Podcast: Ethan Robertson

I spoke with Ethan Robertson, host of Wheelsboy, the leading English-language automotive reviewer in China, about China’s Cambrian Explosion of New Energy Vehicle manufacturers, their intense competition for relevance, and how they stack up against Western and Japanese firms, including Tesla.

Wheelsboy produces the best car reviews I’ve ever watched and if you like this interview, you must check out their YouTube channel. Their most popular video is a review of the Hongqi H9, The Chinese S-Class that looks like a Rolls-Royce and Drives like a…

Some of my favourite videos are:

Hengchi 5: How $300 Billion In Debt And The World's Top Auto Designers Created A Mediocre Car

The World's Cheapest EV Convertible Is Delightfully Awful (Wuling MINI EV Cabrio)

Gaze Upon The Face Of The Trumpchi M8 And Tremble!

MG Cyberster: MG Is Back, Baby!

New School vs Old School- Li Auto L9 vs BMW X7

Ethan also recommends listening to the China EVs & More Podcast.

This transcript has been lightly edited for clarity:

Graham Rhodes: My name is Graham Rhodes, and you're listening to the Long River podcast. My guest today is Ethan Robertson, host of the Wheels Boy YouTube channel, which covers the newest, coolest, and wildest vehicles from the Chinese car market. We're going to be talking about everything Ethan has learned as an automotive enthusiast and reviewer of Chinese cars, discussing their development, features, the intense competition he observes in the market, and where he thinks they're headed as they begin to reach North America, Western Europe, and beyond.

Ethan, I'm so lucky to have you on the podcast today. Welcome.

Ethan Robertson: Thank you very much for having me, Graham. I really appreciate your appreciation of my videos. We put in a lot of time and effort, and I always love to hear that people are enjoying them.

The production is first-rate, and the niche that you've found is just really interesting. So it's a delight to welcome you today. I guess we should start with your origin story, Ethan. How did you get to China and how did you start reviewing Chinese cars?

The short version is that I studied abroad in China when I was at the University of North Carolina, Chapel Hill. And when I graduated, I said, "I want to go back to China, but I don't feel like I want to go the path of being an English teacher," and I chose instead to do a master's degree at Wuhan University. Well, everybody knows Wuhan now; prior to 2020, I had to explain where it was, but now most people have a pretty good idea.

Very soon after starting my first job in Shanghai, I had an incredible stroke of luck. I was having dinner with a friend of a friend, and he commented, "Your Chinese is pretty good. I've got two Chinese friends who are members of the automotive media, and they're looking for someone who can do a Chinese language review—a foreigner who can review a car in Chinese," and I said, "I was born for this."

That was in the spring of 2019, and between 2019 and 2021, we built up our Chinese language platforms and our following there, and then also on YouTube. I'll never forget: it was April 11th, 2021, when I went full-time, quit my marketing job, and started doing car reviews full time, fulfilling my parents' greatest wish for me, which was to become a YouTuber.

So that was the birth of the Wheels Boy channel.

That was the IP, so to speak. Wheels Boy was actually a preexisting thing. My two partners had already started the company in mid-2018 before they found me. But I have to give them a lot of credit for realizing that they were relatively late to the game at that point when it came to automotive media in China, and they needed a way to separate themselves from the crowd.

And my friend, partner, and cameraman, editor, whom I need to give a big shout out to—his name is C Man. C Man is the beating heart of the operation. Everyone is vital to it, but I have to say he is the guy who makes sure those videos look TV quality.

He was the one who recognized they needed something to separate themselves, so they went on the search for someone like myself, who was a foreigner who would bring a different perspective, but could also speak to a Chinese audience, quite literally, in Chinese. And so it was later on when we started the YouTube channel and, obviously, it expanded our reach abroad, so to speak.

So I guess YouTube is something of a pivot, like turning your megaphone from the Chinese market outwards towards the rest of the world. What's the story that you want to tell with Wheels Boy?

That's a great question. I think that I know there are people who see our videos and feel that our intention is to promote Chinese automakers or the Chinese automotive industry. And I wouldn't put it that way. I think I would prefer that people understand it as, I just think that I have been and will forever be an automotive enthusiast, and I think that what's happening in the Chinese automotive market is absolutely fascinating.

The amazing speed with which these companies are developing, the amazing pace in terms of powertrains, interiors, and exterior styling, and some of the fascinating risks that they're taking that make their cars just cooler or more interesting to hear about than some of the things that we're getting in Western markets like my own United States.

So I think it's just a window. I want to create a window into what's happening there for people like me, who I know would find it interesting.

I have to agree with you. I feel like we're in the midst of a Cambrian explosion here in the Chinese auto market. And there's so many interesting things happening. And it's just fascinating to watch.

And again, you're just in the right place at the right time. Ethan, last year was a watershed, and China surpassed Germany to become, I think, the world's second-largest exporter of vehicles. Can you give us a brief history, if you can? Where did this come from? It's clearly not an overnight phenomenon.

No, you're absolutely right about that. I will try not to read the entire Wikipedia page for the history of the Chinese automotive industry to you, but the short version is that cars and foreign manufacturers have been in China for over a hundred years. You had Mercedes Benz and Ford, who had factories and facilities inside of China, but what China would refer to as the war of resistance against Japanese aggression and fascism meant that they all left. Then, following the creation of the People's Republic of China, they weren't very interested in bringing in Western manufacturers. The Chinese automotive industry during the 50s, 60s, and 70s was essentially based mostly around designs they would have gotten from Soviet Union companies.

They borrowed designs and used those. It wasn't until the reform and opening up happened in the 70s and 80s that the Chinese car industry, along with every other industry, really started to explode. The first foreign manufacturer to come in and create a joint venture, I believe, would have been Volkswagen around the mid-80s. They created cars like the Audi 100 and the Volkswagen Santana, which was the Volkswagen Passat sedan in countries like Germany. A car that, by the way, was sold in some version or derivative up until maybe a year or two ago. They just kept pumping them out.

It's amazing. So, the late 90s is when the Chinese automotive market really started to draw attention. By the year 2000 or so, they were making only 2 million vehicles a year, and it just went even crazier after that. By 2009, they had surpassed the US car market as the largest passenger vehicle market in the world.

And as you said, they recently surpassed Germany as the second-largest exporter, and now, more recently, I believe they actually finally passed Japan as well. During a certain period of the year, Japan exported 2 million vehicles and China exported around 2.2 million. So, they are, by some metrics at least, the largest exporter of vehicles in the world right now.

So I think the aspect that most of my fans and the viewers of my videos are most interested in is the development of China's new energy vehicle market. This term isn't really used abroad, but I actually think it's pretty useful because new energy vehicles include everything from plug-in hybrids to pure electric vehicles, to hydrogen vehicles—any of these things that aren't a pure gas or petrol internal combustion engine vehicle. And that's definitely been what has vaulted the Chinese car industry into the global spotlight, for sure.

So you touched on the original structure of the car market, where foreign firms entering China had to participate through joint ventures with local partners. Volkswagen is such an interesting case because, I think at one point in the late nineties or early two thousands, it had a market share approaching 50%, if I remember correctly.

Which just really was emblematic of how dominant these foreign firms were. They had the brands and the technology, and it felt like the local car manufacturers who were brave enough to compete against them really had to carve out niches for themselves at the lower end of the market. And now, as you're describing, they've cottoned onto something new, which is new energy vehicles.

And I'm just wondering, why did they choose to go that path? Because it definitely felt maybe 10 or 15 years ago that was playing in hard mode. This was new technology and far from widely adopted.

Oh, that's a really good way to put it, playing on hard mode, because you're absolutely right.

I think that the first part of what you were saying there, which is completely true, is the explanation, or rather the answer to the question. Essentially, what happened around 15 years ago is that Chinese manufacturers, despite their best efforts, were consistently losing market share to foreign brands.

Now, these were foreign brands that they often had joint ventures with, so these foreign products, let's say it's a Honda, but it's a Guangqi Honda and it is made by the joint venture company. So it's not as though the Chinese side isn't making any money off of it, but it's not forwarding or building the Chinese automotive industry in the way that the central government wanted to see.

Understandably, they recognized the fact that if they just continued to be a factory, then they would never really achieve any kind of true status in the global automotive market. So it was with the recognition that they had zero chance, essentially, of catching up on the nearly 100-year head start that these foreign brands had in the ICE vehicle market. If Mercedes Benz has been making cars since 1889, it's very unlikely that Chinese manufacturers are going to be able to catch up to them in a few short decades.

So what do you do instead? They looked at the landscape and, I think, very wisely as it would turn out, they said, we think that these new energy vehicles, these hybrids, pure plug-ins, are going to be the future. And so we're essentially going to attempt to leapfrog everybody. We're not going to completely stop making internal combustion engine vehicles, but they really put the full muscle of the central government behind it in the form of subsidies for buyers, subsidies for companies, and other various incentives to encourage manufacturers to make and develop new energy vehicles and for buyers to purchase them.

So it was a full-court press, as you might say, from both the supply and demand side to try and guide the market towards an area where they knew they were going to have a real chance of success, or more of a chance.

So you can't compete against traditional cars. You've got to find an orthogonal vector, and they chose new energy.

So there are a growing number of well-known Chinese brands now, like BYD, Xpeng, or Nio, but watching your channel, it feels like there are even more brands that we've never heard of.  Things like Denza, or my favorite, Tank Cherry, Huval, Zeker, Human Horizons, Rising, and I could go on and on.  I use the term "Cambrian explosion" to describe what's going on right now.  And it just feels so apropos to all these hundreds of different people vying for survival, essentially, because there's going to be a winnowing out at some point.

If you roll back the clock to America at the dawn of the 20th century, there were probably an equal number of car manufacturers then.  But then by maybe 1925 or 1930, it had consolidated down to 3. So we're at the really fun stage now where we're seeing all this creative risk happening. And that's exactly why I was hoping to talk with you. So if I can turn the conversation to the cars themselves, what are the vectors on which people try to differentiate themselves and build their brand and appeal to consumers? Tell us a little bit about how these cars compete with each other in the market.

The short answer is everything is up for grabs, but to dig down into it, I think that one area that is very interesting and one that is not as appreciated by foreign manufacturers, which will help lead back into why foreign manufacturers are struggling to compete here in China at this point, is what they call connectivity. So this is an aspect of a vehicle's experience that includes the main screen, as we would call it, Bluetooth, the ability to connect your phone to it, to use apps on the screen. How useful are those apps? How good is the voice command system in the vehicle?

And that's something that foreign manufacturers are very far behind on. And one of the reasons for that is because they didn't appreciate how important that would be to Chinese consumers. I think that Chinese consumers differ in certain ways from, to paint with a broad brush, Western consumers.

I'll speak about the United States specifically. With US consumers, it's not as though Americans don't care about being able to connect their phone with Bluetooth; it's just that they will have Apple CarPlay and be fine with it. Chinese cars don't have CarPlay. Instead, they have their own, either developed in-house UI and UX, or they will use or cooperate with somebody like Baidu or Huawei to design an operating system for their vehicles.

And, frankly, they're just... The word we use is smarter.

Would you agree that there's a conflation in the popular perception between electrification and digitization? But really, these are two different things.

Yeah, I think that's a good way to put it. I completely agree with you.

You could have, as is the case with these tiny micro electric cars, like the Wuling Mini EV and all these other ones. The Baojun E300, actually, is pretty smart, but you can have a "dumb" electric vehicle. This is something I run into all the time with these EVs, and it's not just Chinese EVs, but the reality of the situation is that when the powertrains are all electric and they're all very fast, the difference between them becomes a little blurry. Obviously, the driving experience starts to blur between the different vehicles. And so one of the great ways that they compete with each other is through things like connectivity, and it's truly one of the biggest battlefields: software. I have a friend, Tu Li, who has another podcast, not to promote someone else's podcast, but I think if your audience is interested in learning about the Chinese automotive market and all of that, then the "China EVs and More" podcast is a great choice.

Just to say that he harps on software and software development. And he points out that foreign manufacturers, frankly, just don't get it. They haven't developed talent in-house to be able to develop these connected vehicles that Chinese consumers want. And considering the fact that China is, far and away, at this point, the most important automotive market in the world, you really have to do that in order to compete.

And I think we saw that culminate last year in the dismissal of the CEO of the Volkswagen Group after repeated delays rolling out their self-developed OS. And it just feels like, if you consider a car to be a mechanical product, you're missing the boat. I was at JoyCon in Shanghai in July this year, and there were just tons of EV manufacturers showing their latest cars. And it felt like these were more entertainment and lifestyle products on wheels. And if you don't have that core skill to design the software and the OS, it's just very hard to iterate and add the features and keep up with everyone else.

Absolutely. You're absolutely correct. I think that, and it's a very difficult thing to do because it moves so incredibly quickly. The time that it takes you to hire on a bunch of really smart people and talent to create the brain trust you need to develop those things, everyone else is not standing still waiting for you. They're still moving forward. So it's a really difficult game of catch-up.

It's interesting that the term Chinese automotive companies like to use when it comes to the interiors of their cars is "third space". So there's your home, your office or your work in general, and then there's your car. And those are the three main spaces that you will spend time during the day. And so they try to include features within the vehicle that will make you more productive, if that's what your goal is in terms of work, or more relaxed, if your goal is to have it be more like a home environment. So that's why so many of these Chinese cars at this point, the level of standard features on Chinese vehicles, regardless of powertrain, whether it's an ICE vehicle or an EV, is somewhat mind-numbing.

Honestly, I can't remember the last car that I drove that cost more than 20,000 USD, which is about 150,000 RMB, that didn't have at least heated seats, but it also probably had heated, cooled, and, if it's over 200,000 RMB, it ought to have massaging seats even. It's truly amazing. And the reason for that is because the competition is absolutely cutthroat. As I keep saying, the development cycles are so short and what sets you apart, your big selling point right now, is going to be something that everyone's going to have in six months.

So you've got to keep innovating so quickly. And that also has been an interesting development that I think people have been hearing about is the price war that's going on in the Chinese market, specifically across all powertrains. Cars that used to be, say, 30,000 or roughly 200,000 RMB are now being sold for 130,000 RMB or less than 20,000. It's truly mind-numbing, honestly. Every time a new car comes out, my partners and I look at each other and say I think that car is going to cost the equivalent of, we'll say it'll start at 250,000 RMB, then it hits the market and it's starting at 210. And it still has a Level 2+ driver assistance system. That's essentially the Tesla level of driver assistance, standard. It's not a 10,000 option on these cars. It's a standard feature.

I guess in many people's minds, there's a trade-off between price and quality. But do you think that's a fair framework today? Is that still valid? Or do you think we're going to get to the point where you can have both a good car and a cheap car? I'd love to hear you answer that by referencing things like the appearance and the features as well.

I think what makes these Chinese manufacturers so interesting, whether it is exterior design, interior design, features, or feature mix, is the risks that they're willing to take to gain attention in the market. That really is, to a greater or lesser extent, what it comes down to when you talk about the interior of these Chinese cars. I often joke in my videos that the gimmick for a particular car is that it does something specific.

Take, for example, the Voya Free, an ERAV or EV SUV from a brand called Voya, which is made by Dongfeng, one of the largest state-owned Chinese automakers. It has a dashboard with three screens embedded in a single pane of black plastic that can raise and lower into the dash by about four or five centimeters. Is it useful? Frankly, no, but it's something where a Chinese consumer could walk into an experience center for Voya inside of a mall and be intrigued.

These experience centers for Chinese startups and new energy vehicle brands are often located in malls. Customers don't want to go to a dealership to try a car; they'd rather check out a car while they're at the mall for another reason. Something like this dashboard feature is a sales tactic that can easily be shared in a short TikTok video, grabbing people's attention and getting them into seats. The reason they have to do this is that the competition is so great that it's not enough to just have a solid EV with decent range, power, and a quality interior.

Foreign manufacturers often don't understand this. I've had conversations with a large foreign automaker where their engineers and marketing team disagreed on what features would attract attention in the Chinese market. While it may seem like gimmicks, to answer your question, I think we're already at the point where you can have a good quality car that's cheap. The quality of a vehicle that you can get from a Chinese automaker for around 150,000 RMB, or a little less than 25,000 USD, is impressive in terms of features, range, and comfort. However, if you were to compare them to foreign competitors, they may not match or beat them in every aspect. The area where these Chinese cars still tend to fall short is usually the driving experience.

Yes, I was going to ask about that.

Yeah, it doesn't mean that they all drive poorly. It doesn't mean they ride like ox carts and handle like tugboats. It's more a matter of degree where you're not going to have the same level of quality or weightiness to the suspension between, just as a random example, an equivalent sized BYD and a Volkswagen. Now, the difference isn't night and day. It used to be, quite frankly, four or five years ago. Even if you jumped out of a small hatchback from BYD and then jumped into a Volkswagen Polo of the same size, you would say, "Oh my God, the other one feels like it's made out of tin cans," but that's not the case anymore.

Still, there are areas in which they need to improve, whether it's ride, handling, or steering feel. They definitely aren't all the way there, but when they do get there, and they will, I have no doubt, they will either create a market in which their type of vehicle is the one that people actually want, or they will find a way to successfully imitate or achieve the level of quality and sense of quality that these foreign cars can offer because they have many more decades of experience producing, developing, and tuning vehicles.

What makes getting the feel of a car, the feel of the drive, so difficult to perfect?

I think this is interesting. I had a conversation with another one of my partners, a guy named Justin, who started my channel with me. Both he and C Man, who I mentioned previously, have extensive experience in automotive media before they ever met me. Justin wrote for multiple Chinese publications, and they both actually produced content for Chinese branches of German automotive publications as well. Justin's thought on it is that there is a lack of institutional knowledge in Chinese manufacturers.

If you go to a General Motors, a BMW, or a Toyota, and visit their engineering departments, you will almost inevitably find that many of the engineers working on the cars have a much longer history with vehicles. Often, and this is just my impression, you'll find more of them participating in autocross or track days with their personal vehicles. They're people who are really engaged with and more knowledgeable at this point about the desirable dynamics in a vehicle. This isn't to say that there aren't talented Chinese engineers. I think all the Chinese vehicles I've driven are testament to the fact that there are thousands of them. It's just a matter of building up this institutional knowledge and gathering people with great backgrounds that can make these vehicles what they are.

Just for conversation's sake here, I drive a third-hand 2013 BMW X5, and it's a nice ride. It's very tall, which gives my wife confidence on the road. The door has great heft, and it makes a nice sound when you close it, that kind of thing. And it handles superbly. But I wonder now if that's becoming a luxury that fewer people are willing to pay for because when I think that I could buy a new car for the same price or less than I paid for this one, and that new one might come with heated massage seats, LIDAR, air suspension, multiple climate environments, or you name it, do I really want to pay extra for something like that perfect ride handling? So, I wonder if the market's going to fragment along those lines as well. Or perhaps it already has.

There's a very specific video that I would recommend your audience check out from us, and it is a comparison video we did between the LiAuto L9 and the BMW X7. It is a genuinely eye-opening video. I know I have friends that work for BMW, and many have said, "I have forwarded that video to every single one of my coworkers to try and get them to watch it." Because it puts in context what is happening in the Chinese market. To summarize, the BMW X7, as you said, handles superbly for such a huge SUV; it rides superbly and the seats are among the most comfortable I've ever sat in. But in China, specifically in the Chinese market, it costs over a million RMB, which is about $145,000. I think as tested, it was $165,000.

Take the LiAuto L9, a vehicle of equivalent size that has not just two but, I think, gigantic screens in front. It also has another huge, I think, 15-inch screen in the back. That screen is where you can sit in the chairs in the second row that are heated, cooled, and massaged. All the first and second row seats are heated, cooled, and massaged. You can use really advanced, very easy-to-use gesture controls to control the large screen in the back row, which makes it easy for children to use without having to touch the screen because they can't reach it. The seats have built-in speakers so that you essentially have a 4D movie experience, like one of those 4D movie theaters where the seat buzzes with the movie. It's got LiDAR, and it's got a driver assistance system that LiAuto is now rolling out, what they call City NOA or City Navigation on Autopilot, which is essentially like Tesla's self-driving beta. And the car costs literally half, less than half as much as the BMW.

Now, does it ride as well as the BMW? It does not. Does it handle as well as the BMW? It does not. The seats on the BMW are much more comfortable than the LiAuto because the LiAuto is essentially a sofa. But if I go to a Chinese consumer and say, "Here's what you get for this, and here's what you get for this, for twice as much," I think that an increasing number of them are saying, "What the heck am I doing spending twice as much on this vehicle that is frankly a worse family car?" LiAuto nails creating the ideal vehicle for taking your family, your partner, and your children around, making sure nobody has any complaints, whereas the BMW just does not do that.

Some people in China, I will say, because this has to be said, I do think that there aren't that many people in China, to this day, who can afford a million RMB BMW who would "settle" for a LiAuto. Now that's changing as perceptions of Chinese brands improve, but it's worth pointing out that I do not think this mythical customer that I pointed out exists in large numbers because the BMW badge is still very powerful. But frankly, that's not going to last forever.

This makes me think of that meeting you described where you have the engineer touting a feature that the marketing guy just says isn't relevant, and perhaps the things that foreign OEMs used to compete on just aren't that relevant anymore. And for a lower price, you're actually getting a lot more when it comes to these newer features, like connectivity and smart features. I think that's really interesting and probably something people in the West don't appreciate as much.

No, and I think that one of the reasons is that there are differing expectations of what a car is going to have when it comes to Western and Chinese consumers. One small example that I always like to dig into, where Chinese cars truly exceed all of their foreign competition here in China, is voice command systems. It's my perception that many people in the West use voice commands, even in cheap Chinese vehicles. I don't mean cheap by Western market EV standards of $40,000, but $15,000 USD.

Those vehicles' voice command systems are accurate, useful, and efficient. They're not perfect, but some get really close, allowing you to do something like put in a navigation destination. They're good enough that they understand my level of Chinese. I don't think these foreign manufacturers can compete. Just recently, I tried the voice command system in an Audi Q4 e-tron, an all-electric Audi, and it was like having a conversation with the dumbest person you've ever met. The system couldn't get anything I said correctly, and its response times were so slow that I often thought it didn't hear me. Then, four or five seconds later, it would come back with an incorrect answer.

Or take the Kia EV6 GT, a fine-driving, very fast EV that received a ton of praise in the West. I drove it here and immediately knew that it was dead on arrival in the Chinese market. I wrote a near-rant-level Instagram post about it, outlining all the ways in which this car won't succeed in China because it's not a good value. This car receives a ton of praise in the West, where they focus on aspects like handling and driving dynamics, which Chinese consumers don't care as much about.

Many foreign manufacturers don't have the capacity to provide Chinese consumers what they want, whether they've been trained to want it or want it naturally. Either way, they're not doing a great job of it at this point.

It'll be interesting to see once these cars really begin hitting markets in North America and Western Europe if they satisfy needs that consumers there have had unmet for such a long time too.

Yes, I have to say, if you just base it on the comments section of my YouTube channel, there is definitely an appetite for what the Chinese are selling, whether it's from Western consumers, consumers in Africa, South America, the Middle East, or Southeast Asia. We have a very diverse audience. I think our largest audience by percentage is the U.S., but that makes up anywhere from 12 to 15 percent of our audience. The rest of it is pretty much the entire globe, except for Antarctica. Maybe if I really dug into it, there's someone down there watching our videos, I hope so.

The appetite for affordable, practical, and yet technology-filled vehicles is large. In my opinion, those who don't have the appetite just don't know what they're missing out on. One of the interesting things about doing this channel is giving people a window to see what they could arguably be missing out on.

This is a podcast, so people have to use their imagination here. Afterwards, you can go and watch Ethan's videos. But Ethan, tell us a little bit about how these cars look, because on one hand, and I'm going to quote you on this because I think it was so funny, you reviewed the Trumpy MPV and said a battle is underway to see if you can come up with the boldest, strangest, some would say ugliest, design for an MPV. On the other hand, you have things like the new MG Roadster that just looks like a work of art. So let me know what you think about how these cars look and how they feel to the eye.

Sure. The designs are another area in which these Chinese manufacturers know that, with such stiff competition, you can't put out, frankly, a Volkswagen. You can't put out a very mainstream-looking vehicle, even if your vehicle is arguably mainstream, like an affordable EV sedan. Your affordable EV sedan needs to have something about it that sets it apart. For example, tomorrow I'm going to be picking up, or they're going to be dropping off, a vehicle called the Hyper GT. It is a mid-sized electric sedan, but for no other reason than the fact that they needed some way to sell the car, its front doors are scissor doors, like a Lamborghini. This is a car that costs, as far as I can recall, I think the most expensive model is less than $45,000. This is not some crazy high-end vehicle.

The designs that they're willing to do, if I'm being honest, as is the case with the MPV segment, are one of my favorites. I truly have been completely won over by the value of the MPV. The big luxury MPV. I think they're fantastic. I love the concept. I love the execution of them. They're absolutely rolling first-class lounges. But the designs in there, as I said, are a fight to see who can make the most outrageous, the most eye-catching, and the most hideous front-end design, and that somewhat applies to almost every other segment as well. It is a matter of creating something that is going to get people's attention, and the attention doesn't necessarily have to be all positive.

It can be polarizing, and that results in some designs, like anything from HiPhi. I'll pick on the HiPhi Z specifically. It looks like something from Blade Runner, something from a semi-dystopian but still pretty interesting future. It's got LED panels, not just on the front, but also LED grids, matrices, where you can display simple graphics like a thumbs up or a smiley face, or in the case of the panels on the doors, you can actually display words and letters. So you can send messages; you can't do it while driving due to regulations, but when it's parked, you could have a message constantly playing across, saying, "Don't touch my car." This is true even in lower-level segments.

I think that there are certain cars that have come out in the Chinese EV market that have been hugely influential to global design. I would argue that something like the Xpeng P7, to give Xpeng their due, has been influential. If you think of a lot of these electric cars now, especially Chinese electric cars, you picture a single LED strip that runs along the edge of the hood, and then the headlights are down underneath. That's a look that was developed by Xpeng and has now essentially proliferated to everyone else, including some foreign manufacturers. I wouldn't go so far as to say the tables have turned and now the foreign manufacturers are copying the Chinese. That's not the case. But there are definitely design trends that have been started by Chinese companies for sure.

Where is this all going then? We have all these manufacturers, and you describe it as cutthroat competition. How does it play out? Do you see any leaders emerging or anyone who appears to have a sustainable competitive advantage in the works?

I do think that there are some—disclaimer, my advice should not be taken as investment advice. Oh, of course.

I usually do that at the start of the podcast, but since you're not like an investment analyst, I didn't this time. But yes, this is just a conversation. It's not investment advice. Yes, please heed that disclaimer.

If I thought I had good investment advice, I might actually be invested in Chinese automotive companies. I'm not because I'm a reviewer. That's the main reason. So I try to keep myself separate from having any kind of a financial incentive in any one automaker. But I think there are some brands that are obviously in a very strong position, and most of them, if your audience, those in your audience who are paying attention to the Chinese automotive market, even casually, would have heard of them.

The giant in the room at the moment is, of course, BYD. You mentioned previously that Volkswagen, and I think that would have been the Volkswagen group in general, had an incredible market share in China, and they have watched over the course of the last two years, but especially the last year, that market share has been devoured. And it's not just BYD, but BYD did pass Volkswagen this year, or at least in the first couple quarters and should for the entire year, pass the Volkswagen brand specifically, not the group, in outright sales. And that is, I think a lot of people in Wolfsburg, Germany, are really sitting on the edge of their seats, very scared right now, because just how quickly the tables have turned essentially.

So BYD is really poised to be in a great position. They're obviously already preparing to be exporting a number of their models, their pure electric models. They've got some that are already in Europe, but frankly, they're cartoonishly overpriced.

And, a little bit of inside baseball, I spoke with the head of global PR for BYD. We had a dinner when the Shanghai auto show happened in which they invited myself and other media to come and to meet with him. And obviously, they wanted to pick our brains about what we thought about the brand and what they were doing and stuff. And he made the bold decision to open up the floor to questions. And one of my colleagues in the industry said, "Why is your BYD Han sedan, a car that costs 250, so maxing out at a little over 45,000 USD, priced at 65,000 Euros in the European market?" And his response was, he hemmed and hawed a little bit, but he said we just don't want to immediately have the cheapest offering on the market.

And I get what he's saying. They don't want their cars to be sold based on price alone because that's frankly what everyone expects the Chinese manufacturers to do—they expect them to come in and do what they did in so many other industries like electronics, where you have a CD player, which everyone still uses, of course, and the one from Sony costs 50 and the one from China costs 25. They didn't want to use that strategy, at least at first. But they are coming to market with more affordable models in places like Australia, South America, the Middle East, and all over.

Probably the biggest vote of confidence that I can give is that our company vehicle is a BYD. In places like Australia, and we needed a car that fit our needs and was pure electric. So we could drive it where we wanted to in certain restricted areas of Shanghai. And we chose the BYD, so take that for what it's worth.

The other manufacturers to go a little bit higher up, more upmarket, there's the big three again. These are ones that your audience has probably heard of. There's the three.

If you'd have asked me, say, six months ago, do I think Xpeng is in a good position? I would've said no. To be honest, I think their last few vehicle launches, and I've said this in my reviews, the last Xpeng I reviewed, I think was the Xpeng G9 SUV, and frankly, the company's last couple of launches, their P5 sedan, their G9 SUV haven't been particularly successful. They haven't been nearly as successful as they needed them to be. But then, Volkswagen comes in and injects 500 million dollars or so to buy a stake in the company, and now things are looking a little bit rosier. Time will tell whether their plans to create a Volkswagen-branded vehicle using Xpeng's platforms is going to be successful. Frankly, I think by the time they get those vehicles out, those platforms are going to be outdated. We'll see if I'm correct about that.

If we want to move on to Nio, Nio's vehicles, I've never driven a Nio I didn't like. I've driven every one of them, from their current Nio ET5 sedan, which is their cheapest vehicle, all the way up to the Nio EP9, which is their... This was the car that they produced prior to actually making production vehicles. It was essentially a publicity stunt where they hired their Formula E, the electric version of Formula One team, to create a track-only quad motor, 1,000-kilowatt, 1,300 and however many horsepower hypercar, basically. And they let me, for some reason that I'll never understand but forever be grateful for, drive that on the racetrack here in China. And that was an experience. It was only on power level 2 of 5, which is about 400 kilowatts or about 550 horsepower, but it was enough. And knowing it was a 3 million dollar car and that only 15 or so existed on planet earth, that was enough to keep me from really pushing the limits, to be honest.

But Nio, the brand, has struggled recently with keeping up the number of deliveries. They'll see a good month and then it seems like they struggle for a while. I do think that they have what it takes to survive in terms of the product and services. Nio is known here in China, and it's going to be interesting to see how they translate this to Western markets, for example. They're known for having the best customer service of any of these brands, more like a Lexus than a BMW, and offer many benefits for their customers.

Yes, and then finally, just to cover my bases here, there's Li Auto. As of now, and I'll get to my big caveat on this in a moment, Li Auto is in the strongest position of the three because their three SUV models, the L7, L8, and L9, are selling like hotcakes here in China. Those vehicles are extended range EVs, which for those in the audience who don't know, is a type of plug-in hybrid in which the gasoline or internal combustion engine in the vehicle is only used to charge the battery or power the electric motors that move the car. This is different than Xpeng and Nio, who are pure EV only. I say right now that Li Auto is in the best position because their current lineup of ER EVs is selling very well, but they are about to begin their transition to pure EVs. That is going to be challenging, as it is for every manufacturer. Can they retain the same customers when they switch over to this pure EV powertrain, wherein they don't necessarily have a distinct advantage over Nio or maybe a competitor from Xpeng as well?

But yes, for your viewers who are in places like Europe, these are three brands that, if you haven't seen them already, you will be seeing for sure in the next couple of years.

Let's use that as a pivot point because I want to ask you, how does Tesla stack up amongst all this competition?

Tesla is undeniably a very big influence on the Chinese automotive market. At this point, the Tesla Model Y and Model 3 are among the best-selling EVs in their segments. In fact, just yesterday, one of my colleagues mentioned that the Tesla Model Y sold around 20,000 units in one month here in China, making it the best-selling electric vehicle by far. They sold nearly four times as many Model Y's as they did Model 3's, and 5,000 plus unit sales for the Model 3 isn't bad for a car that's about to be replaced by a second generation.

The Tesla brand is, as much as we talk about these foreign legacy manufacturers being threatened by Chinese manufacturers, in a better position. That doesn't mean they're unassailable. By being the leading manufacturer of pure EVs globally and being at the top in China, they have a huge target on their back. They were able to out-innovate other foreign manufacturers, but now Chinese manufacturers are adopting their strategies. The Tesla Model 3's minimalist interior and easy-to-use UI for the center screen have been replicated by other Chinese manufacturers. Over-the-air updates, once a unique feature of Tesla, is now common among Chinese manufacturers.

So, Tesla is still huge here, there is no doubt. I do not think that they are in a weak position, but five years from now, they're going to have to work really hard. They can't just rely on mid-cycle refreshes every six years and pass them off as new generations. That won't work anymore. We will see which brand is going to be the one that makes the car that topples the Model Y and Model 3 in China. I don't know which one it'll be yet.

Yeah, that's exactly what I was thinking. You were describing how today's hot feature just becomes a commodity in six months. And you have Tesla with this business model where they try to limit the number of production models to drive scale and efficiencies. But you can correct me, I think the Model Three is four or five years old now, and the Model Y might be a little younger, but still relatively long in the tooth. I just wonder how cars like that stay relevant in a market as fast and quick-changing as what you described in China.

The answer is, I don't know that they will. Tesla's relevance right now is driven by a lot of things. I don't want to take away from the fact that they do have a very good product. They certainly do. They still have a lot of cachet in China. I think one of the things that they've benefited from, the same thing that foreign brands have benefited from for decades, is that, in China, people care a lot about appearance, and they want their vehicle to reflect something about themselves and their status. I've lost count of the number of times I've had a conversation with a Chinese friend or colleague who's looking for a vehicle, and when I recommend a Chinese brand, they laugh at me. A specific example would be a former coworker who was driving an Audi Q5L, a locally produced long wheelbase version of the Audi SUV. When I suggested the BYD Tang, which is 300,000 RMB and a good deal, he was appalled. That was a few years ago, but I think that sentiment still lingers.

For context, there's good reason that Chinese consumers are hesitant about their own brands. For a long time, Chinese brands were poorly built, often copycats, and unreliable. That's only started to change significantly in the past decade or so. So, when talking about Tesla and other foreign brands, they benefit from this perceived quality difference. You get more credibility from driving a Tesla to work, even if it's the same price as a BYD e6, which is the BYD equivalent electric sedan. That's not something that's going to change overnight. It's going to take a long time and a lot of hard work for Chinese manufacturers to change. So, I think it's a safe bet to say that Tesla is going to continue to be a really big player in the Chinese EV market for a very long time to come.

I want to, and this is probably towards the close of the interview, ask about how the way these cars are sold has changed as well. Consumers aren't visiting dealerships; they're going to the mall, being won over by features and a kind of showmanship. What happens to the role of the dealer in this market?

It's interesting. We have, in my office—just sheer luck, frankly—our office space in Shanghai just happens to be a couple hundred meters away in the same office park as a big strip of dealers ranging from Chinese brands like Wuling, Baojun, and Chang'an. Geely and BYD are there with their whole line of cars, even a Toyota dealership, though we don't have much reason to go over there very often. And I've watched how things have changed for these dealers.

I do think that dealers have a future role to play as a sales outlet, but the move towards EVs is something that I know is very scary for dealers because the reality is, when you get down to it, you can't make as much money maintaining an EV as you can an internal combustion engine vehicle, because there are way fewer moving parts to change. There's no oil that needs to be changed. The only thing that you're going to be there for is body damage, issues with batteries, and the three main technologies: the battery management system, the batteries themselves, and then the electric motors. So, you're going to be there to deal with that and then wearables like brakes, tires, etc., but there's just not as much money in that. As much as I want these dealers in the U.S. and elsewhere to embrace EVs, I can't sit here and pretend that I don't know why they're hesitant to do it.

And also, these EVs and these manufacturers—I know from speaking with people who work for large OEMs, be they American or European or whatever—are moving slowly but surely towards more of a Tesla-style, simplified sales strategy, where instead of having thousands of variations of features that you could put together, they simplify it down to a dozen or five. And in the case of American manufacturers, that was a big issue previously. The Japanese, for the record, didn't have that problem. They've always been very simple. But a lot of them are moving down to a simpler kind of sales strategy, which makes it easier for the consumer, but it doesn't necessarily include as much profit margin for dealerships that want to encourage customers to select various option packages and things like that for their vehicle.

So, I think that I don't see many manufacturers, especially legacy manufacturers, going to what we call direct sales like Tesla, where you turn on the app and you just buy the car. You can do that with NIO, for example, but I'm not seeing that happening overnight. But if I was, let's put it this way, if I'm a Chinese dealer, I'm in hog's heaven in that Chinese cars are really coming up. Chinese brands are really gaining a better reputation and they're having appealing products, but I'm also worried because, again, lower profit margins for maintaining EVs and then also a consumer base that is less and less willing to deal with the hassle of going to a dealership and would rather just buy something online like they do every single other thing in their life.

Yeah, I get that. And without the haggling or the other kind of unpleasant experiences that dealers can be known for.

Yes, absolutely. It's hassle-free, and it is a much more enjoyable experience to just buy the thing and know that you're paying the same as everybody else, and not having to worry about finding out that your neighbor bought the same car and then you talk to him and find out he got it for a thousand dollars less than you. Everyone's nightmare.

Let's close out the interview with one last question. Is there anything else that you would like people to know, or ways that they can reach out to you if they're interested in speaking more?

Absolutely. You can find us on social media platforms like TikTok. The easiest way to find our links would actually be to follow the link to one of our YouTube videos. In the description, we have links to our TikTok, Instagram, and Facebook. So, I encourage people to check that out. One of the more interesting things we've started doing recently is exporting Chinese vehicles. After years of considering this as an option, we finally found a reliable partner to help us. As you can imagine, from the second I started doing these English language reviews on YouTube, I've been getting countless emails and messages through social media platforms saying, "How do I buy one of these cars?"

Now, we've found a partner that we trust, who is experienced with exporting Chinese vehicles, and we can essentially do that for anybody that wants to learn more about how that's possible. Our main markets would be those outside of the U.S. and Canada, for example, because their restrictions are very tight on that. But if anybody, even in those markets, is interested in learning more, they can reach out to us at [email protected].

Perfect. And I'll put a link to that address in the show notes. It's been such a pleasure speaking with you, Ethan. I've learned a tremendous amount watching your channel. I had a lot of fun doing it too, and I've really enjoyed our conversation today. Thank you.

Thank you so much for having me. Thank you for the opportunity to meander and give way too long answers that barely answer your question, but I can talk about cars all day long. So, I always appreciate the opportunity.