WEBVTT 1 00:00:04.799 --> 00:00:08.320 With Laurent's segle and from London and Gerard Reed from Berlin. 2 00:00:08.839 --> 00:00:10.640 This is redefining energy. 3 00:00:11.039 --> 00:00:13.199 Today. On redefining energy, we're going to talk about the 4 00:00:13.240 --> 00:00:17.359 future of the global automobile industry. Who the winners, the losers, 5 00:00:17.640 --> 00:00:19.519 and I suppose the challengers are. 6 00:00:19.600 --> 00:00:23.320 And the zombies because unfortunately we believe that some companies 7 00:00:23.320 --> 00:00:24.239 are not going to make it. 8 00:00:24.519 --> 00:00:27.160 Yeah, we believe there's going to be some zombies out there. 9 00:00:28.199 --> 00:00:30.760 And we don't even want to talk about the tariffs 10 00:00:31.079 --> 00:00:34.359 because it changes by the hour. We don't know who's 11 00:00:34.359 --> 00:00:38.039 going to tariff home and the spare parts and the batteries. 12 00:00:38.679 --> 00:00:42.640 So we really want to concentrate on the technology or 13 00:00:42.759 --> 00:00:47.719 technological edge of all those car manufacturers. Now, if we 14 00:00:47.759 --> 00:00:51.600 look at the IV market, and I'm quoting the excellent 15 00:00:51.799 --> 00:00:56.039 row Motion study for Q one twenty five, well four 16 00:00:56.079 --> 00:00:58.880 point five million evs was sold globally, which is a 17 00:00:58.960 --> 00:01:02.159 twenty nine percent increase compared to first quarter of two 18 00:01:02.320 --> 00:01:05.719 twenty four. Of course, China is very strong plus thirty 19 00:01:05.760 --> 00:01:10.239 six percent, but even Europe is very good plus twenty two, 20 00:01:10.359 --> 00:01:14.719 and even North America plus sixteen. So we have a 21 00:01:14.799 --> 00:01:17.400 continuous growth of the EV market. 22 00:01:17.560 --> 00:01:20.879 And by the way, a continuous decline of the internal 23 00:01:20.879 --> 00:01:24.680 combustion engine market. We've seen peak IC some years ago. 24 00:01:25.560 --> 00:01:29.239 To make sense of all this and to assess one 25 00:01:29.359 --> 00:01:33.680 car manufacturer after another, because I think it's important to go, 26 00:01:34.079 --> 00:01:36.079 you know, inside the brands and not just blah blah 27 00:01:36.120 --> 00:01:40.840 about the global market. Web invited one of the leading experts, 28 00:01:41.040 --> 00:01:41.840 and that is. 29 00:01:42.519 --> 00:01:46.040 Michael Dunn, and he's the CEO of San Diego based 30 00:01:46.120 --> 00:01:50.920 consultancy business called Don Insights. Yeah, listen, this guy has 31 00:01:50.959 --> 00:01:51.480 been around. 32 00:01:51.480 --> 00:01:51.680 You know. 33 00:01:51.760 --> 00:01:54.599 He was a president of General Motors Indonesia with a 34 00:01:54.680 --> 00:01:58.159 managing director of JD Power China, so he really does 35 00:01:58.400 --> 00:02:01.159 know what's going on in Asia, and we think age 36 00:02:01.200 --> 00:02:04.400 is particularly important because that's where a lot of the 37 00:02:04.480 --> 00:02:06.400 challenges are coming from exactly. 38 00:02:06.760 --> 00:02:12.240 So let's bring Mike on the show. Mike Kiln, finally, 39 00:02:12.360 --> 00:02:13.280 welcome to the show. 40 00:02:13.879 --> 00:02:16.520 Tremendous to be here with you. Been looking forward to 41 00:02:16.560 --> 00:02:16.960 this day. 42 00:02:16.960 --> 00:02:22.840 Oh my god, you made my day. Like your first question, 43 00:02:23.120 --> 00:02:27.159 super simplen to watch twenty four seventy five million cars 44 00:02:27.159 --> 00:02:31.039 producing the world, twenty six million in China. What the 45 00:02:31.080 --> 00:02:31.960 hell's going on? 46 00:02:32.680 --> 00:02:35.439 Welcome to the world in which China is the center 47 00:02:35.520 --> 00:02:40.199 of the global auto industry, the dominator, bigger than America, 48 00:02:40.360 --> 00:02:44.120 bigger than Europe, number one export in the world, number 49 00:02:44.159 --> 00:02:48.240 one DV maker, number one battery maker. You go down 50 00:02:48.319 --> 00:02:50.800 the list, there's China and then everyone else. 51 00:02:51.280 --> 00:02:54.759 We have decided not to talk about the trade wars, 52 00:02:54.800 --> 00:02:58.560 the tariffs and song We've decided to concentrate on the 53 00:02:58.639 --> 00:03:02.560 tech to be rerustrative. We have decided to kind of 54 00:03:02.680 --> 00:03:07.840 screen the major OEMs in the world and you'll give 55 00:03:07.919 --> 00:03:12.560 us your opinion. Are they leaders, are they challengers or 56 00:03:12.759 --> 00:03:15.759 are they strugglers. So we're going to start by China. 57 00:03:16.439 --> 00:03:20.560 That's because that's probably easier. So Number one byd. 58 00:03:21.120 --> 00:03:24.599 The single most exciting company, the fastest moving company in 59 00:03:24.599 --> 00:03:26.800 the world is byd IF. I had the opportunity to 60 00:03:26.879 --> 00:03:29.840 test drive their vehicles both here in the United States 61 00:03:29.840 --> 00:03:34.560 and Mexico recently. I can testify that in terms of 62 00:03:34.680 --> 00:03:39.599 quality and technology, fit and finish performance, they're right there 63 00:03:39.919 --> 00:03:43.080 with the Hyundais and Toyotas of the world. What's most 64 00:03:43.120 --> 00:03:46.680 astonishing about this is the speed with which they've risen 65 00:03:46.879 --> 00:03:49.960 to the top ranks. They're now bigger than Ford. In Nissan, 66 00:03:50.639 --> 00:03:54.319 they were valued at you know, nothing, five years ago. 67 00:03:54.400 --> 00:03:57.319 Today the third most valuable company in the world after 68 00:03:57.360 --> 00:04:00.560 Tesla and Toyota, and by all measures is they're just 69 00:04:00.599 --> 00:04:03.240 getting started. That most of their sales ninety percent of 70 00:04:03.240 --> 00:04:07.680 their sales are in China, but going forward they expect 71 00:04:07.680 --> 00:04:11.960 to sell millions globally, so they have the vertical integration. 72 00:04:12.240 --> 00:04:16.199 They make their own batteries, They're low cost, they're high quality, 73 00:04:16.839 --> 00:04:20.000 no wonder the executives from Toyota who recently visited there, 74 00:04:20.120 --> 00:04:25.000 went back to Japan and said, uh oh, we're in trouble. BYD, 75 00:04:25.319 --> 00:04:29.279 putting fear into the hearts of every auto executive world. 76 00:04:29.319 --> 00:04:33.399 Why today, Mike, I'm so glad you started with BYD 77 00:04:33.959 --> 00:04:36.480 because actually I put my money where I'm out is 78 00:04:36.680 --> 00:04:38.800 and I'm invested in them, have been for a while 79 00:04:39.279 --> 00:04:42.680 because I take that view the same as yourself. I 80 00:04:42.720 --> 00:04:45.720 don't put it as poetically as you do, but I 81 00:04:45.759 --> 00:04:48.480 would like you to talk a little bit about what 82 00:04:48.680 --> 00:04:51.680 is it that makes BYD special? What are they doing 83 00:04:51.800 --> 00:04:53.240 different than everybody else. 84 00:04:53.959 --> 00:04:55.839 We kind of have to go back to their origins 85 00:04:55.879 --> 00:04:58.759 as a company. What's their DNA nineteen ninety five, they 86 00:04:58.759 --> 00:05:02.240 start making batteries for sell phones. How did they beat 87 00:05:02.319 --> 00:05:04.879 out the Japanese and Korean battery makers at that time, 88 00:05:05.439 --> 00:05:09.199 cost down, low cost, and low cost. Again, this has 89 00:05:09.279 --> 00:05:14.240 been Wangchrang Fu's bible since day one, and that served 90 00:05:14.240 --> 00:05:16.800 the company well for the next twenty years as they 91 00:05:16.839 --> 00:05:21.759 got into evs. But really we didn't see this takeoff 92 00:05:22.079 --> 00:05:25.319 until twenty twenty. What happened in twenty twenty two things 93 00:05:25.399 --> 00:05:30.160 One is they had hired a designers from Europe, Wolfgang Egger, 94 00:05:30.600 --> 00:05:34.639 to design, engineer, and develop much better looking vehicles than 95 00:05:34.759 --> 00:05:38.319 ever before. So if you were in China during the 96 00:05:38.319 --> 00:05:41.920 two thousand and twenty tens, bid was kind of an 97 00:05:41.959 --> 00:05:45.879 also rant, not that exciting. People didn't really desire to 98 00:05:45.920 --> 00:05:49.319 own one. But under Wolfgangger they've come up with really 99 00:05:49.360 --> 00:05:52.720 good looking products for the first time. Second thing that 100 00:05:52.800 --> 00:05:55.079 happened the end of twenty twenty they came up with 101 00:05:55.120 --> 00:05:58.199 this battery called the Blade battery, which is arguably the 102 00:05:58.240 --> 00:06:02.160 most technologically advanced battery in the world today. There's some 103 00:06:02.319 --> 00:06:04.879 backstory there. They may have gotten some help from Apple 104 00:06:05.240 --> 00:06:09.800 on that, but who cares. BYD now has a formidable 105 00:06:09.920 --> 00:06:16.040 battery manufacturing capability, and then thirdly quietly BYD also has 106 00:06:16.079 --> 00:06:21.480 this semiconductor subsidiary they're building their own chips. So not 107 00:06:21.560 --> 00:06:24.720 only are they good at batteries, good looking vehicles, but 108 00:06:24.879 --> 00:06:29.639 now those features inside the car you're on, navigation, your maps, 109 00:06:29.800 --> 00:06:34.600 your entertainment, they're engineering that in house too, so massive 110 00:06:34.680 --> 00:06:39.519 vertical integration, low cost, better designs, and more advanced technology 111 00:06:39.560 --> 00:06:42.160 all happening at the same time. This is what explains 112 00:06:42.199 --> 00:06:45.639 their sales going up twelve x in five years, five 113 00:06:45.720 --> 00:06:47.879 hundred thousand to more than five million this year. 114 00:06:48.199 --> 00:06:51.519 And it looks like it's just the beginning because I've 115 00:06:51.519 --> 00:06:55.560 been chicking on their overseas factory which are planned, or 116 00:06:55.639 --> 00:07:02.000 the construction Brazil two hundred thousand, Thailand thousand, Indonesia, Contism, 117 00:07:02.160 --> 00:07:06.639 Hungary two hundred thousand, Mexico, Turkey. They're literally all over 118 00:07:06.639 --> 00:07:07.360 the place. 119 00:07:07.839 --> 00:07:09.959 All at once. In the old days, you'd say, well, 120 00:07:10.040 --> 00:07:13.560 let's venture out and build a plant in Brazil, for 121 00:07:13.680 --> 00:07:16.480 it's going to sell us one that's been idle. That's great, 122 00:07:16.519 --> 00:07:20.399 Let's go learn how to manufacture something overseas. No, they're 123 00:07:20.439 --> 00:07:24.600 going globally all at once, including too. This isn't manufacturing, 124 00:07:24.600 --> 00:07:28.240 but they're going into the Japanese market, which is almost heresy. 125 00:07:28.839 --> 00:07:32.240 No Chinese company would dare try to sell cars Japan 126 00:07:32.720 --> 00:07:36.120 until now bids there in forced trying to sell their 127 00:07:36.120 --> 00:07:39.600 products and arguably the toughest market in the world. They're 128 00:07:39.600 --> 00:07:43.639 going global at pace, and the chairman has said most 129 00:07:43.639 --> 00:07:46.879 of our future growth will be outside of China, where 130 00:07:46.879 --> 00:07:49.839 we can make some profits. This of course leads us 131 00:07:49.839 --> 00:07:52.959 to the United States, where today they don't have access. 132 00:07:53.519 --> 00:07:57.279 But the wildcoud out there is will President Trump three 133 00:07:57.319 --> 00:07:59.600 months from now wake up one day and say, hey, 134 00:07:59.759 --> 00:08:03.040 I've got a genius idea persuaded BYD to invest ten 135 00:08:03.079 --> 00:08:06.959 billion dollars here in the US the manufacturer cars and batteries, 136 00:08:07.240 --> 00:08:08.000 And we're often. 137 00:08:07.879 --> 00:08:10.959 Running Michael on that point there. It's sort of already 138 00:08:10.959 --> 00:08:13.680 happening because my Tesla Model three is a BYD battery 139 00:08:13.680 --> 00:08:15.680 in it, right, So it's sort of showing you the 140 00:08:15.720 --> 00:08:17.680 way forward. Isn't it that you have to cooperate with 141 00:08:17.720 --> 00:08:18.399 the Chinese? 142 00:08:18.920 --> 00:08:22.639 It really does. It looks like there's no workarounds. They 143 00:08:22.920 --> 00:08:26.680 own the battery manufacturing business, from a lot of mining 144 00:08:27.000 --> 00:08:31.079 to definitely processing to the cell manufacturing. It's hard to 145 00:08:31.160 --> 00:08:33.679 get a battery that doesn't have a Chinese aspect to 146 00:08:33.720 --> 00:08:34.120 it today. 147 00:08:34.559 --> 00:08:39.320 If we took about other Chinese OEM because I listened 148 00:08:39.320 --> 00:08:42.480 to your excellent podcast and you said there were one 149 00:08:42.519 --> 00:08:47.039 hundred and forty different manufacturers in China, in more than 150 00:08:47.039 --> 00:08:50.240 four hundred factories. Let's focus on a few big names, 151 00:08:50.240 --> 00:08:53.039 and because I don't want to least them are So 152 00:08:53.080 --> 00:08:57.759 we have Shanghai Automotive, we have Gielee, we have Shong 153 00:08:57.879 --> 00:09:02.480 Gong Automobile, Soon Automobile. I mean every time, it's two mediums, 154 00:09:02.720 --> 00:09:07.279 great wolves, expand I mean, do you have anyone you 155 00:09:07.600 --> 00:09:09.120 like or you follow in particular? 156 00:09:10.039 --> 00:09:14.399 Number one takeaways? There's BYD and everyone else BYD's in 157 00:09:14.440 --> 00:09:15.879 the class by itself. So then you go to the 158 00:09:15.879 --> 00:09:17.720 next level and you say, how do we think about 159 00:09:17.759 --> 00:09:20.000 these one hundred and forty We'll take the next ten. 160 00:09:20.720 --> 00:09:24.440 And if we look at the next ten nicely conveniently 161 00:09:24.480 --> 00:09:29.080 for us, there's five what I call OG companies old school, 162 00:09:29.480 --> 00:09:33.559 and there's five what I call techno gang companies. So 163 00:09:33.559 --> 00:09:36.080 those are newer companies that want to be the teslas 164 00:09:36.120 --> 00:09:40.200 of China. Okay, so within those two groups, you've named 165 00:09:40.200 --> 00:09:43.399 them already, But within the OG group, I'd put g 166 00:09:43.600 --> 00:09:48.440 L number one. They own the Vobo brand, poll Star, Zeeker, Lotus. 167 00:09:48.879 --> 00:09:52.799 They have ownership and Mercedes they're the next one to watch, 168 00:09:53.080 --> 00:09:56.679 and the Ogs. And then in the techno gang of five, 169 00:09:56.879 --> 00:09:59.600 it's very interesting. You've got this new company called CILB, 170 00:10:00.080 --> 00:10:03.399 second largest smartphone maker in the world, delivering a beautiful 171 00:10:03.440 --> 00:10:06.799 new product called the SU seven set the track record 172 00:10:06.879 --> 00:10:09.840 at nerveer Gring recently. They would be on the top 173 00:10:09.879 --> 00:10:12.159 of my list. Then you go to x Pun that 174 00:10:12.200 --> 00:10:16.120 heads that relationship with Volkswagen. They're also very impressive. So 175 00:10:16.120 --> 00:10:18.360 those are the three companies after BYD. 176 00:10:19.320 --> 00:10:22.240 Can I specifically ask you about the shelmy car because 177 00:10:22.600 --> 00:10:25.679 obviously smashing the Nurmberg Ring, this is a shock to 178 00:10:25.720 --> 00:10:29.039 the Germans. And also it's a shock because the car 179 00:10:29.399 --> 00:10:31.320 is like a fraction of the price of say the 180 00:10:31.360 --> 00:10:32.720 Porsche that it looks like. 181 00:10:33.000 --> 00:10:34.960 And I be interested to know just how the hell 182 00:10:35.000 --> 00:10:35.600 are they doing that? 183 00:10:35.919 --> 00:10:38.879 And even to maybe start, we're looking at European guys, 184 00:10:39.200 --> 00:10:40.919 how does a Porsche compete with these guys? 185 00:10:40.960 --> 00:10:44.840 Going forward? How do you compete with the Chinese? When 186 00:10:44.879 --> 00:10:49.240 the Chinese can manufacture at twenty five percent lower cost. 187 00:10:49.679 --> 00:10:52.320 That's the shock, that's the earthquake coming out of China. 188 00:10:52.559 --> 00:10:56.000 It isn't necessary that the Chinese are genius in terms 189 00:10:56.039 --> 00:11:01.120 of innovation, but they are genius in low cost and commercializing. 190 00:11:01.200 --> 00:11:04.720 So the backstory on Shelmi is so interesting. The founder 191 00:11:04.799 --> 00:11:08.600 Lei June met Lelon Musk ten years ago in China, 192 00:11:09.120 --> 00:11:11.600 took delivery of a models and said, one day, I 193 00:11:11.639 --> 00:11:14.639 hope to duplicate what you've done. And here we are 194 00:11:14.679 --> 00:11:17.519 ten years later. He's come up with this beautiful new product, 195 00:11:17.679 --> 00:11:23.039 great design performances there, and it's built in arguably one 196 00:11:23.039 --> 00:11:26.279 of the most highly automated factories in the world. If 197 00:11:26.320 --> 00:11:28.879 I'm an automotive executive from the West, I'm not afraid 198 00:11:28.879 --> 00:11:32.440 of Chinese companies by themselves. What I'm afraid of is 199 00:11:32.480 --> 00:11:36.600 their ability to manufacture high technology and low cost inside 200 00:11:36.720 --> 00:11:40.320 China in ways that no other nation can match. That's 201 00:11:40.320 --> 00:11:43.440 a problem for everybody that's not Chinese. 202 00:11:44.000 --> 00:11:48.000 Before we leave China, any other names because Neo, but 203 00:11:48.080 --> 00:11:52.720 he's seen Neo is losing money out over fist. 204 00:11:52.399 --> 00:11:58.159 Right, Neo, when your twenty second takeaway would be super ambitious, 205 00:11:58.279 --> 00:12:03.159 great visionary leader, spread too thick, doing everything all at once, 206 00:12:03.200 --> 00:12:04.960 and it's hard to make money that way. 207 00:12:05.559 --> 00:12:08.600 Okay, let's leave China, even if we come back on 208 00:12:08.679 --> 00:12:11.440 a regular basis. So let's just cross the Sea of 209 00:12:11.519 --> 00:12:13.799 Japan or the Sea of China, because now you don't 210 00:12:13.840 --> 00:12:18.159 know how you name the piece of of of sea. 211 00:12:18.360 --> 00:12:19.320 They change name all the. 212 00:12:19.360 --> 00:12:20.600 Time, Greater China. 213 00:12:20.960 --> 00:12:24.159 Yeah, so let's go to Japan. And of course Toyota, 214 00:12:24.240 --> 00:12:27.519 which is the eight hundred pound gorilla, lost a lot 215 00:12:27.559 --> 00:12:30.759 of time on the hydrogen dreams, which of course would 216 00:12:30.799 --> 00:12:34.679 never materialize, but seems to be quite okay with hybrids. 217 00:12:34.919 --> 00:12:37.080 So how do you see Toyota and the rest of 218 00:12:37.159 --> 00:12:38.000 the Japanese crowd. 219 00:12:39.039 --> 00:12:41.399 Just came back from a trip to Japan, met with 220 00:12:41.720 --> 00:12:46.200 several automakers there. My overwhelming takeaway was that there was 221 00:12:46.320 --> 00:12:50.440 there's Toyota, and then everyone else. Similar to BYD story, 222 00:12:50.519 --> 00:12:54.120 like Toyota's got its act together. It's not moving as 223 00:12:54.200 --> 00:12:57.759 quickly as we'd like them too, but they're highly profitable. 224 00:12:58.120 --> 00:13:01.840 They have a nice portfolio of products distributed across hybrids, 225 00:13:02.080 --> 00:13:06.519 plug in hybrids, and gasoline. They're making their way towards EVS. 226 00:13:06.919 --> 00:13:09.519 And when I talk to Chinese automakers, I ask them 227 00:13:09.600 --> 00:13:11.639 who do you fear in the world, and they say 228 00:13:11.639 --> 00:13:14.360 they're two companies to re respect. One is Tesla and 229 00:13:14.399 --> 00:13:17.639 the other's Toyota. Everyone else is sort of up for grabs. 230 00:13:18.480 --> 00:13:21.279 I'm confident that Toyota will find a way forward. The 231 00:13:21.360 --> 00:13:23.360 question is what about everyone else in Japan? 232 00:13:23.840 --> 00:13:27.639 Because Nissan is on his last leg and you still 233 00:13:27.679 --> 00:13:32.200 have Hondo. Yeah, maybe a merger, a merger will finish 234 00:13:32.279 --> 00:13:34.039 to up in in that chapter, or. 235 00:13:34.080 --> 00:13:39.759 No Honda that whole Nissan Mitsubishi with Honda, My concern 236 00:13:39.919 --> 00:13:44.679 is their core DNA has forever been building great engines 237 00:13:44.799 --> 00:13:49.200 for their motorcycles and their cars. So I'm fluent in 238 00:13:49.279 --> 00:13:52.480 Portugueze for decades and then someone comes along and says, no, 239 00:13:52.639 --> 00:13:55.080 you have to actually learn how to speak Chinese. Now 240 00:13:55.559 --> 00:13:58.320 what Honda will have a hard time making that transition 241 00:13:58.360 --> 00:14:01.200 to electric We've already seen it. That's what concerns me. 242 00:14:01.960 --> 00:14:04.919 Staying in the zone. Koreans, they seem to have adapted 243 00:14:05.000 --> 00:14:05.799 pretty well. 244 00:14:06.240 --> 00:14:10.399 Doing nicely both with their conventional gasoline products and their 245 00:14:10.440 --> 00:14:15.480 evs and smart making investments globally. Here in the United States, 246 00:14:15.519 --> 00:14:19.879 they just announced a huge additional investment into Atlanta. What 247 00:14:20.159 --> 00:14:26.080 separates the Koreans. I think they're just tenaciously competitive. They 248 00:14:26.200 --> 00:14:29.799 understand that they're a country the size of the state 249 00:14:29.879 --> 00:14:33.320 of Michigan, and there's no time for rest and they're 250 00:14:33.399 --> 00:14:38.080 just super zealous, work really hard and have a realistic 251 00:14:38.399 --> 00:14:42.159 appreciation for the competitive environment the world now enters, and 252 00:14:42.200 --> 00:14:45.320 they say, we have to move faster, work harder than 253 00:14:45.320 --> 00:14:47.159 everyone else. And they're doing a great job of that. 254 00:14:47.840 --> 00:14:50.360 And it's probably the only competitors of China was an 255 00:14:50.399 --> 00:14:54.840 integrated supply chain. Is there a scay and you know 256 00:14:54.919 --> 00:14:56.080 some sums. 257 00:14:56.840 --> 00:15:00.879 And some of the semiconductors, they're in good shape there. Now, 258 00:15:01.559 --> 00:15:04.000 I should hasten to add that no matter how good 259 00:15:04.039 --> 00:15:09.039 you are globally, global automakers, including Hyundai are really getting 260 00:15:09.399 --> 00:15:14.720 crushed in China today. Hyundai's numbers down about ninety percent 261 00:15:14.799 --> 00:15:17.440 from their peak in China. Can you believe that they're 262 00:15:17.480 --> 00:15:21.679 barely hanging on there? They've done nothing wrong. Products are great, 263 00:15:22.159 --> 00:15:25.879 but the sentiment inside China for consumers today is I'm 264 00:15:25.879 --> 00:15:28.519 going electric and I'm going to a Chinese brand, and 265 00:15:28.600 --> 00:15:32.759 every single non Chinese automaker is taking it on the chin. 266 00:15:33.519 --> 00:15:36.159 So, Michael, can we move a little bit towards the 267 00:15:36.200 --> 00:15:39.320 old world? And the old world for me is starts 268 00:15:39.320 --> 00:15:42.320 in Europe, and I would actually start in Germany with Volkswagen. 269 00:15:42.960 --> 00:15:46.519 If I look at Volkswagen For me, it's just inexcusable. 270 00:15:46.519 --> 00:15:49.399 They were the biggest manufacturer in China for the last decade, 271 00:15:49.960 --> 00:15:54.639 and they just seem so ill prepared for the future 272 00:15:54.919 --> 00:15:56.679 that you sort of have to wonder if it's going to 273 00:15:56.720 --> 00:15:59.559 be around. That's my assessment, but I'd love to hear yours. 274 00:16:00.919 --> 00:16:03.960 In a way, this is the second major shock for 275 00:16:04.039 --> 00:16:08.159 Volkswagen in China. I was there in early two thousands. 276 00:16:08.200 --> 00:16:11.840 At that time, Volkswagen was enjoying fifty percent market share 277 00:16:11.879 --> 00:16:15.600 in China, selling through two joint ventures. They owned the market. 278 00:16:15.879 --> 00:16:19.879 They were the king of the hill. Wto happened and 279 00:16:20.039 --> 00:16:24.399 all other automakers flooded in and suddenly Volkswagen was really 280 00:16:24.519 --> 00:16:28.679 under enormous pressure, losing market share, sales and profits. Through 281 00:16:28.720 --> 00:16:33.559 the early two thousands, they recovered, they rallied somehow against 282 00:16:33.600 --> 00:16:36.759 the odds. They found a way to update themselves for 283 00:16:36.799 --> 00:16:40.200 the China market, but that was building gasoline powered engines. 284 00:16:40.399 --> 00:16:44.519 This time around, they really look vulnerable. How do they 285 00:16:44.559 --> 00:16:47.279 come back at a time when the Chinese are getting 286 00:16:47.320 --> 00:16:51.159 stronger by the day. I don't know. They've lost over 287 00:16:51.200 --> 00:16:54.519 a million sales in the last five years in China. 288 00:16:56.519 --> 00:16:59.399 They've closing plants, there, it's going to be a lot 289 00:16:59.440 --> 00:17:03.159 harder to re cover. Their answer, we know, is to 290 00:17:03.279 --> 00:17:06.519 invest in x pump and try to sort of attach 291 00:17:06.559 --> 00:17:09.880 themselves with an up and coming Chinese player. That seems 292 00:17:09.920 --> 00:17:13.000 to be their formula going forward. They probably should have 293 00:17:13.039 --> 00:17:15.680 done it years ago, but that's where they are right now. 294 00:17:16.400 --> 00:17:18.799 Yeah, because look, they made a lot of bets, not 295 00:17:18.960 --> 00:17:20.960 of them winning. If you look at the went beg 296 00:17:21.000 --> 00:17:25.359 into Northwold, see the result. And also from a software perspective, 297 00:17:25.440 --> 00:17:27.839 I don't know how much billions they've burned into their 298 00:17:28.519 --> 00:17:32.000 software platform. It doesn't seem to work very well. Well 299 00:17:32.000 --> 00:17:34.640 at least they tried, but unfortunately they failed. 300 00:17:35.279 --> 00:17:38.880 Yes, big picture, guys, I think we're talking technology here. 301 00:17:39.480 --> 00:17:44.480 The software defined vehicle is a great differentiator. Tesla's there, 302 00:17:44.920 --> 00:17:49.920 several Chinese are there. Volkswagen has really struggled, as you say, 303 00:17:49.960 --> 00:17:53.880 with Carryat and they're a hopeful X punk relationship. They're 304 00:17:53.920 --> 00:17:57.079 hopeful in their Rivian relationship to save them, the rescue them. 305 00:17:57.640 --> 00:18:01.960 But without an exquisite software defined architecture, they're just not 306 00:18:02.000 --> 00:18:04.440 going to be competitive. No one will be. And that's 307 00:18:04.480 --> 00:18:06.000 where we are with Volkswagen today. 308 00:18:07.000 --> 00:18:11.200 The old Lady Mercy, it is uh huh, what's your take? 309 00:18:11.880 --> 00:18:16.200 This is going to be heresy or highly controversial. My 310 00:18:16.319 --> 00:18:19.000 German friends will probably not be happy to hear this. 311 00:18:19.160 --> 00:18:22.480 But to some extent, when I think of Mercedes today, 312 00:18:22.519 --> 00:18:26.200 I think this might already be a Chinese company. Look 313 00:18:26.240 --> 00:18:29.880 at the ownership. Nineteen and a half percent share belongs 314 00:18:29.920 --> 00:18:34.240 to Chinese groups that gi Le and Baic Wow, single 315 00:18:34.279 --> 00:18:38.279 largest shareholder in Mercedes. When I listen to the CEO 316 00:18:38.440 --> 00:18:40.960 talk about, well, we don't need to have tariffsu on 317 00:18:41.079 --> 00:18:45.240 Chinese cars here in Europe, I do wonder what's inspiring 318 00:18:45.279 --> 00:18:50.200 those words. And then unprecedented I saw he wrote an 319 00:18:50.200 --> 00:18:53.839 op ed that was published in the National People's Daily 320 00:18:53.920 --> 00:18:57.400 in China, which is a direct media organ of the 321 00:18:57.480 --> 00:19:00.960 Chinese Communist Party. I've never seen a Western CEO do 322 00:19:01.039 --> 00:19:05.200 that before, so to some extent I wondered, maybe maybe 323 00:19:05.279 --> 00:19:08.960 China already owns Europe's most iconic automotive. 324 00:19:09.240 --> 00:19:11.559 Michael, I'll jump on that and say, yeah, they're also 325 00:19:11.640 --> 00:19:13.440 manufacturing there, because at the end of the day, the 326 00:19:13.480 --> 00:19:16.400 Smart is not even manufactured, it's it's a Chinese car. 327 00:19:16.480 --> 00:19:21.160 Basically, right, you are right, the Smart, let's be honest, 328 00:19:21.359 --> 00:19:29.160 is Chinese now okay, BMW, BMW. I'm more optimistic. Why. 329 00:19:29.400 --> 00:19:33.480 I think that they retain their independence and they're still 330 00:19:33.799 --> 00:19:39.240 innovating and they'll find a way to survive. And this 331 00:19:39.279 --> 00:19:42.720 is where guys, I'm an American who lived in Asia 332 00:19:42.720 --> 00:19:44.480 for a long time, so I'm a little bit far 333 00:19:44.559 --> 00:19:48.519 from Europe the Old Continent. But as I look at things, 334 00:19:48.559 --> 00:19:51.319 I would say I bet on BMW finding a way 335 00:19:51.480 --> 00:19:52.799 to compete long term. 336 00:19:53.400 --> 00:19:56.000 By the way, Michael, I wanted to talk about the French, 337 00:19:56.079 --> 00:19:58.079 but they're useless and they have no chance to survive, 338 00:19:58.119 --> 00:20:00.200 and so we could probably not that. 339 00:20:02.119 --> 00:20:05.960 Interestingly, there is this group which is half European, half 340 00:20:06.079 --> 00:20:10.079 American and that kinda allows us to cross the Atlantic. 341 00:20:10.160 --> 00:20:14.200 It's stell Antis, which is really a pile of weak 342 00:20:14.279 --> 00:20:18.599 brands of being coupled up together. And they're now changing 343 00:20:18.640 --> 00:20:22.039 their CEO. So stell Anti's. 344 00:20:21.680 --> 00:20:24.319 Which is like what they have a new one yet. 345 00:20:24.279 --> 00:20:26.960 As we speak, I don't know. It must be very 346 00:20:26.960 --> 00:20:31.039 tough to manage all those dispread brands from Chiat to 347 00:20:31.440 --> 00:20:37.319 Open to Purge You to Chrysler to Wow. So stell 348 00:20:37.359 --> 00:20:41.119 Antis first, does it exist as a group or it's 349 00:20:41.119 --> 00:20:43.680 still different strategy The way you see it between the 350 00:20:43.720 --> 00:20:46.160 European side and the American side. 351 00:20:46.519 --> 00:20:50.680 Feels like Stellantis on the side of the ocean is jeep, yeah, 352 00:20:50.799 --> 00:20:52.599 and then on the other side of the ocean is 353 00:20:52.640 --> 00:20:56.279 the European brands. Here again, they wouldn't be surprised to 354 00:20:56.279 --> 00:20:59.880 see a Chinese automaker make a bid for one or 355 00:20:59.880 --> 00:21:02.039 more of those brands in the near future. 356 00:21:02.720 --> 00:21:04.200 Wow. Interesting? 357 00:21:04.799 --> 00:21:07.079 Why because they've done so well when they acquired the 358 00:21:07.200 --> 00:21:10.359 MG brand, they acquired the Volvo brand, it's been a 359 00:21:10.400 --> 00:21:12.839 winner so far, so why not pick off one of 360 00:21:12.880 --> 00:21:14.519 those brands from the Stilantis group. 361 00:21:15.160 --> 00:21:18.680 Okay? In the US, Ford GM, How do you see 362 00:21:18.720 --> 00:21:21.559 them from a technology point of view? Because Ford was 363 00:21:21.640 --> 00:21:25.359 quite ahead, but now it's seeing GM's coming back. Was 364 00:21:25.400 --> 00:21:29.000 it just pr or is there a bit of substance behind. 365 00:21:29.359 --> 00:21:32.839 Ford's rush into evs? I do feel as though, in 366 00:21:32.880 --> 00:21:37.759 retrospect was premature and mostly driven by a desire to 367 00:21:37.759 --> 00:21:40.079 make an impression on Wall Street. So they ran both 368 00:21:40.079 --> 00:21:44.319 the F one fifty Lightning not a good idea. You 369 00:21:44.480 --> 00:21:47.079 knew that their range wouldn't be there on the battery 370 00:21:47.119 --> 00:21:50.279 powered full size electric pickup truck. You know you've got 371 00:21:50.319 --> 00:21:55.519 long distances, high speeds, Hills cold weather towing and that's 372 00:21:55.559 --> 00:22:00.480 been a disappointment. Secondly, they really fitted battery arc texture 373 00:22:00.559 --> 00:22:02.960 onto cars that were designed for guests, so they sort 374 00:22:02.960 --> 00:22:07.240 of rush to markets Fords behind. In my mind, GM 375 00:22:07.599 --> 00:22:10.640 has done the right things in investing in crews and 376 00:22:11.039 --> 00:22:14.720 try and develop its own battery manufacturing capabilities with LGCM, 377 00:22:14.960 --> 00:22:19.119 but they have not executed well. So I feel as 378 00:22:19.119 --> 00:22:23.160 though as a detroiter I can feel their pain. They 379 00:22:23.200 --> 00:22:27.279 are companies one hundred years of manufacturing and suddenly the 380 00:22:27.319 --> 00:22:31.839 game has changed to things called chemicals that batteries and 381 00:22:31.880 --> 00:22:35.799 then again software defined vehicles, and it's so unfamiliar to them. 382 00:22:36.440 --> 00:22:40.640 How do they make that transformation? I'm very concerned about 383 00:22:40.640 --> 00:22:43.119 the future of those two companies. They'll be able to 384 00:22:43.160 --> 00:22:46.400 carry on in North America buildings, large trucks and SUVs 385 00:22:46.440 --> 00:22:49.359 for probably a couple more decades. But if you look 386 00:22:49.400 --> 00:22:54.000 outside the United States, where are Ford or GM competitive? 387 00:22:54.400 --> 00:22:57.920 Europe niche player right, yeah? Asia? 388 00:22:58.119 --> 00:23:02.920 No, they used to wreck billions every year in China 389 00:23:03.640 --> 00:23:05.480 last decade. Then now it's gone. 390 00:23:05.759 --> 00:23:11.400 Gone, swung from huge profits to losing losing Boku money. 391 00:23:12.480 --> 00:23:15.559 That's not good. The trend is not their front. GM. 392 00:23:15.640 --> 00:23:18.400 You know, took a five billion dollar charge last year. 393 00:23:18.440 --> 00:23:20.920 They used to take home two billion dollars a year 394 00:23:20.960 --> 00:23:24.960 in dividends for years, and now they're underwater, so it's 395 00:23:25.000 --> 00:23:25.960 forth okay. 396 00:23:26.039 --> 00:23:29.720 So that's the shrinkflation before we go to the last 397 00:23:29.759 --> 00:23:33.200 one world on Rivian? Are they going to survive as 398 00:23:33.240 --> 00:23:34.359 a stand alone company? 399 00:23:34.519 --> 00:23:39.359 In your opinion, the terriffs might buy them some time. 400 00:23:39.920 --> 00:23:43.920 They're all American, and who knows. If our ja get's 401 00:23:43.960 --> 00:23:45.839