00:00These videos are all over the internet.
00:02This is what $37,000 gets you in China, and I promise you are not ready.
00:06On YouTube, Instagram, and TikTok, American car influencers are hawking Chinese car brands.
00:11If you're a rich mom in China, you're probably driving this.
00:14This is the Yanghua U-8.
00:16They're touting luxury features.
00:18Everything massages you.
00:19State-of-the-art tech.
00:20Hey, I'm astonished.
00:22And most importantly, low prices.
00:24All of this for $15,000.
00:25But inflation-weary Americans watching these videos can't import the cars.
00:33Let's go back a bit.
00:34For decades, the global auto industry was really ruled by basically the U.S., Europe, Japan, and Korea.
00:40Then China decided to get into the car business.
00:43The Chinese government forced Western automakers or non-Chinese automakers to form joint ventures with state-owned Chinese companies.
00:50At first, they weren't very good at it because they were still new.
00:53At some point, Chinese automakers realized they were never going to beat them at gas cars.
00:58So they decided to play a different game.
01:00And the Chinese government created a national goal to develop electric vehicle technology.
01:15And a lot of Chinese entrepreneurs answered that call, like BYD, which started out as a battery company and then
01:21got into automotive.
01:23You also have Geely, where the founder, Li Shufu, started making parts for refrigerators.
01:27Xiaomi, they're a cell phone company that has now gotten into cars because cars are becoming really software-driven.
01:38Today, we're at the headquarters of Carasoft Global at our new technical center.
01:43We have many vehicles that we have disassembled and done value analysis.
01:47We've done benchmarking work on.
01:49Here we have a Tesla Model Y, and it demonstrates their usage of mega castings.
01:54In doing that, they're able to reduce the mass, reduce the number of parts, reduce the labor and the time
01:59it takes to build the vehicle.
02:01It's a very innovative approach.
02:03Now we see from China the Xiaoping G6.
02:06They've come forward with a very nice vehicle.
02:08And if you look close, you'll find there is a mega casting in the rear.
02:11There is a mega casting in the front.
02:13There is no floor in the body.
02:14It's very, very similar.
02:16It's been imitated here.
02:17However, if you look closely and study it, you realize they've been improved upon.
02:21And we see that across the Chinese auto industry, brand by brand, this drive to imitate, to improve, to increase,
02:29and to do it very, very quickly.
02:31And we're reminded it's not the big that eats the small.
02:34It's the fast that eat the slow.
02:36So when you look at the speed of the Chinese auto industry, I think the traditional AMs, those from North
02:42America, those from Europe, they get it.
02:44They understand.
02:45This cannot be left unchecked.
02:48Car companies in the United States definitely need to worry about Chinese cars.
02:53And they are worried about Chinese cars, even though it's basically impossible to sell them in the United States today.
02:59The reason is a combination of tariffs and regulation that's linked to national security.
03:04In 2024, under President Biden, the United States introduced a 100% tariff on Chinese EV exports.
03:13In addition to that, in early 2025, a new rule was introduced, which essentially banned the sale and import of
03:21vehicles containing technology linked to China.
03:25This, in practice, makes it very, very difficult for Chinese companies to import into the United States.
03:31Even though the U.S. has these policies in place to keep Chinese cars out, they're growing almost everywhere else
03:37in the world.
03:38They have a lot of market share in Mexico.
03:40They're growing in Brazil.
03:41They're taking over Europe.
03:42They're big in Southeast Asia.
03:44Think of it as the global pie that's a finite size.
03:47And so when the Chinese come in and take share, that means another automaker like Toyota or Ford or Volkswagen
03:53is losing share.
03:58Just like we're seeing the growth of physical EV exports from China, viewers in the U.S. on social media
04:04are also seeing them more.
04:06Last December, YouTuber Marquez Brownlee posted a review of the Xiaomi Sioux 7, and he was really impressed with it.
04:12There is basically no question in my mind that if a car like this was available in the U.S.
04:17for $42,000, that it would crush.
04:20The review went viral with over 10 million views.
04:23It really woke Americans up to just how sophisticated Chinese cars have become.
04:32China's entry into the global auto market is very controversial because it's threatening the future of a lot of existing
04:38companies.
04:39There's really dueling narratives about what's going on.
04:41If you talk to people in the U.S. or in the West, they'll say that China is not playing
04:45fair, that they're getting support from the government.
04:47But one thing I noticed on TikTok is that there's a really different narrative there.
04:51And what you see is that the story is more it's the U.S. who's being unfair and hypocritical by
04:56not letting American people buy them.
04:58While lurking on Red Note, I found out about this car.
05:03We can't sell this car because it's Chinese.
05:05I think when people on social media see Chinese cars, not only are they so impressed with the technology and
05:11the price, they're also really mad because cars have become really unaffordable in the United States.
05:15The average new car price in the U.S. is around $50,000.
05:19That's just out of reach for more and more people, especially now with inflation and high interest rates.
05:27Everyone talks about how quickly China is moving.
05:30They can design, develop and produce a new car in 18 months versus three to five years for a Western
05:35car company.
05:36And that brings up questions of quality and reliability.
05:39But the truth is we don't know yet because EVs are still a relatively new technology.
05:44Even though there may be some questions in consumers' minds, that doesn't mean that the legacy automakers aren't looking to
05:50China to learn how to make cars like they do.
05:52What you're seeing right now is actually a lot of big European automakers engaging with Chinese technology very openly.
05:59U.S. companies have been very hesitant and it's been very difficult for them to do the same.
06:03So it's a really difficult balance to get right.
06:05I think the future of the U.S. automotive industry really hinges on the question of whether or not there's
06:13going to be more openness to Chinese technology.
06:15It might mean more openness to maybe licensing some Chinese technologies.
06:18These kinds of arrangements, if done carefully, could be a real boon for the U.S. industry.
06:24It could allow for more innovation.
06:28Even though the U.S. has been successful so far in keeping Chinese cars physically out of the country, they
06:34can't control what people see or what people think.
06:36The Chinese cars are very hard to resist for a lot of people.
06:39And I think that puts pressure not just on U.S. politicians, but also the rest of the auto industry
06:44to have more affordable cars that are as good as the Chinese.
06:47Or else people are just eventually going to vote with their wallets.
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