[SPEAKER_03]: This is episode 420 of wheel bearings.
[SPEAKER_03]: I am Sam a bull sandwich from telemetry, and I'm the only one here right now because Nicole and Robby are both traveling this weekend But I have had a bunch of conversations with people over the last couple weeks at a couple of different conferences I attended
[SPEAKER_03]: And these have all been already available to Patreon and supporters, but now everybody can listen in on these.
[SPEAKER_03]: I think there's some really good stuff here.
[SPEAKER_03]: So have a listen.
[SPEAKER_03]: We're going to start off with Mike Dawesett, who is the Chief Engineer, had a development for electric drive systems at Magna International.
[SPEAKER_03]: Magna is one of the largest automotive suppliers in the world.
[SPEAKER_03]: And they produce just about everything almost every part that goes into a vehicle for some automaker or another many cases many automakers for similar components.
[SPEAKER_03]: So I talked to Mike at the Center for Automotive Research Management Briefing Seminar and Detroit last week.
[SPEAKER_03]: And have a listen.
[SPEAKER_03]: All right.
[SPEAKER_03]: Mike, let's talk about electrification.
[SPEAKER_03]: My name is David Subject.
[SPEAKER_03]: Yeah, we would not just listen to your panel over here.
[SPEAKER_03]: And I guess, let's start off with, you know, the industry is in, you know, shall we say instead of flux right now, you know, trying to figure out what to do next.
[SPEAKER_03]: From your perspective, leading the, uh,
[SPEAKER_03]: EV and electric propulsion stuff from Agna, what are you seeing right now overall on the industry?
[SPEAKER_06]: I think the consumers are making their voice heard.
[SPEAKER_06]: They weren't quite ready for the trajectory that we saw Beves.
[SPEAKER_06]: I think the whole industry was expecting a much faster growth.
[SPEAKER_06]: And I kind of touched on it just now up on stage that certainly in North America I do think
[SPEAKER_06]: We have some unique challenges, and that is the vastness of the country.
[SPEAKER_06]: There are a lot of Americans that don't live in a city.
[SPEAKER_06]: Don't have access to a mile with 10 superchargers in the parking lot.
[SPEAKER_06]: There are many Americans that don't have a garage there.
[SPEAKER_06]: They can put their own charger.
[SPEAKER_06]: So, I think an adjustment was the right thing to do.
[SPEAKER_06]: I think that the demand we're seeing now for hybrids is real.
[SPEAKER_06]: And I think it will continue for some time.
[SPEAKER_06]: I do think, again, touched on it on stage briefly, but a plug-in hybrid with a reasonable size battery can deliver for the consumers some really exciting electric performance that they won't have been used to.
[SPEAKER_06]: And they will feel and see the difference between that and their combustion engine.
[SPEAKER_06]: Anyway, if you can get a plug-in hybrid with 50-60 miles of range, which they're trying to do a
[SPEAKER_06]: I think that's the way to go, and then we're going to start to educate the masses that actually electric power trains are great to drive, they're exciting, they're silent, they really do change the driving experience, and I think that will boost the growth.
[SPEAKER_06]: But in the short term, hybrids, absolutely, and again mentioned it briefly on the stage for magna.
[SPEAKER_06]: We have a very long heritage of combustion engine power trains so world leader in all drive full drive and manual transmissions DCTs we've been doing at the decades.
[SPEAKER_06]: Then we work on electric vehicles and the power trains for electric vehicles for a decade or most.
[SPEAKER_06]: And now we bring all of that together in a hybrid which is a very natural place for magnet to be, brings all of our experience and product knowledge together.
[SPEAKER_06]: And hybrid's a real, we're seeing an awful lot of interest on the, we call it DHD as the dedicated hybrid drive where we're actually put in one or two electric motors, high voltage electric motors into the transmission.
[SPEAKER_06]: The gear's real exceptional performance and it can be a range extend there a parallel a series hybrid depending what we do with a clutch and the gear, the clutch is and the gears inside that transmission.
[SPEAKER_06]: We can give our OEM customers really any driving scenario they like, whether it's combustion engine and electric together or one or both.
[SPEAKER_06]: We can give any combination of those and it's more complex.
[SPEAKER_06]: It's not an easy thing for some suppliers to do, but as I mentioned for magnets are really natural place for us to be.
[SPEAKER_06]: We're using our same engine here as our
[SPEAKER_06]: to deliver these quite exciting hybrid transmission, so certainly that's going to take up an awful lot of that time for the coming years.
[SPEAKER_06]: I do think we're seeing beds alongside it.
[SPEAKER_06]: I think the dates of the mic just presented is pretty accurate.
[SPEAKER_06]: But in most of the hybrids for North America, we're going to put on electric drive on the rear axle, for example.
[SPEAKER_06]: So, we'll have a hybrid total through the road hybrids, but for those applications here, we're going to call it a P4, but yeah, it's an independent E drive in the rear.
[SPEAKER_06]: very low cost, but it gives you that all will drive that you need when you get stuck or you can't get up your drive and you just need a little bit more or for that overtake in Manoeva when you need more talk.
[SPEAKER_06]: So, it gives real extreme flexibility.
[SPEAKER_06]: And our portfolio is so broad for electrification but also hybridisation.
[SPEAKER_06]: But we can supply our hybrid transmission up front, either long-dituent or transverse, we have both in our portfolio.
[SPEAKER_06]: a really low cost, eDrive, a P4 in the rear axle, whether they want it.
[SPEAKER_06]: So that's the selection, the consumer can make if they want from or drive or if they want or will drive.
[SPEAKER_06]: And all of that exists today in our portfolio.
[SPEAKER_03]: So it sounds like it's such a thing to know the way you've just described it is that you kind of come at the hybrid side from the opposite direction of somebody like Toyota.
[SPEAKER_03]: Yes.
[SPEAKER_03]: that, you know, they, you know, they've been doing the hybrids, the late 1990s, and Magna focused more on Bev over the last decade.
[SPEAKER_03]: And now you're, and Toyota Honda, they're taking what they weren't from hybrids to bring it to plugins and Bev.
[SPEAKER_03]: Yeah, and you're going the opposite direction.
[SPEAKER_03]: Yeah.
[SPEAKER_03]: and so have you been able to leverage some of the lessons learned from developing Bev or pure pure electrified power trains to what you're doing on the hybrid just the hybrid side it's a great question and absolutely yes is the on the easy answer is yes and so the application of high voltage electric modes is into a transmission is not an easy task
[SPEAKER_06]: There have been a lot of lessons learned in our first programs using full EVs, all of that caused into a hybrid transmission.
[SPEAKER_06]: It's extremely compact, so there's a lot going on in a hybrid transmission.
[SPEAKER_06]: We're not given any more space in the vehicle than the original iS transmission.
[SPEAKER_06]: So we have to get two big electric modes as typically a couple of clutches usually and we will get all of that into the existing drive and to do that We use all of our lessons learned So we've been working on Harvey transmissions a lot longer, especially in the Europe we started off with 48 volt and we now up at 800 volt and full 100 volt
[SPEAKER_06]: And because we're a truly global engineering team at least, we certainly transfer all those lessons learned for local engineering to support an individual customer.
[SPEAKER_06]: So we've won business on hybrid transmissions in China, and Northern America, and in Europe.
[SPEAKER_06]: So all we share those lessons learned on a daily basis.
[SPEAKER_06]: We have a system just for lessons learned, and they really go down into the absolute detail of designing one of these transmissions for our customers.
[SPEAKER_03]: So one of the, you know, one of the interesting things like from the conversation yesterday I don't know if you're here yesterday, but cherrywackoski president of Chersaf talked about is the one of the things that's different in China, for example, when the advantages they have versus the Western automakers, the Western automakers often, you know, they'll go to a supplier, a supplier will have a product off the shelf, but they will want something slightly
[SPEAKER_03]: Whereas in China, the automakers are much more inclined to just take whatever's off the shop and they get the benefit of lower costs because that supplier is selling two, three, four million of the same part to multiple OEMs.
[SPEAKER_03]: Are you finding now with OEMs, Western OEMs that
[SPEAKER_03]: essentially an asked a shelf component as supposed to something that's more of a spope, especially because of the fact that they are now having to go back and invest down multiple pathways whereas they were hoping to go all bad before.
[SPEAKER_06]: I think there's a really strong desire from the big OEMs to do what you just described, reusing what's there.
[SPEAKER_06]: Typically, especially those with all that combustion engine heritage, they're struggling to do that.
[SPEAKER_06]: They always want their unique
[SPEAKER_06]: But there's a strong desire to do that to drive cost down.
[SPEAKER_06]: But at Magna, what we do is we have what's called building blocks.
[SPEAKER_06]: So in every aspect of our power train, we have split up into building blocks, all the different aspects.
[SPEAKER_06]: I'll give you an example, an oil pump, for example, that we would have in a transmission or an E drive.
[SPEAKER_06]: And we have a building block that looks after just the oil cartel they look after another actuator, but it focuses on that globally.
[SPEAKER_06]: So if we've found either a off the shelf third-party oil pump that we can use or if we're designed and developed on ourselves, that will be owned and managed by a building block.
[SPEAKER_06]: And we in engineering a charge to reuse as much as we can.
[SPEAKER_06]: So before we ever sit down, we start with our clean share paper.
[SPEAKER_06]: And then we see how much of that we can reuse, and that does include taking off the shelf components from other tier 2, 3, 4 suppliers, and trying very hard to reuse the ads.
[SPEAKER_06]: Because we know if we change one thing, it has to be tested and validated and it drives significant increment or costs.
[SPEAKER_06]: We're trying ever so hard with all of our drives, combustion engines, whether they're high bit of EVs, to reuse the standard components from across our building blocks, and we've been more and more successful at that as we move forward.
[SPEAKER_06]: and we also get into a point where we're now able to collaborate really closely with an OEM and we can justify some of those standard components.
[SPEAKER_06]: We would do, we would say, understand you would like this oil pump, for example, but however if you use this oil pump, we can say you, $x, both in terms of engineering and peace price.
[SPEAKER_06]: And we are, I'm finding, certainly, that the OEMs are more and more open to that.
[SPEAKER_06]: Some of them are still struggling with their
[SPEAKER_06]: But there's a huge drive for affordable vehicles, especially AVs.
[SPEAKER_03]: Oh, mushrooms since so many of these components that the do add that incremental cost, yeah.
[SPEAKER_03]: Are not things that differentiate the product from the consumer perspective?
[SPEAKER_03]: Super doesn't care where that oil pump is.
[SPEAKER_06]: I'm as long as it worries very well.
[SPEAKER_06]: Yeah, I agree with you.
[SPEAKER_06]: And in power trying, no.
[SPEAKER_06]: adjusting one widget in the overall benefit of performance of the vehicle, whether it's tall or power or longevity or egg, movie so for an oil pump if you find an oil pump that doesn't quite deliver the volume of oil you need, or that cold viscosity when it's in zero degrees, that can impact the overall performance and then the consumer feel for the power, we all feel the power drain, whether we know it or not you know you feed it
[SPEAKER_06]: That's all the factor.
[SPEAKER_06]: And many of the OEMs, especially in Beb, are looking for how do they transmit their brand now?
[SPEAKER_06]: Most OEMs used to deliver their brand through their engine.
[SPEAKER_06]: They owned their engines, they tuned them, they made them.
[SPEAKER_06]: It's a lot harder to do with electric drive.
[SPEAKER_06]: Exactly that.
[SPEAKER_06]: So when you start to suggest changes that could impact the driverability, the way it accelerates, the way it accelerates, the noise, all of those factors come into that widget, unfortunately.
[SPEAKER_06]: But the good news is there's very much a two-way collaboration with the OEMs now to come up with the best overall solutions.
[SPEAKER_06]: Still hit their brand that they're looking for, their drive ability, the way the vehicle feels, but try and reuse as much as we can.
[SPEAKER_06]: You know, to validate any drive train is many, many millions of dollars.
[SPEAKER_06]: You only have to change one aspect, but you have to test it.
[SPEAKER_06]: A whole thing are going plural on time.
[SPEAKER_06]: So,
[SPEAKER_06]: The pictures clear and in engineering were absolutely charged for maximum reuse.
[SPEAKER_06]: and if we come up with something new, we're all thinking about the next programs and how adaptable on flexible that is.
[SPEAKER_06]: So I'm designing an eDrive now with my team in Troy and we're already looking we're designing it primarily for the North American market and what we're seeing but we also know it's going to be in demand in China and Europe for slightly different reasons so we're building
[SPEAKER_06]: And that's really important because overall, it's going to drive down the cost of that power trines and might better business for Magnum.
[SPEAKER_03]: Don't be act to a hybrid drives permit.
[SPEAKER_03]: What is Magnus approach to the hybrid drive architecture?
[SPEAKER_03]: Are you doing it combining the motors with a step ratio transmission or doing the the ECBT type of architecture or you do involve?
[SPEAKER_06]: Okay, whatever our customer wants and we have them all in our portfolio.
[SPEAKER_06]: So there's an interesting demand from our customers and their consumers that it's the full breadth of all of the different hybrid transmissions.
[SPEAKER_06]: If you see our commercial depictions of DHD are dedicated hybrid drives, you see it's one motor two motor series
[SPEAKER_06]: They're all in there and we can do all of those.
[SPEAKER_06]: Usually the biggest constraint is the package face.
[SPEAKER_06]: How much space do we have to work with?
[SPEAKER_06]: And sometimes that can dictate what type of hybrid drive it is.
[SPEAKER_06]: And we're seeing all of those, literally the pull spectrum.
[SPEAKER_06]: The best is when you can have a dedicated hybrid drive that has a generator in it and attraction motor that can operate in all of those different modes and give absolute flexibility to the OEM.
[SPEAKER_06]: Cost a little more money.
[SPEAKER_06]: It does an optimise one or the other, but give you a really good performance, pure electric.
[SPEAKER_06]: It can give you electric and combustion engine if you're hauling your bow out the late absolute flexibility.
[SPEAKER_06]: As long as a battery is big enough, a kind of touch to let on the stage have with their tiny battery a very limited electric leak, but the plug-in hybrids with a decent 2030 kilo
[SPEAKER_06]: Um, to that one's a question.
[SPEAKER_06]: Yeah, no, I ran it.
[SPEAKER_03]: Yeah, that sounds like you know, you're using that building block approach.
[SPEAKER_03]: You, because you got the same, same basic motor designs that you can, yes, combine with different gear sets and different, different combinations depending on the, all the other constraints that you have in the vehicle.
[SPEAKER_06]: It's a really good point, we are trying to reuse all of our motors and the inverters that drive them as much as possible and there is quite a lot of flexibility in doing that.
[SPEAKER_06]: So yes, absolutely, we can reuse motors and the inverters that drive them and then just adjust within the gearing to give the OEM what they want.
[SPEAKER_06]: That's what we do every day.
[SPEAKER_06]: That's how it is.
[SPEAKER_03]: So, you know, talked about the hybrids, clogging hybrids.
[SPEAKER_03]: Yeah, e-refs is an area that's getting a lot of attention.
[SPEAKER_03]: We've mentioned it up on stage.
[SPEAKER_03]: Yeah, so this idea of the extended range EV were,
[SPEAKER_03]: The propulsion of the vehicle is exclusively from the electric drive units.
[SPEAKER_03]: And you've got an engine and charm combustion engine driving a generator to extend your range.
[SPEAKER_03]: The first of those for the North American market should be arriving first up in next year from Stolantis.
[SPEAKER_03]: But beyond that, how much interests are you seeing from OEMs or North America
[SPEAKER_03]: are they are they coming to you or are they doing a more in-house or and what kind of applications.
[SPEAKER_06]: It's funny what the answer is always yes with Magno is so so big and we have such a debt to knowledge.
[SPEAKER_06]: We're seeing a lot of interest and an ultimary theory is the primary market but we are getting interest in China and Europe as well but North America is the primary one.
[SPEAKER_06]: There are a couple of ways you can do this.
[SPEAKER_06]: and it doesn't have to be a combustion engine driving the rain.
[SPEAKER_06]: Could it be also all?
[SPEAKER_06]: Could there could be some other things?
[SPEAKER_06]: So again, I come back to the thing I said earlier about the vastness of the U.S.
[SPEAKER_06]: I have thought for more than a decade that a range extended battery electric vehicle is the ultimate solution for an ultimargy.
[SPEAKER_06]: You may not use that range extended for three or four months.
[SPEAKER_06]: but on the day you need it it's there and you've got a small tank of gasoline and and that's the reassurance that many North American customers are looking for.
[SPEAKER_06]: The the range extend of peace is not so expensive.
[SPEAKER_06]: I've been driving in valves for a few years now and if there were an option to tick a box for a thousand dollars for a range extend there I would tick it every time.
[SPEAKER_06]: I don't think I'd ever use it.
[SPEAKER_06]: But I would still tick it.
[SPEAKER_03]: Can you get the cast down to that point where, you know, be a thousand?
[SPEAKER_06]: I think we asked to.
[SPEAKER_06]: I think it's in that old park.
[SPEAKER_06]: It might be 15 under it.
[SPEAKER_06]: It might be 800.
[SPEAKER_06]: It depends on how much power does that range extend or produce?
[SPEAKER_06]: Yeah.
[SPEAKER_06]: Big part of that.
[SPEAKER_03]: And I can see where, you know, something like, you know, would BMW did with the A3.
[SPEAKER_03]: Yeah.
[SPEAKER_03]: So, you know, you could only get it down to that price point.
[SPEAKER_03]: But, you know, I mean that vehicle was also extremely limited, you know, once you're into a range-extended mode, yeah, you only had about two gallons of gas and, you know, it was our limited, it's be limited and So we've worked on lots of solutions from a small SUV to the big trucks and a range-extender for the big trucks is like a V6 usually, yeah, it's a big engine and
[SPEAKER_06]: I think the lowest cost range extender is one that will keep you running at 70 mile an hour.
[SPEAKER_06]: You know, I've got to think in these 4567 gallon to guess.
[SPEAKER_06]: Yeah.
[SPEAKER_06]: But it depends.
[SPEAKER_06]: Again, it comes back to their OEM brand.
[SPEAKER_06]: What are they want?
[SPEAKER_06]: What are they looking for?
[SPEAKER_06]: And we do see the entire range from our OEM customers.
[SPEAKER_06]: There isn't a one system that's dominating.
[SPEAKER_06]: They are all over the place.
[SPEAKER_06]: Okay.
[SPEAKER_06]: It appears that that piece of our technology hasn't found it's, uh, it's no star, it's silver lining.
[SPEAKER_06]: They are all over the place, but they're reusing what we know.
[SPEAKER_06]: So the motors in there, the inverters in there, the gearbox, the drives it for the optimum, speed and efficiency.
[SPEAKER_06]: All of that is what we do every day.
[SPEAKER_06]: So it's coming.
[SPEAKER_06]: Don't know that there's a one job that fixes all, but we're seeing more and more interesting that.
[SPEAKER_03]: So, and if you had to look forward five years at the North American market, you know, in China right now and you've got E-Rabs in all kinds of different view, yes.
[SPEAKER_03]: But where do you think we're most likely to see them in North America?
[SPEAKER_03]: Is it going to be the bigger trucks and the utilities or is it going to be that mix, you know, E-Rabs in different applications?
[SPEAKER_06]: I think it's gonna be the meaps.
[SPEAKER_06]: Okay, we have such a diverse consumer based that there are so many different applications
[SPEAKER_06]: The range anxiety issue is not being fixed.
[SPEAKER_06]: We're still suffering from that.
[SPEAKER_06]: It needs a lot more work and I do think range extenders are a really good midterm solution.
[SPEAKER_06]: I think their future is limited.
[SPEAKER_06]: There will be a transition to pure bevel, but I think the next decade is going to be full of range extenders and different formats.
[SPEAKER_06]: Whether they're true, range extender, very high electrical power,
[SPEAKER_06]: given you full capability until you gas tank his empty or whether one to just keep your mode or freeway speed until you can get to a charging station I think we'll see all of those in family SUVs are probably the highest anxiety of any um they want that up they want that
[SPEAKER_06]: back up plan should they forget to charge or as I get occasionally the app on my phone doesn't quite do what I asked it to do and you come out in the morning and your battery didn't charge overnight as I think having the back up is a really good short to mid-term solution and as I say we're seeing a lot of interest in that we're doing a lot of work.
[SPEAKER_03]: What's the charging infrastructure is more
[SPEAKER_03]: Consumers are more comfortable with the reliability of it that they know that when they get to a charger They're going to be able to charge reasonably quickly and and the chargers are going to be working when they get there and and I think you know the other thing of course is you know As people get accustomed especially with peat with plug and hybrids, you know, and they realize you know my plug and hybrids got
[SPEAKER_03]: 50 miles of 40 or 50 miles of electric range, and I haven't put gas in it for six months.
[SPEAKER_03]: Do I really need a 4 if I 100 mile pounds, you know?
[SPEAKER_06]: And then I absolutely agree.
[SPEAKER_06]: And then you throw in with that, the fabulous drive and experience is a buzz.
[SPEAKER_06]: Their next vehicle will not have a combustion engine in it.
[SPEAKER_06]: Yeah.
[SPEAKER_06]: Most people are 50, 60 mile range, is that trying to...
[SPEAKER_06]: push in California is enough for most bleak.
[SPEAKER_06]: I have a round trip of 180 miles in my bed to go to the office and home, so my bed gets a really good workout and I've been on road trips and charged on road trips.
[SPEAKER_06]: Never had a problem with my zero range anxiety, but would you drive?
[SPEAKER_06]: Test the model wide performance, okay.
[SPEAKER_06]: And I had a model wide before that, or we'll drive for many years.
[SPEAKER_06]: no complaints.
[SPEAKER_06]: I mean, absolutely wonderful vehicle land zero range anxiety.
[SPEAKER_06]: Yeah, and then clues pretty long road trips.
[SPEAKER_06]: The supercharger network and the way it works for the GPS is very confidence and inspiring.
[SPEAKER_06]: So I keep pushing the EV button but in the meantime, hybrid's.
[SPEAKER_06]: they're great for those that aren't quite on board yet and as I say I do think the next decade and a little bit more we're going to be dominated by hybrids as uh when i talk to non-automotive people their first responses i want to hybrid they don't even really fully understand it
[SPEAKER_06]: But they're voting convinced themselves.
[SPEAKER_06]: They all are high.
[SPEAKER_03]: The cost differential between straight up gas engine and a hybrid has gotten so relatively small, yes.
[SPEAKER_03]: And you get so much benefit out of it, answers in terms of fuel efficiency, that it makes sense that that should really be kind of the default.
[SPEAKER_03]: You know, that's your starting point for pretty much everyone.
[SPEAKER_06]: Nice a lot of sense.
[SPEAKER_06]: And we back to your price is coming down.
[SPEAKER_06]: That's going to get better and better on better and better.
[SPEAKER_06]: So yeah.
[SPEAKER_03]: Yeah, you know, a lot of cases, yeah, you're only looking at $2,000, $2,500 premium for a hybrid version of the same vehicle.
[SPEAKER_03]: And instead of 30 miles per gallon, you're getting 50.
[SPEAKER_06]: Yeah, or if you have a show up to you, so 100, yeah, no, had that trick caused for a gallon.
[SPEAKER_06]: That's, yeah, I agree.
[SPEAKER_03]: So one one more thing on Peehab's versus E-Rab.
[SPEAKER_03]: Yeah, given that a Peehab is fairly mechanically complex.
[SPEAKER_03]: uh... you know that that the hybrid drive unit compared to any rev and he revs mechanically simpler and a lot of the spats you know typically as a larger battery but that doesn't necessarily have been that large what he which one do you think is going to be the bigger factor in the North American market it's very hard to say but based on the discussions i've had with some of our customers
[SPEAKER_06]: Some of the vehicle maneuvers that define our industry, for example, hauling a boat out of the lake, up Davy Stam and continuing there for a couple of miles, you can't do electric only.
[SPEAKER_06]: So, you really need the combination of the internal combustion engine,
[SPEAKER_06]: and the electric motor to achieve what we've been doing for years.
[SPEAKER_06]: So I think that is going to probably push us p-have direction, okay?
[SPEAKER_06]: There are an awful lot of Americans that tell and hold huge trailers with huge lows once a year or twice a year, but it doesn't matter.
[SPEAKER_06]: If you're trying to hold that out the like and you haven't got enough talk,
[SPEAKER_06]: That's a bad place to be.
[SPEAKER_06]: So when we design a powertrain, we're really driven by these specific vehicle maneuvers that are still in demand from our customer, the OEM.
[SPEAKER_06]: If we eliminate those,
[SPEAKER_06]: I see a different answer, but right now those are still very much required by our customers and to meet those without being a crazy electrical system.
[SPEAKER_06]: We use both the internal combustion engines and the electric motor in combination to achieve those difficult maneuvers and it's not just hauling, you know, some of the roads in the US go upkill for a long way, miles and miles
[SPEAKER_06]: But certainly the raves are a slightly lower cost and less complex solution, like you mentioned.
[SPEAKER_06]: So is that I didn't want to say it depends, that's the answer to everyone.
[SPEAKER_06]: Yeah, it really does depend on what does our customer want to do with this vehicle.
[SPEAKER_06]: Okay.
[SPEAKER_06]: Any final thoughts?
[SPEAKER_06]: We haven't talked about that.
[SPEAKER_06]: But I don't think so.
[SPEAKER_06]: I can't touch on it in there.
[SPEAKER_06]: Magna are in a wonderful place.
[SPEAKER_06]: We have, uh, we're receiving extensions on combustion engine business, where the market's unsure.
[SPEAKER_06]: We're getting a huge amount of hybrid business right now.
[SPEAKER_06]: And we have a very, very strong, bit of full electrification portfolio.
[SPEAKER_06]: So right now, whichever way it goes,
[SPEAKER_06]: We're in a very strong position to give our customers what they want.
[SPEAKER_06]: Yeah, they have all the bases covered.
[SPEAKER_06]: We do, and I find that in this, because the market is so volatile right now, the OEMs are leaning on their big suppliers, like Magna, that they can trust to deliver something really complex.
[SPEAKER_06]: that's happening more and more.
[SPEAKER_06]: In my time in the industry, I've seen OEM spreading the net wide looking for the best solution.
[SPEAKER_06]: But although there are a lot of supplies out there right now, I do find that because of the complexity and the needs to be adapt and changed direction quickly and cost effectively.
[SPEAKER_06]: They're looking at people like magna with huge manufacturing
[SPEAKER_06]: It feels like all rows lead to magnetite now and that's what our customers are telling us as well.
[SPEAKER_06]: Because of this adaptability, flexibility, the building blocks and RAO, I mentioned all of that, puts this in a really strong position.
[SPEAKER_06]: So that's all.
[SPEAKER_06]: I mean, okay, I don't mind which way it turns.
[SPEAKER_06]: Personally, I'm a very committed person and I will continue to try and push that outside of you know, I sell my battery ledger very cool to anyone that asked a question.
[SPEAKER_03]: Well, we, you know, I've been driving many beves for many years and yeah, we're doing them, but we actually did bother our first staff a couple months ago to exercise this night.
[SPEAKER_03]: What do you get?
[SPEAKER_03]: We've, we've about a kid at EV six.
[SPEAKER_03]: My wife out drives it and she's loving us.
[SPEAKER_03]: Beautiful call.
[SPEAKER_03]: Yeah.
[SPEAKER_06]: All right.
[SPEAKER_06]: Well, thank you so much for your time, Mike.
[SPEAKER_06]: Be patient.
[SPEAKER_06]: I appreciate it.
[SPEAKER_06]: Thank you.
[SPEAKER_03]: My next conversation is with Carolean Foulara and Mike Messina from Brembo.
[SPEAKER_03]: Brembo is probably the world's pre-eminent manufacturer of high-performance automotive braking systems, they're evolved in both production programs, increasingly high-performance vehicles from almost every brand have an option for Brembo brake systems.
[SPEAKER_03]: And they are also obviously heavily involved in motor sports.
[SPEAKER_03]: They supply all of the teams in Formula One and in many other series as well.
[SPEAKER_03]: So have a listen.
[SPEAKER_03]: So, Brembo is obviously probably seen as the most high performance breaking manufacturer in the world, you know, supply formula 1s, supply many other racing programs, but it's been interesting to watch over the last, you know.
[SPEAKER_03]: 30, 40 years, you know, where it used to be, you know, I've been in the industry, you know, since the beginning of the late 1980s when I graduated, and watching, you know, how Brembo has gone from being really a niche manufacturer, to being available on so many mainstream vehicles now, and the evolution of the brand.
[SPEAKER_03]: It's hard to find vehicles that don't offer a Brembo breaking package on their performance models anymore.
[SPEAKER_03]: Let's start up with where you see Brembo today overall.
[SPEAKER_05]: Is this for me?
[SPEAKER_05]: Yeah, you can take it.
[SPEAKER_05]: But we're watching it today.
[SPEAKER_05]: Oh, thank you.
[SPEAKER_05]: So in terms of, you know, obviously my forte is Motorsports and that's where I live.
[SPEAKER_05]: And I think a big component, one thing that we're always very sort of aware of is the reputation.
[SPEAKER_05]: When you talk about being niche,
[SPEAKER_05]: We were niche because we were very specialized and only people that were also specialized do our name and with that came a certain level of credibility.
[SPEAKER_05]: And that credibility has transcended into that main stream.
[SPEAKER_05]: And one of the biggest priorities that we've had as a group and as a main is to maintain that level of credibility.
[SPEAKER_05]: You know, I think a lot of times when you go main stream, you tend to sort of dilute your name.
[SPEAKER_05]: And that's something we've been really, really cautious to preserve.
[SPEAKER_05]: And that comes through technical innovation.
[SPEAKER_05]: being the, the, the, the, the, the, the, the brimbo of whatever level you're at.
[SPEAKER_05]: So to speak, you know, when you come sort of, you know, down category, so to speak, you know, you have all these prestigious brands, then you have some other brands that are a little bit more, I don't say blue collar, a little more mainstream.
[SPEAKER_05]: You know, how do you become the Brembo of that break, you know, in terms of breaking your performance, how do you still have a price point and offer a measurable difference?
[SPEAKER_05]: And so that's been probably the biggest priority.
[SPEAKER_05]: And as far as where I see us today, I think we've been able to do that because we are that next level of whatever it is you're driving.
[SPEAKER_05]: it breaks, notably different than the car that doesn't have it, and people can feel that, they can see it, so there's a technical aspect that's been preserved as well as the aesthetic.
[SPEAKER_00]: And then if I can ask that, so if you look at the company today and just look at the financial reports, I mean, obviously passenger vehicles is the main part of our revenue generation right now.
[SPEAKER_00]: And this is
[SPEAKER_00]: this is made out of you know we talk about the calipers a lot because this is what you see and this is our it's very distant the thinking from a rent standpoint but our disc's business is also huge so there's a lot of cars that maybe you don't know because it doesn't say but they have removal discs on them and this is you know this is
[SPEAKER_00]: This has been a very important growth for us, and that's the reason why we are today also in terms of size, right?
[SPEAKER_00]: So it's not only calipers, but also discs, so, um, and looking back at how we got there.
[SPEAKER_00]: I mean, so I've been with Grumble for 20 years now, um, and in North America, so really saw the growth of the
[SPEAKER_00]: But definitely motor sports, you know, that's where we started and we talked about the history of this year because it's our 50th anniversary motorsports We started in 975 with Ferrari, right in Formula 1 and Everything we did in motorsports really helped us, you know, enter the road car sphere and and we all let's say of You know technology and the developing the
[SPEAKER_00]: aluminum monoblock calipers light weight and that's what also helps us you know getting to this market in the US if you look at the Calax for example so back you know 10, 12 years ago they didn't have fixed aluminum calipers and so we were able to get into them more like meet premium segments
[SPEAKER_00]: with that technology offering you know some lightweight advantages and you know concurrent concurrent a little bit of that market here in the US so moment string and now it's like let me talk about the color right is becoming more distinctive design aspects of the vehicle so
[SPEAKER_00]: I think the company did a good job in trying to go more mainstream with all the different assets that we had between technology, branding, and manufacturing, because we will expand our footprint here in North America.
[SPEAKER_00]: So we have manufacturing in the home or Michigan.
[SPEAKER_00]: We have maximum manufacturing in Mexico.
[SPEAKER_00]: So we talked yesterday, produced local for local.
[SPEAKER_00]: That's definitely been part of our strategy as well.
[SPEAKER_00]: So all of these elements together are really enabled us to get to where we are today.
[SPEAKER_05]: So I think another one that, you know, technology transfer is a term you hear a lot.
[SPEAKER_05]: Yeah.
[SPEAKER_05]: And I think people sort of get, you know, do you sensitize to it that, you know, is it real or is it really more of a marketing term?
[SPEAKER_05]: And that's a, that's a real aspect in this company.
[SPEAKER_05]: And if you consider, what do we have to 16,000 employees global it out?
[SPEAKER_05]: Let's hit.
[SPEAKER_05]: And if I'm not mistaken, on average, it's about 10% of those employees are put in R&D.
[SPEAKER_05]: So at any given day, you've got 1600 people waking up that are either in motorsports, so there are an R&D, they're about that they're thinking of something.
[SPEAKER_05]: And so motorsports has really helped us and that's genetic aspect.
[SPEAKER_05]: One of the things that the Carolina Mission was weight, obviously weight is over the clinical importance.
[SPEAKER_05]: But also drag is as another component of that.
[SPEAKER_05]: And those are things that we've learned in various different forms of motorsports, which
[SPEAKER_05]: Just so happens that, you know, electric vehicle manufacturers, they care a lot about weight and they care a lot about drag.
[SPEAKER_05]: Yeah, and so we've been able to adapt a lot of those technologies as well into our OE applications.
[SPEAKER_03]: Yeah, I mean, I'm an engineer by training.
[SPEAKER_03]: I spent the first seven clean years in my career working in my, I'm a product development, working primarily on brake systems.
[SPEAKER_03]: Yeah, what does that?
[SPEAKER_03]: Working on brakes, ABS, and then stability controls are working on a lot of the electronic control systems,
[SPEAKER_03]: The core functionality of friction breaks during that time, especially early on and when I started in the early 1990s Yeah, it was pretty rare to find anything on the you know in mainstream production with fixed calipers And you know the great systems back and work.
[SPEAKER_03]: They were bad and it was a really awful
[SPEAKER_03]: even the gallons yeah yeah and yeah it was pretty unusual and you know when when we first started working with vehicles that had some sort of fixed calipers and you know later you know monoblock caliper like what REMBO produces yeah it was it was transformative in the performance you know not only just the core breaking performance the ability to control them as you mentioned
[SPEAKER_03]: you know, you know, with that technology transfer, things like friction reduction, you know, you know, with brakes, you, when you want the friction, you want it there now, and you want to be able to control it.
[SPEAKER_03]: But when you don't want it, you, you also want to eliminate that drag.
[SPEAKER_03]: That's superior to the background on EV, where, you know, very, or any electrified vehicle, even a hybrid, you know, where you want to recover as much of that kinetic energy as you can.
[SPEAKER_03]: you want to make sure and, you know, looking at motorsports, you know, you know, one of the areas I follow is Indie cars, you know, and on on ovals, you know, they to do a lot of work on, you know, I'm trying to make sure you own back those pads, you know, or, or any, you know, any form of motorsports, you know, don't want that drag.
[SPEAKER_05]: Right, and the other thing about Ols 2 is it's ice cold when they go to stop on pit lane.
[SPEAKER_05]: So to have a braking system that has no drag and then activates immediate lane contact with no temperature in it because it's been running around at 221 miles an hour for all last 30 minutes.
[SPEAKER_05]: That's also another technical challenge that yeah we're going.
[SPEAKER_05]: So there's materials that you use and those sort of things is also part of that equation.
[SPEAKER_03]: And, you know, one of the interesting developments, especially in the last, let's say probably the last 15 years or so in production cars, longer than that on race cars, has been this adoption of carbon ceramic rakex.
[SPEAKER_03]: Yeah, I think the first, probably the first car I ever drove with carbon ceramic brakes was the C6 ZR1.
[SPEAKER_03]: Yes, that's that had carbon ceramic rakex,
[SPEAKER_03]: Yeah, caught a little bit about that, what impact does that have, and then maybe get into the announcement that you've got some as far as expansion of that capability.
[SPEAKER_05]: So in terms of, I think, well, there's a couple of different ways to attack that.
[SPEAKER_05]: From a production standpoint, we've put a huge investment in the production process and owning every step of that.
[SPEAKER_05]: It's a very, if you think about cast iron, you have a raw material, you melt the down, you're bored into a mold, you have a machining process, you know, and all those other things.
[SPEAKER_05]: And it's pretty straightforward and we control that from top to bottom.
[SPEAKER_05]: But when you get into carbon, if you're talking about carbon, carbon and erasing standpoint or take carbon ceramic in an OE standpoint application, there's a lot of steps to that process.
[SPEAKER_05]: And so I think the biggest investment, I've, I'm 21 years with Fremdo now and we've literally built factories to build those materials to eliminate the third party so that we can control all of that.
[SPEAKER_05]: And so that's a big part of it, you know, they always say it's difficult to build one ceramic disk.
[SPEAKER_05]: It's really difficult to build 10,000 and to make them all the same.
[SPEAKER_05]: And so all the controls that huge aspect of it.
[SPEAKER_05]: But one of the other things that's, I mean, you've driven them and you know that there's really nothing that drives quite like a high performance carbon ceramic setup.
[SPEAKER_05]: That's one of the biggest aspects of breaking everybody thinks it's the brakes that stop the car.
[SPEAKER_05]: It's really the tire that stops the car and it's the brakes that stop the tires.
[SPEAKER_05]: Um, entire technologies improved dramatically.
[SPEAKER_05]: Suspension technologies improved dramatically.
[SPEAKER_05]: Electronics have improved dramatically.
[SPEAKER_05]: And so the, the beauty of the ceramic brakes is that you're able to capitalize on that.
[SPEAKER_05]: that lower rotating mass, which is pre-horsepower, better ride quality, but also unbelievable repeatability that they just feel the same.
[SPEAKER_05]: Every single time.
[SPEAKER_05]: And that's what we really try to get to is where the brakes are really just taking for granted.
[SPEAKER_05]: You expect when you hit the gas pedal something's going to happen and it's going to happen the same way every single time.
[SPEAKER_05]: and really that the brakes are there now, you know, we've achieved that in a lot of those applications and we've been able to do that.
[SPEAKER_05]: because of the thermal properties of ceramics, and so cost is managed to come down as as volume is proliferated, and I think ceramics are a great thing.
[SPEAKER_05]: It's also sort of created an expectation too, that all they're just going to live forever, and so there's an education component that we're catching up with.
[SPEAKER_05]: There, in terms of, you know, one of the questions earlier today was, you know, you start with the guns, the consumer.
[SPEAKER_05]: You start with a customer and work back.
[SPEAKER_05]: And for us, those customers have always been the OEs.
[SPEAKER_05]: And now, since our name was attached to it, we have to also have a line of sight to those end users too and educate them on what it is that they're living with there.
[SPEAKER_05]: And, you know, it's great, but just like your tires, it requires a certain level of attention.
[SPEAKER_05]: you know in order to maintain, you know, keep it optimized and understand about what you have.
[SPEAKER_03]: Yeah, I mean, if you ask an average driver, you know, somebody who's not necessarily enthusiast, chances are they probably won't be able to name a break system manufacturer, but if they can, probably the one name that they know is Brembal.
[SPEAKER_00]: Yeah, and that's, you know, we usually do some brand awareness survey.
[SPEAKER_00]: And that's what comes out all the time, is I'd run with the top of mine, like we said, so exactly what you said.
[SPEAKER_00]: So if they know it, if they know a brand, that's the brand was the first one that I would mention.
[SPEAKER_04]: And it's not only amongst breaks, like yesterday breaks that we also were a supplier.
[SPEAKER_04]: And there aren't many tier one or below suppliers out.
[SPEAKER_04]: in the world that people can just.
[SPEAKER_03]: Yeah, I mean, they know it.
[SPEAKER_03]: Most people don't know the, or at least in certain, in the context of automotive suppliers, they don't necessarily know the name Bosch, you know, or they don't know it or they don't know it or they don't know it.
[SPEAKER_03]: They make your EC.
[SPEAKER_03]: Yeah, yeah.
[SPEAKER_03]: They, they may know a continental, you know, from the tire.
[SPEAKER_03]: Tires are probably the one supplier that the people know just because they see that around it up and they go buy them.
[SPEAKER_03]: But yeah, breaks, you know, Brembo's the one-day and people know.
[SPEAKER_03]: So how many vehicles a year now are typically equipped with Brembo braces dips?
[SPEAKER_00]: Yes.
[SPEAKER_00]: This one?
[UNKNOWN]: Wow.
[SPEAKER_05]: This is a very good question.
[SPEAKER_05]: A lot of.
[SPEAKER_05]: I mean, are we in the millions, are we?
[SPEAKER_00]: No, but it's like, yeah, how do we determine?
[SPEAKER_00]: Because between and again, we talk vehicles between, you know, we, like we said, so we have vehicles that have only calipers, vehicles that have only the discs and some that have.
[SPEAKER_00]: So, maybe looking back at the volumes, we could try to make an estimate.
[SPEAKER_00]: Oh, volumes.
[SPEAKER_00]: We don't, but we can, it's a good exercise for us, but don't know the answer right now.
[SPEAKER_04]: We could do it by model or we could do it by units, right?
[SPEAKER_04]: And those are due to, and there's the motorcycle side.
[SPEAKER_00]: No, we have most times we have aftermarket too.
[SPEAKER_00]: So, you know, I have the line of aftermarket.
[SPEAKER_04]: And now bicycle?
[SPEAKER_00]: No, we have the mounting bag.
[SPEAKER_00]: It's great in it.
[SPEAKER_04]: How many on the way?
[SPEAKER_04]: We've made, like, probably out of six bikes that the specialized race team has.
[SPEAKER_05]: But is there a thing that's a little bit like, if you ask for how much do you make on an F-150 when you sell it?
[SPEAKER_05]: You know, nobody knows.
[SPEAKER_05]: and we're getting to that point too where how many cars are have a bremble component on them now in the u.s.
[SPEAKER_03]: or you know globally every year this shot I don't want it to wash but you know certainly in motor sports you know f1 I think everyone's using bremble breaks right now every team on the grid all 10 games rumb over the rumb 11 next year yeah the McLaren uses AP racing
[SPEAKER_05]: Yeah, one way or another, it's every, every team on the grid.
[SPEAKER_03]: Yeah, and then, you know, another high-end motorsport seal, most of them are probably using, at least some Brembo components, if not in the whole Brembo brain systems.
[SPEAKER_03]: So, Brembo, you know, your focus, I think has been on the hardware side, calipers, blindings, rotors.
[SPEAKER_03]: Are you doing anything on the software side yet?
[SPEAKER_03]: Yeah, I'll already be working with the companies on that.
[SPEAKER_05]: Roughly, you should think we're what?
[SPEAKER_05]: 10 years ago now, we started our first break-by-wire systems in F1 when they introduced curves.
[SPEAKER_05]: And so integrating that regenerative braking in a seamless, transparent application that the driver doesn't necessarily feel was the first step.
[SPEAKER_05]: and, you know, making the car feel like it's fraking normally, while it's regenerating, regenerating, like you're actually on the rear for the rear wheels, especially in something like an F1 car, where you feel everything.
[SPEAKER_05]: It can run over a quarter or a dime and it can tell you which one it was.
[SPEAKER_05]: And breaks, there is no compliance in the breaky system of an F1 car, so literally everything that happens, all of that feedback goes right back to his foot, he feels it.
[SPEAKER_05]: making that Seabless integrations was a big step.
[SPEAKER_05]: Now we've moved on into other applications where there's a level of adjustability in it.
[SPEAKER_05]: And teams are starting to adjust that.
[SPEAKER_05]: And so for the software standpoint, in motorsports, break by wire has been a huge development mountain we've been climbing for the past 10 years.
[SPEAKER_05]: And now you're seeing it on the Olesai, or some of that technology is starting to make its way over into, obviously, a break by wire in the Oli.
[SPEAKER_05]: But we recently announced those last year to be a before-sensify, which is something that we're doing on the OEM side of things, which is sort of...
[SPEAKER_05]: are what we say that is smart breaking intelligence breaking you know so it's sort of sort of the evolution that's the next level of ABS where now you have the individual corners speaking to a main computer and all acting independently of each other instead of just having one channel that's you know delivering signals from from an axle so speak you have independent
[SPEAKER_05]: I think it's always, it's our biggest, but it's definitely one of the biggest focuses internally that we have in the past three years.
[SPEAKER_03]: Yeah, I spoke with David Salter from HRCUS a couple of weeks ago.
[SPEAKER_03]: And we talked about what they're doing and software, how they're utilizing software on the Acura AirXO6 and on the Indicard Hybrid system, especially on the Acura
[SPEAKER_03]: utilizing the software control of the hybrid to do things like pre-loading the the differential and you know giving the drivers more control you know to tune on the fly you know so each driver and especially in endurance racing you've got multiple drivers that each one can make adjustments to their driving style sure so that's the break it goes about yeah yeah yeah yeah yeah yeah yeah
[SPEAKER_03]: But the last thing I worked on is an engineer when I left engineering in 2007 for last couple of years was working on software for, uh, break by wire systems for for hybrids.
[SPEAKER_03]: And, uh, so I'm very familiar with how hard that, or I'm only lending region and friction breaking can be.
[SPEAKER_03]: And, and that was, you know, that was on mainstream road cars sale for, I can just imagine what it would be like trying to do that blending on something like an F1 system.
[SPEAKER_05]: or where you have the most specific, most accurate engineers, the most, the most highly technical guys looking at all of the data, and then you have a Lewis Hamilton who's feeling it.
[SPEAKER_05]: And so there's a technical aspect that the technical guys are looking at.
[SPEAKER_05]: Well, we like this curve in the data.
[SPEAKER_05]: We like what this is happening here, and then there's a subjective element where the driver says, they don't like it.
[SPEAKER_03]: Yeah, you know, I don't like how that's the only one going back to what you said earlier about that repeatability the predictability that was one of the earliest things I learned in my career from from my boss at the time was that you know, it's got to be absolutely predictable for a driver even even for a consumer on the road, you know, especially for something like breaks.
[SPEAKER_03]: you you want to know that when you hit the brakes certain amount of pressure you're going to get certain amount of decal it's going to feel a certain way ever single time right and you know having that you know these kinds of brake systems where it's much more consistent and it's behavior you don't have flexing of the calipers you know you you've got it's it doesn't change as much with temperature uh and now you know the blending of friction and region see
[SPEAKER_05]: So it's incredible.
[SPEAKER_05]: If the other thing that happens to you with it, you see in racing, which you don't see as much on the OE side of it, is, well, one of the things, one of these, we have to account for in racing is tire degradation, you know, so now it's, how does it feel when the tires are new and the cars full of fuel?
[SPEAKER_05]: versus how does it feel in our later, when it's out of gas on old tires?
[SPEAKER_05]: Yeah.
[SPEAKER_05]: And so it's a weight distribution, it's balance, it's contact, it's ability to rip the road, has all the change from start to finish and how do you have a brake system that feels the same and that follows that curve?
[SPEAKER_03]: and you know over the course of an hour and ten minutes yeah is is a really difficult what what about I know you know for example and endurance racing you know something like twenty-four hours a little more you know they they changed the brakes during the course of a race you know and see how how do you deal and so that depends on the model in some and some of the good yeah so when I
[SPEAKER_05]: and the top cars were all carbon, and we had different carbon materials.
[SPEAKER_05]: We had one material for endurance, one material for Smith Race, and to be able to finish that race without a change in carbon was a feat even 20 years ago.
[SPEAKER_05]: Now,
[SPEAKER_05]: I think we could run 41 hours at Lamont.
[SPEAKER_05]: It's not even, it's just, it's a boring conversation to have that.
[SPEAKER_05]: Yeah.
[SPEAKER_05]: From a, from a, comes to card for the G.T.
[SPEAKER_05]: cars that are running with it.
[SPEAKER_05]: Oh, you're in, we're still there.
[SPEAKER_05]: Now, technically, we have friction compounds that will last.
[SPEAKER_05]: We've done it.
[SPEAKER_05]: We've, we've done all 24 hours without a change.
[SPEAKER_05]: Um, you know, and the question is, you know, just because your can doesn't mean you should.
[SPEAKER_05]: because there's probably going to be a gosh with some point, you know.
[SPEAKER_05]: So we used to have an iron brakes, we used to have a change window at Luma for example, of anywhere from 13 to 16 hours.
[SPEAKER_05]: That was your window.
[SPEAKER_05]: You know, so somewhere in that first 13 to 16 hours, you're going to do a change, you know, you need to make it first, fast, fast, fast.
[SPEAKER_05]: Now I think our change windows are 16 to 20.
[SPEAKER_05]: Okay, and so you have a big window Because you've got a race like where you have several hours of rain.
[SPEAKER_03]: Oh, for now.
[SPEAKER_03]: Hey, you're it.
[SPEAKER_05]: They may not need to Man, I need it and and so it really becomes sort of a strategy thing now It's the guy that I'm racing that that you know, we're neck and neck and he comes in for a change
[SPEAKER_05]: Well, at the end of the race, I don't want my old brakes against just due brakes.
[SPEAKER_05]: So I'm going to do a change.
[SPEAKER_05]: We have a safety car.
[SPEAKER_05]: Yeah.
[SPEAKER_05]: It takes anywhere from 57 to 68 seconds to change an axle set of brakes now.
[SPEAKER_05]: It's just cheap insurance, so I wouldn't do it.
[SPEAKER_05]: Yeah.
[SPEAKER_05]: And so I think it now, you know, used to be more of a necessity.
[SPEAKER_05]: It's becoming where we're getting to the point now where it's almost more of a of a tactical decision or all, you know, we're moving towards a luxury.
[SPEAKER_05]: or it's going to be a luxury whether or not you have to do it.
[SPEAKER_03]: So just to wrap up kind of what's what's the future for Brembo?
[SPEAKER_03]: What's what's next?
[SPEAKER_03]: Yeah, I'm like you're doing today.
[SPEAKER_05]: Do you want to talk like motor sports specifically, what do you think it is, and then meeting the funny thing about that, the Russian is that I can't talk a lot about the future motorsports program, we have a lot of, it's going to be a good year, I mean, you know, 50 years was great, but the one year is going to be better, yeah, I guess from a technological
[SPEAKER_05]: Certainly friction materials and whether that's on the disc side or whether that's on the pad side.
[SPEAKER_05]: You know, we've got a lot of optimization software when it comes to your caliper design.
[SPEAKER_05]: So we know where the loads are going.
[SPEAKER_05]: You know, a caliper being clamped obviously, you know, statically is one thing, but dynamically when the disc is spinning at 170, the loads that go into that thing are a lot different than what most people think.
[SPEAKER_05]: So,
[SPEAKER_05]: the things that are improving or the optimization software certainly AI is going to play at play a role in that in terms of you know where the load is going and how do you make that caliper where do you put the material in that caliper so that you've got the perfect balance between stiffness and weight instead of just having to compromise all the time so that's one aspect of it friction materials you know you've got global regulations that are determining what kind of
[SPEAKER_05]: base metals or column pounds that you can use now.
[SPEAKER_05]: And so looking for things that are environmentally sustainable and yet perform at the level they need to.
[SPEAKER_05]: That's going to continue to be a big focus.
[SPEAKER_05]: And
[SPEAKER_05]: you know we we have a team in a basement right now that's working on some things that was shock you and a shock me and so that's that I think you know over the next five to ten years you know and whether we see that in racing you know one of the things you have to think about racing all the time is is the sanctioning body of the rules
[SPEAKER_05]: you know, they're always focused on parity and bringing all the manufacturers in, but then controlling costs at the same time, while also putting on a great show that everybody wants to come and see.
[SPEAKER_07]: Yeah.
[SPEAKER_05]: And that's a really true tricky balance.
[SPEAKER_05]: And so you're always in racing, you're always sort of working with those confines.
[SPEAKER_05]: Um, and so in a certain way, that's what makes engineers creative.
[SPEAKER_05]: Get on the end of that strength.
[SPEAKER_05]: Exactly.
[SPEAKER_05]: And, you know, and there's another part we were talking about this last night is, you know, with all of those rules, are we stifling that creativity?
[SPEAKER_05]: If everybody has to work in the same kind of box now, where it's no longer, you know,
[SPEAKER_05]: 30 years, four years ago in F1.
[SPEAKER_05]: If you could build it, you could run it.
[SPEAKER_05]: You could race it.
[SPEAKER_05]: And that's starting to change just a little bit.
[SPEAKER_05]: So yeah, but I think, um,
[SPEAKER_05]: certainly materials and maintaining sustainability.
[SPEAKER_03]: I was watching the video on YouTube a few months ago.
[SPEAKER_03]: I came over with Sam Collins or something.
[SPEAKER_03]: No, somebody another guy who does racing videos and he visited Brambo.
[SPEAKER_03]: Oh, seeing all the different caliper as it is.
[SPEAKER_03]: I mean, all these different, they're all Brambo calipers for F1 cars, but they all look still very different.
[SPEAKER_03]: Yeah, so even though you got a lot of rules, right?
[SPEAKER_03]: Yeah, like I said, you know, Team Interest, right?
[SPEAKER_03]: Constraints, Force, Force, and Trainers, do I create it?
[SPEAKER_05]: Yeah, have different ways.
[SPEAKER_05]: Sure, and you know, we see, I, that's something I learned really quickly when we, we got in the NASCAR was how hard can it be?
[SPEAKER_05]: All they do was turn left.
[SPEAKER_05]: Yeah.
[SPEAKER_05]: That's why it's so hard.
[SPEAKER_05]: It's because all they do is turn left.
[SPEAKER_05]: They have, they have
[SPEAKER_05]: Yeah, but again, I think I think that the biggest leaps are going to be in just the material basis.
[SPEAKER_05]: That's what I think is going to be really in and software.
[SPEAKER_05]: And as you have AI kind of playing a role in that too, it's going to get interesting.
[SPEAKER_05]: I wish I could talk more about it.
[SPEAKER_05]: Yeah, but we just we can't say yet.
[SPEAKER_00]: Yeah, and then on the production side, I mean, censify for us is, you know, so the more mainstream applications of the technology will be obviously our main both for the next years to film that.
[SPEAKER_00]: And like, offering the customers, OEMs like greener solutions, right?
[SPEAKER_00]: So we had the green tail.
[SPEAKER_00]: I don't know if you had received or saw that.
[SPEAKER_00]: the green tail discs that we introduced speaking of the year, right?
[SPEAKER_00]: So help you know the OEM is needing the emissions regulations started obviously from Europe, but you have been side, but so I would say between those two, God would be a book is for the next years to come.
[SPEAKER_03]: Okay.
[SPEAKER_03]: Well, thank you both so much for your time.
[SPEAKER_03]: She had it, yeah.
[SPEAKER_03]: Good work.
[SPEAKER_03]: also spoke with Michael Dunn.
[SPEAKER_03]: I've been meaning to have Michael on the show for ages.
[SPEAKER_03]: Michael is a real expert on the Chinese auto industry in particular.
[SPEAKER_03]: He lived in China for a better part of 25, 26 years, and as well as spending some time in Thailand and Malaysia, and we talked a lot about what's going on with the Chinese auto industry.
[SPEAKER_03]: All right.
[SPEAKER_03]: Yeah.
[SPEAKER_03]: Michael Dunn, CEO, Gunn Insights, and one of the foremost American experts on the Chinese auto industry.
[SPEAKER_03]: You lived in China for a long time, right?
[SPEAKER_03]: Yes.
[SPEAKER_02]: I was there from 1990 through 2016, so how many years is that?
[SPEAKER_02]: 206 years.
[SPEAKER_02]: 26 years.
[SPEAKER_02]: 26 years with side bars in Thailand and Indonesia, by face of the age of 206.
[SPEAKER_03]: So, and you still even even now, you know, almost a decade later, he still spend a lot of time in China.
[SPEAKER_03]: You talk to a lot of the Chinese companies for those that are not familiar with the Chinese auto industry.
[SPEAKER_03]: Can I just an overview of what's going on there?
[SPEAKER_03]: And how has it changed in the last, well, in the last 20 years, but especially in the last five?
[SPEAKER_02]: For most of this century, global automakers, your Mercedes and Buick, Tondon, Toyota Hyundai just had goals in years in China, growth in profits, growth in profits, Chinese consumers, love foreign brands, and it looked like forever profit machines for global automakers in China.
[SPEAKER_02]: Until it did.
[SPEAKER_02]: Yeah.
[SPEAKER_03]: I mean, that's why Buick still exists today.
[SPEAKER_02]: Exactly.
[SPEAKER_02]: No China circa 2008, no Buick.
[SPEAKER_02]: So,
[SPEAKER_02]: what happened?
[SPEAKER_02]: 2020, now let's back up 2015, Xi Jinping gathered with the soutenants in Beidaia, this resort area on the coast, and they put together a blueprint, a master plan that they called Baton China 2025.
[SPEAKER_02]: And the goal was, hey, we're tired of playing catch-up with the west, in autos and in everything, and they've been not able to catch the
[SPEAKER_02]: Second thing was, they were importing enormous amounts of oil.
[SPEAKER_02]: It said, how do we change this game?
[SPEAKER_02]: Let's lead in next generation technologies, not follow, and let's get off this oil addiction before it happens.
[SPEAKER_02]: So, the solution, batteries and electric cars, and they began to heavily subsidize the manufacturer and purchase of EVs inside China.
[SPEAKER_02]: and that kind of grew gradually through the 2010s, because Chinese consumers were still not certain batteries as safety, range, charging, don't know question marks.
[SPEAKER_02]: Enter Tesla.
[SPEAKER_02]: Q120 starts manufacturing the Model 3 in Shanghai and it's a transformative moment.
[SPEAKER_02]: Chinese consumers suddenly go, wow, EVs are actually cool, we want them.
[SPEAKER_02]: And who else in this country makes EVs?
[SPEAKER_02]: Oh, there's a bunch of other Chinese companies.
[SPEAKER_02]: And we saw EVs just take off from one million units a year of about I per cent of the market to this year or 13 million or 50 per cent of the market.
[SPEAKER_02]: So it's like earthquake where EVs were not cool, Chinese brands were not cool, and suddenly they were everything to the Chinese consumer.
[SPEAKER_02]: And guess what, the global autom hitches have really taken it on the chin?
[SPEAKER_02]: That's what's happening inside China.
[SPEAKER_02]: You've got a massive dislocation.
[SPEAKER_02]: You've got global automakers sitting on all kinds of extra capacity.
[SPEAKER_02]: Chinese automakers flooding the zone with EVs, price wars, brutal competition,
[SPEAKER_02]: And then, one more point, and then we'll go like, like, let me like to keep in tight what's happened in the price for the so intense inside China.
[SPEAKER_02]: They've said, we need a release, release felt.
[SPEAKER_02]: What's that release felt exports?
[SPEAKER_02]: And so we've seen Chinese exports take off from a million in 2020 to this year, close to seven million cars.
[SPEAKER_02]: Number one, export in the world.
[SPEAKER_02]: That's the picture, the earthquake that happened inside China and then the call it the tsunami waves that are hitting the rest of the world now.
[SPEAKER_03]: So, you mentioned Tesla starting production in Shanghai in 2020, it was kind of the pivot point.
[SPEAKER_03]: Up to that point, Chinese EVs were mostly on the low end of the market, cheap, they were cheap, but they weren't anything to get excited about.
[SPEAKER_03]: And in the last five years, we've seen this real transformation of the industry.
[SPEAKER_03]: It's like they, I assume you've probably read the book Apple and China.
[SPEAKER_03]: Yes.
[SPEAKER_03]: And my understanding is that there's a lot of similar, a lot of parallels between that and what's happened in the auto industry where
[SPEAKER_03]: The foreign companies come in, they teach the locals, they train the locals, and then those people go on to work at other companies or start up new companies.
[SPEAKER_03]: Is that the same thing that's happening in the auto industry?
[SPEAKER_03]: Absolutely.
[SPEAKER_02]: I'm glad you've said that because not only did Tesla ignite consumers imagination around electric vehicles, but Tesla also brought world-class supply chains to China.
[SPEAKER_02]: And guess what, overnight all of a sudden, these other EVs start popping up like Neo and X-Pon, Xiaomi most recently Huawei, coming from the tech industry, just like Tesla, entering the auto industry and saying, wow, we have our supply change right here in our backyard, this is beautiful, and they've been developed by Tesla.
[SPEAKER_02]: We'll just copy paste onto our car.
[SPEAKER_02]: It's not as simple as that.
[SPEAKER_02]: The Chinese do their own work, but by and large, the story is to follow a similar pattern, similar pattern.
[SPEAKER_02]: And there's always a used buy date for any foreign company operating in China.
[SPEAKER_02]: You're useful to the Chinese for a period of time and you're treated well.
[SPEAKER_02]: If you're a foreign company and then one day, you're not
[SPEAKER_02]: You're not asked to leave, but you're shown the door, that's the exit if you like to use it because life is not going to be that wonderful for you going forward.
[SPEAKER_03]: Well, first up, let's continue the way Chinese automakers are operating.
[SPEAKER_03]: You were on a panel that was more in Terry White-Coskey, you know, as President of Care Stop.
[SPEAKER_03]: And I carry it was mentioning that one of the differences here are in North America and Europe.
[SPEAKER_03]: automakers will go to a supplier and use the example of white promoters.
[SPEAKER_03]: Everybody's got a proprietary white promoter, you know, there's similarities, but you know, everybody wants something slightly different.
[SPEAKER_03]: And so you got all these different variations of basically the same product that from consumer perspective, they don't care.
[SPEAKER_03]: But in China, it's very different.
[SPEAKER_03]: It's like,
[SPEAKER_03]: 20 automakers will go to a supplier and they'll all buy the exact same part.
[SPEAKER_03]: They don't want anything customized.
[SPEAKER_03]: How, why is that?
[SPEAKER_03]: What, what if they figured out that we can't seem to figure out?
[SPEAKER_02]: They see that cars of future will be differentiated based on their software.
[SPEAKER_02]: Everything else mechanical is standard.
[SPEAKER_02]: A commodity.
[SPEAKER_02]: Yes, this white promoter might be slightly better than who cares.
[SPEAKER_02]: What really matters is the experience of the driver or rider inside a cockpit.
[SPEAKER_02]: That would be 80% of the effort to make it seamless, intuitive, fun, and natural cells in China.
[SPEAKER_02]: So,
[SPEAKER_02]: in that regard they look around and go let's be less dumb how do we source things as low cost as possible for the standard parts.
[SPEAKER_02]: The other thing worth mentioning is it is important is that margin in China are very, very thin.
[SPEAKER_02]: Few companies make money, many lose money.
[SPEAKER_02]: That's okay because their priority is to get scale, take market share.
[SPEAKER_02]: So this is a problem for us in the West.
[SPEAKER_02]: Oh, how do we compete with a company that doesn't care if that much of our profitability?
[SPEAKER_02]: They're all about how do I manufacture more and take share?
[SPEAKER_02]: That's a problem that hasn't been solved yet for automating the West like, ooh, without profits, what are we going to do?
[SPEAKER_03]: But without the profits, I saw a study a few earlier this year that estimated that currently is about 55% capacity utilization in China.
[SPEAKER_03]: most of the automates, most of the brands have capacity utilization in like the single digits or in the 10 to 20% range, which is no way, how do you stay in business like that?
[SPEAKER_02]: Only in China, we call it the China Playbook.
[SPEAKER_02]: They will say we want to we being the central government, we want to utterly dominate a given industry, solar panels of the most famous example of that, but there are other steel shipbuilding
[SPEAKER_02]: the buttons when I first came to China, everybody's going to do buttons and run everybody on the world out of the button business.
[SPEAKER_02]: So now it's cars and they'll say, we want over capacity.
[SPEAKER_02]: We accept over capacity.
[SPEAKER_02]: We'll accept Christ wars at home.
[SPEAKER_02]: We'll accept hyper competition because that means the fittest of our companies will be able to definitely
[SPEAKER_02]: beat other automakers around the world.
[SPEAKER_02]: And this is what scares the daylights out of people in Europe Japan, Korean, and I say it right now.
[SPEAKER_02]: How do we contend with a country that has the scale, the supply chains, the speed, the software, the subsidies, and the ambition to basically wipe everyone else out.
[SPEAKER_02]: How do we go up and pin that?
[SPEAKER_03]: And are we, is there any chance that we're reaching a point where the various levels of government in China are going to start letting some of the weaker players fall by the wayside?
[SPEAKER_03]: Is that going to happen anytime soon?
[SPEAKER_02]: That should happen.
[SPEAKER_02]: I'm going to offer a big capital BUT, but when I first got to China 1990, the government said our goal is to consolidate.
[SPEAKER_02]: We will buy the end of the decade.
[SPEAKER_02]: We'll only have three, four, five, maybe five automakers.
[SPEAKER_02]: in the ensuing 35 years.
[SPEAKER_02]: The numbers all the way into it is a several hundred.
[SPEAKER_02]: So, part of that is the way China's economy is a it's not a market economy.
[SPEAKER_02]: The government and industry are working together and each province wants to have its own auto industry and how come this long-don't has it and we're on the on-way can't have.
[SPEAKER_02]: No, we won't already.
[SPEAKER_02]: So, there's a built in any efficiency.
[SPEAKER_02]: to the economy.
[SPEAKER_02]: So China isn't necessarily the most efficient economy, but it's very effective when the net result is, oh, we're manufacturing 33 million cars a year.
[SPEAKER_02]: We're exporting 6 million of them, and we seem to be eliminating the competitors.
[SPEAKER_02]: It's a formula that they're somehow comfortable with.
[SPEAKER_02]: Yes, some players will go away, but then some of us will want to pop up.
[SPEAKER_02]: Yeah, and ones that we thought were dead come back to light.
[SPEAKER_02]: It's like nothing else we've seen in the
[SPEAKER_03]: And of course, it's not just the Western OEMs that are in danger here, but also suppliers.
[SPEAKER_03]: Yes.
[SPEAKER_03]: You know, the last year I was at Mobilized Investor Day, and I'm not Joshua, basically said, yeah, we're essentially decoupling from the Chinese market.
[SPEAKER_03]: And I've heard the same thing from other suppliers that they're basically giving up on China, where they had had a pretty strong presence.
[SPEAKER_02]: Yes.
[SPEAKER_02]: definitely a shift Xi Jinping has his line that every Chinese knows he references it often.
[SPEAKER_02]: He said our goal in China is to make China less dependent on the rest of world and the rest of world more depended on China.
[SPEAKER_02]: So what does that mean?
[SPEAKER_02]: In the extreme China manufacturers every single car in the world.
[SPEAKER_02]: yeah okay how does that play out what about jobs in the west what about our own industries and technology and and national security so there's a collision we're on a collision course something's going to get so you know right now the US and Canada are basically kind of isolated when it comes to Chinese cars you know they've been exporting you know
[SPEAKER_03]: especially to Latin America, but also in case something Europe, Southeast Asia, we're one of the only places where you can't buy a Chinese car.
[SPEAKER_03]: How much longer do you think that lasts?
[SPEAKER_02]: I could see it breaking, I feel it is like a dam, the dam is about to get about to break somewhere, and I could see that happening as soon as next quarter.
[SPEAKER_02]: I could see the Trump administration waking up right or wrong and saying, look,
[SPEAKER_02]: D-Y-D is offered to make a $7 billion investment in employee 25,000 America's.
[SPEAKER_02]: And build batteries.
[SPEAKER_02]: You don't need batteries here at America.
[SPEAKER_02]: Okay, we don't know about.
[SPEAKER_02]: Let's bring them in.
[SPEAKER_02]: They're the great deal.
[SPEAKER_03]: or he may know we don't know because I mean at the same time they're you know openly antagonistic to the whole idea of electric vehicles anything that doesn't burn fossil fuels so yes and you know what we just saw last week and in Georgia and then in Georgia you know where ice went in and rounded up Korean workers that were installing equipment in a plant that
[SPEAKER_03]: You know, they run up and throw them out of the country.
[SPEAKER_02]: That makes no sense.
[SPEAKER_03]: Yeah, it's like the world turned upside down So, you know, given that Do you see that Potentially being something that company companies from other countries and look at that and say
[SPEAKER_03]: Yeah, you know what it's not worth investing into U.S.
[SPEAKER_03]: Do you think does it actually play out that way or do they look cast that and look long-term and say, you know, at some point, we'll move cast that.
[SPEAKER_02]: Feeling when I talk to a manufacturer outside the United States is...
[SPEAKER_02]: It used to be so easy to step into the U.S.
[SPEAKER_02]: and sell into the U.S.
[SPEAKER_02]: whether you're exporting or manufacturing gear.
[SPEAKER_02]: It's gotten harder, but it's still the most profitable place in the world to sell in service cars.
[SPEAKER_02]: So the Chinese in particular are starving for profits.
[SPEAKER_02]: They can't find them at home.
[SPEAKER_02]: they go to place like Southeast Asia, South America, Middle East Africa, in margins there.
[SPEAKER_02]: You know what?
[SPEAKER_02]: US is still the place to make money and they kill to get in here.
[SPEAKER_02]: They'll tolerate a lot of eight coupesians and they exchange for access to this market.
[SPEAKER_02]: So that's our level.
[SPEAKER_03]: Yeah, again, I think I might have been you or cherry that said something like 60% of all the profit in the auto industry is here in here in America.
[SPEAKER_02]: So they look at that and they go, oh, we got to get in there.
[SPEAKER_02]: Yeah, so that's if we're really smart as
[SPEAKER_02]: We use that maximize that leverage and say, access to our market, the Chinese would do the same.
[SPEAKER_02]: They have done the same, access to this market will cost you.
[SPEAKER_02]: a lot of money and a lot of time and a lot of effort we want here money we want your IP we want training we want promises of more money in exchange for getting that actually we shouldn't give it away yeah the work where do you think the first Chinese auto plant peers uh... in the Americas uh... how we've been Mexico Canada or the u.s no one knows but i would guess southern united states i'm going to say georgia
[SPEAKER_02]: Louisiana.
[SPEAKER_02]: Does it be my top three guesses?
[SPEAKER_02]: Yeah somewhere in the south far from unions.
[SPEAKER_03]: Even with the antagonism to the tours China, you think you think they'll still look for example when Ford wanted to build their LFP plant.
[SPEAKER_03]: We're just initially in Virginia and Glenn Young can said nope.
[SPEAKER_03]: We don't want anything related to the Chinese company here.
[SPEAKER_03]: You think that they'll look the governors in those states
[SPEAKER_02]: it feels like it's going to land with the Trump administration.
[SPEAKER_02]: So I don't know that governors would on their own make that decision.
[SPEAKER_02]: They'd want to look for some interference from Washington like this.
[SPEAKER_02]: Okay.
[SPEAKER_02]: All right.
[SPEAKER_02]: Let's go.
[SPEAKER_02]: They go together.
[SPEAKER_03]: Yeah.
[SPEAKER_03]: Okay.
[SPEAKER_03]: So for the U.S.
[SPEAKER_02]: Absolutely.
[SPEAKER_02]: There's absolutely a chance.
[SPEAKER_02]: You've got great resource in terms of talent, experience, engineering, uh, you've got some of the best of the way in terms of capabilities, uh, where we fall down right now is, we're not tossed competitive.
[SPEAKER_02]: So how do we get cost competitive?
[SPEAKER_02]: I think we have to align with Japan, Korea, India, and Europe in say, as a group, we were going to jointly, it's almost like a Manhattan project.
[SPEAKER_02]: We have to find a way could be competitive against the Chinese.
[SPEAKER_02]: How do we do that?
[SPEAKER_02]: We have design engineering here, manufacturing in India, something else happening in Europe, but it has to be an allied effort.
[SPEAKER_02]: I think alone at a bit of trouble.
[SPEAKER_03]: It, you know, look at Ford, you know, they recently announced their next generation EV platform, large scale casting, structural battery, you know, the same pattern that Tesla started with the Austin built model wise, a lot of the Chinese have adopted that architecture.
[SPEAKER_03]: Can kind of Ford tail do it on their own, doing that, or
[SPEAKER_03]: You know, do they have to partner with a bunch of other companies to potentially make that app?
[SPEAKER_02]: It feels like at this juncture, we need everybody in working together because the competition on China is formidable.
[SPEAKER_02]: It's not just low costs, it's high tech, it's high quality, it's advanced manufacturing.
[SPEAKER_02]: It's, it's really like 10 Japan's coming at us at the same time.
[SPEAKER_03]: Of course, you know, at the same time, you can say that, you know, we've got a lot of policies that are openly antagonized in all of our traditional allies and trading partners.
[SPEAKER_03]: Are they going to want to work with us to make that a reality?
[SPEAKER_02]: I think it's sort of a situation where as these two are softened, it's better than that other option, which is staying standing on their own.
[SPEAKER_02]: Yeah, and trying to contend with China.
[SPEAKER_02]: So they'll be willing to swap to just eat bitter as the Chinese like to say in order to survive.
[SPEAKER_02]: How do we survive?
[SPEAKER_02]: How do we survive into the next generations, Rive?
[SPEAKER_02]: Probably we have to find a way to cooperate.
[SPEAKER_02]: We should.
[SPEAKER_02]: And the United States, I would like to see the better behavior out of the United States in terms of how we treat our allies, it's there for us to, it's designed to work for us now.
[SPEAKER_02]: So I'm not, I'm confused actually about what's going on and I'm hopeful that it'll all work out in the coming months.
[SPEAKER_02]: But who knows?
[SPEAKER_02]: Can, can, can we do it before the Chinese arrive here if you think?
[SPEAKER_02]: Have to.
[SPEAKER_02]: Yeah.
[SPEAKER_03]: All right, one last thing you mentioned earlier and working on a book, can you give us a hint of what's coming?
[SPEAKER_02]: Yeah, thank you.
[SPEAKER_02]: Thank you for mentioning that.
[SPEAKER_02]: I'm so Drills actually and terrified to be writing a book.
[SPEAKER_02]: It's called Car Wars and it's the battle for supremacy and next generation cars between the United States and China.
[SPEAKER_02]: It features a lot of the key characters you, the guys you imagine.
[SPEAKER_02]: Elon Musk, the chairman of B.Y.D.
[SPEAKER_02]: Wong-Trong Fool, Lee Shufu from G.E.
[SPEAKER_02]: Ah, Tamil Trump, and other players along the way who have shaped things and will shape things going forward.
[SPEAKER_02]: It'll be out next year in 2026 and it's designed to be kind of like a thriller.
[SPEAKER_02]: Because this stakes are a sky high, the uncertainty today is also very high and there will be winners and losers.
[SPEAKER_02]: No doubt.
[SPEAKER_03]: Well, definitely I have to have a long conversation about that when it comes out.
[SPEAKER_03]: I can't wait to read that.
[SPEAKER_03]: Thank you.
[SPEAKER_03]: There's so much, some, you know, I've been in the auto industry for 40 years now, since I started as a co-op at GMI.
[SPEAKER_03]: And this is by far the most interesting period of my career terrifying, but interesting.
[SPEAKER_02]: Terrifying.
[SPEAKER_02]: It's fast.
[SPEAKER_02]: Everything's up in the air.
[SPEAKER_02]: There's maximum uncertainty.
[SPEAKER_02]: Yeah.
[SPEAKER_02]: And so they say you can function of business when there's
[SPEAKER_02]: Not without certainty.
[SPEAKER_02]: Well, here we are.
[SPEAKER_02]: We're finding a way to somehow cope it in an environment where terrorists, geopolitics, batteries, batteries, supply chains.
[SPEAKER_02]: What about access to magnets?
[SPEAKER_02]: Everything is sort of up in the air.
[SPEAKER_02]: Yeah.
[SPEAKER_03]: Yeah.
[SPEAKER_03]: All right.
[SPEAKER_03]: Thank you so much for your time, Michael.
[SPEAKER_03]: Thank you.
[SPEAKER_03]: All is good to talk to you.
[SPEAKER_03]: Enjoy the.
[SPEAKER_03]: And finally, I've got a conversation I had at the Move America Conference and Detroit this week with Benjamin Millard, who is the General Manager for North America at Freedom Move.
[SPEAKER_03]: Freedom Move is a business unit of Stalantis.
[SPEAKER_03]: Over the years, they have gotten into a lot of different business areas, including car sharing.
[SPEAKER_03]: and aggregating different mobility services through a single app so that riders could find, figure out the best trip or best mode for each trip they took looking at different ride-hailing and transit services all in a single interface.
[SPEAKER_03]: The most recent endeavor is called car on demand, which is a subscription service, really more, the microlease service, which is similar and concept to what Hyundai is doing with the revolve plus, but it's in addition to still-antist products.
[SPEAKER_03]: It can also work with any brand of vehicles with dealers opting in to participate.
[SPEAKER_03]: So, have a listen to my conversation with Benjamin.
[SPEAKER_01]: We are tech mobility company.
[SPEAKER_01]: Always flexible, always digital.
[SPEAKER_01]: That's what we do.
[SPEAKER_01]: And that's what we do our best to provide to the leaders.
[SPEAKER_01]: So, we start with the leaders.
[SPEAKER_01]: What we do is we deal with loaners, as well as trying to help them getting some, some external revenue out of the loaner fleets.
[SPEAKER_01]: But what we do as well is we try to bring them new customers for buying cars from them under the form of mobility solutions.
[SPEAKER_01]: So we we have a subscription program within feature move
[SPEAKER_01]: which is the microly solution.
[SPEAKER_01]: So that's uh you just pay monthly that's fully flexible.
[SPEAKER_01]: And what we do for the dealer is we reference the program at the dealership level and then the customer following exactly the same customer journey as you buying a car from a dealer.
[SPEAKER_01]: If at the end you don't want to sign for that piece for the next three years or signing for that loan for the next
[SPEAKER_01]: I have to stop saying five years because now it's not five years, it's six to seven years.
[SPEAKER_01]: Yeah, of a long year, or more.
[SPEAKER_01]: So the eight and some places they're easy as it.
[SPEAKER_01]: So what you can do is go for the my trolley's option with freedom move.
[SPEAKER_01]: And basically what we're going to do is in the back end, we're going to buy the car from the dealer.
[SPEAKER_01]: So.
[SPEAKER_01]: Well, it's really moved by the car from the deer, right?
[SPEAKER_01]: And then you'll leave it to the grass there.
[SPEAKER_01]: The car to the customer.
[SPEAKER_01]: Hey, is that on a month or month basis?
[SPEAKER_01]: Yep, that that's on a month's basis.
[SPEAKER_01]: It's fully flexible.
[SPEAKER_01]: Works perfectly well, you know, for EVs.
[SPEAKER_01]: I mean, look, getting the same test broad experience for any of you, that when you get for an IC is just, I mean, 1,000 group.
[SPEAKER_01]: Of course, you're going to fall in love with the car, because when you get at acceleration and everything is just crazy, but then back home,
[SPEAKER_01]: Your partner is going to start asking, hey, what did you do?
[SPEAKER_01]: I mean, I know, oh, yeah, you know, how do I get that pink charge and everything?
[SPEAKER_01]: So you really need to see that, because the opportunity to exactly see what it's like to live with and what the charging and children are going to find and everything exactly.
[SPEAKER_01]: So that's very good for EVs, that's good.
[SPEAKER_01]: And what I'm going to come to realize, wait, I only have to charge this thing once a week.
[SPEAKER_01]: Yeah, I only drive 40 miles a day.
[SPEAKER_01]: Yeah, no, exactly.
[SPEAKER_01]: And most of our customers are keeping the cars for close to 12 months, who are in the 10, 11 months now.
[SPEAKER_01]: So what we do up here, of course, is that we find another subscription customer.
[SPEAKER_01]: Oh, we sell that car can be retailed.
[SPEAKER_01]: I've been through the dealer all weekend option that car, but I mean, that's that's on the back end.
[SPEAKER_01]: But all the customer experience that we really try to provide is
[SPEAKER_01]: As everybody, we've found it at the beginning by saying, okay, it's all about charging the customer for bringing them for getting access to flexibility and doing everything online with a limited offer.
[SPEAKER_01]: It just doesn't work.
[SPEAKER_01]: The thing is, you start saying to the customer, A, needs the customer, you know subscription is freedom.
[SPEAKER_01]: But then you say, okay, you cannot get access to the entire lineup of that OEM.
[SPEAKER_01]: It's going to be that specific car for that period of
[SPEAKER_01]: I mean, I was not afraid of my friend.
[SPEAKER_01]: I was not different from the other regular lab.
[SPEAKER_01]: I got it in jail.
[SPEAKER_01]: I mean, so we tried to really bring that technology to the dealership without having, you know, having hovelap with what the dealership can close as deals, right?
[SPEAKER_01]: Truth, the normal levels say retail customers don't know.
[SPEAKER_01]: Otherwise, you know, it just means no, I mean, it's not additional incremental sales.
[SPEAKER_01]: It's just, I'm taking the sales that you were doing before.
[SPEAKER_01]: It's not what we want.
[SPEAKER_01]: But we replaced that product at the end of that customer journey, unfortunately, not successful of the time, helping the dealer saving you to an acquisition cost or, you know, rationalizing those costs and making sense that, you know, with all of us to add.
[SPEAKER_03]: Say for example, somebody comes and leases a wagon or a, you know, does this lip-microlyse of a wagon or a 500E and they decide after kill months?
[SPEAKER_03]: Yeah, you know, I like this.
[SPEAKER_03]: I want to buy this.
[SPEAKER_03]: And then you can make the arrangements with the dealer and have to have purchased that same card.
[SPEAKER_01]: They've been living with for a hour long.
[SPEAKER_01]: And what we do is, so we have to free the move forward by DI8, Bartonashi Preju.
[SPEAKER_01]: It's a it's a least to home.
[SPEAKER_01]: So basically on every single monthly payment you do, there is a portion that helps building what could be used as you're building equity.
[SPEAKER_01]: Yeah, you can't got something like that.
[SPEAKER_01]: Exactly.
[SPEAKER_01]: You're the link.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: That's my view.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: Okay.
[SPEAKER_03]: Yeah.
[SPEAKER_03]: So you mentioned subscription earlier.
[SPEAKER_03]: Is that the subscription program?
[SPEAKER_03]: That's not a subscription program.
[SPEAKER_03]: Yeah.
[SPEAKER_03]: So, um, and.
[SPEAKER_03]: Um, is that apply to any vehicle in the Stalinist line-up or is it only for the or even outside Senonis we do Nissan, we do volcanoes, we do whatever brands.
[SPEAKER_01]: Of course, the the brands we love the most are the Stenonis brands, but I mean, talking with the dealers, the thing is now.
[SPEAKER_01]: They are most of them are holding multiple franchises, right?
[SPEAKER_01]: So they say, okay, look, I really love it.
[SPEAKER_01]: But will they supply to that or the RAM?
[SPEAKER_01]: Of course, we can.
[SPEAKER_01]: Yeah, I mean, it doesn't change anything on the technology standpoint.
[SPEAKER_01]: So you just, I mean, we get connected with the dealer to move the DMS.
[SPEAKER_01]: So we have an API in place.
[SPEAKER_01]: We just gather or the inventory.
[SPEAKER_01]: We price in the back end.
[SPEAKER_01]: And then we just send back that price or to the dealer or directly to the customer and then the customer replies online.
[SPEAKER_03]: just trying to understand the logistics it all works.
[SPEAKER_03]: So you get all that information from the DMS.
[SPEAKER_03]: You have on your website.
[SPEAKER_03]: You have a list of the inventory that's available out there.
[SPEAKER_03]: And then customer goes to free to move.
[SPEAKER_03]: Is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it, is it
[SPEAKER_03]: you're not buying a bunch of vehicles that have those in your inventory.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: I know we're just outing you, you know, moving movie inventory.
[SPEAKER_01]: So I mean, you can make your own selection as a dealer saying that that one yes, that order not, that that's absolutely possible, but that's what we do.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: So we just gathered your entire inventory.
[SPEAKER_01]: Why?
[SPEAKER_01]: Because really the idea behind is to say, why should I offer different, I mean, what I what I love when I go to a dealership is,
[SPEAKER_01]: being able to choose among that just huge inventory, you know, picking, you know, the card that I want that dream level, that greedy specific card.
[SPEAKER_01]: Then when I'm sitting down, you know, looking at the numbers, usually this is when, you know, these appointment can start to happen.
[SPEAKER_01]: That's one point.
[SPEAKER_01]: You're six.
[SPEAKER_01]: So, uh, yeah.
[SPEAKER_03]: the monthly payment for that.
[SPEAKER_03]: How does that, I would that compare to doing it, just knowing the dealer and doing a standard lease for that same vehicle.
[SPEAKER_01]: So we try to be that close.
[SPEAKER_01]: What do we discover?
[SPEAKER_01]: I mean, we started doing subscription a couple of years ago.
[SPEAKER_01]: And once again at the beginning we said, that's not a problem, customer will be fine paying a premium for all the operations, all the stuff, just by gaining access to Fixibility.
[SPEAKER_01]: That's not true.
[SPEAKER_03]: And the logistics of making that work.
[SPEAKER_01]: A bunch of companies are trying to, you know, and they're exactly, but there is, I mean, there is a real cost, especially if you try to get disconnected from the dealership.
[SPEAKER_01]: What I mean, that is,
[SPEAKER_01]: If you say, look, Mr. Dieter, tell me the car and I'm going to take care about everything.
[SPEAKER_01]: You need logistics.
[SPEAKER_01]: You need, you know, you need points, you know, where you're going to concentrate those far as people for making delivery and everything.
[SPEAKER_01]: Things that Dieters are doing well.
[SPEAKER_01]: I mean, that's no problem.
[SPEAKER_01]: So why not really helping the Dieter setting more, right?
[SPEAKER_01]: What are the same time relating on the Dieter's logistics and everything?
[SPEAKER_01]: That's what we do and that makes a big difference so I mean at the end we we don't apply your premium of course there is a calculation there is a margin on that and everything but we aim to be really close to a traditional traditional list by 10, 15 crores and more yeah but the huge benefit is that there is no down once again there is no commitment that's fully
[SPEAKER_03]: Yeah, roughly how many customers have chosen this option.
[SPEAKER_01]: Yeah, so now we have a couple of hundreds.
[SPEAKER_01]: So we get close to a thousand to give you a sense of scale.
[SPEAKER_01]: So we, we starting with a dealer, Chapman Nissan in New Jersey, Nissan.
[SPEAKER_01]: We over two months, we achieved doing together a little bit more than 50 units.
[SPEAKER_01]: Okay, yeah, sorry, Amik.
[SPEAKER_01]: One leadership, Nissan 50 units, two monks, new program, that's not bad.
[SPEAKER_01]: I mean, if we just put it at the scale of the country, the deeders and everything.
[SPEAKER_01]: Yeah, so we get close to a thousand.
[SPEAKER_01]: We have deeders in San Diego, Dallas, so New Jersey, Miami, we do Jacksonville.
[SPEAKER_01]: We have a couple of deeders.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: And...
[SPEAKER_01]: where we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're,
[SPEAKER_03]: Dabbled in a lot of different things to the heart car sharing and you know very Oh, yeah, I mean, I mean, that's part of why the system was set up You know with with installant is some originally within PSA you're right to you know to Experiment with different business models that you know because everybody I don't know everybody's trying to figure out okay You know what
[SPEAKER_03]: What how what else can we do beyond the traditional deerator consumer model?
[SPEAKER_03]: And yeah, so it's yeah, it's been interesting to watch Hail what works what doesn't you know, and of course, you know, installing is not the only ones to do it I mean, that was as they tried it, but it does it doesn't seem so far like this is something that might stick
[SPEAKER_01]: I think it will, I mean, I think that offering, you know, cars that way is definitely something that's going to stick and I think that OEMs looking on that side for addressing you, I mean,
[SPEAKER_01]: I don't want to call it new needs, but new consumption patterns and everything.
[SPEAKER_01]: I think that this is definitely something that's going to make sense, but you're absolutely right.
[SPEAKER_01]: Back in 2016, when freedom was being created, we started with connect to fleets.
[SPEAKER_01]: So, flick management solution.
[SPEAKER_01]: What's the primary business of freedom move?
[SPEAKER_03]: then starting doing car sharing, saying, and I wanted you to add an aggregator app that tied into multiple ride-belong serviceers.
[SPEAKER_03]: I think that was only in Europe.
[SPEAKER_01]: I think that was the first sort of freedom move was when it was, it was not done by your freedom of company was, it was done by your company that we acquired.
[SPEAKER_01]: And that company was using the freedom of brand at the time without any authorization or nothing.
[SPEAKER_01]: Oh, okay.
[SPEAKER_01]: But the model behind was good model, I mean, that was one of the first, you know, flexible mobility marketplace, but on the market.
[SPEAKER_01]: And you know what, those guys, they were not taking any commission, nothing, although, I mean, they were just doing it, you know, four.
[SPEAKER_01]: addressing a customer needs which was I just want to have all the offer you know reference at the same place at my thing at it but just want you know to okay this morning should I go for a new version should I go for car sharing but which car sharing which company that type of that that was what the company you know proposed at the time and we said look I mean despite the fact that they are using a brand
[SPEAKER_01]: make maybe sense you know something on her hand and try you know to see what can be built in terms of business model out of that so we started then during car sharing we started covering cities then we said look now we have that nice technology we have a certain operation knowledge we have we know oh two
[SPEAKER_01]: buy cars, doing insurance, how we can get customers, all of that, why not trying to spread that thing over the Stenonis networks and even outside.
[SPEAKER_01]: So now we have a SES solution that is installed over 3500 locations out of the world.
[SPEAKER_01]: So here are companies.
[SPEAKER_01]: that are using the SESS solution of freedom move for offering mobility solutions to the customers on the daily basis.
[SPEAKER_01]: And we have 35,000 cars on that side of the business.
[SPEAKER_01]: So all of that together, a lot of freedom to say, okay, look, uh, you go to Verlin, you can use a partial menu.
[SPEAKER_01]: You go outside Verlin, you can get a car from free to move from one of the free to move partner for a week.
[SPEAKER_01]: Providing 2DC, Samsung, all of that.
[SPEAKER_01]: Anybody in, you're not satisfied getting just PCs off-coart.
[SPEAKER_01]: You can do the my trolley solution from trader will trip delicious.
[SPEAKER_01]: That's how we do.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: Oh, well, that's great.
[SPEAKER_01]: Thank you very much.
[SPEAKER_01]: Thank you.
[SPEAKER_01]: Please hear us all.
[SPEAKER_01]: Thank you.
[SPEAKER_03]: Thanks for listening and Nicole Robby and I will all be back next week with the regular show talking about the stuff we're driving including the Lexus LX700H and also had a chance to drive an extended range EV motorhome last week so stay tuned next week for that and talk to you then bye.