Speaker 1: China dominates the electric vehicle market. BYD has overtaken Tesla
Speaker 1: as the world's largest EV maker, and now almost two
Speaker 1: out of every three EV sold globally and made by
Speaker 1: Chinese companies. But what may surprise listeners is that the
Speaker 1: most in demand EV model in China is not made
Speaker 1: by Tesla or BYD. It's actually made by Chaomi, the
Speaker 1: company best known for making budget smartphones and other consumer
Speaker 1: electronic devices. How did Chami create arguably the coolest EV
Speaker 1: in China, What differentiates its car from its competitors, and importantly,
Speaker 1: can the company continue to deliver on high expectations with
Speaker 1: its share price rising over one hundred and seventy percent
Speaker 1: of the last twelve months. You're listening to Asia Centric
Speaker 1: from Bloomberg Intelligence. I'm John Lee in Hong Kong. This week,
Speaker 1: we've got two analysts from Bloomberg Intelligence. We have Johanna
Speaker 1: Chen she looks at the auto, and stevens Son looks
Speaker 1: like technology. Joanna and Stephen Welcome to the show.
Speaker 2: Hi John, Thanks for having me, Hi John, Thanks glad
Speaker 2: to be.
Speaker 1: Here, Joanna. Most of our listeners live outside of mainland China,
Speaker 1: so they probably don't even know that Shallmi makes electric vehicles,
Speaker 1: just tell the audience how popular is the EV in China.
Speaker 2: So basically Shaomi was pretty much very new to the market.
Speaker 2: The shawms first EV only started its debut and also
Speaker 2: delivery back in April last year, and then shall Me
Speaker 2: manage to deliver over two hundred thousand units of those
Speaker 2: Su seven vehicles in China, and that makes the Su'
Speaker 2: saving now one of the most popular EV's and ranking.
Speaker 2: I think it's among the top five model in the
Speaker 2: Chinese EV market. So it is like the company keeps
Speaker 2: beating its targets. And also the wait times are very
Speaker 2: long and contry. Apparently they're willing to wait for this
Speaker 2: new vehicle. That makes the show Me as you saying,
Speaker 2: and also possibly the upcoming next new model very popular
Speaker 2: in the Chinese EV market.
Speaker 1: So if you were to order a show Me model
Speaker 1: right now, how long will it take?
Speaker 2: So that's a very interesting thing. Right now, if you
Speaker 2: want to order a shaw Me car, you have to
Speaker 2: wait about nine to ten months, that's how long the
Speaker 2: waitlist is getting. And in comparison, if you order a
Speaker 2: Tesla you can probably get it under two to four
Speaker 2: five weeks. In general, the EV in China, you only
Speaker 2: need to wait for a month, but show me, that's
Speaker 2: very long waitlist, nine to ten months.
Speaker 1: And I just wanted to confirm this is due to
Speaker 1: the high demand and not due to limited supply.
Speaker 2: One hundred percent correct. So originally when the show Me
Speaker 2: car first debut, the weight list was about six to
Speaker 2: a month, and now it's getting even longer nine to
Speaker 2: ten and people are wondering is it because of their
Speaker 2: too slow in production ramps, just as Tesla did. But
Speaker 2: back in like twenty seventeen, when Tesla first started to
Speaker 2: remp up the production of its Model three, its first
Speaker 2: volume car model, as Elon Mask said himself, it was
Speaker 2: a production hell. There were issues from supply chains to
Speaker 2: manufacturing logistics, shipping, customer experience management. But for shall Me,
Speaker 2: it seems come pretty natural. And also we didn't hear
Speaker 2: any major issues during the ramp up pace in terms
Speaker 2: quality are also good. The ramp up speed.
Speaker 1: Is also good.
Speaker 2: It managed to get to like twenty thousand monthly deliveries
Speaker 2: in just like nine months. So for shall Me, we're
Speaker 2: saying that it's really the consumer demand that is too
Speaker 2: high and that's dragging the way times longer and even
Speaker 2: though they are ramping up the production pretty quick. Even
Speaker 2: though they are beating their sales volume target. Still the
Speaker 2: way times are longer and longer. And hopefully with the
Speaker 2: second factory coming up in Beijing soon, we'll see the
Speaker 2: wait list getting shorter and consumers will be able to
Speaker 2: get their car deliver quicker, and then that will draw
Speaker 2: more consumers to place orders because they don't have to
Speaker 2: wait that long for a car anymore.
Speaker 1: Joina, What makes shall mes Su seven models so popular
Speaker 1: and how does it differentiate from its peers.
Speaker 2: So the first thing is it's a really cool car
Speaker 2: if you look at the exterior design, and of course
Speaker 2: there's some resemblance to the Porsche model.
Speaker 1: You're talking about that Porsche Tyken.
Speaker 2: Yes, right, but still it's a very cool car and
Speaker 2: the boat colors with bright blue, bright pink, the purple,
Speaker 2: and people love it, especially the younger generation and especially
Speaker 2: the female drivers. They are so into the Shell Me
Speaker 2: Su seven car. So it's a cool car, and also
Speaker 2: it has a very smart market positioning. It's a little
Speaker 2: bit affordable, more affordable than the Tesla model.
Speaker 1: Which one you're talking about, the Model three, Yes, the.
Speaker 2: Model three, because both are sedan car it's a little
Speaker 2: bit more affordable than Tesla Model three, but it comes
Speaker 2: with greater room and also more smart tech functions for free.
Speaker 2: For example, you have to pay everything extra for Tesla
Speaker 2: if you want to get the ONUS driving functions, if
Speaker 2: you want to get the better connectivity functions, but in
Speaker 2: a shall Me car, most of them are free. Also
Speaker 2: if you're compared to bid Byde's main battleground is actually
Speaker 2: the mass market where cars are more like priced lower
Speaker 2: and also with less amenities. But for shall Me car,
Speaker 2: basically it kind of like avoided direct competition with BYD
Speaker 2: while it gives a consumers more offerings versus.
Speaker 1: A Tesla car.
Speaker 2: And also I think the second thing that's very important
Speaker 2: is that the brand value. People recognize the shell me brand,
Speaker 2: the shehll me name, people like the CEO Laging. So
Speaker 2: the brand value of shall Me is We've never seen
Speaker 2: this in any other Chinese even maker. You know, it
Speaker 2: takes bid almost a decade to build up its brand
Speaker 2: value in China, but for show me, they can just
Speaker 2: transfer it from the smartphone space to the EV space.
Speaker 1: And I wanted to just elaborate on one thing you mentioned.
Speaker 1: It is cheaper than the Model three by Tesla. But
Speaker 1: it's not a budget car in any stretch of the
Speaker 1: means right.
Speaker 2: Now, it's not a budget car. If it's a budger car,
Speaker 2: then it will face direct competition with BID. So shell
Speaker 2: Me was smart enough to price its vehicles and also
Speaker 2: position it's vehicles in this we call me to high
Speaker 2: end market in China so that you don't go directly
Speaker 2: with BID and face its like fierce competition.
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Speaker 1: and share. Steven, I want to get some background on
Speaker 1: show me as a company. Now most people know this
Speaker 1: as a maker of I would say budget smartphones. I
Speaker 1: also make some cool electronic devices as well. What made
Speaker 1: the company get into evs?
Speaker 3: Actually that's an interesting switch because what happens actually back
Speaker 3: to early twenty twenty one when the US Garment actually
Speaker 3: puts me on the sanctioned list, meaning that show me
Speaker 3: can sell anything in the US, and the company had
Speaker 3: the urgent board meeting, and during the meeting, one of
Speaker 3: the board members say, if we couldn't sell a smartphone,
Speaker 3: what would be our alternative? And then so people kind
Speaker 3: of brainstorm me, and then some people say, wait, why
Speaker 3: not making EV? So there was obviously a bole idea,
Speaker 3: and Leging was not on board immediately because he was hesitant.
Speaker 3: But then he did some homework, he checked with some
Speaker 3: of his friends, did some study, and then even chated
Speaker 3: with son of the EV maker in China, and after
Speaker 3: a few weeks he made a decision that okay, we're
Speaker 3: going to make EV. So that's basically how it starts.
Speaker 3: And then obviously spent a lot of the resources and
Speaker 3: he basically lead the project. I think they actually sent
Speaker 3: a message to the organization that they're serious in this
Speaker 3: endeavor apparently is new, so they are studying what other
Speaker 3: global companies are doing. And then they leveraged a lot
Speaker 3: of the supply chain in China. Obviously China already has
Speaker 3: a pretty comprehensive supply chain for electric vehicle at that
Speaker 3: point of time, even though shell me is new, but
Speaker 3: they can basically tap to those resources. And the other
Speaker 3: thing I think is also important, I think is because
Speaker 3: the government support in China. Obviously the new energy vehicle
Speaker 3: is one of the major industry or more focus based
Speaker 3: on the China's twenty twenty five initiative, the Chinese government
Speaker 3: is willing to support shell means initiative. Actually, the company
Speaker 3: baic was initially the major partner to handle the manufacturing
Speaker 3: for shell Me's vehicle before shall Me had its own
Speaker 3: capacity for vehicle. Those are I think the thing that
Speaker 3: why shell me is able to establish their even business
Speaker 3: from scratch. But other than that, the company also coming
Speaker 3: about ten billion remen b in this whole R and D.
Speaker 3: They are actually developing their own technology for electric motors,
Speaker 3: for alloy. They even have a pattern for their own
Speaker 3: alloy and also the casting. Also the office is so
Speaker 3: software ecosystem, which they leveraged their strengths in their electronic
Speaker 3: device business, so they are able to put everything together
Speaker 3: to this new electronic vehicle business.
Speaker 1: Stephen Apple famously or they had an open secret pretty
Speaker 1: much that they wanted to develop electric vehicle for over
Speaker 1: a decade, but they gave up on their plans. Are
Speaker 1: you surprised at a company like Shelmi was able to
Speaker 1: create an electric vehicle in three years and it was
Speaker 1: pretty much a success. It was a home run in
Speaker 1: their first try.
Speaker 3: As I mentioned, the whole thing of this developing EV
Speaker 3: business for Shelm is really because the under pressure they
Speaker 3: have this crisis or survival because if they are not
Speaker 3: able to sell smartphone, they basically get over for the company. Right,
Speaker 3: So that's actually the big pressure for the company. We
Speaker 3: have to say. I mean Apple is never under such pressure,
Speaker 3: So I guess that's a huge difference. Also, I think
Speaker 3: show me itself, once they make a decision of making EV,
Speaker 3: they're actually committed to that goal. Because one example is
Speaker 3: that most of the top managements show me at this
Speaker 3: point they actually has the driver license for the fine
Speaker 3: racing car. Because Laging itself, when he startied this EV business,
Speaker 3: he found out that most of the major leading auto
Speaker 3: company in the world, all the top management are all
Speaker 3: big fan of fin racing cars. So he says, Okay,
Speaker 3: if we want in this business, we have to do
Speaker 3: this right. You have to really have the passion for
Speaker 3: the speed for the car, for the vehicle, so they
Speaker 3: do that. I'm not sure if other auto companies in
Speaker 3: China are actually doing the same thing, but this actually
Speaker 3: is an example showing that they're really committed to what
Speaker 3: they're doing.
Speaker 1: Even what's driving the share price. Is it the EV
Speaker 1: side or is it the consumer electronic side.
Speaker 3: It's definitely on EV side. I mean, obviously they're doing
Speaker 3: great in their smartphone business. They post a very strong
Speaker 3: growth over the past two years. But EV, it's no
Speaker 3: doubt that people actually has a very highest petition on
Speaker 3: EV business, which is why the valuation actually at some
Speaker 3: points are even more expensive than the EV pers in China.
Speaker 3: We did have a note Elaradier mentioned about their EV
Speaker 3: valuation may not necessarily sustainable at that point because at
Speaker 3: one point they're actually traded like a six to seven
Speaker 3: ties price to seals will by it is only like
Speaker 3: one to two ties. Well, now the share price office
Speaker 3: is corrected and valuation wise it become more reasonable. But
Speaker 3: then people are obviously waiting for the next model and
Speaker 3: hopefully they can maintain their momentum.
Speaker 1: And can you give us some background on the chairman
Speaker 1: the founder Leijun for the Western audience. Leijiuon is almost
Speaker 1: known as the Steve Jobs of China. Would you say
Speaker 1: it's his reputation, Yes, he would draw the comparison. Yes,
Speaker 1: he's got a bit of a cult following in China,
Speaker 1: especially in social media. Tell us his background, Yes, I
Speaker 1: think before show Me he he already is a pretty
Speaker 1: well known entrepreneur.
Speaker 3: He's chairman of Kingsoft, which is one of the major
Speaker 3: software companies in China. Also, I think he found an
Speaker 3: e commerce website which was later on acquired by Amazon.
Speaker 3: So before he founded show Me, he has been a
Speaker 3: very experienced its manewer enjoy investors in China. And when
Speaker 3: he founded shell Me, he never considered show Me to
Speaker 3: be a horwad company. He considered showing Me to be
Speaker 3: an internet company. So he focused a lot on the office,
Speaker 3: the ecosystem software, and then, as you mentioned in the
Speaker 3: social media, we are very good in promoting the product
Speaker 3: or promoting some idea through social media. To the fame
Speaker 3: based building, you must have hurt the me fans, which
Speaker 3: are actually very enthusiastic about all the sham prada and
Speaker 3: obviously to some stand that kind of enthusiasm also extends
Speaker 3: into the chairman Beijing. So the whole thing obviously be
Speaker 3: kind of important assets for showing when they move into
Speaker 3: new business, and EV obviously is a clear example that
Speaker 3: they can actually put us off with a relative period
Speaker 3: time because of that.
Speaker 2: Yes, and actually that really helped on the marketing side
Speaker 2: for the s U seven because under this hyper competitive
Speaker 2: environment of China's even market, all the automakers are trying
Speaker 2: so hard and spend so much money on marketing and
Speaker 2: show me with like laging quite vocal on social media,
Speaker 2: got a huge amount of followers on social media, and
Speaker 2: that kind of helped promote the popularity of the Su
Speaker 2: seven and people going on social media checking out the cars,
Speaker 2: and then they go to the retail stores trying to
Speaker 2: get a test drive, and some of them even before
Speaker 2: they get a test drive, they will place orders for
Speaker 2: the Su seven. That's how popular it is now.
Speaker 1: Joanna, you alluded to the fact that it's really competitive
Speaker 1: to trying to make it EV successful in China. I
Speaker 1: think there's over one hundred electric vehicles companies right now.
Speaker 1: Now you just went to the Shanghai order show. Tell us, like,
Speaker 1: what are the differentiating factors right now for Chinese evs?
Speaker 1: Can companies actually differentiate themselves.
Speaker 2: That's a really good question. So it's getting more and
Speaker 2: more difficult for EV companies to differentiate themselves. And you know,
Speaker 2: the technologies are improving so fast. Most of the even
Speaker 2: models they claim to have fast charging capabilities, they are
Speaker 2: seeing their owns driving capabilities improving. And if you look
Speaker 2: at the exterior and also interior design, it's getting more
Speaker 2: similar or going for there's futuristic and text savvy looks,
Speaker 2: so that's why it's getting more and more difficult. And
Speaker 2: shall Me car really stands out because of the very
Speaker 2: cool design, the boat colors, the sports car feeling vibe.
Speaker 2: And if you look at the crowd, even though Leiging
Speaker 2: wasn't there at the Shanghai Auto Show, shall Miss booth
Speaker 2: still get the largest crowd. If you go in the
Speaker 2: afternoon when all the people crowd into the venue, you
Speaker 2: have to wait like thirty minutes to get into the
Speaker 2: show me both and you can hardly see the car
Speaker 2: because there were so many people in the booths surrounding
Speaker 2: the vehicles checking it out inside out. We can definitely
Speaker 2: tell even though Leiging wasn't there, it's the busiest booth
Speaker 2: among all the venues. At the Shanghai Auto Show.
Speaker 1: And you just mentioned the fast charging av batteries, Now
Speaker 1: what's the latest. There was big use that BYD launched
Speaker 1: a battery that can fully recharge in five minutes. That's
Speaker 1: an amazing step.
Speaker 2: Yes, so b why they launched its fast charging even
Speaker 2: battery technology, you know, like four hundred kilometers under five
Speaker 2: minutes of charge. And then you know, say, atl the
Speaker 2: largest battery maker in China, also launched its fast charging
Speaker 2: battery just one months later, saying that it can charge
Speaker 2: to five hundred kilometers under five minutes. So you can tell,
Speaker 2: like how fast the technologies are involving in China, and
Speaker 2: automakers they have to keep up. They have to go
Speaker 2: with really fast R and D and technology innovation and
Speaker 2: also upgrading their products pretty fast to stay competitive in
Speaker 2: the market and keep attracting consumers.
Speaker 1: And let's talk about the future.
Speaker 3: Now.
Speaker 1: They've just got one model right now. To give listeners
Speaker 1: some background, shallmy's share prices being one of the best
Speaker 1: in the Hangsing index and I've mentioned before it's up
Speaker 1: one hundred and seventy percent over the last twelve months.
Speaker 1: They are launching a model, a new model in the
Speaker 1: next few months. What's the latest.
Speaker 2: Yes, so currently the SU seven is a sedan model
Speaker 2: and then Shami will soon launch its next suv model
Speaker 2: between June and July. And so far what we know
Speaker 2: is that the SU seven also has a pretty cool
Speaker 2: exterior design. Again, very cool color offerings, and the size
Speaker 2: is also like a miss size suv that comes a
Speaker 2: little bit larger than Tesla, but probably the market is
Speaker 2: expecting slightly lower prices so make the car more attractive
Speaker 2: to consumers. Unfortunately, we didn't see the Yu seven being
Speaker 2: displayed at the Shanghai Auto Show, so what we're only
Speaker 2: seen so far are the commercials on social media. But
Speaker 2: we'll get to see the car pretty soon.
Speaker 1: And Steven, given the fact that Shami is a technology company,
Speaker 1: does that give it an added benefit or an advantage
Speaker 1: over Piece in terms of AI autonomous driving and its
Speaker 1: operating system?
Speaker 3: I think so. I mean, if you compare to the
Speaker 3: existing autol maker, obviously they have this creative image as
Speaker 3: a technology company, and if you compare to the new
Speaker 3: start up in the EV market, show me even though
Speaker 3: they are new in EV, but they do have the
Speaker 3: clear try records in the smartphone business and also they
Speaker 3: have a very strong brain recognition, So those are the
Speaker 3: advantage versus those new EV startups. So obviously they're in
Speaker 3: a very good position now. As long as they make
Speaker 3: the product right, they are actually will be able to
Speaker 3: make a very clear impact in the market, which is
Speaker 3: basically what s U seven is still in now. And
Speaker 3: then going forward, I think as long as they keep
Speaker 3: the pace of launching a new product, they are able
Speaker 3: to become a very solid player in this very competitive market.
Speaker 1: And when are we going to say, show me cars
Speaker 1: in other countries?
Speaker 3: Obviously this is on their to do lists. Legend does
Speaker 3: say that they are definitely going to launch the product overseas.
Speaker 3: I think it is said that they want to sell
Speaker 3: the product in Europe by twenty thirty, and I think
Speaker 3: we won't be surprised if we see Shamis EV to
Speaker 3: be sold in some Asian countries. But they are obviously
Speaker 3: very careful in executing this overseas expansion. Obviously they want
Speaker 3: to understand the market before they actually devoted resources there.
Speaker 3: At the moment, I think they will launch their EV
Speaker 3: in those countries where Shami's smartphone actually has a high
Speaker 3: market share because they can actually leverage the channel there.
Speaker 3: So I guess that's what has happening actually, and they
Speaker 3: already set up an R and D and design center
Speaker 3: in Germany. Even though it's very early stage, you can
Speaker 3: tell that that they're very serious in overseas expansion.
Speaker 2: And let's not forget consumers in China are still waiting
Speaker 2: nine to ten months for the shall Me cars, so
Speaker 2: they definitely have to feel the domestic demand first before
Speaker 2: really going abroad getting the capacity enough for overseas expansion.
Speaker 1: The story has been all very positive, but I wanted
Speaker 1: to focus on the other side. A couple of things.
Speaker 1: What's the build quality, like really shell Me versus say,
Speaker 1: you know European or Tesla.
Speaker 2: Well, that's a tough one. Well, people have their own opinions.
Speaker 2: But from my personal opinion, obviously compared to the Europeans
Speaker 2: who have built the cars for so many, so many years,
Speaker 2: a new startup like shall Me, it will be very
Speaker 2: difficult to match the same craftsmanship you're seeing probably in
Speaker 2: a German car. Well, it shouldn't come.
Speaker 1: As a surprise much cheaper.
Speaker 2: Yes, yes, and also like the cheaper so if you
Speaker 2: look at the interior and and also some like very details,
Speaker 2: probably you don't see the bill quality as that good
Speaker 2: as a German car, but still like we don't hear
Speaker 2: a lot of complaints from the Shami car. People are
Speaker 2: overall satisfied with the quality of their manufacturing and we
Speaker 2: don't see like major issues being reported on the manufacturing side.
Speaker 1: And Stephen, the share price had a big correction earlier
Speaker 1: this year, though it has recovered somewhat, and this was
Speaker 1: on the back of a tragic accident. Can you give
Speaker 1: us some details of that accident and it seems like
Speaker 1: it hasn't really impacted business, you know, tell.
Speaker 3: Us, Yeah, I think there's obviously something to do with
Speaker 3: a very unfortunate accident of three college girls. Basically, the
Speaker 3: cars at the crash and burn into flame, and somehow
Speaker 3: the door was locked so those girls can knock it
Speaker 3: out and hence the tragedy. Obviously, now the scenes are
Speaker 3: under investigation. But then, like you said, it didn't really
Speaker 3: have any material impact on the EV demand, and we
Speaker 3: do see similar assident for other major brand like Testla
Speaker 3: for example. They also have such accidant from time to time.
Speaker 3: So maybe people are not necessarily right off show me
Speaker 3: as an EV brand because of that issue, but certainly
Speaker 3: that can be an issue. I mean, going forward, if
Speaker 3: that happened again or a similar situations happen again, then
Speaker 3: you know the company may be under bigger pressure. Hopefully
Speaker 3: it won't happen again, but going forward, I think the
Speaker 3: company right now just have one model, but when they
Speaker 3: start to expand their product line up, definitely the card
Speaker 3: users that we have scrutiny on their quality, safety tray record. Yeah,
Speaker 3: so that's definitely something that we need to keep an
Speaker 3: eye on.
Speaker 1: Okay, before I let you go, I wanted to ask Joanna,
Speaker 1: would you buy show Me EV?
Speaker 3: Yes?
Speaker 2: Absolutely yes, because it's a cool car. It's very cool
Speaker 2: and comes with a range that I can afford.
Speaker 1: And Stephen, what's your honest opinion if you had to
Speaker 1: buy a Chinese EV, which one would it be?
Speaker 3: Yes? I would definitely show Me. I mean certainly looks
Speaker 3: very kind of like a smartphone. Rang this cool product
Speaker 3: with value. Also, I think a lot of the integration
Speaker 3: in their product which tightly integrate with their product ecosystem,
Speaker 3: So I think I definitely I'd like to experience that
Speaker 3: ecosystem myself.
Speaker 1: Yeah, okay, I would personally buy the Essayiics Maxis car,
Speaker 1: but that's a family car, probably a reflection of myself
Speaker 1: rather than anything else.
Speaker 2: Well, I have to say the Maxis MPV are very comfortable.
Speaker 1: Okay, that's a great way to end the show. Joanna Steven,
Speaker 1: thanks for joining, Thanks for having us. Thank you you've
Speaker 1: been listening to Age Eccentric from Bloomberg Intelligence. I'm John
Speaker 1: Lely in Hong Kong. You can find with all our
Speaker 1: episodes on Apple Podcasts, Spotify, or wherever you listen. This
Speaker 1: podcast was also produced by Clara Chan and thanks for listening.