Episode #215 - June Sales, Baidu Apollo Rental Service, Who’s Coming After the Model Y

In this episode of China EVs & More, Tu and Lei dive into the latest from China’s fast-moving EV market. They explore the intense price war that’s reshaping the industry, why Tesla’s Model Y remains resilient despite new competition, and the incredible rise of Xiaomi with the SU7.

They break down June sales data, BYD’s dominance, new EV and EREV launches, and why foreign automakers like Porsche, BMW, and Mercedes are struggling in China. Plus, they talk about Onvo L90’s high-stakes debut, Xpeng’s EREV strategy, and how cities like Wuhan have become ground zero for robotaxi innovation.

• Chinese EV & Tech Brands: BYD, NIO, XPeng, Li Auto, Xiaomi, Zeekr, Leapmotor, Chery, Onvo (NIO sub-brand), AutoX, DeepRoute.ai, Baidu (Apollo Go), Car Inc., Hengchi
• Foreign Automakers: Tesla, Porsche, BMW, Mercedes-Benz, Volkswagen, Maserati
• Tech & Mobility Players: Momenta
• Rental/Service Platforms: Car Inc., China Driven (media/content)

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• 18:00 (Cont.) Episode #215 - June Sales, Baidu Apollo Rental Service, Who’s Coming After the Model Y

Transcript

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. 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. Lei and I are two of 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 am the managing director at Sino Auto Insights, a global management consultancy that helps organizations bring innovative and tech-focused products and services to the transportation and mobility sectors.

I write a free weekly newsletter that you can subscribe to at sinoautoinsights.substack.com. Lei can you please, ‚Åì a Xi'an based Lei, can you please introduce yourself?

Lei Xing 

Yes, live from Xi'an with... I had to ditch my family for this because they're doing the touristy stuff. So I ran back to the hotel for this episode. But yes, coming to you live from Xi'an, this is your co-host Lei Xing, former chief editor of China Auto Review. And this is episode 215, right? Because we missed last week. Yeah, the Independence Day.

Tu Le 

215.

Lei Xing 

And yeah, I'm in Xi'an, ‚Åì a little bit about Xi'an.

Tu Le 

So yeah,

the history of Xi'an, what's the most important thing that most people know about Xi'an?

Lei Xing 

The most important thing that people usually know about Xi'an is the, well, first of all, it's the ancient capital of China of 13 dynasties. Second of all, it's the terracotta warriors. But over recent years, grand Tang hall, the Chinese call the Datang Buyecheng, has been more... ‚Åì

Popular, so I just came from that area. Luckily I took the metro. ‚Åì I'll post some videos. But the other thing about Xi'an, as much as it is steeped in deep history, this is where BYD started its automotive journey. And believe it or not, the Qin, Han, Tang, ‚Åì Song, Yuan,

Tu Le 

Really? Okay.

Lei Xing 

The five dynasties are also their vehicle models. And of all those five dynasties, Xi'an was the ancient capital. So some correlation with Xi'an, BYD, and the automotive stuff. So it's good to ‚Åì kind of make the connection of why BYD named their, at least the dynasty series models the way they did.

I'll tell you what, definitely it's the city of BYDs. But if we just look at what's on the streets, what do think the second most popular brand of EVs I see on the street, what do think it is?

Tu Le 

Mmm. ‚Åì

Lei Xing 

From my

perspective, at least.

Tu Le 

Think the most popular. SAIC say, I see pops into my head.

Lei Xing 

is Tesla.

after BYD, it's 3s and Ys are what I see the most. And so this is where we get into kind of the July sales numbers, BYD, Tesla, right? There's been some news on Elon Musk on what it's been up to. The June sales, right? June sales just came out. I'll give you a chance to kind of, you know, jump in and...

Tu Le 

Okay.

Lei Xing 

We talk about the sales a little bit.

Did that surprise you?

Tu Le 

So.

It doesn't. doesn't. know, Tesla's been very strong in China since it entered the market. Well, since Shanghai Gigafactory. ‚Åì

I think we're at an inflection point because they don't have any new vehicles. The YU7's out. We're going to talk about the L90 and a few other cars that are coming out. The I60, I think, or I80, or I8 ‚Åì is being shown. And then obviously this week, the 9X ‚Åì was unveiled by Zeekr

Lei Xing 

I 8 I 8.

The band took

a dig at the 9x. We can talk about that.

Tu Le 

So

one thing about the 9X is that you mentioned Tesla. It has a 70 kilowatt hour battery. It's a hybrid. It's an EREV. And the current Model Y standard range battery size is 60 kilowatt hours.

So as a hybrid, the 9X has a larger battery pack than the model Y standard range. So that's what Tesla is going up against. And XPeng, they're already like, hold my beer with their EREV that's coming out because their EREV is going to get well over a thousand kilometers, I think, of range. But you know,

Lei Xing 

Go Figgins. Go Figgins. Yeah.

Tu Le 

A couple of other things about BYD. They now have a million cars with God's Eye on the roads. They launched a partnership we'll talk about in a little bit with effectively like a Hertz, right? The car rental company. not BYD, sorry. That's I'm mixing things up to these. I'm getting a little bit confused here.

Lei Xing 

getting happier ahead of our

Tu Le 

Yes,

and BYD actually is now going to insure you or it's on them. If you use their parking function in God's eye and there's any accidents with any damage, they will pay for it.

Lei Xing 

That's part

of the bloodbath. If we don't cut prices, we do something else.

Tu Le 

Yes.

For sure so technically they're not

disobeying, not disobeying, but technically they're not cutting price. So it's in line with the Chinese government saying, Hey, cut this stuff out. But we know that there are other ways to incentivize consumers that don't have anything to do with the price because I don't think anyone at this point in time year 3.5.

almost year four of the price war, I don't think anyone wants to cut price anymore. so, yeah, go ahead.

Lei Xing 

The

competition is still intense nonetheless because the last, well, starting with the YU7 and then there was the G7 and there was this earlier this week, yesterday, the Onvo L90 on the same day the new Leap Motor C11 ‚Åì launched, right? ‚Åì There was another, there was the Chery A9L. It's almost like the cheaper Stelato

S9, but only $20,000. Huge car, right? Also a hybrid. ‚Åì And then ‚Åì i8, as we talked about, coming at the end of this month. So a series, I think I've never seen within such a short time, ‚Åì so many of these so-called model Y killers launching in this short period of time.

while ‚Åì Model Y, I think, the way to put it is that these series of Model Y killers that's been launched, that have been launched, have not taken a huge hole or has not made a huge dent. Although Tesla is losing market shares in China, that's kind of the interesting thing.

that we're seeing if I'm being on Tesla's STAN ‚Åì

Tu Le 

Well,

it points to the resilience of the brand because the product is not competitive. And ‚Åì from a price standpoint, from a feature standpoint, so.

It points to, yeah, there are still a number of Chinese consumers that really are, ‚Åì you know, being a Tesla STAN doesn't mean you're only in the West. Let's just say that.

Lei Xing 

One theory ‚Åì to the why the Model Y specifically has been relatively resilient is the fact that leading up to the YU7 launch and all of these models comparing if they do these comparison PowerPoint slides more often than not Model Y would be on the second column. One theory is that this is cat

kind of inadvertently a marketing for Tesla because the consumers would think, hey, they're benchmarking against Tesla. Tesla must be good. And I don't have to wait as much. And they're offering ‚Åì competitive financing ‚Åì on the vehicle. ‚Åì It's an international brand. Yeah, I mean.

Tu Le 

you

Other companies are doing that now too though.

Lei Xing 

NIO the 556 and the new champion additions, tweeted it.

So, and you alluded earlier about not having the product, but recent days there's been rumors about, again, about this smaller Model Y, Model Q, Model 2, whatever, the spy shots, all of these photos coming out of the factory. So, it's a new but not new product, but hopefully soon enough we'll see that.

Tu Le 

‚Åì I'm going to be in Beijing on the 28th, I think. ‚Åì we'll have to get together with our families. I'm not going to be there the entire time. My wife is going to be with the boys, but I'll need to go to Southeast Asia, Singapore for a couple of days. ‚Åì I haven't figured all that stuff out, but we should definitely.

do what we can with the latest robotaxes in Beijing, Yizhuang, go down, check out BYD or Baidu or whatever. then, you know, I'm looking forward to it because when we go in April, it's always a frenzy. There's always somewhere to be, someone to talk to. This is a family trip that I'm turning into more of a business-like thing. So.

Lei Xing 

Yeah.

Get ready for

the heat. I'm warning you.

Tu Le 

Well, isn't

it so which one of the four cities in China are the four furnaces is is yes.

Lei Xing 

So Xi'an, I mean,

normally we were very lucky. It was only in the high, low thirties. But starting today, we're leaving tomorrow, but starting today was like 38 and it's going to be close to 40. So Xi'an is definitely one of it. Chongqing, Wuhan, and I think Nanjing are together the four.

Tu Le 

That's how it's done, Jake, too.

Lei Xing 

Yeah, but Beijing has been pretty human lately. And I was joking, speaking of Baidu, I was joking with Baidu PR people. You announced this collaboration with Car Inc. but sorry, it's Wuhan only. It's something interesting that you can kind of rent a robo taxi for more than a few days.

Tu Le 

Mile.

In Wuhan, the local government is very supportive ‚Åì more than every other city so far because almost every major ‚Åì robotaxi company has a pilot in Wuhan. They do ‚Åì robotaxi buses in Wuhan on the highways too.

Lei Xing 

Yeah, so say Wuhan is definitely one of the, maybe the capital of Baidu, if not for the capital of robo taxi. ‚Åì

Tu Le 

And we should give Wuhan

some props because it is a Detroit. It is one of the Detroit's in China. There's Shanghai, there's Beijing to a lesser extent. don't think, Beijing and Shanghai, they have factories, but a lot of it is because the companies that reside there. And then you go to Dongbei. ‚Åì What's the city in Dongbei ‚Åì that has... ‚Åì

not hard being forget that has the Changchun has some factories and then because of BYD down down south in Shenzhen and then Xpeng has Guangzhou but ‚Åì Wuhan is definitely a major automotive hub so that's also why a lot of companies and the weather is great generally speaking I've never actually been to Wuhan

Lei Xing 

I'm Changchun Madalyan. I'm Shenyang.

Tu Le 

No, no, I take that back. have been to Wuhan. I take that back.

Lei Xing 

Well,

yeah, I mean, I'd to go, ‚Åì you know, just experience actually the robotaxis and being able to rent. I mean, it's a new concept. Rent ‚Åì a robotaxi for hours and for days. Don't know how that works. OK, do it. Hey, Will, please just download the... ‚Åì

Tu Le 

你看 你看 ⁓

Carve.

Lei Xing 

‚Åì a RoboKaipao

Tu Le 

‚Åì

Lei Xing 

app and then try to run a robotaxi if you do a few days and you can do it. ‚Åì

Tu Le 

Did you bring your

Pocket 3, Will? Show us. Send us a try to... Has it launched or they just announced it?

Lei Xing 

I think it's launched. I think you can do it. You can kind of starting, you know, yesterday or something.

Tu Le 

But you probably

need a local, because some of the Baidu services, can't do it if you have a foreign passport.

Lei Xing 

I didn't record. Yeah. Yeah. Yeah.

Yeah.

Tu Le 

‚Åì so Will, who's on the live stream right now, he runs a platform, content platform called China Driven for the folks that have not seen his videos. ‚Åì yes, very, ‚Åì Will is great, super knowledgeable, very opinionated. That's what we love because, he's not going to sugar coat the things that he likes and the things that he doesn't like. But, ‚Åì but yeah, and so

Lei Xing 

Very quirky videos.

Tu Le 

What else can we talk about? ‚Åì

Lei Xing 

Well,

yeah, mean, just quickly on the big numbers, I'm looking at my one on the WeChat. ‚Åì June, because we're at past the midway point, which is kind of ‚Åì reflecting back on the first half of the year, total auto sales, over 15 million. NEV sales, nearly 7 million. ‚Åì Export, auto export, over 3 million. These are the big numbers.

If we think about it, second half of the year, will always be higher. So, ‚Åì 7 million first half, probably just, you know, guesstimate over 8 million in second half total 15 million, which I think we talked about earlier episode, ‚Åì that this year China will sell same number of

China will sell as many NEVs as the US sells light vehicles. That's kind of the big picture we're looking at. the 45 % in June.

Tu Le 

And the total

China passenger vehicle market will be larger than the European and the US market combined.

Lei Xing 

And yeah, and then ‚Åì speaking of some of the ones that are not, some are not ones, these are familiar names. Porsche, BMW, Mercedes, Volkswagen, ‚Åì all down, double digits first half. Not surprising. ‚Åì

Porsche, they sold 21,000 units in the first half of the year in China. It's a...

Tu Le 

Let me give the

audience a sense of how far they've fallen. Porsche in its best years would sell just over 350, 360K global units. About 50 % of their sales comes from the Macan and the Cayenne, driven a lot by the China market. So the US and China markets were...

their leading markets with China and you correct me if I'm wrong, getting to about 85,000 units or 80 ish thousand units.

Lei Xing 

China

at the top was over 90,000, close to 100,000. And it's prime.

Tu Le 

Yeah, okay. So.

We're seven months into the year and they're at 21,000 units. They're not going to get close to 90,000 units. So let's say they get to 50 or 60. And remember that they only ship from Europe and with the European market down. So they just made an announcement. Sales are down in China. Sales are down in Europe.

Those are up a little bit in the United States. The US market is not going to make up for the losses in China, let alone the losses in China and Europe. And so when you're only building 350 to 380,000 vehicles, a 50,000 unit hit from one country is a massive, massive injury, know, massive hit to sales. And what's

What's kind of telling Lei and you and I, what, only five, six years ago would see a lot of Chinese media asking the Porsche executives who were smiling ear to ear because they saw nothing but growth since entering the market in 2001. The Chinese media would always be like, are you going to build locally? And so there's no chance that they're building in China now.

They might actually have to shut some facilities down or lower their output, their capacity.

Lei Xing 

They were getting cold.

Because one of the comments that one of the previous poor China CEOs made back in the day was when we get close to 100,000 units, we may consider producing locally. So they were almost there. Yeah. And you talk about the injury. Well, the biggest insult to injury, the biggest saw on the wound, guess who it is? It was Xiaomi. They sold over 300,000 units in 15 months.

Tu Le 

But he was just teasing, he was just teasing.

Lei Xing 

Mostly, I'd say 99 % SU 7s because they just started delivering the youth.

Tu Le 

Well,

I think we can say that they're all SU7s, the 300,000 are all SU7s.

Lei Xing 

Yeah,

right, right. But think about it. A year from now, what do you think that number is going to be when it's 30 months?

I think it's gonna surprise a lot of people. It may get close to a million. That's what we're looking at. If everything goes smoothly.

Tu Le 

so

So he, and it's going to ruin a lot of companies. The combination of BYD and Xiaomi pushing or grabbing sales from all these players because it's bad enough that BYD has taken sales. But now with the addition of the YU7 and the SU7, now we start thinking about

Is this the straw that broke the camel's back and which companies did we watch more closely that ‚Åì might actually have to go out of business?

Lei Xing 

So one of the things I remember just a few days ago, the MIIT actually came out with the online system where suppliers could submit ‚Åì complaints or it's a system following that 60 day payment agreement promise that was announced like a month ago that almost every automaker promised. So there's actually a system, online system where you're going to be watched.

These are some of the in the back that are going to force you to ‚Åì do the things the right way. At least from a regular... ‚Åì some water.

Tu Le 

Well, the central government wants them, but

the OEMs will find a way.

Lei Xing 

Yeah.

Tu Le 

If, if they continue to see pressure from BYD and other companies on downward price pressure, the weaker players will find a way and they'll be called out for it because the central government does want some order. They're very concerned about the whole involution thing that we've talked about in the past. And what's your opinion? I don't see.

the intensity of the competition changing significantly in any way this year. Now, maybe it lets up in Chinese new year of 2026 and then kind of settles, but will have been four years into the price war. So it's not like this was this blink of an eye. Four years of just holding on if you're an OEM or a Chinese EV maker, that's one of the weaker players.

That's a long time. And you might have entities, provinces, large cities helping fund some of the weaker players subsidizing, but these cities, they run out of money too. It's not like they have money in perpetuity.

Lei Xing 

That's one of the things, ‚Åì there was some recent news about the subsidies not being made, ‚Åì not enough to support the demand for these kind of subsidies. Yeah, sure, yeah, already a warning.

Tu Le 

So... So...

We do know when you're there, you're there now, Lei, it isn't the same as it was 10 years ago. The economy is, first of all, the base is larger. Though to grow at five, 6 % is much more difficult. And there is a concern amongst a lot of Chinese about being able to keep their job and things like that.

Lei Xing 

I'll tell you something. Well, this is not EV related but having been in Xi'an the last few days, this is my third time, first time since 2019. I was a little bit of surprised that Xi'an is one of the most culturally diverse, vibrant, young, active city that I've ever been to.

‚Åì And sometimes you, right, we do these touristy stuff. People mountain, people see is the Chinese way of seeing this. Are they spending as much? It's a question mark, but at least I don't see some of the way that it's being portrayed about, I mean, there's economic pressure, but I mean, I feel like

Xi'an is a more vibrant city than Beijing. Some of the other smaller tier cities, the reason being I think there's more lax ‚Åì control on kind of these street stalls. You don't see those anymore in Beijing.

Right, just one observation that I'm throwing out there, ‚Åì that sometimes, know, hey, I could be living in Xi'an and it's a fun city. And sometimes you feel like, you know, Beijing being the political capital of China, there's more kind of control on what can be done. Right. ‚Åì

a lot of new we economy, meaning live streamers, people on the street trying to, you know, we're tourists, right? You you want to take pictures, right? There's these photographers on the streets because Xi'an is a very historical, also ‚Åì culturally, because of the history.

and the Grand Tongue Mall that they have.

Tu Le 

The Muslim corridor.

Yeah, I actually haven't been to Xi'an in quite some time, but ‚Åì Xi'an is how I would... ‚Åì

Lei Xing 

Yeah.

But yeah, so. ‚Åì

Xi'an ‚Åì

Tu Le 

Yeah, I think Qingdao is another tier two, turning into tier one. You know, there's a handful. It's a, well, it's Changsha, a new tier one city. I don't think it is yet, Yeah.

Lei Xing 

It's definitely a tier two. I'd say it's a tier

one, a tier two, not a new tier one. It's a tier two, yeah.

Tu Le 

Right.

So the two things that I always tell people when they come to China for the first time or visit China for the first time, the things that they'll remember, the terracotta soldiers and the Great Wall. Those are the two things I always enjoy seeing, experiencing. The Great Wall is just really, really mind blowing.

It's just an amazing scene. And because it's so close to Beijing, it was pretty easy. Drive for an hour, drive for an hour and a half, and you're at the wall. And then, so we did hikes and spent a lot of time in my friend's villa's there. it is, yeah, anyway, so.

What else? one thing that, go ahead.

Lei Xing 

No, I mean we can talk about the Onvo L90 a little bit because one of the things that happened was this was the longest, longest, even I thought the NIO day last year, December in Guangzhou, Lei Bin spent quite a long time talking about the ET9 and the Firefly, but he spent three freaking hours talking about the Onvo L90.

And he's not even the CEO of the brand. So that's something that I always think about when I think about NIO is that Lei Bin is Nio's, what's the word? ‚Åì

Tu Le 

He's the NIO Whisperer.

Lei Xing 

Like he's

‚Åì the person that's kind of holds everything. I mean, for Onvo, a sub-brand launch, new model launch, he's the person up on the stage talking about the vehicle.

Tu Le 

‚Åì He's the more emotional guy of the Lei

Xiang and the He Xiaopeng and he feels like he's willing, he's trying to will his companies to success.

Lei Xing 

Will and try, right? Try meaning himself talking for three hours. Try meaning they did a stunt 10,000 kilometers in an Onvo 60, battery swapping its way across China in 90 day hours. Right? They're just trying to show, ‚Åì trying to sell basically. And I kind of think

This L90 carries so much burden, so much weight.

Tu Le 

It's always the next product that carries that weight. Because before that it was the Firefly.

Lei Xing 

because he did that.

Yeah,

but

Nio is 11 years old. They've launched, I don't know, a dozen models across three brands. Can you think of one model that has consistently sold over 10,000 units a month?

Tu Le 

Well, that's why you feel for him because he does seem like he's trying to will success into his products. And I think he's perplexed like you and I and China driven and some of these other people. The products are good. It's not like, man, this is not going to succeed. It's a complete piece of trash. NIO vehicles are not bad.

Lei Xing 

There have not.

Yeah.

Tu Le 

They're really good. Some of them are close to great. I think the ET9 is super, super cool. I haven't driven it. I've sat inside for a bit. I'd like to drive it when I get back. I think he, I almost feel he's like, I don't know what is going on here. Why we can't have one runaway success. And the fact that the YU7 got so much.

Lei Xing 

yeah.

Tu Le 

I'm sure the guys at XPeng I'm sure the guys at, at, at Lei Auto at NIO, they're all like, hmm, hmm, hmm. And I'd written in last week's newsletter, I said that I hope the Western CEOs are watching this and are taking copious notes because this is probably globally like,

Can you think of in the last five years any other vehicle that had gotten this much ink? I can't think of one.

Lei Xing 

More. ‚Åì

Tu Le 

‚Åì

A Cybertruck, you know, that's a lot, you know, like. ‚Åì

Lei Xing 

mean, the SU7 and the YU7 are two Model 3 moments, basically. Maybe the YU7 more. what I thought was interesting was I mentioned about Lei Bin taking a dig at maybe the 7X, but maybe the EREVs in general. was like, why carry the baggage? Why carry the baggage? Baggage meaning an engine and raging extender.

Tu Le 

Mm-hmm.

Lei Xing 

on the vehicle and he's like, ‚Åì I hope that I8 launch a success. Cause he's like, we love BEVs, you know, but no EREVs let's not buy EREVs. Basically that's what he's saying.

Tu Le 

So this is what China Driven

says.

My NIO videos on Billi Billi always have one or two people saying the same thing. I don't want someone else's old battery. Which is a little weird, but because, okay, fair enough. so. ‚Åì

Lei Xing 

Bye.

Tu Le 

One thing I wanted to highlight because I think it's a great, great article was a Reuters article a week ago from Nick Carey and our friend Nori, Shirouzu. They highlighted in the very early parts of the article that Chery had a Euro spec Omoda 7 and they knew the suspension was designed for Chinese roads.

Lei Xing 

Mm-hmm.

Tu Le 

So if you go to old Europe, a lot of old brick roads. And so they wanted to make a design change before they started shipping and create a Euro spec Omoda. It took them six weeks to do that. And in my experience, when you're completely changing out a suspension system in a vehicle, that

takes an entire model year for most legacies. So.

Lei Xing 

I'm using

it.

Well, you can call it, maybe call it cutting corners. That's the bad way of putting it. But you can also say it's China's speed, right? Maybe it's somewhere in between, but the fact is that...

Tu Le 

So we'll see

whether long-term quality and reliability is at risk because these vehicles are brand new and they're just shipping. We can look at it in many different ways. Cutting corners is one way to look at it, but we can also look at it like the Germans over-engineer, maybe the Americans over-engineer. Though, because...

If you talk to the Chinese EV makers, they'll swear that they're not... And the Chinese government is also really scrutinizing that too, right? You know, the quality and the cutting corners that you're referring to. But I think, I don't think none that I've spoken with feel like...

we're moving too fast and we're missing things. think they really lean into their current processes and say, we've, have as much confidence as any legacy automaker that our product is high quality, very reliable. So.

Lei Xing 

‚Åì

the other thing to mention, I think ‚Åì very importantly when the kind of from the foreign lens looking at the China EV market is not the China speed of how things come out quickly, but the China speed of ‚Åì how they learn fast. the Onvo L90 is the perfect example because L60 launch was kind of a

many issues. Let's just put it that way. I don't want to say disaster, if we saw a few days ago those images of L90s lined up, that means they're ready to deliver. The same things happened with the YU7 not long after launch, same things with the G7, and the part of the problem with the L60 was one, kind of their network

Tu Le 

Okay.

Lei Xing 

availability of the model and the lack of availability of the swap network.

Those things are gone. So you would imagine that L90 after learning these lessons, that's why I say it should be a runner. ‚Åì And that's the learning from one model's mistake and not trying to repeat it.

I think you do see a lot of that ‚Åì in almost all of these competitors

Tu Le 

We always have to lean back and refer back to the fact that China economically is a very young country. They didn't have these established manufacturing processes like the legacy automakers do that, that they rely on heavily because these processes are very rigid. They're very analog, they're very mechanical.

Lei Xing 

Thank you.

Tu Le 

the vehicles that are being produced in China are not, they're complete opposite. So I almost look at it like maybe the old way is not evolving fast enough with a new type of product. again, and Will, let me ask you pointedly, you have an ET7, you've had it now for what, two and a half years, almost three years, I think.

you how's the quality and reliability been for you? ‚Åì I haven't heard you complain about it. I haven't spoken with you in quite some time, but, you know, if you're still listening, you know, put a comment in there because I don't hear about major quality issues from my friends who have Chinese electric vehicles. So.

Lei Xing 

And do

remember that whenever these new models from these brands launched, they offer significant, well not significant, but they offer special discounts for existing owners buying additional vehicles. And more often than not, many of these loyal owners, own multiple NIOs they own multiple XPengs they own multiple

NIOs right? So yeah, right? Well, it's just never been a problem.

Tu Le 

I just think

effectively, Lei, the West has a lot to learn from the Chinese EV makers. Now, whether that's a pride thing that doesn't allow them to do that, some of it is just a big company versus small company, nimble company, because we can't expect the General Motors to instantly adopt Apple.

Lei Xing 

Bye.

Tu Le 

processes and policies, Google processes and policies. So some of it is just physical constraints. A lot of it is cultural. But some of it is also we need to point at leadership not being able to make these drastic changes either. ‚Åì And so

Lei Xing 

Look at how Mercedes is I'm looking at the pre-sale of the new battery electric CLA. If you order by August 1st, you get a free upgrade to a different trim. If you order by September 1st, you get a lesser discount. If you order right before the launch date, you get a lesser discount. There are different ways they entice you to come out and purchase.

Tu Le 

One last thing I'll talk about quality Lei is Western analysts and audiences and OEMs, talk about the risk because to your point, I don't hear that from the Western automakers, the cutting corners, but it's implied a little bit. I don't think they want to go out there and extend themselves and say that these companies are cutting corners, but it's implied.

But then you point back to Ford, who's written $2 billion a year for the last four years in warranty issues. So don't throw stones if you live in a glass house. Your processes, your warranty costs, they need to be bulletproof if you're gonna be accusing people of cutting corners and having vehicles that in five years from now will be falling apart because you didn't

build a physical prototype for your door handle or whatever, and you didn't test it over X number of miles in the real world. I don't know what the right answer is. You know, I'm not a technical person, but all I do know is that again, because you and I live there so long because we still get in these cars multiple times a year. I don't see any

difference between First of all, think the designs are better generally speaking the Chinese brands and then second of all If you get into a Tesla is not great and I would argue that the Tesla's in China are built better than the Tesla's in the United States But anyways, so so for those that are curious, it's the Reuters article Nick Carey ‚Åì Norihiko Shirouzu

Lei Xing 

this.

Tu Le 

They wrote a ‚Åì longer piece. It's worth the read. forget what the article is called, but it's in my newsletter for those that subscribe to the newsletter. Anything else that I wanted to talk about or bring up, but you can riff a little bit. Have you been to the Muslim Quarter yet, Lei?

Lei Xing 

‚Åì yes I have. ‚Åì

Tu Le 

Can you tell people

what's this big deal about the Muslim quarter?

Lei Xing 

It's, well, one of the things about it is that you cannot put too much control over that area, right? And then the other thing is just the food.

Tu Le 

Yes, the food. That's what I meant. Oh, hey, hey, hey, we should actually talk about this because Cui Dongshu, he said when on July 4th, yeah, he said, the one big beautiful bill is really an advantage. Advantage China EV Inc. When that passed, because I wrote this, hold on a second, I wrote this in my newsletter.

Lei Xing 

Yeah.

It is here.

Well, yeah.

Tu Le 

He said, I quote, intelligent EV models against the obsolete technology of internal combustion engine vehicles. So, and.

I got a, so I sent the newsletter out yesterday morning within an hour and a half to sending it out. get six or seven emails. This week's newsletter hits hard. And part of it is because I riffed on my agreement with Cui Dongshu about guys, this is really, really, ‚Åì going to make us uncompetitive.

Lei Xing 

Yeah, it's the Trump stimulus, right? I think we mentioned this or joked about this earlier in the year. And the tariff thing is still very fluid. It's a roller coaster. mean, today we agree, next day we don't. The day after we agree again. Yeah, I mean, and then I think China is just...

Tu Le 

Yeah, anyways.

Lei Xing 

It is just full steam ahead on the EVs.

Tu Le 

Actually, let me ask you, we did not talk about this. Anything stood out on the June sales side? I saw the numbers too, but anything that stood out to you?

Lei Xing 

I mean there was a strategic kind of retrench from Li Auto because also from ‚Åì a managerial point of view they kind of had a shuffle all because they want to make sure this i-Series model launches are a success and they make sure they have the ‚Åì supercharging network ready. This was mentioned last year because they delayed the launch till this year.

So if we look at a one month or one weekly kind of up and down, I can't draw any conclusions. Don't be like, my God. ‚Åì Yeah. Yeah. So for June, ‚Åì usually it's higher anyways, but for some specific examples, it may not be the case. XPeng right?

Tu Le 

Summer's tough. Summer sales numbers are tough.

One of...

Lei Xing 

first half already more than the full year 2024. So, yeah, I think they're kind of on cloud nine, but.

Tu Le 

Brian Gu and He Xiaopeng must be feeling pretty good. Sarah must be feeling pretty good.

Well, you know, but they can only pat themselves on the back for about an hour before they need to get back at it because what Xiaomi is doing, I know for a fact, what know NIO is doing is pulling in production of the L90. Li Auto is pulling in production of the I8. So, XPeng needs to be pulling in production of the G7. And make, to your point, two weeks ago, hey,

You don't have to wait a year for a YU7. My car is just as good and it's available in six weeks. That's what they're all doing.

Lei Xing 

Yeah, and also the... ‚Åì What else was gonna... I'd say, know, speaking of BYD, BYD is actually, we're looking at their monthly numbers. At some point, it's been below 400,000 units. At some point, how do they get... If they want to get to 5.5 million, I think at some point in the second half of the year, they have to get to half a million.

Tu Le 

Unfortunately, for BY-

Lei Xing 

How do they do it? I think they're facing

extreme pressure from Geely because Geely is EV and Chery So that's something to watch. Cause when you're at the top, it's just so much harder to grow higher as we've said before.

Tu Le 

and Chery

And

this goes back to Sam Livingstone, the car design research guys that BYD is now known as almost like the low price. And so they need to establish themselves in a multi-dimensional way, the brand does. And I think...

We see Zeekr separating itself a little bit from a branding standpoint. I think they lean into that a little bit heavier, a little bit more heavily than a BYD.

They seem to kind of be this one trick pony like Tesla. I'm just going to cut price again. I'm just going to cut price again. Because does God's Eye offering God's Eye standard, does that move the needle to your point about getting over half a million? Does guaranteeing that you're not going to be out of pocket for any accidents using the parking feature on God's Eye, does that move the needle? They've trained the Chinese consumer to only really

buy when there's another price cut. And you could say that more broadly about the market due to the length of time that the price war has been in. But which is unfortunate because there's so much innovation going on and we don't highlight all the cool things as much as we should. We only really talk about the sales numbers and stuff. I would, you know, I'm hoping that in the next seven

six or seven months Lei you and I can be like, man, we just got out of this car. This feature is great. You know, this feature is great as opposed to like, man, they cut price again. They're offering seven years of free financing, blah, blah, blah. So anyways.

Lei Xing 

Well, mean, Li Bin

talked about the three-row SUV L90. It's talked about three features. I forget that it's the only SUV that offers those three features at the same time. So trying to be different.

Tu Le 

That'll

change in six months, less than six months. So anyways, hey, I'm about done. One thing I did want to mention is that Joe White and I have launched a platform that is much more focused on ‚Åì Joe's expertise and kind of, I'll throw in a little bit of my commentary, but it's called At The Wheel for those folks that are looking more for.

Lei Xing 

So.

Tu Le 

a North American view on things. interviewed Ed Kim ‚Åì recently. ‚Åì I just think the reason I started at Lei because there's still a lot of uneducated folks on what's going on and how fast it needs to change. ‚Åì that, let's get to questions unless you have anything else.

Lei Xing 

No, I'm good.

Tu Le 

Okay, so SPX, what's the market trend for EREV in China, in Europe, and it's a market share relationship with PHEV and EV. Is it a better option as a transition BEV?

Lei Xing 

Well, here's a way to look at it. Xpeng is due with the EREV. Xiaomi is due with an EREV. At the same time, the Li Autos they're kind of moving while they have these new wave of BEVs coming. So I think there's both dynamics at play just because of different strategies of different companies. But I think for...

Some time to come, I'd say until the end of this decade, EREVs and PHEVs, if you look at the Chinese market or the global market, it's going to be ‚Åì a significant portion that the consumers will want until the end of this decade. That's kind of my way to

Tu Le 

I want to look at this more globally and I think EREVs will become a huge thing in the United States because we do have different use cases for what our needs are, at least professionally and commercially. The truck drivers, do need something that can ‚Åì tow. Until individual cells and modules and battery packs can get to 700, 800,

comfortably miles of range and which means that if I'm towing something it goes down to three, 400 miles. Okay. I think EREVs are going to be a thing. That being said, Ram is launching an EREV ‚Åì truck. So there'll be an initial backlash, but I think once that backlash dies down, people are going to be like, this is actually pretty good. This is pretty cool.

So we should see it, but where the Chinese are way ahead is their ability to design it into the vehicle. You know, I think the Western automakers are still like, oh, let's base this on an ICE design and cram in this small engine and a battery pack. And so if you get into vehicles in the West, a lot of them still look like ICE vehicles that were

Frankensteined into a clean energy vehicle as opposed to in China everything's a clean sheet now and it just kind of makes sense from from the moment you grab the door handle and get in the vehicle

Lei Xing 

I think besides NIO...

everybody's gonna have some sort of plugin or EREV

Tu Le 

And, and SPX, this is driven largely by Li Auto who has had a ton of success with their EREVs and with BYD because BYD is 60-40 split. And it allows BYD to enter these hundred plus markets and say, you know what? You don't need to commit to a BEV.

Lei Xing 

Right?

say Li Bin definitely learned a lot from Li Xiang with the Onvo L90 launch because it's for families, it's three-row SUVs, but it's not an EREV It's a battery-swappable SUV. ‚Åì

Tu Le 

So think this, ‚Åì

so Jeffrey is on. What's going on, Jeffrey? I think this refers back to the quality. The first time I saw NIO, I was blown away by the quality. Okay. And then ‚Åì Will, I asked Will about any issues with his ET7. He said no problems at all. at least, you know, intermediate term, two, three years, there's no quality reliability issues according to Will.

And he'd tell us, he'd be honest with us if there were. Oh, let me see here.

Lei Xing 

One of the viral videos that the L90 showed ahead of the pre-launch yesterday was a truck hitting it from behind at 50 kilometers per hour and it was pretty sturdy. That actually had a lot of views on that talking about safety.

Tu Le 

Studies brands nowadays always show that in-house standards for safety and testing that exceeds NASH.

Lei Xing 

Always saying, you know, this is

5x, 10x the standard.

Tu Le 

And I just don't think people realize that, how far ahead they are on some of these things. So, Jeffrey, Tesla did a study, the Tesla car made in China had much better quality. There's so much pride in China. Fremont, no one is happy about it. MNSGA, make NIO stock great again. ‚Åì

Lei Xing 

Make me a what?

Tu Le 

Stock grade again. XPeng readjusted basically all rear wheel drive models. is Will from China Driven. Getting pricing correct. ADAS is now coming more to the forefront of consumer discussion. Now XPeng is starting to reap the rewards of years of ADAS marketing. ‚Åì So Will, ‚Åì what you should keep an eye on is Australia because XPeng is not doing well in Australia.

That's one of the markets that they're going to have to reevaluate. ‚Åì Jeffrey, keep up the awesome effort. We appreciate you both. I love the transmission tunnel with an EV battery. I think he's being sarcastic about that. think Jeffrey's being sarcastic about that. So let me check LinkedIn real quick. Mark Wilcox, Farley recently called China an existential threat. Thoughts. So let me start with my two cents.

He was at an Aspen conference and, ‚Åì

Lei Xing 

That was the second

time that he's mentioned something about China. Big time.

Tu Le 

Yeah.

And he was being interviewed by the guy that wrote Isaacson. Yes, Walter. ‚Åì yes, he thought, so let's, let's back up a little bit. Mary weeks prior to Farley two weeks ago, she was interviewed at a Wall Street Journal conference. She said that China.

Lei Xing 

Walter is excellent. Isaacson.

Tu Le 

didn't have any technology at that. Farley completely disagreed with her in this interview with Isaacson. I actually linked it to my newsletter two weeks ago. So for those people that want to watch it in full, it's a 40 minute video that I watched on 2X. So, but it is almost exactly what I think.

I agree with what Farley said needs to happen for the United States to be competitive. So if you're wondering what his thoughts are, it's definitely worth watching at two speed or 2.5X. And he's right. I think that Mary is being disingenuous when she says that there's no lead, there's no technology lead. There's definitely a technology lead. ‚Åì

I do like what GM is doing, but then they announced that they're writing a hundred million dollar check to double down on ICE vehicles too. I don't know if you can be a no man's land like that. I don't know if you can sit in the middle and win.

Maybe they're not trying to win. But what do you think about this existential threat?

Lei Xing 

100 % agree. And it's not like it's just recent. It's happened probably when we started doing this podcast, or even earlier, 2021, four years ago.

Tu Le 

Well,

let's think more broadly, Lei. Let's think about drones. What company do we think of when we think about drones? What company do we think of when we think about our kids in social media? These are Chinese companies. That's innovation right there. Okay? We don't think of Meta Who uses Facebook anymore? My kids still use Facebook.

Lei Xing 

Exactly.

Tu Le 

So it's just a broader, there needs to be a broader discussion about multiple sectors, not just the electric vehicles.

Lei Xing 

thing is for GM, specific to GM, what's happening in the US and China is completely different because in China, GM has Wuling, GM has the Buick, which launched this Electra brand and they're trying to assimilate to the Chinese ecosystem very fast by incorporating Momentas right? They're invested into Momenta, but still. ‚Åì

which is not something they can do in the US. it's trying to... Right. And so for Mary to say that then...

Tu Le 

But they don't want.

the West to know what they're doing in China.

Lei Xing 

It's conflicting.

So, but because she knows what they have to do in China.

Tu Le 

The the so I'm gonna put you on it

I'm putting you on the spot, Lei, because Will just asked who we think the next Chinese brand that's going to be in trouble is.

Lei Xing 

I saw a Hengchi 5, I think. I'll post some pictures, which is like, this must be one of a few hundred in China that I see. ‚Åì Who's... Well, NETA is already out of the conversation, I think. ‚Åì Who's next? I don't know.

Tu Le 

So does that sound right?

He

I protect.

Lei Xing 

I'd

say one of these premium brands from these ‚Åì well-established NEV brand makers. I won't mention who, but you can kind of guess.

Tu Le 

Yeah, yeah, so.

That just goes to show that.

They're still in early innings when it comes to premium, the Chinese EV makers and their understanding of the Chinese consumer at that price point. ‚Åì And they're trying to use the same strategy that they do, product introduction, all these things that they use for the mass market successfully. And we're talking about a consumer which is buying a third or fourth car.

This is not likely the first car, the only car they're going to be driving. So how you market to them, how you engage with them is going to be completely different. Now they're not necessarily much, much, much older than the Chinese consumer that buys the mass market brand or a Xiaomi, SU7 or YU7. Like in the West where an S class buyer versus a C class buyer.

are probably just probably 40 years between those two market segments. know, a seven series buyer versus a three or four series buyer. There's a lot of age between that. In China, the age difference might be 15 years, maybe. So ‚Åì I think. And this is where, again, we talk about brand because the price war has eroded any semblance of differentiation through brand, through positioning.

And it's just who's the latest to ship? Because my assumption is that I'll have all the features that are in the market.

Lei Xing 

There was a news about the Maserati, what's the model? Grecale, is that the way to pronounce it? The SUV. Selling for like 380,000 RMB at a huge discount.

Tu Le 

‚Åì yeah, I forget.

So I'm telling my friends here in the United States, I'm like, man, you could get a really, really nice BMW for super cheap. And they're like, no way. And so I send them pictures and they're like, what? Can't believe it. anyways, hey, I think that's all the questions. ‚Åì yeah, so next week we should be

Lei Xing 

Yeah. ‚Åì

Tu Le 

9 a.m. again for those that apologies last week was 4th of July lots of going on lay had just gotten to China and that's more on me than him But happy birthday America belated happy birthday America So everyone thank you for joining us as always good morning. Good afternoon. Good evening. We will talk with you all next week

Lei Xing 

Yeah.

Likewise, bye bye.