Inside Stellantis's Corporate and Product Re-do

追加: 2026-05-22

[00:00:00]But again, >> Autoline After Hours is brought to you by Bridgestone Tires. Solutions for your journey.

[00:00:11]Hey everybody, thanks for joining us on Autoline After Hours. Gary Vas Lash is not here today. He's on vacation. I I believe he's in jolly old England in London in particular. But we've got Sean Maroy here and our great colleague and friend Lindseay Brook has joined us as well.

[00:00:26]>> Good to see you. Boy, we got a lot of good stuff to talk about.

[00:00:30]>> Yeah, I mean, obviously, I think we should address uh first, we were supposed to have a couple of guests that haven't uh showed up yet. Uh so, we're just kind of uh waiting on them.

[00:00:41]>> Rolling with the punches.

[00:00:42]>> Rolling with the punches, so to speak.

[00:00:44]So, I'm kind of here filling in at the moment. Hopefully, you know, we have a guest or two show up at some point.

[00:00:50]>> If a guest shows up, I'm kicking you out of the chair.

[00:00:52]>> Yeah, I'll be gone. That's for sure. But uh so yeah, I mean figure there's plenty of news going on in this industry for the three of us here to talk about. So uh I think it'll be just fine.

[00:01:04]>> Well, let's get into I mean I literally just got back from the Stalantis investor day >> and you know they brought in media from all over the world. Actually I shouldn't say all over the world, mostly Europe and Latin America. brought in analysts from Europe and Latin America and of course uh there was a US and Canadian media and Mexican and analysts and all that. But here here's the basics that I you know the highlights of what I see.

[00:01:35]They're going to try to put just about everything on only three platforms.

[00:01:40]>> Uh they have a new platform coming called Stella 1. Yep.

[00:01:45]>> Uh that is going to be able to front drive, rear drive, all-wheel drive, ice, uh hybrid, bev, e-rev. >> Yeah. I think it was BCD segments that that that one platform could cover in up to 30 plus models.

[00:02:01]>> Yeah.

[00:02:02]>> And then they have uh Stella frame, which they've had for a couple of years, and now they've got another uh uh commercial van uh platform coming too that will do ice and bev. Um, but I I think that's a smart plan to have three platforms. I mean, you're going to get massive scale, but Lindsay, we were talking before the show and you were pointing out, man, do they have a lot of brands to feed.

[00:02:27]>> They got a lot of brands to feed. Uh, name plates within the brands. And I think for automotive enthusiasts, you know, you wonder about some of the storied brands that they have, Maserati, etc. Um, but what happens to them in a global platform environment and can you sustain them? And even Fiat in this market, we saw what happened to that with the Fiat 500 and the little kind of van version of it. Uh, and then the Fiat 124, which was really a Mazda Miata. Uh, and the dealers just they were achingly disappointed at the the product cadence that that happened there. So, I'm wondering what they're going to do with Is the Fiat brand still alive in in the US?

[00:03:13]>> I don't think so. I mean, they they talk a lot about Fiat, but globally.

[00:03:18]>> Yeah.

[00:03:18]>> And I I didn't realize this before. Fiat is actually the highest volume brand in the Stalantis group. There are more cars sold with the Fiat badge on them than any other badge in the in the Stalantis group. Um, but yeah, they didn't say anything about Fiat in the US or Alfa Romeo in the US. And they said, uh, Maserati, we'll talk about Maserati another time. So, they've got plans for Maserati, but they weren't ready to talk about it yet.

[00:03:49]>> Yeah. I mean, I think the thing I found pretty interesting is that, you know, over the next five years, they're committing something close to $70 billion to this whole this whole plan that they have uh rolled out. And 70% of that investment is going towards the commercial brand. Jeep, Ram, uh was it a Pujo and Fiat?

[00:04:13]>> Yeah. Yeah.

[00:04:14]>> So those five will get the 70% of that.

[00:04:18]Then it's Chrysler, Opel, Alpha, and Catroan are kind of like the next tier down.

[00:04:27]They'll get all the same stuff that those ones get, but those ones get the new stuff first.

[00:04:31]>> Right. Right. And then DS Launchia are going to be controlled by Catroan and Fiat and will kind of be like more of a niche brand within those groups. And then they said two new e-mobility vehicles for Maserati, whatever that may mean.

[00:04:48]>> Yeah. Yeah.

[00:04:48]>> And they're doing deals, Pujo's doing deals with Chinese automakers as well.

[00:04:53]>> Yes.

[00:04:53]>> I read recently.

[00:04:55]>> Yeah. They're gonna they announced that a couple of models that they showed off at the Beijing Auto Show uh are going to be uh developed in China and then there's going to be a Jeep uh model off of that same platform it sounds like as well.

[00:05:12]>> Yeah. So, so and that's all going to be I think the Stella one platform.

[00:05:16]>> Yeah. I don't >> and that that's they didn't say it but I'm confident to say that it's all leap motor. this is all being done in China >> and so because they're bragging, hey, we're going to get this out in two years time and blah blah blah blah. And it's like, yeah, it sounds to me like the Chinese are doing this for you.

[00:05:35]>> It sounds like a lot of bandwidth in this one in on this one platform. I mean, a ton of bandwidth.

[00:05:40]>> Yeah, right. You know, and and do you do you make like the ones in the middle, are they really good? and the ones on the fringes of it, the the you know smaller ones and larger ones, are they going to be kind of compromised because >> Good question.

[00:05:54]>> Well, hopefully one of our guests later will be the perfect person to ask that question.

[00:06:00]>> Yeah, because we'll have uh Matthew Vacher from Kerasoft coming on.

[00:06:04]>> Hopefully, fingers crossed.

[00:06:06]>> And he's he's I'm just he's talked in the past about that exact very thing.

[00:06:10]Lindsay is, you know, uh, we we've all heard of flying cars before, but we know that they're not good cars and they're not good planes either, right? That's right.

[00:06:20]>> So, it's kind of that same effect on a platform where you're trying to stretch it across so many things. There is going to be inefficiencies somewhere in there.

[00:06:28]>> Yeah. And hopefully Matthew does show up because that's a good it's a good uh point to make about uh mega castings or giga castings or whatever you want to call them and consolidating some of this down to just three or four kind of main underpinnings of the platform and how you do that with that with that breadth of product that you're going to be putting on that platform.

[00:06:51]>> Yeah.

[00:06:52]>> Yeah. So, big news I think that our audience is going to be especially interested in. The Chrysler brand is going to get three new models.

[00:07:00]>> Uh, uh, sort of a, uh, I would say a Ford Sapsized, uh, uh, hatch version and slightly more fastback version. And they're going to be rebadged versions of >> No, no, they're not going to be doing like the Mercedes BMW thing where they have, you know, the the the fastback SUVs are. Is that what it sounded like to you?

[00:07:31]>> Yeah. I really dislike that strategy because I think you just >> And cross tour was in that realm.

[00:07:38]>> Exactly. Right.

[00:07:39]>> It's not that bad. I mean, most people will go for the more squared off back to it because it's, you know, more luggage capable and all that, cargo capable.

[00:07:49]>> Some people are going to want a slightly sportier version. I mean, all the sheet metal is identical except for the rear 34 panels and the hatchets. Other than that, so for very minor tooling change, you can address I don't know what is it going to be 10 20% of that of those sales will be the sportier version.

[00:08:12]>> So is Stalantis recommitting to passenger cars with this?

[00:08:15]>> I I wouldn't call I'd call them crossovers. They don't look like passenger cars at all.

[00:08:20]>> No three box sedans. What? Yeah.

[00:08:22]>> No, not not for the US market certainly.

[00:08:25]And then they've got uh what they're going to call the Chrysler airflow that is not like at all the airflow that they showed at what was it CES four years ago or something like that years ago.

[00:08:38]>> Uh it's much boxier version again. It's uh >> you know another rebatched refaced version of something that Fiat's getting >> a boxy airflow.

[00:08:48]>> Yeah. Now viewers out there, Google Chrysler airflow. Okay. The whole point was aerodynamics before aerodynamics was even a topic in automotive.

[00:08:59]>> That's right. So, >> exactly right.

[00:09:02]>> Let's see the other thing. Uh, Catroan's going to bring back the Duchabo >> and it's a a retro modern version. I thought it was pretty cool, but it's it's clearly going to be a a really niche product and it's going to be electric.

[00:09:18]>> And I I'm sure they're not going to sell it in the US. It'll probably be a phenomena largely in France, Italy, Spain, and Portugal. That that kind of market is what I see it.

[00:09:30]>> Do either of you guys see something like that working for a car as iconic as the Ducho?

[00:09:37]>> Me? No. I like I don't think you can capture that essence anymore that a vehicle like that had.

[00:09:43]>> Well, it's a question, Sean, about just basic vehicles and how basic you can go in today's particularly in this market where you're used to electric windows and automatic transmissions and air conditioning and all that kind of jazz.

[00:09:56]And we'll see it with the slate truck certainly that's probably the, you know, as far down as we'll see it. But uh when I was at Chrysler, we did the CCV program which was a doucheo, modern doucheo with just a few plastic panels, big panels for developing markets. And so, but as it turned out, the developing markets didn't want something that cheap, you know, they didn't want something that basic.

[00:10:21]>> But you know, that car was brilliant. It was really brilliant >> because you know you say four panels it was really >> the car was made up of >> it was a floor that was the anchor of it >> right but then the rest of the car was just four big molded block you know people are talking about giga castings yeah >> the CCV >> plasto castings >> plasto but I mean you know talk about cutting complexity I I still think the idea should be brought back because to me it blows giga castings away >> right right so So, it's interesting that Stalantis is returning to that with from uh from the Pujo brand and Chrysler had tried it because the head of engineering was French and he used that as a model for a a global cheap car. So, that's really interesting to see that. I can't wait to see that car.

[00:11:09]>> Yeah, >> it it looks cool. It will be revealed at the Parisa Auto Show appropriately. So, yeah, they're not going to release any pictures and of course they didn't let us take any pictures. The other thing that might be interesting too to the uh everybody watching, Dodge is going to bring the GLH back or at least uh they're gonna have uh a hot hatch that they're going to call the GLH.

[00:11:34]>> Goes like hell.

[00:11:34]>> Goes like hell. That remember that was Carol Shelby came up with that back in the day for the Omni.

[00:11:40]>> Yeah.

[00:11:41]>> Yeah. I thought they had a GLH version of the Hornet as well.

[00:11:46]>> Yeah. Yeah, >> but I don't but I know they they what was the other name that they used for the Hornet that was an old uh >> Superb.

[00:11:53]>> I think they had that as well, but I I thought they were supposed to have a GLH version. I don't know if they ever did come out with that, but they they they had that name back for at least a moment with that one. You know, you got to hand it to Chrysler and then Daimler Chrysler and now Stalantis that they have curated these great name plates and kept them in their intellectual property as well as anybody in the industry has and they constantly pull these. They'll be behind a vehicle in traffic. It's like they pulled that out of 1968 or they pulled that out of 1974. I think they have an appreciation for their history that's >> pretty good.

[00:12:30]>> Yeah. Yeah. It's it's worked. Uh, another thing, Dodge is going to come out with a hyperformance car.

[00:12:35]>> I thought it was going to be like a Viper, uh, but it's it's a hyperformance sedan >> and it looks like a super slammed version of uh the Dodge Challenger >> and or Dodge Charger >> and um they wouldn't say anything about they're they're calling it the Copper Head, >> you know. So Viper is a snake, Copperhead is a snake, you know, >> and that was a concept car if you remember during the Tom Gale era, right?

[00:13:04]>> It was uh >> forgot about was it a roadster, but it was a Copperhead. It might have had a Viper engine in it at the time. Oh, >> so uh yeah, they, you know, their their whole goal is refresh everything, uh put everything on three platforms, get mega scale, take cost out, get into new segments, you know, where they're not right now, and grow the company that way. And I think the plan is solid, but you know, every car company we go to says, "Oh, we're going into new parts of the market we've never been. we're going to grow all our, you know, everybody thinks they're going to grow their sales and it never works out that way. I'm not saying it's not going to work out for them. I'm just saying that everybody says they're going to grow their sales.

[00:13:48]>> Did they mention their uh continuing commitment or not to electrification?

[00:13:54]>> Yeah, absolutely. um not so much for the US because it's not happening here, but they believe that uh in a decade >> uh EV market share in Europe, >> I'm trying to remember now, they say it's either going to double or triple.

[00:14:12]>> So, so there every one of these brands that that I've been talking about plus commercial is going to have pure bevs.

[00:14:21]Let's >> see if I can remember the numbers enough.

[00:14:25]60 new models was part of it.

[00:14:28]29 BEV, 14ish PvE.

[00:14:35]>> Uh there was a bunch of full hybrids in there and then there was ice and mild hybrid as well. So yeah, and the Stella 1 platform is multi- powertrain >> and it can go up to 800 volt with bev >> uh and it'll have like LFP packs and Stella pack design.

[00:14:56]>> Yeah, they they said it would be 800 volt ready.

[00:15:00]>> So it looks to me like it's a staged thing to get 800 volt.

[00:15:04]>> And they also said it would be uh birectional ready by birectional charging. feed it back into the grid, >> right?

[00:15:11]>> Yeah.

[00:15:11]>> Or you can feed it back into your home or other devices.

[00:15:14]>> Right. Right.

[00:15:15]>> What I like about birectional I and I think this will be the game changer where a lot of people say, "Man, I got to get me a BEV."

[00:15:21]>> Um where you can uh fill up your battery when electric rates are low at night and sell it back to the utility during the day if you're not using your vehicle >> and actually make money. So I mean you know theoretically it may even be possible your electric bill is zero >> uh because you're buying and selling electricity buying low and selling high.

[00:15:48]>> So yeah I I love the idea of birectional.

[00:15:51]>> Well you think of like a a space view of any uh quadrant in a suburb at night with x number of electric cars and all sitting there with potentially full batteries full charge. and what the potential that could be to to mitigate, you know, storms or feed it back into the grid or what you want to do. I mean, potentially it's a lot of energy sitting in one place.

[00:16:17]>> That's right.

[00:16:18]>> And multiply it over the world. Wow.

[00:16:20]It's a good idea.

[00:16:21]>> I don't know if you've heard about these virtual power plants at all, Lindsay.

[00:16:24]And it's that idea just people are aggregating all that together into one source and then these virtual power plants are selling off that electricity to the utilities and uh it you know it's not just vehicles. A lot of people have solar and they have home energy storage as well >> and they're using all of that to >> they're sitting on a lot of power potentially >> there. there's gigawatt hours uh in some of these virtual power plants that are all together.

[00:16:55]>> So it begs the question with this breadth of uh all sorts of new vehicles, all sorts of new technologies uh down to three platforms, did they mention at all about their manufacturing plan for this and like supplier involvement? Because Chrysler was always weak on kind of advanced technology, but they were always clever. They had great ideas, but it was like pulling it off in in scale was always a struggle, you know.

[00:17:21]>> So, so the only thing they talked about manufacturing wise really is they're going to reduce Stalantis capacity in Europe by 800,000 vehicles without with without closing any plants.

[00:17:35]And what the how do you take out that much capacity and not close a plant? So, one of them is a assembly plant in France Pi. They're going to convert it from assembly to parts manufacturing.

[00:17:48]>> And then there's three other plants and I don't know if I can remember them off the top of my head. Madrid, >> one was Madrid and then there was another one in France as well.

[00:17:56]>> Yeah. And then I But anyway, what they're going to do is let Dong Fong from China build car. They will build cars for Dongfang.

[00:18:08]and um and >> Leap Motors.

[00:18:11]>> Leap Motors is uh oh no, I got that wrong. They're going to build cars for Leap Motor and Dong Fong is going to manufacture cars in their those plants.

[00:18:23]So, they're taking Stella capacity out and filling it with Dong Fong and Leap Motor capacity.

[00:18:31]Uh we'll see how that works. But what it does is it'll get those plants, so the plan says to 80% capacity utilization.

[00:18:40]That's when you can start making money at those plants.

[00:18:42]>> Any me reciprocity for Leap Motor and Dongfang plants in China to make brand vehicles?

[00:18:51]>> No, they're going to make Jeeps.

[00:18:53]>> That makes sense. They're going to put and they didn't say exactly which models, but it's probably like Compass and uh you know the smaller >> it was like I if I remember correctly I think they were like mid considered midsize uh vehicles.

[00:19:10]>> Okay. But they're >> they didn't say what brand yet.

[00:19:14]>> Wow. Elite Motor Platforms built in China for export to markets around the world. But badged as Jeeps, but but badged as Jeeps.

[00:19:24]>> This is the the Pujo vehicles that we were talking about earlier, too. That's right. That's what uh the Jeep vehicle was going to be on as well.

[00:19:32]>> Sounds like an ambitious plan. Of course, I remember when uh um Sergio came in and the first big plan when Fiat took over, it was just the the grand plan and some of it turned out, but they ended up just standing on the shoulders of muscle cars which was very profitable for them and ramps, >> right?

[00:19:52]>> You know, so can they pull this off with, you know, the stretch platform is really interesting. That's a great story.

[00:19:59]>> Yeah, it really is. And uh that it is so multi-powered train, right? you know, it can accommodate anything. Now, you know, the people at Kerasoft will tell you, well, there's a what do they call it?

[00:20:12]SCAR mass.

[00:20:13]>> Yeah.

[00:20:14]>> You know, where you know, if if you design a vehicle to accommodate >> a gas tank, >> a gas tank and stuff you and you want to make a BEV version and the BV version's hauling around a lot of weight.

[00:20:26]>> It's compromised. It's a compromised design. But we're in an industry right now that has just wiped out tens of billions of dollars in capital on EV bets that went wrong. Here in the US, the automakers are spending of multiple billions on tariffs. And it's like >> they got to have one platform that can do it all.

[00:20:48]>> Right. Right.

[00:20:49]>> Yeah. I will say though that uh you know what Stellantis is doing is very ambitious and you know it sounds really nice but I kind of think at the same token their previous platform plan soundsish similar to this where they had Stella small, Stella medium, Stella large and Stella frame.

[00:21:12]>> Now that was supposed to be more bev focused but they weren't able to pull those off really. there there not too many vehicles that fit on those platforms right now. And on top of that, the Stella platforms were supposed to get their what they call Stella brain, Stella smart cockpit >> and all this technology.

[00:21:36]>> And now this what we think is elite motor platform, the Stella one that's going to have all of it.

[00:21:41]>> It's getting that stuff first, not the original Stella platforms that were supposed to get it, right? So, >> can they pull it off, I guess, is the deal. You know, they weren't able to do it before with the stuff that they had previously announced and now it's just kind of looks it's getting kicked down to this now.

[00:21:59]>> Here here's how I read it. So, they had, you know, all the different Stellas that you know that you just mentioned, >> they were probably high cost >> certainly compared to, you know, they probably looked at Leap Motors platform and went, "Oh my god, this is so much cheaper."

[00:22:16]>> Yeah. Yeah. And and also Leap Motors can move far faster than them. You know, it's doing a programs in in 22 24 months. And so when you're you got a program that's moving far faster, you can put new technology into it quicker than into the other stuff. So I I think that's what's happened is they just said, "Okay, we did all these Stella frames or Stella platforms, but let's just put it all on this leap motor one and call it a day." I get it. But I still, you know, we criticized Volkswagen for how bad Kari ad screwed up.

[00:22:51]>> Yeah.

[00:22:51]>> And they're kind of doing the same thing with that Stella's doing. They've jumped to Riven and sank nearly six billion bucks into Rivian to get their tech.

[00:23:00]>> Right. Right. Right. But, you know, but that was all about getting uh software defined vehicle. You know, zonal centralized compute architecture. They couldn't Volkswagen Kriad couldn't make it work. Rivian said, "We'll sell it to you. It's only5 billion dollars. But how is but how is that different from what Stella's doing with Leap Motor then?

[00:23:20]because you know so they're getting the platform but they're keeping stellar brain which is essentially a zonal not essentially >> it is it's it's a zonal centralized >> central computing in the vehicle >> but that comes from Qualcomm and Nvidia >> right >> right no that's exactly right >> I'm just I'm just saying like I I wonder about their ability to integrate all this stuff in as fast as they really want to >> great question and and then we have to see you know to your point Lindsay How how good are these vehicles going to be? Yeah.

[00:23:54]>> You know, that go uh B, C, and D segment, you know, is it going to be a great C segment and a mediocre B and a mediocre D or a fair question or what?

[00:24:03]>> Yeah. And and what is the Did they mention the future of the old Chrysler technology center? What is going to be generated from the the the engineers and designers in this market versus globally? Because Fiat has played a big role in these kind of global global platforms >> like the only reason Stellantis is holding this meeting in Auburn Hills >> where they're making the money >> where they make all their profits. I mean they can talk all this great stuff going on in Europe and Latin America and Asia and all they make all their I shouldn't say all their make 60 >> or they did make 60% of their profits until everything came apart. Yeah.

[00:24:43]>> And they recognize Jeep and Ram are going to be the saviors of the company.

[00:24:48]>> Yeah. So, uh, look, uh, why don't we, uh, I I think one of our guests has arrived. This is probably Matthew. And, uh, we'll keep talking, folks, because this is what you do when it's live. You just roll with whatever is happening.

[00:25:03]>> Yeah, I was going to add one quick more thing, uh, that Lindsay was talking about production earlier. They did say in North America they want to boost volume by 35% here and boost capacity utilization in North America to 80% as well.

[00:25:20]>> Yeah.

[00:25:20]>> So I mean obviously they're they're thinking about some increase production somewhere somehow you know.

[00:25:27]>> Yeah.

[00:25:29]But uh >> well I was wondering about like design and engineering uh capacity utilization.

[00:25:35]You know they're hiring like crazy in Auburn Hills right now.

[00:25:39]>> Oh that's good.

[00:25:39]>> They they gutted the operation under Tavveraris. They realized now that was a mistake. They're they're trying to rebuild it.

[00:25:46]>> Um >> but uh it isn't easy. So >> yeah.

[00:25:51]>> No, they they'll rebuild the the capacity in in Auburn Hills. I I don't know is it'll go back to what it was before, but remember what was the other big news that broke this week or yesterday? They're they're going to work with JLR, Jaguar Land Rover. Yeah.

[00:26:07]>> To do uh new technology and new vehicles and all of that engineering will be done in Auburn Hills.

[00:26:14]>> That's interesting. Yeah. Yeah. Who would have thought that? But these last concepts I saw of the future Jaguar, these kind of long almost shooting break kind of, you know, huge cars.

[00:26:26]>> Yeah. What they call the typo one. They finally put a name on it. But it uh >> Yeah. I don't see Stalantis doing much with Jaguar. But I think there's a natural to have Jeep and Land Rover >> develop platform or technology or whatever together.

[00:26:42]>> Yeah. Yeah. Hopefully. Well, I don't know. I I think they could both lend something to each other um without muddying the water between them or muddying each other. You know, there's a refinement with with Range Rover that maybe Jeep could use, but there's a utility and a um kind of simplicity of Jeep, just thinking of Wrangler versus Land Rover that that um I think Jeep has an advantage on. I did see a headline that kind of made me chuckle. Uh just talking about wow, two brands that are really known for their reliability.

[00:27:17]>> Horrible.

[00:27:19]>> Horrible in the dumper.

[00:27:21]>> Yeah. Yeah. Yeah. Hey. Hey. Uh let's take a quick commercial break right now.

[00:27:25]We'll be back in just a minute. We got a lot more to talk about.

[00:27:31]>> Knowing that a little rain won't slow down your day. That's what really matters. Bridgestone Toronto quiet track tires. Confident control in wet conditions.

[00:27:45]>> How you doing?

[00:27:45]>> Yeah, I'm doing well. Great to have you here, Matthew.

[00:27:47]>> Lindsey Brookke.

[00:27:48]>> Nice to meet you.

[00:27:49]>> Nice to see you again.

[00:27:49]>> Nice to see you.

[00:27:52]>> All right, we're back. We have Matthew Vacha Parampill, the CEO of Kerosoft with us. And uh Matthew, I know one of the things we've been trying to get you on the show for for weeks now, but you were at uh the Beijing Auto Show >> and you learned a lot of things.

[00:28:13]So just top of mind, what were like two or three of the top things that you learned while you were there?

[00:28:20]>> I think the thing that impressed me the most was uh one is of course in China, it's always the speed of change. more importantly how they are implementing AI in the product, how they're employment AI in their companies and processes so on. So that was one big piece. You could see that in ADAS systems and so on and so forth. The other thing that really struck me was uh uh the evolution in terms of chips and they one of the most expensive components in AI is chips that run it and so you saw various companies developing their own SOC systems on chips and so on and so forth because uh they want to keep control of their costs and get control of their technology. And then um uh the other one was uh the fast charging from BYD was huge uh because it goes from zero to get around 9 minutes around 90 80 90% of the charge. So the it reduces the difference between an ice vehicle and a battery vehicle. Uh CL showed uh their batteries which they're planning to go into production in 2027.

[00:29:36]They didn't say it's solid state, but they said it's uh uh battery with um uh no u no liquid semi solid semi solid state and so on.

[00:29:53]So and then the important thing was that for the same uh kilowatt hours the battery was around 40% less in volume and lighter. So which affects your body j body in terms of crash performance thermal runaway all those things and so on.

[00:30:14]>> Yeah that's amazing.

[00:30:16]>> You know one uh Matthew one um uh descriptor that's used to describe the the Chinese OEM success is government support. uh you know it's one one advantage they have over the rest of the of the industry. Um if if you were advising the US government on how to you know how how to change that scenario so there's so the US industry is on more of a competitive footing terms of government support. What what would you advise the government?

[00:30:57]Okay. So I think it's first important to understand. I think there's a lot of things being thrown thrown out in term a lot of things being thrown out in terms of government subsidy >> but it's important to understand >> what the government subsidy is. So typically it has to do with >> um um >> they give you land that can be leased.

[00:31:21]Mhm.

[00:31:21]>> Uh they will help you with the construction of a building >> and uh those are sort of subsidies and so on. But I think uh so that's one piece. So I think what's important to understand is uh where the Chinese work very very efficiently.

[00:31:36]So uh let's take a company like uh SIC for example. They work with um they work with Volkswagen, they work with GM and they work with say some other OEM.

[00:31:49]>> Mhm. And um uh typically if you go to GM, Ford and Stellantis here, uh if you take a vehicle which is 2,000 kilos, they all develop their own brake systems.

[00:32:05]>> Mhm.

[00:32:05]>> Pretty much what defines the performance characteristics of brake is the weight of the car, the stopping distance, how many seconds you want to stop it in, the speed and so on. And the Chinese OEM looks at Volkswagen, GM, and somebody else and says, "All three of you make same cars in the CSUV segment. You make different brakes and it makes no sense because it's the same thing. Does the customer care what so long as the car stops, do you really go in and look at whether the brake has this particular spec and so on? If the car stops, >> yeah, >> it's the performance, you're happy with it. Chinese look at and says, "You make 100,000, John makes 100,000, Lindsay makes 100,000. Why don't I just make one break at 300,000 and get it off the shelf?" So when we see these cost advantages, I I think uh when you see these cost advantages, the Chinese work very smartly. They ask fundamental questions and that's the advantage when you don't have 100 years of legacy.

[00:33:09]>> Sure.

[00:33:10]>> Okay. So coming back uh to this the what the government gives and I've worked with a lot of tier ones and I've heard from OEMs what they give is land you know which is is free which is kind of free they give you building they build it up it is usually the state government the provincial government so it's it's like Michigan saying the governor saying hey I want the automotive industry here's some land >> here's a building come set up and you want some loan loan. I'll give you some interest free loans and you take a risk.

[00:33:43]So what happens is the barrier to entry is less and it allows fosters innovation. You're not going around asking spending half your time fundraising and so on. And that's that's what I I I've never heard of in very rare cases do they their ultimate objective in the provincial government is to raise employment. Mh.

[00:34:06]>> So by providing this they hope that entrepreneurs will come in or they invest in companies like like in H province NEO they invested in Neo. Neo came out there created those jobs.

[00:34:17]>> Chile came out to Ningbo >> and so on created those jobs. This is the government support that I know of.

[00:34:25]>> Okay.

[00:34:26]>> Okay. What that does is it reduces the risk level of entrepreneurs which allows them to set up more industries. So this is coming out playing out very well right now in the humanoid robot industry.

[00:34:41]>> So they handle initial big capital expenses that otherwise the startup company would have to it would be very difficult.

[00:34:49]>> Okay. So it's so you have to look at it from the government's perspective.

[00:34:52]>> I have land.

[00:34:54]>> Yeah.

[00:34:55]>> If you fail, Lindsay, you fail, I lose it for something else. Give it to somebody else. Right.

[00:35:01]>> So you see it is not like you're handing out. It's just reducing the barrier to entry.

[00:35:06]>> So you're not seeing any major R&D input from government to these >> so they they okay they help you with land building uh if you have capital equipment they they help you with financing >> and so on and so forth. So it's not like the government hands out those and then you you see in certain cases uh you you have seen that many Chinese EV companies went bankrupt.

[00:35:28]>> Sure. So when they go bankrupt of course they walk out they you know that's 90% even in the United States 90% of uh startups go bankrupt.

[00:35:41]>> Okay so that's just the nature of the game.

[00:35:44]>> Okay great great thank you for that. So, Matthew, you've really hit on something that I think is key to China speed, and that's this common commodity components across the industry. And uh it's Qatar, the the the government organization that that sets that up is my understanding, the China Automotive Technology and Research Center.

[00:36:06]>> Okay.

[00:36:07]>> And it designs all these component parts and it validates the designs. It validates suppliers. So all an OEM has to do is maybe a top hat, maybe an interior, maybe some of their own proprietary technology and the user interface. Everything else is commoditized.

[00:36:26]>> So I haven't been to Tanzhin Qatar in four years. Okay. So I used to go there a lot the initial stages of company between 2016 and 2022 in co I didn't go to China. So I've not been to Qatar in three or four years. Qatar is kind of your nitsa okay your they or they have it's an organization where they test the vehicles and so on it is not I don't think they design the components and all that that's not what they do they say hey they look at this they set specifications and so on and so forth and uh they the they are able to see all these vehicles and the industry is very much about looking at things so let's go back in history to the 80s China had a very there's a video famous video in FAW first auto works from the 196560s or so on it's a famous video where you see them assembling a truck with hammers and while Henry Ford was doing the assembly line with hammers and everything >> and China was very smart saying hey we don't know much about building cars they're very humble people Chinese they said okay let's learn from the best event. What's the best way? Let's set up. We have this huge market of a billion, 1.5 billion people. Let's allow them in.

[00:37:50]Let's set up joint ventures with all these companies. 50/50 joint ventures.

[00:37:56]You come and set up. We learn manufacturing. We learn engineering. We learn how you design. We build a supplier base. Uh we uh if you don't build in the country, you don't uh there's a tariff. So what happened? It spawned an industry.

[00:38:11]So they learned from the early 90s to for 20 years they learned from Toyota.

[00:38:18]So if you go today to Chinese OEMs a lot of the people in manufacturing are ex Toyota gak Toyota gak Honda automotive is a cooperation with Honda Gongo automotive has a cooperation with Toyota Dong had a cooperation with Nissan. So those folks in manufacturing are now at very a lot of the Chinese companies because they came from the lean turbo manufacturing system. Same way they would take a lot of Germans who came they would go for styling. So BYD's head of design I think is a German gentleman.

[00:38:53]So they use the 20 to 25 years from the late 80s to the mid 2015 to really learn and they said hey uh you remember the days where everybody said we could make money from China handover fist with royalties and IP fees and all these things. The Chinese knew that Western and the other countries were making money at their expense. Said this we are going to have our time and that time is now. The time has come.

[00:39:26]>> It's no different to what the Japanese did, no different to what the Koreans did.

[00:39:30]>> So, so it's just history repeating itself.

[00:39:35]>> Interesting.

[00:39:35]>> Do you see the same thing kind of happening now? uh just kind of on the reverse with like US automakers or legacy automakers with the Chinese having to now kind of take and absorb some of their technology. You talked about everything that you saw at the Beijing show that these automakers are bringing in a house uh chips and beyond.

[00:39:56]Do you feel like the legacies will kind of have to do the same thing that they did that the Chinese did with the legacies to kind of kick off? I think it's more more uh the question is okay so look at it simplistic somebody's if you're better than me it's very important that I first accept that you're better than me only if I accept that you're better than me will I come to you and say can I learn from you okay that's the fundamental so the qu first I think we have all realized you're better than us question is now uh do we with all the tariffs and all the geopolic political issues will will environment allow us to go learn from the Chinese.

[00:40:41]So for example, it's a famous news that Jim Farley said in the Wall Street Journal, I drove the Xiaomi Q7 for 6 months and I didn't want to give it up.

[00:40:51]I think something of that nature, right?

[00:40:53]So I think it's great of Jim to say, hey, that he respects a competitor. It was huge and so on. So uh it all depends on uh whether the environment government will allow you to to apply those technologies here.

[00:41:11]Don't you think Barley's comment too was kind of a motiv a motivator intended motivator for Ford engineers and designers and manufacturing people that if the top guy is saying we got to get serious this is really a good competitor here whereas they might have thought oh it's a Chinese car >> well I don't know the intentions but I think it's great of uh >> I mean does that make sense? Yeah, I think it's Yeah, it's we have to accept.

[00:41:37]So, we have a Xiaomi YU7 here in Southfield in our office and yesterday day yesterday I took the chief manufacturing officer of one of the Detroit 3 to drive. He came through and he said it's an amazing car. He looked at the fitted finish. He said this is better than this is better than our cars and so on. I think realization is coming that the Chinese after all the Chinese learned from us. So if you go to the lot of the companies uh uh so I'm going to China uh tomorrow night Friday tomorrow Friday night I'm leaving for China next week I'm with three days in China we're working with uh three Chinese customers and when I go there um they have come from all these joint ventures so I have Chinese who speak German I have Chinese customers who only speak German because they worked in Wilsburg or they worked in uh or whatever.

[00:42:33]>> I have Chinese customers who only speak Japanese and Chinese because they worked in Nagoya >> or you have Chinese customers who speak go to Wuhan, they speak only French. So, uh they've been trained and they've learned. So, uh you know that's how knowledge spreads. Now, are those companies um the Chinese OEMs asking Kerosoft to do tearowns and analyses of American, German, Japanese vehicles as well? I mean, are they staying up on the competitive set like like the Americans are with the Chinese?

[00:43:07]>> So, when we So, I'll talk about the three customers whom we're doing cost reduction project benchmarking and cost reduction projects with. uh they are asking us we analyze around 35 to 40 vehicles a year and we have a lot of data uh but we also have the advantage that we have done around 60 cost reduction projects for 22 OEMs >> so we are kind of um uh just imagine it's like this um just imagine that um we are a blood test lab okay and you have 100 people there we have collected the blood from everybody we look at all their markers and we know who is the healthiest of the lot.

[00:43:48]>> Everybody has their issues but who is kind of the healthiest. So what we do is say who's the best, who's the worst and how can we and it's all measured in terms of cost. Technology and cost are two sides of the same coin. So for example, I have this iPhone here. Uh, if this iPhone has double the technology like in two years, do you think I'll pay double the price?

[00:44:15]>> No way.

[00:44:16]>> Expectation is the same price. It's the same expectation with cars. You look at cars. So, I remember when I first came to the US, my car was a secondhand car.

[00:44:25]I bought it for $400. And I bought a new car. It was around 15 $16,000. Today I can get a new car say at the lowest end of a sedan uh would be say 20 $25,000 or so. So the car has in terms of technology since I've been here like 35 32 years the car technology has improved drastically >> but for the processing power it has not increased in price the same. It's like the Intel um Moors law. Okay. So the chip doubles in speed and so on. So the so the coming back to the thought process is the uh uh the technology is just going so uh so fast expectation is to >> uh still have the same price and >> so Matthew you mentioned that you've got all this data on cars is this part of this uh Eureka program that Kerosoft has developed?

[00:45:23]>> Yes. Yeah. So coming back to your question on the ch Chinese OEMs and cost. So having done these 60 cost reduction programs for various OEMs uh we are now uh we have uh a platform called Eureka where we have uh for various entire vehicle we have what's known as best of benchmark system designs.

[00:45:46]>> Mhm. So when we tear down and analyze in a vehicle uh we can now say hey which is the best design uh so when we work with Chinese OEMs also they are very eager to know it could be from a German company it could be from an American OEM it could be from a Chinese OEM but what is the best design that's out there which helps me reduce the cost you don't want to take away from the customer go to market strategy go to market per attribute Whatever you measure in terms but you want to have the best technology, the lowest cost, the lowest weight and the lowest manufacturing time >> in terms of putting it together time to put it together in terms of weight in terms of cost. A weight has become extremely important in China especially in the last 6 to nine months. uh we are doing cost reduction projects in China China but now suddenly and I was in Beijing we got we were two of our customers said more important than cost is tax because over a particular weight class the tax increases double >> okay so that has become a big focus and coming back to Eureka now we've developed this platform uh where we have around 800 to,000 best of benchmark ideas so when we tear down a vehicle and analyze all the designs we look at our the with the platform and we put the data in um we now have an AI solution as a proof of concept but what we do is we see whether the idea applies with our experts we're an engineering company and we really apply these idea then if so we are able to say hey um the you can save 300 or 500 or even $1,000 on a vehicle.

[00:47:32]So what used to take us six months, we're now able to do much faster in a couple of months or so.

[00:47:40]>> Are you even able to like compare parts?

[00:47:42]Like say one might be lighter than another like you mentioned, but another has more power, let's say. Would someone able be able to quickly kind of review that sort of stuff on there as well?

[00:47:53]>> Okay. So, so a lot of times we just don't look at parts. You have to look at the system.

[00:47:59]>> Yeah.

[00:48:00]>> Okay. So a classic example is uh you could compare a classic example is you could look at a seat compare the seat frames and you could say hey that's a lighter seat so let's lighter frame a thinner seat frame it's cheaper it's lighter let's do it but then you have to see whether when you mount it in the body whether seat is the one that takes the maximum impact from a safety perspective in a crash so will the crash load path be able to pass through that frame or are you going to kill someone?

[00:48:32]The worst thing you want, which happened to one of the Japanese OEMs recently for the is long time since it's happened that their seat buckled during a crash test and they got a zeroar rating for a big Japanese OEM. It happened a year ago. So, you don't want a disaster like that to happen because >> uh and so and so on. So, you just can't look at a part and say, "Hey, this is lighter." If that's the case, everybody would be driving the cheapest car in the world, right? So you have to look at C, you have to look at the system, you're going to degrade the system because vehicle the whole vehicle is part of a system. You have to look at the architecture and so on. So that's where as we're an engineering company, but we also have a a lot of experts, technical experts who review the ideas and see whether we can apply them and so on.

[00:49:25]Do you see mass production returning as a engineering priority in in the US in North America? It it had been before EVs and then EVs it seemed like just giant batteries, very heavy batteries kind of negated the gains that were made in the the the last generation of combustion engine vehicles. Now we're swinging back to hybrids and combustion engine vehicles. Is that a returning priority for the engineers in this market? You mentioned China with the weight classes which isn't as important in this market but nonetheless weight reduction is still important.

[00:50:00]>> Sure. Weight translates to cost right.

[00:50:02]It translates to cost because you have an extra kilo of steel it could be a buck buck and a half aluminum or copper so on. So weight translates to cost. So if we work everything in the fundamental of cost >> the weight translates to cost.

[00:50:16]Manufacturing time translates to cost and so on and so forth. So um uh customers specifically in North America have not said they want to take out weight unless in certain cases but in China this has become very pronounced because China government recently I think introduced I'm not very sure of all the details and the weight classes or so on but the tax increased tremendously and so they are trying to reduce the weight >> that's a real driver is the taxing >> yeah the tax so for example uh another country India Uh you see any vehicle less than sub 4 meter has a lower tax rate than one over 4 m because they want to have cars that are smaller because smaller roads easier easier to park plus it's more affordable. So the affordability you can keep the just to give you an example if you said I just I'm just going to hypothetically say this but if the US had a rule which said sub four all sub4 meter cars in the United States had no sales tax.

[00:51:22]>> Yeah.

[00:51:23]>> Okay. Or it said if you had a sub4 meter car and if it cost you $20,000 you get a $20,000 reweight of your income tax.

[00:51:33]>> What happened? Suddenly the average price point of the car goes down.

[00:51:37]>> Booming market.

[00:51:38]>> Yes. Okay. So it it just depends on the government incentive. So you had the 7,500 EV incentive.

[00:51:44]>> So if you flip this around, suddenly the affordability problem goes away. You know, your fuel efficiency goes up because you're if you have a sub4 meter car, it's going to be lighter.

[00:51:55]>> Yeah.

[00:51:55]>> Okay. And so on and so forth. So tell me how you measure me. Tell me the incentives. I behave accordingly. M >> Matthew, China speed is something that everybody in the industry talks about.

[00:52:08]What advice are you giving to legacy automakers? What are what do you think are the key steps they need to take to catch up to China speed or can they um well um so um uh it's a very very difficult question.

[00:52:29]Okay. So it's one thing you can feel the speed when you go to China. So a lot of times so for example uh just I'm going to China on Monday and next tomorrow night and so on. So I'm meeting the CTOs of two companies. I set up the meeting earlier this week. Okay. And yesterday we had the CTO of one of the big Chinese OEMs visit us here to see our process and what we do. The CFO he was here at for Wall Street. I invited him over. He came over yesterday evening, went out for dinner with us. He's meeting with Wall Street investors and so on. So he's here in the US. He immediately saw what we do, all the things and cost and so on. He immediately set up a meeting on Monday morning. Okay, next Monday morning. That would never happen in a European, American or Japanese OEM.

[00:53:22]So they they Chinese when I see them they understand um uh it's importance and urgency importance dictates urgency and for them cost is a very very important element coming to speed. So, so that's a good kind the the country itself is very flexible. The culture is very flexible uh it's cha it sounds chaotic uh and so on but it's very flexible to move with speed. So a lot of times when we so I'll just give you a concrete example what I see which I tell my customers uh last week I was in Germany I spent a lot of time with one of the German OEM CEOs exactly on this point and he asked me this exact same question. So when we come up with technology and cost reduction ideas usually because we focus only on engineering cost reduction not sourcing not options configurations which the consulting companies do because an engineering cost reduction because we engineering company when we give this ideas we give it to the engineering organization so they look at it they have their rules which is called the spec book and they will re say hey this will not work and so on and so forth they reject a lot of ideas Then you go to say manufacturing people they will say this will not we don't have the capital the tooling they will reject ideas and then you go to purchasing they say okay uh we have this contract with this supplier for 3 years we cannot change it the cancellation costs are high we need to spend half a million for tooling uh so if you're going to save $1 and I my life cycle is only uh say for 3 years is only 600,000 units it makes no sense sense to spend half a million to make a buck and so on and then it go list goes on then it'll go to finance and it doesn't meet my RR in sequence everybody has the option to say no and these OEMs are so structured with their process and specs that uh the the ability to change quick is very very difficult >> now contrast that to Chinese OEMs and it's a it's very much a pleasure to work with them one the pressure from leadership is very very high on cost.

[00:55:40]Then often when you implement an idea, yes the the idea involves change. So there's there are there's there'll be issues in engineering, there'll be issues in manufacturing, there'll be issues in um purchasing and so on. But the Chinese will like when we present the ideas at a Chinese OEM when we present them, we have they have all their stakeholders. So I'll give you an example of one uh meetings which we had last year in um one of our customers and every review went this way. So we went into ideas first of all they told us Kerosoft we don't need to see your ideas because we know your ideas are good. They worked with us before said give us your ideas.

[00:56:24]They analyzed it in four days 52 ideas five days and they said out of the 52 ideas two ideas are good. we're going to do it.

[00:56:36]24 ideas have to go for checking. We know they're good. The remaining 26 they said we don't think we don't we we have rejected them. They came back to us and said we have rejected them but you have told us that BMW is doing it. We had seen Tesla is doing it, BYD is doing it and so on. So they came back and immediately said those guys are not stupid.

[00:57:05]We really don't understand the reason why we should do it. Can you tell us they gave us also the rejection reasons?

[00:57:14]Tell us where we are wrong.

[00:57:17]>> The approach was not your others are bad. It's we the others are different. I need to understand why I am wrong. So we went back looked at this whatever the 26 ideas and in that meeting kid you not I've never had meetings like this with any OEM outside China three OEMs you go to China we had the head of deputy CTO there the head of program plant manager the head of deputy head of purchasing and all their teams behind around 40 people in the room it's a 4-hour meeting so we'll present an idea uh our experts of the US would be on teams we had two or Seven of us on our side. We present the ideas.

[00:57:59]They will give their counter. We give their counter. Speak for English in 5 to 10 minutes on each idea. Then suddenly there's a big argument in Chinese.

[00:58:08]They're all uh you can it's a little chaotic. They you you think you're fighting with each other, but actually they're having a conversation saying, "Hey, this is the obstacle. This is how I sue it. Somebody will save. Somebody will answer, solve, and so on."

[00:58:22]end of the move, end of the four hours, the 26 ideas, 24 went back into a validation bucket and two were rejected.

[00:58:31]>> Okay? And when the deputy CTO walked out of the room, this was the most important event moment before he took me out for lunch. He he told his team, "If anybody of you want to reject an idea which is more than five R&B, which is like 70 cents, 80 cents, you have to come to my office, explain to me why you cannot do it before you reject the idea." Because they all said agreed and said, "We will send it. We think it's possible." And if Beamer is doing it or uh Tesla is doing it or BYD is doing it, it's a very good reason that we are actually the ones who are not fast enough. And he walked out. Now just imagine if John, you're an engineer in that company. Do you want to go to the deputy CTO and say I can't do something?

[00:59:20]>> No way.

[00:59:21]>> Yeah. Okay. The pressure is so high. And because it's parallel, not many people can veto. So in a western OEM in we get 10 15% or in the best case we've had around 25%.

[00:59:34]The Chinese OEMs it's around 40 to 50% in our best case with one Chinese OEM was 65% on a future program because tooling was not involved and so on. So the pressure is high you work in parallel uh when you do in sequence and if somebody checks 50%. Then you come here another person rejects 20%. So now you're working out of the 100 ideas to 50 20% of that you go to 40 and so on the falloff is much lower at the end of the process. Here if you get together and if you can get 50 in the first shot you get at least 50 ideas through so that is how they faster. So typically with a western OEM it'll take you six months to dispose of an idea here they are able to disposition the idea in say say eight weeks.

[01:00:20]So very fast. Yeah, >> Matthew, I could listen to you all day long, but unfortunately, we're gonna have to wrap up this segment of the show.

[01:00:29]>> Oh, darn.

[01:00:32]I know. But, uh, Matthew, thanks so much for coming on.

[01:00:36]>> Lindsay Brook, great to have you on the show. Hey, Sean, it was good to have you on here, too.

[01:00:40]>> Yeah, it was nice to hop on.

[01:00:41]>> Want to thank all of you for having tuned in.

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