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Episode 116

The Chinese Challenge: BYD vs Legacy Automakers

This episode is sponsored by Lockton, click here to learn more

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In this podcast episode, Jan Griffiths tackles a crucial question: Are Chinese OEMs ready to take over the global automotive stage, possibly replacing legacy automakers? 

In the quest for answers, Jan sits down with Tu Le, Founder of Sino Auto Insights. He brings his experience as a seasoned tech and auto professional with a rich background spanning Ford, General Motors, and Apple.

The conversation started with the current state of the automotive market in China — China's electric vehicle boom and the rise of Chinese automakers globally, with BYD surpassing a legacy OEM in sales. The talk then extends to the worldwide impact of China's EV exports and BYD's strategies for the US and Europe, with Tu identifying key factors contributing to the success of Chinese OEMs— visionary leadership, vertical integration, and a focus on innovation and scale. He also revealed the challenges for legacy automakers facing the evolving auto scene, emphasizing the necessity of cultural change for digital transformation.

Talking about traits leaders need in major OEMs, Tu advocates for decisiveness, a willingness to hire more competent individuals, and having a global perspective. He urges leaders to be visionaries who consider the evolving needs of consumers worldwide. The conversation concludes with Tu advising leaders to right-size their businesses, reduce dependency on legacy OEMs, and invest heavily in talent and future opportunities, especially in software-driven aspects. The advice also extends to exploring global markets, understanding regional driving trends, and considering the growing EV revolution.

Themes discussed in this episode:

  • Auto industry dynamics and global market perspectives
  • Chinese dominance in the worldwide market
  • Cultural transformation in the auto industry
  • Automotive transformation, OEM challenges, and disruptions
  • ICE (Internal combustion engine) to BEV (Battery electric vehicle) 
  • The role of software in the automotive future
  • Diversification for Tier One Suppliers
  • The importance of customer experience and being customer-focused

Featured: Tu Le 

What he does: Tu Le, Founder and Managing Director of Sino Auto Insights, is a driven entrepreneur dedicated to transforming transportation. He's led the firm to impressive growth, specializing in mobility and transportation consultancy. Tu is a recognized expert, often featured in major media, and co-organizer of the MOBILIT/E Conference, a key event in the global mobility space. His goal is to simplify and enhance how people and goods move, emphasizing innovation and accessibility. 

On leadership: “Leadership traits [OEMs for the future] I think that they are decisive. They also hire people on their teams that are smarter than they are. So, they don't have that typical ego of a CEO. I think it's important to be very confident and decisive because the automotive sector is not going to be a high-tech space.  It'll become this individually distinct new sector that has elements of manufacturing and elements of customer engagement service. You have to have a really diverse understanding of how the world works.”

Mentioned in this episode:

Episode Highlights:

[00:02:58] The Big Question: Jan sets the stage by raising the crucial question of whether Chinese OEMs will dominate the automotive landscape, sparking a conversation about the future of legacy automakers and what sets BYD apart regarding leadership and culture.

[00:09:47] Innovating Faster than Giants: Jan questions the astounding pace of BYD's success compared to legacy automakers like GM, revealing the factors behind BYD's global dominance.

[00:14:53] Chinese Auto Export Strategy: Jan and Tu delve into China's plans to lead the global auto market, discussing timing, long-term visions, and the shake-up in global manufacturing involving Tesla, MG, Volkswagen, Nissan, and Ford.

[00:31:46] Speeding Up Transformation: The conversation stresses the auto industry's need to break free from traditional mindsets, speed up decision-making, and embrace the necessary cultural and operational changes.

[00:35:17] Tier One Leaders' Survival Guide: Tu shifts attention from OEMs to Tier Ones, providing crucial advice for leaders in the EV revolution, emphasizing the importance for Tier Ones to move away from relying solely on traditional OEMs, urging them to diversify products, explore new startups, and explore a broader automotive mobility landscape.

Top Quotes:

[00:07:42] Tu: “If you're cutting your teeth on supplying Apple, the automotive sector, I'm sorry. It is very cutthroat, but if you have scars from the high-tech sector, you will do okay in the automotive space.”

[00:08:49] Tu: “I visited BYD in April of last year, right after the Shanghai Auto Show, drove six, seven cars, and they could compete today with the best of what German legacy has, Italian legacy has, United States and Japan legacy and Korea legacy.”

[00:11:12] Tu: “The challenge for legacy auto, and you slot in GM, slot in Ford, is that we live in a digital world. It's transitioning over from analog to digital. And up until this point, even if you look at the OTM or the F-150 Lightning, the legacies are bringing analog toys to a digital party.”

[00:14:37] Tu: “As a leader, you got to get everybody rowing in the same direction, and I think those are some of the challenges.  And one of the reasons I started the consultancy was because the tech guys were talking their language, and the car guys were talking their language, and there was no translator.”

[00:34:28] Tu: “China's faster than Silicon Valley. Very simply, we need to stop and get out of our heads that China is this copycat country once and for all. If you don't believe me, believe Elon. He said nine of the top 10 automakers will probably be Chinese in the future.”

[00:34:58] Tu: “So, the reality is, things will change because they have to. If GM and Ford want to remain competitive, that's the reality.”

[00:40:00] Tu: “What Tier One leaders need is to assess how small they have to get while also investing heavily in the talent and the opportunities they see in the future. It's going to be driven by software.”

Mentioned in this episode:

This episode is sponsored by Lockton, click here to learn more

Transcript

[Transcript]

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The Chinese are coming. There's fear in the air. I sense it. I feel it. Could it be true that the Chinese OEM will take the place of our beloved legacy automakers, such as Ford, General Motors, Volkswagen, and Toyota? I decided to ask somebody who knows how to answer that question. Today, you're going to meet Tu Le. Tu is the founder and managing director of Sino Auto Insights. He has a wealth of experience working both in high-tech and automotive sectors. He's worked for Ford, General Motors, he's worked for Apple, he's worked in the tech space. He has lived and worked in Detroit, in Silicon Valley, and in China. So, I could think of nobody better qualified to answer these questions. He is passionate about helping companies that want to be difference-makers in the mobility space, and that's what his business is all about. In this episode, we talk about, is BYD going to take over the automotive landscape? What is the DNA of an EV OEM leader for the future? What are some of the things that are slowing us back from a legacy automotive culture perspective? Let's dive in. Tu Le, welcome to the show.

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That whole notion that the Chinese government has subsidized the EV space. I mean, we're writing a 50 billion check in the United States. And that's just to say that at the end of the day, great products, compelling products are going to really solve the legacy auto with the recent slowdown in EV adoption in Europe, in the United States, I think there's this false sense of, "Oh, the legacy automakers can reconcile their product strategy and slow down this EV transition." Elon said by 2025, they're going to sell, build and sell a $25,000 electric vehicle. Think what you want about Elon. Think what you want about Tesla. And I would love your thoughts on this, Jan. Do you think a $25,000 electric vehicle that has digital features that are better than anything in the market, can go over 200 miles, will sell like hotcakes in the United States, in Europe, and in China? I'd love your take on that. So, if they slow down their product rollout on electric vehicles, guess who's coming for that? And they'll never get that market share back. They'll never get that market share.

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About your host

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Jan Griffiths

Jan Griffiths is the founder of Gravitas Detroit, a company committed to helping you unlock the power of your team through authentic leadership.
In January 2020, Jan launched the Finding Gravitas podcast where she interviews some of the finest authentic leadership minds in the quest for Gravitas.
Gravitas is the hallmark of authentic leadership.