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BYD's 5 Millionth, Ready for eVTOLs(?), SF Not Down with more Robotaxis - SAI Newsletter 31



 

I want to move delivery back to Wednesdays to help with evening out my week so here goes.

The big non-news this week was that NIO and Merc were on the verge of announcing a partnership but alas, NIO said uhhh, no. This points to the frenzy of #FOMO that automakers notoriously have if one of their competitors, specifically from their own backyard, make a big move. In this case, it was VW with a few big moves the last few weeks, the biggest being its investment in XPeng a couple weeks back.

The other big news we touch on in the Tesla section so let’s get after it.

CHINA EVs & MORE (CEM)

This week’s live CEM is scheduled for Friday at 9am EST. Please do join us and bring with you an appetite for knowledge and lots of questions. We’ll talk about July sales and more.

If you can can’t join the live show, I invite you to listen to our recorded China EVs & More episodes at this site. And as always, we appreciate any feedback that will make the show better.

BYD

- 5 million and counting. BYD just built their 5 millionth vehicle, a Denza N7 SUV, with no reason to believe they’ll be slowing down anytime soon. For context, it took BYD 13 years to hit its 1st million vehicles. It added the last 2 million (to hit 5M total) in 9 months.

From what I’ve been told, they’re going to continue to be aggressive and enter markets where they feel they have a strong chance of becoming the #1 EV brand. And who am I to doubt them with the track record they’ve had the last 40 or so months?

I’ve followed their journey ever since I moved to Beijing and initially I was skeptical having been in their vehicles in the early days. It’s around the time that I started the newsletter that I saw a distinct improvement in their products.

The team reflects its leader and is relentless and not afraid to battle. Where they would always be the underdog in the early days, they’re now the favorites entering any new battles, and that’s including vs. Tesla in and outside of China. Truth be told, they’re both battle tested, and consequently, the only two profitable EV makers around.

I’ve said this before and I’ll say it again. DO not sleep on BYD. They will continue to surprise and along the way achieve a whole lot more ‘firsts’ like the one they just did.

Congratulations to the BYD team, this is quite an achievement, and you should all be very proud of yourselves. This wasn’t easy but your journey is only beginning.

TESLA

- Tesla CFO Zachary Kirkhorn decides it’s time to tap out. A lot of times if a CFO decides to leave a company, especially one as polarizing as Tesla, it’s because he knows something we don’t. That could very well be the case, or it could just be that after 13 years with the company, 4 of them as CFO he’s ready to ride off into the sunset with his $590M in cash and stock. I am NOT hating him for that…

GET SMARTER

- Yes, eVTOL’s are coming. Along with delivery drones. I know this because we are working with a couple of these companies. Think 3D printed delivery drones, but not for Amazon packages, but how about organs needed for transplant? There are many use cases outside of the normal rich dude can’t wait to get from HK to Macau to gamble and party, so he takes the helicopter instead of the ferry.

The bottom line is that helicopters (that use petrol to run) used for intracity transportation will begin to slowly and then quickly be replaced by these eVTOLs since their footprints are much smaller, can run up to 100 miles and can still transport up to 4 people. First, it’ll be flown by a person, then it may be flown remotely and then it’ll be autonomous. And you may be thinking of these planes going point to point, but that’s only one option. You could still be transported to your destination by going multi-modal.

Oh, and the holy grail for a company like Uber or Didi and the grand hopes of legacy automakers is that they would touch every part of that ‘mobility’ journey. That means you’d just book a trip from point A to point B and they’d figure out for you which modes you’d take on a single transaction. The biggest future potential profit drivers for Uber is eVTOL and robotaxis so here’s a realistic scenario within the next 7-10 years (in not sooner).

You log in your origin / destination and after a few minutes get picked up by a roboshuttle that drops you off at another location where you jump into an eVTOL that takes you into the city close to your destination but restricted from large vehicles. You then get in an autonomous minimobility vehicle to your final destination. Whoever the mobility provider is gets a piece of every part of that transaction, none of which they have to pay a human to be any part of. That is going to be the future. It’s multi-modal, clean and autonomous.

NEWS THAT GOT OUR ATTENTION THIS WEEK

- China doubles down on hydrogen as a clean energy source. I’ve said in the past to people who’ve asked me if hydrogen will succeed – as long as the Chinese govt looks at hydrogen as a strategic source of energy, it will have a place globally. If you are wondering how they can focus on growing both the EV and hydrogen fuel spaces, they could focus the commercial market on hydrogen and the private passenger vehicle market on electric and both sides could have profitable companies.

The key to adoption of anything is getting enough of transactions in the wild so that initial investment and development costs can be amortized over a very large number and who has the largest passenger and commercial vehicle market in the world? You guessed it – China.

The three challenges to sort out before hydrogen can succeed per the article:

  • Incomplete standard formulation

  • Limited application scenarios

  • Hydrogen being strictly treated as hazardous materials

The Chinese govt believes that determining how to standardize its use will solve the other two challenges.

They plan to create standards for hydrogen by 2025. The use of hydrogen is important for the Chinese govt’s goal of being a net-zero emissions by 2060 goal. Right now, the lion’s share of hydrogen output is generated by burning coal, so they have quite a way to go to change that. But knowing China the way I do; I wouldn’t doubt them.

- SF not that into robotaxis. The Bay area is ALL about contradictions, many that perplexed me when I lived there for the better part of 7 years. So it’s no surprise to me that an outspoken group are protesting Cruise and Waymo wanting to increase the number of robotaxis on the roads in SF. The city most known for protest and counterculture isn’t comfortable with the most radical technology likely to ever come out of the area.

In all fairness to those people, Cruise has deployed a total of 400 robotaxis (100 running in the day 300 running at night) while Waymo has deployed 250. It’s important to remember that SF proper is tiny. The Bay area may have a total of 6M people, SF has a population of ~800K, about 100K more than Detroit but Detroit is 138.7 square miles (sq mi) while SF is 46.87 sq mi making SF the 2nd most densely populated city in the US behind NYC.

I’d be pretty annoyed if I was stuck in traffic because this science experiment was blocking traffic for no real reason other than it couldn’t decide what to do. That said, I think the city will acquiesce and allow more of them on the road, but I also think that Cruise (and Waymo) will continue to roll out pilots in other cities like they have in Nashville and Miami. That’s really the only way to not piss too many people off. The ones that you want to eventually be your customers.

TRENDING ON SOCIAL MEDIA

- The US’ best hope to compete against BYD in the electric bus sector files for bankruptcy. Many may not know this, but BYD has been an American electric bus manufacturer since 2014 and as of 2021, have delivered 500 US built buses to mostly American customers.

Can Proterra bounce back? Only if cities in the US (and not only in California) decide they need to convert their fleets to electric. The stock price hit a high of $17 just after it SPAC’d in June 2021 but hit $.17 cents on Tuesday, a mighty fall.

Will Proterra be able to compete against BYD on price? That’s another challenge altogether especially since it looks like they may get out of the electric bus business altogether and focus their efforts on selling EV batteries for commercial vehicles.

- Auto execs still out of touch, this time on the DTC model. There was a survey done by Kerrigan Advisors that asked auto execs whether they think the Direct-to-Consumer sales model would work 43% of the 115 surveyed weren’t sure if the DTC model would work.

Jumping on my soapbox. These execs have no idea how a DTC model would work. They ONLY know how the dealership model works so of course they aren’t confident about selling DTC. If it was to work, it wouldn’t likely be with those ‘execs’ leading the way. Let me also add that Kerrigan is a dealership consultancy so they’d be out of a lot of business if these automakers decided to move their sales to DTC.

Finally, it’s these same execs that thought Tesla was nothing just 6-7 years ago so IMHO, many of them have no credibility. Complete mush. Jumping off now.

INTRODUCING

- The Escalade IQ. The electric version of GM’s beast of an SUV the Cadillac Escalade. It’s too big, too obnoxious, too heavy and too expensive. With that all out of the way, I like it. I think the General has done a good job of designing the interior to incorporate the large digital display. And the exterior has bits of the Celestiq and Lyriq but left the less attractive parts on those vehicles.

It’s probably because they went clean sheet on this. This is one of their bread and butter products, so they couldn’t get too Avant Garde with design. Now, the important numbers that will have you wincing. 200kWh, 750 ponies, estimated range of 450 miles and an eye watering price of $130K. GM’s obvious strategy here is to launch all their hero products that will bring attention and foot & internet traffic into their (virtual) showrooms and perhaps end up with a smaller, more affordable GM crossover / SUV.

Would I buy it? Of course not, but I can appreciate it’s looks and design without needing it in my garage (It wouldn’t fit anyway).

BY THE NUMBERS

- $48,334. That’s how much the average transaction price for a new vehicle was in the US. It was up about $200, a sign that vehicle prices have begun to flatten out. The average transaction price for an EV was $53,469, pulled down by the Tesla price cuts.

If we are to increase that attach rate in any significant way, there need to be many more products around or below those two transaction prices. The IRA will help with adoption but the legacies still aren’t there yet on the product side and couldn’t build to demand if they were.

_________________

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

The Sino Auto Insights team

 

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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Escalade IQ: I'm BIGGER, BADDER, and FASTER than yours!

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