FISITA World Mobility Summit speaker Tu Le shares his thoughts on the topic of the event’s title, “To EV, or not to EV?”
The speaker line-up for the 2024 FISITA Summit features an impressive list of senior executives from automakers, automotive suppliers, energy and infrastructure companies, and other stakeholders in the transition to cleaner mobility. Also on the bill are several independent industry experts, including Tu Le, managing director of management consultancy Sino Auto Insights. Tu has spent time living and working in Detroit, Silicon Valley, and China, and has deep family roots in the Detroit automotive industry. He also has a passion for EVs, and co-hosts the China EVs & More podcast where he applies his expert knowledge of the Chinese automotive industry.
In the build-up to the 2024 FISITA World Mobility Summit, we asked Tu to share some thoughts on the event’s topic, “To EV, or not to EV?”.
What are the key challenges for the automotive industry in the transition to clean mobility, and how could these be overcome?
The biggest challenge for everyone is what I call China EV Inc, led by BYD. Now, more than ever, the so-called legacy automakers have to design, engineer, and manufacture compelling products that provide clear value to their customers. For the US automakers, that means pivoting towards smaller battery electric and plug-in hybrid electric SUVs and crossovers, as well as sedans and hatchbacks.
The challenge for the established OEMs is when to pivot. They need to identify how to drive EV costs down so they can make profitable vehicles, and they need to identify how to be as good as Apple, Amazon, and Alphabet in software and services. That means making tough decisions now rather than later, looking at every possible scenario for survival, including partnering on technology. They need to move management along if they are not capable of understanding the changing dynamics of the sector, hire more technical experts in pivotal management roles, and let them do their job.
Meanwhile, the challenge for the Chinese automakers is how to grow when their largest markets are being fiercely protected. That means building locally, and partnering with the established OEMs to get their products and technology on roads outside of China.
Sales of battery electric vehicles are slower than initially hoped and expected, but the products themselves are highly compelling. What has impressed you most about the evolution of BEVs?
After a few false starts from the established automakers, we are starting to see more affordable vehicles that can help them create positive momentum. I have been really impressed with the design and driving capabilities of many of the EV start-ups, both in the US and China. As long as the market continues to drive down battery costs and governments continue to invest in charging infrastructure and a more secure, reliable grid to support more EVs plugging in, we should see the tipping point in the US and EU right around the corner.
We’re seeing regional and national governments introduce restrictions or bans on the sales of internal combustion engine vehicles after certain dates. Is this the right approach, or should market forces lead the transition to clean mobility?
It’s very difficult for new technologies to gain traction without government support. EV adoption in China and Norway took some coaxing from those countries’ respective governments before the private markets took over, so to meet their climate and carbon goals, it’s necessary for governments to propose these requirements. Again, I see this more as the push that’s needed to enable those market forces to take it the rest of the way.
Electrification appears to be inevitable, but few automakers can compete by producing BEV only, and BEV is not suitable for all markets, in terms of cost, infrastructure, terrain… How will the transition play out?
That really depends on whether Chinese EV companies are allowed to play a role. They have the leading products in both categories, BEVs and PHEVs. They also have the largest battery manufacturers in the world, so if China is not allowed to play at all, which is the current direction from not only the US and the EU, but also Turkey, Brazil, and Canada, it could take time for the EU and US to reach that tipping point where the market forces take over. By that time, the Chinese automakers and several US EV makers could well have lapped them at least a few times.
China dominates the EV battery supply chain, and for various reasons, Chinese automakers can produce EVs more affordably than the long-established automakers. How should global automakers and national governments handle the obvious advantages that Chinese automakers currently have in the global EV market?
Global automakers and national governments should encourage innovation that can leapfrog the Chinese by subsidizing R&D while re-shoring some manufacturing, at least enough to be competitive long-term. Let some companies fail if necessary. Eventually they will crack open the US market for the legacy automakers to feel pressured to move faster and build products that can compete head-to-head with Chinese competitors. Furthermore, Chinese EV and battery companies will have a cost advantage for the foreseeable future, so to compete in the near term, the established US and EU automakers should be allowed to source their batteries from Chinese manufacturers until built out capacity in mining, refining, and manufacturing batteries is sufficiently re-shored.
You’re speaking at the FISITA World Mobility Summit in November 2024. The event is titled, ‘To EV, or not to EV?’ With that in mind, what will be your key messages to delegates?
My main messages are that regardless of powertrain, consumers in China, the US, and the EU want and demand value. Those OEMs that can deliver an amazing user experience while providing value will ultimately be the winners. EVs are so-called table stakes if you want to be a global player and compete on the global stage. The Chinese automakers aren’t slowing down, so you should do everything in your power to speed up everything you do without sacrificing quality, reliability, and even excitement. And my final message to delegates will be that nothing like this has ever happened to the automotive space—so this is your opportunity to define your company for the next 100 years. What do you want to be known for?
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The Summit is a must-attend event for global mobility leaders, offering a dynamic platform for high-level discussions, collaboration, and debate. It’s a key event within the global mobility community, driving thought leadership and fostering engagement in FISITA’s member-led environment, with an agenda featuring high level speakers involved in the transition to cleaner mobility.