China dominates the electric vehicle market. BYD has overtaken Tesla as the world's largest EV maker, and now almost two out of every three EV sold globally and made by Chinese companies. But what may surprise listeners is that the most in demand EV model in China is not made by Tesla or BYD. It's actually made by Chaomi, the company best known for making budget smartphones and other consumer
electronic devices. How did Chami create arguably the coolest EV in China, What differentiates its car from its competitors, and importantly, can the company continue to deliver on high expectations with its share price rising over one hundred and seventy percent of the last twelve months. You're listening to Asia Centric from Bloomberg Intelligence. I'm John Lee in Hong Kong. This week,
we've got two analysts from Bloomberg Intelligence. We have Johanna Chen she looks at the auto, and stevens Son looks like technology. Joanna and Stephen Welcome to the show.
Hi John, Thanks for having me, Hi John, Thanks glad to be.
Here, Joanna. Most of our listeners live outside of mainland China, so they probably don't even know that Shallmi makes electric vehicles, just tell the audience how popular is the EV in China.
So basically Shaomi was pretty much very new to the market. The shawms first EV only started its debut and also delivery back in April last year, and then shall Me manage to deliver over two hundred thousand units of those Su seven vehicles in China, and that makes the Su' saving now one of the most popular EV's and ranking. I think it's among the top five model in the Chinese EV market. So it is like the company keeps beating its targets. And also the wait times are very
long and contry. Apparently they're willing to wait for this new vehicle. That makes the show Me as you saying, and also possibly the upcoming next new model very popular in the Chinese EV market.
So if you were to order a show Me model right now, how long will it take?
So that's a very interesting thing. Right now, if you want to order a shaw Me car, you have to wait about nine to ten months, that's how long the waitlist is getting. And in comparison, if you order a Tesla you can probably get it under two to four five weeks. In general, the EV in China, you only need to wait for a month, but show me, that's very long waitlist, nine to ten months.
And I just wanted to confirm this is due to the high demand and not due to limited supply.
One hundred percent correct. So originally when the show Me car first debut, the weight list was about six to a month, and now it's getting even longer nine to ten and people are wondering is it because of their too slow in production ramps, just as Tesla did. But back in like twenty seventeen, when Tesla first started to remp up the production of its Model three, its first volume car model, as Elon Mask said himself, it was a production hell. There were issues from supply chains to
manufacturing logistics, shipping, customer experience management. But for shall Me, it seems come pretty natural. And also we didn't hear any major issues during the ramp up pace in terms quality are also good. The ramp up speed.
Is also good.
It managed to get to like twenty thousand monthly deliveries in just like nine months. So for shall Me, we're saying that it's really the consumer demand that is too high and that's dragging the way times longer and even though they are ramping up the production pretty quick. Even though they are beating their sales volume target. Still the
way times are longer and longer. And hopefully with the second factory coming up in Beijing soon, we'll see the wait list getting shorter and consumers will be able to get their car deliver quicker, and then that will draw more consumers to place orders because they don't have to wait that long for a car anymore.
Joina, What makes shall mes Su seven models so popular and how does it differentiate from its peers.
So the first thing is it's a really cool car if you look at the exterior design, and of course there's some resemblance to the Porsche model.
You're talking about that Porsche Tyken.
Yes, right, but still it's a very cool car and the boat colors with bright blue, bright pink, the purple, and people love it, especially the younger generation and especially the female drivers. They are so into the Shell Me Su seven car. So it's a cool car, and also it has a very smart market positioning. It's a little bit affordable, more affordable than the Tesla model.
Which one you're talking about, the Model three, Yes, the.
Model three, because both are sedan car it's a little bit more affordable than Tesla Model three, but it comes with greater room and also more smart tech functions for free. For example, you have to pay everything extra for Tesla if you want to get the ONUS driving functions, if you want to get the better connectivity functions, but in a shall Me car, most of them are free. Also if you're compared to bid Byde's main battleground is actually the mass market where cars are more like priced lower
and also with less amenities. But for shall Me car, basically it kind of like avoided direct competition with BYD while it gives a consumers more offerings versus.
A Tesla car.
And also I think the second thing that's very important is that the brand value. People recognize the shell me brand, the shehll me name, people like the CEO Laging. So the brand value of shall Me is We've never seen this in any other Chinese even maker. You know, it takes bid almost a decade to build up its brand value in China, but for show me, they can just transfer it from the smartphone space to the EV space.
And I wanted to just elaborate on one thing you mentioned. It is cheaper than the Model three by Tesla. But it's not a budget car in any stretch of the means right.
Now, it's not a budget car. If it's a budger car, then it will face direct competition with BID. So shell Me was smart enough to price its vehicles and also position it's vehicles in this we call me to high end market in China so that you don't go directly with BID and face its like fierce competition.
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and share. Steven, I want to get some background on show me as a company. Now most people know this as a maker of I would say budget smartphones. I also make some cool electronic devices as well. What made the company get into evs?
Actually that's an interesting switch because what happens actually back to early twenty twenty one when the US Garment actually puts me on the sanctioned list, meaning that show me can sell anything in the US, and the company had the urgent board meeting, and during the meeting, one of the board members say, if we couldn't sell a smartphone, what would be our alternative? And then so people kind of brainstorm me, and then some people say, wait, why
not making EV? So there was obviously a bole idea, and Leging was not on board immediately because he was hesitant. But then he did some homework, he checked with some of his friends, did some study, and then even chated with son of the EV maker in China, and after a few weeks he made a decision that okay, we're going to make EV. So that's basically how it starts. And then obviously spent a lot of the resources and
he basically lead the project. I think they actually sent a message to the organization that they're serious in this endeavor apparently is new, so they are studying what other global companies are doing. And then they leveraged a lot of the supply chain in China. Obviously China already has a pretty comprehensive supply chain for electric vehicle at that point of time, even though shell me is new, but
they can basically tap to those resources. And the other thing I think is also important, I think is because the government support in China. Obviously the new energy vehicle is one of the major industry or more focus based on the China's twenty twenty five initiative, the Chinese government is willing to support shell means initiative. Actually, the company baic was initially the major partner to handle the manufacturing for shell Me's vehicle before shall Me had its own
capacity for vehicle. Those are I think the thing that why shell me is able to establish their even business from scratch. But other than that, the company also coming about ten billion remen b in this whole R and D. They are actually developing their own technology for electric motors, for alloy. They even have a pattern for their own
alloy and also the casting. Also the office is so software ecosystem, which they leveraged their strengths in their electronic device business, so they are able to put everything together to this new electronic vehicle business.
Stephen Apple famously or they had an open secret pretty much that they wanted to develop electric vehicle for over a decade, but they gave up on their plans. Are you surprised at a company like Shelmi was able to create an electric vehicle in three years and it was pretty much a success. It was a home run in their first try.
As I mentioned, the whole thing of this developing EV business for Shelm is really because the under pressure they have this crisis or survival because if they are not able to sell smartphone, they basically get over for the company. Right, So that's actually the big pressure for the company. We have to say. I mean Apple is never under such pressure, So I guess that's a huge difference. Also, I think show me itself, once they make a decision of making EV,
they're actually committed to that goal. Because one example is that most of the top managements show me at this point they actually has the driver license for the fine racing car. Because Laging itself, when he startied this EV business, he found out that most of the major leading auto company in the world, all the top management are all big fan of fin racing cars. So he says, Okay, if we want in this business, we have to do
this right. You have to really have the passion for the speed for the car, for the vehicle, so they do that. I'm not sure if other auto companies in China are actually doing the same thing, but this actually is an example showing that they're really committed to what they're doing.
Even what's driving the share price. Is it the EV side or is it the consumer electronic side.
It's definitely on EV side. I mean, obviously they're doing great in their smartphone business. They post a very strong growth over the past two years. But EV, it's no doubt that people actually has a very highest petition on EV business, which is why the valuation actually at some points are even more expensive than the EV pers in China.
We did have a note Elaradier mentioned about their EV valuation may not necessarily sustainable at that point because at one point they're actually traded like a six to seven ties price to seals will by it is only like one to two ties. Well, now the share price office is corrected and valuation wise it become more reasonable. But then people are obviously waiting for the next model and hopefully they can maintain their momentum.
And can you give us some background on the chairman the founder Leijun for the Western audience. Leijiuon is almost known as the Steve Jobs of China. Would you say it's his reputation, Yes, he would draw the comparison. Yes, he's got a bit of a cult following in China, especially in social media. Tell us his background, Yes, I think before show Me he he already is a pretty well known entrepreneur.
He's chairman of Kingsoft, which is one of the major software companies in China. Also, I think he found an e commerce website which was later on acquired by Amazon. So before he founded show Me, he has been a very experienced its manewer enjoy investors in China. And when he founded shell Me, he never considered show Me to be a horwad company. He considered showing Me to be
an internet company. So he focused a lot on the office, the ecosystem software, and then, as you mentioned in the social media, we are very good in promoting the product or promoting some idea through social media. To the fame based building, you must have hurt the me fans, which are actually very enthusiastic about all the sham prada and obviously to some stand that kind of enthusiasm also extends
into the chairman Beijing. So the whole thing obviously be kind of important assets for showing when they move into new business, and EV obviously is a clear example that they can actually put us off with a relative period time because of that.
Yes, and actually that really helped on the marketing side for the s U seven because under this hyper competitive environment of China's even market, all the automakers are trying so hard and spend so much money on marketing and show me with like laging quite vocal on social media, got a huge amount of followers on social media, and that kind of helped promote the popularity of the Su seven and people going on social media checking out the cars, and then they go to the retail stores trying to
get a test drive, and some of them even before they get a test drive, they will place orders for the Su seven. That's how popular it is now.
Joanna, you alluded to the fact that it's really competitive to trying to make it EV successful in China. I think there's over one hundred electric vehicles companies right now. Now you just went to the Shanghai order show. Tell us, like, what are the differentiating factors right now for Chinese evs? Can companies actually differentiate themselves.
That's a really good question. So it's getting more and more difficult for EV companies to differentiate themselves. And you know, the technologies are improving so fast. Most of the even models they claim to have fast charging capabilities, they are seeing their owns driving capabilities improving. And if you look at the exterior and also interior design, it's getting more similar or going for there's futuristic and text savvy looks,
so that's why it's getting more and more difficult. And shall Me car really stands out because of the very cool design, the boat colors, the sports car feeling vibe. And if you look at the crowd, even though Leiging wasn't there at the Shanghai Auto Show, shall Miss booth
still get the largest crowd. If you go in the afternoon when all the people crowd into the venue, you have to wait like thirty minutes to get into the show me both and you can hardly see the car because there were so many people in the booths surrounding the vehicles checking it out inside out. We can definitely tell even though Leiging wasn't there, it's the busiest booth among all the venues. At the Shanghai Auto Show.
And you just mentioned the fast charging av batteries, Now what's the latest. There was big use that BYD launched a battery that can fully recharge in five minutes. That's an amazing step.
Yes, so b why they launched its fast charging even battery technology, you know, like four hundred kilometers under five minutes of charge. And then you know, say, atl the largest battery maker in China, also launched its fast charging battery just one months later, saying that it can charge to five hundred kilometers under five minutes. So you can tell, like how fast the technologies are involving in China, and
automakers they have to keep up. They have to go with really fast R and D and technology innovation and also upgrading their products pretty fast to stay competitive in the market and keep attracting consumers.
And let's talk about the future.
Now.
They've just got one model right now. To give listeners some background, shallmy's share prices being one of the best in the Hangsing index and I've mentioned before it's up one hundred and seventy percent over the last twelve months. They are launching a model, a new model in the next few months. What's the latest.
Yes, so currently the SU seven is a sedan model and then Shami will soon launch its next suv model between June and July. And so far what we know is that the SU seven also has a pretty cool exterior design. Again, very cool color offerings, and the size is also like a miss size suv that comes a little bit larger than Tesla, but probably the market is expecting slightly lower prices so make the car more attractive
to consumers. Unfortunately, we didn't see the Yu seven being displayed at the Shanghai Auto Show, so what we're only seen so far are the commercials on social media. But we'll get to see the car pretty soon.
And Steven, given the fact that Shami is a technology company, does that give it an added benefit or an advantage over Piece in terms of AI autonomous driving and its operating system?
I think so. I mean, if you compare to the existing autol maker, obviously they have this creative image as a technology company, and if you compare to the new start up in the EV market, show me even though they are new in EV, but they do have the clear try records in the smartphone business and also they have a very strong brain recognition, So those are the advantage versus those new EV startups. So obviously they're in
a very good position now. As long as they make the product right, they are actually will be able to make a very clear impact in the market, which is basically what s U seven is still in now. And then going forward, I think as long as they keep the pace of launching a new product, they are able to become a very solid player in this very competitive market.
And when are we going to say, show me cars in other countries?
Obviously this is on their to do lists. Legend does say that they are definitely going to launch the product overseas. I think it is said that they want to sell the product in Europe by twenty thirty, and I think we won't be surprised if we see Shamis EV to be sold in some Asian countries. But they are obviously very careful in executing this overseas expansion. Obviously they want to understand the market before they actually devoted resources there.
At the moment, I think they will launch their EV in those countries where Shami's smartphone actually has a high market share because they can actually leverage the channel there. So I guess that's what has happening actually, and they already set up an R and D and design center in Germany. Even though it's very early stage, you can tell that that they're very serious in overseas expansion.
And let's not forget consumers in China are still waiting nine to ten months for the shall Me cars, so they definitely have to feel the domestic demand first before really going abroad getting the capacity enough for overseas expansion.
The story has been all very positive, but I wanted to focus on the other side. A couple of things. What's the build quality, like really shell Me versus say, you know European or Tesla.
Well, that's a tough one. Well, people have their own opinions. But from my personal opinion, obviously compared to the Europeans who have built the cars for so many, so many years, a new startup like shall Me, it will be very difficult to match the same craftsmanship you're seeing probably in a German car. Well, it shouldn't come.
As a surprise much cheaper.
Yes, yes, and also like the cheaper so if you look at the interior and and also some like very details, probably you don't see the bill quality as that good as a German car, but still like we don't hear a lot of complaints from the Shami car. People are overall satisfied with the quality of their manufacturing and we don't see like major issues being reported on the manufacturing side.
And Stephen, the share price had a big correction earlier this year, though it has recovered somewhat, and this was on the back of a tragic accident. Can you give us some details of that accident and it seems like it hasn't really impacted business, you know, tell.
Us, Yeah, I think there's obviously something to do with a very unfortunate accident of three college girls. Basically, the cars at the crash and burn into flame, and somehow the door was locked so those girls can knock it out and hence the tragedy. Obviously, now the scenes are under investigation. But then, like you said, it didn't really have any material impact on the EV demand, and we do see similar assident for other major brand like Testla
for example. They also have such accidant from time to time. So maybe people are not necessarily right off show me as an EV brand because of that issue, but certainly that can be an issue. I mean, going forward, if that happened again or a similar situations happen again, then
you know the company may be under bigger pressure. Hopefully it won't happen again, but going forward, I think the company right now just have one model, but when they start to expand their product line up, definitely the card users that we have scrutiny on their quality, safety tray record. Yeah, so that's definitely something that we need to keep an eye on.
Okay, before I let you go, I wanted to ask Joanna, would you buy show Me EV?
Yes?
Absolutely yes, because it's a cool car. It's very cool and comes with a range that I can afford.
And Stephen, what's your honest opinion if you had to buy a Chinese EV, which one would it be?
Yes? I would definitely show Me. I mean certainly looks very kind of like a smartphone. Rang this cool product with value. Also, I think a lot of the integration in their product which tightly integrate with their product ecosystem, So I think I definitely I'd like to experience that ecosystem myself.
Yeah, okay, I would personally buy the Essayiics Maxis car, but that's a family car, probably a reflection of myself rather than anything else.
Well, I have to say the Maxis MPV are very comfortable.
Okay, that's a great way to end the show. Joanna Steven, thanks for joining, Thanks for having us. Thank you you've been listening to Age Eccentric from Bloomberg Intelligence. I'm John Lely in Hong Kong. You can find with all our episodes on Apple Podcasts, Spotify, or wherever you listen. This podcast was also produced by Clara Chan and thanks for listening.