Ok I have been going over my thoughts and own research over Chinese EVs.
I have read all your comments and been interacting with many of you,
and listening to your feedback and taking it all in. I genuinely find it invaluable,
and always appreciate you giving me your usually very good points. My ultimate objective is talk
through potential scenarios that may occur, and see if we can work out which are the most likely.
I feel like there is a lot of disagreement in what I have been saying though.
All I am doing is pointing out perspectives that I haven't heard from any other sides.
Just because I am not fitting the narrative that you already believe,
or that other credible people have been saying, that doesn't mean you shouldn't at least hear
some other points. This is investing, it's important to not maintain an open mind.
That having been said, in regards to Tesla, I never once said that the Chinese EVs will
be taking any of Teslas market share. According to my research, despite how
cheap China may get things done, well Tesla can still produce their cars at a much lower cost,
at least like for like, and when Tesla launch their compact $25,000 model,
then it will be a very tough price point for the Chinese to undercut.
I repeat this is not me just trying to say that I think Teslas are better than the Chinese,
no one comes close to Tesla. Tesla is vastly superior in absolutely every possible way,
and Tesla do not need to worry about anyone taking any of their market share. The only rational
reason to buy a Chinese EV over a Tesla is because Tesla's waiting lists could get too long for a lot
of people to wait, and said consumer has to have an BEV, and a plugin hybrid is not going to be
enough for them. Or someone wanted a cheap EV, and could live with perhaps 150 or so miles of range.
And although we do have a zero emissions movement, it may not be enough not motivate the typical
consumer, but if gas prices went through the roof, then perhaps they might find a bit more
encouragement to possibly make the move to fully electric, even with such small range.
So I wouldn't rule that out as a possibility. Again, I am not trying to say Chinese EVs simply
wont make it in the US, I am trying to just point out, in my opinion what it might take
in order for them to make it. And some of these scenarios are not as likely as some people think.
I was disappointed with my findings to be honest, I had more hope for the transition
of EVs. I thought the Chinese were really making more impact, as that is generally what we hear.
But as Tesla shareholders, we are safe from Chinese EVs as a competitor,
for those of you who say they will catch up, well I find that unlikely,
but even if they did catch up to where Tesla was today, Tesla would be at another level tomorrow,
it is a moving target. The Chinese might be able to get into some markets with lower cost vehicles,
that remember don't make a profit, that Tesla is not already established in. Also bear in
mind this Chinese EV series has mainly been focusing on the US, as there was a narrative
that the Chinese EVs are going to storm in the US just like the Japanese cars did in the 70s.
I have explained how this is a different scenario,
and given plenty of reasons as to why. But history does often not repeat like people think.
I have also gone through the best selling Chinese EVs, and pointed out how many of
them don't even count, as they are not legally able to be sold in the US, are plug in hybrids,
or they have about 50 miles of range, which simply isn't suitable for the US. This is a big deal,
the numbers are being distorted, no one else seems to be mentioning this either. There are
a lot fewer Chinese EVs than people think. Of these Chinese EVs, only about 10% of them
are suitable for the US market. But the majority of these are going to be sold in China anyway,
and then the exports will have many other countries to go to other than just the US.
As in, there are not many Chinese EVs that could even be exported anyway.
Also all these cars are going to be sedans, as the Chinese cross overs, what with being bigger
and heavier and still using LFP batteries, get even less range, which makes it extra hard again
to compete in that category, which happens to be the biggest selling segment of cars in the US.
Of course pick up trucks would be even harder for the same reason. And if they
use nickel batteries for more range, then they can't ramp up that battery supply.
I talk about the BYD Han a lot, as I believe that is basically one of the only Chinese EVs that
might be suitable to some of the US market. But it is incredibly slow, except for the performance
version, which uses nickel batteries, is very expensive and can't be ramped up.
So if the Chinese were to make it into the US, then they would only be
in the sedan and perhaps compact market, leaving out the largest market segement,
cross overs and SUVs. Yes, NIO does offer them with good range, but they have good
range because they use nickel batteries, which again, they can't ramp up fast enough.
Also I should address the Polestar as the other Chinese acquisition, along with MG.
Well the Polestar doesn't count, because it is using nickel batteries, not LFP,
which means it simply can't ramp up as fast as legacy autos can, as they don't have their own
nickel battery supply. Remember nickel batteries are very scarce, all manufacturers who want nickel
batteries have realized, they have to spend billions on making their own battery factory.
The other option is using CATL's LFP batteries, which are far more abundant, and continue
to be too. There will be enough LFP batteries for these manufacturers. But the issue is, you end up
with cars that, according to market research, are not sufficient for the US market in performance
and range. Hence why the US legacy autos are all starting their own nickel battery factories.
Yes, XPeng has had tremendous growth of about 200% YoY, but they produce 1/10
of what Tesla does, and Tesla is also about to see some tremendous growth next year.
This doesnt mean they will grow 200% next year. Remember we haven't seen anyone else hit volume
production yet. Do you really think XPeng is going to be the magic manufacturer that finally does?
The XPeng might look like it has a good range, but they use nickel batteries for their longer
range models. This simply means, they can't scale up. The advantage of the Chinese EVs
is they are not battery constrained as they use LFP batteries. That is their advantage, they are
cheap and abundant, but result in poor range and performance. The long range XPeng vehicles use
nickel batteries, so they can't scale up. The XPeng P7 LFP has under 205 miles of
EPA range. This may be suitable for some people in the US, but it's nearly $40,000 in China without
subsidies. Then add on the cost of importing it to the US with tariffs, its still a lot more
expensive than a Tesla Standard Range Model 3, and the Tesla has a lot more range and performance.
But perhaps there is a budget market I am not thinking about, maybe the sub
$20-25,000. Perhaps some compact EVs with just 100 miles of range. Maybe something like the BYD
Dolphin perhaps. Yes, that could be a market, I mean Nissan manage to sell about 15,000 Leafs
a year in the US. Ok, that's not a massive number of sales, but it starts at $27,000,
oh and elligible for a $7,500 tax credit to, so is already essentially $20,000,
but that does get 150 miles of range still. The Dolphin gets 130 miles of range, EPA,
but is over $20,000 excluding subsidies. Right, don't forget, there already are cheaper
alternatives to Teslas, that already don't sell well, but established brands. So who can say?
Anyway, this will be something to look for, watching to what level the Chinese EVs really can
ramp up. Especially for their cars that do have above 200 miles of range, which may be adequate
for some consumers. But then it might be so few, that economies of scale become really hard,
especially when you factor in service centers and infrastructure, along with advertising.
There is also one other major issue, that the US might have with Chinese EVs. Well do you remember
how the US banned Huewai phones? Becuase the CCP was supposedly listening to everyone? Well guess
what, these cars can listen and see everything you do too. There maybe some major privacy issues that
will concern the US government here, and they may even simply ban Chinese EVs as a result.
That may be a bit extreme, but I do like to think of as many possibilities as I can.
Anyway, I must say I was surprised and somewhat disappointing with some of the comments, but as
I say, I am not a cheerleader channel, I am not hear to simply agree with what other people say,
I want simply say, this person is smart because he thinks Tesla is going to be big,
or this person is stupid because he thinks Tesla is going to fail.
I make my own opinion on everything, otherwise what's the point of listening
to me. I will only ever offer my own unique perspective of things and how I see them.
Ok, to summarize, if Chinese EVs do try and make themselves a decent market share in the US,
either way I think it will be difficult, and to be honest I don't know how they can. Gasoline
prices becoming absolutely crazy, maybe the most likely way, but even so, they are not making close
to enough vehicles today, and they obviously need to ramp up, and Elon tells everyone just how hard
ramping up is. And again, the Chinese are still not making EVs at a profit, so ramping up more
could just mean faster losses, especially if they have to drop their prices to compete in the US.
It's not that I don't want them to succeed. I believe in the mission,
I want as many EVs out there as possible, including legacy autos.
I am not trying to say I want it all to be Tesla, I really, truly don't want
that. I think competition is imperative, a society needs choices in products to buy.
But it doesn't change anything, China will still make as many EVs as they can, and likely sell
them, its a big world, and they are targeting price points from $5,000 to $15,000 too. Tesla
isn't touching these markets, until they bring out Robotaxis. All I have been saying is that Chinese
EVs might not be suitable for the US. I think there are much easier markets for the Chinese EVs.
Anyway, that is my conclusion on the Chinese EVs. I think in light of all this,
I need to re-evaluate legacy autos again.