Good morning grid connections listeners.
Today we're joined again by guest to lay the founder of Sino auto insights.
And he's here to unpack China's profound impact on everything from electric vehicles and EV charging infrastructure to the rise of plug -in hybrids and the competitive landscape
of the Chinese EV market.
We'll also discuss what global tariffs can mean for Chinese made vehicles and how these changes might ripple through the global automotive industry.
Before we get started though, I want to ask a favor.
If you enjoyed this episode, please share with at least one person you think would love it too.
And don't forget to leave us a pause review on our podcast page.
Your support helps us continue to bring you insights from industry leaders like to lead today with that.
Enjoy.
Chase, thanks for having me on again.
I think just to kind of kick it off, mean, I was looking back at our episode.
was almost a year ago that you were on.
Yeah.
Which it didn't, it doesn't seem like that long, but even in that past year, there's been so much change.
I think unfortunately some of the challenges we probably talked about last year are still, present, but I wanted to kind of talk with you first about, for anyone listening today
that might not be familiar with your work.
as I said, you have a really strong background in a few different fields of lived experience.
And even before we went live, we were kind of talking about, one of the things I really admire about your work versus like the keyboard warriors out there is you get on, you get
on the plane, you, you're get behind the wheel.
You actually are out there, in a lot of different markets, seeing firsthand what is happening in the space.
So, just real quickly, if you could just give us a background about a little bit more around that and what Sino auto insights brings the industry.
Sure.
Let me take a few minutes because I'm sure you've grown your audience.
So maybe they didn't listen to the first episode that we had together.
Tu Li grew up in Detroit.
First job was at General Motors and worked in the automotive industry for few years before going back to graduate school and then moving out to Silicon Valley.
I'd spent almost seven years there working in high tech.
at two companies that I believe are probably arguably the best in hardware and software integration from a product standpoint, Apple and Logitech.
And so I learned a ton from a digital standpoint and understanding digital products and how fast a high tech market and sector moves.
And then I met a girl, a woman in San Francisco, and she happened to get transferred over to Beijing.
And I'm actually Vietnamese, so I'm not Chinese.
I couldn't speak the language at that time, but then ended up chasing her over into Beijing.
what I thought or what we thought was going to be three, four, five year thing ended up being 12 and a half years.
And about seven years ago, I started a consultancy called Sino Auto Insights.
Our tagline is we're at the intersection of technology and transportation.
We have three core beliefs.
One is innovation is now moving east to west.
Think TikTok, think DJI drones.
Number two is that all companies are becoming software companies.
I actually need to probably cross that out and say, are going to be AI companies.
And the third thing is you're not moving fast enough.
And if we've learned anything, we saw Ford is slowing down on the EVs.
We saw GM laying off people this week.
We're seeing this disruption and actually
Let me take that back, Chase.
It's not a disruption.
It's a reset.
That's how broad and deep what's happening in the transportation sector is.
And to your point, having lived in China for 13 years, I got to see the Neos, the Xpungs, the Li Autos, the BYDs mature and grow into the players that they are right now in the
China market.
And to give your listeners some perspective,
Last month was the first month China had reached 50 % take rate on passenger vehicle sales that were clean energy vehicles.
So clean energy vehicles, and we can argue, because I know a lot of people out there don't think PHEVs are clean energy vehicles, but the Chinese government considers them to be
clean energy.
So they call them NEVs or new energy vehicles.
So battery electric.
plug -in hybrid and fuel cell electric vehicles.
And China became the largest passenger vehicle market in 2009, overtaking the United States.
This year, they're probably at around 26 and a half million cars.
And if we're thinking of half of those are gonna be NEVs or close to half of them this year, when the United States is gonna be around probably 1 .2, 1 .4 million.
That gives you some perspective on how competitive the market is.
Tesla is even struggling in China.
and to your point, before I bogart this entire conversation, I was just there in April for the Beijing Auto Show, got to meet up with a lot of Chinese EV companies, try out their
vehicles.
We actually, with my co -hosts, or for our podcast, China EVs and More, we drove
Xpeng G9 from Beijing to Shenzhen about 1 ,500 miles using mostly level two intelligent driving.
So that was interesting.
And again, to your point, I try to separate myself from the people that are critiquing the Chinese EV industry because I'm out there trying it out.
And I'd mentioned this before.
We started
I also am driving a lucid right now for a week to try that out.
So I'm able to compare and contrast the Chinese EVs and some of the European and American EVs too.
Yeah, I think that's a great overview of what I've always really found really entertaining about your work.
And just really the perspective, it's definitely based, I think in an optimistic light of like how to help a lot of these automakers that are struggling with the move to electric
vehicles, but also kind of bringing the facts that, there's a lot going on right now in China.
That's really pushing the industry forward.
And sometimes I don't know if the U S especially is seeing as big of the direct impact as, maybe like the European market is already with, Chinese electric vehicles, but.
With a lot of this stuff you've already talked about just there.
I think that gives us quite a bit for what we're going to go over in today's episode.
But I think you mentioned driving the loosest.
Let's just kind of start there.
That's a really interesting one because they are definitely still in the startup phase.
I think there's a growing interest in their product, but they're pretty still small.
but they're taking more of the startup approach.
They're putting a pretty strong focus on efficiency with their electric vehicles.
They're putting in a, focus on software and with this kind of drive you're doing right now and your experience, what, what have been your takeaways with, one of the newer, more
successful startups in the American EV space.
Well, I would debate whether they're successful yet.
I think that they have their second product that's going into production, the Gravity, which is an SUV, but it's still at the $80 ,000 price point.
And so if we look at the US EV makers, there's really only Lucid and Rivian, arguably.
Now, Kia and Hyundai have really taken up the mantle from a legacy standpoint.
That's because up until recently when GM lost the Equinox, the Blazer EVs, there was really no challengers, right?
Ford had the F -150 Lightning, which was a truck, and which they said was gonna start at $40 ,000.
I think it starts at 57 now.
And the Mach -E.
The Mach -E has largely been unchanged since it launched.
And so we're seeing the Koreans really take advantage of the gap in products or affordable products for most Americans.
And that's where Lucid is.
You know, the air starts at around $70 ,000.
And so it's not something that most people can afford.
I can't really afford it myself.
But what I will say about it is that
for a first, specifically for a first effort.
It's a great, great car.
think if you get behind the wheel, I don't hear any rattles.
I don't hear any, you know, quality issues that you would normally see in startup cars or, you know, early production vehicles.
So they've been able to dial in even with a small production.
base some of the early issues that they've had.
Now there's some quirks with the vehicle, I've only spent a couple of days with it, so I want to spend a few more miles behind it before I really, really judge it harshly.
I think that's all pretty fair.
And I think
though.
Let me say that.
It's stupid fast.
And the battery tech is significant.
The range is much higher than other comparable vehicles, which is game changing.
Because I think one of the topics you wanted to talk about is Chinese battery technology.
So compare and contrast that.
We can talk about that later, though.
Yeah, for sure.
I think just to follow up with that, I think one, you made a great point of saying maybe successful is a bit early to call them that.
I, kind of made it.
I feel like you're right.
It's like them and Rivian are still like the only two domestically.
I feel like there's the Lordstown motors and so many other EV companies that got fundraising, all this stuff that I've just kind of fallen by the wayside and they seem to
be still,
moving forward, I will say I definitely see a lot more Rivians on the road than I do Lucids and part of that is due to product and like you said, the price point, but one of
the I think early negative kind of feedback about the Lucid was it software.
And from what I've heard, that's definitely improved.
And I think that is such a big from what you've also said, the software experience and kind of having that user refined vehicle.
is huge, think, not just in the Chinese market, but especially with younger car buyers in particular.
And I think that's one of the things that, whether intentional or not, Tesla did have a lot of success with their EVs when growing was that element of it.
And given the exposure that you have to a lot more of the Chinese EVs that really excel at that.
Is that something you would say the lucid is good at, or is it still need quite a bit of refinement in your opinion to kind of hit that?
I think what is now kind of a bar set of a user defined vehicle, whether that be from like the Teslas of the world, or I think even more so with a lot of the Chinese EV automakers.
First, I gotta give you kudos, Chase, because you said user -defined.
I hate when people say software -defined.
I won't say hate, but I think software -defined is a terrible acronym because...
guess where I got that from.
Let's put it that way.
So anyways, because software doesn't define the vehicle, it enables the user experience, a good or bad one based on the design.
But to answer your question, and sorry to go off on a tangent there, but I was like pumped when I heard you say that.
I have not encountered any significant bugs on the software side.
The interface is fairly simple.
And the fit and finish of the materials is really nice.
Again, no squeaks and rattles.
And in an electric vehicle, it's amplified because you don't hear the motor.
And so that's really, really important to note.
And it's super roomy.
I have two kids.
And they can.
Lounge in the back seat because they pulled the wheels out, but it creates a weird trunk egress and ingress egress because it's like a clamshell and it's flat, but it's a little
awkward.
But the frunk is amazing and I really enjoy driving it.
It has some steering feel.
There are a bunch of cars that I've driven in the past that kind of feel like you're floating a little bit when you're steering.
This one has some bite to it, which is great because it makes you feel the ground a little bit.
Again, I'm not one of those car reviewers.
I would recommend you watch videos from those professional car reviewers.
I think they just sent it to me because they wanted to hear
get an objective opinion on what is good, what could be improved.
But so far, so good, nothing that stands out in a negative way.
No, that's great.
I think that might be an interesting kind of pivot to.
Yeah, that's fair.
Fair for sure.
And it's interesting you mentioned kind of just the driving dynamics of it because I think earlier this year I had the chance to test drive Rivian R1S and obviously much different
vehicle.
But I was surprised how bode feeling it was for.
even for an SUV.
And I think that was something that I kind of hadn't expected and been spoiled with a lot of other EVs I've driven that just you have to obviously be very you have to put it kind
of front and center when you're designing an electric vehicle to make it feel more sporty and or at least like have that kind of connection to the road.
And that was one of the things that surprised me and it has consistently been a positive I've heard about the Lucid.
But kind of focusing on, more of the focus of today's discussion, which is around.
Kind of looking at Chinese EVs and you, mentioned kind of how they have been also counting, plug -in hybrids towards some of this new electric vehicle, mandates and stuff
they have.
How are you seeing, I, because even as you mentioned the love, the domestic automakers are definitely pulling back on their EVs.
some of that investments in the software side, some of that's investments in actual product side.
How are you seeing it in?
just domestically and then comparing that to China, because I know a lot of people, I think from the more traditional auto industry had kind of complained, part of the reason
they've been so successful in China is incentives.
And then they even use like the European and union as an example, or specifically Germany that had really good incentives for EVs.
And then like the instantly stopped those.
EV sales did take a pretty serious nose dive.
And it doesn't seem like that's been quite the case in China, but I'd really love to hear your kind of thoughts on.
how that differs around the idea of moving the auto industry forward with EVs and then how plug -in hybrids play into that.
Let me address the elephant in the room first.
So these Chinese EV companies in general have received significant subsidies for the development of their companies and technologies.
And that's happened starting in 2009.
And if you look at sales throughout 2009 until today, the inflection point started in right around 2020.
That also happens to be when job one
of the Shanghai Gigafactory rolled off the line, Model 3.
so even with substantial subsidies from the Chinese government, these Chinese EV companies, you can Google it.
NIO in 2017, 2018 was on the verge of bankruptcy.
XPUN was struggling a bit.
And I think it took Tesla to really catalyze and bring much more interest, eyeballs to the sector.
And then COVID happened.
there was for the West anyways, it was like they were flying blind now.
They didn't see what was going on in China with regards to take rates.
I can tell you in 2020, there's 1 .5 million cars or any V sold.
2021 there's 3 .5, 2022 6 .5.
Last year around 8 .5 million any V sold.
This year, probably getting close to 10 million.
And I can also tell you, I was there.
Because I was stuck in China because of COVID.
And we didn't leave until 2022.
So I've been back in the United States for the last couple of years.
Still travel quite a bit back to China, but now home base is here.
So the proliferation of green license plates
Typical ICE vehicles in China have blue plates.
or NEVs have green plates.
And so you just see more and more and more of those, you know, starting in 2019, 2020.
And now they dominate most of the tier one cities.
And with regards to the subsidies, Europe and the United States have to be in it for the long haul, because if they only dabble in
incentivizing consumers to purchase EVs, you're going to see this tail off if you pull subsidies too early.
In China, the market took over.
And so they were able to dial back some of those subsidies.
And what we're seeing now, there was a CNBC video that I was a part of that dropped a couple of weeks ago.
They said there was 140 EV brands in China.
So if you could imagine being able to choose from
20, 30 brands chase that have products on every, almost every price segment and almost any feature that you would want and compare and contrast that to the United States.
How many $50 ,000 EVs are in the market?
Number one, how many of them have the features that you want?
Number two, and I'll, I'll, I'll go a step further.
The ID buzz just was announced for US sales.
$70 ,000, 230 or 250, 230 miles of range.
The product is not complete.
How are you selling this thing for $70 ,000 when it only has 230 miles of range?
So I'm torn.
Should.
car makers launch vehicles that don't seem to be competitive and they're definitely not going to be able to compete with those specifications in China.
But, or do they wait like, like a Ford says, we're not going to launch a full -size SUV, EV until 2027.
You know, I don't know what the right answer is, but all I know is that the products have done and Volkswagen.
seems to be satisfied with overcharging for an underperforming EV.
Well, and I think that vehicle especially kind of speaks to some of the electric vehicles currently in the U S where it's almost, it is definitely lifestyle focused versus like
being a practical or obviously affordable option for most people.
And I'm kind of curious when you talk about, China and like, you tell me there's 30 brands out there that that's what we kind of keep hearing to me that says that,
Especially with what we're also hearing about kind of a price war in China with EVs that eventually that sooner or later that's gonna be more consolidation of those brands.
Do you think that that is likely to happen and is the price war we kind of keep hearing about EVs in China as big of a thing as it actually is or is it just kind of the market
you think sorting itself out?
There's a few different things going on.
the China economy is lukewarm.
It's not going great, not compared to pre -COVID days.
so Chinese consumers are really, really being careful of what they spend their hard -earned money on.
And so we talked about consolidation in the China market.
Before EVs, there was always talk about consolidation as well.
So can 140 brands survive in China?
No.
But we need to look at the China market and how the foreign legacies compete in that market separately from what's happening in Europe and the United States.
Because the fact of the matter is 140 Chinese EV brands are not going to be exporting to the United States.
There might be
15, 20 brands that try to, but there might be three or four that are successful being long -term players.
If we look at the Koreans, we look at the Japanese, right now it's Honda, Nissan, Mazda to a lesser extent, and Toyota.
So there's only a handful of players.
And I don't see 20, 30 Chinese brands being very successful in the United States.
Because I don't think there is...
a room for that many brands in the automotive space in the United States.
And so for us to look at it, we're not going to have that many choices.
But what's important is that Tesla pushed along the Chinese EV players and the market is the way it is.
If the Chinese EV companies come to the United States, whether they're successful or not, they're going to create more competition.
for the US consumer.
And that means the Detroit three will need to step up in a big way.
Because right now, Hyundai Kia has eaten their lunch.
If there are three, four, or five more players, and we haven't even talked about Tesla, but Tesla is still pretty competitive, although their products are three, four, or five
years old, largely unchanged in the market.
And that's why they're struggling in China.
yeah.
And I think you said something, if I remember right on an auto line episode recently, where you kind of talk about how like Tesla is not like maybe the leader anymore as far as
like innovation in the eyes of maybe Chinese buyers, but they're kind of looked at as almost like the safe play.
Like if you want an EV and you get a Tesla, it's a safe play.
Like, you know, it'll work.
It'll be fine.
Is that accurate or has that kind of changed a little bit?
Are they starting to see the Chinese EVs be more of interest than a Tesla?
Obviously more so than like traditional legacy automakers.
Right now in the China market, there's really two winners and a lot of losers or a lot of.
Ultra competitive companies that that haven't been able to separate themselves.
The first company is is Tesla and the the champion is BYD and this is a champion in a big way.
They sell about 350 ,000 vehicles a month.
Almost half of those are plug -in hybrids.
So they can offer you a vehicle in any powertrain, although only on clean energy.
So it's either PHEV or BEV.
And they live in the mass market.
And so their products generally are less than 30 40 ,000 US dollars.
And it's important to note that 85%, 90 %
of all vehicles sold in China are less than $50 ,000.
Whereas in the United States, over the last few years, the average price of a vehicle has gone up to $53 ,000.
And we're not even talking EV.
But the economics are such that now it's as cheap or cheaper in certain instances to make an EV versus an ICE in China.
So we've reached parity in China.
Now you said Tesla coming to the Chinese market was kind of a motivating moment to the Chinese automakers to get competitive, to kind of push them forward.
Why do you think that that hasn't quite been the case?
I mean, I would say obviously Tesla motivated a lot of domestic automakers to make and offer electric vehicles, but it definitely seems like it wasn't quite the like shooting
gun kind of starting the race impact.
that we, in China that it has been here.
And do you think that that's.
due to the actual products themselves and maybe the traditional automakers being so, truck and large vehicle heavy, or is there something else that's really that kind of made
Tesla's entry into China, kind of kick off a competition race in the EV space, a much bigger event.
It's definitely the unique use cases that Americans have.
In Michigan, many folks have boats, have trailer hitches, and they do road trips because we have so much highway mileage all over the United States.
In China, the thought of road tripping is newer.
It's mostly cities that are very, very vastly populated.
Now I lived in Beijing and Shanghai, two of the largest cities in the world, and we're talking over 20 million people.
So my neighborhood in Beijing was probably larger than some states.
so again, just to emphasize the different use cases, but at the end of the day, Chase, you and I know it's all about price and in China, it's all about value because
because of the price war, incidentally that Tesla launched in January of 2023 because they had a three and a four year old Model 3 and Model Y, they needed to lower the price in
order to bring more consumers back to their vehicles.
And so another thing that the legacies will struggle to do is refresh.
vehicles on a timely basis.
In China, cars get refreshed now every nine months, every 10 months.
And I just mentioned to you, Tesla hasn't refreshed in a major way the three or Y in three or four years.
That's just not gonna get it done in China.
And so it's too competitive in China, which is...
that that kind of, I, that makes me think going back to the question I had around consolidation, like that level, that many brands with that level of refrashing just
doesn't seem, even when you have a very large car, public just doesn't seem sustainable.
And I think it's, it's kind of funny you say that because yes, Tesla does in some ways have older products, but a big thing that
had really pushed the American automakers forward was the fact of how quickly Tesla could iterate and make changes on the flight to their products.
That just was not a thing for us automakers.
And so I'm kind of curious about, with, I'm sorry, were you going to say something there?
Well, Tesla doesn't have that advantage in China because there's so many software companies and people that have experience writing code.
so let's lump Tesla into the Chinese EV startups where 80 % of the engineers at a Chinese EV company and let's say Tesla are going to be software.
and software engineers.
20 % are going to be traditional automotive engineers.
At GM, at Ford, at Volkswagen, that number is flip -flopped, meaning 80 % traditional automotive engineers, maybe 20 % software engineers.
And so what we're seeing is a simplification when it comes to EVs or clean energy vehicles, because now we don't need thousands of engineers to help develop
the latest efficient petrol powertrain.
Electric motors are much simpler and they're high performing.
And that tells me that they're going to be commoditized very, very soon.
So you can have a $25 ,000 car, EV five years from now in the United States, and it can still go stupid fast because electric motors will be so...
the performance of electric motors will be so democratized, you know, in a...
now that's, that's definitely an interesting part of it is that, ability to have so much power in an electric vehicle.
And it's not because you made some new version of a VA or some sort of breakthrough.
It's just kind of like the baseline.
I.
or you threw turbochargers or a supercharger on top of it.
Right.
And I think that's what's really interesting for the startups and also the Chinese brands is they don't have to worry about legacy products that they're going to overshadow with
more speed, more performance.
That's actually an incentive for them to kind of crank it to 11 with these entry products to have plenty of performance.
But, and I do want to talk to you a little bit more specifically about P hubs in the Chinese market, but I guess going back to that nine month iteration period,
Everything you said there about having these companies that have such strong software engineering backgrounds and that kind of iterative process totally makes sense to see that
amount of change in the vehicles.
But do you think that, I just hear a nine month change.
And to me, that just doesn't seem sustainable from a almost brand standpoint.
Or do you think, I guess that's, there's, I guess two questions on this kind of area.
I just wanted to,
discuss before we move on.
I guess one is, is that something the consumer is asking for that amount of change, or is that being driven by the company to stand out?
Cause if it's the latter to me, that doesn't seem like that's going to be a long -term strategy that works for a lot of these automakers.
These Chinese companies are generally speaking in survival mode.
So they see that if a new product drops or new features drop on a current product, they might have a month of shine before it gets leaped over or aped by another Chinese EV
maker.
And so this is just survival mode, okay?
If you're not...
because it is kind of like the traditional software and hardware, PC or even smartphone market where it's like you have the Apple approach and then you have a bunch of different
companies that make windows computers and are battling out on hardware specs, which traditionally is usually a race to the bottom and hasn't worked out very well.
Do you think that that is, I mean, especially with your kind of background in tech, do you think that's a pretty analogous experience to what we're seeing in the Chinese EV market?
If you follow Chinese sectors, e -commerce, traditional sectors in China for a while, it's normally a race to the bottom because it's so competitive.
That's the irony a little bit of what a lot of people think of China is the copycat thing.
it is, when it comes to certain specific sectors, it is some of the most
cutthroat competitive markets, much more competitive than anything in the United States and in Europe for sure.
so when it comes to, here's my theory, Chase, in the next 20, 25 years, it's not the battery platform, the actual vehicle is not the physical industrial design or physical
design of the vehicle is not really gonna matter that.
If we look at the current silhouettes and we squint a little bit of some of these crossovers and SUVs, they have a model Y silhouette.
If we combine that in with ride hailing, no one cares what the brand is that picks you up.
In China, you and I are car guys.
Love Porsche.
I love Porsche.
I would love one 911 Targa in my garage.
It's a brand that has heritage that automatically will have buyers in Europe and the United States.
It's probably the, if not the, it's one of the strongest automotive brands in the world, full stop.
In Porsche lost 15 % year over year sales.
The first half of this year, it fell a further 30%.
There are no sacred cows when it comes to brands in China.
And it's not about this nationalism that some people like to think, because if you make a great product, it's gonna sell, okay?
And there was another narrative that somebody had written.
won't say who.
It was a couple of weeks ago that were like, the Chinese government want all foreign automakers out of the country.
That's a completely inaccurate and wrong statement.
Because what the Chinese government want to do is actually attract foreign direct investment from multinationals into China.
And so if they made
The automotive sector is so unattractive that foreign automakers couldn't play.
Would they be able to attract foreign direct investment from other sectors?
They wouldn't.
So that's a...
point.
And looking at Porsche specifically kind of talking about product mix and, almost product stagnation, they've got some great products, but as far as like that level of iteration,
especially on their electric side, I'm kind of curious as to if that's part of it, along with price point, in addition to,
I know we were going to talk a little bit about terrorists.
can get to that in a second.
But I guess the one other question I wanted to ask you was talking about the price war that did kick this off on Tesla's side.
Do you see that?
Has that hurt them?
Has that been a benefit to them or has that hurt them more?
You think in China?
I think.
They still have that distortion force field around them.
And if there was a $25 ,000 Model 2 that launched tomorrow, it wouldn't be a knockout win in China because there's already a ton of $25 ,000 great EVs, many from BYD.
They would be successful in Europe and the United States for sure.
Why they haven't launched something like that yet, I don't know.
There, well, it's interesting you say that, or I I'm sorry, continue.
Well, I was going to say one of the theories now it sounds like they are bringing out a $25 ,000 car again, sometime in 2025, but one of the big theories as to why they had
stopped that was due to how many $25 ,000 cars there already are in China and are being planned to ship globally.
So I'm curious to see what if.
that does follow through with a $25 ,000 vehicle in 2025, what it is they're going to bring to market to stand out.
And we'll see if that does follow through.
I guess going to, unless there was anything else you wanted to talk about, I would be kind of curious to talk with you about tariffs.
Let me pull back to Porsche a little bit.
Let me explain why I think it's going sideways for Porsche in China.
Because they were effectively a niche player, 911s, Caymans, and Boxsters.
And then they launched the Cayenne.
Then they launched the Macan.
Those vehicles in China,
A disproportionate number of those vehicles sell to women.
And we know Porsche as a heritage brand.
We also know it as product focused.
It's not customer focused.
And when they sold nine 11s, performance vehicles, men loved it.
Right.
I loved it.
But guess what?
When half of your sales are SUVs that and a good number of those sales go to women.
You can't be product focused anymore.
And especially when Lotus launches an SUV, Polestar launches an SUV, Zekor launches, you know, they're because before this is the amazing thing about Porsche.
They entered China in 2001, never had a down quarter until last year, 2023, always grew.
And Porsche only sells around 380 ,000 units worldwide.
But 50 % of Porsche's profits come from China and a lot of their volume.
So in 2023, Porsche actually grew by 2 % despite losing 15 % of sales because Europe and the United States took up some of that slack.
But they can't expect that to continued.
To your point, does the McCann EV move the needle far enough?
Right.
Yeah, I guess that was going to be the only other thing I was going to talk about that was I could be mistaken.
I believe Porsche sales are down.
At least the SUVs are already down domestically because of kind of them waiting to come out and deliver the new Macan EV.
And I think the new version of the Taycan, it just showed like that sales of those previous gen had nosedived.
I'm kind of wondering, and I guess we'll see how much of that is due to that gap between the new product coming out.
and obviously is detrimental to them when you have these brands that are able to come out with a new thing so quickly and deliver it to a market that's looking for those products.
In China, least, Chase, it's not just Porsche.
If you look at ABB, what we call Audi, Bimmer, Benz in China, their sales have cratered a bit too.
They're getting squeezed both ways.
The ICE vehicles have lost favor from the China, generally speaking.
And then the EVs that they've launched,
have just not resonated very well.
And so where 15 years ago, you could sell a BMW just because of the logo on the hood, you can't do that anymore.
And let me assure you, my first job at GM, that was my first job out of college working at GM, I worked at the Oren Assembly Center.
We built five cars, the Oldenville, Aurora, the Sabre, the, shoot.
I forget, but we built five cars there and it became an EV plant, is where they built the bolt.
So there's an irony to that.
And so I, and I grew up here.
So I mean, talking cars is like breathing to me.
And let me assure your audience chase that Chinese EVs quality wise are some of the best in the world, full stop.
And you're talking to someone who's
lit or worked at several factories.
And so I have no problem saying that and I'd put money on it because if you talk to some of your German friends who worked in the automotive space, if there be an objective,
they'll tell you, wow, this has improved significantly over a short period of time.
know, a case in point.
think anyone that says otherwise lately just shows that they haven't been behind one or haven't seen one in person.
Also fair.
As we were talking about earlier.
In a quick case in point chase, I landed in Beijing in 2009.
One of the first cars I got into was a BYD.
And I was just not impressed because nah, I'm the car guy, right?
I'm like, man, this car's terrible.
This car's terrible.
The doors are paper thin and like, just, you know, didn't feel safe.
The quality of materials was not great.
You get into a BYD right now, you'd be like, wow.
I don't know how the Detroit three are going to compete with this.
Then you look at the price tag, you're like, there's no way they can compete with this.
So they have their work cut out for
Well, I guess talking about BYD, as you mentioned earlier, a lot of their sales are P Heavs and domestically, obviously the big three and everyone was, especially when Wall
Street was behind it or pushing for it.
Everyone was all in on EVs and now really this past year, EV sales are still actually doing pretty well, even though headlines are kind of like distorting some of those
numbers.
Yeah.
Right.
Exactly.
but
Now they're kind of going back and doubling down on P hubs.
I think it's interesting, especially when I talk to friends of mine who are big truck guys, they're pretty skeptical of EVs, but they're like, yeah, P hubs makes sense.
And I have my own kind of pros and cons of that, but I'm kind of curious looking at the growth of a plugin hybrids in China.
Is your feeling that there's a similar sentiment that a lot of the buyers are kind of like, this makes sense.
I would rather get this over an EV or does price and maybe, life's, is there more of like a practicality of choosing a P have or an EV or what is it?
I'm just kind of curious of what the sentiment towards that is there versus what we see here between the two types of vehicles.
I believe they see the success that BYD has on the BEV side and the PHUV side.
And so in order to attract a broader market, they're gonna offer BEVs and PHUVs.
And also...
The tier one cities, so there's four tier one cities in China.
I think there might be more.
I think they approved a couple more, but traditionally it's Beijing, Shanghai, Shenzhen, and Guangzhou.
Those cities are pretty saturated with NEVs.
And if we go to the tier two cities, we're talking like Wuhan, we're talking like Tianjin, Wuxi, Changsha.
There's still large cities, seven, 10, 12 million people, but charging infrastructure isn't as mature.
Okay.
And then you get into the, even the lower tier cities, the tier three and tier four cities that still have millions of people, by the way, the charging infrastructure and investment
hasn't reached there either.
And so we're likely seeing some of the PHEV sales and the sales growth in China, not only because there's more products to choose from,
but because the clean energy movement is moving to the lower tier cities.
And I'm not a purist.
So, a BEV or a PHEV is a win in my book.
Let's chalk it up as a win.
And then you look at Toyota, who was very hesitant to go all in.
And let me backtrack a second.
Ford, GM, they were always wrong with their forecasts.
in being so bullish.
Because if we look at it practically, if you're charging almost $60 ,000 for an F -150 Lightning, why would you ever say that you're going to start sales at $40 ,000?
What spreadsheet are you looking at that made you confident to announce that to the public?
Because if you're buying the batteries from China, possibly, right?
But
your risk management teams and these companies have huge risk management teams.
There had to have been some sort of heads up that says the US government is looking at making, you know, dialing up restrictions on Chinese batteries and or, you know, slapping
tariffs on them.
And so the forecast numbers were never real to begin with.
And so these Mia Copas that
the CEOs have had to make, just thought, just never thought they were real numbers to begin with.
And I honestly, and you know this Chase, but I've been writing my newsletter for six, seven years.
And I wrote about that right when they were talking about these forecasts because I was still in China at the time.
And I was like, my first question was like, where are they sourcing their batteries from?
The reason batteries are so important in case your audience does not know this is because it's 30 to 40 % of the cost of manufacturing an electric vehicle.
So you dial down the cost on a battery, all of a sudden it might become profitable.
For sure.
I guess, just default, like one final part of that is, I, I appreciate all that.
That's really interesting.
And that makes a lot of sense.
I guess what I'm asking or curious about is.
I think you're spot on with the company, mindset and execution of EVs versus P house.
But I'm kind of curious about, and it sounds like you kind of answered it about the consumer mindset of P Heavs versus Bev.
It sounds like for a lot of people in China, if you're in a smaller, let's say city and there's not the charging infrastructure, the P Heavs is a pretty good option, but there
the buyer wouldn't.
necessarily be closed off to getting a Bev if it fit into their lifestyle.
And it just seems like so much of what I've been hearing, it kind of the American sentiment from let's say more like middle America or traditional truck buyers that I have
as friends.
It's like the idea of a fully electric vehicle, they're not sold on, but a P have is kind of that balance.
And so to me, it's interesting that the Chinese consumers open to either
but chooses it based on reality versus, and in some ways, some of it is product fit to product availability, but someone who is completely shut off from the idea of ever buying
a Bev.
And so they're just going to go with the P have, does that make sense?
That's kind of what I'm talking about.
And is that, would you say that's kind of an accurate reflection of what we're seeing maybe in the Chinese market versus obviously the uphill battles, maybe domestically around
the Bev versus be have idea.
Here's what I would say.
I think there's a Venn diagram here, right?
There's a circle of BVB buyers, a circle of PHEB buyers, and there's an overlap where they are curious about battery electric vehicles, but maybe aren't confident that the area that
they live in will invest in their grid in...
Increase the number of charging stations because one of the things that I've figured out driving this Lucid for the last few days is that charging infrastructure in the United
States still is horrible.
It's terrible specifically in Michigan and I live in Metro Detroit.
I'm 15 miles from the city proper.
I don't know if that was an OEM.
We don't want chargers and so we're not going to.
try to encourage, but it is, I have to, get to a 350 watt charger, a kilowatt charger, I have to drive seven miles.
And so that just seems really, really terrible.
Cause you know, this is a loaner.
I don't have an EV yet.
So I don't have a, charger at my home and I'm not
looking to spend four hours, five hours at a charger.
And so the fast chargers, few and far between, if you can find a charger that's within a few miles of your home.
And so that's why you would, in the United States, would want to buy a PHEV.
No, I think that's a great point.
and it's interesting you bring that up because, we've had this, we've talked about this with a couple other people in the podcast recently about how many automakers when you can
choose like your company vehicle that electric vehicles weren't even an option.
There's these companies that are trying to sell electric vehicles and then the people that are in charge of like designing it and like thinking the product.
Don't even drive them and understand that experience.
And obviously, as a lot of people know that if you drive, if you have a home and you're able to do.
Have a battery electric vehicle.
Yeah.
Most of the time you're doing level two, but, so much of the public fast charging, unfortunately in the U S is not up to grade and it's shocking.
I still haven't been and witnessed it firsthand, but I consistently do hear from people in the Detroit area who still talk about.
how bad public charging is.
And you would think that that would be something that a lot of the people and the companies in that area would be very focused on trying to change that experience and also
that mindset internally to have their own employees be driving them and experiencing to see where they can make those improvements.
But now I'm just complaining, I guess.
Tesla has, one of the big reasons Tesla has loyalty, because of their supercharging network.
Tesla buyers, they don't have to experience what I've experienced the last three days.
And so if I was an OEM, I would find a way to partner with EVgo.
or one of these network providers, charging infrastructure providers, and own the customer experience.
If I truly want to increase sales of EVs of my vehicles, now remember, the major OEMs have all moved over to the NACS Plus.
And I think starting in 2025 model year, the charging or the whole and the female in the vehicle
will all be NACS.
So that should help.
It's gonna suck for Tesla buyers or Tesla owners, but it should help the rest of the OEMs because now there's this standard.
there's an inevitability to it.
would ping me with wanting to talk about some of the battery technology.
It's not just battery technology, Chase.
It's how fast chargers.
for sure.
now, like DC fast charging.
In Detroit, there's a mile of highway or road that is charging under the road.
forget.
Like wireless charging is called.
And so these are some of the kitschy stuff.
don't look at it like an either or.
OK, look at it like an.
OK, so.
Well, I know I completely agree with you.
And I think that's what I was interested to hear your experience with.
Because like you're totally right.
Like in the US, we're starting to see some of the Hyundai stuff, of the like Porsche's new generation can tip 300 kilowatts.
Yeah, 800 volt, but like their actual charging is like around that 300 kilowatts spot.
And then we have Tesla still kind of pretty much all their stuff does 250 or even the Cybertruck I guess goes higher now.
But then you look at what not only the chargers, but some of the energy density of the batteries in the China.
to be honest with you, I'm more interested in actually the charge speeds of these Chinese EVs.
But we have some that are in the 400 to 500 range.
And I'm kind of curious if you've had any experience with trying or testing those out firsthand, or if you
think that that's, I don't know if you feel like any of these brands are trying to over hype what's actually capable right now and what the cars can deliver or what, what you're
just seeing or hearing from brands and the experience in China versus cause like, to me, it's so ridiculous that so many us automakers are releasing brand new EVs and the best
thing to do is 150 kilowatts, which yeah.
It's horrible.
So I've experienced battery swapping in China.
Super, super, super convenient.
And again, it's not an either or.
It's not either charge or swap.
It's and.
You can charge and you can swap.
So that to me is customer engagement.
for sure.
provide you options.
And then on the charging side, so I'd mentioned earlier that I drove a Xpung G9, which is the flagship SUV from Xpung.
Five seater, large, it's probably about the size of a Land Cruiser, a Toyota Land Cruiser.
And over three days, about 500 miles a day.
And the battery, think it was 97 kilowatt hour battery.
And we drove, so we would have to charge at least once during the day.
We would drive from like, say 95 % to less than 20%.
We'd go to the charging station, did not have any issues finding a working charger, none.
They all worked.
just to get that is unfortunately a huge win here in the States.
And then the XPeng interface would tell you, okay, these are the chargers that you should go to.
So on the map, it would just tell you, go to this charger.
And then it would take between 20 and 40 minutes, depending on the number of other EVs being charged at the station.
And so we would go from 20 % to 95 % in less than generally 30 minutes.
So we would have lunch or whatever and then go and go to the hotel, charge it up, and then have 95 again starting the next day.
So that experience was...
Quite pleasant.
So we had two reasons to do this trip.
Test the intelligent driving and experience the charging from northern China to southern China.
And so if you look on a map, Beijing is northern China and Shenzhen is very southern China.
so, you know, it was eye -opening.
And now even I was in California.
two months ago and I had rented a Kia Niro EV and This was California I was struggling to find a Decent charger because it wasn't a Tesla.
Okay, and then trying to find a 350 kilowatt hour charging station was really challenging and then the third thing was It throttles you so you're not
you're never at 350 kilowatt hours.
You might be at 120.
Even if there's no other vehicles being charged, you're never hitting that 350.
Because if you did, you'd be on your way within 20, 30 minutes.
So that's a bit frustrating because the Lucid even, I was at a 350 kilowatt hour charger, and there was a car next to me using the same charging station.
So I thought,
When they unplugged, I would see a jump.
Did not see a jump.
So a bit frustrating.
so.
Well, I think that just totally hits on software, both on the infrastructure side and on the car side, because I think that's still an area where even the Rivians and the Lucids,
who I think do above average, still aren't as good as Tesla when it comes to that advantage of just telling you where you're going to be.
How long it essentially removes having to think about anything and just the fact that you can do the plug and charge functionality.
I, something I say on this podcast a lot is for a technology to take off.
doesn't have to be just as good.
It has to be better.
And for kind of the Tesla experience where you just plug in, you don't even think about it.
You can walk away.
You don't have to swipe a card.
That's still better than a gas station where you have to swipe a car and it's not that hard, but it's like when you're on a road trip, especially when you've been in the car for
like three hours and you have to be lined to the bathroom.
It is so nice to just plug in and walk away.
Don't even think about it, let alone to deal with that.
so the car is proactively kind of told you where to go down the charging and figuring out how long.
And you can either do that or, and it clearly gives you other options, kind of like your experience.
And then once you get to a charger, the charger does the software of like managing the site instead of it being this kind of kind of chaotic thing.
And I think that's where just this level of customer.
experience is like night and day between still kind of the Teslas of the world.
Some of the stuff that Porsche has come out of this new level is finally like getting there from what I've seen at least.
and then really most Chinese automakers are already just kind of doing this day one.
and I think that that's still just going to be inherently, until that is solved by others.
That's just going to be why other people just don't understand how living with an EV really is not a challenge.
In fact, it's an improvement.
for most people.
Two comments on that because I agree with you.
First of all, legacy automakers are normally, like Porsche, product focused.
So they focus on the vehicle.
They don't focus.
And then you look at technology companies.
In order to get stickiness on your app, on your e -commerce website, you gotta be user focused.
Tesla made...
further and look at it as like platform platform versus just the product kind of speaking of the software realm where you have to look at the multiple customer interaction points,
but I'm sorry.
Continue.
No, I think you make a great point because again, Tesla made it seamless, right?
Frictionless, right?
I park, I plug and I go.
You're right.
I don't need to look at the screen to make sure it's charging.
I don't need to wait, you know, 10, 12 seconds to make sure everything works.
Yeah.
my God.
And so the second part is really, really important.
And I'm not sure a lot of people really
Get this.
Apple and Tesla have closed systems.
They build their own chargers.
They build their own software to integrate the hardware part to the software part.
And so that's how they can create a non -buggy seamless experience.
And in theory, if you're using somebody else's charging infrastructure, you could in theory create a seamless experience, but
That means that this third party charging station that charges GM vehicles, Ford vehicles, Kia vehicles needs to cooperate.
And so where a challenge might be for Tesla is now that they're accepting non -Tesla vehicles, there could be some bugs that emerge from that.
have seen the kind of reports of that with people having some challenges or not getting the full speeds or sometimes it derating a little bit because of heat unexpectedly.
Whereas yeah, having that closed loop system requires a lot of work, but delivers usually the optimal experience and gets a lot of that friction out of the way.
I completely agree with you.
And the other important aspect, and you know this, is that it's not only the software and battery management system of the charging station, but also the vehicle that kind of sets
the stage for a successful charging experience.
And I think, well, I was just going to add to that.
think, something we both can have discussed is like the hardware element of the EV infrastructure is huge when it comes to being able to deliver and continuously deliver,
but I still think a lot of them are falling or
really missing on the software level of how you take this hardware and actually kind of make it think or make it smart in the fact of like your experience exactly.
Like maybe it was hardware limited.
Maybe there was some other issue going on, but it should know the instant that other car unplugs that yours should just shoot way to the top and meet what it needs versus this
kind of lag of just not doing that for the user.
And what's important here, Chase, is that as a consumer, I don't really care what the problem is, fix it.
You know, why do I have to stand there and figure out and be confused and be frustrated?
Like, holy cow, man.
or confused when I fuel my car.
just swipe the card, plug it in or put the gas pump in and it works.
And I completely, you are preaching the choir.
cannot, and I wish more people would understand that and kind of hear that, in the industry to really resolve this.
But I do realize we've already gone over a bit over time.
And, if you have a few minutes, I would just like to talk with you still on the tariff side of stuff.
Can you go a few minutes longer or?
Yeah, I can go till 3 .30.
Okay then yeah let's just real quickly I would just love to kind of get your thoughts on what we're seeing especially we're going to election year here in the US and not trying to
get too into the political thing but there's obviously already been just recently with Biden increasing the tariffs on Chinese EVs and talk of that changing in other markets too
not just the US and I'm kind of curious on your perspective of what that
has signaled to the Chinese automakers and if they're actually really that concerned about it or what, those kinds of impacts have and, any ideas that China has maybe shared about
how they're going to maybe put their own tariffs on certain vehicles.
Yeah.
This might, this could easily be its own podcast.
I realize, but just, any high level things.
Yeah.
first of all, the Inflation Reduction Act put a 100 % tariff on Chinese EVs entering the United States.
There was already a 27 .5 or 25 % tariff that the Trump administration had slept on in 2018.
Before that, there was always a 2 .5%.
So that's why when people talk 27 .5%, it's 25 plus 2 .5.
Now with this 100%, it's really made it very, very unattractive for Chinese EV makers to enter the United States market.
And so that's when you heard rumors about BYD and certain Chinese EV companies entering through Mexico.
And I'll get back to that.
But then you saw the EU do an investigation and just yesterday, they, I think, finalized the tariff rates.
on certain brands.
Tesla is at 9%, BYD is at 17%.
So there was already a 10 % tariff for Chinese vehicles entering Europe.
So at 17 and 10, BYD has 27 .5 % or 27%.
And then SAIC, which is Shanghai Auto, which happens to be the state -owned enterprise with joint ventures with General Motors and Volkswagen in China, they own
a British brand called MG.
And because they weren't very cooperative with the investigation that you had done, they were slapped with a 36 % tariff.
So basically 50%.
And so they're not very happy.
That being said, we see that BYD is going to be building in Hungary and Poland and Turkey.
So intended consequences.
The EU wants jobs.
production to come to Europe.
Okay.
The United States, it's a little, it's so political still because November we're going to elect a new president and hopefully in January, we're going to peacefully transition to
the next president.
So two weeks ago, there was an article about the Biden administration.
restricting Chinese technology for intelligent driving.
If we think about the USMCA, which is the revamped NAFTA,
That was the loophole that Chinese EV makers had to build in Mexico to ship the United States tariff free.
This might be the Biden administration's way of closing that loophole.
Because now if that becomes a policy, the Chinese EV makers would need to basically have two bills of material, one for the West and one for China.
they're likely, Chinese EV companies can't afford to do that.
So that's a limiting factor.
But instead of reconciling with Mexico and browbeating them to not accept foreign direct investment by Chinese EV companies, I think this is the Biden administration's way of,
again, closing that loophole.
So that pushes out EV
and Chinese EVs coming to the United States likely for at least two or three years.
Okay.
I don't see Trump or Harris, either presidential candidate, lifting that hundred percent tariff.
But what I do see potentially is, you mean Trump said it point blank, you can build in the United States.
And so
What needs to be reconciled is if Chinese EV companies or Chinese companies are going to be building in North America or Latin America, do we want to lose those jobs to Mexico,
Canada, or any other place?
You know, as a president, because if you think about it, Trump's main sources of support or one of his main sources of support are the Southern states.
How, what would be a great reward for a Mississippi governor and Alabama governor to have BYD write them a $4 billion check and have BYD employ about two, three, 4 ,000 Americans
in Mississippi or Alabama.
Okay.
So there's, there's that aspect of it.
and, and now pre -tariff, pre inflation reduction act, pre European tariffs.
there's already talk of overcapacity in China.
Currently, most of that overcapacity is on the ICE side, the petrol side, okay?
Because EV companies are much smaller, their manufacturing footprints are much smaller, but it has the potential to increase significantly, okay?
Because of the price war in China, many of these 140 brands,
aren't very successful at selling into the domestic market.
That dials up the pressure to send that capacity somewhere else.
Okay?
And so now that the United States is off limit for the short term, Europe is less attractive because of these tariffs.
We're going to see the pressure release valve
be Southeast Asia, be Latin America, be South America, be Middle East, be Africa and Australia.
That's what we're going to see.
Now, if we look at Canada, they're talking about putting a tariff up.
And so it's going to exacerbate.
If these countries don't want the excess capacity to go to their countries, they might have to consider tariffs as well.
And that's going to create a
really, really weird situation in China because one thing that's really important Chase is that it's not just Chinese brands that have over capacity.
Volkswagen has over capacity in China.
GM has over capacity.
And if we look at all the announcements over the last 48 months, Volkswagen said that they're going to be shipping ID series EVs to Europe.
Ford already ships Chinese -made Lincoln Nautilus to the United States.
GM ships Buick and Vision.
it's not Chinese brands that are shipping.
Tesla was the number one exporter last year from China.
everybody is looking to make...
that you brought up about like the 9 % Tesla has to pay.
Cause I think a lot of people don't fully appreciate how many, even though they have a factory in Germany, how many are being imported into Europe still from the Chinese plant
for a lot of the LFP batteries and all that stuff.
But no, mean, all of those are amazing points.
believe that it's one of the reasons Berlin Gigafactory hasn't ramped completely because they have a lot of capacity in Shanghai that needs to go somewhere that can't sell into
the market because they have a four and five year old vehicle.
So the demand isn't there and they can't keep on cutting price in order to try, because it's the law of diminishing returns, right?
How much lower can you go?
so...
I don't know if that answers your question on tariffs, but that's kind of...
I think that's a great overview though.
And I, like I said, I realized you're trying to squeeze a lot in and we're, coming up right on that half hour mark.
So I want to be respectful of your time, but no, I think that, that did answer stuff and, really kind of dived into the other topic that we're seeing globally, not just in China,
which is that over capacity.
But unfortunately that's going to have to be for another conversation soon.
And I just want to say thank you so much for coming on the podcast again, too.
This is always so fascinating.
And I realize I could probably just keep asking you questions all day, but there's, I know you have only so much patience.
So, no, I thank you again.
Looking forward to doing this again soon.
And this has been a great conversation.
Hey, Chase, thanks for having me.
And hopefully, we'll get an opportunity to meet in person sometime in the near future.
I hope so too.
And I guess, I will have links in the show notes, but for anyone, that's listening, what, what are the best ways to engage with you and Sino auto insights and any, maybe
opportunities in person or other events that you'd like to promote real quickly.
So I'd mentioned earlier, we write a weekly newsletter.
You can find it at SinoAutoInsights .substack .com.
I think there's a decent number of readers that appreciate my perspective on the market.
We get into a little more detail.
I also co -host a podcast called China EVs and More.
You can find it on all the major podcast platforms.
We have a pretty global audience.
We get into the minutia of
what happens every week in the China EV industry.
Thanks.
yeah, I will be in Vancouver the first week in September for fully charged.
think I'm sitting in a panel, might be moderating one, but if you are in Vancouver, you don't get in touch.
And then yeah, you can just find me normally being interviewed or quoted by most of the main media outlets as well.
feel like every week I'm seeing you in some sort of clip or other interview thing on LinkedIn and others.
So we'll have links to all of that in the show notes for today.
And once again, just thank you so much and we'll have to talk to you again soon.
It's been too long since last time.
That's for sure.
Hey Chase, thanks.
We'll talk to you soon,
Thanks for tuning into this episode of the Grid Connections podcast.
I hope you enjoyed our conversation with Tu Li, the founder of Sino Auto Insights.
It was fascinating to explore how China is reshaping the global auto industry from electric vehicles and charging infrastructure to the rise of plug -in hybrids globally.
If you found this episode insightful, I encourage you to share it with at least one other person who would appreciate the content as well.
And if you have a moment, please leave a pause or a view on our podcast page.
It really helps us continue to you valuable discussions.
like this one today.
Until next week, this is the Grid Connections podcast, signing off.