Episode #203 - BYD's Faster than Filling Up, NIO Keeping On

In this episode, Tu and Lei discuss the latest developments in the electric vehicle (EV) sector, focusing on the competitive landscape between major players like BYD and NIO. 

They explore the implications of recent announcements regarding charging technology, battery swapping, and new vehicle launches, while also addressing the challenges faced by companies like NIO in a rapidly evolving market. 

The conversation highlights BYD's innovative strategies and the potential impact on the global EV market. This conversation delves into the evolving landscape of the electric vehicle (EV) market, focusing on the implications of Full Self-Driving (FSD) pricing, advancements in charging infrastructure, and the latest earnings reports from key players in the industry. 

The discussion highlights the competitive strategies of companies like BYD and Tesla, their international expansion efforts, and the challenges faced by traditional automakers in adapting to the rapidly changing market dynamics.

Transcript

Tu Le: 

Welcome to a special edition of the China EVs and More podcast. In the next hour or so, my co-host Lei Xing: and I will go over the week's most important and interesting news coming out of the global EV, AV and mobility sectors. What Lei and I 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 like and subscribe buttons so you don't miss anything from us in the future. Also, I'm confident that Lei and I are two of the most knowledgeable people in the world talking about this, so help us get the word out to others about this show. My name is Tu Le, I am the Managing Director at Sino Auto Insights, a global management consultancy that helps organizations bring innovative and tech-focused

products and services to the transportation and mobility sectors. I write a free weekly newsletter that we pull many of our discussion topics from. You can sign up for it at sinoautoinsights.substack.com, which of course I encourage you all to do. A about to get on the road lay, can you please introduce yourself?

Lei Xing: 

Yes, good afternoon. Difficult to say good afternoon because we usually say good morning. this is your co-host Lei Xing, former chief editor of China Auto Review. And this is episode number one. No, not one. It's already 203. 203 Thursday jitters. And March Madness officially began today.

Tu Le: 

Huh.

Lei Xing: 

in the, we're talking about the NCAA men's basketball tournament. Always something spectacle to watch. But March Madness continues. We should call it daily madness. Continues in the China EV realm. And so much of the talk about this week, this past week, so much happened. Especially the first day, Monday.

Tu Le: 

Ugh.

Lei Xing: 

is what I would call maybe perhaps two industry, top 10 industry events happening on the same evening. Hashtag, and hashtag, basically. So, Wang Chuanfu announced this flash charging

Tu Le: 

What are we talking about, Can you please update the audience?

Lei Xing: 

as fast as a fillup while NIO and CATL signed the agreement to build the world's biggest battery swapping network. Happening at this roughly at the same time on the same day. It is almost as if one was like, look at me, this is what I announced. And the other one was like, no, no, no, no, not so fast.

Because when Wang Chuanfu announced flash charging as fast as filling up gas, he didn't say, not yet at least, flash charging as fast as battery swapping. Now that would have been something even more out of this world.

Basically, those are, I think, two things that happened that, again, it's the word you used in your newsletter. BYD at it again, right? Or something like that. That's basically what the...

Tu Le: 

So.

Here's the other

part of that. Here's the other side of that coin, because the reason NIO or one of the main reasons NIO leaned into swapping was because of the charging times. And I don't think, I won't speak for you, I'll let you speak for yourself. I thought charging to 240 miles,

was going to take 20, 30 minutes for the foreseeable future. Okay. Meaning years and to be able for, for BYD to be able to say they're making it available this year on vehicles that have just begun to take orders is an unbelievable thing. And the largest battery maker

the large EV maker are competing and then odds with one another. Now BYD is also competing against CATL and the battery manufacturing side. So do we even need swapping anymore? Or will we need it in five years? Those are the foundational questions because now NIO has spent all this money to create this customer engagement and

We can argue, I think you and I would agree that the swapping is great, but the overall strategy for the company has been up and down. with BYD moving the needle so far ahead and pulling in EV adoption for the mass market with these last two announcements over the last month, man, it's changing strategies all over the world.

Lei Xing: 

Yeah.

Tu Le: 

And I don't

think anyone would have. I didn't believe that or I wasn't thinking in 2025 BYD is going to do this so.

Lei Xing: 

Basically, the question of how low can you go and how fast can you go and how high can you go. We haven't reached the limits. Basically, that's what BYD is telling us.

Tu Le: 

They're also telling

us that they're dictating the pace. They're gonna do so for the foreseeable future and no one can touch them from a bill of materials cost standpoint.

Lei Xing: 

Yeah, and it was, think for NIO specifically, I think it was a great morale booster because they've been

facing hiccups. In the topic you listed about the Firefly situation, the ONVO situation, the CEO of ONVO came out and had an interview on Hu Xiu and he shared some of the problems behind this kind of the ONVO's funk of not getting to the 20,000 delivery target that he said they will.

back in November, or he'll quit. And then he's like, no, I'm not going to quit. That's too easy for me to do, rather than I have to stick to doing my job and learn from the factors, internal and external factors that cause kind of

Tu Le: 

Or he would quit.

Lei Xing: 

One thing he shared was a huge drop in orders because the people who ordered it were worried about the ending at the end of the year, the scrap and the trading subsidies, which continued. So that caused a big drop off in January.

Tu Le: 

Right.

Lei Xing: 

of so they ended up delivering on all new orders. They have no backlog orders. That was the situation that he kind of So yeah.

Tu Le: 

So

what have they been doing? This is where I scratch my head, number one. Number two, this is the damned if you do damned if you don't, because he didn't have any automotive experience in the past. think, yeah. And so he seemed very optimistic, very bold statements. When I was in Hefei and he was introduced

Lei Xing: 

came from Disney World, I believe.

Tu Le: 

when the 500,000th NIO came off that line. And so...

I like the car and I've been told it's a pretty decent car. So to not be able to get any future orders outside of the backlog, generally speaking, right? I'm sure there's there's orders, but not that many. But it but maybe it has less to do with Envo and more to do with how intense cars that are.

price below $35,000 US dollars electric vehicles anyways in China. How intense that market segment is. And with Mona and with now BYD really, really dialing up the pressure. And people are at odds because it seems like BYD is able to keep this pace.

and not breathe too hard. Let's say it's a marathon. They're running around in this track and they're lapping people. Not only foreign legacy automakers, but they're lapping Chinese brands too.

Lei Xing: 

The scary thing about BYD is, so we're in the middle of March, right? This year is still, still have nine more months to go and BYD has already announced two significant announcements. The scary thing is they have more up in their sleeves, more coming. Yeah, yeah, yeah. Which by the way is only about a month to go.

Tu Le: 

This is before the auto show, eh?

Lei Xing: 

and they're launching the Denza N9 tomorrow, China time And then there's a Yangwang U7. But I mean, there's a bunch of others launching additional vehicles all at the same time. Right? This is that season. This is the March 9th we're talking about. Yeah, yesterday, the Stelato Luxeed Aito just launched a new M9.

Tu Le: 

There's the stiletto that just launched the S.

Lei Xing: 

EREV version or the Stelato launched S9 EREV version.

Tu Le: 

S9, is it?

So this Stelato just for folks, Stelato is the premium brand of BAIC with a cooperation with Huawei. And if you look at it, it looks pretty nice. It looks like an S-Class and an Audi A8 had a baby. That's how I would describe it, because.

Lei Xing: 

E B A I C

wait, yup.

Tu Le: 

It has the bean shape and the new Model S, the EQS, not the Model S, the EQS. It looks like an EQS. And this thing is an S9, so it's the flagship. And it's less than $40,000. It's an EREV with around 620 miles of range, which is ridiculous.

Lei Xing: 

Yeah, roughly around, yeah.

And then you had also on Tuesday, Chery launched their edition of the Smart Driving for All offensive following BYD's footsteps. mean, every single one of their brands, four brands or five brands, launched these newer models with the so-called the Falcon. The Falcon, I think it's called the C-Pilot. Also different tiers, but at a lower...

a lower if not staying the same prices. So these are all pressure if we talk about NIO with the Onvo and also launching a Firefly, which is at the same price point as the Onvo with the BASS model.

So that not just It's perplexing

Tu Le: 

So

let's stick to this NIO because we're jumping around a little bit about these new cars because there's so many and it's hard to keep track. But let's talk about Firefly a little bit because originally they were going to have separate swapping stations and now they're backtracking and it's quite confusing. I can't read Mandarin or Chinese very well, but from what I gather,

they kind of backtracked away from building their own swapping stations for Firefly and they're leaning into the CATL relationship. But the first car is going to use NIO swapping stations and then the subsequent products are going to use the EVOGO swapping from CATL.

Lei Xing: 

Yep, or ChocoSwap

is also a name. No, I mean, to me as a consumer, first of all, the Firefly first model is launching on April 19th. That does not mean deliveries start on April 19th. Deliveries, I would expect, start a few weeks later. But as a consumer, my expectation is when I buy the car, when it's launched, I would expect

the compatible battery swapping stations to be in place. And apparently, from NIO, from what they are communicating, that's not the case. The case seems to be that there will be demo, the pilot battery swapping stations first, and then the fifth generation that would be compatible. And then it will be the next generation of products or upcoming products models.

that can utilize the ChocoSwap stations, which themselves need to be ramped. It's not expanded, right? So NIO has about 3,200, I think, China, battery swapping stations. But how many of those are Firefly compatible?

Tu Le: 

Expand it.

And the important thing, is that the EVOGO Choco swapping stations that you're talking about have, up till now, pre-Firefly have been used mostly for taxis and Didis So the level of upkeep probably isn't great. It's not going to be as clean or as nice as in a NIO swapping station.

Lei Xing: 

Yeah

Right.

So those are concerns. Those are concerns for if I'm a consumer.

Tu Le: 

This sounds to me, Lei, I don't want to dwell on this too much, because I do want to talk about some more of the BYD announcements. it almost sounds like XPeng, the international sales team, chopping it off and starting over a little bit, because NIO seems to be just adding, adding as opposed to taking a step back and

and really looking at what makes sense.

Lei Xing: 

Well, yeah,

last episode we talked about Li Bin pushing that article written by a former employee and doing a sweeping cost cut initiative for the stock to go up. Kind of. And that's happening as we speak, right? There's this every penny counts. The near term.

goal in front of the bin is breakeven Q4. I don't know if they can do it. But it looks like the cost reduction measure will be a significant undertaking again this year. While they work with Onvo you know, push out newer Onvo models,

Tu Le: 

and

Lei Xing: 

and launch Firefly.

Tu Le: 

Quick reminder

that April 19th is right around the corner from when Shanghai Auto Show Media Day is. And so we'll likely see some fireflies, although we probably won't be able to sit in them at the Shanghai Auto Show. We'll likely see them in real life at the show, or this will be the first time where Chinese consumers can actually see them and touch them and feel them. That being said, let's rewind a little bit because we talked about God's Eye.

On February 10th, that announcement from BYD democratizing with three versions of their own intelligent driving system. The C being vision only and standard on low cost vehicles or value vehicles like the SEAL. B and A, including LIDAR. And then they go ahead and on Monday, think, or Tuesday.

Lei Xing: 

Yeah,

Monday, yeah, 17th, yeah.

Tu Le: 

They announce that they're launching an e-power system that has charging capabilities. A charging station can now be a one megawatt charging station or a 1,000 kilowatt hour charging station. So I'm complaining about

Lei Xing: 

Mm-hmm.

Tu Le: 

finding 100 kilowatt hour charging stations right around me where I live in China, they're talking about one megawatt. So BYD is going to install 4,000 of them. They didn't give a timeline. There's still a lot of questions. There's still a ton of questions because they did say that they're at each charging station. Now let's...

Lei Xing: 

But yeah, yeah, he's happy.

Tu Le: 

Let's separate charging stall from charging station. A charging station might have three or four or five or six stalls. My assumption is that there's going to be, they had mentioned an ESS or a battery to accompany the one megawatt charging stations. And that is to relieve the grid because most cities in China won't be able to handle

Lei Xing: 

Yeah, yeah.

Exactly.

Tu Le: 

multiple megawatt chargers, not many of them anyways. And so that means that they'll be collecting energy, it'll be stored in this ESS and then when the vehicles do arrive. And the other part, they announced an e-motor that's the fastest in the world for mass market, 30,000 revolutions per minute. And the last thing was...

a battery that could charge 400 kilometers or 240 miles in five minutes. So.

Lei Xing: 

So one

second can get you two kilometers for the mathematicians out there. Yeah. Yeah. So yeah. No, think, yeah. I I think it's awesome. But and then we take a step back to kind of throw some, what do you call it? The grain of salt is exactly what you raised.

Tu Le: 

a little over a mile, two kilometers like a little over a mile. So what do you think, man? What are your thoughts?

Lei Xing: 

First of all, the timeline when you actually get to 4,000. Second, they did show a demo at the event, but that's under ideal conditions. So I think all the numbers they put out take a grain of salt because those are ideal conditions, max conditions. Real life conditions, probably you would not get to that high, but still it's significantly higher if you can charge it.

800, 900 kilowatt. That's more than double what is available of the fastest 5C. They probably can do 500, 600 kilowatt charging. And then exactly how they deal with the grid overload, I think, is something I'm sure BYD will solve.

Tu Le: 

So, Li Auto, Mercedes have made announcements for fast.

with the help of local governments.

Lei Xing: 

And so really the issue is when the Tang L and the Han L actually launches, how much coverage or where do you actually

can charge at those kind of speeds. So at the beginning, there's always a ramp up. So that's we kind of take it with a grain of salt. Same for the battery swapping. They're calling it the world's largest battery swapping network. But until the models come out, until the stations are cross-compatible, that pole, that consumer pole,

Tu Le: 

Well, let's back that up.

Let's back that up, Lei, because until there's a clear cohesive strategy between Onvo, Firefly, and NIO, and CATL, okay? Because I'm a little bit confused still.

Lei Xing: 

Yeah.

And then from a consumer habitual point of view, let me throw some numbers. So BYD 4000, Xpeng in their earnings, I watched, looked at some of the numbers that they have close to 2000 superchargers. They're expanding at to 3000 till the end of the year. The auto will have 4,000 of their supercharging stations by the end of the year.

Zeekr already has 1,500. NIO itself operates one of the biggest battery swapping and charging networks in China. So for the consumers, I think the majority of them are used to charging already. And the charging infrastructure of pretty much, we talk about the expressways in urban areas.

it right i mean we had the experience last year of charging along the way of a road trip and 30 minutes didn't seem that long to us

And now you have BYD saying, you know, five minutes for 400 kilometers. Hence the thinking of why do you need battery swapping? think the, no, the only, I think the plus about battery swapping, one of the drivers is the end of life cost or value of an EV.

Tu Le: 

The, the... Go ahead.

Lei Xing: 

Is that a selling point? Capability of getting a bigger capacity EV for some longer road trips.

Tu Le: 

And

let's be clear, one of the open questions is, if there's this combination of new innovations on these BYD vehicles, the e-motor, I happened to be meeting with Sandy Monroe earlier this week. We took a tour of Newlab where you've been to,

And one of the things that he talked about was when an e-motor has 30,000 revs per minute, it's like one of those dental drills. And if you've ever had your teeth cleanly, I'm sure you have, you've heard how fast that's moving, but it's a large, loud, loud sound. And he said that one of the things that they probably needed to take care of or manage was the sound that the motor was making. then,

He said the silicon carbide power chips because the carbide was to take on the extreme heat from the management of the pack, the charging. so there's a lot. So it's not like, okay, we created these innovations and we're just going to bolt them onto regular cars now.

There's all these other considerations, a lot more heat. How many cycles the battery pack is going to take? think that's a basic question that most people are asking. How fast does it degrade the battery now? And BYD has the Blade battery. So I think they have a lot of expertise on the battery manufacturing and development side. So my assumption is that

You know, it degrades the battery incrementally more, but not in a significant way relative to the past. I hope not.

Lei Xing: 

But

yeah, I don't think that's something that BYD will overlook.

Tu Le: 

I don't think so either. That's why it's an open question that needs to be answered, but I don't think it is going to significantly reduce the number of cycles. And I wouldn't be surprised, Lei, really quickly. I wouldn't be surprised if BYD, if there's doubts about the cycles and BYD comes out with an extended warranty on these battery packs just to reassure Chinese consumers.

Lei Xing: 

Right.

Yeah.

And then it's just a matter of how fast BYD can build those chargers in the first place and then put them in place across China. That's the only question remaining.

Tu Le: 

Well, here's

the other question, Lei. You talked about XPeng, NIO. You talked about all these Zeekr these companies building these charging stations. Now they're going to have to replace them with megawatt charging stations. So these costs, they don't stop. know, one of the biggest cost drivers NIO has to your point, they have to buy swap.

install swapping stations and they're installing chargers. Now those costs might be managed pretty well, but they're significant, especially when you don't have the volume, the sales volume to support high utilization rates at these charging stations because they got to be bleeding money quite significantly with a lot of these underutilized charging stations.

Lei Xing: 

Yeah, and hence the expectation that the Firefly, when it goes on sale, there should be infrastructure up and running to support it. Outside of charging, you can still charge Fireflys right? You don't have the battery swap. Since they are kind of the urban cars. Yeah.

Tu Le: 

Which...

And smaller,

one of the viewers had asked about them being smaller. I don't know what the size of the battery is. I'll find that out. But it is more like a city car than a long range vehicle.

Lei Xing: 

Probably

45, 50 kilowatt hour battery.

Tu Le: 

Yeah, I

was thinking smaller than 60 for sure. So let's just noodle on this, because I think you read some of my newsletter, so you got a pretty good idea of my thoughts on strategy, Wang Chuan Fu, BYD, setting the pace. I'd like to hear your thoughts.

Lei Xing: 

I agree 100%. BYD is dictating what's going on. Look what happened on Tuesday. I mentioned Chery, Zeekr and GAC Group at the same time all announcing their own tiered smart driving editions of their vehicles. Well, obviously,

Tu Le: 

That

means their product planning team was working 996 the weekend before to come up with this.

Lei Xing: 

And obviously, FSD into China has been one kind of driver. BYD's own Smart Driving for All is a huge driver of that. Continued kind of the bloodbath competitive environment as a way of not cutting prices but putting more features at no cost. No cost for the consumers.

to as a non-price cut price cut as you will call it you know

Tu Le: 

So

and I looked at our transcript last week, Lei. We say so a lot, so we should both stop saying so so much during these podcasts. that puts even more pressure on BYD's competitors because they have to buy all their components. And when you're swapping in, swapping out components, there's always margin attached to it.

You can pressure suppliers to reduce their margin, but BYD, a lot of those costs are passed through because they build their own components. And this gives them such a huge advantage because even at 1%, 2 % per component of profit that suppliers are getting, that adds up when you're dealing with

A vehicle that caps out at $37,000 but has level two plus with two lidar or three lidar and then can charge 240 miles in five minutes.

Lei Xing: 

Yeah, it goes back to I think the early years of BYD when they had nothing, when they didn't have the resources, what did they do? They turned to their own employees and engineering drive to figure out things themselves. This goes way back in the 90s.

when they weren't even making cars, when it was started with batteries. And this continues to this day. the number of engineers and the of employees they have and they've hired is behind part of what they have been able to accomplish. And that tells you also about the engineering talent in China.

of all of these companies Xiaomi right of Xiaomi was the last company to have the highest RPM motor and BYD topped it. 27 yeah yeah so and

Tu Le: 

on the SU-7 Ultra.

But

now, so the other part, and we'll go back to what you had said earlier, we're only in March, man, March 19th, and two groundbreaking announcements that BYD has made that I just don't believe the West appreciates the significance of these announcements.

Lei Xing: 

And

Yeah, and BYD, the last five years, every year they had something very significant.

and they continue to do it, find a way out of our expectations.

Tu Le: 

And the only thing I can really think of.

from a hiccup over the last few years from BYD is they had a small hiccup during COVID when they had to stop production for a few weeks. But outside of that, I haven't heard any major issues. And you and I hear lots of rumors all the time, but I haven't heard about any major disruptions on production.

and or delivery of vehicles or anything like that. So quite significant management is doing a tremendous job. Now they must be pulling their hair out because one Trump who seems to love his foot being on the accelerator, Stella, her foot on the accelerator. I don't feel they're going to be slowing down specifically in the China market anytime soon.

And I talked to Ed White from the Financial Times and I didn't think, I'll say this now, what I'd said to him is not hyperbole.

Over the last two announcements taken together from BYD, it puts some global brands out of business. That's my thought.

Lei Xing: 

Yeah, definitely.

I mean, if you have the top player in China, in the world, in any of these, pushing like that, it's scary.

Tu Le: 

They're pushing

like they're behind by a lot.

Lei Xing: 

Yeah,

that's why I said it's heartbreaking, it's agonizing, it's painful for all of the competition, not only the foreign brands, but the Chinese competition. at least I think the Chinese competition overall, they're a lot more confident these days, at least the top players. And Tesla, again, is in the middle of this here.

It's a huge firestorm, pun intended. in China, as you said, they're relatively shielded. think Model Y is doing relatively well based on the weekly numbers, which by the way, I think stopped this week because the CAAAM had put out a statement saying, let's not put out those weekly numbers again because it messes up.

how you read the market and drawing conclusions. yeah, I think Tesla announced their own kind of tweak again, the three years zero financing for the rear wheel drive new Model Y. And then an increase in price of the...

Tu Le: 

No one's gonna listen to them.

Non-price cut, price cut.

Yes,

Lei Xing: 

the other version. Yeah, so,

Tu Le: 

by like $1,200, something like that.

Lei Xing: 

and like we said, even last year and earlier this year, more moves is needed.

not surprising and I think we've heard that they're trying to make FSD available to more customers.

Tu Le: 

The only way that's gonna happen is

if they slash that price.

Lei Xing: 

Yeah, or I think there were some free use for like limited time or something.

Tu Le: 

I think there was like a

tri-trial period.

Lei Xing: 

Trial period, right? So, it's.

Tu Le: 

At 8,000 US

dollars, it's a non-starter in China.

Lei Xing: 

Yeah, especially this standardization movement of adding these at no cost in our prices.

Tu Le: 

So.

I posted this in, it was a Bloomberg article, Danny Lee's Bloomberg article, had a chart of how fast some of the OEMs had made announcements. BYD is now number one in this whole kilometers per minute. They're saying 80 kilometers.

per minute charging 400 kilometers in five minutes. Li Auto has 500 kilometers in 12 minutes. Mercedes has, well, so they don't have Zeekr but they have Mercedes Benz at 325 in 10, and then Tesla 275 in 15, but Zeekr should be there as well. And I don't think, so there's already a lot of fast charging going on in China. It's just not hit.

Lei Xing: 

Zeeker must be up there.

Tu Le: 

United States and it's not hit Europe. I don't think they appreciate it. You and I appreciate it because we drove 1,500 miles and stopped twice a day for about 20 to 30 minutes. Only in southern China was it a little bit tricky and we were on a main highway, which didn't make a lot of sense. But on the way down, no problems finding really fast charging, no waiting. And because

Sometimes when I want a fast charger, I'll go to my Myers and to an EV go and there will be cars there already. And so I'll have to wait, but it is quite annoying.

Lei Xing: 

You said no waiting, which is, búyōng děng. When we

already have that kind of no waiting in the BYD, it's a different level of no waiting.

Tu Le: 

So,

man, so what else, what else did you want to talk about, man?

Lei Xing: 

No, think

Xpeng and Xiaomi had earnings. Geely Auto, Zeekr, I mean, the numbers are, all of them are saying we had our best earnings report ever, the strongest ever, most positive ever, right? Xpeng, right, their margins are improving.

Tu Le: 

yeah, yeah. And in Zekker, in Geely, in Geely.

Positive momentum.

So

the margins are improving, still negative profitability.

Lei Xing: 

And here's

the thing that He Xiaopeng mentioned in the earnings call, which is there's trajectory on three fronts, the AI smartification, the international expansion, and the humanoid robot are all progressing very positively. They expect doubling of overseas sales this year.

And domestic sale, I'm expecting nothing less than a doubling of sales. Because that was the kind of the guidance he gave. Last year was 190,000 units. this year, if they don't do 400,000 units, I'm going to be really surprised. And 40,000 of those are exported or overseas sales. So it's a temperature.

Tu Le: 

Well...

Here's the important

thing about that expansion export and growth, because they're likely to sign a contract or an agreement with Magna Steyr.

Lei Xing: 

That was,

guess who was in that meeting room after our talk with Brian Gu? It was the Magna Steyr guy that I knew from. So not surprising at all, right? So it's one of those things roots, Greenfield, Brownfield, or contract manufacturing that the Chinese will have to find a way to, no, it's not confirmed yet, but we know the discussions were.

Tu Le: 

Yeah.

Great.

Lei Xing: 

happening in front of our eyes.

Tu Le: 

they're all kicking the tires. They're trying to figure out, I think there's

European Union lobbyists that are trying to figure out whether or not shipping kits. So the rumor, the current rumor that Lei is referring to is that Magna Steyr is in discussions with XPeng and GAC, which is Guangzhou Automotive, which our friend Daniel Kirchert is working with.

Lei Xing: 

CSE.

Yeah, which announced

their European Expansion Strategy at the Paris Motor Show last year.

Tu Le: 

Yes. And so there's reasons to ship kits instead of manufacturing whole hog in a region or a country. First of all, you can immediately ship vehicles over. if you're shipping kits, supposedly there is no additional tariff for doing that. And a kit is basically a box of parts that

that when you put them together, build the car. And they ship them to Austria and Graz. They would ship them in Graz to final assembly there to try to avoid the finished good tariff. And will the EU accept that? Because it doesn't utilize as much labor. Maybe there's a happy medium where there's a short-term

grandfathering in while XPeng, GAC, others find Greenfield or Brownfield sites in order to rehab old assembly plants or negotiate with individual countries to figure out where they should be building. I don't know if the EU is going to accept long-term XPeng or anybody else shipping kits. Another case of CKD or knockdown kits is

BYD does that in India. And there was two people I talked to in the last two weeks that spent their holidays in India over the last few months. And they're both like, man, all we see is BYDs. All I see is BYDs. And so they're making huge impacts in Thailand. BYD is the number one EV maker or EV brand in Thailand. So they're making inroads, significant inroads.

Lei Xing: 

Yeah.

Tu Le: 

The difference between a BYD and everybody else is that BYD has also made huge announcements about manufacturing in Poland and Turkey, in Thailand, in India, in Indonesia and Hungary, so, and Brazil. So this is where they're playing 3D chess versus everybody else still trying to get off the checkers board a little bit. And I had emphasized also my newsletter that

Lei Xing: 

Yeah.

Tu Le: 

BYD is in 95 countries. So this whole level two plus is accessible to so many people potentially. Then an FSD, then anything else. And let's assume that the fast charging bleeds into the lower price vehicles, the SEAL, the Atto III, and we don't need one megawatt charging.

Lei Xing: 

Yeah.

Tu Le: 

but anything that's faster than drip charge is probably gonna be a win in the short term because all we know, you've been to Thailand, you've been to Southeast Asia, the Japanese came early and that's all we see now in Vietnam, in Thailand, Indonesia, is Hondas and Toyotas, vehicles is what I mean. And so what BYD is doing, they're going early.

And they're building that trust with the Indonesian consumer, the Thai consumer, the Vietnamese consumer. And it's going to pay off dividends because for the Japanese automakers, Southeast Asia was such a stronghold for so long.

Lei Xing: 

Yeah. then Xiaomi, right? Yeah. Xiaomi.

Tu Le: 

Anything? Well, let me ask you

anything that pop out to you among these earnings reports.

Lei Xing: 

I was just going to say Xiaomi, their vehicle margin was over 20%. And they raised their sales target, 350,000 units. In their second full year of products on sale, last year was only nine months. They're doing 350,000 units. Again,

Tu Le: 

Yeah, and it looks like they're gonna expand the Beijing factory

Last year was

nine months and 135,000 units. They're closer to 170,000 now with the U7 likely to launch before the end of summer. And so if there's at least a quarter, quarter and a half of U7 sales, it could be on almost two to one ratio of U7 to SU7 sales in 2025.

Lei Xing: 

Yeah.

So these earnings, just looked good. And then also what jumped out is the guidance for XPeng XPeng, the ability to sell the same number of vehicles in the first quarter of the new year compared to the quarter, the Q4 of the year before, is usually not, it's not common.

because of the seasonality and XPeng is going to do it. I don't know what it is. It's the products, it's the execution, it's the efficiency, whatever you want to call it, which some others are not doing.

Tu Le: 

Lacking?

Lei Xing: 

And every model that's coming, the new G6 and the G9, have gotten some pretty good orders.

Tu Le: 

What

is important to because they steal momentum from each other and it's a month to month thing. So what we always want to see, Lei, is you and I want to see consistency over a sustained period of time. And NIO might have good news for one month and then all of a sudden they have a challenging month or a challenging quarter. What I'd like to see from XPeng is sustained success.

over a six, nine, 12 month period. And it seems like they're building really significant consistent momentum in order to do that. Zeeker as well.

Lei Xing: 

Yeah, think these

companies are getting old, right? NIO is 10 years old. At a certain point, I think it doesn't make sense that when you're not much being a player in the industry and you keep saying there's lessons to be learned.

Right, you see what I'm trying to say? Yeah, it doesn't make sense. That's why I think some of the investors are worried.

Tu Le: 

If you can't get over the hump, you're not learning them.

and

I had a conversation a couple of days ago that Western media have really started to pay attention to what BYD is doing. But I also think that they're ignoring because they don't have the visibility into the China market and they don't follow it like we do. And I think they make erroneous assumptions about

some of these other players and their capabilities because this is why a lot of investors are very worried, not only because US sales and EU sales have fallen and brand, let's say people are really, really pushing against the Tesla brand. In China, it's a completely different story. The brand seems resilient. It's one of the things that keep the sales

going, but it's a lack of product that's competitive with everything that's coming out and this bombardment of brands and new products that you and I have said for two years, three years now that consistently seem to be getting upgraded and unveiled.

Lei Xing: 

Yeah, for Tesla to be continuing to be at the top of the echelon in the China market is pretty significant. And given the competition, but in the Western world, it's more of Elon, kind of the Elon problem. In China, it's more of the product problem. So, and I don't think Elon will be the central factor if Tesla does not do well in China.

Tu Le: 

Yeah.

Lei Xing: 

It's the rest of the competition, That's driving, that's stealing market share away because of more affordability of better products.

Tu Le: 

Somebody's got to step up, whether it's a 7X, Zeeker 7X, to really...

Bully the Juniper, whether it's the G6, U7, whether it's the U7.

Lei Xing: 

I think the U7

will be the biggest killer yet. we'll see. think the Su7 is already beating the Model 3. And the Model 3 is OK. I wouldn't say it's a relevant product in China.

Tu Le: 

Yeah, so

Whooping, whooping the Model 3.

Yeah, because all we seem to be talking about, and this is not by design, because we don't really talk about the P7 Plus from XPeng, which is a sedan, we really continue to talk about consistently is crossovers and SUVs. so, hey, that's all I really have lay out. Man, we are at 53 minutes, so we did well to really only talk about a couple of things in detail.

Lei Xing: 

more product support.

Tu Le: 

But unless you have anything else, there are a couple of comments or questions that I think we can answer. So this is from Baz. What will, in your experience view, be the impact of this BYD move be on the European carmakers in their EV efforts? That's a good question. Thanks for posting it, Baz. Well, let's say...

Lei Xing: 

Okay.

In China?

Tu Le: 

Let's say China and then Europe.

Lei Xing: 

You just have to suck it up. I think for, well, it depends on who we're talking about. Volkswagen is already active with their strategy. I think they're at the very end of their strategic shift. And next year is when they supposedly pounce with the products they think is ready for the Chinese market.

but still a big question mark. But the simple answer is for the foreign automakers, like I said, it's painful, agonizing, and just have to, like a Toyota BZ3X launching at a $20,000 price point with LiDAR. Do that.

Tu Le: 

It's the old Wayne Gretzky adage, I skate to where the puck is going. unfortunate thing, so again, I'm saying so again, typically what an OEM does from a product planning standpoint is they look five years out and they work with market research firms, JD Power, Cox, AutoPacific, and they'll...

try to figure out, what is Lei Motors going to be launching in model year 29, model year 30? A C-Class SUV, a B-Class crossover with these features. And so they try to match that. And then their engineering teams. And so my fear is that a Volkswagen, every week or every month, they crumple up their product plan.

because a BYD goes so far ahead in what, and they look at their product plan and they're like, we didn't anticipate that until 18 months from now. They have it available now. So the car that we have matched up with that is not going to be competitive now. So what do we do? And that's why I mean, they crumple up their product plan and they start over. And so I think that's kind of the challenge.

Lei Xing: 

That's.

And the Onvo situation is exactly one good example of availability, which some other brands, let's say a Tesla, let's say an XPeng when you launch, when you start deliveries, you're able to deliver to meet the consumer, the order. And that's what's driving, I think, some of these competition that

If I can't wait for your product, I might turn to someone else's who can make it available. And I think that's part of why Tesla is still resilient because they can make the Model Y be available. They still have a huge capacity compared maybe to some other ones that are.

Tu Le: 

And Baz my quick response is what I had pointed to earlier. BYD likely put a few brands, global brands, out of business with these two announcements. And I'm not saying that they're going to go out of business in the next 18 months, but long term, some brands are just going to continue to struggle.

Lei Xing: 

Neta,

we have to mention Neta, they've been facing some there's a protest of suppliers asking for money at their headquarters and a year ago or half a year ago nobody would have right I mean

Tu Le: 

You

Yeah.

Lei Xing: 

And there will be more of these on the French.

Tu Le: 

Yeah,

for sure. that's a Chinese EV. The legacy automakers, if we're talking in China, you and I talked about that last week where they're still trying to find a bottom. With regards to Europe, it'll depend on a little bit about the EU, whether they want to continue to have the tariffs, whether they want to dial them up.

Lei Xing: 

Yeah.

Tu Le: 

whether they want to close any loopholes, meaning PHEVs, meaning kits being shipped to Europe, is that sufficient? And then, you know, yeah.

Lei Xing: 

And then the smart driving, yeah. No, no, I'm just going to add that the smart driving part of it is where Neil is behind compared to their peers, XPeng Li auto, BYD, GV, Zeekr right? So.

Tu Le: 

If it wasn't for B- Go ahead.

Well, you

point to the battery swapping and you point to three brands versus XPeng's 2. And now you should have a better understanding of where they have to put resources. And XPeng focused more on smart driving and just one brand, Mona. So friend of the show, Alicia, our good friend, she asks.

How big is the market for that segment of BEVs? We're talking Firefly, Firefly is small, right?

Lei Xing: 

Well, small A-Class, I mean, the price is at 150,000 RMB. It's where the Mona plays in. The kind of the 100,000 RMB range. Yeah, SEAL, Dolphin, and we can even add the lead motor, B10. Kind of the compact A-Class or A-Plus SUV that's selling right around 150,000.

Tu Le: 

and the seal.

Lei Xing: 

price point. It's, it's, it's a lot.

Tu Le: 

So Alicia,

maybe this makes a bit more sense. Pretty popular in the lower tier cities. And then outside of Fifth Ring Road in Beijing, you might see many of them. And then maybe out near Pudong Airport, you'll start to see these smaller vehicles.

Lei Xing: 

you

The other caveat is this Firefly brand is Nio's international go-to brand because they want to launch this pretty soon, I think, into Europe after China. They actually wanted to launch this car in Europe first, not at the Nio day. Remember, at the Nio day, Libyan talked about it, but because of these

Tu Le: 

First.

Mm-hmm.

Lei Xing: 

schedule and the EU tariffs and all of the factors that this is a model or brand dedicated to the international markets. I think it's going to be very difficult to compete in the Chinese market.

Tu Le: 

yeah.

It should fit

quite well on the narrow European streets is what you're alluding to.

Lei Xing: 

It's the

perfect vehicle for Europe, I think.

Tu Le: 

And if we think ID one ID for all, is it?

Lei Xing: 

ID2,

ID, yeah, two ID, ID, everyone and ID2 for all. Everyone, yeah. And then the, the Renault five, right? That type of, you know, it's perfect, but you have to take care of the production capacity ramp issue, which Neil is still figuring out.

Tu Le: 

Everyone, that's what it's called.

So that was the two questions in the LinkedIn chat. So that's all I have, man.

Lei Xing: 

Yeah.

Same here.

Tu Le: 

Everyone, thank you for those that are able to make it, even though we did a last minute kind of pivot on the time. And we should be back next week at the same time. Hopefully, my Spartans have made it past the Sweet 16, and we're playing for the Final Four next week. I've started to pay a little bit of attention to...

Lei Xing: 

Thank you for accommodating.

Yeah.

Tu Le: 

to the tournament that started this morning. But anyways, one thing, there was a really good review for the Escalade IQ in the Detroit News. So that was good. It seems like GM is really kind of settling in to UX design. And they have

Lei Xing: 

I thought it, but...

Tu Le: 

Whereas Ford with the F-150 Lightning, they don't have a frunk. no, they do. The F-150 Lightning has a small frunk. But it's my IONIQ 5 that doesn't have a frunk. Like the Escalade IQ, you can fit two golf bags in the frunk. So they've kind of settled into the UX. It's a 9,000 pound car, though, everyone. And it's 202 kilowatt hour battery.

Lei Xing: 

Yeah, so there's

a bunch of...

Tu Le: 

$130,000

by the way.

Lei Xing: 

There's a bunch of Escalade IQs, similar sized EVs launching in the next weeks. So starting with the M9 yesterday, new M9, the Zecur 9X, the Denza N9, the Lincoln Co 900, the GAC HypeTech HL.

Tu Le: 

Yeah, so...

So the Chinese EV makers are going where before they would not ever dare to go. and this also means that we're gonna see a lot more.

Lei Xing: 

Bonkers

Yeah.

Tu Le: 

features that are going to be new and maybe groundbreaking because most Chinese EV makers haven't had this much interior space, interior real estate to work with.

Lei Xing: 

Richard

E. shows something where you can gesture and the door opens.

Tu Le: 

goodness. So Richard Yu is the head of the automotive division for Huawei, for those wondering.

Lei Xing: 

His nickname

is Big Mouth Yu in China.

you

Tu Le: 

Okay, so everyone, thanks for joining us for this early edition of China EVs and more. We will talk with you all next week. Good morning, good afternoon, and good evening.

Lei Xing: 

Like always, bye bye.