Detroit's Dunne, China's won? How it happened & is it 'unstoppable'?

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1:07hello and welcome to another episode of the everything electric podcast we are very much focused in this episode on china i'm uh just had the most incredible conversation with a man called Michael Dunn. He runs a kind of an organization called Dunn Insights. He has a very, very long history of interaction with China. He speaks Chinese, he's American. He was brought up in Detroit in the middle of the car-making culture of the USA. And he, you know, around about my age, a bit younger than me, he's a young man. And just has this incredible knowledge of the history of how China got to the position it's in today and its incredible market dominance in terms of electric vehicles and renewables and a lot of other stuff, electronics in general.

1:58Really interesting conversation, amazing man, very entertaining. I know you're going to enjoy it. Please do subscribe to this channel because we get the most amazing people on here and it's a real privilege to talk to them. Tell your mates about it, you know, all that gubbins. And also we've got uh if you're in the uk we've got a show coming up in september where i've just found out there's a couple of new chinese vehicles being really revealed their launch there you won't have seen them anywhere else we haven't seen them so you know very exciting and then we're also in sydney where the same vehicles will be on display along with thousands of others the sydney show is going to be huge um so that's i won't go on about that that's all uh please welcome on to the uh everything electric podcast michael dunn from dunn insights our three free youtube channels on evs and clean energy tech are funded by our fun packed test drive tastic events in the uk and australia Next up, Everything Electric Greater London and then Sydney.

3:04All events include a B2B EV Day and commercial vehicles too. So, Michael, thank you. I won't bore our audience with the battles we've been through to get here, but it's so good to see you. I'm really glad you've done this. I mean, what would be good is to explain to people a bit of your background and how you got to where you are now. I think people would be interested to know where you are now and all the rest of it. Tremendous. Thank you, first off, for having me. I've been looking forward to this conversation for weeks now. And we did have some that we had to connect with the technology gods to make this happen.

3:43So I'm just grateful to be with you today. Briefly, background, credentials, street cred. Grew up in Detroit, son of Jim Dunn, legendary car spy. I used to accompany him to take photos of next generation cars before they got out into the public. So I broke around cars, straight out of school, went to China, 1986. Wow. 1986 as a graduate student. The very first car I saw was this powder blue model called the Shanghai 760. And when I looked at it, I had said, what is that? It doesn't look like what I expected. It looked like a German car. And sure as hell, it was based on a 1955 Mercedes that had been transplanted to the Soviet Union, re-transplanted to China.

4:32So that's my first impression. A big blue lumbering bench seats, huge steering wheel, no seat belts, push button radio. That was one of two cars that China was making at the time. They only made a few thousand and only the party officials got their hands on them. So that was first impressions in 1986. but I've got to go back to that I mean my bizarrely my wife uh went to China in 1986 but she was um yeah yeah but and she was with a she was a circus performer this is this this is so off topic but just briefly oh my god she's she went and studied with the Nanjing acrobatic company and she learned to do amazing circus tricks that no other uh you know European person of European descent has ever done before or since she's the only woman i'll just quickly inform our audience the only caucasian woman in the world who can balance three eggs on a chopstick on her nose can't do any more i saw her do it she could do it three eggs on a chopstick on their real eggs they're real eggs and there's no glue involved i don't know how she does it there is a trick but it looks amazing anyway we don't need to go there but that but what i'm intrigued is what what drew you to go to China then?

5:46Because it was a very different country in 1986. It really was very different. Imagine I grew up in Detroit, Detroit through all my colleagues, all my classmates, they'd work for Ford or GM or Chrysler. And my dad was a little bit of a, you know, he'd always encourage Robert Frost, the road not taken, go find out where everyone's not going and take that one. So I studied some Chinese at University of Michigan and straight out of school bought a ticket and landed myself in china and naturally they when i got there when i got to china they said what are you doing here are you doing here yeah so that was that was ancient history we can go back yeah just bringing us up to date and where we are today because really there's serious action happening in the world and arguably none bigger than what's happening where you are the uk yeah um so today i run a company called done insights we advise investors on the future of cars in particular what china is trying to do with the world global auto industry and um yeah the transformation is just there's no words for it right the things that are coming out of china these days yeah now i'm in the sketch because i was i went for the first time i visited Shanghai last year.

7:02You were? Okay. Yeah, yeah. And that's my first visit ever. And I just, you know, basically, my face looked like this for 90 % of the time. All right, just take us back to that moment, you're stepping off the plane, you're getting into the airport terminal. What were your very first impressions? What did you see? I mean, I mean, super modern, super clean, super efficient. Everyone that I interacted with every single Chinese person I interacted with was incredibly courteous, kind, spoke English. I mean, I'm sure, you know, I spoke to a tiny percentage of the population of China, but I never had one bit of, you know, I don't know what, grit in the gears.

7:45It was always very, very smooth. Smooth and there's good energy. Yeah, amazing energy. Motivated. Yeah. Yeah. Yeah. But I also had the benefit of Elliot, who I think you know Elliot, don't you? Yes. So he'd lived there for a long time. So I was with someone who's an English guy who lived there a long time and understood how it all worked. I think if I'd been on my own, it would have been just I'd just be stumbling around. So he got me like all the kind of phone stuff and, you know, your pass to get on trains and all that kind of thing. You know, I would I would have found that probably quite challenging on my own.

8:21but that's true that's true you get into those trains and it's all chinese and it's moving and but it's incredible i mean all that stuff yeah and then the hotel we stayed in you know i can't even remember getting it all happened got off the plane got to the hotel and then i just went out for a little walk on the street outside the hotel uh you know the first day i was there and it was really quiet and i could hear birdsong and i could breathe air and there were tens of thousands of scooters going past me on a scooter and hundreds of thousands of cars and trucks and buses and it was so peaceful and quiet you do you go that is you know every now and then well the one i really remember that was the following day i was walking along talking to elliot and i heard a ferrari and i went oh and i could hear this engine we sort of looked around there was a red ferrari there's a ferrari yeah that in you i'm guessing you were in shanghai we were in shanghai yeah Yeah.

9:17And all the cars are Primo, right? Yes. Yeah. Mercedes, BMW, Ferrari, Lamborghini. And then you've got the Chinese electrics, which are so impressive in their own right. Yeah. Anyway, yeah. So that was, it was amazing. So, I mean, what I'm fascinated by then is my experience of Chinese cars is much, much shorter than yours. but it would have been about 17 or 18 years ago that I was at the Geneva Motor Show when there still were things like big motor shows. And there was a BYD stand there that in comparison with Volvo, Audi, Mercedes, Ford, you know, all these companies, big, big, you know, flashy things with glossy cars.

10:00And there was this three BYD taxi things that looked, you know, My aesthetic sense of motor vehicles is pretty limited, but I could tell these looked a bit weird. Weird and just not attractive. And you ask a Chinese consumer, and at that time, they wanted nothing to do with BYD. Right, right. At my office in China, the joke would be, oh, engineer Li Gong, he had to buy BYD because he didn't get his bonus this year. Like you bought a BYD when you couldn't find anything else. You couldn't afford something better. That was what it was at the time. Right. Yeah. But that turnaround then, so the other key moment I do remember was at the Volvo factory in Gothenburg in Sweden.

10:48And there were all these Volvos, big SUV Volvos, coming off the production line with gold wheels, gold door handles, sort of salmon pink or shrimp pink color, you know, just like you don't see cars like that in europe yeah where are they going oh they're all going to china yeah which was but that was that was probably 20 years ago and then you think well that market that was huge for european brands i've got a sneaking situation that's changed a bit you're you're absolutely right they used to say i used to ask um and check in with the president of general motors which in itself had a huge market there and i used to say how's the business and you say, we're making more money than God.

11:28It was for two decades, Robert, it was growth and profits, growth and profits, automatic, enormously profitable, whatever they put out to the market sold and they sold well, and they couldn't build factories fast enough. And that would seem to be like, well, Chinese consumers love foreign products. We're building foreign products. We're making a lot of money. Let's do this forever. Let's do this forever. And as we know when somebody wrote the song, all good things must end. And it's ended very abruptly, Robert, suddenly like a lightning bolt came, a meteor hit and things have completely transformed.

12:08And people talk about disruption. I don't think the word disruption begins to describe what we're experiencing and witnessing in China since, let's just say since 2020, the last five years, I think of two major earthquakes. One was, and these will be familiar to you and to your audience, but the first one was in the world's largest market, China, electrics went from about 6 % of total sales to last year, 50%. I don't know. I don't know. Imagine if like Guinness, no one's buying Guinness in the UK, except for Ireland, of course, but no one's buying Guinness. And all of a sudden, half the people are drinking Guinness five years later.

12:47What? What is that about? And then the second earthquake is related to the first one, is that all those foreign automakers had these big, beautiful factories all over the country that suddenly there's no demand for those cars. And so the foreign automakers and their Chinese partners said, we need to do something with these factories. And the workers in the factories, what do we owe? we start shipping them overseas and we've seen exports go from 1 million in 2020 to it's on track to be like 12 million this year 1 to 12 million in five years just phenomenal changes and i know you're seeing the consequences of that in the uk with tell me what you're seeing on the streets these days the chinese cars pouring in i mean it is that i think it's the this is in a way why i wanted to talk to you is to kind of explore that because I think the British, the general public in the UK are now aware that there is such a thing.

13:45You know, the general, like everyone, understands that, like, BYD, they will have heard of it, they know it's Chinese. They might not know anyone who's got one, they might never have seen one, but that information has gone into the general consensus. And, I mean, it is, everywhere you look, everywhere you go, you see Chinese-built cars. They're not all electric. I mean, you know, there's a lot of them. A lot of them makes it, you know, a motor and Jayco, I think, are the ones that have done it. Yeah, I just see them everywhere. Oh, my God, they're just so common. Yes. In another country, Robert, they might say that's Cherry Jayco.

14:22Cherry, yeah. Exports are, as you say, not electric. They're gasoline. In another market, they may say, oh, we had our time. Chinese people don't want gasoline-powered vehicles anymore. Right. Our business is done. but the Chinese pivoted very quickly and said our business in China is done but guess what we're going to start shipping these worldwide and it's just been phenomenal the traction because yeah I mean that is interesting because the one lot of sales figures I've seen very recently for the UK is we've just overtaken so sales of electric cars have just overtaken pure petrol cars pure petrol cars going down I mean diesel forget it no one's buying diesel but electric cars it's literally they've just passed in the uk already in the uk but the but what is interesting is still the most common sales are hybrids plug-in hybrids and hybrids but they've completely flatlined they're not going up electric sales going up by an extraordinary amount is the infrastructure in place for that or it doesn't really matter people just like the product i mean they like the product but also the infrastructure is there once you know i've spoke to someone recently who's recently got an electric car and thought there was nowhere to charge and now everywhere they go all they see is places to charge because you don't if you're not using it you don't notice it you don't it's not visible and there is a difference here in the states where i live the the gas stations are very visible very visible and the electric charging centers are there but there's around the back usually yes yes yeah we need kind of i mean there are a few examples in the uk of there was one very sort of well-known one in the middle of london which used to be a gas station as you'd call a petrol station we call it yeah and that was i forgot where i was but that was completely gutted and rebuilt and it's now electric vehicle charging station on a corner and it's very urban it's right in the middle of london in a very and it was a very small gas station it would have been but the two things i've learned about that one it's in use all the time it's got phenomenal use levels it's run by i'm going to say the wrong one it's either shell or bp they still run it it's got a nice shop it's got a new thing new thing okay but the other one is the local residents where have there's been some research with all the local residents and they all say it's so much nicer here since it's not a petrol station because you could you know no matter how well you run it you smell it you know if you live next door which people do literally like overlooking it then so but anyway that's tell me something so you know normally it when the koreans came in or the japanese before them yeah early buyers you might have some early movers but there'd be a question mark hangover oh yeah the case of chinese brands it doesn't seem to be that no be be a hesitation is that accurate or what's going on if it was it was it was very short-lived it was a blip whereas i do i can remember as a child my dad making fun of japanese cars that'll fall to bits in two weeks you know that was his joke he was driving a ford a british made ford which were quite renowned for falling apart in two weeks but you know they always made fun of you know japanese was rubbish it wasn't they weren't reliable and then it was korean it was they're awful you know all that that's happened before and I'm sure it did happen with Chinese cars.

17:48I mean, the thing that we still see comments on now are people saying, I wouldn't buy Chinese, I don't want to support the CCP, you know, whatever. And that's still there, but they've also typed that on a Chinese-built keyboard or on a Chinese-made phone. Yeah, that's true. One doesn't really like to point out. Do people in the UK, are they aware that the MG brand is Chinese-owned? Yeah, I think so. It's hard to know. I think they probably do. But that brand has, I have an MG4. I'm about to drive it across the country now. It's such a great little car. And so easy to... Yeah. They've sold a lot.

18:27They've sold a lot. With GM and with Volkswagen over the years. They do a good job.

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19:13but then so the other thing that i have come across every now and then is people who have worked in the british mainly the british auto industry so people who worked at uh aston martin jaguar bentley rolls royce quite a lot of the people and this is not necessarily designers This is people who run production lines and talk, you know, quality control and all that. And they all had a job in China in the last 15 years. They did five years in China. They were paid incredibly well. And, you know, I don't know how, if you're aware of that, but that was, it seemed to be quite a thing. And then you'll see a car and you go, that looks a bit, that's got a little bit of flavor of Aston Martin about it or of Jaguar.

19:59Definitely. Yeah. So that had been a big thing, presumably, of European and American. China does very smart recruits, attracts recruits, some of the best talented, most talented designers. I think there's at least 2 ,000 foreign automotive designers now working in China. So up and down to China. You can't find a Chinese company without a foreign designer. Many of them come from the UK, Germany, Italy. And so that's real. And the second thing is we used to have an expression called what is Chinese R &D? R &D stood for, this is 15 years ago, receive and duplicate. So they were always very good at copying.

20:42But now what's happening is they go receive, duplicate. And then build on top. They innovate on top of that. They don't just copy anymore. They've really iterated and innovate on top of what they learn. Yeah. So they're a force to be reckoned with. Like, in my mind, people ask me, oh, were they like the Japanese and Koreans before that? I think we're at a completely different magnitude. Yes. Yeah. I mean, well, that was one of the facts I learned last year was, you know, I'd been in a discussion at an event where someone mentioned that Tesla had 100 ,000 employees around the world. And I was going, that is amazing.

21:29Yes. Considering I first met that company, you know, 20 years ago when there were seven employees or 10. You know, it was very, very small. But then you find out that when I was in China, that BYD have 100 ,000 employees in their R &D department. They have a million employees. A million employees. This is incredible how that, and that, I mean, if you think back then to, you know, even Toyota's sort of heyday in the 80s and 90s or globally, did they have a million employees? I'm not sure they did. and maybe did but they were i don't think so i think they did and they just and byd makes no secret of the fact that by 2030 what's that how many years away three three and a half years yeah they expect to be number one in the world yeah oh i can't see how they won't be i mean just and i mean that we've recently had the denzer uh and the 1.5 megawatt charging the flash charging introduced here yes it's just yeah that you know that bit of information it doesn't matter whether anybody uses it or genuinely understands what it is what goes in is you can charge an electric car in five minutes that's all that's all that's all that's all that's the headline it doesn't matter whether you know whether there's the infrastructure to do it or we generate the electricity forget that but that is it but no one else no one in europe no one in america has done that you know that is that is not replicate and duplicate whatever that is innovation yeah innovation They're world class now.

22:57A little bit of backstory, because I was living in China at the time, and this may all be familiar to you, but as I said, the foreign automakers were just having their cake and eating it, too, in China for the longest time. Xi Jinping comes to power in 2012. 2014, August, he goes with his lieutenants in an offsite called Beidaihe up near North Korea, across from North Korea. And they put together this blueprint now known as Made in China 2025. And it's this document that says by 2025, China has aspirations to lead in next generation technologies from autonomous vehicles to electrics to batteries.

23:34And atop the list were these, let's make it go in electrics and batteries. And they put in place extremely generous investments in infrastructure and batteries, in subsidies for manufacturers, in rebates to consumers. and um here's where it gets interesting robert from 2014 2015 2016 27 it's looking a lot like a top-down government-funded expedition that's not really going anywhere because for most of the decade chinese consumers were still saying electric i'm not sure chinese electric no no no the designs aren't that great the range isn't terrific i don't know if i heard about some fires I don't know about charging.

24:20So through the 20 teens, 2010s, there was a lot of wheel spin. There wasn't a great immediate uptake by Chinese consumers. And it was only after Tesla entered in 2020 that suddenly consumers views of electrics seem to be like transformed overnight. Right. And in my mind, what happened wasn't so much that they fell in love with an electric powertrain overnight, but they saw, oh, this is a totally new type of vehicle software defined vehicle with over the air updates, a big screen. And as we know, the car culture, as we know it in the West, really never sunk in, got traction in China. It wasn't about performance and handling and speed and cornering.

25:08It was all about the experience inside the car. So Tesla hit all of the right sort of cords with the Chinese consumer. And then the Chinese consumer started to look again and go, oh, by the way, BYD designs have gotten a lot better. And there's these new companies called NIO and Xpeng and Li Auto. They're, oh, look at their designs. So we saw this sort of something clicked right around when Tesla came in. And there's been no looking back. It just took off. And if there's any defense for global automakers, they were lulled into a sense of complacency. But that complacency, in a sense, was well-founded because until 2020, they're still killing it.

25:48They're still saying they love us as a brand and they love gasoline-powered vehicles. And then they didn't. So it's been a real shock to the industry for anybody outside of Tesla and the Chinese automakers. Your Toyota, Nissan, Honda, Volkswagen, all taking it on the chin today. GM, Ford, Stellantis. It's real. I mean, that was an incredible conversation I had with Elliot in, I think, 2022 at the Shanghai Motor Show or the Beijing Motor Show. I can't remember which one it was. When he followed a group of European and American executives around the site because nobody else was that interested in them.

26:29but he just, he would get, they'd go to the BYD stand and he'd look at their faces and they're going, and he said, essentially what they were saying is we're screwed. You know, they looked at that. They looked at the battery technology, at the drive trains, at the software. And they just went, they've, it was like, that was when the rest of the automotive industry in the world realized what the Chinese had been doing. That's right. You're exactly right. Shanghai 2023. They used to have it when you walk into these huge auto shows and there'd be halls. Yeah, it would all be these Western brands.

27:02And then the side corridors, maybe there's a BYD or a Chariot, but no one really is going to go over there. And then in 2023, it was completely reversed. I got a call from a good friend of mine, Klaus Meyer, who used to be the CEO of Mercedes-Benz in their Halcyon days in China. He got there on the first day in 2023. I was boarding a flight out of California. He goes, Mike, yeah, it's a shock. It's a, I go, you okay, Carl? Yeah, I'm telling you, it's over for foreign brands in China. I said, what? Wow. What? Wow. Yeah. Yeah, that is extraordinary. Just like that. So there is a, you know, we have to be mindful of the fact that this is all very good for China.

27:46it is a little bit debilitating, a lot debilitating for incumbent automakers and jobs in industry and especially in Europe. So the consumer is happy, but as a society and as an industry and jobs, we have to be mindful, like, what's the cost of having a better car out of China? That's real. Oh, absolutely. And, I mean, is that thing now that I don't know if it's going to happen? I mean, it is happening up to a certain extent. But, I mean, there's new car factories owned by Chinese companies, I know, in Spain, Hungary, the Czech Republic. You know, they're around. Because what I've been saying to the only politicians I know, which is very few, can't you get them to come here?

28:34We then have to deal with Brexit, which I don't want to talk about. Will they come to the UK, do you think? I mean, I can't. It's not happening at the moment. They don't need to right now. because they don't need to. No, I mean, you know, I mean, for one thing, electricity in Spain is about half the cost that it is here. And it's all renewable and they've got it right. They've done something right after. They went through a bit of a rough patch, but they've got it sorted. But that kind of change, I think I can't sense like a big resistance in the public mind against Chinese cars. But I mean, I think the difference is, and that might not be so obvious if you're outside Europe, is that there are companies.

29:20So I would say Volkswagen, Renault, Citroen. Strangely, I mean, the Renault 5 is a hugely popular car. And you see, I see more of those than I see BYDs. Okay, good. You know, they've had a 50 % increase in sales since a certain gentleman decided to bomb a quite annoying country. I don't want to get into the details of that. But I mean, that, I've got to say, I've said it publicly a few times. You know, we've spent 16 years promoting and trying to explain about electric vehicles and that. And, you know, we've had some success. I'm not going to be overly humble with that. But in six weeks, one man in America has increased global electric car sales by a phenomenal amount.

30:08Just extraordinary. No wonder he has such a giant ego. Yeah, I think he's great. I love him, man. You can intend to make it happen. He's the best president you've ever had. Tell me a little bit about your own decision. How did you land on MG? Is that your first Chinese car? Is that your first electric car? What came before that? No, no, not my first electric car. Okay. I'm trying to work. I think I test drove one and I just went, gosh, this goes a hell of a long way. And look how much it costs. Yeah. You know, just, you know. Yeah. So, I mean, at this time of year, it's realistic 280 miles range.

30:50Which is for a car that's that price and size is extraordinary. I mean, it's very, very fuel efficient car. And they've got now newer ones, the MG4 Urban, I think, is even more. Yeah, they keep getting better and better. Have they introduced their premium brand in UK, the IM? Have you seen that? I'm not sure about the Denser. It's like that they are. No, sorry, not the IM, the MG. Sorry, yes, I think they have. Yes. Just comment. I was in the UK last fall, and they were talking about one of the dealers that we expect to get the IM brand in. That's right. I think it was at Goodwood, the big festival, which I went to, and it was just too hot, and I was too old, and I couldn't cope.

31:35When we have a heat wave in Britain, it just everything kind of grinds to a halt, or, you know, anyway. A heat wave is in the 70s or what? What's the 80s? Oh, in Fahrenheit. Oh, no, it was hot. It was about 38 degrees centigrade, which is probably 90 Fahrenheit, maybe more. I can't remember. I grew up with Fahrenheit, but I've forgotten how it works now. I can only do centigrade. Come back. We need more Fahrenheit. Yes, we need more Fahrenheit. But the other one, I don't know what I think is fascinating, is that how far back it goes. So say you're a Mercedes-Benz or Audi, and you decide you want to make electric cars, and then as a company you go, well, where do we make our own batteries?

32:23and they go, well, you can. And they go, what do we need to do that? Oh, well, we need these materials, nickel, cobalt, etc. Where do we get those from? Well, the Chinese have bought all of them. For the next, all of them. Did you just say all? Yes. Yes. Have we got any in our country? We've got a bit of copper, you know. What did Henry Ford say? You can have any car color as long as it's black. As long as it's black. If you need battery materials, no problem. You can get it from any country as long as it's China. But, I mean, that decision then to do that, just ignore the politics of it for a moment, the decision to do that, when did that happen?