robosensors.

In 2021, four years ago, BYD signed separate strategic collaboration agreements with RoboSense and Horizon Robotics. This was four years ago. So in those four years, things are happening that we didn't know about, that this has been preparing. And now,

the example BYD, how they've risen with the volumes and Horizon Robotics is one other very important player for the ADAS chip. They're going to deliver their 10 million chip this year in the ADAS sector, right? So they've been working together for four years to prepare for this moment. So the right, and now you have the scale, you have the leverage.

your cost base is totally different than, let's say, some other new smart EV startup that are talking to Hesai, that are talking to RoboSense. At the same time, the RoboSense and the Hesais, their scales are up, and their costs are going down. So it's one of those the right moment at the right time thing. And you know.

Tu 

And lay.

Tu 

And I was doing a back of the envelope calculation with a friend and we're annual revenues for a single, if it's single sourced, the LIDAR alone is annual revenue could be two, $300 million on a base of a three or $400 LIDAR. So.

Lei 

Yeah, and also I think for the at least the lidar space in China last year, I think RoboSense put out a data, they did over half a million lidars in 2024. Industry overall is well over.

Tu 

They're gonna need more fact- They're gonna need more factories.

Lei 

Yeah, so the industry, there were more than 1 million units. So this year, we're looking at at least possibly Hesai and Robosense each doing over a million lidars in one single year. And just look at BYD. We try to be conservative. They want to do, let's say, 5 million units. 40 % of those are

probably going to have the God's eye C. Let's be a little bit conservative. They're probably going to be more than that. And then that's significant volume when you talk to Hosei, when you talk to Horizon Robotics. Now, the C uses the NVIDIA ORAN N, not the X. The X is the more premium version, along with the Horizon Robotics J6.

M chips which are basically about the same. So right there, mean a lot of volumes.

Tu 

J stands for Journey, which is their product line.

Tu 

So a couple caveats, like we knew it was obvious because BYD had focused on volume, buying market, or not buying, but taking market share and entering foreign markets. So they were behind on the technology side, stack in China specifically. And with XPong, with Li Auto,

with Nio, with Huawei coming into the market, all having their own intelligent driving systems. It became very, very apparent that they needed to work and likely partner with someone or someones. And that announcement with DJI was what, two years ago? And then the Momenta announcement was more recent. But I don't know, with these three...

versions, I'm not sure whose technology they're going to be using for A, B, and C. So that'll be interesting to kind of peel the layers of the onion back. But my guess is they'll also, over the long term, look to bring it in-house so they're not having to partner and license and pay IP rights to anyone.

Lei 

Speaking of in-house, so the joke on the street is that besides tires and windows, glasses, BYD does everything on its own, which is not yet true because they do source the chips, right? The lidars. But guess what? Those are the exact same products they're developing in-house right now. The domain controllers, the lidars, the chips, like what Neil is doing, what X-Bone is doing.

Okay, so don't be surprised. No, I'm just saying don't be surprised when they come out with their own everything that they're sourcing right now.

Tu 

And I think the key, I think, go ahead.

Tu 

Well, add, Lei, the key differentiator is that they have a track record of fabricating their own silicon. So these other companies, they talk about designing their own silicon and doing this and doing that, but they've not done it before. So when BYD says they're going to do it or they're looking at doing it, you can rest assured that their chance of success is much, much higher.

than a NIO or an Xpung. Not that the NIO team or Xpung team don't have the capabilities, but again, if you've never done it, it becomes really, really, really difficult. so BYD has done it. Now, let me switch a little bit to the risk and the downside potential because when we talk democratizing, first of all, we're going to be democratizing in the China market for the foreseeable future.

because number one, 90 % of their sales come from China. Although they're in 95 countries, a lot of the sales that they have relative to their 4.2 million units is not a lot. And then the other thing that's really important is that a lot of these countries from the emerging market standpoint, they have traffic like China did 20 years ago, 15 years ago.

And so it's going to be a lot more complicated. And I'm not sure BYD wants to take on that liability at this time. So when we look at this announcement, we should primarily over the next three or four years, think of this as this is their trying to gain back a foothold in the China market when it comes to technology and smart features.

Lei 

Yeah, and the caveat is that they're not yet up to the levels of Huawei, XBone, and LiAuto in terms of this door-to-door parking space to parking space. NOA, ADAS yet. So for the C version, it's only available for highway NOA and some of the AVP parking assist functions.

So I think it remains to be seen how fast they can catch up to really the higher levels, which is basically FSD, right? Equivalent in China. They're not there yet, but I think it's like Wang Shunfu said, right? It's standardized. It's not a, what do you call it? It's a qualifier. It's not a differentiator, right? And yeah.

Tu 

Yep. And he knew that. He and Stella knew that.

Lei 

Yeah, even though he bashed it, well, he bashed about self-driving a couple of years ago, but... So, I mean that...

Tu 

Well, that's fair because we know that in old terms, Level 2 used to be a premium feature. And so before he had Fan Cheng Bao, before he had Yang Wang, before he really brought Denza in-house, it might have been fairly irrelevant for the mass market vehicles. But you know, he's just looking at it like...

I need to be better in the market than, or BYD needs to be better in the market than our competitors. Okay.

Lei 

And then the other cost part of it is I think of DeepSeq. I think of Baidu announcing the Ernie bot becoming free. And the reason that is is because this network effect is bringing the cost down. Some of the chat GPD functions, right? And I think that goes with similarly the...

L2 plus driving, the ecosystem is more mature. So you have a kind of the cost base compared to outside of China. That's another reason. and really, It's Tesla has autopilot in China. They don't have FSD yet. They will get it. So the stakes are higher and

Tu 

So now...

Lei 

the ones that stand to lose, guess what, are the foreign mass volume brands.

Tu 

So let's change gears a little bit. Now, he made two announcements. He made Level 2 Plus being standard on all the 21 models, and then he announced the partnership with Deepsea. And as you'd mentioned, everybody else jumped on board as well. And so that also becomes a qualifier, not a differentiator.

Lei 

ever

Tu 

because they will all each be able to customize DeepSeek, using DeepSeek as the foundational AI system for their products and their smart features, but...

It's not really a differentiator. And then the other part that's really, really important here is that if they're using Horizon in all this data now and they're using DeepSeq, will there be restrictions on that in Europe? There are already restrictions on it in the United States. So again, we're looking to bifurcation here or

Does BYD take on a separate strategy of not giving it for free outside of China? Because they might have to swap out silicon, they might have to swap out data centers, they might have to swap out AI, which increases their costs. So that's what's going to be really important to see over the next three or four years. What's their strategy of smart features and intelligent driving outside of Europe?

or outside of China in Europe. And there might be individual countries in Europe that say yes, and some might say no. So now the Biden administration is gone. And so does Trump keep the connected software restriction on US roads, starting with model year 27? Does he keep that in place? Does he keep the hardware restrictions

for model year 2030, does it keep those in place? Because if he does, then it creates not only a hard choice for the Chinese EV makers that still want to enter the US, but it actually puts a Volkswagen or GM behind even more challenging, a more challenging situation. Now Volkswagen, they've already decided we're going to use XPong in.

Tu 

in country and maybe XPeng in Europe, but definitely use Rivian in the United States.

Lei 

Yeah, so I think regardless, it's going to be two different type of place because the consumer base is different, regulatory environment is different, that the IP and privacy issues are different. So you're not going to get the same exact car, let's say a Dolphin or Seagull with the God's Eye Sea in China versus elsewhere in the world. Probably a little bit toned down.

Tu 

What a great name, huh? God's eye, what a great name.

Lei 

Yeah, sounds better in Chinese, Tian Shen Ji Yan. And the fact of the matter is that the Western consumers, they're not as sophisticated and demanding as the Chinese consumers, right? Not yet. Yeah.

Tu 

Yeah.

Tu 

Well, I'd like to see the numbers though, about people who actually use the system pretty regularly, right? But I do want to acknowledge and give, because we have friends at Leado as well. They did this two, three years ago as it becomes standard, their intelligent driving. So this is not new.

Why it's unprecedented is because BYD is the largest volume car manufacturer in China.

Lei 

Yeah, so and also speaking of Expung, Expung, success is in fact part of the success is standardizing smartification on the P7 Plus. Right, a little bit lesser variant of it on the Mona MO3, but the pricing is there. And that's why they've had this recent success, continue having success.

Tu 

And speaking of XPeng, congratulations to Brian, Sarah and team. They successfully entered the UK market. They unveiled the pricing for the G6, about $50,000 US dollars. Had a great, great event. Unfortunately, you and I were not there to be a part of it, but looks like they are taking very seriously the UK market as an opportunity. And what makes

Obviously the UK market unique is that it's a right-hand drive. So it's likely a similar vehicle that's getting shipped to Singapore and Australia.

Lei 

I think Xpeng is right now one of the top companies when it comes to having both a good momentum, not only in China, but outside of China. It's very difficult to find someone doing that. The Chinese way of saying is, which means the flowers bloom inside the country, but it smells good outside.

But in this case, it smells good inside China and outside China for expo. Right now, at least.

Tu 

But it's still a pretty delicate situation just because of the diplomatic changes that are happening all around the world, a lot of it being catalyzed by the Trump administration. So, and we can look at the UK market as traditionally an automotive headquarters for a lot of British brands, but

They don't do much manufacturing there anymore, with the exception of some of the more expensive ultra premium brands.

Lei 

Yeah.

Tu 

But can you give us a history lesson, Now, you had talked about Chang'an and Dongfang, the significance. I don't know if the Western people understand the significance of this, but let me start by saying Dongfang and Chang'an are both state-owned enterprises, or SOEs. And the big, yes.

Lei 

Yeah, that's.

Lei 

sensually administered. That makes a huge difference.

Tu 

So yes, so let me start with the basics. There are a number of state-owned enterprises, SAIC, FAW, GAC, Dongfeng, Chang'an, BAIC. And so they're all state-owned, meaning that the governments, the local governments, with the exception of the centrally-administrated, are really helping fund.

Lei 

Come on, BAIC.

Tu 

these companies. Now, can you tell us what the difference between centrally-administrated are and why this is so significant?

Lei 

The centrally administered state-owned companies are basically owned by the state asset supervision and I forget the name, In Chinese, it's a guoziwei. Basically, it means it's China, China-owned. FAW Group, Chang'an, Dongfeng are the three. Of those three, they're not on the same level.

So FHW Group and Dongfeng are directly under the State Asset Supervision Commission. Whereas there's an extra layer for Chang'an, which is under the China South Industries Group. And China South Industry Group is under the State Asset and Supervision Commission. So Dongfeng actually, even though in Chang'an, there's the same centrally administered,

Dongfeng is actually a level above Chang'an if you rank them. So I say in FAW, FAW first automotive works. Dongfeng second automotive works. So that has significance. So if you rank them, the three of them, it's FAW, Dongfeng, and Chang'an in that order. And so.

Tu 

So second question, Lei, who are the joint venture partners for Chang'an and Dongfeng?

Lei 

OK. Chang'an only has Ford and Mazda left. So that's simple. Dongfeng, interestingly, guess who they have? On the international side, Dongfeng has Nissan and Honda. Guess what happened to Nissan and Honda, right? No love. They also have Stellantis, primarily Peugeot and Citroen. They have a joint venture with Renault Group, exporting the Dacia Spring.

Tu 

On the international side.

Lei 

And each of them have their bunch of their Smart EV or new brands. Voyage, Deepo, Qi Yuan, Nami, AOLS. I can name them, right? All of them. And they're both very complicated. Yeah, Avatar. Complicated structures. And so these statements came out of their subsidiaries on Super Bowl Sunday.

Tu 

Avatar.

Lei 

And now we're looking at, really, I think, I mean, since I covered the China auto industry, there's been talks of integration, consolidation. And this time, earlier this week, there was this formation of the National Data Group. Did you see that? It's also part of the integration of these centrally administered enterprises.

Tu 

Yeah.

Lei 

So I think this time it's for real that something's going down. The degree to which it happens, I think it's going to take some time. And again, don't rule out all three of them. Somehow could be ending up together. This has also been talked about for many years. And the reason why

Tu 

Well.

Tu 

So there is a...

Lei 

I think another reason why, just one more. The automotive industry landscape in China now is no longer dictated by the state-owned automakers. It's dictated by the BYDs, by the great wall motors, by Cherries. Cherries also state-owned, but they're more nimble. And hence, I think it's...

in the back of I think that the officials, know, right, these are essentially menaceous companies, they need to do better. And maybe integration is one way to do it, you know, to, to compete and we're finally

Tu 

So couple of quick comments, There's one comment here who's asking about where BYD sits. There are three companies that are technically private enterprises. That's BYD, that's Great Wall, and that's Geely. Now, Great Wall gets a lot of help from its local government where it sits just outside of Beijing.

Lei 

Really, yeah, definitely.

Tu 

Obviously BYD is supported a great deal by Shenzhen and then Ji Li is supported by Ningbo. so although we talk about them being private enterprises, they do also get a lot of support from the local governments, but they're technically not state-owned. so there's that. And then with regards to Chang'an and Dongfeng,

Lei 

Sure, sure.

Tu 

We know them, most people know them because of the private passenger vehicle brands that they have. But they also have commercial trucking. Chang'an has huge military operations from the standpoint of helping build military vehicles. And so this is where it gets a little messy. And to your point, what is really important here, at least for the Western audience, what

which factories are going to get closed because that's the huge debate, number one. And then number two, yeah, which brands? So nothing else really matters from a Western standpoint except for the fact that and this becomes probably a local pissing contest because one of the reasons

Lei 

which brands might.

Tu 

These companies are centrally administered and state owned is because they need to employ people. And so it's a prideful thing. It's going to be losses to their local communities where their factories are. And these aren't simple things that just happen. you know, I'm sure there's vigorous debate and negotiation internally to figure out what makes the most sense. Now, you had also said that.

This is unprecedented as well. This consolidation, you and I have heard about it from day one since we were in China. But what's different here?

Lei 

Yeah. Yeah.

Tu 

they are starting to export and because of this exporting, not starting, but exporting has grown significantly. And then in response to the exporting growing significantly, trade barriers and protectionism have been put up by large entities where a lot of those exports would go. So we also know that the Chinese economy is not

running on all cylinders. So with domestic demand likely plateauing a bit, there's going to be a lot of overcapacity. So the Chinese government is really trying to address that in a real way this time.

Lei 

And then the other aspect of it is the three companies, FBW, China and Dongfeng. There's been things going on. They have a jointly invested T3 mobility platform. It's almost like the DD competitor, right? T3. I've taken rights in it, right? In China. They have another joint company called China Innovation.

Alliance company is joining invested on connect connective vehicles R &D. There are CEOs and chairmans and vice presidents. They crisscross over the years. So I think behind the scenes preparations have been going on all along and just a matter of when it happens, I think.

Tu 

Mm-hmm.

Tu 

I think what's important for my American friends who live in Michigan or have strong ties to the D2, ask your Ford friends how fun it is or has been to work with Chang'an in China.

Lei 

Yeah, Ford seems to be leaning more toward the JMC partner because of the export business.

Tu 

But also the state-owned enterprises, and this week, Huawei and SAIC announced that they are going to launch a brand. So, famously, SAIC is joint venture partners with Volkswagen and GM in China. So, these state-owned enterprises that have created these JVs,

SAIC, FAW, BAIC, GAC, they're not waiting around. They're creating their own brands and they're building vehicles that compete directly and are winning electric vehicles, battery electric vehicles, plug-in hybrids that are competing directly with their joint venture products.

Lei 

Yeah. Yeah.

Tu 

And so let's remind the audience, Lei, Huawei has HEMA. It's this consortium of brands, most of them Chinese. HEMA stands for Harmony in Motion. I don't know what the A's stand for. Harmony in... Say it again?

Lei 

Intelligent Mobility Alliance.

Lei 

the Intelligent Mobility Alliance.

Tu 

Okay, so Avatar is part of that, Ceres is part of that, now SAIC is going to be part of that, who else is part of that?

Lei 

Well, GAC and Huawei, they're launching this new Xiangwang brand. It's an MPV. I think there's been pictures that have been shown. It looks like one of those high-can, right? Another GAC brand that's resurrected. yeah, I mean, that alliance expanding, you know, part of, and...

It's part of the state-owned automakers' way out because they couldn't do it themselves. They used the help of Huawei.

And the jury is still out on the BAIC, the stiletto on the new Maxtro with J.C.

So we'll see.

Tu 

So Lei, talked about the BYD announcement on Monday. We talked about the Dongfeng Chang'an potential restructuring merger. Is there anything else that we want to cover?

Lei 

Talked about XBONG, we talked about, I mentioned Nissan Han a little bit, yeah, mean, it looks like Nissan is still trying to look for partner to...

Tu 

That blew up.

Tu 

Don't sleep on Foxcon. Do not sleep on Foxcon. I've talked about this. I've said this. Do not sleep on Foxcon. Now, I was told that Nissan has about a year of runway before they run out of.

Lei 

Yeah, yeah, yeah.

Lei 

Yeah, they put out the numbers, right? The 400 billion yen they want to cut cost and they want to bring down the break-even point to 2.5 million vehicles worldwide.

Tu 

And...

Tu 

And they talked about closing plants in the United States. So.

Lei 

And that's part of what's happening at Dongfeng. It has everything to do with Nissan, right? Because they're not selling well. think Dongfeng, the group January sales was pretty horrendous considering this Chinese New Year, but still.

Tu 

Well, you could say that about all the joint ventures because F.A.W. Volkswagen's not selling well, SAIC Volkswagen's not selling well, GM SAIC's not selling well.

Lei 

Yeah, Shanghai GM is closing a factory in Shenyang, the S Northam plant.

Tu 

Yeah.

So what it sounds like is that Dongfeng was the slowest to kind of react to Nissan's troubles.

Lei 

Yeah, and then maybe the last thing we can talk about is, fact, the US side of things, the US automakers that we heard about.

Tu 

Let me stop you there really quickly because Jim Farley was at a conference in New York and talked about the layoffs that would likely need to happen if the 7,500 tax credits were taken away. But please go ahead.

Lei 

Yeah, that's where I was.

Chaos.

Lei 

No, I'm just going to say that US is going to drop further behind. And when you talk about China, when you talk about where the EV leadership is, the tariffs on both the Mexico and Canada on pause right now, but potentially coming back on the steel tariffs, double, triple whammies.

for the US arm makers.

You know, it just feels like now with BYD announcing that God's Eye, the smartification, it's almost like a marathon where the Chinese, they've almost reached the crossing line, the finish line, whereas the Western, they're still in the early five mile, 10 mile running slowly.

Tu 

The other thing that makes the China market a bit cleaner when it comes to technology being incorporated into the transportation system is that they have a 15 year scrap law where cars that are older than 15 years get scrapped. So in the United States, there's going to be cars from the 80s, 70s that are still on the road when Waymo has robotaxis. And these people are just not going to buy new cars.

That's going to keep things pretty messy unless large cities restrict private passenger vehicle entry into city center so that the robo taxis can really be the main driver of the transportation system, whether that's autonomous buses, autonomous delivery vehicles, or autonomous taxis. I think we're going to start to see that.

Lei 

Excuse me.

Tu 

as the alternate for China where within 20 years lay, every car in China is going to have level two basically.

Lei 

Well, this year, so He Xiaopang, he's talking about starting production of level three capable vehicles at the end of this year. So, yeah.

Tu 

Man.

Well, so a quick reminder that GM, Ford, Mercedes, Tesla all charge, Xpung charges, Neo charges for their premium intelligent driving. And to hammer home the significance of BYD's announcements now, unless, and this is the key here, unless their systems are

clearly superior, Intelligent Driving, from a safety statistics standpoint, who's going to pay a premium or a large premium? I think people might pay a small subscription fee still, nothing because FSD costs $8,000 in the United States. $8,000. And so how does Tesla compete with that?

they will have to reconcile their strategy in China because if they charge anywhere close to four or five, $6,000 for FSD once it launches in China, it's DOA. You and I know that, it's DOA.

Lei 

Something that they'll have to think about and play on in terms of a non-price cut price cut. If they get that fast, how much they charge, whether they charge at all. Yeah, that's something to think about.

Tu 

Well, they'll probably still charge, but maybe give you credits or something so that on the books, on the balance sheet, it looks like they're generating revenue from the service, from selling FSD, but not really. Because they, Elon still wants to be able to say, oh, we're, we're better service than everybody else. So that's why we're, still able to charge, even though they might be offering a non-monetary or a price incentive.

that gets people closer to zero in order to compete against the Xpongs and the Neos in the China market specifically. hey, let me see here. There's a question from SPX. Unless you want to, you have anything else?

Lei 

Mm-hmm.

Lei 

No, I think we talked pretty much all the topics.

Tu 

So, hold on. The Super Bowl was terrible. I did like the Jeep commercial with Harrison Ford.

Lei 

Yeah, I like that one as well. So yeah, that was at the very, very end. That was pretty cool. But

Tu 

So Stellantis was the only automotive company that wrote the $8 million checks for those commercial spots.

Lei 

And then Bosch did a commercial which I think was kind of a flop. It was like the 30 second. Yeah.

Tu 

Yeah, that was weird. It was kind of weird. But,

Lei 

Yeah, you know, we said we rooted for the Honor Dogs.

Tu 

the underdog smashed the... I mean, we were in what? End of the first quarter, game was over. So, does BYD God's Eye system provide manufacturer side liability for any accident while autopilot engaged in terms of insurance? Yeah.

Lei 

Yeah.

Lei 

I don't think so, because it's still level two, which means the driver pays attention and will be responsible. So that's the answer.

Tu 

And all those regs are still evolving with regards to as more and more vehicles are capable of level two plus. So let me check on LinkedIn here to see if there's any questions. Oh, Jeffrey. Hey, Jeffrey, look at my cup, man. San Francisco, buddy.

And then let me see here, Jeffrey, definitely showing what disruption is. He's talking about BYD and how effective it is when US markets react in the manner they have. And then there was one or two comments on LinkedIn as well. And I don't know why they're not combined, but. So Ishmael says a smart move by BYD to make technologies available to the masses.

that other OEMs only offer in their premium products or only at a surcharge. European OEMs will continue to face cost pressure and will have to come up with technological ideas. I think you're absolutely right, Ishmael. And then to the end, he had asked about the BYD and where they sit with regards to state-owned enterprises. We answered that question. And he is...

listening in or watching from Dubai. In Dubai, BYG just opened a new showroom where they invite people to come discover their vehicle and test their technology. Right on Sheikh Zayed, the main Dubai auto route. And my one friend, good friend in Singapore, he texts me because he's

from Philadelphia or he went to school in Philadelphia and he was like, you watch that Super Bowl. And the next thing he writes is was reading your newsletter. He said BYD is the number one brand in Singapore right now. So shit is real guys. It is real. So anyways, I don't have anything else, Lei.

Lei 

I don't have anything else either.

Tu 

So.

Everyone, as always. Now, did you have a snow day yesterday? We had a snow day.

Lei 

No, we didn't have a snow day.

Tu 

We have snowed it. Now it's super sunny. I mean, there's like six inches on the ground right now, but I'm ready for winter to be over. Anyways, everyone, thank you again as always for joining us. Good morning, good afternoon, and good evening. We will talk with you all next week. And Lei, good luck to your daughter in the volleyball tournament.

Lei 

Yeah.

Lei 

Thank you. Thank you. Thank you. For three weekends, I'm ready to take a break.

Tu 

All right. See you, everyone.

Lei 

All right, bye bye.