00:00This is a problem I would say that we wish we had, but we really don't, right?
00:04Because Ford and GM don't ever want to be in this situation where they're just throwing incentives at the customer and trying to take market share from each other in this way.
00:14Yeah, what drives this problem, Matt, is that China has capacity to build 55 million cars a year, and the industry is using less than half that.
00:25So they're trying to keep the factories running by cutting prices to below what it costs to build the vehicles.
00:32And that's what the Chinese regulators are trying to stamp out with this proposal that says if you price your car below what it costs to build it, you face significant legal risks.
00:46So what is the option then for these Chinese automakers?
00:51I imagine, and I'm just thinking about this because of the Mexico tariffs that went on yesterday or were announced yesterday, they're going to start trying to invade other territories.
01:03When are we going to start seeing BYD seagulls on the road in Cabo?
01:08Yeah, well, that is the issue, is that with all this overcapacity, China has to send their cars somewhere because the market can't absorb 55 million vehicles, nowhere near it.
01:20So that's creating tensions with trading partners.
01:23As you know, here in the United States, there are 100 percent tariffs on Chinese electric vehicles, so they're not essentially in this market.
01:32So this is part of what the Chinese government is trying to control.
01:37They want to reduce the tension, and they want, particularly it's the lower, smaller players in China who are guilty of this.
01:46BYD, for example, supports these price controls because their factories are running near 90 percent capacity.
01:53They don't have this problem.
01:54It's really the smaller players.
01:56There are 130 players in China selling, you know, new energy vehicles, EVs and plug-in hybrids.
02:05And Alex Partners thinks that's going to shrink to about 12 by 2030.
02:09Keith, what about in the U.S.?
02:11Just got 20 seconds here, but I'm increasingly looking at what I would consider to be middle-class cars for, you know, normal families in the Midwest to buy that are priced at six figures.
02:21Yeah, it's really crazy when the average price of a car in the United States is over $50,000, which is luxury pricing.
02:29And you add on extras, and yeah, all of a sudden you're in six figures, Matt.
02:33We have runaway inflation in car pricing here in the United States, which is, of course, why Congress is going to start looking into this with the hearing that's coming up in January.
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