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Blueprint for Detroit, 'Clean' Commercial Trucks, GM losing in China - SAI Newsletter #27



Seems like Tesla’s rise is lifting ALL boats or more appropriately EVStartups. Nikola, NIO, Lixiang recently, and this week Henrik Fisker is trying to get into the act as well. 7 years after he bankrupted his earlier EV startup, Fisker Automotive which was then picked up in bankruptcy by China’s Wanxiang Group and renamed Karma Automotive, Fisker is back at it with a new EV company – Fisker Inc. They’ve announced that they’ll combine with a SPAC to generate capital in order to get his newest EV, an SUV he calls the Fisker Ocean, on the road. Analysts speculate that they could generate up to $1B from the transaction.

Let’s make sure we remember though that NOT ALL EVStartups are created equal. Tesla has been in this game for a long time and they’ve still never made an annual profit. Not very many, if any of their vehicles have sold without some sort of govt. welfare, both here and in the US. Finally, much of their earnings are generated by selling regulatory credits to automakers that are not able to meet EV production targets in the US. China will also be moving to a similar system this year so those NEV ONLY companies will be able to generate some revenue by selling these credits as well.

Where Tesla also stands out and sets itself apart, in a good way, is that ecosystem they’ve created with Elon’s other companies: Solar City, SpaceX, and Tesla’s powerpack businesses. Tesla’s share price is supposedly pricing ALL that goodness in. But if someone tells you they can explain Tesla’s continued share price climb, don’t believe them.   

The market’s getting pretty frothy which tells us that there’s a bubble likely going to be bursting in the future. Our job here isn’t to give investment advice so we’ll stay away from that but what we will say is that there are tens of thousands of new investors in Tesla via the online brokerage app Robinhood, a #FOMO effect from the late investors piling in creating an ‘irrational exuberance’ in the stock and the sector. For example, this last Monday started with 408K Robinhood investors owning Tesla shares, by the close of trading that number jumped to 458K!

Finally, a reminder that Sino Auto Insights is co-sponsoring a half-day virtual conference on July 23rd from 8AM-Noon EST. Those that are keen to join and I hope that's all of you, sign up here: https://events.supchina.com/mobility20/

IN THE NEWS:

-  Is Honda partnering their way to an EV future? They’ve announced that they’ll take a 1% stake in CATL, and continue to build on their battery development partnership. For those keeping score, CATL is now working with Honda, Tesla, Toyota, and VW. A pretty premium list of customers. Do they have the chops to keep them all happy?

-    There seems to be a lot of valuable EVstartups in the US markets right now, even though they haven’t built a single car yet. This bodes well for the well-managed companies, not so much for the poorly managed ones. #irrationalexuberance

-    From having 8 different G.O.A.T. (Go Over Any Terrain) modes to being able to store all the doors in the vehicle, the Ford Bronco has a lot of neat little tricks that make it a worthy competitor to the Jeep, on paper of course. Only one way to find out if it keeps up when its rubber hits the road, and there will be plenty of comparos once they start shipping so we will find out about that soon enough.

TRENDING ON SOCIAL MEDIA:

-    A kick e-scooter with that extra torque needed to take on the Pac Heights streets? Try the EcoReco L5+. It’s not cheap (currently on sale for $1K), but it’s supposed to be pretty torque-y and stable even at a cruising speed of >25MPH.

-    Ford’s Bronco launch was wildly successful since it’s being talked about a TON on most social media platforms we subscribe to. We won’t connect you to any particular links since you should be able to find plenty on your own but we will say that they’re going to sell a TON of them. We are fans. We’d like one too. A bit bittersweet since the world has started to trend towards NEVs.

-    BMW yanks the ICE out of their X3, bolts a battery to it and …VOILA! You have the iX3, their latest EV for the EU and China. A pedestrian 285 miles of estimated range and will likely have a HEFTY pricetag >$65-70K! For the company that had the early lead in EVs with its i3 and i8, this seems like a pretty poor showing…

PRODUCT & SERVICE INTRODUCTIONS:

- With each new product intro’d, the case can be made that the innovation coming out of the pedal e-bike category is leading the mobility sector. Case in point, based on 18 measures a custom 3D printed carbon fiber bicycle can be manufactured for you by Arevo, a startup out of you guessed it – Silicon Valley. Their bike is called the Superstrata, which means ‘badass’ in Italian  …actually it doesn’t mean anything in Italian, we’re just thinking about the possibility that Arevo has in busting up the bicycle sector that’s dominated by a handful of companies. Good luck to them!

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This weekly newsletter is a collection of articles I feel best reflect the happenings of the week or important trends that have effects on the automotive and mobility sectors here and in the US, I also provide a point of view that I hope educates and sparks debate.

The  Sino Auto Insights team

EVs A blueprint for Detroit. When I visited Pittsburgh in January for the first time in years, parts of it were unrecognizable and mostly in a good way, the investment that had transformed the city, the neighborhoods I frequented and a few that I didn’t because back then there was NOTHING to frequent, created a buzz that those who’ve never visited but still think of Pittsburgh as a ‘steel’ town are missing out on. There are a # of universities that have made Pittsburgh’s resurgence possible, not the least Carnegie Mellon. CMU is the main reason why Facebook, Google, Uber, Amazon, Argo, Aurora, Apple just to name a few premium tech companies off the top of my head, have decided to invest so much in the city. They see promise. They know that the workforce there can help them achieve their considerable company goals. I LOVE (mostly) all that’s going on in the city. If there was a way for a small town to be all of these - a blue-collar town, a tech-town, a midwestern town, a foodie town, a historically significant town, a sports town, a beer-drinking town, a humble town, a hipster town - it is all of them, it just depends on which neighborhood you want to hit up. I couldn’t say that 15 years ago. This is my hope for Detroit. Metro Detroit does NOT have the university support system that Pittsburgh does and as many people may try to convince you, Ann Arbor is a GOOD 45 mins. drive from Detroit proper so it’s not the same as having Carnegie Mellon in a neighborhood 5-10 mins away from downtown. IMHO, Detroit’s time is now so here’s to hoping the leadership recognizes this as well. COVID is creating these new opportunities for people to move to anywhere they want and still work at their companies. The automotive-related companies that still call metro Detroit home will need to compete with cities like Pittsburgh, Austin, Columbus, and other tier 2 American cities for young talent that are priced out of Silicon Valley, and frankly don’t want to deal with all that goes along with living in the Bay area. I for one don’t want to go back. Eventually, maybe. As long as I have two young kids, I’d rather be closer to my family, have a yard for them to play in, and a good midwestern sensibility about themselves. So long term, where do I see the family once we eventually decide to pack up and leave China? I guess we’ll have to see how Detroit progresses but here’s to hoping that they can take this time to work with the private sector to make themselves the ‘it’ place for jobs and where people want to be. The burbs are great already, that'll happen when you have years of great jobs provided by the OEMs. They can use that article that I linked to, which was basically a marketing doc for the city of Pittsburgh, as a blueprint on how to do it the ‘right’ way. Jumping off my soapbox now. #Pittsburgh #Detroit #hometowns #rebirths #MotorCity2.0 #Detroitcandoit Could commercial trucking lead the way to NEVs for the general public? There are 15 states in the US that have committed to putting a plan in place to phase out petrol & diesel propelled commercial trucks and replacing them with electric and fuel cell powertrain’d tractor-trailers. Numerous companies including Ford, Freightliner, and Tesla are already developing ‘Class-8’ semis that would look to replace the pollution-spewing over the road (OTR) semis. These 15 states seem to be following California’s lead to ‘clean’ up the heavy truck sector. If enough states sign the pact, it may force change alot earlier since California normally leads the way with stringent environmental laws that companies need to follow. Most companies make a business decision to just follow California's stringent standards for the rest of the US since it doesn't make sense to build two separate powertrains, one for CA and one for the rest of the US. Could the commercial trucking sector be the FIRST big step in getting personal, passenger vehicles ‘cleaned’ up as well? Much weirder things have happened.    #Overtheroad #commercialtrucking #nomoredirtytrucks #leadingtheway #nodiesel #nopetrol OEMs GM is losing its touch in China. And it’s going downhill fast. Is GM falling into the same trap that Ford did? An unbalanced product plan with no room for error? Or are Chinese consumers just #OVER GM brands? Caddy had a chance but they decided to bring that brand here late so it needs to play a lot of catchup with the German brands. 7 straight underperforming quarters and shrinking market share that translates into losing just under 1M units in sales between 2017 to 2019 means that this is a very serious issue. The German, Japanese, and Korean brands have gladly filled that 1M unit hole with their products and will not so easily give those sales back. Here’s the headscratcher as well, the CEO of GM China that oversaw that shrinking market share (2012 - 23% to 2019 - 15%) was promoted to become the global CTO. Let that sink in, he was promoted. #GM #China #shrikingsales #panicmode #losingtheirtouch #stopthebleeding URBAN MOBILITY Deep diving into Uber’s acquisition of Postmates, completing their pivot into delivering ‘things.’ We get a chance to talk with some very interesting folks trying to do a lot of cool, dare we say game-changing stuff in the mobility sector. Our initial convos always start with both parties trying to learn from each other. Learn more about what they’re trying to do, the angles they see, the angles we see, what our research tells us, the opportunity that might not necessarily be out there yet but that they see forming as markets, technology, and people’s needs and tastes evolve. Some of them we work with formally, all of them we keep track of to watch their progress. With Uber, we’ve been able to see their evolution from an upstart startup that didn’t take no for an answer, whether it be SF, LA, Chicago, Beijing, Shanghai, or Paris and London to mature publicly traded, underperforming company. With this evolution, their pretty significant layoffs, and just announced acquisition of Postmates we now see Uber as a mature company trying to chase sustainable profits. The original service they provided spawned copycats all over the world and variations that riffed off the original idea of using an app to get someone (or something) moved from point A to B. We really enjoy these types of articles since it takes you inside the company, brings you along on some of the major considerations for some key decision-making and really demystifies how tech companies work, even HUGE ones which Uber has now become. See they put their pants on just like the rest of us – one leg at a time! Can Uber keep that ‘take no prisoners’ attitude that made them at one time, the highest valued startup in the world? They did a lot to shed that reputation, and there’s a fine line that’s needed to be tightroped so that they don’t fall into the same troubles some of their earlier decisions created for them before but if they lose too much of their edge, will they still be able to lead in the sectors that they helped create? #Uber #Postmates #pivot #chasingprofitability #stillneedthatedge #canUberturnthecorner As services like Cadillac ‘Book’ & Merc’s ‘Collection’ subscriptions shutter, Jaguar Land Rover (JLR) decides their ‘Carpe’ service is worth keeping alive. What JLR is doing with their ‘Carpe’ subscription service is what GM & Merc should’ve done with their subscription services. There’s no way that JLR is making money providing the service but they’ve decided it’s still worth nurturing to try to build into a new revenue stream so they’re doubling down and tweaking the service to see where it may lead. The data gathered on their customers alone, the engagement with current customers and the opportunity to attract new customers to the brand should’ve been enough for GM and Merc to continue their programs but alas, it seems that only Volvo and JLR are willing to keep at this until they can figure out the right amount of service to price ratio. Let’s not also forget that this could be a gateway to providing paid services to these customers in the future! The holy grails for most companies competing in this evolving sector are getting paid to deliver people and things autonomously & while their audience is captured, utilize the data they’ve gathered from each and every trip their customers have taken, customize it to each individual customer’s specific needs, and sell them something they didn’t know they wanted! We all know that this is where the market is headed so the sooner the OEMs get a viable service in place the sooner they can get it to break even, and even at break-even, there’s still the opportunity to provide them with customized services that they could pay for. #JLR #Cadillac #Volvo #Mercedes #subscriptionservices #dataplay #sellingservices

Sino Auto Insights is a Beijing, China-based market research and advisory firm that specializes in assisting companies analyze, strategize, and develop products and services that will shape the future of mobility and transportation. Members of our team have experience working in Detroit, Silicon Valley as well as here in China across multiple sectors and functions as entrepreneurs as well as working at larger companies like Apple, Google, Amazon, GM and FCA, and many others.



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