Episode 232: Tu Le

Hi, it's Joe Lowry. Welcome to another episode of the Global Lithium podcast. Today is episode 232. My guest is Tuley, the founder and managing director of Sino Auto Insights. Tues been on before. He is very well versed in both the China EV market and the global picture. He will benefit greatly from giving a listen to what he has to say. At the end of the podcast, I'm going to make some comments, very brief comments about the growing angst in China over the global lithium supply situation. So you might want to stick around for that, even if you're one of those people who is in a fan, a rapid fire. Without further ado, Tuley. Welcome back to the Global Lithium podcast. Joe, thanks for having me. As always, man, great to catch up with you. Well, we'll get into Michigan State's prospects in the sweet 16 during the rapid fire segment. You are arguably the best informed American on electric vehicles. The best commentator. A lot's been happening, but the story told through a purely Western lens tends to be quite distorted in my opinion. I think you are of all the people I listen to the most capable of debunking the myths, and that's probably because you're living in China, and you still spend a lot of time in China, and your co-host of your podcast does as well. If we could start this by getting your 50,000 foot assessment of where we are in the EV world right now. First of all, Joe, thank you for the compliments. I don't take that very lightly coming from someone as well well informed as you. And, man, what a difference 14 months makes. I think that's the last time we recorded an episode. Let's say that B-Y-D still is the number one EV maker in the world. They've overtaken Tesla as the Bev maker in the world, the number one Bev maker. I think 14 months ago, people were arguing that that was inclusive of plug-in hybrids and Bevs. Now they're the champion. Number one, number two, Tesla is second consecutive year of down sales and largely due to the United States and to China. And so exports from China have increased substantially B-Y-D about 20% of their vehicles are shipped abroad to over 100 countries. And if we turn our focus to North America, the land to us on the General Motors and Ford have decided to write multi billion, tens of billions of dollars of checks to write off their EV investments. And oh, by the way, there's an Iran war that has gotten gas prices in Michigan at least to about $3.80 a gallon. And yeah, so what a difference again 14 months makes because what we've also seen amongst the Europeans and some of the North Americans, first of all, Canada and January is going to eliminate its 100% tariff and kind of diverge from the United States. The United States is going to be surrounded because Mexico already imports Chinese vehicles, ICE vehicles and clean energy vehicles and then Canada is also going to be doing that by the end of the year beginning of next. And so with Trump originally scheduled to go to China around this time or early April, which has not been canceled, we might have to wait a little bit before we hear about any grand deal between the United States and China, which most definitely will include some sort of EV trade agreement. So I think that's what really people are the followers anyways of the the automotive and EV sector are really looking out for because North America is the final frontier for China, EV Inc. And the United States, which is the second largest passenger vehicle market in the world behind China is the grand prize or North America. That's a really interesting point that China might consider the US a grand prize. I always kind of wondered if they were like, hey, if we get the rest of the world and don't get the US, we're still good. That that seemed to be the way things were going, but I've listened to your last couple episodes of your podcast that seems like you were saying that if it was possible, you would see these bigger SUVs that are better on fit and finish, maybe then the home team makes all over America. It's just a matter of availability. So when we're talking to the North America, I'm specifically normally talking about the D2 and a half 4 GM, Stellantis, Stellantis, which is Ram and Dodge. And so I call them 2 and a half because Stellantis is technically a European company with 30 to 35% of their profits coming out of the Americas or North America. That's where they currently lean into the largest SUVs, the Tahoe's, the Grand Wagoneers, the Expeditions, the escalades and the Lincoln navigators. And so, uh, funny thing happened in China last quarter, these largest SUVs from Neo, from X-Pung, from Ito, which is a Huawei brand. A lot of these companies are now getting into the C segment or the Tahoe, Tahoe-sized SUVs, but they're clean energy. So they're either e-revs, which is, you know, extended range electric vehicle where there's a small motor that recharges the battery. It doesn't, it doesn't operate the wheels, it recharges the batteries. And that's different from a typical plug and hybrid, which operates the wheels. But I've seen a few of these pictures, Zeaker, which is Julie, a Julie brand has also launched a few of these larger, larger 5, 7, see SUVs. So the Chinese are now also starting to encroach on the money makers for the big, the D2 and a half. And I'm, if they're not freaking out a little bit and Dearborn and Detroit and Auburn Hills, they should be because they're likely going to be seen here in the next five years. Normally, you think B-Y-D makes a product that can compete with Tesla's, that cost at least twice as much. So is same relative difference apply here? Well, the landed cost would be more than what it would be in China, but I would, especially if we eliminate or reduce the tariff. Okay. So a scenario could be the Trump administration negotiates a grand bothering in period where we also like Canada have a quota of imported vehicles from China that gets lower and lower over over a number of years. As long as there's investment foreign direct investment from the Chinese automakers into the United States to build local capacity. So I think that's a realistic scenario that the Trump administration might try to be negotiating with the Chinese currently. And so the idea would be, okay, they'll eat some of the, the margin in order to gain share, create awareness of the brand, the playbook and well, and honestly, you know, this you, you, you get behind the wheel of some of these things and most Americans going to be like, holy cow, this thing is really, really cool. Whether they buy it or not might take a year, might take 24 months, might take 30 months, but you know the Chinese as well as I do, they play the long game, right? They're not here for 24 months to make a buck and then go, go and leave what they're trying to do. And this is where you're my counterpoint to your point about if they get everything except North America or the United States, it's still okay. We also know having experienced and work with the Chinese in the past that they also want soft power, right? So would they would they rather say they were dominating the US market or the Peruvian market? I think probably the US market, but no, my point was on an economic basis, their excess capacity, you can feed the rest of the world and they can survive without North America. But if they can get North America. And then yeah, that that balance their whole. We, we won the big one. Even automotive executives in Europe are saying there this couldn't be the Nokia moment for them because they recognize that the Chinese move so quickly in how they add features, how they change over for model year to model year. They, the, this is where the Chinese act more like tech companies and I'll give you a specific example apple, they always come out with a new iPhone every year. They might not need those features, but they're ready ready and willing to cannibalize sales of the 16 pro. in order to launch the 17 Pro. Whereas traditionally, I believe in the automotive space, they want to bring out all the profits they can from a cash cow. And so they try not to add too many new features so that they can continue to amortize the investment they made on the latest Tahoe because of the capital equipment and all these other things. And so what the traditional automakers really, really, really need to do in order to compete is change their culture in the way they think about model change over and how features are going to be launched and go from once a year to many times a year. Well, the history is fascinating because if I go back to the early cell phone days when I was living in Japan, the Japanese were buying new cell phones every six months. And it was just batteries were improving, features were being added, and it was a whole thing. And then you see the transition now to EVs. And instead of the Japanese doing it with cell phones, the Chinese are doing it with cars because you were talking about on your podcast, people that refreshed in the first or second quarter of 24 were already refreshing their models last year. And once the last time a Tesla has been truly altered aside from software. So it does seem like the China constant improvement of features and software is just something that the West wasn't prepared. And doesn't understand because they don't see it on a day-to-day basis unless you're traveling to places that have them. So there are two great articles. One recently Bloomberg this week that talks about how Cherry quickly changed the intelligent driving system with the software update over a weekend. And my friend Nick Carrey wrote a Roger's piece six or seven months ago about how Cherry also had a China spec vehicle that he had driven. And over the course of like six weeks, they changed suspension and the software to make a year-oh-spec so that it attract European customers. And that happened again within a matter of weeks. Now there is this competition, hyper competition in China that is really, really pushing the envelope on why you would refresh so quickly. And there's always gonna be this hyper competition in China. What they don't want is a bunch of unhealthy companies. And so the Chinese government last year kind of limited some of all these price cuts that were happening in order to try to compete. But will Europe and the United States or North America need as many changes and updates to these vehicles? Probably not. So this is the only respite of optimism that I see from the legacy automakers. They won't need to keep up with the Chinese like they do in China where it is blinding how fast changes happen. And but one thing that I think is really important, Joe, and you and I talked about this before you press record is these brands that you and I know to be very, very premium, very, very prestigious. That doesn't really exist in China. And I think because they create so much value in the features that they have on these much, much less expensive vehicles, Xiaomi Su 7, for instance, as a prime example, there are multiple people, including Jim Farley, who's the CEO of Ford, who was a fuse of this praise of a $35,000 car. And you know, that is the one thing where your CEO is telling you how great a competitor's car is and how he didn't want to give it up. That's probably fairly disheartening to the own teams. - Well, speaking of, I guess you referred him as the US 3 and if you're talking about trucks as the US 2 1/2. What's the survival outlook for the 3? Does it become the 2? We talked last time about maybe 4 in GM, wind up merging. There's stuff that seems to people my age, he seems like how could that ever happen? But it does seem like the continuous, when you're right in $40 billion off, I think that's what the collective write-offs have been in the last 12 months. That doesn't port tend well for the future. - Here's some food for thought for you and the audience. And you probably already know this because it sounds like you're an avid listener to the podcast. We traditionally think of companies like Bosch, like Conti, like Delphi, Zadeth, as tier one suppliers to the automotive space. And these companies are normally a couple of step functions smaller than the traditional OEMs. But incomes in video, incomes Qualcomm, who are much, much larger than their customers, the OEMs. But by definition, they're now tier ones. So how we need to think about the automotive industry is changing in a huge, huge way. And if we incorporate intelligent driving into some of the features for the traditional automakers in GM and Ford have already said, we're gonna be launching level three intelligent driving by 2028. That means much more of their investment needs to go into data centers or cloud service, depending on whether they want to outsource it or do it themselves. And so the nature of how these companies are gonna make money is gonna change completely as well, which brings in new competitors. Do we think Waymo in 10 years is gonna be a competitor to GM and Ford? Most likely, and then who else is coming in Uber is a large player who is selling picks and shovels. They're not really betting on too many horses. They're betting on all the horses. And so when you see technology companies come into a sector, you know that they see a huge pie on the horizon. And so I think that's also where the legacy automakers need to keep one eye on the Chinese, but then the other eye needs to be on Silicon Valley and some of these tech players. - Well, you had to thought the Apple car for a long time that didn't happen, but that doesn't mean just 'cause Apple didn't do it. Somebody else isn't going to. It just seems to me that in the last decade, the legacy auto guys have just made too many bad moves. And at some point you can't overcome them. And I don't know. - You know you hear the expert. To me, it's a little bit of how our market is chasing quarter to quarter and numbers. It's really hard to come up with a long term strategy. And then the ping ponging back of policy by the US government does not help because the $7,500 subsidy for EV adoption was gonna be a huge, huge, enabler for the legacy automakers. Now they need to play their part by launching and bringing us the US consumer great products. And up until this point, there's been quite a few mulligans from the automakers, which doesn't help. But now it seems like we're a bit bookended because before when they weren't coming to Canada and very little in Mexico, it was a bit of auto site out of mind for the legacy automakers. But now that we know they're coming to Canada, they're in a big way already in Mexico. It really, really creates a small window for them to get it right in GM and Ford, have assured the shareholders that they are building products that will be competitive, price-wise and feature-wise. Now do we believe them or not? - I would say that if their past performances and indication future returns were in big trouble, but let's give them the benefit of the doubt. Your points that this seems to be almost a perfect situation for China because they have all the excess capacity in the world. Their market wants all these changes. US North American market may be less demanding of constant upgrades. So that just gives them more fodder where the stuff their consumers say, well, that the inventory builds will be changed in terms of they can just go to America because the one thing about our car market is this big enough to absorb a lot of their inventory if they get the green light to sell here. So there's some ironies there Joe, you know, I think they'll and we can have said for even 14 months ago, I believe maybe 20 24 months ago that the Mexico was very careful about accepting foreign direct investment from Chinese automakers, you know, Canada was not interested in the United States was not interested now it seems like we're fighting over for an direct investment at least behind the scenes from the Chinese, okay, and you know, you'd mentioned that. You know, you'd mentioned over capacity a couple times, but if we have we have one opportunity to get this right from a negotiation standpoint, and so it's really, really important to figure out what's in the best interest of the United States because we want them to hire US workers and build locally to build out our economy. And if that is indeed the case, that over capacity is going to stay in China, and it needs to be reconciled by the Chinese government because there's going to be less opportunity to export it to other markets except for maybe Southeast Asia, Australia, and other part like Africa and stuff like that that do not have automotive manufacturing as a major major economic development asset. So I think again, we have a couple of year window to negotiate the right deal for us because the Chinese are going to come now, do we want joint ventures, do we want them to have wholly owned factories, I'm not sure, right, I'm not part of the Trump administration, but it seems like with barley talking to the Trump administration, he wants to help influence the rules of engagement. And I think that's the right thing to do. And I heard Trump say this on CNBC during the campaign that if the Chinese built in Mexico, he would bar that he would, you know, whatever terra if he needed to put on a keep them out. But if they wanted to build factories in the United States, welcome. Now, I don't think that's a universal feeling maybe, but I think it is indicative of the way Trump thinks and he loves to announce he made a huge deal whether it's getting question how good some of those deals are. And the CATL should be able to make batteries here, and I think B.Y.D. should be able to make cars here, but probably it wouldn't even be B.Y.D. who would make the biggest impact. You know, you got other guys who if they wanted to take the premium segment. Yeah, it's an interesting conundrum. You know, I've always argued that the Chinese automakers, because the prices so large, the US market, that they would make it work if we required them to use local suppliers instead of importing Chinese component or components from Chinese suppliers from China. And so this creates opportunities for the supply base here in North America as well. If we can negotiate the right deal. Okay. And another thing that I think is really important to kind of talk about Joe is that you had mentioned this is the perfect storm for the Chinese. It was kind of sort of already the perfect storm because MSRP of passenger vehicles in the United States has grown over the last five years to around $50,000 now. That's how much it costs to buy a car in the United States on average. And wages having kept up younger people are disenfranchised because they can't afford a house and they can't afford a car. And so it was already a terrific terrific environment for a value based Chinese OEM to enter the US market. And then you have the air and war. So it's made the thought of owning a huge SUV that gives you about 10 miles to the gallon. Very, very unattractive in the short term. So, and it couldn't have come at a worst time for the automakers because as you said, there's about $40,50 billion of write downs from legacy automakers that say, you know what, we overestimated on EVs and we paid for it. And so we're going to focus on big big SUVs. The sell to our consumers and then this happens. So, let me just understand. I've never investigated this, but are there any Chinese cars right now that you can bring in here and pay the tariff that are approved for US roads? I mean, if crash tests been done, have, are they, are they ready to just say, okay, Mr. Trump, we're going to build a factory. But until we do, we'd kind of like to sell these models. Of course, we'll limit the volume. But you and I both know that when people start seeing their neighbor has a BYD, it's actually half the price of their Tesla. And it's the doors sound better when they close. They don't have so some of the problems. So, there's a couple of different ways I'll slice this. First of all, is the cars need to be homologated for the US, you know, for the US roads. So, it won't get plated with a US plate and from any state, if it's not homologated. That being said, you see Mexican plated BYDs cross the border every day from Texas and California. So, that's already starting to happen. And likely beginning of next year, you're going to start seeing BYDs and things like that from Canada. Okay, so there's the practical thing, but they're already homologated for Europe. So, that distance between the type of registration for homologation between US and Europe is not huge. Okay, so they're almost there. And if they can homologate for Canada, it is a slam dunk for them to be able to be driven like legally, at least from a policy standpoint, a regulation standpoint, pretty easy. You know, the second thing is I'll point to the Biden administration restrictions that that they launched on the way out. So, in the year 27, you cannot have Chinese connected software, Chinese vehicle connected software on cars that are driving on US roads. By the year 20, you can't have hardware. So, when we say software, it could be firmware from a controller, it could be anything like that that collects data. And I'm pulling up pretty broad brush here. And then on the hardware side, we're talking about lidar sensors radar things like that. Okay. Well, will the Trump administration want to keep those in place? Okay, because if they too, then the Chinese automakers will need to resource some of the components for their vehicles before they can import them into the United States. Okay, but there's no guarantee that the Trump administration will even enforce those those Biden policies because they don't want to do anything that the Biden administration has put in place before them. So, that is those are kind of the two biggest ways I would look at what it will take for for the Chinese to enter the US market. And as offers technology and services that support both direct lithium extraction and conventional evaporation ponds. Minimize the environmental impact of your lithium site through Zalanda's data driven insights and tailored solutions for each extraction method. Go to Zalandas.com for more information that's ZEL, AMD easy dot com. And I think that's one thing. One, I learned the word homologated by reading your sub stack. I don't know how many of you listeners knew what homologated me, but I have to confess ignorance of the term. I went into the chat GPT and said what the heck is homologated to the real point. I think if a deal is going to get made, I think you'll have different levels. Like you're not going to have government fleets buying Chinese software cars. I'm pretty sure that nobody from the DOD is going to be driving right. I'm going to start with Chinese software. Let me stop you there, though, Joe, like, but up until a few years ago, I think military were using DJI drones or, you know, like quasi military, right. So that's kind of the situation we're in a little bit. And we, I agree with you that we got up to a certain level of dependency and then decided we didn't want to have that level of dependency. So they're, they're picking excluding homologation from the defense and government entities, at least initially wouldn't really slow down China at all, because we have a pretty big car market. And then we got a very small part of it, government fleets. interesting time because I don't know if we're comparing apples to apples, if Western suppliers have, and this is a binary thing, if they have the capabilities to build the components that the Chinese automakers make and use for their vehicles in China. Okay, that's a binary thing. And then second, they definitely can't produce them at the cost that the Chinese counter suppliers, tier ones, can do in China. And whether you believe it subsidized or not, that's a separate debate. But at the end of the day, one of the reasons is the economy is a scale. The other reason is vertical integration. So BID on a few of their cars, early in the market, they produce about 80% of their own parts. So that means that every single part number that they build themselves, they're not giving any margin to anyone to. And so that's another way. And at the end of the day, they make 4.6 million cars a year. So that's really going to create a lot of economies of scale as well. So I really don't see that situation much different than when BMW decided to make cars in green mills-south Carolina. And yet this whole booming ecosystem of German suppliers, Lufthansa started a flight from Munich to Charlotte. It just popped up very quickly. And I think China's a lot faster at executing these kind of things than the Germans were. But you know to me, Joe, and having moved back now almost four years, it's the recognition by us, the Americans that we can learn something from the Chinese. You know, three years ago when I first moved back, I don't think there were many in Michigan that thought that. I think most of the guys that worked for GM or Ford in China and came back knew that. Yes, yes. And so for GM at least, China is still a huge key market for them. You know, Ford, they export a lot from the China market. So they still book revenues and profits, but they don't sell that many vehicles. And Stellantis, they re-injected themselves into the China market with their acquisition or 20% purchase of lead motor. And so one thing that I think is really important to make your audience aware if they're not yet is that the idea of joint ventures between US OEMs and Chinese OEMs, that's not new. They're already doing that in China. Okay. It's just getting your mind to comprehend that that probably needs to happen in the US. What was the requirement in China? Yes. Yes. What's to say the Trump administration doesn't put the show on the other foot, right? I think that's I think that is the crux of negotiation. But I think China already has 29 scenarios or 55 scenarios planned and it will nicely fit into one of them. So yeah, I think you and I both agree that if America wants to accelerate the future, bringing China in will do that. And we should point to GM in the 50s and 60s having over 50% market share. And then the Japanese coming in the late 60s, early 70s and now GM having 17, 16, 18% market share in the United States. I feel that that's a likely scenario where GM and Ford again lose market share. Toyota might lose market share. But the fear, I think from a lot of Americans is that there's going to be these 50 brands coming from China. And the reality is it's going to be many, many less. That doesn't make sense. How many brands? Yeah, it does. The Chinese wouldn't do that. The government will control that because they don't want chaos over here. So yeah, I have a higher degree of respect for the white China manages things like that. But if you want to use the Japan analogy, I mean, the first thing Honda was selling like 100 CC motorcycles here first. When I was a little kid like six or seven years old, that's the first thing you saw from Honda over here. And then I drove across country in 1973 and one of those orange Honda civics, well, you weren't born yet. But yeah, the first Honda that came in were like toys. And literally, I wanted to do a ditch right night, one night and two large guys put the car back on the road. So I've seen the movie in a sense. So it doesn't surprise me. And everybody bitched about it back then. Oh, you know, we won the big one. Why are we letting them come over here? And the oil crisis in the 70s, early and late 70s, there were two oil crisis during that decade. Sorry for my age bringing out historical references. But yeah, that really enabled because all those cars got great mileage and gas guzzlers were not in favor. There's a lot of parallels right now with, you know, what happened in the 70s. But you know, my friend Joe White, our friend Joe White, he always likes to say, you know, history doesn't repeat itself, but it rhymes. And so I see parallels between the Japanese and the Koreans coming, but also I see a lot of differences because we were in a completely analog world. And it took the Japanese a few years, a few product cycles to really understand the American consumer. And now Toyota has big SUVs and big trucks, whereas in the 60s or the 70s and 80s, they were really focused on the small car. And I think ultimately two or three, maybe four Chinese brands will succeed, long term in the United States, because number one, they're going to have enough capital, number two, they're going to be the ones that are diligent and studying the local market to understand the US consumer. And I think for the D2 and a half, they need to look themselves in the mirror and say, are we an SUV company or do we want to broader remit? Because we can't compete if we only build SUVs in the rest of the world, because the United States is the only country that really, or North America is the only place that buys these big, big, big SUVs. And so if we want to be competitive globally, we have to be much more flexible with the products and create a lot of value and rebuild that trust on the small car side for our consumers. Given you are an American consumer, and if I heard right on one of your podcasts, you are leasing a, "Mocky, is that correct?" That's right. I'm a new leacy of Ford Mustang Machia 2025, Ford Mustang Machia. And are you happy? I really like it. I think the biggest downfall is the range. Unfortunately, we're still in the middle of winter, although I think the last day of a winter officially ended yesterday or two days ago. But I was told that in the spring and summer that the range will increase, but it is not something that is great. That's the one. And I have to double to make it really, really great. Right. Exactly. And it's an NCM battery, so it's not like this LFP where it should be lower range. And so I like the interior is great. I think the design, the UX is a little clunky, but even the Chinese, for my standpoint, is pretty clunky. But I'm very picky on some of this stuff. So, I think it looks great. It doesn't look dated, although it's the design is a few years old. I was looking to get a car months ago. And this was before FSD turned into a monthly fee. If I would have. I read your post. I just. Let me do a shout out to Tewsgotta, Substack. You might want to subscribe to. And it's a lot of interesting stuff in there, but I read about the whole FSD. Thank you. Yeah. It's one on my second EV. I had a Hyundai Ionic 5 before. I like them both. Not going to the gas station is something that is terrific. You know, range is something. You know, my wife has a gas car. So I think that's kind of how we balance that out. And I don't plan to do too many long road trips. in the Maki. So, all right, you already used the word analog a couple of minutes ago. And one of your recent quotes was that by the end of this year, Tesla will, Tesla's will look analog. What did you mean by that? So, in China, they almost look like a taxi, a robot cab, like a very, very simple, simple vehicle. And I think if you look at the R2 at around $45,000, you're starting at 45 or $46,000, there's going to be some vehicles that have really, really progressed or evolved in the United States. Lucid is looking at a baby gravity and then Ford will come out with what they're calling the UEV. And so, I think what we're going to see is the Tesla interior is look really dated. And I mean, there's going to be Elon has made a lot of people really rich. And so, they're going to be long Tesla just because of that. But if those people could see what's going on in China, now they, I'm not saying they would like every design from the Chinese, but there's so much more to it than that you can have at $35,000 or $40,000, which is the typical price point of a three and a y. So, well, what are your thoughts? I mean, Elon's got a lot going on, SpaceX, going to Mars, robots, neural link, boring company. I mean, do you think that, do you think Tesla just gradually kind of becomes less central to his empire and that it's not really a driving force anymore? Do you think because of the FSD and the robot taxi thing that keeps Tesla forefront people's minds? So, that's the interesting thing, Joe, because if you think about the technology companies that have entered the robot taxi space, we're talking in video alphabet with Waymo. And so, the smartest people, most valuable companies are entering right now, the robot taxi space. So, I think partner, Pasta with Tesla, if they're able to kind of redefine who they are, because right now it's rhetoric, because the cybercab still hasn't really gotten much traction. And as long as they can maintain that trillion and a half market cap, he's going to have a ton of flexibility. But how do you do that in a market where you're three years in a row potentially losing sales for the product that generates most of your revenue? And then I don't know these analysts and how much they priced in or out the Tesla market cap based on how they're going to be doing in China. Okay, because they do have FSD, but it's not the same version in China as it is in the United States. Will they ever be able to launch that version, the full version in China? That's up for grabs. Elon said it should be launched earlier this year, but that hasn't happened. And so, they have a factory in China as well that is close to 50% of their production. If they can't continue to sell into China, that creates the flexibility in the underutilized capacity becomes a weight on their neck from a balashi standpoint. And so how much more can they can Elon pump up shareholders in Wall Street to say that we're an AI company, we're a robotics company before they actually launch products and services that match what he says. As long as there's a huge, huge delta between those two things, I think Tesla is going to be challenged to head in the coming months. So that's been the mystery of Elon as long as he puts a rocket back to Earth in his little slot once every once in a while, then people forget he's been late on just about everything he's ever said he was going to do. But he's done a lot of great things. So it's about. Yeah, I think that's the huge thing. He's privatized space exploration. He's made EVs of things. So my goodness, he deserves the benefit of the doubt. But also he says things that just seem a little off from a timing stamp. Yeah, always aspirational. But I mean, that's, I think everybody kind of factors that in now. I mean, I'm certainly not saying negative things about Elon Musk here that aren't very clear. The way he has changed what happens in space, having grown up being a kid who wrote to NASA to get stuff and they would send just stuff back to 60s. Yeah, I have a huge amount of admiration for the space part of that. Well, let's move on to the build your dreams company. For the listener, that is B.Y.D. They've the the as fast as gas company now, Joe. So his best is gas. Okay. Well, what's your assessment of some of the issues they have? It's not been as easy to be dominant, I think. You get stronger, more and more competition. Where do you see them going from here? Let me start by saying that their current struggles or their recent struggles has more to do with the China market and the amount of competition than it does with B.Y.D. faltering. Now, they're a little bit weaker, but we're talking a company that went from 700,000 units just a few years ago, six, seven years ago to 4.6 million units. Last year in entering over 100 countries, as I mentioned earlier, Wantwantful got up on stage recently and admitted that they were behind and some of their competitors had caught up. Some of their competitors are Cherry, are, you know, SAIC are Glee, you know, are great wall motors. And so these are the companies that sell in the millions. Okay. We hear about Neo, Ex-Pan, Leonardo, Xiaomi, but they're really, really smaller players with regards to how large some of these other entities are. Because, you know, Glee's a few million units a year. Cherry is also a few minutes units a year. And Cherry, I believe sells more cars abroad than they do domestically in China. Cherry also IPO'd last year. And 25% of their vehicles had been exported to the Russia market. Once they IPO, they said they're going to be leaving the Russia market. So they have a 25% sales volume hole that they need to fill. Now, you'll start seeing cherries in the UK and Mexico in all these countries. And so they are really, really a big player, but B.Y.D. has been the company that has, you know, taken all the air out of the room, the £800 gorilla. And it was actually the Glee Xinyuan, which is about a $10,000 car that was the number one selling B.E.V. in China. And over to, you know, several B.Y.D. products. But a couple of months ago, I want to say six months, six weeks ago, Wantro Fulgat up on stage saying, yes, yes, some of these guys caught up, but we are going to be the technology leader. So they launched version two of the blade battery. And then they launched their next version of the mega charger, which now charges at 1.5 million, which is an absolute crazy, crazy number. And they want to have 20,000 of these chargers in China by the end of this year. So I wouldn't worry too much about B.Y.D. they will continue to be a major disruptor in the automotive space. Now, I'm sure if you talk to Stella and Wantro Fulg separately, they'll tell you that they want to overtake Toyota as the number one automotive brand in the world. Toyota last year sold about 10.6 or something like that, almost 11 million vehicles. So in order for B.Y.D. to continue, Stella said that they wanted 50% of their vehicles sold to be from outside of China. So if that's to happen, they're going to have to sell a little bit more than their current sales record of 4.6 million in and outside of China. Do I think they can do it? The growth is going to slow, not only because they're entering a lot of foreign markets, but because that denominator has gotten so big. How many ships do they have these days? Fairying cars are on the world. I believe they have about seven of them. And one, I think the The largest one carries around 7,000 vehicles. vehicles. So, or some some ridiculous number of vehicles. And they they have struggles outside of China as well. Brazil, they had some labor laws that they um that they're getting in a lot of trouble for. And then Stella, as she was in Sao Paulo for a conference last week had said we're open to acquiring foreign brands. We're open to building in Canada, but we don't want to jv. So to me, she's negotiating in the media to the Canadian government, to the US government and the Mexico government. This is kind of where we start our negotiations from this point. And I'm sure the Trump administration, the carny administration and the shine belt administration are going back doing their homework to sharpen their pencils. This episode is also brought to you by MLC. Are you looking for the highest purity calcium products to produce battery grade chemicals? Look no further. MLC is your reliable partner. Check out line for lithium.com for more information about MLC's calcium solutions and expert support. That's L I M E the number four L I T H I UM dot com. What do you think happens in Canada? So I think you probably noticed, but I'll I'll play this out for your audience. If there's a 250,000 unit factory that is built in Canada by any Chinese automaker, the likelihood of it being domestically consumed in the first 24 or 36 months is very low. And so they'll have to export some of that capacity with the USMCA. It would have been a no brainer to export it into the United States and maybe even to Mexico. But as we're trying to renegotiate that USMCA or the Trump administration wants to renegotiate it, Canada would have to or these car makers would have to figure out where they could send it to outside of currently the United States and Mexico. Now, if they were to build something in the United States at 250,000 units, it would be domestically consumed a lot quicker than it would ever be in Canada or Mexico. That's a reason for them to want to build in the United States versus a Canada or Mexico. And and that's a pretty compelling reason. I do think that companies like a UID or Glee that have the sales volume and the capital could build in both in Canada and the United States, especially if the USMCA could be renegotiated or massaged in a way that would still keep in essence the free trade between the three countries. I always thought that Trump would try to be negotiating with multiple Chinese parties just to get the best deal. But in the end, I think you would want to make a deal with BYD because they're the biggest and they would bring a battery factory with them likely. I think both CAT and BYD need to be making batteries in the United States because we have just dithered for so long and I don't know how you feel about OTHM sales. But you know, I think the uptell now the whole US battery thing has just been such a disappointment. And you know, I would say Tesla is an exception, but that was a panasonic building inside Tesla's walls when that all started. So that was a whole different scenario. Everybody's talking about, oh, we're going to redeploy our battery plant for battery energy storage systems because there's a market there. That may be what kick starts EV batteries more broadly than has happened so far is that you now have the US grew substantially in battery energy storage systems. So if you have a plant that can make both, you can get probably to scale faster. But it's been crazy. I can remember three years ago I was going around the world talking about what the Biden administration said was going to happen. You know, they're all these I had this whole map of the US with so many battery factories and it just it feels like you're a 10 years ago. It doesn't it? They had planned so many battery factories. So it does. One thing that I will point out is that GM which has relaunched the bolt at $30,000. It ships with imported batteries from CATL as well at probably shoot. Yes. And GM eats eats that tariff. But if you're building a $30,000 car, what alternative do you have? You know better than I do that they don't really have a good alternative because the Japanese and Koreans they don't know how to build at mass production, LFP batteries at the quality reliability that CATL or BYT does. Not yet anyways. And I don't think they'll be able to do that for the foreseeable future. I think you're looking at the 30s. I think you're looking at the 30s before that. And in real I mean you'll have it happen. But it will take China didn't do any of this stuff overnight. Right. People talk about China's speed. But China's been over a decade developing China's speed. So nobody talks about China focus. So you like so much. And you know the other thing I think is really important Joe if if I may is that battery energy storage battery cells are not automotive grade. They're the margin is lower. And this kind of keeps the factories running. But you can't swap into an electric vehicle the cells of a battery energy storage system. Yeah at least not now. And we'll see what happens. But that's why I say 2030s because there's a lot to get worked out. And it's really easy. I was in Korea I don't know six weeks ago. Besides being depressed about how things have worked out in the battery end. And how they were all worried about what happens if Trump gets elected. But what they should have been worried about is what happens when our strategy is again wrong. And that was focusing on high nickel when they should have they did the same thing with it took them a long time to go to nickel. And then now it's taken them a long time to go to LFP. And well let me let me ask you this. What are your thoughts on LMR because Ford and GM seem to be betting on that as the next evolution of alternative to LFP? I think it's almost obfuscation. Oh look over here. Maybe but having come from Asia back to the US even though it was a while ago but still going over you can just see simplistic. Oh we're going to do this. Oh we're going to do that. And unfortunately none of it's really happened. Well I think a lot of people are starting to realize or have to acknowledge that it's not as easy as flipping a switch. There is a lot of capital that needs to be invested. There are a lot of regulations that either need to be bypassed or massaged and we don't have to know how in house in the United States to really scale mining refining manufacturing on the battery side. Well that's why long before this last election cycle started I said if the US was really serious about all this you would do the China playbook in the inverse just like they did with GM and Volkswagen. You got to come over here you got to do a JB and we have our own USAIC or whatever we want to call it. I don't think there's anything wrong with that strategy except for I think a lot of times America's ego gets in the way. Well Ford has accepted that blowback because Marshall Michigan factories use the CATLIP and it's that factory in Marshall Michigan that's going to be supplying their UV next year. So effectively that is a joint venture. Now there are no badged CATL employees at this Marshall Michigan factory. So our other OEMs going to come to God come to Jesus moment and say we do need that help. We can't do it ourselves. The Japanese and Koreans that we partner with are still years away from becoming remotely competitive on pricing quality and reliability. And so that's the reality of where we're at especially if the Iran war goes on for months and months and months. Yeah I guess I just felt that that was always so obvious that for broad EV adoption needed a price point that was a lot lower than what Tesla was selling Model S's for. And Nobody seemed to look now like that. And then the original GM offerings didn't really fly. And, well, you, so here's the crazy thing. And I'm sure you were pulling your hair out. When you heard Mary Barra and these leadership five, six years ago talking about, we're gonna sell a million EVs. No, like where are you getting the batteries from? There's no freaking way, right? We knew that these numbers were never gonna be hit. - Well, she said, and now I get the years wrong, but I said this on the podcast numerous times that in either, I think it was during COVID, that by the end of next year, or maybe it was two years, will be bigger than Tesla. And it was like, hello, Tesla's got a whole battery thing that works because they have Panasonic doing it. And then they got C8L involved and she really had nothing. They sold 24 cars the quarter before she said that. 24 cars. (laughing) And I might be wrong, maybe it was 23, maybe it was 25, but it was less than 30. (laughing) And that was on the back of the year, they had to recall all the LG batteries, if you remember that. - Yes. - I, I, I can't make this stuff up and then people stay employed. I mean, it's, - I, I don't, that creates the sense of, if I don't, even if I screw up, I'll be able to keep my job, which is, I think one of the reasons we haven't been able to be really that competitive because the automotive sector has created a great middle class for the state of Michigan and the Midwest in general. But when somebody screws up, they need to, there needs to be some accountability. And unfortunately, we're, and Joe, we're just talking, you know, over the last several weeks, about a $20 billion right now, and a $10, 15 billion right now. Have you seen any article that follows that, that huge number up with this whole department of my career? - Well, I actually think maybe Honda's was the most amazing 'cause they've never lost money in, you know, since the post-war period, where they came right out of the post-war period, and they've never lost money, and then they have the, - Right. - I think it was 15.7 billion in US dollars or something like that. But anyway, well, as always, thank you for your time. But I do have to ask you about the Spartans chances against Yukon on Friday night. What do you think? - I like that we are hitting our stride on defense. You know what Jeremy Fieres is one of the best point guards in the country. Now, if we can continue to lock down their best player, I think we got a really good chance. And since we're talking about Spartans show, and I don't know if you are a hockey fan, but Michigan State Spartans, there's a number two or three hockey team in the country as well. So the Frozen Four is happening right now. So two reasons to root for my Spartans. But, you know, Iso is 71 years old, and he's not gonna be doing it for much longer. So I think if he can motivate them, he's got a nice commercial out now. - Yeah. - Yeah. When they wind up, they're throwing basketballs into a front end loader or something. - Okay. - I really saw it once. But, I'm sure it'll be on this weekend. - What you were in for? - Well, I am rooting for Arkansas, but I don't think they're gonna be able to beat Arizona. The reason I'm rooting for Arkansas is my college years. I used to go to Arkansas when they had some of their glory years in the 70s. - Nolan Richardson? - No. - No, no, this is Mon Creek, Brewer and Delph. - Oh, the trip list. - And, you know, my college roommate still lives there. So he pointed out to me this year, they had this freshman point guard, a cuff. I think his name is and I've watched-- - It's a Detroit. - Of course he is. (laughing) I have watched a lot of Arkansas basketball in the last few weeks. And then I watched Florida and the Florida point guard who was in Arkansas last year, his name is Boogie Flynn. His mom teaches with my son in law in New York. Oh, wow. So it's a small world. - Are you a Calapari fan? - Not really. - Okay. - No, I'm not anti, but I excuse us for digressing in rapid fire, but then there is one follow up question, which I think you know what it is. (laughing) What happens to the lions this year? - Oh, man. I, normally I'm not on the fence with anything. I normally have a pretty firm opinion about things, but I just don't know this offensive coordinator. I think David Montgomery losing him was okay 'cause we got Pacheco Chico, but and we revamped our entire offensive line, okay? But a lot of it is injuries and defense. And so I think if we're to stay out of the mash unit on our defense specifically, and we can get some pressure on the quarterbacks, we're gonna be back in the playoffs. My prediction, we're back in the playoffs. How about you and the bills? - Well, you know, I hope the sabers come through this year 'cause Pagula owns them too. And he is so unpopular in the city of Buffalo after axing the bullock. Coach, we'll see what happens. But Buffalo's got the bones of a great team, but they haven't every year for the last six years and they gotta get it done. I hope we're on in a year, or a little less than a year talking about the lions bill Super Bowl, but. - Let's do it. The one thing that I always think of Joe when a successful coach who hasn't been able to hit the top of that hill, I think it dug Collins and how Phil Jackson came in and then pushed everybody over the top. So that's my hope for you guys and that the lions and the bills have a knockdown drag out Super Bowl next year. That's what my hope is. - It did not surprise me that they made a change because I think if you're the owner, you know, you know more than the outside guys do, but yeah, if they don't go deep into the playoffs next year. - Oh man. - Yeah, yeah. Josh has a few years left, but he doesn't have an infinite number of years left. And sorry, General listener for dragging you through a sports trivia, but you probably clicked off anyway, so it doesn't matter. Thank you again too for spending some time with me. My ignorance of EVs is deep and wide. So I appreciate accessing your knowledge. - Thank you for having me on the show as always and always, always good to catch up with you. And I do have to wish you a belated happy birthday. So happy birthday to you, sir. - Okay. - We're in our last year that starts with six. So it's getting ugly. But anyway, thanks again. I always enjoy my conversations with two. This one was no different. Hopefully you got a benefit out of that. There are a couple of other things I wanted to mention on this. I talked a little bit about it in the intro that it is clear now with a couple of the Spodiumine off takes that have floors without ceilings and prepayments. And just to bring you up to date, I had a conversation with the world's largest battery company and they fully communicated their angst about being able to obtain adequate lithium chemical supply in the coming years. And I think what you're seeing in this cycle is different than in the past. I believe the major battery players have a growing awareness that demand is gonna be so large that the lithium industry is currently configured is gonna struggle to bring on adequate chemical supply for multiple years. I'm not gonna say too much more about that. I may in coming days, it's an evolving situation. Thanks again. for listening.