Episode #199 - Renault Up, Merc Down, The Porsche (Management) Shuffle, The Year of AVs (according to Robin Li)

In this episode, Tu and Lei focus on the earnings reports from major automakers Mercedes, Porsche, and Renault. They explore the implications of these reports on the global market, particularly China's pivotal role in the EV landscape. 

The conversation delves into the competitive dynamics between Chinese and German automakers, the advancements in autonomous vehicle technology, and the strategic moves of companies like Baidu in international markets. 

Audience questions further enrich the discussion, highlighting trends and future predictions in the automotive industry.

Transcript

Tu: 
 Welcome to the China EVs and More Podcast. In the next hour or so, my co-host 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 discuss today is based on our opinions and should not be taken as investment advice. For those that are new to the show, welcome. And to our loyal listeners and viewers, welcome back. We ask that you smash those subscribe and like buttons so you don't miss anything from us in the future. Also, I'm confident that Lei and I are two of most knowledgeable folks in the world doing this. So help us get the word out about this show to others. My name is Tu: I'm the managing director at Sino Auto Insights, a global management consultancy that helps organizations bring innovative and tech-focused products and services to the 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. A not going anywhere this weekend, Lei. Can you please introduce yourself?
 
 Lei:  
Yeah, relatively slow week Lei, This is your co-host, Lei:  former chief editor of China Auto Review, this is episode number 199. Yeah, a relatively slow week on the China side of things. Less relatively, relatively less fireworks than the previous weeks.
 
 Tu: 
 Relative.
 
 The Germans and
 
 the French had a lot to say though, didn't they?
 
 Lei:  
 Well, that's probably where we'll start, I guess. Especially if we've heard some earnings over the last few days. again, there's no...
 
 China was on the agenda. Anyway, look at it.
 
 Right, so.
 
 Tu: 
 So where do you want to start, So to summarize this week, Mercedes had earnings. Porsche had also an event. And Renault also reported. And there's an article, think, in Bloomberg that said that the numbers, at least for the results, were similar to Mercedes Q4.
 
 Lei:  
 Well, there was no report. Yeah, so that you did.
 
 Tu: 
 I must admit I underestimated Luca de Meo's or overestimated the dire. I don't think I overestimated how desperate Renault was. Maybe I should give Luca a lot more credit than I'm giving him because in the short term, he's turned the organization around quite substantially. So you want to start with Renault and Mercedes and
 
 Lei:  
 I mean,
 
 Tu: 
 Move on to Porsche.
 
 Lei:  
 we gave Renault a ton of credit back in October when we were at the Paris Motor Show because they had, think, it's their home court, but in terms of product rollout and plans, I think they had, in terms of the auto show, they have one of the better booths, I think. And he was a star, right?
 
 and he continues to be Renault one of the better positioned, whether financially or product roadmap. Even though there's near to no production of Renault group brands in China, although this is something very interesting, not often seen for a
 
 foreign automaker that's not relevant or actively producing in China, Renault has set up a R &D center in China to develop some of their future models. That's quite an interesting play and not surprising given Luca in his Volkswagen group days. mean, It's a lot is hinged on China.
 
 So there is China play. They work with Geely on the horse, powertrain joint venture And then, yeah, they also, Geely also bought a stake in Renault, the Brazil, which is an interesting play. So I think it's almost like a light asset approach where they're not actively in China, but they're actively working
 
 Tu: 
 Didn't they announce that they're going to work with Geely on manufacturing as well?
 
 Lei:  
 with China even though they're not producing that much. So that's kind of my few cents.
 
 Tu: 
 It's what we had said last week where it's just very hard to quit trying to cold turkey. And unless you're forced out, you would rather stay in there at least even just for a manufacturing footprint standpoint because...
 
 China gives you access to Asia, South Asia, Southeast Asia, East Asia. And even though a lot of these companies don't ship to those parts, that could become, if my theory holds that the next 30 or 40 years worth of global growth is likely going to come out of South Asia, Southeast Asia, non-East Asia.
 
 So not Japan, not Korea, not China, but the South of Asia, then this is very, very important manufacturing beachhead for them.
 
 Lei:  
 Manufacturing R &D again, it doesn't have to be manufacturing. could be something else because I mean, so far this year, the big headlines in terms of tech have been coming out of China. You know, the deep seeks, the unitries, the Nujah, the movie.
 
 and which has resulted in now we have Baidu announcing free Erniebot Grok 3 from Elon. This is raising the level of competition all of a sudden because of China.
 
 Tu: 
 So
 
 Morgan Stanley published a humanoid report this week and ranked the top 100 humanoid companies or humanoid associated companies. I think 40, over 40, I want to say 47, over 40 of them were Chinese. So Unitree obviously being one of them. Now companies here,
 
 in the US that are doing humanoid, there is a figure, there is a Tesla, there's one other company, I forget its name, that's based out of Austin, Texas, that just raised, I think, over 300 million. So there are companies in the West that are also doing it. But to your point, Lei, it's just that when there's one of something in China, there's normally 10 or 12 of something in China.
 
 Lei:  
 Mm-hmm.
 
 No.
 
 Tu: 
 And a lot of it is ex-Western employees that go back to China or were working for the Chinese subsidiary of X company or Y company because the autonomous vehicle OGs in China, a lot of them came from the Baidu's, the Waymo's in Silicon Valley. Tony, James.
 
 They came from Baidu, from Silicon Valley, and then moved back to China and launched their operations. know, Tony Han, the We Ride, he was a professor at the University of Missouri, I want to say. So.
 
 Lei:  
 Yeah.
 
 And they recently got investment from Nvidia. And their stock took off that day. Yeah.
 
 Tu: 
 Yeah, yeah, you saw that, huh?
 
 So it went from a couple billion dollar company to an 11 billion dollar company, I think settled in at around eight or nine. So for those people that are wondering whether Nvidia can be a kingmaker. Yes, they can. Now, I want to point back to you and I sitting at the Mandalay Bay Arena with 12000 of our other friends.
 
 And one of the last things I remember Jensen saying was autonomous vehicles will be the first multi-trillion dollar robotics industry in the world. So now does Jensen have a reason and incentive to say that? Yes, because obviously they invested in We Ride and We Ride is probably buying a bunch of their silicon, although
 
 Lei:  
 You
 
 Tu: 
 depending on what the Trump administration does, that could not happen in the future. So I don't know how that's going to play out, but I'm leaning towards, generally speaking, Chinese tech companies are going to be throttled back from buying Western silicon or silicon that has Western IP in it.
 
 Lei:  
 Yeah, and actually speaking of slow, well wasn't that slow. mean, in the AV front, I think we heard a lot of news recently. think Baidu and their earnings said they're now 100 % driverless operation of robotaxis in China. 11 million rides so far. And Pony just got a license to offer this on a trial basis, a fixed route in Guangzhou going from airport to
 
 Airport and the high-speed rail stations. I think they're the only ones so far to get it. And Lyft sent something out on a blog about their positioning in a future AV. And Uber talked about it. And Tesla is still preparing to launch the Austin unsupervised.
 
 Tu: 
 So Waymo still does
 
 not want to do the LAX SFO loop. And this points to what Wang Chuangfu said about, and this is what I'm not clear about, Lei, did he mean all Chinese EV companies or BYD specifically? He said that generally they are three to five years ahead.
 
 Lei:  
 Not yet.
 
 Tu: 
 of their Western counterparts.
 
 Lei:  
 Why and what?
 
 In electrification or?
 
 Tu: 
 No, just technology and features and things like that. So did you see that? Cause he had made it. Yeah. So that's what I wasn't sure of whether he was just talking about, you know, in general, the Chinese TV companies are specifically about BYD. So
 
 Lei:  
 Yeah, I saw that.
 
 Well, I think in general, I'd say that's based on the recent developments and based on what BYD is trying to do. Today, they just launched a Function Valve 5 with the Smart Driving Edition. With LIDAR and now, they're also going to launch the Denza 9.
 
 the D-PILOT 300, which the God's Eye B with LiDAR. Those are coming. I think comparatively to the leaders, they're still a bit behind in terms of the capabilities of these NOA features. But they're trying to catch up, at least on the basic highway AVP features.
 
 Tu: 
 The biggest question this week that I've gotten lay is how good is it? So I guess we'll have to find out in April. Because I don't know, I've never driven it. my two goals, Huawei and BYD system when we're back in April for the show.
 
 Lei:  
 So, yeah.
 
 I guess so.
 
 Right, we can say it is over.
 
 Tu: 
 So we talked about Renault.
 
 I think, so Robin Li also said this was the year of the autonomous vehicle, right? Because he was in the Middle East a couple of weeks ago for a conference. And I think what we're going to see is Baidu really try to.
 
 penetrate the Middle East in a big way. And also, I spoken with a friend who went to Wuhan and got a ride in the RT-6 from the Apollo RT-6 that I believe is contract manufactured by JAC, if I'm not mistaken.
 
 Lei:  
 Mm-hmm. Yeah, there's six-gen, six-gen mobile taxi.
 
 I think it might be JMC. JMC, yeah.
 
 Tu: 
 JMC, sorry, JMC. And
 
 so he said that the front seat is available and there's two back seats. So we've never been able to sit in the front seat of a Robo taxi, but it seems that that's possible now. And I think that...
 
 Lei:  
 Mm-hmm.
 
 Mm-hmm.
 
 Tu: 
 There will be a lot of foreign media at the Shanghai Auto Show that'll want to try this out. Now, I've just been told that I think foreigners can download the app, but does that mean that you still need a local Chinese number? I believe that's the case.
 
 It could still not be as available as it needs to be in order to show it off to the entire world while they're in Shanghai.
 
 Lei:  
 Yeah, we'll see what the
 
 Yeah, or you have special access or something. But I think for me, I had to use my wife's identity card.
 
 Tu: 
 no, so that's what I asked specifically. I asked and they were
 
 like, I think you can now be a foreign passport holder. I didn't follow that up with do I need a Chinese phone? I mean, I'm not, you and I aren't concerned about the Chinese phone number thing. But if you need a Chinese phone number, then most of the foreigners still don't have that. but what are your thoughts? Because
 
 Lei:  
 That's good.
 
 Tu: 
 You still go to quite a few of the Mercedes technology events, so...
 
 Lei:  
 Yeah,
 
 I've been to quite a few of their events, including this annual results conference back in the days when Zetra was CEO. So yeah, what was your question?
 
 Tu: 
 Well,
 
 what so they basically said their margins are gonna take their margins are or Have shrunk they're gonna continue to shrink next year and Looks like they're gonna launch a baby G wagon, but what overall what were your thoughts on their earnings?
 
 Lei:  
 I think the earnings, really, this is the first time I've seen all three of their top execs, CEO, CTO, CFO, spend considerable amount of time talking about the Chinese market and saying China is their second home. And when they say that second home, means more local for local, more R &D, more doing things on the ground, more specific.
 
 apps and features only available to their Chinese Mercedes owners. And I think they drove this message. And then what they're doing right now is they're doing three things at the same time. Cutting cost, trying to be more efficient on one track, still spending R &D on another track, and these product launches that are, they're betting that will help them.
 
 in next wave until 2027. The CLA is their biggest model this year because it launches globally and localized production in China. And CLA will have specific Chinese developed features only available in China. And supposedly, they'll try to catch up with the level 2++.
 
 and they talked about point-to-point driving being available. So that's interesting to watch because certainly they want to catch up on that department because that's one of the biggest competitive arenas in the smart EV market. And it was interesting to see the CTO Marcus Schaeffer. He had a slide up.
 
 with the word juan and he talked about what that juan meant. and yeah so but juan literally it means an illusion but it's Mary Barra calls it a drive to the bottom and Ola K√§llenius says it's a Darwinian competition so that's what it means.
 
 Tu: 
 Remind the folks with juanmei.
 
 Like you've never seen before, if you think the tech competition between Amazon, Google, Apple is really intense for the home, for the entertainment, then time's about five or 10, and that's what you get currently in the automotive space.
 
 Lei:  
 Yeah, I call it a thought path.
 
 And.
 
 And there's another element of juan that you don't see anywhere else in the world, but only in China, is these CEOs. What's the word? They have this kind of beef, but not beef. They would tweet this stuff on Weibo and say, you did this, I'm going to do this. And we welcome you to experience it. Prime example is the...
 
 Maextro SA-100 they did the higher blowout thing and then Li Bin came right back with another video of all four tires of the ET9 doing the tire blowout test and they're like let's you know this is all we want to do is push these higher more safety features out and
 
 Tu: 
 Hahaha.
 
 Lei:  
 I commend you for doing this, but we can do this as well.
 
 Tu: 
 You know, what's
 
 really important, Lei, is that these... It's almost like it's a mianzi thing. It's showing off, but not showing off. It's showing off in an Asian way. Because you and I know that the Asian culture is more about not bringing attention to yourself, but...
 
 The Chinese have perfected bringing attention to yourself, but also being like self-deprecating or very humble in a way, right? Think Lei Jun, okay? He basically rips on his competitors, but in a very soft way so that it's not overt and people get upset, okay?
 
 Lei:  
 I mean, yeah,
 
 the reason Ultra, they had this lap record in one of the tracks in I forget which city and he specifically tweeted something out and he said, oh, we still respect Porsche so much. They're the benchmark, they're the gold standard. But you look at that as, you see really, I mean, it's almost like a diss, but in a not a diss way. Yeah, and then Porsche came back.
 
 Tu: 
 it's a total diss. It's a total diss.
 
 Lei:  
 Porsche tweeted something and said, know, you know, we love seeing this and, you know, we're still the kind of the benchmark and that's part of the joint that that's not not on the price card, price war part of it. That is pretty prevalent in China. Yeah.
 
 Tu: 
 So
 
 one of the things that I wanted to really emphasize, Lei, is that when we look at ABB specifically, and let's add Porsche into that, the difference between, and I'm gonna specifically say and call out the German companies because of the number of the sales volume that goes into China and the number and the amount of profit that each of these German brands pulls out of China.
 
 This is where they're different than these D2, right? And this is where they're different than Stellantis. They got really addicted to the growth. They got really addicted to the high profitability and they took advantage of the low manufacturing costs and just dove right into building a huge manufacturing footprint in China. And so we're still seeing growth.
 
 Lei:  
 Yeah.
 
 Tu: 
 It's the only major market in the world that's still seeing growth. And so if you look at the European market, it's a distant third to the United States and to China. And the United States is a distant market, a distant second from the China market. So
 
 I'll give you a quick example. 311 or 315,000 vehicles sold by Porsche last year. They're looking at 250,000 this year. 60,000 Delta. So if we do a percent, that's probably what? 30 something percent or something, close to 30%. So this is why they can't leave the China market because
 
 They're not who they are without it. And as much as Europeans and Germans specifically want to say, these are German companies, is, you know, Germany is their home market. Of course it's their home market, but guess what? They care more about the China market right now than they do about the German market. And the only other market that's buying their products en masse is the US market. They say North America, but North America is basically US.
 
 Like Porsche. so, so 310 or 315 for Porsche last year globally, about 60 % of those were McCants and Cayennes. And there was an article in Bloomberg that was like, Porsche wants to make up the sales losses with increasing sales of the 911. A couple of things. You and I are just car guys. So we just love following the stuff anyway. How many derivatives can you have of the 911?
 
 Right, Like, they have so many different... GT2, GT3, RS. And so, one of the reasons the 911 is so desired by men like us around the world who are car guys is because it is very limited. If there's a flavor for everybody on the 911, does it carry the same cachet? It doesn't. So...
 
 Lei:  
 You remember that.
 
 Tu: 
 If you try to increase volumes on the 911 to make up for the losses of the Macan and Cayenne sales, you're shooting yourself in the foot long term. so they're going to try to dump more 911s into the US market to keep their profitability up because the Macan EV isn't doing well. The Cayenne is supposed to come out. again, it won't make up.
 
 The US market gains won't make up for the losses in China just because like Germany, the US market is very mature. And so you might get a couple of percentage points increase in sales through more products, through some types of promotion, but you're not going to get the bang for your buck like you do out of the China market. And so this is where this panic is setting in.
 
 Lei:  
 No, yeah.
 
 I
 
 for the German premiums, the Porsche's and Mercedes, their priority is definitely not growing sales in terms of the Chinese market. Their priority is, so let's say for a Porsche, this year they're probably going to be under 50,000 units in China. Last year was around 60,000. So this year, most likely under 50,000. So 50,000 out of 250,000, you said that's 20 % of.
 
 Tu: 
 Finding a bottom.
 
 Lei:  
 of the global sales, significantly lower than what was before, like a third. And what they are trying to do, same as Mercedes, is cost, cost, cut cost. And that entails right sizing the dealership footprint. Porsche is reducing their dealership from 140 to 100 by the end of this year. Mercedes.
 
 They want to cut 10 % in cost globally and in the China joint venture. They want to cut the variable production costs. They want to cut the fixed production costs by 20%. They want to rise size their dealership footprint in China because they have that double digit return on sales metric that they want to achieve.
 
 You know, that's, I think there are priorities, definitely. Whereas I was looking at the January end user sales rankings by brand. Guess who was the number one brand in January? I'll give you a hint. It's not BYD.
 
 Tu: 
 Was it Zeekr
 
 Lei:  
 It's a German brand.
 
 who else can it be? It's Volkswagen. They were back at the number one rankings in terms of brand and passenger vehicle sales after 11 months. Guess what? The Passat sells for $150,000, the lowest.
 
 Tu: 
 Yeah.
 
 Yeah.
 
 Lei:  
 They talk about value over volume, but in actuality, these price adjustments have helped, at least in the seasonally different generation.
 
 Tu: 
 Yeah,
 
 you and I always talk about January and February being tough months to really glean any meaningful nuggets of insight out.
 
 Lei:  
 Yeah, so, but at least for January, know, BYD was second, Geely was third, so.
 
 Tu: 
 But that's, but
 
 you raise a great point, Lei. That's why there should be this huge asterisk next to the Volkswagen, because how much have they had to cut pricing in order to get back to that number one spot? Okay. And if we think about Porsche, they don't discount. And, but.
 
 BMW has, Mercedes has, Audi has, all in the China market. And just to give people a frame of reference as to how profitable for Volkswagen Group, Porsche has been traditionally for them. The ABB, they typically sell between 700 and 850,000 units in the China market.
 
 Global sales are a little bit over three million units for each one of them. it's normally between the Delta between the three brands global sales annually is probably 200, 300,000 units. Mercedes always normally ends up number one, BMW number two, Audi number three. And so the reason I bring all this up is because just four or five years ago, Lei...
 
 we were talking about Porsche building a factory in China because their sales were growing. And now they're, yeah, so how things change so quickly. And I have to point to my newsletter and literally I press send on the newsletter and an hour or two later I get four or five messages. Hey man, that was a pretty harsh takedown of Porsche that you had in your newsletter.
 
 Lei:  
 You were near 100,000 units, yeah.
 
 Tu: 
 I didn't, I just read one of the Bloomberg articles or one of the Reuters articles about, and it specifically said, and you had tweeted about it too. It said that US took over the number one spot from China, overtook. And I was like, okay, that's, no, it's a terrible, terrible, it's a misleading description.
 
 Lei:  
 worth it.
 
 It's correct, but...
 
 Tu: 
 because for those that don't know, Porsche could do no wrong up until 2022 in the China market.
 
 Lei:  
 Well,
 
 so saying China overtook the US as Porsche's largest market versus US overtaking China as the largest market, that's completely different things. It means completely different things.
 
 Tu: 
 Yes.
 
 And the reason it means different is because starting in 2022, sales of Porsche went down 2%. The first time since it entered the China market in 2001, since they saw sales shrink. And that could have been an anomaly, but then follow that up in 2023 with 15 % shrinking. And then last year, 28%.
 
 Lei:  
 3, 24, 15 percent.
 
 Tu: 
 Okay. So to say that the US, these, both of these markets were growth markets, but the US was just a better growth market is, is completely misleading because they're losing their shirt in the China market. Porsche is. And so it got me thinking, I did a quick Google search who, how long has Blume been the CEO of Porsche? And so it
 
 boggles my mind that people aren't held responsible for the things that are happening that are supposedly
 
 They're supposed to be leaders of these companies, these brands. And then not only does he not get pushed out, but he gets additional Volkswagen Group as the CEO. So.
 
 Lei:  
 I think probably changes on the horizon soon enough.
 
 Tu: 
 But, but,
 
 Lei let me ask you. If your financial advisor lost you 2%, lost you 15%, and then 28 % in a market that's growing?
 
 Would you be like, okay, I'm going to give you more money to manage. That's what they did. That's what Volkswagen Group did. That's what the board did. when I sat down to write.
 
 It's just a stream of consciousness. I'm just typing. And then I was thinking about it. was like, what? And so this has to be, let me be honest with you, Lei, and you please be honest with me. This has to be one of the worst management jobs in the automotive space in the last 30 years. Can you think of any other?
 
 Lei:  
 think the minute that Blume became the dual CEO, had scrutiny written all over it until this moment. And the performance of the last few years have shown that something needed to be changed and it hasn't, at least from a management perspective. And there were some changes recently.
 
 Tu: 
 Well, they forced the CFO
 
 or they're forcing the CFO out and they're who?
 
 Lei:  
 Yeah, the sales and
 
 marketing guy. And there's been a couple of CEO changes in China already in the past couple of years.
 
 Tu: 
 You know
 
 what's concerning about Porsche, Lei though, is that if the McCann EV doesn't resonate in the China market, fine, so be it. But it doesn't resonate anywhere else either. however they engineered it, however they market it, didn't work. So their strategy, their approach to products is not a winning strategy anywhere in the world when it comes to electrification.
 
 Lei:  
 Yeah, also Mercedes is pretty good example. A couple of years ago, they were talking about 2030 being in the year where, well, their fine print is full electric in where market conditions allow. Now that's completely gone, right? All of their upcoming products, right? The CLA has an ICE version, but they...
 
 The EQ era is gone, right? They're going back to the original naming. So the EQC now is next generation GLC BEV, right? The C class would be the C class BEV. It's not the EQE or you know, the naming convention. And they no longer talk about these targets. And their XEV share has gone down. But they're also betting on these
 
 upcoming EVs to migrate.
 
 Tu: 
 Halfheartedly. I would say they're halfheartedly betting on
 
 They, to
 
 me...
 
 They're trying to mitigate risk as opposed to they're trying to not lose the game as opposed to win. Now, I understand their situation in China because I don't think they've all feel very comfortable that they found a floor from a sale shrinking standpoint. I get that, but
 
 In a digital world, you and I know this, man.
 
 Waffling is not going to help. You've got to be decisive. Even if you make mistakes, minimize that and then course correct along the way. You know how complex these manufacturing facilities are going to be when suppliers are shipping cells, battery cells, they're shipping powertrains, they're shipping hybrid engines.
 
 It's not going to be very easy for them to do this stuff. And I know we talked about Mercedes, Audi, Tesla. They all have, you know, China for China, R &D centers and things like that.
 
 where has all that knowledge been when they were winning? They should have tons of data that they can look at. And so to me with the Germans specifically, it's about control. Can they give up some of that control in order to move faster, in order to change the culture? And the fact of the matter is,
 
 Lei:  
 I'm sure they do
 
 Tu: 
 People get replaced, people get fired, but their backfills are people with 30 years of the same company.
 
 And so, Lei if you and I go to the same school, there's a good chance that you and I are, from an engineering standpoint, from a finance standpoint, are going to think pretty similarly because we're taught the same things. If you're a 30 year veteran of Porsche and you're replacing Blume are you really going to bring new ideas, new ways of thinking and moving faster? I just find it really hard.
 
 Lei:  
 Yeah.
 
 Tu: 
 digest all this stuff. But anyways, I was a little spicy on Porsche.
 
 Lei:  
 Okay, I saw the peppers.
 
 Tu: 
 Yeah. So because because I because that's the thing people were like, Whoa, dude, I was like, first of all, I was like, awesome, man, people are reading the newsletter. Second of all, it was like, I didn't mean I didn't sit down and say, okay, I got a rip on Porsche in a in big way in this newsletter. It just kind of like I said, stream of consciousness like
 
 Man, if I had three losing seasons, if you're in the NFL, you had three losing seasons, you know that coach would be gone.
 
 So, and it's not like the first season was the worst. The first season was like, I'm respectable still. So that's why and I just.
 
 Lei:  
 So yeah.
 
 Tu: 
 It just makes it seem like, so they acknowledge that management was terrible because they're getting rid of the CFO and they're getting rid of the sales guy. So that's Blume basically throwing people under the bus. Anyways, anything else you want to talk about?
 
 Lei:  
 no, I'm in j-
 
 Tu: 
 We can talk
 
 about we can talk about Stellantis launching their own level two version.
 
 Lei:  
 Level two
 
 plus and level three perhaps. Yeah, auto drive, Stella auto drive. Finally, they're in the game.
 
 Tu: 
 They're in the game, but
 
 this is how I would categorize the global intelligent driving game. And you let me know what you think. GM, Ford, Stellantis, very limited. Let's put them in one buck.
 
 The Chinese EV makers, Li Auto, Nio, Xpeng, Hema, Xiaomi, Great Wall to a lesser extent, but Great Wall has Haomo. Yeah.
 
 Lei:  
 Xiaomi.
 
 Haomo and
 
 their new smart driving editions using our good friend from DeepRoute.
 
 Tu: 
 yeah, okay.
 
 So I don't... So I don't... I'm not...
 
 Lei:  
 I put Great Wall
 
 Motor, and BYD in the same bucket.
 
 Tu: 
 Okay, I'm not
 
 that familiar with the Great Wall, although we have ridden in deep routes. So I guess we could say we are a bit familiar with that. then, you know, Baidu, so the RoboTaxi companies, they're kind of a little bit all over the place because some of them have partnered with OEMs, like a deep route. And so let's say NIO, Li Auto XPeng, Xiaomi to a lesser extent, they're all in a bucket. Okay. And you almost...
 
 In the United States, and this is where Tesla needs to be in different buckets in different regions, right? Because FSD in North America is like wild west. You turn it on and you are responsible. In all of the D3, can't turn it on, or you can only turn it on in specific situations. So how would you describe these buckets?
 
 with regards to the ones that we've tried and the intelligent driving, if we're looking at the Chinese EV makers versus the Western.
 
 Lei:  
 Well, I mean, you explained it pretty well, The Wei Xiaolis and the Huawei and Xiaomi, they're in one bucket, right? They're out in the front. And there's a bunch of others catching up in the second group. Now, I'd probably put Tesla within those second group in China, but in the US, it's Tesla out in front and then the rest, basically, right? That's probably the simple way of putting it.
 
 And then this year, think we're also going to see some things in between the RoboTaxis and the Level 2+++. Because there's talks of Level 3 capability reaching a of a chat GPT moment. He Xiaopeng was talking about it.
 
 Tu: 
 Aurora, likely running pilots in Texas.
 
 Lei:  
 And out into the future, there's also talk about, I mean, that's what Tesla is trying to do, this personal AV with level four capabilities, right?
 
 Tu: 
 And then on X, I've seen quite a number of Zoox videos advertising their service in Las Vegas. Although I don't believe we can use it. I don't think we can call it as regular people, which is a little bit weird that you would market it and then not have it available, but whatever. So.
 
 Lei:  
 No, not yet. No, no.
 
 Tu: 
 Let me check my newsletter before...
 
 Lei:  
 Other than that, it's a quite significant meeting between Xi and the private entrepreneurs that made headlines. Wang Chuanfu, Lei Jun, the CEO of Unitree, Ren Zhengfei, the founder of Huawei, right in the center, where they sit is very meticulously planned. Who sits next to whom?
 
 Tu: 
 And it's important. It's important.
 
 I think some people were asking me, they would send me a link to kind of the seating chart and say, does this really matter? And I was like, yes, it does.
 
 Lei:  
 Very much. The Lin Jung-Fei is not in the middle for no reason.
 
 Tu: 
 Well...
 
 Well,
 
 think Jack Ma being part of that group. So you can say that he's back in the club. He was put in a box for a number of years, a number of years. So he's done everything he's needed to, to kind of be part of that main group of. And then we saw the DeepSeek CEO or founder was part of that group. And so, yeah, but...
 
 Lei:  
 Exactly.
 
 Yeah.
 
 Yep.
 
 Tu: 
 The message is also very important. said, we need you effectively. Xi Jinping said, we need you. We need to detect leaders, to kind of lead. But, you know, he also five years ago slapped the technology industry in general down pretty heavily. So, and with every single one of those companies leaning more heavily into data,
 
 and how it's used to create insights. That's what's going to be really interesting to see the policies moving forward when it comes to Chinese, not even foreign companies and Chinese data. I'm saying Chinese companies and Chinese data. So that'll be the interesting thing. the background and all that is where the data center is going to be in the Middle East, where the data center is going to be in Europe.
 
 what silicon is going to be used to drive the algorithms and the training at the data centers. These are the underlying questions and they become mobility questions. They don't consumer tech questions. don't become, or they're not consumer tech questions or e-commerce questions. Now they're mobility questions. So.
 
 Lei:  
 Mm-hmm.
 
 Tu: 
 I don't have anything else, so let me jump to the questions. I know Zane has quite a few.
 
 Do you think the emergence of new car brands is a positive thing? I think he lives in the Middle East, will the US allow the Middle East to become a China car market? So.
 
 Zane, think that competition is generally very good for the consumer because it drives down prices and increases innovation. But I'm a little bit torn because if there were a number of Chinese EV makers in the United States right now, I think that it would put the D3 behind the eight ball when it comes to their capabilities to
 
 design, engineer, and manufacture electric vehicles.
 
 Lei:  
 The first question, there's both things going on at the same time. There's brand consolidation, vis-a-vis Zekker and Lynk & Co. While there's still new brands coming out, the most recent example could be the Shang Jie, which is reportedly SAIC just signed a deal with Huawei.
 
 It hasn't been confirmed or read that it could be one of those Huawei inside type of cooperation, not the HIMA type. So it remains to be seen. that's all going on at the same time. But in the Middle East, I think it's definitely going to be a China EV and AV region. We ride in Uber, right? That's a good example.
 
 Tu: 
 and AV.
 
 And you look at every company that Huawei is partnering with, Huawei could become the unofficial, intelligent driving system for a number of Chinese brands in China, specifically.
 
 Lei:  
 BYD offers both the Huawei Qian Kun ADS as well as their own Godzai C or B.
 
 Tu: 
 And what's important to note about a BYD and Huawei?
 
 kind of collaboration is that I'm certain Wang Chuang Fu is not super comfortable with those types of cooperations because Huawei is number one, super opinionated and a large player. And BYD is not used to being equal with anyone. So whether that actually blossoms into anything significant remains to be seen.
 
 And we also have to remember that BYD is the international Chinese EV company. So when it comes to
 
 installing hardware and software from Chinese technology players, it might be okay today, but as you and I have seen with the Trump administration, things can change very quickly. And Trump could bully some countries into
 
 let's say adopting US policies towards Chinese connected software and connected hardware.
 
 I'm not saying they will. I'm not saying the Trump administration will, but I wouldn't put it past them. Let's just say that.
 
 Lei:  
 And it looks like Bill Ford, he's hinted that of a positive discussion with Trump about hearing what the US automakers, their stance. it looks like Trump is also hinting that they'd like to work with China on the tariffs if possible, but those are fluid.
 
 And the last thing I will say again, the January sales, February sales will be probably lower because of the shorter month and the carryover the Chinese New Year. So don't draw any conclusions. I know there's a lot of fans of certain brands that gets to me.
 
 wait till the end of March to draw any conclusions at all.
 
 Tu: 
 Well, the
 
 other thing too, Lei, is that there was that rumor that NIO was cutting 50 % of its staff. And then we saw Afonso had posted an article about BYD paying people to help them determine who are creating these rumors on social media. So...
 
 Lei:  
 That's another part of the trend in the Chinese market.
 
 Tu: 
 Yeah,
 
 these are targeted attacks that don't happen as often, I think, in the Western markets as they do in the China markets. And part of that reason is because the carbine public in the Western markets, they trend older, so they're not as active on social media. But in China, the target market between 30 and 50 years old, they're on social media all the time.
 
 So they get a lot of their news from social media. so, yeah, let me, Zayn had a ton of questions. So I think we can answer a couple more and then maybe I can type some answers in. So are we close to seeing an electric car that travels 2000 kilometers on a single charge? We're trying to be the first to enter the 2000 kilometer club.
 
 Lei:  
 There already are. Well, when you say electric car, it could mean different things. Is it a BEV? Is it a PHEV? Some of these PHEV have proven that they can travel 2,000 kilometers or more. There's already those on the market. I think Cherry had one. The Denza N9 supposedly gets 1,300 kilometers total range for a full-size SUV.
 
 Tu: 
 Okay, so...
 
 The last question I'll ask for Zayn is do you think Volkswagen Group is slowly sinking?
 
 Lei:  
 Well, there was...
 
 Tu: 
 I think the sales numbers point to it.
 
 Lei:  
 Wow they're under pressure but I think they're still...
 
 I mean, they invested into XPeng They made a lot of these bets that are...
 
 We don't know for sure yet whether they'll come to fruition in terms of helping them, whether it's market-wise or financially. No, I don't think they're sinking. I think they're still on a downward trend.
 
 you
 
 Tu: 
 So Mason has
 
 a quick question, last one before we end the show. What's your take on Nicola filing for bankruptcy?
 
 Lei:  
 never meant to be. That's I mean how they started with Trevor, with Trevor Milton, right? That bad publicity of that stunt, right? It was downhill from there. I don't think that you ever gain the trust as a whatever happened, you know, he says something else about, yeah.
 
 Tu: 
 Well, dude's in jail.
 
 Lei:  
 I think he published something about what happened.
 
 Tu: 
 So.
 
 The other
 
 thing too, Lei, is that we... So to peel the layers of the onion back a little bit further, GM had talked about investing in Nikola, right? Because Steve Gursky, the ex-chairman of General Motors, launched like an investment SPAC firm that had taken control of Nikola. And Mary almost got a ton of egg on her face because...
 
 Lei:  
 Jam guy.
 
 Tu: 
 She trusted him and basically the company was a scam at that point in time, right? Cause they were thinking hydrogen and then they started doing battery vehicles. so then Steve, and you remember a woman named Mary Chan, she worked at General Motors. She was the on-star, think person. like two or three XGM management.
 
 came along with Steve Girsky to do this Vecto IQ. And so they became managers of Nikola, trying to get further investment, trying to get more, they're trying to stabilize the company effectively, right? Because they probably were in line to lose a bunch of money. And so they obviously weren't able to raise any more capital, significant capital.
 
 And so this is, and so I want to say that if we look at.
 
 Nikola was never a really positive story. Okay. And it lasted this long. It IPO'd and it lasted this long. So when people talk about Chinese companies consolidation and Chinese EV companies going out of business, this could take a while. It's not like, okay, it happens in two months. It is a slow, slow, slow burn.
 
 Lei:  
 Heck, I was reading about something that WM Motor was being resurrected. I talk about consolidation when we have zombies that never die. So.
 
 Tu: 
 a lot of times.
 
 Ugh.
 
 And then, and then Tu Simple, there's
 
 a little post about Tu Simple I read about how they are getting sued by their employees or something.
 
 Lei:  
 They
 
 Yeah, but they completely pivoted to a different arena, right?
 
 Tu: 
 Yeah,
 
 yeah, so anyways, everyone. I didn't think this was going to be a very long, long show, but we were able to. So anyways, hey.
 
 Lei:  
 There's always something to talk
 
 about, there's always something to talk about and then we end up, you know, talking a lot.
 
 Tu: 
 Everyone,
 
 thanks again for joining us. Good morning, good afternoon, good evening. We will talk with you next, I think next week for our 200th episode. So, Lei, I know you're gonna have some poetry or something. So, please do join us for our 200th episode. Everyone have a good weekend.
 
 Lei:  
 yeah. 200.
 
 I'll prepare something.
 
 Well,
 
 talk to you guys.