Japanese teardowns of Chinese electric vehicles by BYD and Nio stun car parts executives in Nagoya

0:01 good morning when a guy tells us what an amazing deal he got on his new car that the quality is great the engineering is best in class and he got an amazing price we don't pay much attention that's human nature to justify major expenses as a terrific bargain instead of a big expense most of us have done it too and we pretend to have some good reason why we bought one brand of smartphone or a laptop or a new car because all that

0:31 sounds better than just admitting we bought it because we like the commercial it's a different story though when electrical engineers rip apart a smartphone or when car industry experts tear down a car when those guys are surprised at the Quality and the engineering and shocked at the low price now we should be paying attention last week a local government hosted industry experts and manufacturers in an exhibition in Japan which featured over

1:02 a dozen torn down cars two companies were cooperating here Sano trading manages a huge database of car parts and koft which is an industry consultancy in the Auto Engineering koft is a US company and there were 90,000 Parts on display from top selling non-japanese brands including byd Neo and Tesla Executives and Engineers from 70

1:34 Japanese Auto Parts manufacturers examin the parts how they were made and they concluded that Chinese car makers keep production costs Low by integrating parts and through vertical integration of their production Chinese brands also use the same parts for more than one model of car which also keeps cost down and allows for much more Simplicity in supply chain and efficiency in Factory operations taking the ad3 from byd as an

2:06 example the car's electric Drive combines eight major parts into one this means lower costs and the weight goes down which allows for longer battery life or a smaller battery that's needed different byd models also use the same parts and byd is maybe the most vertically integrated company since Standard Oil so they're an extreme examp Le anyway but Chinese companies in all Industries tend to be much more vertically integrated than Western

2:37 Brands there were some aspects that the Japanese Engineers did not like but the key takeaway is here shock that how few parts byd and Tesla cars contain and this is a common theme lately and it does beg some uncomfortable questions we did a feature previously on Ford motor Jim Farley is CEO there and he was shocked at what he saw from Chinese car makers the Chinese brands are moving at light speed they use artificial

3:09 intelligence and other Tech in their cars that is not even available in the US markets China has a lowcost supply base have a lot of great technical features and they're very competitive in global markets now Jim Farley has an encyclopedic knowledge of car models according to the Wall Street Journal he takes a Chinese car out on the track with his CFO and afterward the two of them are quiet stunned at how far and how fast the Chinese had come this is

3:39 nothing like before these guys are ahead of us this entire piece by wired is fantastic it's not paywalled so please consider clicking on the link below and reading through it this guy T Lee has a big problem with all of this and he asked some good questions he's saying here just why exactly are we paying our Auto Company CEOs tens of millions of dollars a year if they don't seem to know anything about what their competitors are up to it's literally

4:09 their job to know what's going on in the car business China is the world's biggest car market China has dozens of car brands and hundreds of factories so why is it that Japanese car parts factories Executives didn't know what was going on in the Chinese car parts factories how come Ford didn't know is there their job to know those things T Lee says koft again is here they're the company that tore down byd's seagull in Detroit their CEO is a chief engineer at

4:42 GM and said that the seagull is a huge problem for us automakers he's been in the industry for 45 years and has doubts the United States car makers can survive and they need to radically change if so the company reports on a lot of the advantages the bydc go has got the entire car is an exercise and efficiency even with a minimalist design it feels like a highquality product and Detroit needs to unlearn lots of what

5:11 they know about building cars and learn some new tricks if we're going to keep up Mark rainford was at Mercedes for eight years he's been reporting about the going on in China's car industry and warning Europe's top brands that they're not ready for what's coming out of China Andy Palmer has been in the electric vehicle industry since before there was one he built a leaf for Nissan then became Global COO of Nissan he's been warning his peers about China for 15 years he

5:44 warned the Japanese the Brits the Americans if the Chinese get this business figured out they'll take it over and here we are because the Chinese figured it out and that is the angle to these issues that is so Baff koft CEO was at General Motors forever Mark rainford is Mercedes Andy Palmer was a top guy at Nissan these are guys with Decades of experience at the very top of their field at the top companies in the whole world and they're on

6:15 YouTube and they're publishing reports so why wasn't anyone listening to them they've been doing this reporting for years on China and from China and now it's probably too late our companies will never catch on battery swapping no company can vertically integrate like byd has and we need to reinvent how we design and build cars that fuse many different components into one part and then standardize that part across different divisions how long

6:45 will it take us to figure that out and back to the question that tul Lee there was getting at why are our top guys just now learning about it how did it happen that byd opened up dozens of factories sold millions of cars before someone in Detroit or Japan had the idea to take one apart and see if they were any good or just drive one why didn't that happen a few years ago doesn't Ford Motor

7:13 Company know anybody here in China who could buy a car and take some photos and email them back how much money and time was wasted here and now it's Japan too why didn't Japan's Auto Parts companies know what was going on Japan's just right over there and it's literally the job of Japanese engineering managers of Japanese Auto Parts companies to be aware of new manufacturing techniques new efficiencies and better ways to do things they figured out how to do things

7:45 better than the the American car makers back in the 1980s but they were stunned too and it's true that things happen fast in China everything does move much faster but it's not light speed byd is not a startup company and it took those guys at Neo the better part of a decade to get battery swapping right but it's all too common now that in just about every single industry insiders tell us and they tell themselves that China cannot

8:13 possibly compete in high-end Electronics or heavy equipment or an aircraft or in satellite navigation and then a few years later those same experts including multi-million dollar CEOs they're shocked that China's taken over their industry that nobody could have seen it coming when all they had to do was pay attention to the people who were here this is Le Jang Park wean they good

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