Daybreak Weekend: CPI Preview, Reeves Statement, BYD Earnings
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This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our daybreak anchors all around the world. Straight ahead on the program, a look ahead to some key inflation data in the U.S., how that may impact Fed policy, plus a look at the impact of tariffs on housing. I'm Tom Busby in New York.

I'm Caroline Hipka here in London, where we're weighing up the Chancellor's options ahead of the Spring Statement. I'm Doug Crisner looking ahead to the earnings from Chinese EV giant BYD. That's all straight ahead on Bloomberg Daybreak Weekend.

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Good day to you. I'm Tom Busby, and we begin today's program with fresh reads on U.S. economic growth. That's for the final quarter of last year and the Fed's preferred measure of consumer inflation for last month. For more on what it all means, we're joined by Stuart Paul, U.S. economist with Bloomberg Economics.

Well, Stuart, thank you for joining us. Did the economy continue to grow in the fourth quarter, and what's behind that growth? Well, we knew that the economy grew in the fourth quarter. Our previous estimates that we got from the Bureau of Economic Analysis showed 2.3% annualized pace of growth in the fourth quarter, mostly supported by consumer spending, which was pretty robust, strong, healthy spending through the holidays.

We're likely to see the same 2.3% estimate in the final reading of that fourth quarter GDP number. If anything, risk might be skewed a little bit to the upside. We do know that there were some adjustments that firms were making in terms of imports. We know that some foreign countries were trying to get ahead of any sort of escalating trade tensions as the Trump administration was gearing up to come into office in the first quarter.

So, if anything, maybe there's a little bit of risk that GDP will be revised up just a touch. But we do know that there was a healthy, robust pace of growth in the fourth quarter. Probably not going to see the same degree of growth this year. We know that amid policy uncertainty. But I think that we did end 2024 in a relatively strong place. Well, to your point, consumer spending, the big driver of all that. And

There are indications, though, in this current first quarter, which is about to end, there has been a significant pullback, though, in consumer spending, unlike what we saw leading up to the holidays. That's right. The first quarter is going to be especially choppy. In January, sales were just dismal. Spending in January declined 0.2%. A big part of that was a pullback in autos, and a big part of that was that there was a polar vortex in the lower 48 states.

When it's snowing in Houston, folks aren't going to be wanting to walk around an auto dealer's lot. We do expect to see quite a rebound in February. Again, a big part of that is a rebound in auto sales. We're estimating that February personal spending growth will register 0.6%. That's pretty strong, and that is the type of number that's going to justify the Fed's decision to hold rates steady when it met just last week.

Uh, but I think that when we decompose what's driving the spending, it's not all sunshine and rainbows. Uh, after January's polar vortex, the February data, we're going to be, so we think we're supported by spending on autos again, just a rebound on healthcare because of the rise in the number of flu cases, uh, and a little bit of an increase in discretionary goods. But we also do know that people pulled back on their spending, uh,

at food services and drinking places. They were dining out, which is one of the key measures of discretionary spending. That was the biggest decrease, right, in bars and restaurants. That's right, in the retail sales report. So when we think about what we should expect from the personal spending report coming out this Friday, I think that the headline number for spending is going to look pretty solid, 0.6% growth. But some of the details, some of the composition under the surface is just going to illustrate this choppiness in the first quarter.

Well, let's talk about an even stickier subject related to that, and that's inflation. We have the PCE for February. That's out this week. What are you expecting to see there? We're expecting to see a very hot core number, core inflation of 35 basis points during the month. That's going to push the year-on-year measure of core inflation up to nearly 2.8% from a touch under 2.7%.

What's a little bit troubling is that we did see a nice, cool CPI measure. What could it be that's driving core PCE inflation higher? Well, if you track all the components that come from CPI and that come from producer prices, the PPI, and combine those to create the PCE measure, which is what the Fed is really good at estimating,

before it even meets, we see that the composition of all the different spending categories are going to boost the Fed's preferred measure. You had hot financial services inflation, you had hot food services inflation, despite the pullback in spending. You had rising healthcare costs, possibly just a continuation of the annual resets that typically take place in January.

And we saw a lot of goods inflation. Typically, core goods, particularly durable goods, weigh on headline inflation. Over the past couple months, in February in particular, goods were boosting inflation, which is something that's troubling, especially as tariffs start to hit. We only saw just the first little wave of tariffs in February taking effect. As we get reciprocal tariffs in April, April 2nd, as we've been told to expect, we're

we could expect, at least for now, that's right, as we get those reciprocal tariffs, we should expect a little bit more goods inflation. So it is the sort of thing that should be troubling for the Fed, and again, will justify that decision to hold rates steady just last week. Q4 GDP, a third and final reading on GDP. That's out this Thursday. February's PCE out on Friday. Our thanks to Stuart Paul, U.S. economist with Bloomberg Economics.

Well, we turn now to housing and spring has sprung the busiest time of the year for the U.S. housing market. But boy, has it struggled. Skyrocketing home prices, elevated mortgage rates, a dearth of homes on the market despite pent up demand. And now a new worry, President Trump's tariffs against Canada, Mexico and China. And for more on how those policies could impact housing and home building, we welcome Drew Redding, Bloomberg Intelligence, U.S. home building analyst.

Well, Drew, thank you for being here. I tell you, the timing could not be worse for builders, contractors, buyers, people that want to replace their back deck or renovate their kitchen. I mean, could it be even worse for them right now?

Yeah, you're right. There's a lot of factors conspiring against the home building industry, whether it's high home prices, as you mentioned, elevated rates, declining consumer confidence, potential tariffs, immigration policy. So there's a lot of things that builders and investors in this space are having to digest right now. So definitely a difficult period.

And these tariffs, these numbers are staggering. 25% on certain imports from Mexico and Canada. That went into effect early March. And that includes softwood lumber. And the U.S. gets, what, like 40% of its lumber from Canada. Also the appliances in Mexico and China that come in, 20% tariffs there. Drywall out of, you know, the gypsum and drywall out of Mexico. And we're expecting even more tariffs on April 2nd, as of today anyway.

Right. So for just for a little bit of context, the U.S. imports about 13 billion dollars worth of goods used in residential construction. So that's about 7 percent of all goods used in the industry coming from other countries. Within that, you have about 45 percent coming from China, Mexico and Canada, which is, you know, have kind of been at the forefront of all this tariff talk. China is about 30 percent of imports, Mexico about 10 and Canada almost 10 percent. And you're right. It's those products you mentioned. It's, you know, appliances and lighting from China. It's

drywall from Mexico. And I think, you know, the real biggie, as you mentioned, is lumber from Canada. That accounts for about 70% of all U.S. lumber imports, and it's about 30% of the lumber used in U.S. construction. So certainly an important thing to watch. Now, keep in mind, we're already paying a 14.5% tariff on imports of Canadian lumber. So

You know, when these go into effect in April, we'll be at 40%. So certainly a real threat to the builders. Wow. And speaking of builders, last week, the National Association of Home Builders said tariffs on lumber, appliances, steel, aluminum piping could add as much as $10,000. That's just to the cost of building a home. I mean, what does that mean to a buyer? Yeah, it's a great question. So typically, builders are able to pass their costs on to the consumers, but

You know, the concern, I guess, from an investor perspective would be, you know, home shoppers have become increasingly sensitive to cost, whether it's financing costs or, you know, the actual cost of a home. So, you know, I'm not sure in this environment how much they're going to be able to absorb. So I think you're going to see builders take some of that on the margin side. So I think it's going to be a little bit on the builder side, as well as consumers having to pay a higher price for a new product.

And it's not just the builders, of course. You want to replace your deck or your kitchen cabinets. I mean, you are going to pay more, aren't you? Yeah, we're going to see it across the industry. So you're going to see it in the repair and remodeling space, which is dealing with its own issues as consumers continue to battle with the cumulative impact of inflation over the last couple of years. You have people not wanting to go out and make big

big purchasing decisions. So we're seeing a pullback in discretionary categories. And of course, you know, lumber is a big component of that. You know, the appliance market has also struggled over the last couple of years. So, you know, on appliances that are imported from China and other countries, you're certainly going to see higher prices there.

Now, we did get some encouraging data last week on housing. New home construction sharply higher in February, but is that more because of all that wicked winter weather in January? I mean, what's behind that push on construction?

Yeah, I think you're right there. I think a lot of it is some payback from some of the weather disruption we've seen within that same report. Our preferred measure of activity is really building permits. It's a much less volatile indicator and it's a better leading indicator of production. And they were actually down 11% compared to last year. And that jives with the

the data we saw in Builder Sentiment. You're definitely seeing a more cautious approach to the market. What they're doing is matching starts with demand and with the market slowing, you're seeing a corresponding pullback in new production. The other important piece is the fact that

The industry was so aggressive in ramping up spec home production to fill the void left by resales that, you know, there's a lot of inventory out there that's already under construction. So there's a lot less incentive for builders to be aggressive until they start to work through that inventory. And to do that, we think they're going to have to continue to lean on incentives, particularly given the increase, as you alluded to before, with the increased competition that we're seeing in the resale market in key markets in Florida and Texas.

Does that mean maybe there's too many houses out there, too many new houses, or maybe not the right kinds of houses? People are looking for more affordable houses instead of, you know, five bedrooms, four baths.

Yeah, I certainly think when you talk about a lack of for sale inventory over the last couple of years, it's really for more affordably priced products. Now, it's an area where the builders have been shifting to over the last couple of years. They've done that through smaller square footage floor plans or less amenitized homes. So

they realize that's where the gap in the market is. But now, you know, when you start to pile on additional costs, it gets harder and harder for them to make that product work. But by and large, if you look at the inventory picture, I mean, over the last couple of years, the lack of resale supply has really been

what's driven demand into the new home market. It's certainly been a key factor. Well, we get more housing data out this week. New home sales for February coming out on Tuesday. Our thanks to Drew Redding, Bloomberg Intelligence U.S. Home Building Analyst. Coming up on Bloomberg Daybreak Weekend, a look ahead to U.K. Chancellor Rachel Reeves' hotly anticipated spring statement. I'm Tom Busby, and this is Bloomberg. ♪upbeat music playing♪

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This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York.

Up later in our program, we'll look ahead to earnings from Chinese EV maker BYD. But first, UK Chancellor Rachel Reeves presenting her hotly anticipated spring statement this week. She faces contentious, a contentious environment, including recently slashed growth figures and expensive promises on defense. Now, there's also a question of silencing critics, some of whom may be from within her own party. For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker.

Tom, on Wednesday 26th March, the Chancellor is expected to announce billions of pounds of spending cuts to ensure that she meets her key fiscal rule, which requires day-to-day government spending to be covered by tax receipts.

Her task is not an easy one. Rachel Reeves left herself an historically slim £9.9 billion margin against that target at her budget in October, a buffer that has since been eroded by higher government borrowing costs and lower growth forecasts. Net debt for Britain stood at 95.3% of GDP in January. That is close to levels last seen in the early 1960s.

The deficit in the first 10 months of the year was £118 billion, and that is nearly £13 billion more than the Office for Budget Responsibility forecasts only in October.

But Reeves is standing strong. She told Bloomberg that she is committed to bringing down government borrowing despite the obstacles. We've already made some substantial changes on regulation. Last week, the Prime Minister announced that we're going to be getting rid of NHS England, the biggest quango in the world.

We announced last week getting rid of the payment systems regulator and just today the merger of the community interest companies regulator into Companies House. So you can see that this government are determined to make it easier for businesses to do business in the UK, to get building and to get on with things.

Overburdensome regulation, overlapping regulation has held back Britain for too long and we're determined to turn that around. What's the metric for success here? How soon and how much do you expect this to boost GDP? Well we've made a commitment to reduce the regulatory burden, the administrative burden by 25% during the course of this Parliament.

That's across all regulators, whether it is in the environment or financial services, right across the economy. And that is to meet our ambition to grow the economy, to make working people better off and to make our country and our economy more competitive. So next week, the new growth forecast will be published by the Office of Budget Responsibility. But

this is just one of a range of measures, along with the Planning and Infrastructure Bill that was published last week, the Pensions Bill, which is coming soon, to turn around the lacklustre growth performance that has affected the UK for far too long. Well, the OCD published its forecast today. It's cut its growth forecast for this year and next. Do you accept responsibility for that, or is it all the fault of Donald Trump and the Conservatives? Well, it's...

Well, if you look at what the OECD have done today, they have downgraded most major economies' growth forecasts. The UK is not immune from those global headwinds. If you look at the forecast for next year for the UK, we're forecast to be the second fastest growing economy in the G7. That is up from the third fastest, the last time they published their forecasts. But if you're asking, am I happy with those numbers? Of course not.

I want to see the UK economy create more jobs, create more prosperity, to lift the living standards of working people. And that's what this regulatory drive is all about, unlocking growth, making it easier to do business in Britain. Well, what I'm asking is, do you accept any responsibility for the downgrade? Is it anything to do with your gloomy messaging or your tax rises in the October budget?

Of course, there are costs from any measures on tax, but there are also costs of irresponsibility. And if in the budget last year I hadn't have dealt with the £22 billion black hole that I'd inherited from the Conservatives, if I hadn't have put our public finances on a firm footing, then we wouldn't have been able to increase defence spending in the way that we did just a couple of weeks ago, and we wouldn't be able to weather the global economic headwinds

headwinds. So we made the right decisions in that budget to return stability to the economy. And since the general election, of course, there's been three cuts in interest rates, only possible because we've returned stability to the economy. But do you regret not giving yourself more breathing space against your fiscal rules at the time of the October budget? Well,

In October, we set the fiscal rules for this Parliament that we would balance day-to-day spending with tax receipts, that we would get debt down as a share of GDP. But significantly, we changed the way that we measured investments. So for the first time ever, we count the benefits of investment, not just the costs. And because of that, we were able to invest an additional £100 billion during the course of this Parliament in capital projects.

transport, digital, energy and of course housing. That's pro-business, that's pro-growth and it's pro-working people. That was Chancellor Rachel Reeves speaking to Bloomberg's Lizzie Burden ahead of her big day in the Commons. This is an event the government though has tried to play down even as Work and Pension Secretary Liz Kendall announced a plan to save £5 billion a year by 2030 with cuts to welfare benefits.

So what will we learn from the Chancellor's Spring Statement? Can Rachel Reeves keep markets on side and also fend off her political opponents? I asked Bloomberg's UK government reporter Jo Mayes how difficult the backdrop is for Reeves given the UK economy shrank in January and Britain has many long-standing and now some new expenses.

Yes, the backdrop is a stagnating economy. It's barely grown since Labour took power last year. And indeed, the budget that Rachel Reeves had in October is seen to have not made things much better. Indeed, the increase in the National Insurance Payroll Tax has led to a decrease in business confidence. It's been a hit to hiring as well. And Rachel Reeves has tried to get growth going with these initiatives she's announced, such as Heathrow expansion, developing the Oxford Cambridge Arc.

But these will take time. So in the immediate term, there's been headwinds to growth. And so, yeah, the backdrop is difficult for her. And it's within that very tight space of low growth that she's having to manage these public finances. And as we'll talk about, she has to find spending cuts to make sure she keeps hitting her main fiscal rule. And that will be a big fiscal difficulty for her. Yeah. Spending cuts rather than tax increases. Where do we think the cuts are going to come from?

Well, what we expect Rachel Reeves to announce on March 26th is a reduction in the overall spending envelope. So the overall amount the government's going to spend on public services through to the end of the parliament. It's currently set to grow at 1.3% on average until 2030. And economists think she could take it down to 1.1%, 1%. But she won't crucially have to spell out

where those cuts will fall. That's something that will be revealed at the spending review in June, which is where each government department has allocated its budget. So yeah, that can be, that'll come later. But we do know that welfare is already earmarked for £5 billion in savings. Government's already announced that. We'll have to wait and see in terms of where the rest of the cuts do fall.

Okay. Will we get more details on that then, do you think, potentially on Wednesday, given the pressure that Rachel Reeves will be under? How much does Reeves need to gain in terms of savings in order also to keep to her pledge of sticking to her fiscal rules?

So we think that she might announce up to £10 billion of reduction in public spending, in addition to the welfare savings that have been announced. And that would help her get back to a fiscal buffer of about £10 to £15 billion against her fiscal rule. That's another question here. What headroom does she build back?

against that rule. I mean, we saw that headroom eroded in recent months because of the weaker growth forecasts, because of higher borrowing costs. I think Rachel Reaves is alive to the problems that can happen when you don't have much headroom to absorb these kind of fiscal shocks. So you expect to go back to 10, 15 billion funded through that 10 billion pound reduction in public spending. I think that's where the expectations are.

In terms of that cut to welfare, that has been hugely significant, that announcement and a lot of backlash around that sort of cut to welfare, especially from within the Chancellor's own party. That's a very difficult issue. Yes, we're already seeing signs of what could be quite a punchy rebellion here on the Labour backbenchers. I think that

The concern is that the welfare cuts that were announced might not necessarily achieve what the government says they want them to achieve. The government says that too many people are claiming benefits and it creates a disincentive to work. But the particular benefit they are targeting and reducing the accessibility of, it's really unclear why reducing the availability of that benefit, which is predominantly taken by people who are disabled and have to meet various requirements,

quite strict criteria to receive the benefit, why reducing access to that would necessarily lead to a particular increase in access to work. At the same time, the government is increasing above inflation the universal credit benefit for everyone else. So that's increasing an incentive to stay on that benefit, which would perhaps reduce the likelihood that people go into work. So

Yeah, it's a confused package in that sense. I think lots of Labour MPs are worried about it. I say that the problems for the UK economy and for the government's finances are familiar, but actually the defence spending is something quite new, this idea that we must ramp up defence spending. How do you think that Labour is addressing that issue now and thinking about it fiscally? I mean, it's something of a massively long-term need and desire.

Yeah, so the increase in spending from 2.3% of GDP to 2.5% of GDP by 2027 is funded by moving money across from the foreign aid budget. And that obviously has caused some upset in the Labour ranks, but it does give the government a kind of very credible and definite way of funding that.

uptick. And then they have the line that it will increase to 3% over the course of the next decade. But that line quite conveniently parks the question in the next parliament. So the government can say, oh, we'll get to 3%, but won't actually have to say how really until after the next election, which is kind of in political terms, a very long way away. So yes, they have a pretty immediate, plausible uplift. But then Rachel Reeves does know that funding pressure is going to be significant, sustained, and

high. So, yeah, it does add pressure to the public finances. In terms of the other sort of part of this story, which is the sluggish economic growth that Britain has seen and the fact that the economy contracted in January, the Chancellor's talked about global uncertainty. We know that there has been an increase in global uncertainty in terms of tariff risks and so much more. And

When we heard from the Chancellor, she pointed to worldwide volatility as a contributing factor to the country's recent OBR growth downgrade. Is that a fair assessment? How much is global uncertainty a factor for Britain? Yeah.

I think that it is true that across the piece, you know, governments around the world have seen borrowing costs increase. We have seen global growth forecasts hit by the trade tensions, tariff wars being instigated by the United States since Donald Trump was elected. So all of that is true and fair. I think there's just a UK element in that there's a vulnerability that we have given a significant debt stock that we have, and that makes us

even more kind of susceptible and at risk when it comes to foreign costs increasing. And then, and there is also a domestic element of the impact the budget did have in hitting business confidence and making conditions to operate in the UK harder. So you have to combine the two things.

That was Bloomberg's UK government reporter, Joe Mayes. My thanks to him for joining me. So will the country's first female chancellor manage to balance the books amidst stormy global seas? We'll have full coverage of the spring statement here for you on Bloomberg. I'm Caroline Hepke. You can catch us every weekday morning for Bloomberg Daybreak. You're beginning at 6 a.m. in London. That's 1 a.m. on Wall Street. Tom.

Thank you, Caroline. And coming up on Bloomberg Daybreak Weekend, we'll look ahead to earnings from Chinese EV giant BYD. I'm Tom Busby, and this is Bloomberg.

When you have bars in the sky, onboard showers and award-winning in-flight entertainment, it's no surprise that Emirates was recently named the best airline in the world. We fly you to over 140 destinations and with partners across the globe, we connect you to another 1,700 cities across six continents. So when we say we're also the largest international airline, what we really mean is...

If you're going there, so are we. Book now on Emirates.com. Fly Emirates. Fly better. Deep domain expertise. Strong relationships. Broad capabilities. It's what makes Stifel one of the industry's leading providers of M&A and capital-raising services in the middle market.

But don't just take anyone's word for it. IFR has named Stiefel U.S. Mid-Market Equity House of the Year five times in the last 10 years. When it comes to investment banking, Stiefel is the name you should know. To learn more about how Stiefel can help you address your most complex investment banking needs, visit StiefelInstitutional.com.

Stiefel, Nicholas & Company, Inc., member SIPC and New York Stock Exchange. AI is redefining what's possible for your business. Are you up for the challenge? Microsoft is helping leaders like you get AI-ready faster with unified data and simplified platform management, unlocking up to 150% improved output.

Just look at the NDA. They're using AI-powered insights to deliver more personalized fan experiences. Then there's BMW, driving change confidently with safe, secure AI tools and guidance. And the LEGO house? They're creating new interactive experiences for people to explore.

No matter where you are in your business journey, Microsoft is here to help you achieve real breakthroughs that drive impact. Their industry-leading trustworthy AI fuels innovation in ways that are safe and secure. Business leaders Microsoft surveyed saw an average of 3.7 times ROI per $1 invested in generative AI.

Growing and innovating your business is your job. Microsoft helps you achieve that with innovative AI tools and experiences to guide you confidently into the future. Whatever change comes next, let Microsoft help you keep pushing forward. For more details, visit Microsoft.com slash challengers.

This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Earnings this week from BYD. That's the Chinese EV giant that's battling Tesla to be that nation's top selling automaker. Let's get to Daybreak Asia podcast host Doug Krisner for a preview.

Tom, last year, BYD nearly took over Tesla as the world's largest maker of electric vehicles. And so far this year, shares in BYD are up more than 55%. For a closer look at the story on BYD, I'm joined by Danny Lee. He is Bloomberg Asia Transport reporter. Danny joins us from our studios in Hong Kong. Danny, it's always a pleasure. Thanks for taking time to chat with us about this story. What is your sense of what we may hear from BYD in the coming week?

Well, we're here from BYD. Over the past 12 months in 2024, the record number of sales it has delivered in terms of passenger electric vehicles and hybrid vehicles, 4.25 million of them in the past year. That will feed into a record amount of earnings. And in particular, it's going to be quite a landmark, the fact that for the first time it will be able to deliver

we expect 100 billion US dollars worth of sales. And that's for the first time ever. And also, it's a contrast to one of its near rivals Tesla, which it will overtake if they can deliver on expectations that investors and the market is looking for and by quite some margin. So it's yet another

Another metric that we see potentially BYD overtaking Tesla on in a growing list of numbers that we are closely watching for. So I have to ask you about this new charging system that BYD recently unveiled. Do you think it's going to show up in the outlook? Will BYD say that essentially this new technology really will pave the way for a jump in earnings growth? Well, BYD has already flagged it expects to sell 5 to 6 million units.

units this year of EVs and hybrids. And I think when you think about the numbers that it has already guided towards, it already knows over a very long lead time what products and innovations and developments will be coming out over 2025. And we've already had some of those developments emerge already. For example, we've had

big details on its autonomous driving strategy, driver assist vehicles, things that putting in much more tech into its vehicle at no extra cost, which will really grab the attention of drivers who are weighing up how to, particularly in China, how to find more value for the cars that they are going to buy, particularly in electric vehicles. And

And so with the announcement last week that they will install or have and create fast charging, ultra fast charging vehicles that can charge 400 kilometers in five minutes, that in itself is way better than what other competitors, Tesla, for example, Mercedes-Benz is putting out. And so it has set a

benchmark for other competitors to try and chase down not just outside of China but even in China where there is a much more narrow sense of competition given the advancements in the EV space that there has been and so therefore

the kinds of developments that BYD has already got in train, this will already feed into the expectations and also the pressure for them to deliver five to six million units this year, which is

going to be around one, potentially two million more. So every year they're having to pull out for my next act trick. So this is always going to be a challenge for them. And for now, this is them delivering on that promise. So in terms of this new charging system, Danny, is this something that BYD developed on its own? Is it proprietary? Or has the company partnered with a battery manufacturer to arrive at this level of speed and sophistication?

No, this is very much BYD pursuing its own in-house development with its, frankly, army of R&D technicians, developers, researchers, over 100,000 of them, very much in China, working on these kind of innovations and breakthroughs day and night.

They have the resources, they have the firepower to do all of this. And so it's important to understand for a global audience just how many people BYD employs. We are getting close, if not already at a million employees, predominantly in China. And they have been so aggressive recently.

in their push to hire, not just on the R&D side, but clearly on the manufacturing side. And so, you know, they have really rapidly expanded its workforce base. And so this all feeds into them trying to push out very quickly new innovations, new developments. And so this latest push with ultra-fast charging is a big step forward for them. However, one of the fascinating things about last week's announcement was

We were anticipating and expecting developments in this space like ultra-fast charging, more durable batteries, but the one kind of phrase that was not mentioned in last week's announcement, in last week's event was,

Blade 2 refers to a type of battery product that BYD initially produced in 2020 called Blade, which changed the game for them in many ways to really get them to where they are today in terms of selling millions of vehicles. And that Blade, which is a lithium-ion phosphate battery, really durable, very low cost to make.

we were expecting an upgrade on that product this year and it hasn't been announced yet and so whilst we all thought that this fast charging was related to that technically yes and no but it does appear that this blade 2 battery upgrade is still yet to come so in terms of other

other innovations in 2025, this is another one to watch. So away from the kind of the technological advancements, I'm wondering about the extent to which BYD has kind of benefited from maybe missteps on the part of Tesla. There really hasn't been anything in terms of a material redesign that any of the Tesla vehicles have had recently. But at the same time, BYD has been constantly refining and redesigning its cars.

Is that one of the other things that has kind of contributed to the enthusiasm around BYD? There is always a criticism of Tesla that its lineup is very thin, it's very stale. The fact that there's no wholesale upgrades of its mass market product. And when you look at Tesla as it's rolled out more narrowly produced products such as a Cybertruck, which is not being sold around the world either, and

Now it's pushing its focus into robo-taxis, autonomous-style driving, which is, yes, very similar to what the Chinese EV producers such as BYD are focusing on, but they're not necessarily pushing into a sphere where they are really going to be over-reliant on effectively what we call so-called autonomous driving to the ultimate extremes that someone like Tesla is pushing to.

But then the same criticism could be leveled at other foreign automakers when we look at someone like a Ford or a GM who have lagged behind significantly on such a strategy as they have this huge gasoline lineup of cars. And it's really hard for those legacy automakers to try and transition as we have seen, as we've seen with targets for 2030, 2035 being pushed back in terms of investing in a strategy of EVs, which is very costly and where...

The Chinese EV brands and automakers have had bigger bets and more bold bets. And so far, at least in the world's biggest auto market, China is paying off handsomely, which is why we're seeing this leadership, this makeup of the auto domination kind of shift a little bit when you look at the numbers and the way in which foreign automakers are seeing sales increase.

get pinched and the likes of BYD who are very much high up there. You know, BYD was so close to overtaking Ford Motors in terms of annual sales in the past year. It just fell short and when you look at the

2025 targets, if they can even reach the top end, that will take them beyond potentially General Motors. So what is BYD doing to expand markets outside of China right now? And I think we have to talk a little bit about the tariff story, because that seems to be a threat to further expansion, does it not?

Well, the tariffs is a fascinating component. And let me answer it in two ways. So tariffs obviously being put on in markets such as Europe, where BYD is really being aggressive in, that's part of a hindrance. And one of the fascinating conversations with automakers, generally in China is, how do they approach such an imposition of tariffs, they are actually generally swallowing the cost of these extra tariffs on behalf of the consumer, because they're

They know what it means to try and gain entry into a market and build a reputation and build sales. And for someone like BYD, they have found it tough in Europe because they're starting on...

basically zero to a low base. But they are making gains and they're steadily increasing sales, clearly nowhere near enough for the investment they have put in across Europe. But then outside of Europe, a mature auto market in the emerging market space, BYD in particular, and generally like most Chinese automakers have been aggressive where there are no tariffs, where they have been warmly welcomed. And they are selling 1000s and 1000s of cars

every month and that is to a testament to see how well they have gone up in the rankings but byd who are leading in electric vehicle sales in a number of countries whether it be a thailand or brazil they are delivering and squeezing on the existing competitors not just in the ev space but uh

particularly in the traditional gasoline and the overall sales space. So there are lots of gains to be made. And BYD, who has got bigger targets to sell overseas, has been able to deliver so far this year, doubling the number of sales overseas month on month. And so that is a sign of just how well they're doing. And

They're not going to be slowing down. We talk about or we see ships that BYD has bought, several of them. We had one or two come online last year. Now we are coming up to at least five ships now. So they will have their own dedicated fleet of ships to...

particularly more and more cars around the world on top of localizing production, which will see the benefits of not just in Thailand, where they have localized production soon in Brazil in the coming year or so, and also in Hungary, in Europe as well. So there's lots of excitement to come. But, you

When we look at the developments, as you said, of targets of pushing into markets, clearly when they localize production, the risk of tariffs lessens, even if they're not in one of the world's biggest auto markets, such as the United States. Danny, thank you so much for joining us and helping us understand more about what's happening with BYD these days.

as we look ahead to the company's earnings report in the week ahead. Danny Lee there. He is Bloomberg Asia transport reporter joining from our studios in Hong Kong. I'm Doug Krisner. You can catch us weekdays here for the Daybreak Asia podcast. It's available wherever you get your podcast.

Tom? Thank you, Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at 5 a.m. Wall Street time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.

Thank you.

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