CEM MAX AutoShanghai2025 Roundtable - Part #1

Tu and Lei invite Jill Shen, Ethan Robertson and Ed White - three China locals to talk ALL THINGS China EV Inc and, boy did they have a lot to say. So much so that we needed to divide this episode into two parts. This is Part #1. 

This conversation delves into the recent Shanghai Auto Show, highlighting the evolving landscape of the Chinese electric vehicle (EV) market. The discussion covers regulatory changes impacting safety standards, shifts in marketing focus from technology to safety, and the competitive dynamics between legacy automakers and emerging brands. Key players like Tesla and BYD are analyzed in terms of their market strategies and future challenges, with insights into the global expansion of Chinese EV brands and the implications of geopolitical factors on their growth.

Keywords
China, EVs, Shanghai Auto Show, regulatory changes, safety, Tesla, BYD, automotive industry, electric vehicles, market trends

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Transcript

Tu Le

Welcome to a special edition of China EVs and More. Thank you to NIO for letting us borrow a NIO house. ‚Åì We're in the Jing'an district NIO house right next to one of the largest Starbucks in the world. And this is a very special Shanghai Auto Show edition. And because it's a special edition, I've invited or Lei and I have invited some special guests. First, Jill Shen.

Ethan Robertson ‚Åì Ed White. And of course, all know Lei I'm going to give each of them an opportunity to introduce themselves. So Jill can you start?

Jill Shen 

OK, hi, I'm Jill. I write stuff about ‚Åì EVs and autonomous vehicles at TechNode and I'm based in Shanghai.

Ethan Robertson

Hi, I'm Ethan Robertson. I'm the host of the Wheels Boy channel. We are the largest channel on YouTube covering Chinese vehicles, both electric vehicles and internal combustion engine vehicles, but it's China. So mostly we cover EVs.

Speaker 1 

Yeah, hi, Ed White. I'm the journalist with the Financial Times based in Shanghai.

Lei Xing 

And my name is Lei. I'm the co-host of the Chinese EVs and more podcast with my partner in crime too and ‚Åì as previously the chief editor of China Auto morning review covering each Chinese auto market for more than 20 years and this was my I think 12th or 13th Shanghai Auto Show

Ethan Robertson

Wow. ‚Åì

Tu Le

It's probably my fourth or fifth China Auto Show, fifth or sixth at least. So ‚Åì before we dive right in, one person was actually unable to attend the Shanghai Auto Show at this table. So I'm going to pass it off to Ed and let him ask the first question or create the first discussion topic. So I take it over, please.

Speaker 1 

Okay,

well yeah, slightly irrelevant me being here, but I'll do my best to partake, given that I wasn't at the show. Anyway, I mean, for me not being here, it's been interesting to have a look back at the coverage. I think going into the auto show, a lot of the marketing and a lot of the kind of hype in the industry was around L2, L3 kind of technologies and what was going to be available. And then you had this.

regulatory announcement and all the industry heads summoned in Beijing just beforehand saying, know, Beijing, the officials there saying, we want you guys to tone this all down. So I'm kind of keen to hear from you guys how that announcement then impacted what you then saw from the companies at the auto show.

Tu Le

As a veteran of the automotive journalism space in China, what were your biggest takeaways from being at the show and covering it over the last couple of weeks?

Jill Shen 

My thoughts was pretty much relevant to what Ed is thinking about because what surprised me pretty much is that most automakers in China, they're no longer saying things like we are the first tier players in smart driving. And this makes XPeng even saying things like, oh, we are the...

zero tier player in smart driving. So we no longer hear stuff like that during, ‚Åì at this year's Auto Shanghai. And almost every company is trying to present things like we are really paying attention, spending more efforts on safety. So companies like XPeng and probably Huawei, which

Tu Le

you

Jill Shen 

consistently say that it does not make cars never. But ‚Åì Huawei also ‚Åì announced with 11 other Chinese automakers saying that they are launching some kind of like training camps to drivers to teach them how to use the ADAS software.

Ethan Robertson

Yeah, I think what you're saying is really interesting. Should we maybe offer some context for those listening? I think you guys have discussed it on the podcast before, but what is it we're talking about when it comes to the changes in the regulatory space? Because we had the very highly publicized incident where a three young female college students were driving a Xiaomi SU7 down the highway, allegedly from what we understand the driver assistance was activated. There was an obstacle. The system did not react in time, nor did the driver. There was an accident.

Unfortunately, the three drivers died when the car caught fire. ‚Åì And so as a result, right, what were the main regulatory changes? I know that we had more ‚Åì a higher emphasis from the from the government wanting to be placed on driver monitoring systems, right? So basically making it harder for people to abuse the systems, something if you watch my videos, you will know that I'm very strongly in favor of. have always said that so many of these systems are way too lax. The amount of time you can take your eyes off the road.

or hands off the wheel is way, way, way too long and almost all of them. ‚Åì We also had changes right where there was the no more automatic valet parking. So any system in which you don't have to be in the car in order for it to drive, that's no longer allowed, right? So ADP is out. They were no longer allowed to use the, ‚Åì without the consent of drivers use the big data from the cars and from their fleets.

Tu Le

And really quickly, the reason these things are important, because prior to the accident, there was a lot of social media videos of people getting out of their car and parking itself. And I think that just became kind of normalized. So please continue.

Ethan Robertson

Yes, but yeah, exactly. It became a thing that people kind of were frankly more and more expecting for manufacturers. And as someone who attends a whole lot of test drive events, it's something that, you know, it's something that they talk about a lot in their in their marketing materials, just one of the aspects of the of the ‚Åì driver assistance systems that they sell. So with that context, I want to support what Jill was saying. My impression of the show was that there was a whole lot less of an emphasis on the driver assistance.

on advanced driver assistance features. know, previous shows you would have had a lot more, I feel like, announcements saying like, touting the driver assistance, talking about how powerful it is and how it's the best and the leading one and everything and everybody TOPs you know what I mean? You know, the power of the LiDAR units and everything. And again, now they are going with the direction, you know, they're going with the wind here and they're saying, it's all about safety. Our systems are the most

Tu Le

TOPs there is.

Ethan Robertson

the safest out of all of them.

Tu Le

And we know that the China consumer believes that safety and connectivity are two of the most important features of a vehicle. And now the Chinese government is really leaning into the safety part of it because I think from a marketing standpoint, it did get a little bit lax. But Ed, it's got to be pretty dizzying for you to keep up with the number of brands that have launched intelligent driving. mean, so.

In the time span that you've been in Shanghai, you've been covering autos in Asia for quite some time. How quickly has this proliferated into one or two players and then into multiples and how fast has the progression been?

Speaker 1 

Yeah, I mean, my time in Asia, I've been in Taipei and Taiwan and Seoul and South Korea and then now more recently in Shanghai. And so I've covered a lot of different industries for the FT, not just cars. And I guess coming into this more recently than all of you guys, I think it's quite interesting that

You guys are in the weeds, right? Lots of incremental changes, like all the little details. It's so cool. I rely on you guys a lot in terms of being able to follow the industry. But at a really broad level, what I think is amazing is that the words like disruption get thrown around a lot. But actually, it's actually quite rare to see an industry in the middle of change like this. When I started covering China autos a few years ago, when things like these companies face

legacy companies face like an existential crisis. And our editors would go, you know, is that the right word to use? yeah, exactly. But it turns out that actually this is the right way to think about this industry that is a huge amount of change. So in terms of, yeah, the number of brands that you're asking about specifically, I mean, I don't know, like is brand even the right word to use? Is model the right word to use anymore? Like, you know, look at we're in NIO house now. So look at Onvo or something like that.

Tu Le

They thought it was hyperbole.

Ethan Robertson

Yeah.

Speaker 1 

You know, do we think that this is going to be a brand that's going to be around for 50 years or is this more going to be something you look back in 10 years and go, well, that was a really cool, successful part of the NIO story for a few years where they really nailed a niche kind of part of the industry that was an opportunity. But maybe it's not ‚Åì a long lasting brand. don't know. I'm just like no criticism of NIO. I'm just saying that maybe some of these words are a little bit more malleable and that's part of the industry changing.

Tu Le

And I want you all to also feel free to ask questions and make comments. So, Lei what were your thoughts on the show?

Lei Xing 

I think back to the first question about the backdrop, safety, and also the announcement of new battery requirements. No explosion, no fire within a two-hour period, right? I don't know whether that's achievable, but I think two key words I saw was, first of all, safety in all of the press conferences. And second of all, the ‚Åì emphasis on the word

Assisted. I want to emphasize that. And ‚Åì stories of these marketing teams having to reword the press conferences the night before. PowerPoints, just to put the assisted on the PowerPoint. I think that was kind of coming back down to earth ‚Åì this year, ‚Åì as everybody talked about.

So that was one huge backdrop in the future of this year's Auto Show. And then about the brands, mean, this, of NIO

Tu Le

There's really tons of zombie brats. We probably won't say out loud, but they aren't going really laugh.

Lei Xing 

This is

the fifth year that NIO has participated in the Shanghai Auto Show. And now they're finally a three brand group. At the same time, we're seeing the demise of let's say companies like HiPhi.

Speaker 1 

Although we

Tu Le

see a bunch of WM's on the road yesterday.

Lei Xing 

‚Åì you're never around. that's what we're seeing, ‚Åì right? And none of these, we said this on the show, none of these startups are out of the woods. ‚Åì Kind of going back to your observation, ‚Åì how long are they going to be

Tu Le

they're being replaced because there's new brands popping up left and right still.

Lei Xing 

Sure. saw the first press conference I attended was SAIC Motor and the president and the president of the business unit of Huawei, they hugged twice. I'm supposed to read about it. Richard Yu announced the Shangjie brand. Right. That's the fifth or the fourth or the fifth.

Ethan Robertson

And they

Lei Xing 

brand out of Huawei ecosystem, right? We're still seeing brands popping up.

Tu Le

I think the West doesn't understand how, ‚Åì let's say, bullish Huawei seems to think they are in the automotive space for someone who's only been in the space, what, less than five, six years?

Lei Xing 

One narrative I heard was in China, CATL and Huawei have become the WINTEL of the China smart EV space. So think about that.

Tu Le

And so there were, we'll continue with the Shanghai Auto Show, but I also want to emphasize that outside of the convention center, exhibition center, there were a Zeekr event, there was a CATL event, there was a Buick event, a Volkswagen event. So for everyone that is watching, these are the only shows that really matter. ‚Åì I take that back. Paris was pretty cool last year.

IAA will be exciting this year. But for bang for your buck, if you're trying to look for a target rich environment, if you're a supplier or if you're a partner coming to the Shanghai Auto Show is really the only place to get all of that. And as someone who drove, who drives all these different cars, like what was the most exciting things and what was the most troubling things that you saw? Because you have great relationships with a lot of these brands.

Ethan Robertson

Yeah, yeah. Occasionally I'll do a review of their cars and then they won't want to talk to me for a little bit. Well, they always come back around. Well, I think that one of the interesting things that my takeaway from the show, in addition to again, everything like, like, uh, Lei was saying about the increased talk about safety and Jill was saying, I think that's honestly my biggest impression from the show was first of all, it is still undoubtedly the most important automotive show in the world. think bar none.

far and away. But at the same time, I think this year was interesting because it wasn't necessarily quite as electrifying as say 2023. 2023 was a almost a coming out in 2024 Beijing, obviously.

Tu Le

And there is no Lei Jun fact.

Ethan Robertson

And it was now Lei Jun, so Lei Jun the CEO, because of the incident that I was discussing earlier, one, he did not show up, because I'm sure he knew he would have to answer some very uncomfortable questions, or at least we asked them. And then two, they also chose not to debut the Xiaomi YU7 or YU7, the SUV, which is going to be the biggest car of 2025, I think, by far.

Tu Le

and the most recent Model Y killer.

Ethan Robertson

And the most rate, one of the five dozen, right? ‚Åì And so, but I think that it wasn't quite as electrifying. And the reason for that is in discussions, I have to give credit to Will Sundin from China Driven because this is a discussion he and I had at the show, which is that we feel as though many of these manufacturers have gotten to the point where it's a sign of confidence that they don't necessarily pull out every single last stop at the auto show anymore.

It's a big show, do not get me wrong. But some of them feel confident enough that their unique individual events can get the attention that they need that they don't feel the need to, when everyone's already together at the auto show, put out their biggest stuff. So some brands are choosing to have their standalone events to launch their newest model or to launch a new brand or something like that, as opposed to using the show. And I do think it's a sign of maturity for the market.

Tu Le

To your point, were no major unveils. Most of the vehicles that were on display were already unveiled in past events. Correct.

Ethan Robertson

or prior to the show, you know, and there were some awesome, there were some very interesting models were in the NIO house, the Onvo L90 was interesting, again, to steal from Will. I think he said it was a, buy the trunk and you buy the frunk and you get the rest of the car for free. Basically, then the whole press conference was about the giant frunk, the Zeekr 9X, I'm really looking forward to reviewing that was very the Hangzhou Cullinan.

Lei Xing 

It's not in it.

Ethan Robertson

Yes, I will look. Trust me, go watch my video because I stand next to it. look absolutely adorably small.

Tu Le

the folks that are wondering, the 9X is a Bentley and a Range Rover had a baby.

Lei Xing 

The nickname is called the Hanzhou Colliden. Hanzhou Bay Colliden.

Speaker 1 

Yes

Tu Le

and the

windows were blacked out which is a dead giveaway for the interiors not finished. And so that's still planning to launch pretty soon though right?

Ethan Robertson

Yes, I expect to be getting a call from them in this second quarter about about doing a second quarter. Yeah. Yes, well, I'll see if I can get them on the list.

Tu Le

Check out some of these cars, man.

It's going to be a sweet car. can't get used to the grill, but I think it's going a

Ethan Robertson

I'm

a gauche person. If people who watching the video know that I like to wear floral shirts and stuff, I'm not subtle. ‚Åì And so I don't mind it. But ‚Åì yes, I can see what it is. Not to everyone's taste. That does remind me of another trend at the show, which is that, and this is something that I think has been building in starting last year, was EREVs and PHEVs, right? There has been this turn from so many brands where they came out and said, we

are pure electric. You got Avatr. You have ‚Åì probably some of the Huawei brands as well. Aito, for example. And then all of sudden they see LiAuto selling very well. They see the fact that BYD is still a majority of their sales are a ‚Åì great number of their sales are still PHEV models as opposed to pure electric. Right. And so they're like, there's still a really big market for these cars. And so all of sudden, you your Avatr is coming out with extended range versions.

Tu Le

60-40, 50-50, 55-35.

Ethan Robertson

Obviously, Aito is doing extended range versions. Envola. Yes, yes. XPeng suddenly like, hey, did you know we do EREVs? No. Xiaomi

Lei Xing 

Thanks.

Tu Le

next time.

And

not only are we doing eREVs, but we're building the longest-range eREVs. Right.

Ethan Robertson

And of course that that becomes yet another battleground for them to say well our EREV has a combined range of 2,100 kilometers. Well ours is 2,150 well ours is 2,300 you know which no one will ever ever use ever but

Tu Le

It creates opportunity for Western markets because those use cases do exist.

Ethan Robertson

Yes,

in the sense that yes, I do think that and this is a whole other discussion, we could have an hour long discussion about the advantages of the EREVs versus pure electric vehicles. Are they a stepping stone? Are they the future? I, you know, I'm in favor of them. I think that they answer a question that many people are, they solve a problem that many people, least especially in the West, have about range anxiety.

Tu Le

To the purists, they're not EVs

Ethan Robertson

Yes,

yes, um, you know, to the NIO bros on Twitter that love to talk about how no, Aito doesn't count. Avatr doesn't count as an EV brand because they sell.

Tu Le

has some some NIO stands that are big fans of his. bet, I bet. ‚Åì

Lei Xing 

How many NIO haters?

Ethan Robertson

You have, yes, yes, it is...

Speaker 1 

when

Ethan Robertson

‚Åì The people of NIO we should say are very nice people. are fans of the nice people we work with at NIO. We like the cars but man do the people that invest in the company bother me. Anyways, ‚Åì not to get back but like to get back to the show. So like I said, EREVs, talking about safety, the use of the word assisted for example, ‚Åì the relative, relative low keyness of the show. ‚Åì

But again, I don't think that that's a sign of a slowing of the market or a weakening of the market, but rather it's a sign of confidence from the brands that they can just do their own event.

Tu Le

I looked at my initial impression was the foreign brands Volkswagen, huge, booth. Audi, was really surprised the E5 had a ton of traffic and these foreign brands were really selling to the Chinese consumer, just very focused on the Chinese consumer. And then the Chinese brands to your point, because they have a ton of confidence, they're like introducing themselves in a real way to the rest of the world. And I think that was the

the comparing contrast between the two where it's like, hey man, the foreign brands are like, stick with us. We're coming around with some great products. It's gonna take another 18 to 20 months. And it's gonna use some Chinese DNA, know, and XPeng and Volkswagen, the scientists, you know, so, but the empire strikes back probably in 24 months, 30 months. But Jill, what...

Ethan Robertson

you

Tu Le

What was the biggest surprises for you from the show? Was there any product surprises, any announcement surprises, any disappointments that you had?

Jill Shen 

Yeah, I agree with you, which is that legacy automakers really had a very significant presence at Auto Shanghai this year. And I believe companies like Toyota, especially those Japanese who are in Toyota and Honda, I think they are doing some pretty good job recently with their new product launches. We saw that BZ3X from Toyota.

and the N7 from Nissan. Yeah, think Chinese consumers are buying that. And they got a lot of traffic online and a lot of order intake. ‚Åì And also, I believe you also noticed that ‚Åì the absence of South Korean automakers, Hyundai and Kia. and the French ones. the British.

Tu Le

And Mazda had a nice...

and French.

And the high ends, and the high ends, with the exception of Bentley. Yeah.

Jill Shen 

So I really didn't expect that to come so fast, so immediately, with the absence of these auto brands.

Speaker 1 

Can I ask just to follow up on that in terms of the legacy automakers? mean, one of the trends I think is quite interesting at the moment is you've got...

Huawei kind of breathing life into some of these come like Chinese companies that were sort of seen as like okay How are you guys going to compete with the likes of BYD and then all of a sudden? There's some Huawei software some Huawei Hardware and it's like okay, you can you can do this and also you've got a huge amount of you know state support to keep the factories running was that Kind of trend Was that obvious in the at the auto show was there was there a sense that?

Changan, some of these sorts of companies are maybe going to have a run at the EV market now.

Tu Le

So companies like Avatr, it's been well known that they're going to go international. we can talk about BYD, but I don't know if we should lump them in with everybody else, because BYD is basically printing money by selling 400,000 units a month, where everybody else is selling 50,000 units a month or 40,000 units a month. So they're not even in the same ballpark. and then so so Huawei is a little bit

weird because one of the biggest brands I saw because So Lei and I, we drove from Beijing to Shanghai and an ET5 saw a ton of Aito M8s and M9s and they're in Paris. Aito was in Paris. No plans to launch in Europe, but it was like FOMO because they drove in M9, was it? Or an M8 ‚Åì from Beijing. Yeah, M9.

Lei Xing 

9.

Tu Le

No pricing announcement, no announcement of entering France or entering Europe. It was just there. so that's the only way they're going to get to the sales volume they need to. There was a conference a couple of weeks ago where one of the Chinese professors was like, the table stakes is 2 million. If you can't build 2 million cars a year, you're not going to survive. So long-term, I think that should kind of be your baseline. And if we

divide them into 12 months, they need to be selling 70, 80, 90,000 units a month. And the easiest way to look at whether or not they're doing well, how fast the market growing versus how fast they're growing. If they're not growing as fast in the market, they're losing share to other people, Tesla being one of them. So maybe we could segue into that. What are some of the interesting things? Tesla was absent. So what are your latest interesting questions about

Tesla ‚Åì surrounding China and stuff.

Speaker 1 

I mean, where do you start?

Ethan Robertson

Especially with Musk

Speaker 1 

I mean, but maybe parking the putting the sort of the political side of things with Musk to one side just in terms of Tesla in China. I mean, it's a tricky one because on the one hand, and up until the last few months, you know, the factory is running it full tilt. They're either selling a lot here or they're when they're not selling as much in China, they're shipping overseas and the business is fine. The big question, I think, remains around data security and data transfer. I might be wrong.

You've definitely correct me. I'd love to have more info about this, but my understanding is that to really compete in the future in terms of ADAS functions, moving into driverless functions, you're going to need to be able to train your algorithms. It's easier to do that in one place. It'll be easier for Tesla to do that in the US. Can they have a US company just focused on the US and the rest of the world and then a China-focused business just here?

There's sort of, it doesn't seem to me to be 100 % clear whether they're actually happy to have the business units completely separate. And actually this is something that's now coming up as a question for other companies as well, like Volkswagen with the Made in China strategy. If they're going to have a bigger presence here and the software needs to ‚Åì keep evolving, at some point you have to say, can we compete with the Chinese ‚Åì brands by training our algorithms in China? Is that going to work for us when we're also trying to do the same thing at the same time?

for the rest of the world. And so I don't know, mean, you know, there's one area with Teza which is like...

Tu Le

So just to let the audience know, it's not even FSD in

Lei Xing 

Even

change the term terminology. ‚Åì

Tu Le

So your point being they can't move the data outside of China. ways. Yeah.

Speaker 1 

It might not be all the data, it might just be that are you at such a disadvantage if you can only get half of what you need overseas? These are the kind of questions that I have. I'm not sure about where exactly that's at.

Tu Le

It's

a more basic issue. Okay without new product Tesla is gonna be irrelevant in five years because if The Juniper have you driven the Juniper? Mm-hmm. Yeah, I mean like

Ethan Robertson

Model

3, I spent a lot of time behind the wheel of a Juniper Model 3. Not yet.

Tu Le

OK, have you driven the Juniper Model

Y? So maybe Ethan, and maybe this kind of alludes to your question. Can you tell us what improved from the old Model 3 to the Juniper? And then who are the competitors? How many competitors are there? I mean, you might need a half an hour.

Ethan Robertson

Yeah, the first question is a lot faster to answer and I would say that the ‚Åì number of mean genuine improvements are not that many. ‚Åì There's a lot of there's small design changes. There's interior ergonomic ‚Åì downgrades in my opinion. There's a screen that can make you make you car sick in the backseat. There's turn signals on the steering wheel that don't work. I would say it will put it this way.

Tu Le

Yeah.

Ethan Robertson

The strong advantages of the Model 3 had before it still has, i.e. it is the best driving electric sedan you can get. I've driven all these other Chinese examples. Even the Xiaomi SU7? Yes, yes. Even the Xiaomi SU7, they're great, but they're still not quite there at the level of driving pleasure that you can get from a Model 3. Now, every other aspect, they are at work.

Tu Le

next?

Ethan Robertson

succeeding that of a Model 3. We're talking about range, we're talking about power and speed, we're talking about the interior ‚Åì infotainment and stuff. I remember I was flabbergasted on the Model 3 that there didn't seem to be the voice command system. The only person that could control it was the driver. And actually there is no, what they call a wake up for the Model 3.

Lei Xing 

no no me

Ethan Robertson

There's no no me. Yeah, there's no way in a Chinese electric vehicle you can say, so in case of BYD, you can say, right? And then it voice and the voice command system is awake and then you can tell it to do whatever you want with the with the Tesla one. You can literally only hit the button on the steering wheel. And so if you want, if you're a passenger, you want to do anything with voice commands, i.e. put in a navigation destination, which is what I do mostly with that. You can't do it. You'd have to reach over and touch the button on the steering wheel with the in front of the driver.

or ask them to do it. But this is just these little things. And in terms of the competitors, like you said, I don't have enough time in the length of this show to list all of the competitors. Most recently, I drove the Avatr 06, which I think is a far better looking vehicle. The interior is very interesting ergonomically. There some challenges. there is very strong competition from almost every single direction right now, at least in the Chinese market, which is the most important market.

Tu Le

And really quickly like and we're talking about a sedan like China is like the US it's an SUV crossover and we're talking about a sedan with a half dozen to a dozen competitors. So go ahead.

Ethan Robertson

Yes, for sure.

Lei Xing 

Here's

what Tesla, even though they did not exhibit ever since the notorious incident five years ago, four years ago. Right before the auto show, they expanded the three-year zero interest financing on the new Model Y to five years. And right now you have to pay 64,000 for the FSD. Look for them to tweak that.

Ethan Robertson

years.

Lei Xing 

in coming months because lack of new products, the only play they have is through these incentives. And right now I put my Tesla stand hat on. There's no single model, single model Y killer that's selling more than the model Y in the Chinese market. So, you know, ‚Åì

Tu Le

But that's also because they're five years of free

Lei Xing 

Exactly, and NIO is falling suit, everybody's falling suit on that. So there's both good and bad, but you wonder how long that continues.

Tu Le

So, Jill, ‚Åì let me ask you, what do you think the Chinese consumer thinks of the Tesla brand and how has that evolved over the last three or four or five years?

Jill Shen 

‚Åì I think what Lei said is really the truth because ‚Åì I talked to an analyst just like two weeks ago and that guy said he ‚Åì bought a Tesla Model Y in Hong Kong, a secondhand one and he looked around like... ‚Åì price is one of the reasons but he checks...

Tu Le

I'm pianyi.

Jill Shen 

many of the so-called Tesla killers on the market. And finally, there is nothing which he thinks can really compete with the Tesla Model Y in terms of driving performances, in terms of...

Lei Xing 

One thing I've heard from doing ride hailing some of the drivers in a WM motor and another one the driver all of them. They say one thing that the other Chinese EVs don't have that Tesla has the model Y is a global vehicle produced on three different continents. That's a peace of mind to the consumer. I think that's maybe one of the reasons why they're still selling quite well.

Tu Le

To reinforce that point, in 23, Model Y was the number one selling EV in the world. In 24, it was the number one selling car, regardless of their power train. So it sells over a million units, and they were at 1.79 last year, so it's the lion's share of what Tesla sells.

Jill Shen 

But I do expect, I agree with ‚Åì Ethan, I do expect Xiaomi Yuqi to make some difference.

Tu Le

Yeah, is it? So let me let me ask all of you this. Is it SU7 or SU7? Is it YU7 or US7?

Lei Xing 

The

Chinese just call it suicide.

Ethan Robertson

just got to see what she she means. So she said, whereas I heard one foreign media, one American podcaster called it the sushi. He's clearly reading some machine translated singing and it was translated as sushi. And I was like, that's not that's not it. But yeah, I this is something that comes up a lot on the podcast. I am, by the way, a longtime listener, first time guest, very happy to be here. ‚Åì The well, the ‚Åì

Lei Xing 

You

Ethan Robertson

There is much discussion about the death of Tesla. And I appreciate this is something that Lei you've acknowledged multiple times in the podcast and you acknowledged right now, which is as much as I can do reviews and tell people both in China and abroad, hey, look, there's so many of these competitors that are very, very competitive. People are still buying Model Y out the wazoo and they're outselling almost everything. So it's one of those things where I do eventually believe

that there is going to be something of a reckoning for the fact that Tesla has not updated their product portfolio with the speed that they need it to. I suspect, I think that could very well be true. But for now, do you what I mean? It's one of those things where they're still selling very well. And this is the time, frankly, where they need to be putting something out.

Tu Le

It's going to start in September, October.

Speaker 1 

Just in like really common sense numbers around this, the factory, it's kind of what I mean, the factory has its output in Shanghai for the Chinese market. They're not importing cars into China. So product range is one thing, but they're already selling most of what they make here. And then they're either in China or they're selling it to someone overseas. So the business is fine. The problem is, that the, from a like basic numbers point of view is that

The Chinese market is growing still, 30 % each year. Tesla's market share has gone from 12 % to EV plus PH and EREV, 12 % down to 7%. So they're just not growing. And even new products or even access to FSD or something doesn't really change the fact that they have one factory with a certain number of cars that they produce, whereas

BYD and others are just adding new factories. And so as the market grows, Tesla's share naturally decreases while they're still running a really good business. I mean, it's not like rocket science. the point becomes, the question then becomes, if they succeed in some, creating some new popular models, plus have a technology offering on the software side that is attractive, what are we then talking about? They're just selling at a higher price here or?

Does the conversation then start to be like, is there a second factory that starts to come into the conversation?

Tu Le

Here's a couple of things food thought. think three or four years ago, they wanted to be at two million units at Shanghai Giga. Number one. Number two, that opportunity for first mover to have a model two, three years ago, there's plenty of great cars. And Ethan will tell you this at 25, $30,000 in China. that huge opportunity has kind of evaporated. And what we're seeing is

If we're at 1.2 million units in Shanghai Giga, and let's say 80 % capacity utilization is probably a healthy rate, that means about 900, 950,000 cars are being built in Shanghai Giga. ‚Åì 20 to 30 % of those were exported to Europe. That's not happening anymore. So that puts even more pressure on them to sell domestically, because, or ship them to Japan, ship them to Korea, ship them to Australia.

where the markets are much, smaller. the street and rich people, Elon made rich people richer. Now he's taking money out of their pocket. That's why you're seeing this pressure for him to become the CEO of Tesla again. Because when it was a $1.3 trillion company, rich people didn't care what he did, right? Because it wasn't about ‚Åì political correctness. wasn't about this. It was about rich people.

letting him do what he wanted to do because that was a $1.3 trillion company. ‚Åì

Speaker 1 

What he's doing in Washington may also have an influence.

Tu Le

Yes. And so that's the big part of it because Europe was the pressure release valve for Shanghai Giga and Berlin Giga as well as being able to ship from Shanghai Giga. That was kind of the linchpin opportunity. 50 % of production comes from China. And without that flexibility to sell into the market and continue to grow with the market, it just creates a weight on your neck. And if

And the street, traditionally, Wall Street, if you're not growing, people start worrying about you. many analysts that I respect are saying that Tesla is going to shrink again this year, like global sales. ‚Åì

Lei Xing 

More than likely. Because right now, Tesla is a small competitive issue in the Chinese market, but a huge geopolitical ‚Åì backlash that caused the sales to drop significantly outside of right, that's been what's happening. I think relatively China is shielded relatively, right? They're in their own bubble.

But you still have to face the competition from the Chinese.

Tu Le

I'm going to throw a curveball. I was at the Beijing event for the BYD that demoed the mega charger. Yeah, the drive with the Han-L and the Tang-L, which are capped at around 300,000 RMB, think, right? 300-ish. So about 45,000 US dollars. The Han-L now has a top spec that

Ethan Robertson

And the megawatt, yeah.

The top spec now, yeah?

Tu Le

goes zero to 60 in 2.7 seconds. So have you driven that yet?

Ethan Robertson

No, I'm getting a tongue out at the end of this month and I'm very excited. I don't know what spec it is. We'll see. Let's hope it's the mega, mega powerful one. Either way, I want to try out the megawatt charging.

Tu Le

In BYD, I didn't actually go to the presser. didn't. But they weren't really showing anything.

Lei Xing 

go to the presser.

I did see the megawatt charging demo. It was like so

Ethan Robertson

Can we talk about the megawatt charger? Yeah, sure. How many guns does it take? How many chargers? One. Okay. You have thoughts on this too? How many? I, what is, they use a GBT, right? This is just the Chinese standard. It it caps it 800 amps. How can you do that with one?

Tu Le

One.

Explain to everybody what a jubilee

Ethan Robertson

The right, so there's gotta be something going on there because if you have two charters at once and they have not mentioned so I specifically asked on the stand because so with the wheels, but you need to or thing that we did and I can talk about that in a minute, but the the one of our guest was a person who's actually someone who does research in the charging charging and charging. Yeah, and so they were they were talking to me about it and they were like it is in unfeasible technologically that they could do it with one gun if they are using the GBT now GBT standard outside.

It is 500. China's 800. So you can get 800. So you can charge it 800 watts, a kilowatts, which is awesome. But to get to 1000, you would need to plug in two guns. Now there's nothing wrong with that, but they have not as far as they haven't said anything hourly. Now I did talk to someone on the stand who was not an engineer, who is very much a PR person. I said to them, this is in Chinese, so there's no room for misunderstanding. I said, is this, can you do this with one gun? You can get one megawatt.

And they said, yes. And I said, so you don't need to use two. And they said, you don't need to use two. And I was like, you're a positive. Because I explained to them why that seemed physically impossible. And they were like, ‚Åì maybe I should talk to someone. Like, maybe you should. ‚Åì But either way, that was just something that was a beat that was in my bonnet about it.

Jill Shen 

you

Tu Le

It's important to qualify things because in the United States, I think we're still at 400 volt majority.

Ethan Robertson

Yeah, if they can actually do 800 it would be awesome.

Tu Le

Right? Well, so the first demo that they showed was two plugs. Yeah. And it was getting six, seven hundred. So it was close to a thousand. And then we went to the mega charger and it had one. It was one. And it was at a thousand at first. And then it went down. Sure. But it went to 60 percent in five minutes. So.

Ethan Robertson

I just, I would like to hear some clarification, that's all. So when I get the Tang L later this month, hopefully I can connect with somebody at BYD that can really give me the lowdown on it.

Tu Le

So less about BYD, but more about the competition part of China. Within two weeks, Zeekr and Huawei, was it? ‚Åì Launched megawatt chargers. Huawei's is for commercial vehicles as well, I think. this is the competition, whether it's realistic or not, because megawatt chargers are super expensive. The transformers, you definitely need a battery energy storage system.

Ethan Robertson

Also the fact that we have to establish that the BYD relies on a battery that's there. You can't draw from the grid like that realistically. these are all the first wave of megawatt chargers are all going to be BYD dealerships, right? Yes. And so if they actually had to draw from the grid, all the BYD dealership slides would go out the second you plugged it in.

Tu Le

future where the lights.

And one of the things that I'm not sure about, and maybe this is where Jill and Ed can come in with their articles in the near future, how many cycles? Because a car battery, an electric vehicle battery is supposed to go 800 to 1,000 cycles, generally speaking. Most of them don't warranty for 1,000 cycles or 800 cycles. And it's just back of the envelope math. the capacity of the battery is

300 miles, blah, blah. So it should go X number of miles, right? And then divide, that's the number of cycles. because putting that much electricity through the battery is gonna degrade the battery substantially. And so does that still guarantee 200, 250 cycles? I guess that's kind of what I wanna know. And...

you know, how are they going to pay for all of these megawatt charges? Cause I was at least in the U S the transformer for a megawatt charges, like $200,000. So, um, but taking a step back is BYD unstoppable? What, what, okay. If you had to think of things that might trip them up, what, cause right now they're running on all cylinders. They're in over a hundred countries.

They're probably going to get to 5.5 million units this year. have three brands, two brands struggling. Fanchang Bao and Yanwan kind of struggling, but they get a lot of social media attention because of the, what do you call the parking? Yeah, yeah, yeah.

Ethan Robertson

‚Åì all you mean that the strength

Speaker 1 

Snipe all.

Ethan Robertson

The crab walk is sideways. You're talking about the compass turn? Yeah, yeah, yeah. The compass turn is a denza thing and then the young one can do the tank turn. Yeah. it turns in place.

Tu Le

So, I mean, Jill, do you think they're unstoppable? How, do you think they're gonna catch Toyota? Like. ‚Åì

Jill Shen 

mean BYD? Yeah.

I think BYD is is doing actually not very good job in the brand, especially, know, upscale going up for their brand image. Yeah, upscale. And so that's what we've been seeing that the sales of Fang Cheng bao and Yaowang has been kind of like declining and there is not really that much recognition from Chinese consumers.

being like, ‚Åì BYD is really a premium Chinese EV maker. They don't buy that.

Ethan Robertson

Yeah.

Jill Shen 

Something we can really acknowledge is that BYD really do things very well in the mainstream segment with all those dynasty lineup and with the ocean lineup.

Speaker 1 

In

Tu Le

Chinese

is it confusing to you? Because when it's in English it's confusing to me.

Jill Shen 

Yeah, I have no idea with all these names, you already has created for all those lineups that, you know, the function on the road don't make sense to me. Yeah.

Ethan Robertson

Yeah, can we have a whole other discussion about that in a minute? Yeah, I'm sure that Jill and I both have thoughts about how, like you said, how confusing the BYD naming schemes are in both Chinese and English. Yes. But ‚Åì yes, I would completely support what you're saying about the fact that BYD is obviously doing a great job when it comes to the mainstream segment, despite their confusing naming conventions and too many different series of cars.

But when it comes to the higher end cars, mean, certainly Denza is doing better than it was when it was under half Mercedes management. ‚Åì But I don't think that it is turning into the apart from the D9. ‚Åì I don't know that it's turning into the incredible sales success that BYD wants it to be. ‚Åì This is not even to talk about again, Fengcheng Bao ‚Åì or Yang Wang. Fengcheng Bao obviously. ‚Åì

Late last year, early this year, they had major price cuts for the Bao 5, their first model. ‚Åì By close to $10,000 or something like that. US dollars, At $5,000 at least. ‚Åì And so obviously that's a sign of the fact that they're struggling a little bit. And as Jill said, they're struggling to establish themselves as a premium automaker. Now.

Tu Le

USO.

Ethan Robertson

does that keep them from continuing to succeed? I don't necessarily know because I think that obviously when the brands they're exporting, right? They're in a hundred countries. Yang Wang's not in a hundred countries. Denza's not. Fengcheng Bao isn't. It's BYD, right? And confusing names are not. Those are the cars that are selling. you know, does BYD, it's an interesting question, does BYD need a Lexus to become the next Toyota, right?

because Lexus obviously does contribute a great many sales to the Toyota brand, the thing that...

Tu Le

is

more of a profit driver than the volume driver. Yes, very good.

Ethan Robertson

Good point,

as every premium brand should be, right? And that's what they want these premium brands to be. But I would say as of yet, they are not.

Jill Shen 

Can I add one thing? Go ahead. I think ‚Åì one key issue for BYD over the next couple of years will be like how BYD will be able to attract to Chinese young consumers. So one thing I do have have impression at this Auto Shanghai would be like BYD is really was having some kind of like cosplayers. One is from the Wukong.

Yeah, that PC game. so there were some casters doing the role play at the BYD stand.

Tu Le

He

was there.

Lei Xing 

That was one of the features on many stands.

Ethan Robertson

Yeah, but I 100 % BYD because BYD is BYD they get first dibs on the one, you know, the one collaboration that everybody wanted last year and this year, which is the, you know, Wukong Black Myth or whatever the game. ‚Åì Everybody else kind of has to settle for whatever game they can get or whatever anime they can collaborate with. ‚Åì

Speaker 1 

I love how anime collaboration is suddenly important in this conversation. But I know it is, I'm not No, no.

Ethan Robertson

You know, it is, trust me, it is funny. mean, I'm there on the media days and I'm like, I'm trying to stand next to a car to get a video and I have to like push some guy dressed like Wukong away, dressed like the monkey king out of my way in order to get a sh-

Tu Le

You were so polite about that, but Ed you were gonna say something?

Speaker 1 

So you guys are making a very interesting conversation around what BYD does in brand and marketing. And obviously that's where the profit is coming from at the moment in terms of quarterly numbers around what they're selling and what margins.

As an outsider to the industry, what I find really interesting around BYD is its history and what it's been able to achieve in terms of there's very few companies in any industry that has the level of vertical integration that they have ‚Åì through Wang Chuang Fu's family connections, into lithium mining. Also in terms of the success they have as just a nuts and bolts manufacturer. If you get into their corporate earnings numbers, what they're able to achieve in terms of yield and things like that.

That just gives them these opportunities to develop, I think, new technologies, the amount of money that they're putting back into research and development. Only really CATL and BYD are on the same level in the industry in that space in China. And so that's where you get these technology leaps. So the blade battery technology, the super fast charging that we're talking about as well, all comes from that core kind of competency in batteries. To me, what's been interesting in the last few months has been what

I mean, over the last few years, what we talked about as a disadvantage or a weakness of BYD was around the software side. And now they've got God's Eye. So that is kind of solving or maybe filling that gap. So in terms of whether they can be stopped, mean, who knows? But they have this set of fundamentals which not that many companies in any industry have. And so they can make more mistakes. They can try things. They can get it wrong. They can get all their names wrong and confuse everyone. It doesn't matter.

They can go to Brazil and get accused of slavery and all these sorts of things, which they deny, blah, blah. things that other companies can't get away with, they can. ‚Åì And that's because they've been so successful in areas that I think are really, really hard to get right and can't necessarily be replicated. And that, to me, is quite impressive for a company that not that many people would hurt off until quite

Tu Le

Well, and for good reason, because what, with only within the last seven years, they were at half a million units seven years ago. Now they're 2024, they're 4.27. So Lei, you've been covering BYD since day one. Do you have anything to add or?

Lei Xing 

your question about whether BYD is unstoppable or not, the direct answer is yes. Whether they'll catch up to Toyota, direct answer is yes. But that's contingent on a couple of things. I actually met Stella Li at the New York Auto Show right before coming back to Shanghai. And I asked her kind of about the future volume projections. she was saying that they plan to have

a thousand dealerships in Europe alone by the end of this year and doubling that next year. So her ‚Åì response was, my job is to focus on the after sales part of what BYD is doing. think volume wise, we don't have to worry about that. ‚Åì But then the other thing that's contingent on is

the different regional markets, the geopolitical ‚Åì headwinds and the local labor, ‚Åì the requirements, whether they can, you know, manufacture, right? They're producing in multiple regions. So ‚Åì I think that's the part we're looking at. It's almost, I think answering the question that you raised on BYD is all almost the same as trying to answer

whether Tesla is, you know, how, ‚Åì whether they could continue to be successful in China. You know, it's difficult to, but.

Tu Le

Why?

I think we'd all kind of agree that BYD is a phenomenon that isn't talked about enough in the West. So I've been back in the United States for almost three years now. And when I first got back, it was a hoax because of subsidies. Now people are starting to... You know, a little bit less because hopefully I'm this voice in Michigan, the heart of automotive that's kind of trying to...

Lei Xing 

Still the narrative.

Tu Le

be reasonable about, know what, you can blame it on this, that, or that, but I've driven these cars, you know, I've worked in factories and it's not because of that. So the problem is that now the West acknowledges BYD, they just don't acknowledge these other 50 brands that are quite significant with their products. It's not like they're just not able to compete against BYD because BYD has a flavor for

every price segment. what people don't appreciate is that the Chinese consumer and the Chinese market for automotive lives in the sub 3000 RMB price point. Everything 90 % of all sales, I think is under 300,000 RMB. So BYD to dominate that and I'll add to the impressiveness of BYD Ed. The fact that they create the demand

Speaker 1 

300.

Ethan Robertson

Yeah.

Tu Le

is one thing. The fact that they can supply to that demand is operational efficiency. And to your point, they don't give any margin away because some vehicles have 70, 80 % of their own content. So that just means that every supplier I have, I'm giving a quarter percent, half percent margin, and that's not happening. And when you have four and a half million units of scale,

and you can amortize your R &D costs over that number of units, you're going to beat most people. The one thing that's really, really people don't kind of understand is they're doing this in a market that's growing, and they're not even playing hardball yet. Because once the market in China starts to like plateau from a growth standpoint, they're going to do everything in their power to protect that share.

And they're going to start playing dirty. And you know, like, that's how automotive works. And we haven't even seen that yet. Now, can they dominate? Yes. I guess my thing is they're going to be building in nine countries. To your point, they had challenges in Brazil. They're going to have challenges. They're going to have culture challenges, FX challenges. They're going to have labor law challenges. And does that stop them? No. Does it slow them down? Yes. And so.

that path to 10 million or 11 million units is going to be challenging and much more difficult without the U.S. ‚Åì

Lei Xing 

numbers that people may not realize. BYD has a million employees and 120,000 R &D engineers. How many automakers in the world have 120,000 employees?

Ethan Robertson

Little than 120,000 R &D

Speaker 1 

Of those engineers, what percentage of those are focused on basically batteries, which is the lion's share of the cost of the car. mean, it'd be a sizeable majority, Batteries and batteries integration chemistry.

Lei Xing 

I batteries, things.

‚Åì

Tu Le

And what were you gonna say,

Jill Shen 

Talking about UID playing dirty. Have you heard the news like three months ago about the UID asking Chinese suppliers of cutting prices for another percent?

Ethan Robertson

Yeah, ooh, yeah, ooh.

Yeah.

Tu Le

But to me, so I worked in sourcing and automotive and that's part and parcel of being a supplier. Cause remember OEMs are three, four, five, 10 times the size. And a lot of the times suppliers, they might get 50 % of their sales from BYD. And if they don't get sales from BYD, they're not in existence. So they'll cut to the, to the bone just to keep the factories running. And

if they ask to cut any further. So their salespeople are trying to diversify out of BYD, but it's impossible because in order to keep those factories running, we got to have BYD as a customer because number one is prestigious now. And number two, they keep a lot of the capacity taken care of, but the whole cutting 10 % is not a big deal. And in the automotive standpoint, so.

Ethan Robertson

I don't know if I would call it not a big deal. 10 % is huge.

Tu Le

yeah, yeah, yeah. But I'm saying it's strange. It's not unusual.

Jill Shen 

do that.

I don't think so.

Ethan Robertson

I'm sorry, really quickly, because I have a story specifically. was taking a flight one time and I ended up sitting next to a gentleman who was from a supplier. This specific supplier, all they did was supply little hooks, like cargo tie downs and stuff. He was actually a pretty happy guy because he was working with his client was a Nissan here and he was like, they're pretty slow. They don't have that many demands. It's not that bad. And I said, I think I said, what about BYD?

Tu Le

That's probably why they're going out of business.

Ethan Robertson

And

this is a meaningful anecdote in a few ways. And then I said something about BYD and he's like, oh yeah, well, the turnover for people that we have that are the reps with BYD is incredibly quick because they burn out. They burn out because of all the demands that BYD has and the speed with which you need to get back to them and the standards and everything. And so I do think that...

This is not the first person I've spoken to in the automotive industry that doesn't love a BYD because of the strain that they put on their suppliers and all these networks and stuff. But again, to your point, it is what it is. When you are a company that's the 800 pound gorilla in the room and you are trying to find every single advantage you can, you are gonna throw your weight around.

Tu Le

Any of the only player that has clear growth. So, you know, these suppliers, the other big reason is that they can grow with BYD, whereas the other players are kind of flat. But please.

Ethan Robertson

Is it nice? No.

Speaker 1 

Longer term, you mentioned the geopolitical issues as they grow overseas. I think this is where there's a lot of risk and uncertainty with BYD, is, think business practice stuff, the cultural side of things of a Chinese company going overseas. mean, you know, there are questions and there's obviously missteps and it's...

There's no real reason why they can't be successful. They could be. There's no flat reason that actually this isn't going to work. Sure, they are going to have to raise their labor standards, environmental standards, all of these things. They're not going to able to be the same company.

Tu Le

And truffle

is not running doge for any country.

Ethan Robertson

Yeah. ‚Åì

Speaker 1 

When it comes to, I think the Huawei expansion overseas is probably quite instructive on this, where you have a company, US decides actually we don't like what we're seeing, that the rest of the world is becoming reliant on Chinese-made telcos for critical infrastructure. If that same decision got made around smart cars, BYD's in a lot of trouble. And so then you've got a question around, okay, country, I'm from New Zealand, I was recently in Australia, so I missed the auto show.

Lei Xing 

I have some good ideas. ‚Åì

Speaker 1 

Well,

it's a big way to go into these countries. A lot of people are going to be going to Europe, South America. At some point, if the US got heavy handed around this, not necessarily likely in the immediate next two or three years, but longer term, perhaps they put the hammer down, then you've got a problem. And I don't think people are really thinking about that at the moment in terms of calculating that into the risk around BYD. also don't seem to on both sides, you don't really see BYD acknowledge this as an issue. And you also don't see a very sophisticated

‚Åì know data protection on the on the side of the countries with BYDs coming in and You know again, there's probably a way through that But that to me is a bit of a longer term risk with BYD rather than the kind of day-to-day business practice stuff

Tu Le

I think countries are just generally more aware because they saw what happened with steel. They saw what happened with solar panels. they talk about the threat of EVs and the flood of EVs, but it's mostly ICE vehicles that are being exported from China. And the two largest countries are Russia and Mexico. And Russia, because all the OEMs left. And so I think to your point,

Some countries can still get in front of it, you know, but BYD has just this compelling, if they can reprice in Europe, because they weren't very smart about their pricing strategy in Europe. And there was a great article from one of your competitors talking about how BYD press reset on their international strategy. And now they're relying more on dealers because every Chinese company, we can do it ourselves.

XPeng did that. And they basically gutted the initial sales team and BDBD is doing it too, relying heavily on the dealers. And that's why you saw a lot of dealer groups at the Zeekr event. Middle Eastern folks, Filipino folks, European folks, because I think that's kind of the way to go as opposed to like a Chinese face trying to sell into Europe.

You know, I'm going to have this European guy who understands the market and is familiar with the consumer.

Speaker 1 

Yeah, maybe, but then also, and I think I might be not 100 % right about this, but I think in Australia...

Part of the growth story for BYD has been selling it to expatriate Chinese with Chinese language advertising and things like that. BYD can do an international expansion. They can even probably price through the tariff risk. Or if they get pinged on EVs like they have in Europe, just switch to hybrids for a few years. They'll be able to make their way through that. But data security runs into national security. That becomes trickier.

Ethan Robertson

No.

Tu Le

Yes,

yes, for sure. And Europeans kind of the canary in the coal mine just because the United States is off the table. So let's see how they react, because the thumb is on the scale of the German government pushing the EU to accept Chinese imports and also local manufacturing. But the EU needs to step up and create a robust policy.

around because they pride themselves on data security and data privacy. So this should be really one of the foremost challenges or issues that need to be tackled. So you're absolutely right.