XPeng Explodes? Fleet Cheat? Oil Shocks?

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1:35Hello and welcome to another episode of the Pulse podcast, the podcast where we delve into the life and death decade of the automotive industry. You're joined, as always, by me, Imogen Bogle, and Dan Caesar, CEO of Fully Charged Show and founder of Electric Vehicles UK. Dan, how are you doing?

1:52Imogen:I'm good. We actually, Robert and I did a secret podcast without you while you were away. I think you know that really. But we took the opportunity to talk about what had just begun. You've been away, of course, on a well-earned break. Have you been in Japan? Is that right? I've been in Japan, but I was meant to be in Australia, which I think links to what you're about to say. I was not in Australia because my flight that was going to take me via Abu Dhabi, of course, got cancelled. And sort of from that point, the world's gone mad. It's been a very strange few weeks and there aren't many certainties in life.

2:33Imogen:But I think the stone cold certainty is that the cost of living is going to go up again, which sounds a little bit kind of Western world centric, selfish, I suppose, in the light of what's going on, the tragedies that are unfolding in the Middle East. But yeah, at the point of recording, we don't know whether the conflict in the Middle East is going to stop shortly or it's going to continue for a while. But irrespective, the world has changed. The cost of things is definitely going to change. So another period of huge upheaval. And Robert and I were reflecting on the fact that we've known each other for 10 years and when we first met, it was around the time of the Brexit vote in 2016.

3:13And the world has been very unpredictable ever since then. Yeah, and it's interesting because there are so many things that have happened at the same time to sort of be sucked into this tornado of change. Yes, 2016 was the Brexit vote. It's also when Trump came in for the first time. It was also when really there was mainstream adoption of social media platforms and not an understanding of how they could be used to shape election, public opinion, create polarization between different groups. We've had AI in that time, the whole, and it's then such a melting pot of the world that we is changing far quicker than we can possibly predict.

4:01Imogen:I often used to say on social media, if you're scared of change, if you're scared of electrification in whatever form, then the next 10, 15, 20 years aren't for you. Because actually we're going to see an acceleration of change. And we are, I think, still quite early in that. Things have changed massively and it is incredibly disconcerting. I guess with this podcast, we're trying to keep an eye on what's going on in the automotive industry specifically. But yeah, change is super fast. And in the near future in the industry, we're talking about things like dark factories where there's no people in them making cars, autonomous vehicles, all sorts of different changes coming.

4:45Imogen:And around that is, of course, the changes to the world. You've got a factory as well. So it is difficult. And as we always say, for automotive execs, what a horrendously difficult period of time to come navigate your way through. Well, I will be interviewing many of them at the Financial Times Future of the Car, which I feel like this year's event is going to be a bit of a therapy session, is my prediction. But as you say, things are changing at an astronomical rate. And I have to say, I've been away for two weeks and I'm totally out of the loop. So I'm really treating this particular podcast as an opportunity for you to update me as to what are the key things I need to be aware of.

5:27And we've got three stories today. We're talking Xpeng, fleets and oil. A very nice combination there. So do you want to kick us off with the first story?

5:36Imogen:This episode is brought to you by Hankook. The Hankook Ion tyre is built exclusively for electric vehicles. engineered to deliver what EV drivers need most, confident grip, quietness, energy efficiency and long mileage. As the official tyre partner of Formula E, Hancock proves its EV technology is at the highest level of performance and brings that same innovation to every ion tyre on the road. Yeah, I do. One of the things that occurred when you were away was Honda canned their Zero Series vehicles, which were going to be made in the US. So due to US policy that canceled those, and that actually probably means that Europe won't get those cars either.

6:18Imogen:So they're probably off the table completely. Honda, about a year or so ago, was actually talking about possibly merging or working with Nissan or closely. If you remember, that went away. I posted about that recently on LinkedIn and someone said, I can't help but use the phrase dinosaurs mating about Honda and Nissan kind of potentially merging. And so on one hand, you've got some of the old guard visibly struggling. And I take no pleasure in that. I feel huge sympathy. But you've got others who have been thinking about the future, think about electrification. And I would say one of the ones that are furthest ahead in their thinking is Xpeng.

7:00Imogen:So we've been covering Xpeng on Fully Charged, Everything Electric for six years. In fact, when Elliot Richards joined the channel, interview with Robert's interview with Dr. Brian Gu from Xpeng and Elliot's review of the P7, the first content we shared from within China back then. And we've been covering the Xpeng story ever since. And Xpeng, I think, could fairly be compared to Tesla in that they've not just got the cars going on, they've got software, autonomous driving, they've got their own robot, iron. They've got some low altitude economy technologies, including A-Ridge and another electric vertical takeoff and landing plane as well.

7:45Imogen:So super advanced company, but fundamentally at its core, it needs car sales to, I guess, support, much like Tesla has, support its growth plans around the world. And it's a really interesting story. I've been in contact and come across Xpeng two or three times while you've been away. And I thought it was an interesting subject for debate. So from a car perspective, their sales skyrocketed last year. Some of that was to do with the domestic market in China, but also they have established certain priority markets across the world. And the UK and Australia are two of those priority markets. I dare say Canada will be now flickering on their radar as Canada is going to let more Chinese manufacturers in as well.

8:34So generally speaking, there has been real sales growth.

8:38Imogen:The product itself is great. So I was up in Scotland last week. I was at a fantastic family-owned dealership outside of Aberdeen. They invited me up because they were launching Xpeng kind of officially in Northeast Scotland. And a family-owned firm had sort of decided to, that Xpeng was the brand that they were going to work with. They still sell other brands or they sell used cars, but actually Xpeng was going to become the focal point of their showroom. And I got to test drive the G6 performance. Robert's just reviewed the standard G6 on everything electric cars and the performance model was unbelievably good.

9:19Imogen:I'm not being paid to say this. It was extraordinarily good. I couldn't believe how good it was. And that was great to see. great tech, you know, reasonably priced, all those sorts of things. But what was fascinating was to go into a dealership and see them really embrace this Chinese brand. And then they had about a hundred loyal customers come to this event. And I was there with someone from representing XPeng to talk about EV myths and all the sort of normal stuff that we would talk about. And it was incredibly well-received. The cars were very well-received. and I just thought you know we've come a long way because often with dealerships some dealerships will try and talk you out of buying an EV you might go in there with good intentions of buying an EV but I come out and buying a plug-in hybrid or or maybe a self-charging hybrid or something like that so that was that was a fascinating thing to say I don't know if you've driven that Xpeng G6 but the new performance model is is really phenomenal I went straight to that near the top of the pile of my sort of favorite EVs.

10:19Yeah, we've only driven it in Australia, not necessarily the performance version, but as a team, as a production team, we were like, ooh, this is really rather good. I know that Robert really enjoyed having it because he had it for a slightly extended period of time before he did the review. And that episode, of course, is doing very well. You can watch it on the Everything Electric Cars channel. It went out at the time of recording yesterday, day uh but by the time this goes out last week uh yeah but yeah i mean fantastic cars and just look

10:50Imogen:brilliant as well yeah and the driving dynamics of the new one were absolutely phenomenal i don't claim to be a jack scarlet expert on on cars but i i really enjoyed driving that car and it's that the xpeng g6 is a new facelifted version it's now available in the uk there are other vehicles coming to the UK and it's part of a larger portfolio of vehicles that XPeng sell. I dare say we'll see some new ones as well in Beijing in a month or so's time. But what I find particularly fascinating is you can have great product, but that is really only the tip of the iceberg towards being successful. And I think that's where I see some real challenges for the Chinese firms as they kind of enter the market.

11:40Imogen:A, there's a lot of them. They're coming up against some stiffer and stiffer opposition from legacy car makers who are also upping their game significantly. You'll see maybe when you're away, the BMW A3 looks like a great car. And there's a whole conveyor belt of fantastic battery EVs now available. But what's interesting to me is the export strategy. So XPeng selling cars well in its domestic market, but there is pressure, obviously, with over capacity to sell elsewhere. They've identified UK and Australia as two of those priority markets. And in Australia, there was sort of some relatively big, I guess, inside baseball industry news over the last few days that actually they have their relationship with their distributor in Australia, a company called True EV, has effectively broken down.

12:26Imogen:We knew that that was coming because actually, well True EV helped X-Peng exhibit at our Everything Electric Melbourne show at the back end of last year and we haven't received payment for that so we knew there was something strange going on and effectively the relationship has broken down and True EV has gone into administration in the last couple of days so that's very very sad news for all concerned but it does give X-Peng a problem market. Reputationally, what does that mean for them? The products are fantastic. How do they not break stride, make sure they're able to deliver existing orders to customers?

13:10Imogen:How do they make sure they're setting up? I think they are setting up, they have set up their own HQ in Australia already. I think they'll be able to relatively seamlessly move into a model where they're selling cars directly. And quite often you see this from the Chinese automakers in In Australia, BYD sold almost exclusively, I think, to a company called EV Direct originally before broadening, diversifying the way they sell cars down under. So you see that, but you're kind of at the mercy of how good your proxy is in each country. And so the product piece is important. But actually, if you don't get the whole thing right, it can be very, very difficult.

13:49Imogen:And there's a real debate in the industry about what works. Is it online sales or is it traditional dealership model or somewhere in between? And some of the Chinese manufacturers that have set up shop in Australia, in the UK and elsewhere have done a really good job by actually getting out into the more traditional bricks and mortar car sales businesses and actually getting their brand out in the marketplace. So really interesting time. So Xpeng sales have exploded in the last year. But one of their components, one of their routes to market, if you like, distributor has sort of fallen by the wayside, which is really interesting.

14:29Imogen:How do you operate as a Chinese manufacturer? How do you get out there? The car is just not the only measure of success. No, and it's something that we've said in this podcast before that, yes, when we talk about the automotive industry, we're talking about a piece of technology. We're talking about engineering, but also we're talking about something totally irrational and emotionally led and the value of brand and how you show up differently in different markets and understand the culture of those markets as well is really key. And the nature of those dealership models or agency models, whatever they choose, is a very core part to that success.

15:03But what I think is also interesting is that a lot of these successful Chinese brands are large enough that they can absorb a bit of failure to be like, well, we tried that and we're going to do something else and we will pivot really quickly. So I have no doubt that whilst this is a complicated relationship that they have with True EV, they'll be back fighting, doing something bigger and better.

15:25Imogen:and I think that's right I think everything we've seen so far indicates to me that kind of more top-down strategy that the Chinese brands might have means that they can if they get something wrong they can trim the sale and tack back quite quickly what we feel sometimes when we're dealing with some of the older car makers as you would expect there are layers of bureaucracy so we might talk to them about doing something and it might not hear about it for quite a long time and then And, you know, the information that we've sent over has been digested internally, going through layers of bureaucracy.

15:57Imogen:And then, you know, we eventually receive a yes or no, or quite often no response at all. These are huge, huge organizations. But the Chinese firms, they do talk to us much more regularly and they are able to pivot and be more agile. And, you know, if something's not working, they are able to move on from that quickly. They're not, I guess the sunk cost fallacy is something that probably most of our listeners will be aware of. But, you know, a lot of companies, when they have put a lot of time, effort, resource, money into something, kind of like to say, well, let's see how this goes. Let's keep it going because we put so much time and effort into it rather than cutting it ruthlessly, where I think the Chinese approach is to be much more sort of cut and dried in that respect.

16:42Imogen:And without wishing to mix markets, I can see OpenAI, for example, at the moment, really focusing on its core offering and just getting rid of some of the side projects that it says. And it's interesting for companies like X-Plane, they're doing quite a lot of different stuff. I mean, what they're doing with robotics is incredible, but they're stretched quite broadly across a range of different things. So it'll be interesting to see if they stick to that. But I think a fascinating company, we've always found them a fascinating company, a really positive force on the industry. Really, really great tech.

17:13Imogen:And I'm sure they will adapt very, very quickly to what's going on in Australia. but the reality is there's much more to this than just creating great cars. Do you know, just as a kind of reflection whilst you're talking, and I was having this conversation with someone the other day, but if you think about it, I would say in a year, I probably speak to about 100 to 150 different organisations. I've been in this particular organisation for five years, so let's call it somewhere between 500 and 700 different organisations that I've spoken to. You will have probably much more than that. and what the insight that we get through having that huge data set of different types of interactions that we have with organizations, we can infer so much from how those organizations operate, right from things of like, how quickly do we get a response?

18:06How many people are included in that first meeting? What does an email chain look like in order to get to a decision? And it does give us this tremendous insight to see which companies are able to pivot and which ones are hampered by the sheer levels of bureaucracy and legacy that exists within them. It's interesting. Yeah.

18:25Imogen:Yeah, there's definitely some paralysis from some of the companies that they can't move quickly and others are much clearer on what they're doing. I think if you know that you're going to sell battery EVs and FEBs only, for example, that gives you a clarity of decision making. There's some just selling FEBs only, of course, and then there's some others that are kind of hedging. And you can see that that immediately complicates all of the decision making process. And that's just powertrain. Then there's obviously different battery types, different management styles, all these different vectors to which you sort of see the industry.

19:03Imogen:and the more battles any car company is trying to fight simultaneously, the less effective it probably will be. So, yeah, without naming any names, you could see those that are very clear-minded on where they're going and those that, frankly, look confused. As the old saying goes, you can do anything but not everything. Let's move on to story two.

20:01Imogen:We'll be right back. your organisation. Visit cisecurity.org. Fleet cheat is your omitted headline. Tell us more. Yeah, I mean, it's really interesting to us. Unfortunately, Iran and the Straits of Hormuz and the kind of choke point on oil supply has immediately got people's calculators out. So, well, if the price of gas and petrol goes up significantly, what does that mean? Of course, that extends way beyond the fuels that we put into our vehicles. That could be fertilizer and it could be materials, just, you know, cost of getting things to places, you know, everything's going to go up, of course.

20:47Imogen:But it's, I think, really focusing minds in the fleet sector as well. You know, if you get a spreadsheet out and you look at the running costs of an electric vehicle, they're actually on total cost of ownership basis, much, much cheaper. Running costs are so much lower that even if there is an inflated price on the initial buying of the products, actually, you will make that back in terms of the running costs and actually servicing and maintenance is very, very low. So it's no surprise really that when it comes to the company car market, that is kind of doing very, very well. And actually, lots of private buyers are saying, well, I quite fancy this, but my employer is running a scheme, salary sacrifice scheme, and I will then buy my car by that because that's the most efficient method to do so.

21:32Imogen:So what's been interesting in the fleet market when it comes to like commercial vehicles, for example, is it's been a little bit slower. So we do a lot of work with electric van man, Paul Kirby. We're doing some more work with him soon. And I think that it is frustrating to see uptake of electric vans, for example, being slower. We do a lot of work in Australia, electric pickups and utes and things like that are also a focal point and there haven't really been too many pure electric products so there's a bit of a bit of a gap really i think a bit of a lag in terms of the product coming through for those markets that's getting better and better and better but the reality is when you do the maths and ey uh also i think once known as ed and Young, I think they're known as EY now, did the numbers.

22:24Imogen:And their recent study shows that company cars are 64 % cheaper for operating costs and company LCB is a 38 % cheaper. So it's those economics, really, the economics of electrics that mean they should be a no-brainer. When you kind of get past the fog of misinformation and maybe some hardwired desire to drive things that are noisy and smelly. The reality is that actually when you get in these vehicles, they save you a lot of money. And actually there's some huge benefits to be had as well. So we looked at that story with interest at Everything Electric North, which is our next show and Everything Electric West and Everything Electric Greater London, Everything Electric Sydney.

23:08Imogen:We now have a B2B EV day as well. So our first days of our show, they're going to be hybrid in nature. Consumers can come on day one on Fridays, but actually they also, So there's a B2B EV day element. And so there will be talks on company cars and like commercial vehicles. There'll be a commercial vehicle zone, plus the ability to test drive lots of these different vehicles as well. So we're appealing to CEOs and COOs and sustainability leaders and HR directors to come to the shows. But I think the important thing we have to say to them is, look, this isn't a cultural thing. This is an economic thing.

23:41Imogen:You can save significant sums if you can change your fleet over to electric. So this report is very, very interesting. I think the government is also trying to stimulate this market as well. There's been some more announcements today about supporting the LCV market from a charging perspective. But ultimately, when it comes to balance sheets, profit and loss, spreadsheets, all those sorts of things, EVs really should win very, very quickly in this area. And I think once that product lag is addressed, once there's more transit vehicles, more pickup trucks, all those sorts of things, I think this market could move very, very quickly once it's established.

24:23Imogen:So we found that was interesting that that cost of driving electric piece has become more and more prevalent over the last year. at Electric Vehicles UK, which I founded, actually did a report called the Cost of Driving Electric a year ago. And now that cost element has become key part of the persuasion tool. In fact, the key part of the persuasion tool for the EV industry to say, no, you need to look at this because even if you've got some predisposition against electric, once you see the numbers, and once you've had a test drive, those predispositions against those technologies should melt away?

24:57Well, it's super interesting because there are very clear use cases where the numbers are indisputable. And particularly for point-to-point transport, so let's talk HTVs for a moment, so point-to-point, hub-to-hub, whatever, and high mileage situations. The higher the mileage, the more the electric makes sense. But there are still a ton of use cases where, say, for example, you've got a light commercial van, that van is living at someone's home, They may not have a driveway. They're using the public charging network. And so on the one hand, this is moving in a really, really positive direction.