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Speaker 1: This is Tom Relland's Reese, and you're listening to Switched

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Speaker 1: on the podcast brought to you by Bloomberg and EF.

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Speaker 1: China's electric vehicle market is moving at extraordinary speed. In

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Speaker 1: the third quarter of twenty twenty five alone, the country

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Speaker 1: sold three point five million evs, accounting for more than

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Speaker 1: half of all new car sales nationwide and driving global

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Speaker 1: adoption to new highs. As incentives, trade in subsidies, and

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Speaker 1: aggressive pricing boost demand, Chinese auto manufacturers are scaling rapidly

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Speaker 1: at home. Mini city cars, long wage models, and fast

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Speaker 1: charging features are spreading across the mass market, helping EV

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Speaker 1: sales reach around fourteen point one million expected deliveries this year.

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Speaker 1: At the same time, China's automakers are expanding abroad at

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Speaker 1: an unprecedented pace. Nearly one in five evs sold outside

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Speaker 1: China now comes from a Chinese brand, and companies are

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Speaker 1: building factories from Europe to Southeast Asia and Latin America

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Speaker 1: to stay competitive amid rising tariffs. But as Chinese brands

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Speaker 1: gain scale, diversify their drive trains, and localized production in

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Speaker 1: key markets, is this the moment that reshapes the global industry?

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Speaker 1: On today's show, I'm joined by Ceme, a senior associate

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Speaker 1: on Bloomberg and yif's Electric Vehicles team, to discuss some

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Speaker 1: of her team's notes, including more of Chinese automakers step

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Speaker 1: into overseas markets and evs are just the start for

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Speaker 1: global carmakers China rebound. BNF clans can find these along

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Speaker 1: with other electric vehicle research by heading to BNF go

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Speaker 1: on the Bloomberg terminal or visiting BNF dot com to

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Speaker 1: learn more about how BNF approaches strategy research on the

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Speaker 1: energy transition, including developments and commodity markets, sector trends, and

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Speaker 1: the technology shaping the future. You can find more information

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Speaker 1: at BNF dot com. So let's dive in and explore

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Speaker 1: how China's ev surch is reshaping the global auto landscape.

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Speaker 1: See Welcome to the podcast.

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Speaker 2: Thanks for having me. So we're talking.

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Speaker 1: About Chinese electric vehicles, and you know, I'm sat here

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Speaker 1: in New York in the US, and obviously you can

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Speaker 1: tell from my accent from Europe, and so there's this

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Speaker 1: general acceptance I think that the sort of the heartland

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Speaker 1: for electric vehicles now is China, and that the industry

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Speaker 1: in China is really the one to compete against if

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Speaker 1: any manufacturers in those markets or in those countries or

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Speaker 1: regions want to have anything to say about electric vehicles.

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Speaker 1: Often with those narratives, it's almost like the Chinese electric

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Speaker 1: vehicle industry is the antagonist. You know, we're talking about

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Speaker 1: what are European companies or what are American company is

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Speaker 1: going to do about China. So I'm really looking forward

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Speaker 1: to hearing about the kind of the perspective of the

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Speaker 1: Chinese electric vehicle industry. But maybe we should just start

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Speaker 1: with that question of how the Chinese electric vehicle industry

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Speaker 1: is shaping the global market. Maybe you can explain a

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Speaker 1: little bit, put it into numbers for us.

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Speaker 2: Yeah, sure, Like.

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Speaker 3: China's electric vehicle is important in terms of both the

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Speaker 3: demander supply. So it's been the world's largest EV market

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Speaker 3: since probably twenty seventeen, and this year is on track

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Speaker 3: to sell more than fourteen million passenger EV's and that's

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Speaker 3: about actually two thirds of the globe passenger EV sells.

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Speaker 3: So it's the pretty significant market itself. But also it's

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Speaker 3: the largest EV manufacturing or the producer as well, so

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Speaker 3: it's a very important EV manufacturing basis. A lot of

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Speaker 3: the not only Chinese domestic but also international automixer are

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Speaker 3: leveraging the economy of skill, the well established apply chains

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Speaker 3: in the country to produce electric vehicle and then ship

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Speaker 3: it elsewhere.

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Speaker 1: And I mean it stands to reason that the fact

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Speaker 1: that it's such a huge market for electric vehicles has

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Speaker 1: maybe enabled the development of the industry there as well.

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Speaker 1: I mean, which which came first the growth of the

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Speaker 1: market and then the industry followed, or is it the

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Speaker 1: other way around? I mean, how have these two developed

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Speaker 1: together and what's been driving that.

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Speaker 3: I think for the EV industry early days, whether it's

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Speaker 3: in China or in other market, it's always like a

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Speaker 3: niche technology and then it's always kind of a policy

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Speaker 3: that's enabled the market to kick start. But I think

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Speaker 3: the skill or the demand is important because for auto

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Speaker 3: manufacturing is very much a skill business, like you have

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Speaker 3: the skill and you can drive down the and then

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Speaker 3: it was really important for any for the automakers and

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Speaker 3: any kind of auto suppliers.

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Speaker 2: So that's what we see is once the.

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Speaker 3: EV or in any new kind of technology past that

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Speaker 3: early adoption stage, the economy skill becomes really important for

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Speaker 3: any any market.

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Speaker 1: So the growth of demand has really enabled the growth

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Speaker 1: of the industry there, and you mentioned some policies. Are

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Speaker 1: there still policies in place driving the uptake electric vehicles

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Speaker 1: in China or is it now sort of taking off

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Speaker 1: on its own so to speak.

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Speaker 3: I mean, it's very much taking off on its own,

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Speaker 3: but against like, policies still play a very important role.

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Speaker 3: So China has completely phased out the purchase incentive, but

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Speaker 3: they kind of replace it with like the trading or

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Speaker 3: the scrappage incentives encouraged car buyers to kind of replace

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Speaker 3: their old combustion cars within inductrial vehicles. And there's also

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Speaker 3: local level kind of a support, like city level restrictions

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Speaker 3: on internal combustion purchase and uses, as well as local

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Speaker 3: incentives on a charge infrastructure. These are all important enablers

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Speaker 3: that keep driving the EV demand. But having said that,

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Speaker 3: is that right now EV is already make up more

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Speaker 3: than half of the new car cells in China, so

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Speaker 3: indicating that this market is very much already a mature

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Speaker 3: EV market, that there's very diverse kind of consumer demands

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Speaker 3: on what kind of vehicles they would want, so and automakers,

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Speaker 3: in response to that consumer demand continue investing in EV

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Speaker 3: technology in order to really capture the diverse demand.

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Speaker 1: And fifty percent of demand in such a huge market

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Speaker 1: as China. I mean, that's extremely significant. Has it been

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Speaker 1: around fifty percent for a while or is that a

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Speaker 1: sort of a recent landmark that's crossed fifty percent?

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Speaker 3: So last year saying the second half of last year,

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Speaker 3: there are a few months that's already passed the fifty

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Speaker 3: percent mark, and this year we also see that also

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Speaker 3: cross the fifty percent mark, like since a second quarter.

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Speaker 3: I mean, AUTOVSL is quite seasonal, so they're also kind

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Speaker 3: of the downtimes in like January or like winter time,

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Speaker 3: but there's also kind of pixels tour the end of

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Speaker 3: the year.

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Speaker 1: So I mean, I'm just imagining I'm in Beijing or

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Speaker 1: Shanghai and I stood at the side of the road

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Speaker 1: watching vehicles go by. You know. You mentioned like there's

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Speaker 1: an increasing diversity in the demand for vehicles in China.

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Speaker 1: I mean, are we seeing the same types of electric

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Speaker 1: vehicle as we're seeing in other parts of the world,

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Speaker 1: or as there you know, other particular archetypes I suppose

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Speaker 1: of Chinese electric vehicles that are typical to China, maybe

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Speaker 1: not elsewhere.

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Speaker 3: Yeah, definitely, I think there's quite a wide range of

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Speaker 3: electric vehicles currently offered in China. So they're like those

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Speaker 3: really small mini or smaller sizes for the electric vehicle,

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Speaker 3: which is a site slightly bigger maybe than golf car,

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Speaker 3: but against like perfectly for like one or two persons,

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Speaker 3: and then to commute or for like their shopping or

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Speaker 3: very easy kind of the short distance travels. There are

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Speaker 3: also those average kind of compact or gidium sized vehicles

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Speaker 3: that's typically like what families would buy for their first

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Speaker 3: family car. And then there's also larger vehicles that's used

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Speaker 3: for multiple purposes. But again it's like the side of

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Speaker 3: the vehicles are different. And then we do also see

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Speaker 3: them used in different cases like private vehicles, but also

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Speaker 3: like government fleet, share fleet and and taxis. Therese are

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Speaker 3: almost fully electric as well, and again it's like we're

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Speaker 3: not only we're talking about electric vehicles, but against that

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Speaker 3: that also include like battery electric vehicles. We also see

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Speaker 3: plug in hybrid vehicle. We could utilize both the charging

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Speaker 3: and then the internal combustion engine as well as this

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Speaker 3: new technology not necessarily, but it's like more of a

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Speaker 3: like research of the technology. The range extended vehicles use

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Speaker 3: kind of the gas combustion and as an extender to

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Speaker 3: allow people to drive on longer electric ranges.

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Speaker 1: I'm really curious to learn a little bit more about

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Speaker 1: these mini evs you've mentioned, because if that's something that

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Speaker 1: I don't well, I've not seen that in the US.

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Speaker 1: I mean, coming from Europe, you come to the US

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Speaker 1: and you realize how everyone has to have a massive car.

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Speaker 1: There's no lock what to me, and no normal sized

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Speaker 1: cars on the road. So the mini ev this concept

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Speaker 1: just slightly bigger than a golf car, is you know,

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Speaker 1: very different. I'm assuming that's something that people have in

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Speaker 1: cities more and so my question for you is the

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Speaker 1: people that have those cars or those mini evs, I

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Speaker 1: don't if you would call them a car. Are they

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Speaker 1: owning those in addition to a more conventional sized car

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Speaker 1: or instead of a conventional size car, or do you

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Speaker 1: think it's people who wouldn't have had a car at

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Speaker 1: all in the first place, but now the mini ev

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Speaker 1: is here, there's an option that's suitable for them. Just

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Speaker 1: kind of interested in how this is transforming the automotive

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Speaker 1: picture more generally.

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Speaker 2: Yeah, that's a good question. Yeah.

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Speaker 3: I think definitely first started when mini EV's like start

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Speaker 3: to kind of pick up in China. It started as

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Speaker 3: like a second or third family car. So these are

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Speaker 3: also bought by families that already own a internal combustion

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Speaker 3: and in vehicles, and then they want their additional car because,

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Speaker 3: like lociously, it is cheaper to use, and these mini

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Speaker 3: cars are also priced below like ten thousand US dollars,

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Speaker 3: so that's like real very affordable for those as use

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Speaker 3: a commuter car or those two maybe pick up their

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Speaker 3: children or do their kind of a Grosceri is quickly

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Speaker 3: so increasingly. Is that the technology underpinning those mini cars

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Speaker 3: are also improving quite a lot, so they're rein increasing,

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Speaker 3: their charging speed are increasing, and then they also equipped

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Speaker 3: with like smart driving, like driving assistant systems, so they're

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Speaker 3: not really simplely like for commuter, but they are becoming

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Speaker 3: more common or even becoming more popular among first time

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Speaker 3: car virus as well.

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Speaker 1: That's so interesting, and I'm really curious to know if

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Speaker 1: we're going to start seeing the uptake of similar vehicles

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Speaker 1: in other markets as well. So let's talk about the

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Speaker 1: industry in China and in particular relationship between the as

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Speaker 1: you alluded to already, the relationship between the market and

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Speaker 1: the industry. I mean, there's huge market for electric vehicles

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Speaker 1: in China, Is it fair to say that it's predominantly

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Speaker 1: served by domestic manufacturers? And if so, who are the

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Speaker 1: big players there? Yeah?

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Speaker 3: So, so far for the China's EBN market, over ninety

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Speaker 3: percent of the sales came from domestic players and that's

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Speaker 3: ninet yes, okay. And then we're talking about like more

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Speaker 3: of established manufacturers like the Sha Automatic Group, but also

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Speaker 3: like those leading EV players like byd or jaily and

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Speaker 3: as well as there's also emergent for startups like new expots.

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Speaker 3: So it was really mostly domestic players. And having said that,

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Speaker 3: is that these are basically squeezing out the international automakers.

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Speaker 3: They used to control two thirds of the China's overall

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Speaker 3: auto market, but now there's like share of the overall

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Speaker 3: China auto markets like less than forty percent, which is

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Speaker 3: a big, pretty big hit for them.

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Speaker 1: Yeah. I'm just doing the numbers in my head. If

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Speaker 1: if electric vehicles are fifty percent of the market, now

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Speaker 1: fifty two percent and ninety percent of that is Chinese

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Speaker 1: V manufacturers and then obviously the non evs there's going

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Speaker 1: to be some Chinese manufacturers. Yeah, the Chinese auto market

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Speaker 1: is becoming increasingly Chinese served that's really interesting. And then

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Speaker 1: how are these Chinese electric vehicle manufacturers performing outside of China.

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Speaker 3: They're accelerating their global expansions outside of China, so we

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Speaker 3: do that for example their cells. So Chinese automakers sold

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Speaker 3: nearly one million passenger evs outside.

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Speaker 2: Of China in the first nime ounth of this year.

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Speaker 3: That's almost like twenty percent of the global passenger EV seals. Again,

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Speaker 3: and they're also shipping over one million passenger evs from China,

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Speaker 3: so it was like representing an important share of the

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Speaker 3: global market.

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Speaker 1: So and you said that when was for what period

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Speaker 1: was that one million?

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Speaker 3: One million was like from January to September this year.

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Speaker 1: So for most of the year. Because I'm trying to

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Speaker 1: obviously you mentioned Chinese electric vehicle represent twenty percent of

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Speaker 1: the global electric vehicle market. But from the numbers you're

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Speaker 1: saying to me, it sounds like, actually the Chinese market

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Speaker 1: is so big even compared to the international market for

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Speaker 1: electric vehicles that actually the going global at this point

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Speaker 1: in time is maybe less important than doing well in China.

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Speaker 1: Is that a fair statement? I actually I'm trying to

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Speaker 1: calculate it on this provide. I think was it you

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Speaker 1: said forty million EV sales in China expected this year, Yeah,

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Speaker 1: and we were saying one million internationally for most this year.

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Speaker 3: Yeah.

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Speaker 1: So even if they would dominate, if even if it

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Speaker 1: was one hundred percent of the global market, yeah, the

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Speaker 1: Chinese market is still more important. Yeah. And that's really

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Speaker 1: just a striking thought when we think about I mean,

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Speaker 1: we'll talk about supply chains and things like that, so

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Speaker 1: much of the focus you know, like I mentioned, when

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Speaker 1: we're talking about electric vehicles from the perspective of US

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Speaker 1: or European manufacturers, and the Chinese industry is, as I say,

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Speaker 1: always the antagonist who they're having to compete against, but

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Speaker 1: things like supply chains, but just have that market in

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Speaker 1: China is actually just the biggest advantage you could possibly

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Speaker 1: ask for for Chinese manufacturers more than anything else. Well

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Speaker 1: least I don't know, because I'm not an analyst on

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Speaker 1: this topic. That's what I'm just saying is the podcast.

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Speaker 1: But is that thesis? Is that a fair takeaway from this?

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Speaker 3: I think definitely, like having the Chinese market is lay

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Speaker 3: of good foundation for them to go global. So not

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Speaker 3: only for the Chinese market, but also for international market

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Speaker 3: who want to compete on the EV front as well.

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Speaker 3: So because as you said, the skill, the cost efficiency,

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Speaker 3: the relatively kind of cheaper electricity, water, the sort of

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Speaker 3: costs as well as like the skill labors or still

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Speaker 3: workers in the market, that's very hard to compete if

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Speaker 3: anyone wants to manufacture or make electric vehicles.

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Speaker 1: I mean, you touch on an interesting point the international

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Speaker 1: players competing in the Chinese market, because it sounds like

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Speaker 1: that's actually what they really need to do if they're

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Speaker 1: going to stand the chance globally in the long term. Yeah,

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Speaker 1: so what are international players doing to be relevant within

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Speaker 1: the Chinese market?

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Speaker 3: I think they already recognize that in order to compete

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Speaker 3: in the trend of market, they have to definitely focus

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Speaker 3: on electric vehicles. So what we see is that the

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Speaker 3: leading international automakers German or Japanese friends, they're doubling down

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Speaker 3: on evn investment and EV products in order to stay

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Speaker 3: more relevant or defend their market share. They're also increasingly

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Speaker 3: partner with local tech providers on EV technologies, on smart

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Speaker 3: driving technology and as well as kind of the way

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Speaker 3: to scale their local manufacturing. I think it's like so far,

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Speaker 3: it's like most of them have not really said their

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Speaker 3: want to axit China even though they're losing their market,

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Speaker 3: so they're still staying because the skill or the size

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Speaker 3: of the market is like so important. Like they basically

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Speaker 3: China markets still count for like twenty to thirty percent

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Speaker 3: of their global sales for leading players like Toyota or Worldswagons,

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Speaker 3: so it's like still very major market for them.

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Speaker 1: And is that for like all vehicles of vehicles, but

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Speaker 1: increasingly if it's not electric, they're not going to compete

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Speaker 1: and they're not going to do well in China from

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Speaker 1: the way the trends are going, right.

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Speaker 3: Yeah, absolutely, And I think to add on as it's

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Speaker 3: also like more about just having more electric vehicles. They

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Speaker 3: also have to compete on speed because their Chinese competitors

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Speaker 3: also rolling out EV models that really fast speeds. So

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Speaker 3: a lot of them already have an nouns or roll

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Speaker 3: out some localization strategies in order to better compete. But

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Speaker 3: again it's like, really the key is actually fusion and

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Speaker 3: how could they really deliver the products in a relatively

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Speaker 3: quicker speed than before.

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Speaker 1: I mean in this fast moving picture where you know

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Speaker 1: international manufacturers they're computing, it's the moving target because the

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Speaker 1: Chinese manufacturers are growing and expanding. How are they funding

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Speaker 1: that expansion? I mean, what role IPOs and capital markets

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Speaker 1: playing in that? You know, where is the money coming

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Speaker 1: from to fuel this growth in the Chinese EV industry, It.

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Speaker 3: Kind of depends. So for international automakers, mostly still funding

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Speaker 3: by their own revenues, and that's a lot of actually

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Speaker 3: ironically come from excelling internal combustion and the vehicle, which

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Speaker 3: is still very luctive business so far. By contrast, excelling

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Speaker 3: or making evs are not really profitable for many of them.

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Speaker 3: So is that they're using the revenue coming from ice

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Speaker 3: vehicles to found their EV growth targeting the long term

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Speaker 3: growth story. For domestic Chinese automakers, we do see that

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Speaker 3: increasingly they're tapping into the public market. Some of them

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Speaker 3: have announced that IPO already went public this year, and

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Speaker 3: then a lot of them really public on the Hong

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Speaker 3: Kong Stock is Changers. So taping into the international financial

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Speaker 3: markets enable them to very quickly adapt to the overseas market,

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Speaker 3: and it gave them the actual fundy that needed to

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Speaker 3: speed out their global wolves.

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Speaker 1: Let's talk about the I know, we've sort of established

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Speaker 1: that right now the most important market is the Chinese market,

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Speaker 1: but we know that electric vehicle sales are growing globally

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Speaker 1: and so at some point that's not going to be

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Speaker 1: the case. It's going to be really important to be

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Speaker 1: an international manufacturer or that's the huge opportunity, and obviously

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Speaker 1: Chinese electric vehicle manufacturers in a really good position to

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Speaker 1: be those global exporters. I suppose. My question is is

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Speaker 1: like what is the strategy there? You know, for example,

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Speaker 1: I mean I'm in America and the talk has all

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Speaker 1: been about tariff's tariffs, tariffs for example, and we're seeing

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Speaker 1: in a world with less and less free trade. So

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Speaker 1: is the strategy to manufacture cars in China and export

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Speaker 1: them or is it to have overseas capacity to manufacture

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Speaker 1: those cars. What kind of moves are we seeing?

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Speaker 3: Yeah, so many of those on make say China started

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Speaker 3: their local move by simply making evs in China and

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Speaker 3: then exporting to other markets. But it's like increasingly there

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Speaker 3: are difficult vulnerable as the global trade attention kind of escalated,

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Speaker 3: So right now they're increasingly moving towards the local manufacturer.

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Speaker 3: And then when it comes to local manufacturer also different ways.

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Speaker 3: Some are contract manufacturers, some are building up their own

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Speaker 3: factories from the scratch, so it was like really divergent ways,

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Speaker 3: but I think generally we do see that still relying

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Speaker 3: on export simply because the manufacturing skill in China is

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Speaker 3: hard to replicate in other markets right now, but also

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Speaker 3: increasing to tap into the local production opportunity in response

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Speaker 3: to terror but also to some of the local production incentives.

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Speaker 1: I imagine it's not just the capacity that's hard to replicate,

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Speaker 1: but also the skilled workforce. I imagine, Yeah, it's a lot

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Speaker 1: of skill.

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Speaker 3: It's definitely first and most important, but also like the

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Speaker 3: skilled workers in not only automaking, but also like in

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Speaker 3: battery in electric motors, those along the EV supply chain.

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Speaker 3: Because also China make up like about eighty percent of

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Speaker 3: the battery seale manufacturing capacity, so if you want like

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Speaker 3: a EV maker, you definitely have to be move closer

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Speaker 3: to your your battery suppliers.

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Speaker 2: So that's one of the records as well.

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Speaker 1: So what I'm taking from this is with all these

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Speaker 1: challenges around you know, trade, Chinese electric vehicle manufacturers are

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Speaker 1: pushing to have international production capacity, but there's like a

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Speaker 1: limit to how far they can realistically go with that.

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Speaker 1: Is that a fair takeaway from what.

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Speaker 3: You're saying, I think right now, it's more of a

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Speaker 3: tapping into like some of the emerging markets like Southeast Asia,

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Speaker 3: Latin America like Brazil, as well as some of the

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Speaker 3: European countries. So they start small in EV manufacturer like

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Speaker 3: companies like Cherry, which they start with kind of contract manufacturing,

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Speaker 3: whereas complex bid they use their own kind of capacities.

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Speaker 1: But would it take time that international presence. The reason

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Speaker 1: I'm thing about this is this global raising of trade

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Speaker 1: barriers happened so fast. You know, a change of president

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Speaker 1: in the US had a huge impact, and maybe it

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Speaker 1: could go away just as quickly within a different set

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Speaker 1: of political winds blowing. I mean, obviously if it doesn't,

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Speaker 1: then those will be good long term investments. Maybe this

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Speaker 1: is me being unrealistic. If we move back to a

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Speaker 1: world where the trade barriers come down again, then it'll

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Speaker 1: be back to manufacturing in China, because there seems there

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Speaker 1: seems to be no good reason for Chinese EV manufacturers

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Speaker 1: to have international operations except for because of trade restrictions.

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Speaker 3: I think trade is definitely a key enabler into why

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Speaker 3: Chinese automatics are moving production overseas, but there's also other reasons.

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Speaker 3: I would say general like European market there are still

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Speaker 3: encouraging the EV industry development, but there's like incentive, there's incentive,

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Speaker 3: but also like generally like these are the markets I

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Speaker 3: think there's still see that's as important or as still

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Speaker 3: transition to electrification. Some of the emerging market like Thailand

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Speaker 3: and Indonesia, they already have like quite established auto manufacturer

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Speaker 3: and the local governments also want to be a new

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Speaker 3: champion or new leader in EV industry, so they are

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Speaker 3: attracting investments that are from like Chinese automakers.

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Speaker 1: I mean, whilst we're talking about where the capacity is

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Speaker 1: going to get built in the future and where it's

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Speaker 1: emerging in the different strategies, So what's the importance of

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Speaker 1: supply chains and sort of having really established supply chains,

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Speaker 1: and I mean, how do Chinese TV manufacturers position themselves

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Speaker 1: in this regard.

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Speaker 3: So definitely a lot of the movements are coincided with

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Speaker 3: the global expansion of the Chinese battery industry as well,

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Speaker 3: so computiues like ctlps they're also building new battery factories overseas,

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Speaker 3: so that bacterily encouraged Chinese automakers to set up factories

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Speaker 3: nearby or in the vicinity. And similarly, like because batteries

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Speaker 3: are such a core component to these kind of the

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Speaker 3: movements of supply chain where the geographic movement the battery

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Speaker 3: become quite important. There's also other y like electric motors,

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Speaker 3: like electronics. These are things that of core to evs,

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Speaker 3: but for others like for example, like sea belts, some

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Speaker 3: of the interior. These are things that components are largely

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Speaker 3: can be sourced locally or relatively to set up like

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Speaker 3: a local assembly shops.

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Speaker 1: Got it. So there's this sort of hybrid where the

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Speaker 1: core components might be getting manufactured in specific regions and

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Speaker 1: clusters within China where the industry is really established, and

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Speaker 1: then the details can be taken care of locally.

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Speaker 2: Yeah, exactly.

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Speaker 1: Yeah.

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Speaker 3: I think it's like it's similar to ice, like internal

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Speaker 3: combattion vehicle. You always building your engine, your transmission kind

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Speaker 3: of west nearby, whereas for others like you can take

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Speaker 3: it from overseas or other readers.

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Speaker 1: And we've mentioned a little bit the growth of the

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Speaker 1: international market and Chinese players there and the localization of industry.

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Speaker 1: I mean which countries specifically are we talking about here?

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Speaker 3: So I think market wise, Europe is still the most

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Speaker 3: important market for Chinese automakers. It represents almost half of

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Speaker 3: all the Chinese automakers oversea cells. And among Europe, I

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Speaker 3: think countries like the UK is pretty important, mostly because

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Speaker 3: right now UK has a much lower TERRORFF compared to

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Speaker 3: the European Union. So since like European Union in the

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Speaker 3: last October, it increased the terrors of China made better

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Speaker 3: electric vehicles, and also UK has like some local incentives,

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Speaker 3: so that also pushed the domestic brand as well. Outside

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Speaker 3: of Europe, there's also increasing focus on the emerging markets

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Speaker 3: like Celsias, Asia or Latin America. These are markets that

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Speaker 3: are relatively small in size, they're less competition, and there's

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Speaker 3: also more willingness to accept like foreign brander or Chinese brand.

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Speaker 3: So Chinese automakers are almost eighty ninety percent of all

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Speaker 3: passenger vehicle cells in countries like Brazil or Thailand.

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Speaker 1: I've mentioned a few times so far her in the

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Speaker 1: podcast that normally when I'm talking about electric vehicles either

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Speaker 1: with people from the US, Europe and they're looking at

440
00:23:01,080 --> 00:23:04,040
Speaker 1: it from the perspective of those industries. The challenge that

441
00:23:04,119 --> 00:23:07,240
Speaker 1: those industries face that they have to overcome is how

442
00:23:07,240 --> 00:23:09,919
Speaker 1: do they compete with the Chinese electric vehicle industry. Now,

443
00:23:09,920 --> 00:23:12,040
Speaker 1: if we turn it around and you know, today we're

444
00:23:12,080 --> 00:23:14,479
Speaker 1: talking it from the perspective of what the Chinese electric

445
00:23:14,560 --> 00:23:17,200
Speaker 1: vehicle industry is up to. A China is a protagonist

446
00:23:17,640 --> 00:23:22,040
Speaker 1: in the Chinese electric vehicle industry's story, what is the

447
00:23:22,160 --> 00:23:24,960
Speaker 1: challenge that they face? Because when I'm looking at it

448
00:23:24,960 --> 00:23:27,240
Speaker 1: from the other perspective, it always just looks like the

449
00:23:27,320 --> 00:23:30,560
Speaker 1: Chinese electric vehicle industry is just well positioned to win.

450
00:23:30,840 --> 00:23:32,720
Speaker 1: But I'm sure that when you're looking at it from

451
00:23:32,720 --> 00:23:35,840
Speaker 1: the perspective of the Chinese electric vehicle industry, it's not that simple.

452
00:23:35,880 --> 00:23:38,520
Speaker 1: It's not that easy at this stage. So what are

453
00:23:38,560 --> 00:23:41,560
Speaker 1: the things that people in the industry are concerned about,

454
00:23:41,680 --> 00:23:45,440
Speaker 1: the fears, the challenges, the things that could make life

455
00:23:45,440 --> 00:23:47,760
Speaker 1: difficult for some of these companies that we're talking about.

456
00:23:48,119 --> 00:23:51,919
Speaker 3: Absolutely, first, it's that the because the market's already fifty

457
00:23:51,920 --> 00:23:54,120
Speaker 3: percent of new cars, that was quite established, and then

458
00:23:54,440 --> 00:23:56,600
Speaker 3: the growth of cells become to slow down a bit,

459
00:23:56,800 --> 00:24:00,159
Speaker 3: so because some of the segments already getting saturated. And

460
00:24:00,200 --> 00:24:02,320
Speaker 3: then like the meaning a small car we talk earlier,

461
00:24:02,359 --> 00:24:04,280
Speaker 3: that's already one hundred percent electrics.

462
00:24:04,320 --> 00:24:07,080
Speaker 2: So they're not really much of a growth story there.

463
00:24:07,160 --> 00:24:10,360
Speaker 3: And also like because the demand is slowing down, the

464
00:24:10,960 --> 00:24:13,280
Speaker 3: question lies on the kind of the suppli set where

465
00:24:13,280 --> 00:24:16,159
Speaker 3: we do see their successive supply in auto manufacturer and

466
00:24:16,160 --> 00:24:20,080
Speaker 3: EV manufacturing the country. So the plant utilization has been dropping.

467
00:24:20,240 --> 00:24:22,439
Speaker 3: I think last year it was about forty eight percent,

468
00:24:22,440 --> 00:24:25,199
Speaker 3: which very unhealthy rate. So typically it was like for

469
00:24:25,240 --> 00:24:27,879
Speaker 3: automaking that's like seventy eighty percent. That's more of a

470
00:24:27,880 --> 00:24:30,680
Speaker 3: health big rate for plant utilization. That's also kind of

471
00:24:30,680 --> 00:24:33,680
Speaker 3: a reason why these Chinese automakers are trying to push

472
00:24:33,760 --> 00:24:37,639
Speaker 3: overseas to improve their capacity utilization as well.

473
00:24:37,680 --> 00:24:40,200
Speaker 1: I mean, sorry, just to try and understand this picture.

474
00:24:40,359 --> 00:24:43,199
Speaker 1: We mentioned the start. Having this huge market for electric

475
00:24:43,280 --> 00:24:46,320
Speaker 1: vehicles locally is a huge advantage for the Chinese industry,

476
00:24:46,359 --> 00:24:49,440
Speaker 1: but it's almost like that card has now been played.

477
00:24:49,720 --> 00:24:52,640
Speaker 1: They've reaped the benefits of that, and so now they

478
00:24:52,640 --> 00:24:54,760
Speaker 1: have to figure out how to move to the next

479
00:24:54,760 --> 00:24:58,120
Speaker 1: stage beyond that. When you talk to the non Chinese

480
00:24:58,119 --> 00:25:00,119
Speaker 1: EV players, they would say what's the biggest channel and

481
00:25:00,240 --> 00:25:03,960
Speaker 1: just say it's competing with Chinese EV manufacturers. And then

482
00:25:04,000 --> 00:25:06,000
Speaker 1: based on what you're saying, if you say to Chinese

483
00:25:06,000 --> 00:25:09,680
Speaker 1: EV manufacturers. What's the biggest challenge you face. It's competing with.

484
00:25:09,680 --> 00:25:12,760
Speaker 3: Chinese exactly exactly, and.

485
00:25:13,000 --> 00:25:15,919
Speaker 1: That the over capacity you're mentioning is is maybe a

486
00:25:15,920 --> 00:25:18,600
Speaker 1: part of that because I've been ramping up capacity because

487
00:25:18,640 --> 00:25:21,080
Speaker 1: the market's always been ramping up locally and as it's

488
00:25:21,200 --> 00:25:23,639
Speaker 1: so suddenly they have to look abroad. Is am I

489
00:25:23,720 --> 00:25:24,880
Speaker 1: understanding you? Right?

490
00:25:25,280 --> 00:25:25,560
Speaker 2: Yeah?

491
00:25:25,640 --> 00:25:28,560
Speaker 3: I just think that the market has developed to a

492
00:25:28,560 --> 00:25:31,600
Speaker 3: certain stage that it faces that kind of similar problems

493
00:25:31,720 --> 00:25:35,320
Speaker 3: like for example, ice vehicles. So they're like the overcapacity,

494
00:25:35,400 --> 00:25:38,600
Speaker 3: the intense competition, like price competition, those sort of things.

495
00:25:38,720 --> 00:25:41,280
Speaker 3: It's inevitable. It's not really kind of a niche market,

496
00:25:41,440 --> 00:25:43,720
Speaker 3: just like they have to face those channels and try

497
00:25:43,760 --> 00:25:46,119
Speaker 3: to improve their profitability along the way.

498
00:25:46,320 --> 00:25:50,320
Speaker 1: Rights it's moving on from growth growth, growth to profit,

499
00:25:51,280 --> 00:25:54,040
Speaker 1: which you know, I so many industries you've seen this

500
00:25:54,119 --> 00:25:58,120
Speaker 1: where like you can expand and shareholders are happy because

501
00:25:58,200 --> 00:26:00,480
Speaker 1: you're expanding for the future, and then when you reach

502
00:26:00,560 --> 00:26:02,879
Speaker 1: certain of maturity, then you expected to make a profit

503
00:26:03,320 --> 00:26:06,080
Speaker 1: on a consistent basis. Do you think we will see

504
00:26:06,080 --> 00:26:07,880
Speaker 1: some consolidation then in the future.

505
00:26:08,200 --> 00:26:12,280
Speaker 3: I think that's inevitable. I will say smaller player will

506
00:26:12,320 --> 00:26:14,480
Speaker 3: be a squiz out or kind of maybe it'll be

507
00:26:14,520 --> 00:26:18,480
Speaker 3: acquired by larger automakers, because right now there are over

508
00:26:18,560 --> 00:26:21,480
Speaker 3: one hundred I think at least one hundred automakers for

509
00:26:21,520 --> 00:26:23,359
Speaker 3: a single market. That's like way too many.

510
00:26:23,680 --> 00:26:27,880
Speaker 1: Do you see any parallels with the Chinese solar industry,

511
00:26:28,040 --> 00:26:30,760
Speaker 1: because it seems like the Chinese solar industry, it went

512
00:26:30,800 --> 00:26:34,560
Speaker 1: through that whole thing of growth, nobody internationally could compete

513
00:26:34,560 --> 00:26:38,119
Speaker 1: with it, so then China became the dominant industry. But

514
00:26:38,240 --> 00:26:41,800
Speaker 1: I think it's fair to say that companies in China

515
00:26:41,840 --> 00:26:44,639
Speaker 1: have now been I think they struggled with that maturity phase.

516
00:26:44,680 --> 00:26:47,439
Speaker 1: I guess is that like the companies still find it

517
00:26:47,480 --> 00:26:50,280
Speaker 1: hard to make a profit because it's still so competitive.

518
00:26:50,520 --> 00:26:52,399
Speaker 1: Do you think that might be the fate of the

519
00:26:53,040 --> 00:26:56,359
Speaker 1: electric vehicle industry, that it might be too competitive for

520
00:26:56,400 --> 00:26:58,639
Speaker 1: its own good? Or do you think that it's going

521
00:26:58,760 --> 00:27:01,720
Speaker 1: to be able to reach that? And I realized it's

522
00:27:01,920 --> 00:27:04,639
Speaker 1: vehicles are a lot more complicated than solar modules, So

523
00:27:04,640 --> 00:27:07,119
Speaker 1: it's not a perfect analogy, I'm not, but but is

524
00:27:07,119 --> 00:27:08,960
Speaker 1: there is there a parallel? Is there a lesson that

525
00:27:09,000 --> 00:27:09,800
Speaker 1: can be learned there?

526
00:27:10,200 --> 00:27:12,560
Speaker 3: I think in terms of the kind of competent landscape.

527
00:27:12,560 --> 00:27:14,800
Speaker 3: There are definitely some parallel comp draw to like solar

528
00:27:14,960 --> 00:27:17,879
Speaker 3: or badgery industry, which also in that phase of competition.

529
00:27:18,240 --> 00:27:20,760
Speaker 3: I guess like for all the industry person is that

530
00:27:20,880 --> 00:27:24,080
Speaker 3: first it's it hasn't really reached that high level of

531
00:27:24,200 --> 00:27:26,800
Speaker 3: maturity or high level count development, so we're not talking

532
00:27:26,840 --> 00:27:28,920
Speaker 3: about fifty percent. But against that, there's still like forty

533
00:27:28,960 --> 00:27:31,280
Speaker 3: fifty percent of a market yeah, for them to penetrate.

534
00:27:31,440 --> 00:27:34,399
Speaker 3: And then also is that they're not really kind of

535
00:27:34,480 --> 00:27:36,720
Speaker 3: a single players or a few players that can really

536
00:27:36,720 --> 00:27:38,720
Speaker 3: dominate the market. We do see some of the leading

537
00:27:38,760 --> 00:27:41,680
Speaker 3: prolects a bid or really their grown market shap but

538
00:27:41,680 --> 00:27:44,000
Speaker 3: against like the smaller players just still have a phase

539
00:27:44,040 --> 00:27:46,640
Speaker 3: to to compete. So I think probably we always see

540
00:27:46,640 --> 00:27:47,960
Speaker 3: it's the next two or three years that will be

541
00:27:48,000 --> 00:27:51,960
Speaker 3: really intense competition and force us the market to consolidate.

542
00:27:52,080 --> 00:27:54,040
Speaker 3: But who are going to win or not? I think

543
00:27:54,080 --> 00:27:55,520
Speaker 3: that's still too early to tell.

544
00:27:55,960 --> 00:27:58,240
Speaker 1: See, this has been a really fascinating chat. I think

545
00:27:58,280 --> 00:28:00,560
Speaker 1: it's it's been so refreshing hearing the the sort of

546
00:28:00,560 --> 00:28:03,880
Speaker 1: the perspective of the Chinese EV industry. Like I say,

547
00:28:03,920 --> 00:28:05,840
Speaker 1: because we always look at it the other way and

548
00:28:06,040 --> 00:28:08,720
Speaker 1: even though it seems to be on the path to success,

549
00:28:08,960 --> 00:28:12,679
Speaker 1: the path to success doesn't necessarily mean everything is easy

550
00:28:12,800 --> 00:28:15,960
Speaker 1: or simple. I would also say I really want a

551
00:28:16,000 --> 00:28:19,840
Speaker 1: Mini EV having heard that description, firstly because I can

552
00:28:19,880 --> 00:28:22,439
Speaker 1: afford one, unlike a lot of other electric vehicles. But

553
00:28:22,520 --> 00:28:25,119
Speaker 1: they just sound so cool. I mean, maybe this is

554
00:28:25,160 --> 00:28:28,440
Speaker 1: wishful thinking that they'll be available in the US anytime soon,

555
00:28:28,560 --> 00:28:32,120
Speaker 1: but maybe they will. But thank you so much for

556
00:28:32,200 --> 00:28:34,800
Speaker 1: coming and sharing your insights today.

557
00:28:35,160 --> 00:28:35,840
Speaker 2: Thanks Tom for.

558
00:28:35,800 --> 00:28:47,920
Speaker 1: Having Today's episode of Switched On was produced by Cam

559
00:28:48,000 --> 00:28:51,880
Speaker 1: Gray with production assistants from Kamala Shelling. Bloomberg ne EF

560
00:28:52,000 --> 00:28:55,200
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00:28:55,240 --> 00:28:57,960
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00:28:58,000 --> 00:29:01,760
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563
00:29:01,800 --> 00:29:04,640
Speaker 1: to an investment or other strategy. Bloomberg ANIAF should not

564
00:29:04,720 --> 00:29:07,719
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565
00:29:07,760 --> 00:29:10,920
Speaker 1: investment decision. Neither Bloomberg Finance LP nor any of its

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00:29:10,920 --> 00:29:14,640
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00:29:14,720 --> 00:29:17,520
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