Now this isn't meant to be another video that goes against all the rhetoric of how the Chinese
EVs will dominate the global vehicle industry.
This is just another video of me explaining how as Tesla investors, the Chinese EVs pose
very little threat to our investment.
Yes, the Chinese EVs appear to be arriving in droves.
But so do Teslas.
Both are simply compressing the legacy industry.
CHINESE CANT TOUCH What I plan to outline in this video is how
although a lot of Chinese EVs are popping up, Tesla is in a market segment that the
Chinese can't touch Tesla on.
In fact legacy autos have a better chance than Chinese.
You see the reason the Chinese EVs are growing so much is because the type of battery they
use is being produced at such exponential rates.
And these cell types are only produced in China.
I am of course referring to LFP cells.
The vast majority of Chinese EVs are all using LFP cells.
Yes some are using nickel cells, and we will get to them, but all the growth in China is
happening with LFP.
But we are only seeing them producing ranges of around the low 200 miles of range, and
this is always with a sedan, if they ever went for anything larger, then it would be
sub-200 miles, with LFP cells.
Which wouldn't feel like much range.
I think consumers have somewhat dictated the minimal requirement they are looking for in
an electric vehicle.
Ok sure BYD do have a cross over that gets just over 200 miles of range, but they achieved
that by making it the worst car I have driven in my life.
I say this without my Tesla fanboy hat on.
And I realized why, it's front wheel drive, and has the additional torque that an electric
motor provides, creating even worse torque steer than an ICE front wheel drive.
However, I later realized why it was particularly bad, it's because it is also lacking the weight
of an engine in the front to hold front wheels down on the road, thus traction is terrible.
MODELS In other words LFP cells do not work in SUVs,
barely even cross overs, as the range would sub 200 miles, in fact in a large SUV they
will be even lower.
The same would be true for pick up trucks, simply too big and heavy for LFP to get any
range.
And the same for any large luxury sedan.
Of course a van or minivan is too large too.
And if you think the range in them would be bad, then the performance would be dangerously
slow.
As if they weren't already dangerous enough.
Right bad performance, so we would also rule out any type of sports car.
And if you wanted some reasonable range, or power, then it would mean more heavy LFP cells,
which would then compromise handling, and braking.
Another reason LFP cells can't be used in a performance car.
LONG RANGE Now these are just various versions of vehicles
that are simply not really practical with LFP cells.
Or what the Chinese can offer, hence why they simply don't.
If they could they would, as we know SUVs, cross overs and pick up trucks are the biggest,
most profitable types of models in the US.
And as NIO is actually a Chinese manufacturer that does use nickel cells, they actually
offer 4 cross over and SUV models, because they can manage an acceptable range.
But we are just talking about types of car, there are other various market segments, like
price, safety, features as well.
But with electric there are new segments too, the most obvious important one being range.
Long range, medium range or short range EVs.
In the US it would seem that consumers there really want a minimum of around 300 miles
of range.
Tesla are scraping that limit with around 280 miles with the Model 3 RWD, but the Model
Y standard range is not for sale in the US for this reason.
LFP cells can't hit long range, and therefore that means that Chinese EVs can also not hit
long range.
They are simply leaving out this massive market segment, and by extension, essentially the
US market.
But it gets worse too.
A lot of the population in the US have cold winters, and as for Canada, well, even colder.
Which means even if a North American consumer did opt for 220 mile range Chinese EV, then
it would only get that much range in the summer.
When winter comes, they would lose a lot this range.
Sure Tesla have done very clever things to mitigate this as much as possible with their
LFP batteries, but even Tesla's are affected by the colder climate.
However like I said, Tesla start with 280 miles, the Chinese are at around 220, which
is going to drop to sub-200 miles, or even more.
So what may have been practical in the summer, may not be practical in the winter.
And you want your car to work all year round.
And these Chinese cars also have slower charging speeds on top of that.
So you get less range, meaning you have to charge more frequently, and for longer.
NICKEL CELLS Yes, there are some Chinese brands like NIO
that use nickel cells, and there are even some BYD models that use nickel cells too.
But they are still limited to the amount of nickel available.
They also add to the cost of the battery a lot too, and they are no longer able to compete
as a low cost alternative so much.
But the point is, the Chinese do not have a path to scale up their nickel cells to the
masses, unlike Tesla, and potentially legacy autos.
LEGACY Legacy autos have something the Chinese EVs
don't, brand power, supported by billions of dollars of advertising, some with over
a century of heritage, with prestige and class that the Chinese will never have.
All of this means the consumer is willing to pay more, all else being equal.
Which means legacy can thus afford to pay more for nickel cells, than the Chinese.
This is also why I think legacy will have a chance against the Chinese too, as they
have invested into nickel cells, as they know their customers want longer range vehicles.
And legacy are bringing out the dog and pony show, with hundreds of billions of dollars
being spent on EVs, as if it means something.
But despite all that collective spending, they won't be able to make enough cells that
go into more cars than Tesla will be making.
Just do the numbers.
We hear about these massive factories the likes of Ford are building, well building
with their partners like SK Innovation, you know, because batteries are not legacy autos
business at all, no engines are.
Anyway Ford plan on having about 60 GWh of battery supply, they actually claim by late
2023, but obviously it will be later than that.
But still, that's only 600,000 vehicles.
These are not big numbers.
Tesla should be on about 5 times that just in the US by around that time, with likely
another massive factory soon to come online, or maybe even 2 more factories in North America.
And of course most legacy are just cannibalizing whats left of their ICE business.
Using their best brands like F-150.
People think that it will be between the Chinese and legacy to compete over what Tesla leave
to compete over, but it's not.
China can only make small sedans and compacts with low range, that's their market.
And yes I am sure people will comment about that's what the Japanese did, and sure, they
did, but Ford, GM and Chrysler still remained, they just got a bit bruised.
Besides legacy will also eventually have their own LFP cells too.
COMPACTS Perhaps it will be the EV compact that they
will all try and compete on, likely the battleground will be in Europe.
Legacy may find it tough to compete with their compact in China.
Compact cars aren't so popular in the US.
Whereas they are very popular in Europe, partly due to the lower cost in fuel, with such expensive
gas prices, but also smaller roads, and less convenient parking.
There will of course eventually be Tesla's version of the compact too.
SUMMARY I am not try to shoot down Chinese EVs.
They have a massive market called China anyway, I am sure they will sell well.
I am just trying to reassure Tesla investors, that we do not need to be so concerned about
the Chinese eating Tesla's market share, especially in Tesla's home market.
In other words Tesla will continue to have demand.
Tesla has so much demand in the US, and has still barely begun.
There will be plenty more to come, and this tax credit just makes it even more crazy,
and on top of that the Cybertruck.
Tesla owns the larger car market, Tesla own the long range EV market too.
Sure Tesla also owns all other EV markets and segments, aside from the micro and compact
versions until they launch their compact, or Robotaxi.
And yes Tesla will also own the AV market too.
But we don't need to worry about the Chinese taking any of Tesla's market share for those
longer range markets.