Episode #205 - Tariffs, Tariffs, Tariffs, March Sales, eVTOL Takes Off in China

In this episode, Tu and Lei discuss the latest developments in the electric vehicle (EV) sector, focusing on the impact of political decisions and trade tariffs on the industry. 

They analyze the sales performance of major players like BYD and Tesla, the challenges faced by NIO, and the implications of recent accidents involving intelligent driving technologies. 

The conversation also covers advancements in eVTOL technology and the significance of new charging solutions in the market.

Keywords:
China, EVs, tariffs, trade, NIO, BYD, Tesla, eVTOL, Xiaomi, market dynamics

Transcript

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Tu Le 

Welcome to 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 discuss today is based on our opinions and should not be taken as investment advice

Now, Lei, I don't think in the four years that we've been doing this that we'd have ever thought we'd start off with talking about politics and tariffs. 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. I'm confident that Lei and I are, to the most knowledgeable people,

in the world doing this. So help us get the word out about this show to others. My name is Tu Le 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. Lei thinking about tariffs, Lei, can you please introduce yourself?

Lei Xing 

a downer. day Lei. Yeah, good morning. This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode number 205. the, the, how do we, describe this? The U.S. throws a jab. China returns with the uppercut. Is that how it felt like?

34 % announced this morning, this tonight. then the reason we're talking about tariffs and politics because it's Trumponomics, right? Because Trump is office. So these are the things that we were expecting, but how serious it was, or it was gonna be, nobody knew until now. And that's where we began with.

Tu Le 

Yeah, but the...

It's wider and deeper than many people thought.

Lei Xing 

Any time before

and anytime before, even in the first turn.

and because the way China fought back immediately. It wasn't even a chess move. It was a punch. It was a direct punch back. especially on the auto side of it, we've seen some actions from Ford, from Stellantis, Ford announcing that employee pricing.

is kind of interesting. then Stellantis had to cut jobs, I think, at one of their plants. And then the tariffs, mean, with respect to... Anyways, Yeah. And put 10,000 % tariffs on China. And when it comes to the autos and EVs,

Tu Le 

Lei, that's the Stellantis announcement was likely going to happen anyways in my mind.

Lei Xing 

It wouldn't have mattered, would it? Because the US and the North American market is, I mean, the US market in particular is in the way back, back, back burner for now. Doesn't mean there's this talk going on, but, and as we've seen that the March sales numbers and more incentives coming out.

It's about domestic consumption, I guess.

Tu Le 

Well, it's reshoring.

Lei Xing 

Yeah, no, I'm talking about the Chinese economy and where auto's export are going, given this new backdrop.

Tu Le 

I think the important thing that I think many people are starting to realize is that we can't look at the trade deficit between the United States and China. We also need to back into what gets shipped from Mexico. A large portion of that is by proxy from Chinese suppliers and

Trump administration number one had encouraged this. Mexico has a new leader, but could they have anticipated that if we take all this foreign direct investment from Chinese companies, that the United States government may scrutinize this? I guess they could have, but this is the deal that Trump blew up.

put in place and then he blows up. And it includes computers as well. So it's not just focused on the automotive space. I don't know, the whole point is to get Canada and Mexico back to the table, I suppose, to try to.

close loopholes to really bolster where parts are coming from once they're bolted on to finished goods.

I don't know. There might not be companies that are able to move factories within the four year timeframe and things could change wildly after he leaves office.

Lei Xing 

That's exactly the point because the thinking of how well from Trump's point of view of how easy it is to bring manufacturing back. He thinks it's easy, but it's not. And so far even Tesla still I think sources like I don't know significant less so than the other automakers but significant parts from outside of the US even though they're the most American made.

So, and not only the seriousness of these tariffs but I'm sure there are to be tons of means coming out of how these numbers came about. The formula, right? Have you heard of the herd in McDonald's Island? I have not. I heard it was occupied by penguins only.

Tu Le 

Mm-mm.

Hey.

Lei Xing 

So those are the means and the formula of calculating the percentages from the trade deficit divided by the value of the imports coming into the US from those countries. And then take 50 % off that. That's the part that's...

Tu Le 

But...

Lei Xing 

Yeah.

Tu Le 

It's

the movie, everything all at one strategy.

Lei Xing 

Yeah

Tu Le 

So we are the beneficiaries of free trade. lot of things that we buy here Lei traditionally have been affordable.

Lei Xing 

You know what? think I'm going to stock up on rice today. We eat so much rice. We love some of the rice. There's a brand that come out of Japan that we usually buy. So we might have to stock up on rice.

Tu Le 

Yeah, I didn't even think about that, to be honest with you.

my goodness. Yeah, actually, you're right. There was an article or a post this week about people getting upset at H-Mart because of, do you have an H-Mart near you? Okay.

Lei Xing 

Yeah.

Yes, yes, yes, not near me,

but around the Boston area.

Tu Le 

Yeah, so H Mart is a Korean supermarket. And for those of you that are from California or know California, there's a ranch 99 chain of supermarkets now. So little did I know this Lei but I was told we were saying it wrong the whole time. So everybody I know in California calls it ranch 99. It's actually called 99 ranch. So, but we still call it ranch 99.

Lei Xing 

Yeah.

Okay.

well, we know it's got 99 on it,

But I mean, yeah, we, I mean, we're going off script here because we should be talking about China EVs, but.

Tu Le 

But here's the important thing.

So the huge trade deficit between China and the United States, okay. And you had said earlier, China wants to transfer or evolve from being the world's manufacturer to domestically consuming a large portion of what it manufactures.

They've been promising that for a long time. It still hasn't happened. so with the United States slapping over 100 % tariffs on many goods, mostly automotive parts, but the pressure to find other markets for that capacity is going to be tremendous. And this is why there's fear of this global trade war.

because I think these smaller countries, these other countries that aren't in the EU, they're concerned about getting products dumped into their markets.

Lei Xing 

I'll give you an example of how we our family will be personally affected is that my wife buys these on this platform group buying and then all the packages shipped from China there's actually pretty cheap cheap shipped to one person's house and then people go over there to pick it up now with that new rule on the eight hundred dollar and below packages right is also applying

the tariffs that that cost goes up for us so You know, so yeah, everybody is affected one way or another And and the EVs right you talk about 100 % EVs, right? You add on all those additional 20 % 34 % the 25 % the 25 % of Venezuela oil Right. It's over 200 % on Chinese

And who hurts the most again we said those last episode now one of the companies BMW not only are they adding affected by the new import tariffs from European Union but also the new 25 % autos tariff and then exporting from the US to China you add the

10 % of China added plus this 34 % announced today.

Tu Le 

I haven't done too

much research, but I feel that the Chinese tariffs are largely symbolic because I don't know. Was there a list of things that we export to China? I don't think there's much.

Lei Xing 

So,

Yeah, it's difficult to at a loss for words, I mean, how to.

Tu Le 

One important note.

You know, one, I was reading an article this morning, kind of playing catch up. I've been traveling the last couple of days, but the article stated that the United States effectively put this global trade system in place and now it wants to blow it up. So when, in totality, when I think about it,

Yeah, we should reassure some things strategically from an economic standpoint, but also from a national security standpoint for sure, without question. And I think that...

My hope is that he truly feels that this is the best way forward and he's not along the way trying to...

pay back certain countries, certain people, certain leaders. I hope that the administration is misguided as many people think that the trade policies they just launched are, my only hope is that he's really doing this for the betterment of the country.

Lei Xing 

Yeah, well.

Which is not, at this point, no. Well, he promised when he was running, right? That's not, has not happened, at least for the short term. And just listening to some of his cabinet members talking about this math and it's, yeah, I mean, it doesn't make sense. We lost.

Some of it we've lost common sense, I think.

Tu Le 

So how about March sales?

Lei Xing 

Well, how about it? mean, March was supposed to go up compared to February and everybody did. Just a matter of who did more or less. And we're kind of seeing the separation of groups of where they play along the, if we see the rankings, right, the list. And BYD is, they're just up all the way over there. And then we have the next group.

Tu Le 

Yep.

Lei Xing 

We have Tesla, we have to separate Tesla on its own because of what it has been able to achieve. I nearly 80,000 in March was good in my book. I know a lot of reports saying that they were down. But remember, given that they had this refresh Model Y, and really only one model market for Tesla, and they're in this bubble.

of protection from the Elon's distraction outside of China so far and give it in competition. So still resilient, I'm telling you. And then NIO is in the news quite a lot recently. And then we have a bunch of these, I think maybe we call them the Fab Five, I can remember.

Xpeng Xiaomi Li Auto, Leap Motor, and maybe we add GAC Ion. These are the ones that are doing 30,000 roughly more or less. Well, Zeekr no, not yet. I think Zeekr, I think they were like 15,000 in March. And then we have the three state, not state-owned, but the Geely, Chery and

Tu Le 

Zeekr

Zeekr no?

Okay.

Lei Xing 

Changan, they're kind of a rival.

Tu Le 

It's important to, when you make that top five Lei talk about GAC ION, I would venture to guess that much of their sales go to Fleet and GAC ION and Leap Motor are going to be the lowest on the pricing totem pole. XPeng is probably next and then Li Auto is going to be on the high side.

Lei Xing 

and then the rest, right?

Tu Le 

but...

Lei Xing 

Yeah.

And then NIO at the top. So I think we're seeing some separation and of where these players rank in terms of how consistent they're doing on a monthly basis. And awfully a high hill to climb, if not impossible for NIO because they're maintaining their goal to double sales.

Tu Le 

Right.

Lei Xing 

and breakeven in Q4. This is reiterated by Li Bin recently. While he's putting in that cost reduction measure in place. So I've just saw this morning that they're probably cutting jobs. Again, they've just changed CEOs at the Armo brand. I mean, what do think? I thought he was

Tu Le 

Yep.

Lei Xing 

kind of scapegoated in a way. Because he was there for Alan and I, he was there for four years. He's an outsider.

I mean, the thing that didn't end was promising 20,000 in March and not achieving it. So if it was me, I'd probably resign too. It's almost like, yeah.

Tu Le 

Well, you and I thought that

20,000 was achievable, so.

Lei Xing 

I didn't think it was achievable. No, uh, 10,000. mean, it did 10,000, which they did was in December or, uh, I didn't think 20,000 given, given their kind of the momentum and

Tu Le 

No? Okay.

Lei Xing 

some of the factors that he mentioned before of what they face. One of the factors is that this brand was not from a sales marketing and branding perspective and the retail footprint did not reach the customer as much as they wanted. And they had some issues with the battery swapping availability. it's also very...

Tu Le 

So Firefly is such an important

Lei Xing 

Yeah.

Tu Le 

launch for them to show that they've learned from all these missteps.

I just want NIO to do well.

Man.

Lei Xing 

We will.

Tu Le 

I, Bin is a likable CEO and I like their cars.

And but it is.

Lei Xing 

And they

just put out this five years of free battery swapping, five years zero interest financing, all the incentives that are placed in the market now, scrap trade in.

Tu Le 

It should be also noted, Lei, that you can buy a Juniper in China for 0 % financing for three years now. So these are these non-price cut price cuts. And Juniper, I was wondering how long Juniper could sit out there without any

Lei Xing 

All

Three years, right? Yeah.

Tu Le 

incentive and we found out it was a month.

Lei Xing 

Well, come at the end of April and May, that'll be extended. And come June, July.

Tu Le 

without question. If they see if it's

successful, it'll be extended for sure.

Lei Xing 

And if not, just put two more years onto it. Five years zero financing. What the heck? Without cutting prices.

Tu Le 

So that's free money.

And, but I also feel that this is a preemptive strike because they know the U7 is coming. So they want to pull in as many sales as they can before the U7 comes, before all these new products come at the tail end of this year.

Lei Xing 

and

Mm-hmm and then XPeng I think stood out because they kept on doing the 30,000 per month for five months More models coming out

Tu Le 

Which, which we,

we, we applaud them for that, but 30,000 is the floor they should be selling. It's not this awesome number. It, it basically says we are still to be reckoned with. Now, if in December, you and I have this conversation, we revisit it and say,

Lei Xing 

Yeah. Yeah.

Tu Le 

XY and Z companies are on the rope. Guess who's going to get some of those sales from those companies that are losing steam? It's going to be XPeng NIO with Onvo maybe they can right the ship in the next three or four months because what really matters is that Onvo corrects or course corrects by September.

Lei Xing 

Yeah, and now they have a charging or a swapping guy or a power guy, whatever you want to call him, running the show. I hope that works out.

Tu Le 

You

So here's

a couple things that I wanted to kind of bring up. So first of all, Taylor, good friend of ours, good friend of the show, he exed.

Let this sink in. BYD sold more cars in one month than Tesla sold in a quarter. This is the first quarter, so if they can continue to do that in Q2, Q3, very impressive. But the fear is, you know, I quote tweeted that the fear is warranted because it is. And again, this has not much to do with politics.

Lei Xing 

Right. Right, right.

I think they will.

Tu Le 

taken in totality BYD outselling them in a month, 0 % financing for Juniper, more products coming. And on top of that in LA, will there be backlash because Tesla is an American company in China.

Lei Xing 

That's the thing we're watching. But again, if we do the apples to apples comparison, which is not because you have one model that's doing everything versus, let's say, a BYD that covers possibly every segment that you can imagine with two dozen, three dozen models and the volumes that are three, four X per month in Tesla.

Tu Le 

With BYD, it allows you to hide weakness much easier than...

Lei Xing 

and I'm home.

Tu Le 

all eyes on one product to your point. Because the Model Y, if it sneezes, it's going to be very well scrutinized. I've been quoted in at least a couple of articles about how Tesla's doing. it a sustained challenge to the brand? So, man.

Lei Xing 

Yeah.

Tu Le 

Tesla is not a growth company. I don't see them growing in vehicle sales. I don't see them growing in AI. I don't see them growing in robot. They don't have a robo taxi. So if we're still betting on potential, does the potential now get cut in half? Because that's how we should look at it because the share price is down significantly.

Lei Xing 

It's.

Tu Le 

If they continue to struggle in China and FSD doesn't have a very high attach rate to the vehicles that they do sell in China, is that a failure? how many, know, Adam Jonas, basically he wrote a thing and he was like, this is part of their transformation to an AI company. He's like, okay. Goodness. I don't get it.

Lei Xing 

One data, Model Y was the top selling model in March.

So if that's consolation, yeah.

Tu Le 

Well, that's consistent because it was the number

one car sold, vehicle sold in 2024.

Lei Xing 

We have so

many Model Y killers in China, but not one Model Y killer. That's the thing. That's why we say, yeah, I agree that the problems they're facing, that the headwinds is huge, but given that, that they'll still be able to do this is...

Tu Le 

The closest thing will be the U7.

Lei Xing 

And speaking of the U7, Xiaomi is facing their biggest crisis yet ahead of this launch because of this tragic accident that happened last weekend, which has been, it's not an industry news anymore. It's a, what do call it?

Tu Le 

Yeah, it's quite tragic actually.

Lei Xing 

It's a societal news. Social media, yeah, social media. Because it's got all of the ingredients for traffic. You got Lei Jun you got Xiaomi, you got NOA, you got AEB, you got car catching on fire. It's an EV. You got three young ladies that were driving a car to take a test. Some kind of a test.

Tu Le 

It's a social media thing.

You have a death?

Lei Xing 

and they perished in a, I don't know if, in an instant or how they were killed is whether it was on impact or whether it was because they couldn't get out of the car and got burned inside. You know the thing that Lei Jun put out, right? He put out a statement and he did say that he was very, it was very sad and

But in that statement, he did not say sorry. He did not say we're sorry. See, that's a kind of a PR tactic because if you do that, then you would admit to you had, right, that's your fault. So he just said, you know, before any investigation results that come out, he can't really say that much more.

Tu Le 

Fault.

Lei Xing 

But I think the other thing that I believe that this accident will be kind of a turning point is because of this bloodbath not only on the price war but the bloodbath on who has the best smart driving capabilities in China and smart driving for all which the

Tu Le 

I actually

Lei Xing 

the younger drivers today, are they falling into false pretence that these smart driving capabilities are much better than they actually are? So these are all the questions that are, it's not a Xiaomi problem, it may be an industry problem.

Tu Le 

I

actually think it's even more basic than that, Lei, because of...

the severity of the tragic accident, you people died. Okay. So mistakes can happen. the safety of the vehicle or to your point, it's not clear. And I hope, and this is a weird thing to say. I hope that they weren't trapped in the car. I hope that because that means that they were alive and in a burning car. That's, that's nuts.

Lei Xing 

That remains

a question. You know, mystery.

Tu Le 

And so

here, this is, this is not a Chinese EV thing. I think the specific part is the intelligent driving, but on the EV side, if it, if the battery catches fire, are you able to quickly get out? These should be number one priority for every EV maker because that is a serious challenge, serious issue.

Lei Xing 

And we may never find out.

Tu Le 

And then the second part is the intelligent driving being so widely offered now in China, now BYD, basically making it available to everyone.

in China. wow, is, there needs to be more

protocol from a software standpoint to maybe be more conservative because here's, you know, and the other thing too, and this has less, this has nothing to do with intelligent driving is that the Su 7 can go zero to 60 in like four seconds, five seconds. People aren't used to that. And if they do have a vehicle historically or traditionally, and that could go really fast, it would take a second when you mashed on the pedal.

Now it's instant. So there's going to be more accidents because there's going to be less experienced drivers that can handle that type of torque, handle that type of acceleration. So what I'm hoping for is that these Chinese EV makers are doing the right thing from an R &D and from an engineering standpoint. But then the foreign automakers are learning and saying,

We need to put these in place in Europe and North America so that we don't have these types of challenges or tragedies, okay?

Lei Xing 

And it's also about educating, again, from the OEM perspective, educating the end consumers, the owners, about however you want to term this L2, the number of pluses you add after L2, at the end of the day, the driver maintains responsibility at all times. That's the definition of L2. Now, when you go to L3, well, right, Mercedes says they...

will be responsible under that condition if an accident happens. They're the only ones so far, think. So it's about these owners abusing the system. We see that kind of in both China and the US with FSD of people sleeping behind the wheels. And we see those videos come up. it's, so.

Tu Le 

There's clear abuse in the United States. Clear abuse.

Lei Xing 

Yeah, so that's why I think it could be a turning point of how because it was a Xiaomi because I mean the weight of Xiaomi that the name is so much more than I think besides Tesla or BYD is so much more than other brands.

Tu Le 

And here's

something too late. Let's say within the next 36 months, three years, intelligent, low-level, two plus driving becomes pretty ubiquitous. So the driver monitoring systems need to be upgraded, generally speaking. Whether you're looking at the screen, whether you're holding onto the steering wheel, there needs to be, I don't know. I'm not a designer. I don't know what that balance, that fine line is.

is, you know, because I don't want it to be too cumbersome. But, you know, when does the government take some responsibility and say, hey, we allowed this technology to really become ubiquitous, but we need to put more regulation around?

Lei Xing 

which I'm all for it.

Yeah. And we found out personally, ourselves last year of how it helps with driving when we did the trip, right? I mean, we use that on what 90 % of the time on highways. But we were paying attention. Yeah, also, but we were paying attention.

Tu Le 

Yeah!

probably more than 90%, but the only times we weren't using it was in the city. So.

And there were two of us.

Lei Xing 

Yeah, so, and I think sometimes maybe the younger drivers, I may be.

thinking that they in terms of abusing the system that they just think that it works better than, you know, paying attention.

Tu Le 

Well, and you, I

wouldn't call it abuse the system, I would call it too much trust. And because I don't think these, the people in the Xiaomi were like, oh man, you know, I don't need to look at anything. They were just probably overly trustworthy of the system, unfortunately.

Lei Xing 

Too much trust.

Tu Le 

The one thing that confused me and this is also because I can't read Chinese obviously very well is when we were driving together, I wasn't sure when I could use it or when I couldn't use it. It told me or told us when we couldn't use it. Now, do we need to educate ourselves and say this district in Shenzhen or this district in Changsha, we can't use it, you know, because

Lei Xing 

Well done.

Tu Le 

You and I just jumped in the car, turned it on and recorded ourselves in and or just kind of made observations. Okay.

Lei Xing 

Yeah, well,

I mean, the system back then, think it was highway, NGP, was available on all pretty much all the expressways at that time. So it just turned on, it just worked. If it doesn't work, that means the system recognizes it's not in that ODD, which, and now everybody's talking about pushing all this driving parking lot to parking lot functionality. The minute you sit in,

Tu Le 

Yes.

Which means point to point.

Lei Xing 

It's hard to know.

Yeah, it works, right? So, I mean, that is only a small part of the bloodbath, but there's bloodbath on other features and functionalities.

Tu Le 

When you say parking lot to parking lot, you're basically saying what FSD currently does in the United States.

Lei Xing 

Yeah,

yeah, yeah. And Xiaomi was on this momentum. They're probably going to do 30,000 in April. They should be able to do 30,000 in April.

But I don't know. mean, this is actually the sad thing is this is not the first time that it happened. It's happened to, it's happened to NIO before it's happened to Aito. It's happened to, I'm not Tesla many times. It's happen again.

Tu Le 

Guess.

It will happen. It will happen. 25 million cars sold

every year in China. It's going to happen.

Lei Xing 

And the other thing is accidents happen all the time, but when you have those key words that I described before, it makes it into more significant national news, if not international news. And then, right, what did the driver do? How much responsibility did the driver have?

No.

Tu Le 

And this

is where Lei Jun really needs to be careful because you're kicking dirt effectively, potentially on somebody's grave by blaming them. that Chinese social media, Chinese consumers will not like that.

Lei Xing 

Yeah.

No.

Tu Le 

So let's switch gears a little bit. Ehang got commercial license to do unmanned eVTOL in Guangdong.

What do you feel is the significance globally of that?

Lei Xing 

I think the commercialization given what He Xiaopeng has. Yeah.

Tu Le 

Actually, let me stop you there, Lei.

What is the significance and are you ready to try it out yourself?

Lei Xing 

I'm not sure if I'm ready

to try it out myself. Maybe someone else in it with me, I try it, but not alone.

Tu Le 

Is it yi ge ren or is it two people?

Lei Xing 

I don't know.

Tu Le 

So EVTOL is electric vertical takeoff and landing. And Ehang is one of the largest companies. based in southern China where weather is either rainy or hot. It's very predictable. And just like autonomous vehicles, although EVTOLs are much simpler, think of an unmanned drone. Effectively, there's light out of their sensors, but...

You know, with autonomous vehicles, are so many other things going on on the road in the air.

The avoidance of hitting objects is much easier. That said, you're in the air. So with these particular EV TOLS, they go up as high as 2,000 feet. And they've received commercial licenses for paid services now.

Lei Xing 

Sure,

sure. So the caveat is how far they travel, how far they can travel, how far they are allowed to travel. understanding given what, yeah, my understanding is given what He Xiaopeng has shared with their own work is the distance is not that great. Maybe 20 to 30 kilometers at most. At the beginning, maybe in the southern, let's say Guangdong, Guangzhou, Shenzhen areas that always have these things

Tu Le 

Where they can travel.

Lei Xing 

newer things. I saw the drone delivery of Meituan, right? And those things happen first in those regions on a demo or trial basis before they're actually expanded to much more greater coverage and greater distance. yeah, I mean, there's some caveat, but that's where China is leading in terms of applications and commercialization.

Tu Le 

But like, here's the thing. I think people don't understand how much control.

over from, from a aviation standpoint, the Chinese military controls. And so when people think or read that there's a commercial license approval, they think, okay, China's going to have all these Evie tall flying all over the place. It's very, very limited. What a number that I'd heard 80%, 90%.

or 80 to 90 percent, Chinese military controls that airspace. And you know this, most people that travel frequently from Hong Kong, Shanghai, or Beijing know this. The on-time departure rates in those three, and it's more to Shanghai and Beijing than Hong Kong, but the departure

on time departure is like 50%. Oftentimes, you're sitting in Beijing airport and you're not taking off on time.

Lei Xing 

Yeah, mean,

yeah, that was the case when we were there.

Tu Le 

one out of two times,

you're going to be delayed some reason and they won't tell you. They don't tell you anything. So I almost feel for these Chinese eVTOL companies to be successful, they need to immediately go international.

Like Middle East. I'm sorry.

Lei Xing 

No, I was saying He Xiaopeng at the China EV 100 forum, talked about, he talked nothing but their EV talk. And he was saying that no one single airline company or airplane company produce more than thousand units per year. And he wants to do that.

Tu Le 

Right.

But so the Middle East seems pretty open. again, the Middle East is a bunch of deserts, a couple major cities, a bunch of desert. So that's where the battery range might be the limiting factor. Whereas if you're in Guangdong, I mean, there's huge areas of countryside. I don't know, if you're in city center, you're probably not going to see any

major flights for quite some time or maybe ever.

Lei Xing 

Yeah, so was saying,

you know, the things that are commercialized first, how much you pay, maybe a couple of thousand RMB to go one or two kilometers.

Tu Le 

The other thing too, is that each province, each major city might have a national champion or a local champion. So EHang is not going to be, you're not going to see it in Beijing. You're not going to see it in Shanghai and all these other cities. It's going to be like robo taxis. The local, yeah.

Lei Xing 

Every industry is like that. You talk about robotics,

you talk about EVs, you talk about taxis. Yeah, it's the same playbook.

Tu Le 

So,

but symbolically, it's important because it gives the Chinese government mianzi, or face, that they're able to say we're the first to offer this. But, you know, it's a huge step. It's more symbolic than anything else. And I think you're gonna start to see people on social media in the next few months post videos, but...

Lei Xing 

Mm-hmm. Sure. Sure.

Tu Le 

Yeah, pretty cool. The last thing I wanted to talk about, and get your thoughts on are...

We went from BYD launching a one megawatt charger to now having three san ge And Huawei's is more commercial, it sounds like, for commercial trucks. So we don't ever talk about it, so our listeners might not know. But swapping is also really gaining popularity among commercial trucking.

Lei Xing 

Three, three.

Tu Le 

And so Huawei's megawatt charger is up to 1.44 megawatts. Zeekr has one that's 1.2 megawatts. So whether, and this is what I'm not sure of. I don't know if you've read anything. Did BYD's announcement force Zeekers and Huawei's to announce early?

Lei Xing 

Yep.

Tu Le 

or was it always going to be the case? But in the span of two or three weeks, we basically increased by 300%, 200%.

Lei Xing 

That's the blood bath I was talking about, the smart driving blood bath and then the fast flash charger blood bath. Always someone that comes out with, we're the greatest and then there's a bunch of others coming out and say, oh, we're even greater. It's always gonna be like that.

Tu Le 

Well, and

this is the challenge with technology for the Chinese government because the technology always leads the regulatory environment or the policies that drive how things can be used, where they can be used, how often, things like that. because when we're talking megawatt chargers, we're talking a lot of BTUs. It's got to be super hot.

when that level of and you know with BYD it was clear we're going to have an ESS or a battery or an energy storage system connected to the megawatt charger. I'm not as clear on the Huawei system although they did say that they're going to unveil it in two weeks so which is right around the Shanghai Auto Show. But yeah man.

I that's all I have today man just it's probably going to take a little bit of time to process on the tariffs but

The Chinese EVs, let me summarize and you add your color to this. It doesn't really affect the Chinese electric vehicles that much from a finished goods standpoint. But one thing I did also want to mention is that it seems like the EU is now back at the table talking about tariffs with the Chinese.

Lei Xing 

Yeah, we were talking about that, right? Yeah,

the continued talk of possible some kind of resolution. And that's in sharp contrast to this punch is thrown between US and China, right?

Tu Le 

And so the.

I, the, the, the last thing that China needs right now is, and this is where they have to, I think tiptoe delicately is to look like they're flooding other markets with, with product as a substitute for the U S market, because that's going to create and, and just

initiate alarm bells all over the world. And I think there is going to be a potential for a global trade war.

because I think there's going to be some countries that want to protect certain industries. There's going to be domestic industries is what I mean, where they still feel that it employs a lot of people. so.

We always knew there was this loophole, okay? Because you and I talked about it two or three years ago where Chinese suppliers were entering Mexico, investing in Mexico. So we talked about this.

Lei Xing 

And then the production moving, some of the production, lots of production moving from China to Southeast Asia, Vietnam, right? There's a lot to talk about Vietnam getting how much? 36 % were, I mean, all the right, the Nike companies like Nike and Apparel, Cambodia, Vietnam, Laos, where the production moving over there. Now they're getting hit.

Tu Le 

46%.

So they pointed to three countries. They pointed to Russia getting zero tariffs, Iran getting very little tariffs, and one other country. forget.

Lei Xing 

Good.

And

then Mexico and Canada, they're not included in this reciprocal tariffs. right? Sheinbaum's like, it's kind of a win for us. And there's still that USMCA rule that kind of gives some relief if you meet those rules.

Tu Le 

Yeah.

You

Yes.

Lei Xing 

for parts.

Tu Le 

So maybe we anticipate that there will be a revised USMCA by the end of this year, maybe. don't, cause, cause if these tariffs are in place.

for permanently than it makes for a painful next few years for us.

Lei Xing 

Yeah, and I think the China's 34 retaliatory tariff. It's quite a statement. I think from a point of view of what kind of stance China takes to kind of to respond to the US to Trump. And we'll go from there. The stocks yesterday, I think, lost like three trillion in value today.

It's coming back up a little bit, man.

Tu Le 

Yeah, I-

Anyways, there's a lot of articles. Some of them are pretty interesting. Lei one of them. I highlighted in the newsletter this week about a woman who runs a factory with a brother and John Sue, think who had befriended a customer in Arizona who was selling teddy bears. And you, you worry about the big companies, but you also

Lei Xing 

Yeah, stories.

Tu Le 

clearly worry about these mom and pops that are just doing everything they can to make a living.

Lei Xing 

workshops.

Tu Le 

You know, we got addicted to really cheap stuff. I will always remember my foreign friends that I knew in Beijing when they would come to New York City or when they would come to California, they would always go to the outlet malls. You know, I think there's one in Yonkers just outside of New York City. And they were like, man, stuff is so cheap.

in the United States. To me and you, it's just what things cost.

Lei Xing 

Yeah, I'm kind of glad that I bought this Hyundai three years ago. I didn't have to pay more and the hybrid is great. And it's an imported model. Now that I have it, I enjoy it. I don't have to worry about buying a car, which a lot of people worry about in the US right now. They can't pay for it. You worry. The cost of financing is prohibitively high.

Tu Le 

I have to worry about.

Lei Xing 

Even for Tesla, even they have some kind of zero financing. Maybe that ended at the end of March, but to lease or to finance a vehicle in the US right now, it's just crazy.

Tu Le 

The of money is very high.

Lei Xing 

Whereas in China, it's right as we know.

Tu Le 

They,

so a lot of economists and analysts say that China is going to offer more stimulus to encourage domestic consumption, but it almost feels like they're painted into a corner a little bit because

Trade between the United States is going to get really, really dicey. And because of the tariffs the United States or we put on other countries, their ability to buy things from China decreases. And so it becomes this vicious cycle, unfortunately. Anyways, I'm not an economist. I just am very interested in all these things.

Lei Xing 

Yeah, I mean, my own perspective

is putting in the consumer hand on, right? So also.

Tu Le 

Yeah, yeah. And maybe you and I know a little bit more than the average viewer or listener about how China might retaliate on certain things. but anyways, hey, I don't have anything else. no, I do. I was in Ann Arbor last week. I took my boys or my wife and I took the boys to watch University of Michigan lacrosse game.

went had lunch downtown right before the game. Huge Tesla protest downtown.

Lei Xing 

Same here. I shared a picture. Yeah. Yeah, also the one I shared with us at Fire and Musk was just next town, town next to us. Yeah.

Tu Le 

The newsletter picture, that was downtown Ann Arbor.

So it is definitely not

this media-driven theme. It's really happening. It's coordinated too.

Lei Xing 

It is.

Yeah, it's close to us.

Tu Le 

And so I could foresee a scenario where there might be one or two Chinese people on social media say, hey, let's not buy Teslas anymore in China.

Seriously, right? You could see that, right?

Lei Xing 

It could happen to anybody. Look at what happened to Mega.

Tu Le 

Yeah, so...

Lei Xing 

But those type of things, I happened a year ago at this time.

Tu Le 

That was like corporate espionage kind of driven, think.

that's such a cool car. But anyways, hey, cool, man. I'll talk to you on DMs. All right. And it's starting to get a little nicer outside. So.

Lei Xing 

Yep.

Yeah, definitely. 60s, finally. Yep. Back in the, well, we call it the 23 was when Shanghai shocked the world.

Tu Le 

And we're going to see each other in a couple of weeks back in the Hai the Hu!

Lei Xing 

Bye, guys. Bye-bye.