Speaker 1: With Laurent's Segal end from London and Gerard read from Berlin.
Speaker 2: This is redefining energy today. On redefining energy, you were
Speaker 2: going to talk about cowors, not Star Wars.
Speaker 3: Cowores during that title. Yeah, it's really about what's happening
Speaker 3: in the car industry with electrification, autonomy, who's winning, who's losing.
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Speaker 3: Back to the show. So we received a year ago
Speaker 3: Michael Dunn, and the portrait we did was pretty spooky,
Speaker 3: but now it's the apocalyptic because there are so many
Speaker 3: things that have happened the past twelve months. I'm not
Speaker 3: even talking about Trump Iron crisis. This is accelerating trends
Speaker 3: that we've seen for quite some time, but we need
Speaker 3: someone to put clarite in what's going on.
Speaker 2: For me, when I look at the industry, it's the
Speaker 2: speed of change, which is the thing that's hard to grasp. First,
Speaker 2: you've got to move towards autonomous cars. As I say,
Speaker 2: I drove away More before Christmas and I played with
Speaker 2: the way more. Just mind boggling. That's number one and
Speaker 2: number two for me. It's just a leap forward from
Speaker 2: a technological point of view that we're seeing with these
Speaker 2: Chinese cars, particularly EVS. That does a two standout point
Speaker 2: for me over the last twelve months.
Speaker 3: Yeah, let's bring Michael on the show. Michael, welcome back
Speaker 3: to the show.
Speaker 4: Great to be with you guys again.
Speaker 2: Great to have you in. Michael. Maybe just kick off.
Speaker 2: I mean, we had a conversation a year ago in
Speaker 2: and around the state of the odd more industry globally.
Speaker 2: Let me tell us a little bit what's changed. I'm
Speaker 2: not excited, you know, As you know, twenty twenty.
Speaker 4: Six depends so much on geographies. Here in the United States,
Speaker 4: we've had a complete reversal on evs. They were creeping
Speaker 4: up into double digits, now they're back into single digits.
Speaker 4: They're out of favor. The incentives to build and sell
Speaker 4: EV's have gone away. So if you're living in Kansas,
Speaker 4: the United States rights just in Michigan, EV's are an
Speaker 4: afterthought that whatever didn't want them, government wanted us to
Speaker 4: buy them. We don't like EV's, forget evs. That seems
Speaker 4: to be the sentiment on the ground in the United
Speaker 4: States here in May twenty twenty six. Then you go
Speaker 4: to China, and it's a completely different story. If we
Speaker 4: pull the lens back, evs as a share of total
Speaker 4: global production, sales have just exploded in the last five years,
Speaker 4: going from about three million in twenty twenty to more
Speaker 4: than twenty million last year. So whatever people's opinions might
Speaker 4: be about the future direction of evs, the numbers don't lie,
Speaker 4: going from three to twenty million, so now now accounting
Speaker 4: for more than one in four new car sales globally.
Speaker 4: China is a leader, Europe coming out strong, But then
Speaker 4: we see also big penetration levels in unlikely places like Thailand, Indonesia.
Speaker 4: I was recently in Mexico where the infrastructure isn't great
Speaker 4: for EV's, but you're seeing EV's poor in their phv's
Speaker 4: poor in there. So one big trend evs are happening.
Speaker 4: The other big trend is the explosive number of Chinese
Speaker 4: cars being exported globally and put a number to it.
Speaker 4: Twenty twenty it was one million cars a year. This
Speaker 4: year will be ten. We've never seen such a transformation
Speaker 4: in such a short period of time as we've seen
Speaker 4: with EV's and with Chinese going global. Those are the
Speaker 4: two big shocks.
Speaker 3: Two analyze a bit in numbers. There are two numbers
Speaker 3: who really shocked me. The first one was at the
Speaker 3: end of two twenty five is the amount of write
Speaker 3: offs that the main USUEM passed on EV's and probably
Speaker 3: fifty billion dollars. So that's one. And the second thing
Speaker 3: to counterbalance is the recent Beijing Auto Show with like,
Speaker 3: I don't know, fifty football fields full of okay, so
Speaker 3: the bad and the good please.
Speaker 4: Here in the United States again four GM. Stilantis went
Speaker 4: quote unquote all in on EV's right around twenty twenty one.
Speaker 4: If you remember, Joe Biden had an EV summit there
Speaker 4: We're gonna be the world. Later in EV's Mary Barra
Speaker 4: promising EV's or our future, Jim Farley the lightning taking
Speaker 4: their crown jewel, the F one fifty pickup truck, making
Speaker 4: an electric co the lightning super optimism around EV's here
Speaker 4: in the United States. Bam, that's gone, poof, gone vanished.
Speaker 4: So the automakers look around and go, oh, no more
Speaker 4: ev incentives. The American customer never really wanted evs. We're
Speaker 4: just going to write these down. And so how to
Speaker 4: think about that? I see Detroit increasingly as an industry
Speaker 4: that serves North America full stop with large SUVs and
Speaker 4: pickup trucks powered by castleine engines full stop. That's their business.
Speaker 4: They're not competitive in markets outside of the United States,
Speaker 4: and so they'll take this right down and say, guess what,
Speaker 4: Our profits are even higher this year because we're building
Speaker 4: highly profitable vehicles for our consumers here in the United States. Okay,
Speaker 4: that's happening in this isolated world called America.
Speaker 3: In a way, the America is becoming the new Cuba.
Speaker 5: They're nicer than the cars you get in Cuba. But
Speaker 5: the idea is that there's still there. It's like we're
Speaker 5: living in the past. Ignorance is bliss. Yeah, this is great.
Speaker 5: We still have our big trucks in SUVs. Life is good.
Speaker 5: Why change?
Speaker 4: Meanwhile, the rest of the world is changing and we're
Speaker 4: completely oblivious to it here. We just don't know about it,
Speaker 4: don't care what no isn't that? No, so's That's the
Speaker 4: sentiment in the United States. Now. California, where I live
Speaker 4: is different teslas all over the place here in San Diego,
Speaker 4: but Michigan, Kansas, North Carolina, it's all gastling. So yes, Cuba.
Speaker 4: Hopefully it's not our future, but that's the status right now.
Speaker 4: And then we go across the ocean. As you said,
Speaker 4: Beijing Auto Show wild. When I walk through there is exhausting.
Speaker 4: There's people everywhere, noise, cars, brands, most of which, as
Speaker 4: my friend said, I can't even pronounce the brand, let
Speaker 4: alone recognize, like how do you pronounce Saomi, X Punk
Speaker 4: and these other ones. And they're going wild with electrification.
Speaker 4: It's just wild, always innovating and improving on their range
Speaker 4: of the evs, the capabilities, the efficiency of the batteries,
Speaker 4: the number of products, the price points, everything from fifty
Speaker 4: five hundred dollars to you wanted two hundred and twenty
Speaker 4: one thousand dollars supercar. We have that too. Sadly, as
Speaker 4: an American, I think, well, God, China's looking like America
Speaker 4: in the nineteen fifties, where it was all about innovation
Speaker 4: and creativity and the locus of action. The center of
Speaker 4: the auto industry today is China full stop.
Speaker 2: Can I ask a little bit about let's talk about
Speaker 2: Japan and Europe. Give me your view on the manufacturers
Speaker 2: there and how you see them in the future.
Speaker 4: When I ask Chinese automakers who they respect and admire
Speaker 4: in fear, they say, oh, that's easy. There's just two
Speaker 4: companies left that we worry about. Who are they? Is
Speaker 4: it Tesla Toyota. Everyone else they see as like marsupials
Speaker 4: as the word is, I know, open savannah, like where
Speaker 4: it's is gonna roll over those guys, eat them up
Speaker 4: and spin them out. And so if we look at Japan,
Speaker 4: let's take Japan. Toyota continues to hold its own because
Speaker 4: they deliver quality and great service and reliability, and they
Speaker 4: have the nice hybrids. But it's just solid for customers globally.
Speaker 4: So Toyotas are. But Honda, guys, Honda I grew up
Speaker 4: in the where the Civic and the Accord phenomenal, the
Speaker 4: engine Honda's under enormous pressure they'll record their first loss
Speaker 4: since World War Two this year. Then Honda's the next
Speaker 4: strongest after Toyota. After that it gets very shaky. Nissan's
Speaker 4: and Mitsubishis and Mastas are barely hanging on. I think
Speaker 4: that market cap of Moss is like three billion dollars.
Speaker 4: It's hardly hanging around. So Japan, outside of Toyota is
Speaker 4: under enormous pressure and they don't have answers. Europe, you
Speaker 4: guys are there so forever it's been like, yeah, the
Speaker 4: Italians and the French, you know, there could be pressure
Speaker 4: in the future with Pougeot and Citroen and Fiat and Maserati.
Speaker 4: They're vulnerable. But there was an understanding that the Germans
Speaker 4: would always be strong, invincible, and they were having a
Speaker 4: hell of a great time in China making records, sales
Speaker 4: and profits. That's all vanishing and suddenly the German shares
Speaker 4: in China are collapsing and the profits are going away,
Speaker 4: while at the same time the Chinese are coming in
Speaker 4: double barreled into Europe with exports, with plans to build
Speaker 4: plants there. I see Europe as in a super crisis
Speaker 4: right now. I could see the European industry just becoming Chinese.
Speaker 2: Michael, just on that point there my view, looking at it,
Speaker 2: I think the one that's in the most jeopardy is Volkswagen,
Speaker 2: and they have to probably go to radical and I
Speaker 2: suppose that would be the kickoff of it, because we
Speaker 2: haven't really seen serious restructuring in the industry.
Speaker 4: Yet, No, we haven't. We've heard talks about it. Remember
Speaker 4: Volkswagen said at one point about a year and a
Speaker 4: half ago, they said, we're looking at potentially laying off
Speaker 4: tens of thousands of employees by twenty thirty. And then
Speaker 4: there was discussions with the unions and they said, oh,
Speaker 4: we'll delay that. We'll only close a couple of plants,
Speaker 4: but will minimize the layoffs. Volkswagen, just as you say,
Speaker 4: had tremendous growth in profits coming out of China for
Speaker 4: so many years, for decades, and that's evaporated, so their
Speaker 4: sales are down by more than thirty percent of their
Speaker 4: profits there going to nothing. Volkswagen would be the bell weather.
Speaker 4: If Volkswagen goes, what's holding the fort in Europe. In
Speaker 4: the meantime, you have, of course two Chinese automakers, Beijing
Speaker 4: Auto and Jili being the largest shareholders in Mercedes. You
Speaker 4: have Vovol already, of course owned by Jili. What's next?
Speaker 3: Yeah, you talk about Gili, And it's interesting because the
Speaker 3: view and a few months ago was that BYD in
Speaker 3: China was the king of the game, but now it
Speaker 3: seemed that Jili has kind of outsmarted them or is
Speaker 3: it a good perception Gili?
Speaker 4: We can never underestimate this guy, Li Shufu who founded Gili.
Speaker 4: He's the entrepreneur's entrepreneur. A couple of years ago, when
Speaker 4: BYD started to have explosive growth, Wang trump Fu called
Speaker 4: an all hands reading. He's the chairman of BYD, and
Speaker 4: he said, guys, we have about a two year window.
Speaker 4: After that, Sai C, Gili and Chang'an are going to
Speaker 4: come after us hard. And that's exactly what we've seen
Speaker 4: play out. Chile's the best selling car last year in
Speaker 4: China is called the Senior and from Gil is priced
Speaker 4: at ninety nine hundred dollars. So they went right at
Speaker 4: BYD in terms of we'll go at your pricing and
Speaker 4: we'll match it or better it. And then Gile also
Speaker 4: offers you want gasoline, you want hybrid, you want plug
Speaker 4: in hybrid, you want evs. We have the whole gamut,
Speaker 4: whereas BID is only PHGV and EV in a way,
Speaker 4: they're limiting themselves at home. And they've been the target
Speaker 4: for Sai, C, Changa and gi L for the last
Speaker 4: year and a half. And it's amazing to see how
Speaker 4: strong BID was and then as you say, eight months
Speaker 4: in a row down sales in China now and if
Speaker 4: it weren't for exports, they'd be in a lot of
Speaker 4: trouble actually.
Speaker 3: And of course we have the crisis in the Middle
Speaker 3: East or at one hundreds rar Baril, so I guess
Speaker 3: this especially in Europe where we are is accelerating the
Speaker 3: push for evs. And there was a very interesting statistics
Speaker 3: which was noways interesting in the sense that it's the
Speaker 3: most sectry fund market. So for the first time the
Speaker 3: EV charging network made money in Norway, which is not
Speaker 3: really the case elsewhere. You see the fact that Cassoline
Speaker 3: has become very and save an accideration of evs.
Speaker 4: No question that's happening globally in Europe and elsewhere. One
Speaker 4: of the interesting things historically if we look back at
Speaker 4: how EV's took off take to date twenty twenty, and
Speaker 4: we look at what Europe was thinking. If you remember
Speaker 4: there's a Green Deal where climate Europe said climate is
Speaker 4: number one, Europe is number two, and national interests are
Speaker 4: number three. Our goal is to reach these really super
Speaker 4: ambitious climate targets to save the world. Quote unquote. China
Speaker 4: is looking at the same reality and saying, oh, wealthy
Speaker 4: Europe wants to save the world, how can we benefit?
Speaker 4: And they may have talked about we want to help
Speaker 4: with climate, but what they're really thinking is we want
Speaker 4: to enhance our own power and wealth by providing the
Speaker 4: solutions to Europe's goals. And here we are Europe saying
Speaker 4: climate targets evs and then the Chinese ready to supply those,
Speaker 4: and then layer on top of that the oil price
Speaker 4: going up in look and say, well, boils now through
Speaker 4: the roof, so let's go EV's in the Chinese.
Speaker 2: Towl Mike, could I just turn a little bit to innovation?
Speaker 2: And I just want to say that I had a
Speaker 2: very interesting experience a few weeks ago, which was to
Speaker 2: drive a Chinese Neo and go to the battery swapping experience.
Speaker 2: And it wasn't just a battery, it was just a
Speaker 2: whole car. I just thought this thing is just unbelievable.
Speaker 4: It is it is, It's arguably neo and tell me,
Speaker 4: both build phenomenal products and it's stunning. So tell me
Speaker 4: more about what you did. Which neo was it and
Speaker 4: where did you drive it?
Speaker 2: And I was on the road. It was in the
Speaker 2: Netherlands on the way for Germany. And what you've got
Speaker 2: is battery swapping stations along the way. What was interesting
Speaker 2: you pull in to do the battery swapping and it
Speaker 2: parks for you and it does everything for you within
Speaker 2: like a minute and a half. But it was also
Speaker 2: for me it was just the experience of driving the car. Sorry,
Speaker 2: I was a passenge in the car. What was interesting
Speaker 2: for me though, was the car is basically autonomous as well.
Speaker 2: That's the other thing that was interesting for me. Everything
Speaker 2: about the car in terms of the comfort the field.
Speaker 2: I was really like, wow, this is.
Speaker 4: Did you feel like it was equivalent to a Mercedes
Speaker 4: or BMW and or Audi and ride quality?
Speaker 2: And I did. I actually have a BMW electric car
Speaker 2: and I felt it was really it was the closest
Speaker 2: thing I've got on BMW. That's what I would say.
Speaker 4: Yeah, the executives I know who work at Mercedes and BMW.
Speaker 4: They say Neo is very good car, very impressive both
Speaker 4: in driving and the electronics. So when you went to
Speaker 4: this swapping station, was that integrated into your center stack screen?
Speaker 4: Like how do we find where it's ye or all
Speaker 4: of us? So you're saying, and my batteries, low bang,
Speaker 4: I hit the button here on the navigation battery swap.
Speaker 4: How did you pay for the swap? Do you have
Speaker 4: to pay you or is that also integrated into that.
Speaker 2: It's also integrated everything is, so you have different choices.
Speaker 2: You can buy the car with the battery in other words,
Speaker 2: it's your battery and you don't change it. Or you
Speaker 2: can have the battery where you can swampush by the
Speaker 2: way and you can charge it normally as you would
Speaker 2: as well, or either.
Speaker 4: Way, either way, just like wow, okay, well.
Speaker 3: Michael, you introduce autonomous I can pronounce that. Sorry, not
Speaker 3: a native autonomous autonomous autonomous car. So a lot of
Speaker 3: podcasts also has been done in autonomous. So it seems
Speaker 3: that Tesla now finally good, is up together. There's way
Speaker 3: more a lot of things in China as well, So
Speaker 3: how do you see that old autonomous landscape?
Speaker 4: Seems like a two country race United States and China.
Speaker 4: And on the US side you have way Motor, so
Speaker 4: you said Zooks is a smaller player interesting to watch,
Speaker 4: and then you have some specialists in trucking like Wabi,
Speaker 4: but it's Tesla Way More really the two leaders in
Speaker 4: the US, and then on the Chinese side there's Baidu,
Speaker 4: We Ride, Pony, Momenta are the big players. The way
Speaker 4: to think about it is that the Americans are still
Speaker 4: more advanced in terms of innovation and overall sophistication of
Speaker 4: the technology when it comes to autonomy. The Chinese, as
Speaker 4: is their strength is they'll copy paste and iterate. So
Speaker 4: in the past they copy pasted and people go, well,
Speaker 4: they're always going to copy paste, but they're copy pasting,
Speaker 4: making a little bit better and then going to market
Speaker 4: very quickly, and so who is going to win out.
Speaker 4: Part of that we're seeing in places like London and
Speaker 4: the Middle East now where both Baidu and Way More
Speaker 4: are getting in there and working with partners, and we
Speaker 4: may see how it's going to be decided in Europe
Speaker 4: and the Middle East and other places in the world.
Speaker 4: Whereas the US and China block each other, No Baidu
Speaker 4: in the US, no Way MOO and the two governments
Speaker 4: just don't want the other players in their respective markets.
Speaker 4: So as a result of this, we may see the
Speaker 4: competition play out more aggressively in places like Europe between
Speaker 4: the two systems.
Speaker 2: What about all the technologies out there that you're looking
Speaker 2: at there, I mean, if you look the last twelve months,
Speaker 2: what's the big sort of technology forward you've seeing?
Speaker 4: It seems like autonomy is first, second and third These days.
Speaker 4: There are iterations around software updates and over there updates
Speaker 4: and batteries and being more efficient and different chemistries. But
Speaker 4: the most exciting thing, the ultimate goal is who can
Speaker 4: crack autonomy? And so you see Elon saying redefining his
Speaker 4: company as an AI robotics company. He's discontinued production of
Speaker 4: the S and the X, leaving just the three and
Speaker 4: the Y and the cyber truck, and he's all like,
Speaker 4: our company is all about the cyber caps. So globally
Speaker 4: and within the industry, I think the most exciting innovations
Speaker 4: right now are all around autonomy and their applications.
Speaker 3: Another exciting development for me is going to be trucks
Speaker 3: especial as usually as in China. But I think the
Speaker 3: truck industry who doesn't have an emotional connection with the car,
Speaker 3: and that was designed. It's really what's the cost poculometer
Speaker 3: or mile period and the advancements in batteries and make
Speaker 3: it that. Now the economics looks pretty good and we
Speaker 3: start to see somebody else. My personal opinion is that
Speaker 3: in the next eighteen months, each trucking is really going
Speaker 3: to explode. Do you see the.
Speaker 4: Same Definitely, We've seen it happen in China already, where
Speaker 4: electric share of new truck sales, even the big heavy
Speaker 4: trucks is above twenty five percent. Now maybe thirty percent.
Speaker 4: Let's come out of nowhere. And for the longest time
Speaker 4: the debate was well with heavy trucks, batteries don't make
Speaker 4: sense because long distance and heavy. But the Chinese have
Speaker 4: found a way to make it work. As an American,
Speaker 4: what's I'm coming to terms with is that the trends
Speaker 4: are being set by China. China is the new California,
Speaker 4: where if it's happening in China and it's happening at scale,
Speaker 4: it's likely that it's going to happen elsewhere in the world. Eventually.
Speaker 4: That's like a one in one hundred years change. That
Speaker 4: the world has to get accustomed to. And so if
Speaker 4: the Chinese are using electrics for trucks with success NX
Speaker 4: scale and at low cost, then we have to wonder
Speaker 4: why wouldn't it happen everywhere else in the world now?
Speaker 4: And Europe would be a great candidate for it because
Speaker 4: of the cost of the drivers and you have autonomous
Speaker 4: trucks powered by electric vehicles. Oil diesel is through the roof. Wow,
Speaker 4: it looks like a solution just looking for a place
Speaker 4: to apply itself. You guys are in Europe, so I'm
Speaker 4: always a little bit from the outside looking in. It
Speaker 4: looks like China's number one prior globally right now is Europe?
Speaker 4: How do we concrete? Europe looks so delicious. It's such
Speaker 4: a big market, there's so much money to be made,
Speaker 4: and the industry itself is not at its peak of power.
Speaker 4: Let's go capitalize on it.
Speaker 2: There's only one thing about here's me coming out from
Speaker 2: European side. At least you've got Tesla and Weimo. What
Speaker 2: do we have.
Speaker 4: Why haven't we seen a Tesla or a Weymo materialized
Speaker 4: in Europe? It isn't for lack of smart people, resources, money,
Speaker 4: it's all there, but somehow we haven't seen it.
Speaker 2: I think we're stuck in the old world of the
Speaker 2: combustion engine, and it's just the culture of these businesses
Speaker 2: have they've been so dominant for so long and they've
Speaker 2: lost the ability to innovation. That's it.
Speaker 4: They're maintaining rather than innovating.
Speaker 3: Innovation has come from very aggressive and hungry entrepreneurs, come
Speaker 3: from FALL or from GM or you know the type
Speaker 3: of guys. So when you are sitting on a mud
Speaker 3: ad which has proven lucretive for decades and white.
Speaker 4: Change, let me follow it because it's very interesting to me.
Speaker 4: So you guys are in Europe. Where would something like
Speaker 4: that come from? Now, let's be optimistic, like there's young people,
Speaker 4: smart people who look at Tesla and go, damn, I
Speaker 4: want to build one of those. What country do you
Speaker 4: think that's going to come out?
Speaker 2: Well, listen, the only sort of new brand ev company
Speaker 2: that we have, as Rymack, it can come out of Croatia.
Speaker 2: So if you ask me where does it come from?
Speaker 2: The innovation, the entrepreneurship, et cetera comes out of Eastern Europe.
Speaker 2: But there's an issue. Probably the capital is not there
Speaker 2: for that that's the issue. But we definitely see massive
Speaker 2: innovation across the Eastern Europe, and not just in this
Speaker 2: and in lots of different sectors.
Speaker 4: We see that, but they need capital.
Speaker 2: They need capital, and Europe has a lot of capital,
Speaker 2: but it doesn't go into businesses. It goes in a
Speaker 2: property and it goes into government bonds. And say we
Speaker 2: have no California.
Speaker 4: That's what I would just say, No Silicon Valley, No
Speaker 4: Silicon Valley some days. Coming from the Midwestern United States,
Speaker 4: it wasn't until later when I went to California I
Speaker 4: saw Silicon Valley up front. If I'm being honest with myself,
Speaker 4: it wouldn't occur to me that you could have such
Speaker 4: a culture that welcomes risk and willing to take risks
Speaker 4: and is entrepreneurial and the chances of failure are pretty high.
Speaker 4: That wasn't the education I got in the Midwest America.
Speaker 4: So it is unusual and maybe hard to duplicate, but
Speaker 4: that's what seems to be necessary for Europe to have
Speaker 4: a renaissance, is just go back to that model of risk. Yeah,
Speaker 4: that's that's how it happens. Let's take some risks.
Speaker 3: Miket I like to go into the kind of conclusion.
Speaker 3: It's about the book that you're gonna release next year.
Speaker 3: Next year. I don't know why it takes so much time.
Speaker 3: Do you have a title yet?
Speaker 4: Have a title? It is called car Wars mm hm.
Speaker 4: How China sees the auto industry and how the West
Speaker 4: wins it back.
Speaker 5: Ah.
Speaker 3: So there's an element of.
Speaker 5: Hope, there is, there is, And that was the hardest
Speaker 5: part of writing the book.
Speaker 4: The easy part was telling the story of how China
Speaker 4: convinced the world to bring all the capital and know
Speaker 4: how to the Middle Kingdom or for decades and say
Speaker 4: bring all of your capabilities to us, Thank you very much,
Speaker 4: really appreciate it. The first half of the book is
Speaker 4: looking at how that happened mm hm. Things along the way,
Speaker 4: like China convinced the world that to have access to
Speaker 4: the China market, you must join venture and you must
Speaker 4: give half of the business to a Chinese partner. Now,
Speaker 4: no other country at Russia, India, Brazil, no one else
Speaker 4: was able to get away with that, but China was.
Speaker 4: And then not only the joint venture, but by the way,
Speaker 4: if you're going to be here, you better invest in
Speaker 4: R and D, you better transfer know how and during
Speaker 4: those years there were manufacturing joint venture products that buicks
Speaker 4: and the toyotas and the hats. They're making a lot
Speaker 4: of money. Western automakers making a lot of money. So
Speaker 4: they're like, well, eventually we're gonna win out here and
Speaker 4: it'll just be us and the Chinese will give up.
Speaker 4: But they underestimated the Chinese, and the Chinese has played
Speaker 4: a long game getting all of that capital and knowhow
Speaker 4: into their country. Hundreds of billions of dollars poured in
Speaker 4: and then now we look, China has the capacity to
Speaker 4: build half the world's vehicles. Now, okay, we're kind of
Speaker 4: familiar with that story. Then you start to think, like,
Speaker 4: how do we possibly come back, And to put it
Speaker 4: in geographic terms, think Detroit was yesterday, West Coast Texas
Speaker 4: is tomorrow. Our only hope in Europe in the United
Speaker 4: States is to invest heavily in companies like Tesla, Weimo, Rivian,
Speaker 4: potentially Zooks and these others, because the future is autonomous
Speaker 4: and electric. And as much as I as a Detroiter,
Speaker 4: I'd love for the Detroit to rally, or for Stuttgart
Speaker 4: to rally, or Paris or Milan, I'm not sure that
Speaker 4: it's going to be able to happen. It's all about
Speaker 4: autonomy and electrification. I was having breakfast with an investor
Speaker 4: from Sequoia Capital, one of the early founders, Michael Moritz.
Speaker 4: Sir Michael is very accomplished, very smart guy. And I
Speaker 4: was having brekfasted with him a couple months ago, and
Speaker 4: I asked him, what's the future of America. So he said,
Speaker 4: flipping burgers in healthcare. Of course he is joking, and
Speaker 4: he said, no, we cannot hope for a comprehensive comeback
Speaker 4: of Detroit industry. He said, look for points of light,
Speaker 4: individual points of light, and those can be strong enough.
Speaker 4: When you think about the capabilities of Waimo backed by
Speaker 4: Google or Tesla with its robotics. Yes, that is the
Speaker 4: way forward, and we're still leaders in that. The Chinese
Speaker 4: are right there with us. But if there's a way forward,
Speaker 4: it is it's got to be that. It's got to
Speaker 4: be West Coast.
Speaker 3: Well, Michael, as usual, it was really a pleasure. So
Speaker 3: next time we speak, if you agreed to come back,
Speaker 3: it was after your book goes out, but in the
Speaker 3: case we'll make sure to advertise it. Michael, Thank you
Speaker 3: so much.
Speaker 4: Thank you gentlemen. Always a pleasure having a conversation with
Speaker 4: you guys. Next time we meet in where we'll it
Speaker 4: be in Dublin or Berlin or Paris.
Speaker 2: Dublin, Berlin, Paris, London. We don't mind.
Speaker 4: Just let us know, Okay, all right, don't it so job?
Speaker 3: Any comment?
Speaker 2: He's spot on in terms of where he's at. I
Speaker 2: see the US. Yeah, that's just kind of remain with
Speaker 2: our gas guddlers. It's a cultural thing. What you've got
Speaker 2: is China without a doubt, and I think Asia will
Speaker 2: follow it as well, just electrifying everything. And then you've
Speaker 2: got Europe moving towards electrification as well. But the issue courses,
Speaker 2: they've got the legacy automobile industry that is what outed
Speaker 2: out and a goat from massive restructure.
Speaker 3: There was so much thing to say. We didn't have
Speaker 3: time to talk about one or two things, which I'm
Speaker 3: gonna address now. So the first one is we didn't
Speaker 3: talk enough about batteries advancement. Before the Beijing Auto Show
Speaker 3: COTL it was called their Super Technology Day and they
Speaker 3: unveiled oh my god, this is in Chinese, so sorry,
Speaker 3: the changing Gen three and the killing contents battery, which
Speaker 3: means you can charge certain batteries one thousand favor kilometers.
Speaker 3: Others you can charge them in five minutes. And of
Speaker 3: course they unveil what they call the next RA, which
Speaker 3: is the sodium iron battery. So what's happening in the
Speaker 3: battery area is insane.
Speaker 2: Yeah, I think i'd add to that as well. Ron
Speaker 2: I call it the balance of systems in an around
Speaker 2: the battery in the car. This is the power electronics,
Speaker 2: this is heat pumps. This is also showing incredible avent
Speaker 2: answers as well. And you're right, we've never seen this
Speaker 2: speed of change in the off obil industry.
Speaker 3: That's the bright side. Now if I look at the
Speaker 3: darker side, and just looking back at the statistic of
Speaker 3: the Beijing Auto Show, thirty eight tech dours one five
Speaker 3: hundred vehicles exhibited, including two hundred new ones. And listen
Speaker 3: to this, one point three million visitors but only sixty
Speaker 3: five thousand from overseas. That tell you the size of
Speaker 3: the Chinese auto industry. Now, they went over their skis.
Speaker 3: They have a capacity to produce fifty five million vehicles
Speaker 3: a year, so it means their plans are running at
Speaker 3: fifty percent capacity. In Europe also plans are going at
Speaker 3: fifty percent CAPAESTE in the US it's seventy percent. And
Speaker 3: what we saw over the past months is that the
Speaker 3: cast sails in China were down twenty percent, down twenty percent,
Speaker 3: but the export search eighty percent. So in fact, the
Speaker 3: domestic demand in China is sluggish. And if you look
Speaker 3: at the number of common eufactor are there, I can
Speaker 3: see a big consolidation happening.
Speaker 2: So let me just add to that point here. You're right,
Speaker 2: the car sales are down, but what's interesting is market
Speaker 2: share of electric vehicles is going on. So to be clear,
Speaker 2: I think anyone across the world of what's going on
Speaker 2: in the Parisian Goals, we'll our second thoughts about buying
Speaker 2: an internal combustion aged and that's what we're also see.
Speaker 3: But at the same time, if you look at the
Speaker 3: excitement of the stock market for the two industry, it's
Speaker 3: pretty lame. If I look here today, the smps are
Speaker 3: almost ten percent, but byd GM, Rono, Volkswegen, even Tesla
Speaker 3: they are flat this year for minus seven Shanghai Auto
Speaker 3: Modif minus ten, Toyota minus fifteen percent, BMW minus fifteen percent,
Speaker 3: and then it get worse and worse on the minus twenty,
Speaker 3: Mercedes minus twenty, Ciaomi minus twenty, Xpangs minus twenty five,
Speaker 3: still on Tis minus thirty two. The stock market is
Speaker 3: very very sho em.
Speaker 2: Well, when you've just said why there's over capacity across
Speaker 2: the whole industry, that means margin.
Speaker 3: Pressure, rice pressure. There's only one that's up. It's Gillie
Speaker 3: because they've got such a great diversification.
Speaker 2: Again, exciting times in the automobile industry.
Speaker 3: But the one who are killing it are the battery
Speaker 3: manufacturer because CTL is up twenty five percent this year.
Speaker 3: The battery manufacturer are capturing the value of the EV sector,
Speaker 3: which is fascinating.
Speaker 2: Well, don't forget CTL is not just a battle. The
Speaker 2: CTL as stationary storage as well, and that market is
Speaker 2: booming as well. The growth actually is in stationary storage,
Speaker 2: it's not on the automobile.
Speaker 3: Well job. It was a fascinating conversation as usual with Michael.
Speaker 3: So we thank you for coming on the show.
Speaker 2: Thanks Michael, and I'll look to you next week looking forward.
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