WEBVTT - The Chinese EV Maker That's Selling More Cars Than Tesla 0:00:10.160 --> 0:00:14.040 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.160 --> 0:00:15.880 I'm Geoe Wisenthal. 0:00:15.480 --> 0:00:16.600 And I'm Tracy Alloway. 0:00:16.920 --> 0:00:22.119 Tracy Chinese EV exports. I feel like is a topic 0:00:22.280 --> 0:00:25.800 that we've danced around, maybe is the way to put 0:00:25.840 --> 0:00:32.040 it in numerous episodes related to trade, batteries, tech, trade policy, tech, 0:00:32.960 --> 0:00:35.760 things like that, but we've never really like hit it 0:00:35.880 --> 0:00:36.400 square on. 0:00:36.479 --> 0:00:36.960 I don't think. 0:00:37.040 --> 0:00:39.400 No, it's true. It's one of these things that's kind of, 0:00:39.479 --> 0:00:42.080 as you put it, hovering in the background, and every 0:00:42.120 --> 0:00:46.760 time it pops up, there's usually some amazing statistic attached 0:00:46.800 --> 0:00:48.320 to it. One of the things that's come up a 0:00:48.360 --> 0:00:50.920 few times now, I think, is this idea that China 0:00:51.040 --> 0:00:56.360 has surpassed Germany as the biggest exporter of cars. I 0:00:56.400 --> 0:00:59.560 think that happened last year or in a fairly recent quarter, 0:00:59.560 --> 0:01:02.280 and it seems to be on track to surpass Japan 0:01:02.560 --> 0:01:05.720 as well. So that's a pretty amazing development. 0:01:06.120 --> 0:01:08.880 It's a really extraordinary development. And I think it's like, 0:01:09.040 --> 0:01:12.920 you know, we talked about this with brand Setser for example, 0:01:13.080 --> 0:01:15.240 it came up and like it really seems to have 0:01:15.319 --> 0:01:18.319 caught a lot of people by surprise, and even as 0:01:18.400 --> 0:01:23.000 recently as like twenty eighteen or twenty nineteen, The ability 0:01:23.040 --> 0:01:26.840 of China to become a auto export powerhouse was not 0:01:27.000 --> 0:01:28.119 on a lot of people's radar. 0:01:28.560 --> 0:01:29.200 Absolutely. 0:01:29.240 --> 0:01:31.720 And I think the other reason it keeps coming up 0:01:31.720 --> 0:01:34.840 in conversations and is a particular interest to US is 0:01:34.880 --> 0:01:37.600 because it relates a lot to this idea of the 0:01:37.640 --> 0:01:43.160 new Industrial Policy and the idea of nurturing domestic manufacturers 0:01:43.200 --> 0:01:46.480 and tech sectors of one sort or another. And it 0:01:46.560 --> 0:01:49.680 also lands squarely into some of the tensions we've seen 0:01:50.160 --> 0:01:53.480 between Europe and the US over the Inflation Reduction Act. 0:01:53.880 --> 0:01:56.840 Yeah, I'm thinking about the episode that we recorded in 0:01:57.080 --> 0:02:00.320 Pennsylvania or this spring with Dan Long where we really 0:02:00.320 --> 0:02:02.760 talked about the Inflation Reduction Act. And you know, the 0:02:02.920 --> 0:02:06.680 US has this incredible EV company called Tesla, but what 0:02:06.760 --> 0:02:09.440 we don't really have nearly as much to the degree 0:02:09.720 --> 0:02:13.359 is battery tech, which there's the Inflation Reduction Act is 0:02:13.400 --> 0:02:16.320 trying to foster and so forth. And so there really 0:02:16.560 --> 0:02:18.480 is a lot here with like this sort of like 0:02:18.560 --> 0:02:23.040 global sort of like remaking of the entire like auto landscape. 0:02:22.560 --> 0:02:26.240 Potentially, right, And I think the domestic supply chain is 0:02:26.400 --> 0:02:29.640 probably where the US differs quite a bit to China, 0:02:29.680 --> 0:02:31.919 and I think it would be really interesting to dive 0:02:32.040 --> 0:02:35.919 into how the Chinese EV landscape is developing, and how 0:02:35.919 --> 0:02:38.480 it compares and contrasts with the rest of the world. 0:02:38.360 --> 0:02:41.040 And how the Yeah, how competitive are these How good 0:02:41.360 --> 0:02:43.200 are these cards? Could they one day be on the 0:02:43.280 --> 0:02:47.000 roads across the United States? Are is the European industry 0:02:47.080 --> 0:02:49.440 going to be totally decimated by lower cost competitive all 0:02:49.520 --> 0:02:53.359 these so many interesting topics, labor angles, labor costs would 0:02:53.360 --> 0:02:56.200 cost so much here. Probably do several episodes over time 0:02:56.360 --> 0:02:57.480 on this topic. 0:02:57.760 --> 0:02:58.800 But this is the first. 0:02:58.840 --> 0:03:00.440 But this is the first word just sort of like 0:03:00.480 --> 0:03:03.399 looking at it directly. So I'm very excited about our guest. 0:03:03.440 --> 0:03:05.760 We have the perfect guest to sort of welcome us 0:03:06.000 --> 0:03:08.440 to this topic. We're gonna be speaking with Corey Kanter. 0:03:08.600 --> 0:03:12.000 He is a senior associate for electric vehicles right here 0:03:12.040 --> 0:03:15.440 at Bloomberg ne EF done a lot of research recently 0:03:15.440 --> 0:03:17.720 put out a big report on the state of the 0:03:17.760 --> 0:03:20.680 global EV market. Corey, thank you so much for coming 0:03:20.680 --> 0:03:21.399 on the podcast. 0:03:21.800 --> 0:03:24.320 Thanks show, Tracy. It's great to be here and great 0:03:24.360 --> 0:03:27.799 always a great time to talk about electric vehicles. It's 0:03:27.960 --> 0:03:30.480 always a great always news about electric vehicles. Well, you've 0:03:30.480 --> 0:03:30.880 sold us. 0:03:30.960 --> 0:03:32.320 Yeah, we're sold. 0:03:32.360 --> 0:03:36.440 We're so I want to actually start with you know, again, 0:03:36.480 --> 0:03:39.640 there's a million different angles. But like we mentioned Tesla 0:03:39.840 --> 0:03:42.000 in the intro, it's like, Okay, one thing the US 0:03:42.040 --> 0:03:47.160 definitely has is an extremely successful domestic EV company. But 0:03:47.200 --> 0:03:50.360 there's also like this Chinese EV company that's like is 0:03:50.400 --> 0:03:52.680 it bigger than Tesla? Like or is it close to it? 0:03:52.800 --> 0:03:54.200 Or like what is it? 0:03:54.200 --> 0:03:57.600 It's bigger than Tesla? And whoa. Folks that Bloomberg are 0:03:57.600 --> 0:04:01.280 probably really familiar with BYD given that Warren Buffett invested 0:04:01.480 --> 0:04:04.120 back in two thousand and eight, and since then, folks 0:04:04.120 --> 0:04:07.000 at Bloomberg and in general have been tracking BID's progress. 0:04:07.240 --> 0:04:10.160 BID last year had more electric vehicle sales than Tesla, 0:04:10.320 --> 0:04:12.520 and it's been impressive how much they've grown in a 0:04:12.520 --> 0:04:14.640 short period of time. So if we go back to 0:04:14.760 --> 0:04:18.560 before the pandemic, a twenty nineteen BID had about two 0:04:18.680 --> 0:04:22.200 hundred and twenty thousand electric vehicle sales, and in about 0:04:22.400 --> 0:04:25.520 three years it grew by nine times. So last year 0:04:25.560 --> 0:04:28.640 is about one point nine million electric vehicle sales compared 0:04:28.680 --> 0:04:30.719 that to Tesla last year was one point three million. 0:04:31.360 --> 0:04:33.920 One kind of key takeaway when we talk about EV's 0:04:33.960 --> 0:04:36.559 on the BNF team. It's really a two horse race 0:04:36.880 --> 0:04:40.000 at the top between Tesla and BID. And there's some 0:04:40.080 --> 0:04:42.760 differences that we can get into between the two companies. Ye, 0:04:42.920 --> 0:04:45.720 but Bid is winning right now in terms of total sales. 0:04:46.680 --> 0:04:50.120 Just before we get into more of the Bid versus 0:04:50.160 --> 0:04:52.880 Tesla idea, can we talk a little bit about the 0:04:53.120 --> 0:04:57.960 Chinese EV landscape to set the stage, because my impression was, 0:04:58.520 --> 0:05:00.560 and again I guess it's been you know, over a 0:05:00.680 --> 0:05:03.200 year a year and a half since I left Hong Kong, 0:05:03.440 --> 0:05:07.120 but my impression was, there is a lot of sometimes 0:05:07.240 --> 0:05:10.479 irrational capital flowing into the space. There was talk of 0:05:10.520 --> 0:05:14.640 a Chinese EV bubble. No one was quite sure whether 0:05:14.800 --> 0:05:17.960 or not these companies were going to be viable on 0:05:18.040 --> 0:05:21.480 a standalone basis. But fast forward to today, it seems 0:05:21.520 --> 0:05:25.440 like we are starting to see some differentiation between winners 0:05:25.520 --> 0:05:28.839 like Bid and maybe some losers who aren't going to 0:05:28.839 --> 0:05:29.760 be able to compete. 0:05:30.240 --> 0:05:32.320 Yeah, and to give you know, listeners a kind of 0:05:32.400 --> 0:05:35.000 sense of how big that Chinese global EV market is. 0:05:35.400 --> 0:05:38.080 Last year, globally there was about ten point five million 0:05:38.120 --> 0:05:41.120 electric vehicle sales. China was about sixty percent of that, 0:05:41.360 --> 0:05:44.039 so around six million or so, and it's a much 0:05:44.040 --> 0:05:46.599 more competitive market. When I talk to folks here in 0:05:46.600 --> 0:05:49.839 the US, Tesla really is far and away the leader. 0:05:50.279 --> 0:05:53.080 In China, you have everyone, and not just you know, 0:05:53.680 --> 0:05:56.880 new automakers like Neo who are out there selling EV's, 0:05:56.920 --> 0:06:00.560 but even GM has this really small mini in venture 0:06:00.600 --> 0:06:03.719 car that sells hundreds of thousands of units. So, whether 0:06:03.880 --> 0:06:07.479 traditional or older OEMs or new entrants, it is a 0:06:07.520 --> 0:06:10.560 competitive market and growing. But BID has really started to 0:06:10.600 --> 0:06:13.559 affirm itself in the last three years as the market 0:06:13.640 --> 0:06:16.240 leader there so much so that they've begin to look 0:06:16.320 --> 0:06:18.560 into expanding into other markets. And we'll touch on that 0:06:18.600 --> 0:06:20.360 when it gets to Europe. But it is a more 0:06:20.800 --> 0:06:23.880 competitive space in China, and we do a lot of 0:06:23.880 --> 0:06:26.279 research on the market in particular. But you know, you 0:06:26.279 --> 0:06:29.080 don't just have BID dominating. You have now more consolidation 0:06:29.200 --> 0:06:31.880 than maybe a couple of years ago in twenty nineteen, 0:06:32.040 --> 0:06:34.719 just because you have more of those winners. Again, BID 0:06:34.839 --> 0:06:36.919 for a long time was consistent at about two hundred 0:06:36.920 --> 0:06:39.640 thousand EV sales a year. It was really only after 0:06:39.680 --> 0:06:41.640 the pandemic when they really accelerated. 0:06:41.920 --> 0:06:44.400 Well, what did they do what catalyzed so to speak, 0:06:44.440 --> 0:06:46.479 that sales acceleration decades. 0:06:46.520 --> 0:06:49.360 I think of battery knowledge. So BID before being an 0:06:49.360 --> 0:06:52.560 EV company, is a battery manufacturing company, and they did 0:06:52.560 --> 0:06:54.800 a lot of work in the electric bus space. So 0:06:55.160 --> 0:06:58.039 people may be familiar with BID in the US because 0:06:58.040 --> 0:07:01.040 they do have electric buses here that they're building outside 0:07:01.120 --> 0:07:04.159 of LA in California. So globally they've been building a 0:07:04.160 --> 0:07:07.440 lot of those electric buses in places like the US 0:07:07.480 --> 0:07:09.640 but also Latin America. They've been building that kind of 0:07:09.640 --> 0:07:12.360 global brand and dominance. And then they switch over the 0:07:12.360 --> 0:07:15.640 passenger vehicles. And one big decision at BID made in 0:07:15.640 --> 0:07:17.960 twenty twenty one and then they actually followed through with 0:07:18.000 --> 0:07:20.360 it in twenty twenty two, is that they said we're 0:07:20.360 --> 0:07:22.600 no longer going to sell gasoline cars. We're going to 0:07:22.680 --> 0:07:25.720 end internal combustion engine vehicle sales. They announced that in 0:07:25.760 --> 0:07:27.960 the back half of twenty twenty one, and then they 0:07:27.960 --> 0:07:30.600 actually followed through in twenty twenty two. So you have 0:07:30.640 --> 0:07:33.760 a lot of automakers throwing out ice phase out targets, 0:07:33.800 --> 0:07:36.360 internal combustion engine phase out targets, but they set a 0:07:36.400 --> 0:07:38.000 target and then they said, you know what, We're just 0:07:38.080 --> 0:07:40.800 going to go solely in on electric now. They'd be clear. 0:07:40.840 --> 0:07:43.920 There are some of those hybrid vehicles. Yeah, but they're 0:07:43.960 --> 0:07:46.680 no longer selling purely gas cars. They're either both ICE 0:07:47.040 --> 0:07:49.520 and EV or fully electric. 0:07:50.400 --> 0:07:52.560 So you touched on it just there. But can you 0:07:52.560 --> 0:07:55.720 talk a little bit more about how important the domestic 0:07:55.880 --> 0:07:59.920 supply chain is to the China EV success story? I 0:08:00.080 --> 0:08:02.840 guess because this is one thing that I hear consistently, 0:08:02.920 --> 0:08:06.440 this idea that part of the reason why China's strategy 0:08:06.480 --> 0:08:09.920 of building up this industry seems to be working so 0:08:10.080 --> 0:08:12.280 far is because it has done so in a very 0:08:12.320 --> 0:08:15.960 conscious manner where it's basically built out, you know, from 0:08:16.000 --> 0:08:18.240 batteries to other types of components to. 0:08:18.200 --> 0:08:20.760 Go along with this. Yeah. So China, if you go 0:08:20.840 --> 0:08:23.400 back to twenty fifteen, they weren't making up, you know, 0:08:23.520 --> 0:08:26.480 close to sixty percent of the global passenger EV market. 0:08:26.680 --> 0:08:30.480 They were subsidizing, putting in policies in place restricting gas 0:08:30.520 --> 0:08:34.080 link car registration to make it more appealing for consumers 0:08:34.320 --> 0:08:37.040 to actually switch to electric. And then on top of that, 0:08:37.080 --> 0:08:40.160 they were going directly to the various auto companies and 0:08:40.240 --> 0:08:43.280 giving subsidies for each EV that was sold, so as 0:08:43.280 --> 0:08:45.319 opposed to here in the US, for example, where those 0:08:45.360 --> 0:08:48.920 consumers are getting the credit to purchase evs, they're going 0:08:48.920 --> 0:08:51.760 more so to the companies themselves than encouraging those sales. 0:08:52.120 --> 0:08:55.560 It's you know, policy wonkery. But in addition, you know, 0:08:55.640 --> 0:08:58.120 you do that five, six, seven years and it begins 0:08:58.160 --> 0:09:00.520 to build up that demand for electric vehicles. This doesn't 0:09:00.559 --> 0:09:03.040 just happen overnight, which is a useful lesson I think 0:09:03.080 --> 0:09:06.120 to take away for the automakers here struggling that you're 0:09:06.160 --> 0:09:08.360 not going to just flip a switch with the IRA 0:09:08.559 --> 0:09:11.400 passing and next year suddenly EV's are sold everywhere. You 0:09:11.480 --> 0:09:13.319 need a long time to invest in that kind of 0:09:13.360 --> 0:09:16.240 battery manufacturing side, which you know, to the point I 0:09:16.280 --> 0:09:20.320 made earlier byd had the battery manufacturing expertise. Tesla has 0:09:20.360 --> 0:09:23.120 been in the game for a while now with partnering 0:09:23.679 --> 0:09:26.880 with Panasonic on the battery manufacturing side. I think for 0:09:26.920 --> 0:09:29.920 too long many automakers have sheared away from the battery portion, 0:09:30.240 --> 0:09:32.720 just like they have from charging, and so I think 0:09:32.760 --> 0:09:35.000 that's the big lesson to takeaway. China invested on the 0:09:35.000 --> 0:09:38.040 battery side, and the auto companies are understanding that that's 0:09:38.120 --> 0:09:40.120 key to the core EV product. 0:09:41.080 --> 0:09:44.440 God a billion questions already, this is just so good. 0:09:45.559 --> 0:09:47.360 But you know, just going back to like the sort 0:09:47.400 --> 0:09:50.760 of like BYD versus Tesla framework, Hey, can you just 0:09:50.880 --> 0:09:53.960 reiterate the number unit numbers, but more importantly, like how 0:09:54.040 --> 0:09:56.880 apples to apples are we talking about, because Tesla is 0:09:56.920 --> 0:10:01.480 all ev YD does have hybrid and in terms of 0:10:01.520 --> 0:10:04.400 whether the quality of the cars, the build quality, like 0:10:04.520 --> 0:10:06.559 and maybe you could speak a little bit like in 0:10:06.800 --> 0:10:09.280 markets where they both exist and competing, can you just 0:10:09.320 --> 0:10:11.680 talk a little bit more about how apples to apples 0:10:11.679 --> 0:10:14.000 we should be thinking about these two companies in comparison. 0:10:14.160 --> 0:10:16.120 Yeah, and I think it's it's important to be fair 0:10:16.200 --> 0:10:18.200 to Tesla, right, So let's go back to the top 0:10:18.240 --> 0:10:21.160 line numbers for last year was one point nine one 0:10:21.160 --> 0:10:24.320 point a five one point nine million in bilb for 0:10:24.360 --> 0:10:27.640 BYD and Tesla was about one point three. But BYDS 0:10:27.679 --> 0:10:31.040 split between hybrid and BEV battery electric vehicle is about 0:10:31.080 --> 0:10:33.720 fifty to fifty. Okay, So from that standpoint, if you 0:10:33.760 --> 0:10:36.079 say throughout the hybrids and we just want to look 0:10:36.080 --> 0:10:38.720 at fully electric, Tesla is still in the lead. You know, 0:10:38.840 --> 0:10:42.079 one point three million versus around nine hundred thousand or 0:10:42.120 --> 0:10:46.160 so of the kind of fully electric BYD models. Another 0:10:46.200 --> 0:10:49.160 big difference is Tesla has your four currently your X, 0:10:49.280 --> 0:10:52.200 your Y or three, and your model as cyber truck. 0:10:52.240 --> 0:10:54.000 We will see when that comes. I've been waiting for 0:10:54.040 --> 0:10:56.960 that for a long time. BYD has many different models 0:10:57.000 --> 0:11:00.200 close to thirty. You know, we've tracked last year. So 0:11:00.360 --> 0:11:04.520 they have different segments, different sizes, both battery electric and 0:11:04.600 --> 0:11:07.760 hybrid versions of the same vehicle type. So again their 0:11:07.800 --> 0:11:10.520 strategy has been kind of flood the zone for the 0:11:10.559 --> 0:11:13.920 different segments, and you know there are some advantages to that. 0:11:13.960 --> 0:11:16.880 You can reach more consumers, different price points, so some 0:11:16.920 --> 0:11:19.240 of bids. There was this really cool announcement that they're 0:11:19.240 --> 0:11:21.920 aiming at an eleven thousand dollars car in Brazil in 0:11:21.960 --> 0:11:25.000 a couple of years, so reaching that lower. Tesla's are 0:11:25.000 --> 0:11:28.360 not eleven thousand dollars currently. Different ranges too, Right in 0:11:28.400 --> 0:11:30.760 the US, we expect our vehicles more like three hundred 0:11:30.800 --> 0:11:33.120 mile range. In China, you know, you could have shorter 0:11:33.200 --> 0:11:36.040 range gvs about one hundred mile one hundred and fifty 0:11:36.080 --> 0:11:39.040 mile depending that mini mini car segment, which is really 0:11:39.040 --> 0:11:41.040 cool to follow that you would never really catch on 0:11:41.240 --> 0:11:44.320 in other markets. So you can slice them and dice it. 0:11:44.440 --> 0:11:47.439 Many different ways to say whether Tesla or BID who's 0:11:47.440 --> 0:11:50.280 actually winning. I think the important thing is that they're 0:11:50.320 --> 0:11:53.440 far and ahead of other automakers that we think about. 0:11:54.120 --> 0:11:58.000 Volkswagen GM forward over here in terms of just thinking 0:11:58.040 --> 0:12:00.440 about how diverse of an EV lineup you can have 0:12:00.800 --> 0:12:03.720 and then actually executing it. Anytime an automaker is going 0:12:03.800 --> 0:12:05.760 to go nine times as high in sales from a 0:12:05.760 --> 0:12:07.720 couple of years ago, you're going to take notice. Even 0:12:07.720 --> 0:12:10.280 if you doubled, right, if BYD had gone from the 0:12:10.320 --> 0:12:12.760 two hundred thousand to five hundred thousand, we would you know, 0:12:12.800 --> 0:12:15.280 make a note of that at BAF. But to grow 0:12:15.400 --> 0:12:17.400 at that rate in such a short period of time, 0:12:17.679 --> 0:12:19.760 you know, maybe it's unsustainable to say that they're going 0:12:19.840 --> 0:12:22.520 to grow by another nine times in the next three years. 0:12:22.800 --> 0:12:25.480 They're already seeing a little bit of pushback in Europe. 0:12:25.760 --> 0:12:28.720 In India this week, actually they were rejected from having 0:12:28.760 --> 0:12:34.040 a new battery plant for national policy reasons. But BYD 0:12:34.160 --> 0:12:36.520 is going for it. They're going for it in different markets, 0:12:36.520 --> 0:12:39.040 are going for it in markets that haven't seen evs, 0:12:39.120 --> 0:12:53.000 like Latin America, which is exciting. 0:12:57.640 --> 0:13:02.120 You know, you mentioned BYD's Brazilian ten thousand EV and 0:13:02.200 --> 0:13:05.320 I think they have some sort of partnership with Toyota 0:13:05.520 --> 0:13:08.400 as well to build something. And I wanted to ask 0:13:08.480 --> 0:13:11.800 just more generally, it seems like there are quite a 0:13:11.800 --> 0:13:18.079 few partnerships between Chinese EV manufacturers and foreign car makers 0:13:18.320 --> 0:13:22.920 of one form or another. How important is that dynamic too, 0:13:22.960 --> 0:13:25.880 I guess how quickly the Chinese EV industry has been 0:13:25.880 --> 0:13:26.760 able to ramp up. 0:13:27.400 --> 0:13:29.640 Yeah, that's a really good question and one that I 0:13:30.280 --> 0:13:32.760 can frame and not necessarily have the best comment on. 0:13:32.840 --> 0:13:35.000 In the sense that you look at, for example, for 0:13:35.160 --> 0:13:39.199 the ncatl over here right, you're having the Chinese manufacturer 0:13:39.280 --> 0:13:42.720 knowledge and really able to help a US or Western 0:13:42.720 --> 0:13:45.560 automaker kind of advance their EV development, maybe where they've 0:13:45.559 --> 0:13:49.199 been lagging, or even moving into new battery chemistry technologies 0:13:49.320 --> 0:13:52.280 like LFP new in the sense of new for the West. 0:13:52.800 --> 0:13:55.320 In terms of entering China as a Western automaker, you 0:13:55.520 --> 0:13:58.720 have to often create what are called joint ventures, so 0:13:58.800 --> 0:14:02.040 these partnerships with ae automaker to be able to access 0:14:02.080 --> 0:14:05.079 that market. Now, Tesla, for example, didn't have to do that. 0:14:05.120 --> 0:14:07.760 They were just, you know, after jumping through the necessary hurdles, 0:14:07.920 --> 0:14:11.640 able to sell on their own. But other automakers. China 0:14:11.679 --> 0:14:14.679 has used that kind of joint venture partnership in a 0:14:14.679 --> 0:14:16.719 weird twist, kind of like the US has set these 0:14:16.760 --> 0:14:19.960 barriers in the post Inflation Reduction Act world to say 0:14:20.040 --> 0:14:22.480 you have to build here to be here. Yeah, it's 0:14:22.520 --> 0:14:26.640 almost copying what China did because it wasn't easy for 0:14:26.720 --> 0:14:30.120 automakers to get into the Chinese EV market specifically. I 0:14:30.240 --> 0:14:31.840 hope that answers your question a little bit. I know 0:14:31.880 --> 0:14:32.680 there's more nuances. 0:14:32.640 --> 0:14:34.600 No, I was going to say. You started off saying 0:14:34.640 --> 0:14:36.280 I might not be able to ask that question, and 0:14:36.320 --> 0:14:39.560 then went into you know, great detail, So that was perfect. 0:14:39.680 --> 0:14:43.640 You know, you mentioned the breadth of offerings that BYD 0:14:44.120 --> 0:14:46.800 has and maybe like in the US, like they're probably 0:14:46.840 --> 0:14:50.040 just is not much of a market anywhere for a 0:14:50.120 --> 0:14:52.680 car that only has one hundred miles or fifty miles 0:14:52.760 --> 0:14:55.040 or something like that. But you know, I know, like 0:14:55.280 --> 0:14:58.080 in terms of exports, like the big anxiety currently like 0:14:58.120 --> 0:15:00.480 maybe in a few years all the US compoty shoul 0:15:00.480 --> 0:15:02.480 freak out, but I know, like there's more anxiety in. 0:15:02.400 --> 0:15:04.400 Europe and stuff. Is that in part? 0:15:04.520 --> 0:15:07.760 Like are the markets or the domestic markets in China, 0:15:08.360 --> 0:15:10.880 And like I'm picturing just like a tiny little car 0:15:10.920 --> 0:15:13.440 in Paris as being something that you would never see 0:15:13.440 --> 0:15:15.160 here in the US, but maybe you see it in China. 0:15:15.240 --> 0:15:17.680 Like is there enough like similarity in the sort of 0:15:17.720 --> 0:15:22.160 like domestic markets of China and some places in Europe 0:15:22.560 --> 0:15:24.640 such that there's an advantage where the card that they 0:15:24.680 --> 0:15:28.240 sell domestically also have like an audience in Europe the 0:15:28.240 --> 0:15:29.600 way they might not in the US. 0:15:29.760 --> 0:15:33.680 There's definitely been concern from the European automakers around BYD 0:15:33.920 --> 0:15:38.040 entering or just even a more competitive kind of tavy offerings. Again, 0:15:38.080 --> 0:15:41.680 because BID has the expertise on the EV side, they're 0:15:41.720 --> 0:15:44.000 coming in with attractive models and I believe it was 0:15:44.000 --> 0:15:47.040 an article either earlier this year looking at Norway for example, 0:15:47.040 --> 0:15:49.840 and the consumers being interested just because the cars are 0:15:50.000 --> 0:15:53.560 solid quality and compared to automakers that may be struggling 0:15:53.600 --> 0:15:55.960 with software. You know, BYD is working through or has 0:15:55.960 --> 0:15:58.160 worked through some of those issues. I don't have the 0:15:58.200 --> 0:16:01.120 stat right at hand, but it has been attractive enough 0:16:01.160 --> 0:16:04.000 where the European folks have said, on the one hand, 0:16:04.040 --> 0:16:06.520 we have Ira, you know in the US, squeezing us 0:16:06.520 --> 0:16:08.400 out of the US market. On the other hand, we 0:16:08.440 --> 0:16:10.960 have these Chinese new entrants here that are making us 0:16:10.960 --> 0:16:13.440 nervous about our ability to kind of maintain home court 0:16:13.480 --> 0:16:16.360 advantage in Europe. So they've taken notice of it. Have 0:16:16.440 --> 0:16:18.680 the European automakers been able to respond in the way 0:16:18.720 --> 0:16:22.040 that they need to? Not necessarily and if you know, 0:16:22.200 --> 0:16:25.080 China is seen or the you know BYD for example, 0:16:25.120 --> 0:16:27.640 as a this is a cool, positive new automaker coming 0:16:27.640 --> 0:16:30.280 in and not the kind of geopolitical concerns. You know, 0:16:30.320 --> 0:16:33.480 European automakers could be squeezed out or squeezed down. You know, 0:16:33.520 --> 0:16:36.320 you're not going to see people lose all the market share, 0:16:36.360 --> 0:16:38.440 but even having that kind of trimmed off the top 0:16:38.480 --> 0:16:40.720 by now entrant. One thing I like to think about 0:16:40.720 --> 0:16:44.080 in general, for the global EV spaces, with Tesla MBYD 0:16:44.240 --> 0:16:47.200 growing at the rate that they are, the overall passenger 0:16:47.240 --> 0:16:49.800 car sales PIE doesn't grow that much year of the year. 0:16:49.880 --> 0:16:52.560 You know, it does fluctuate in previous years. It was 0:16:52.640 --> 0:16:55.960 higher closer to one hundred million annual sales units last 0:16:56.000 --> 0:16:58.640 year more in the seventy to seventy five million range. 0:16:58.960 --> 0:17:01.040 But the point is that if you're having EV's making 0:17:01.120 --> 0:17:03.120 up more of that, it has to come from somewhere. 0:17:03.120 --> 0:17:06.119 It's not kind of this endlessly growing pie of car sales, right, 0:17:06.320 --> 0:17:08.479 And so if you're a traditional, if you're a Toyota, 0:17:08.560 --> 0:17:10.840 if you're a Volkswagen, you know you're going to start 0:17:10.840 --> 0:17:13.160 to see that margin come down if you're not releasing 0:17:13.200 --> 0:17:15.800 EV's that are competitive and exciting for consumers. 0:17:16.320 --> 0:17:19.960 Wait, you mentioned geopolitical concerns, and I'm trying to think 0:17:20.280 --> 0:17:23.080 how to phrase this question, but you know, if we 0:17:23.119 --> 0:17:26.240 saw a big boom in China EV's in sort of 0:17:26.320 --> 0:17:30.720 twenty nineteen twenty twenty, around that timeframe, that was also 0:17:31.000 --> 0:17:35.800 peak sort of deglobalization fear time, right, Like lots of 0:17:35.880 --> 0:17:39.120 talk about well, maybe we need to reorient supply lines. 0:17:39.640 --> 0:17:43.800 Trump's trade war with China was still ongoing in twenty nineteen. 0:17:45.040 --> 0:17:48.919 Why hasn't that played more of a role in this dynamic, 0:17:49.080 --> 0:17:52.560 Like shouldn't there be automakers who are looking at China 0:17:52.560 --> 0:17:54.800 and going, well, wait a second, maybe we don't want 0:17:54.800 --> 0:17:57.320 to partner too much, you know, at least according to 0:17:57.320 --> 0:17:58.639 the deglobalization argument. 0:17:59.200 --> 0:18:03.600 It's a complicated story because I think there is in 0:18:03.600 --> 0:18:05.600 the way I would kind of phrase it and think about, 0:18:05.720 --> 0:18:08.680 is the partnership that GM and FOURD and other automakers 0:18:08.720 --> 0:18:12.240 have here with Tesla around DV charging. There's an element 0:18:12.280 --> 0:18:15.159 of you have the knowledge, you have the expertise, you 0:18:15.200 --> 0:18:17.359 want to kind of gain from that experience. And there's 0:18:17.359 --> 0:18:20.600 been reports I believe it was and I don't want 0:18:20.359 --> 0:18:23.600 to name the wrong automaker of continued partnerships this week 0:18:24.000 --> 0:18:28.040 with SAIC kind of reports on a potential potential platform partnership. 0:18:28.240 --> 0:18:32.119 But to the broader point, you know, it's coopetition a 0:18:32.160 --> 0:18:33.959 little bit. It's you're going to gain some of that 0:18:34.000 --> 0:18:36.560 knowledge and then try and leap frog it. From our purview, 0:18:36.600 --> 0:18:40.280 we've seen automakers in Japan, for example, looking to go 0:18:40.359 --> 0:18:43.359 to new battery technologies like solid state, so you can 0:18:43.480 --> 0:18:45.639 kind of leapfrog where China is and it's kind of 0:18:45.800 --> 0:18:49.719 LFP battery chemistry, which is a kind of cheaper, shorter range, 0:18:49.960 --> 0:18:54.320 beneficial chemistry for those who aren't familiar. So learning from 0:18:54.520 --> 0:18:57.760 Chinese automakers, but I would say even the auto industry 0:18:57.760 --> 0:19:01.160 in general, there's always this kind of domestic sense of pride, 0:19:01.160 --> 0:19:04.399 whether you're talking about BMW and Volkswagen in Germany or 0:19:04.520 --> 0:19:07.919 GM forward and now Stilantis here. The Big three in 0:19:07.960 --> 0:19:10.600 the US. So some of it is new, and we 0:19:10.600 --> 0:19:13.760 could talk about IRA related and how that policy was constructed, 0:19:14.040 --> 0:19:15.640 but some of it is very old. And I think 0:19:15.640 --> 0:19:17.440 that the new thing here is that China has been 0:19:17.440 --> 0:19:20.080 so successful or some of these Chinese companies have been 0:19:20.119 --> 0:19:23.880 successful in you know, passing Germany, in you know, competing 0:19:23.880 --> 0:19:27.120 with Japan, and it's because they've embraced this ev opportunity, 0:19:27.160 --> 0:19:30.320 both through kind of smart subsidy planning but also the 0:19:30.359 --> 0:19:31.600 companies doing the work. 0:19:32.200 --> 0:19:35.399 Let's get to the Inflation Reduction Act because, as you 0:19:35.440 --> 0:19:38.040 pointed out, like one of the advantages that it sounds 0:19:38.080 --> 0:19:41.680 like the Chinese companies have is like deep battery experts. 0:19:41.720 --> 0:19:42.560 Yeah, and it makes sense. 0:19:42.560 --> 0:19:44.240 I mean, that's the core of an electric vehicle, right, 0:19:44.280 --> 0:19:46.480 they don't even have that many parts. Right, It's basically 0:19:46.600 --> 0:19:48.879 like the battery is what the whole is, the whole 0:19:49.000 --> 0:19:51.920 game in town. And we know that thanks to the 0:19:52.400 --> 0:19:55.320 Inflation Reduction Act. It's like every day there's a new 0:19:55.320 --> 0:19:58.159 press release about a new battery factory. Just talk us 0:19:58.200 --> 0:20:00.919 a little bit, like walk us through the economics of 0:20:00.960 --> 0:20:04.840 how the IRA changes the game for US battery manufacturing. 0:20:05.160 --> 0:20:07.000 Yeah, So a good way to think about it is 0:20:07.080 --> 0:20:09.880 at BNF we put out, well, my colleagues does great 0:20:09.920 --> 0:20:12.840