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Byton Taps Out, BMW Get 'It' Too Late, Aurora Pivots to Trucking - SAI Newsletter #25



I decided to pull together a short newsletter this week since there’s been a ton going on. Oh yeah, its Murrica’s birthday next week so we may take a week hiatus then. Enjoy.

IN THE NEWS:

-   The plug-in vehicles (hybrids + BEVs) market share hits 7.8% in Europe. That’s double what it was in all of 2019. Top 5 sales vehicles for May were all BEVs. Can the momentum be maintained – I believe it will.

-   Something that may only interest me. How the sound from tires while driving is made. As more and more EVs hit the roads, will their quietness push companies towards a redesign of tires to match the quietness of the powertrains?

-   Like other vehicle subscription services, this likely suffered a premature death. The initial assumption from the automakers is off on this, that it would be profitable within a certain, short time-frame. How is it so easy to build and sell a vehicle for 1, 2, perhaps 3 years unprofitably but for a new service that’s supposed to be your future – it’s so hard to operate at a loss for a short period of time.

Mercedes said that they gathered a lot of data / intel about their customers but they could’ve gathered a lot more if they’d have kept it going for more than 2 years. One final thing, pricing seems to have been waaay off. As you close the doors on this project, do you have a clear idea of how much the customer is willing to pay for convenience?

-   This could leave a mark. India bans 59 Chinese apps from use by its Indian citizens. Two of the more important apps are TikTok and WeChat. This may not be obvious or apparent immediately but depending on how long these apps are banned, this is going to have lasting effects in the mobility space as well.

This could also create an opening for domestic Indian startups with ambitions the size of Bytedance to sneak in to replace TikTok as the social platform of choice for India. Let’s be honest, WeChat, Weibo, etc. wouldn’t be where they are if Facebook, Instagram, and Twitter weren’t blocked in China in what was now many moons ago so this could be that ONE chance that Indian national champions take their place among the global social media platforms.

TRENDING ON SOCIAL MEDIA:

-   I am a fan of the Buick Envision. I think it’ll do well in China, but as an American who knows the history and the target market of Buick in the US, it’s still difficult for me to reconcile its brand positioning in China. It goes to show that brands can and do live alternate lives in different markets.

-   Zoom tips. I don’t know anyone who’s not been on a Zoom call. The growth, stickiness, user experience, as well as the growing pains associated with its meteoric rise, has been interesting to track.

-   Van Moof, the Dutch e-bike company gets their commercial banned in France for being too controversial. This is awesome, in a not so cool way because the commercial doesn’t seem to be controversial at all unless you take in the fact that it’s coming from an electric bicycle startup. I don’t think Van Moof could’ve gotten any more camera time if they’d just run the commercial without any pushback.

-   Getting a Masters in Ninja. Not sure I’ll get signoff from the family but   …YES, please.

-   He may NEVER even don the Green and White, but for now, it’s pretty cool Emoni Bates, arguably the best high school prospect since Lebron, has decided that he wants to be a Spartan.

PRODUCT & SERVICE INTRODUCTIONS:

-   Hailing a RoboDidi in Shanghai. Yep, they launched a service in Jiading district. I am behind on trying out all these services but plan to catch up during the second half of this year. Maybe make a couple of site visits as well.

-   BYD entering Norway with the Tang EV. Customers won’t technically receive delivery of the vehicles until Jan 2021 but there was a launch party in Norway this week. Price, quality, attractiveness, and reliability as always will likely rule the day for its sales prospects but it couldn’t have landed in a more friendly market. EV share in Norway is at about 50%.

-   A recyclable electric motorcycle? Meet the Brooklyn designed Tarform Luna. Order now for delivery in early 2021. There are two versions of the Luna, the base model for $24K and the limited-run Founder Edition which jumps the price to $42K, neither are cheap but these will likely be handbuilt so the manufacturing process and parts won’t be either.

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 Byton throws in the towel. Following up with my Byton post from last week where I fat-fingered the title, it should’ve said 2020 and not 2021, seems that Byton won’t last past June. They’ve officially announced that they’re taking a 6-month ‘break’ furloughing most of their China employees and filing for bankruptcy protection in the US and Germany. Had a quick chat with Christian Shepherd’s FT who captured a lot of what I think about the situation in the linked article. The important stuff: -          Founded in 2017 -          Capital raised $1.2B -          # of employees at peak >1.4K -          # of vehicles produced = 0 I absolutely LOVED Byton’s ambition. But I am not sure what customer and market research they leaned on that said there was a market for a 48” vehicle wide LCD display. The M-Byte is complicated. Complications increase costs. Complications force delays. Delays increase costs. See the trend here? Maybe they could’ve launched the M-Byte as a concept and built an M-Byte derivative as their initial production vehicle – that would’ve been the route I may have taken. One that cherry-picked all the elements from the concept that pushed the innovation and design envelope, but that still made practical, timing, and budgetary sense. You guys have heard me say this before. Building a car is HARD. Just ask Apple and Google. Or ask Faraday Future, Enovate, Bordrin, and now Byton. #Byton #temporarilyclosedforbusiness #needcapital #Job1TBD #needabailout #canIhaveyourmanufacturunglicense OEMs BMW’s own Captain Obvious. For those of us who follow the ICE -> EV transition pretty closely both here and abroad, forgive me if I come off a bit sarcastic but it seems that Manfred Schoch, one of BMW’s board members, had his EUREKA moment (of clarity) about how BMW can succeed in the future, albeit 5-6 years late.    Schoch is quoted in Reuters as saying “Only with our own e-architecture can we fully exploit the advantages of an electric vehicle.” Up till now, what have they been doing …besides creating way too many products and variants of products that all add up to a muddled mess of a product portfolio? Bimmer was moving in the right direction with the i3 & i8 but it seems it made too much sense but lost too much money for them to keep pursuing, refining, improving, and innovating so they scrapped them BTOH. Now they essentially need to start all over. I wonder if they’re developing <10% of the code that goes into their current vehicles?? For the companies that aren’t taking software development much, much more seriously – this potentially HUGE strategic mistake you will not see the effects of today, but in 5-7 years when EVs, touchscreens, and digital services have all moved into the mainstream and you’re sharing 30-60% of that revenue because you decided that investing in an internal dev team 5 years ago wasn’t in the best interests of the company. #BMW #CaptainObvious #goingitalone #welcometotheparty #whereismydevteam This article has captured my thinking about the challenges ahead for the OEMs for the last several years. Here’s an excerpt of the linked article which is recommended reading: ‘Run a job assessment with all top managers at VW, Audi, Porsche, BMW, and Daimler tomorrow and ask them to code a small game or a simple but working virus. If they are not able to do so, fire them immediately, because they are not fit for the job. How many will be left?’ This is a quote from Peter Mertens, the former Head of R&D for Audi, which is arguably the most technologically advanced brand within the VW portfolio. ALL OEMs have been and still are dealing with these challenges but until now most have NOT been willing to openly speak about it. #Audi #ThereWillBeBlood #WeAllDidSleep #wearenotready #Teslaiseatingourlunch URBAN MOBILITY In mobility as in anything else, hindsight is 20/20. The author’s explanations for why micro-mobility companies like Lime, Bird, Jump, etc. have all struggled and during Covid-19, have offered the least when their products and services were needed the most leave me with a few things I need to get off my chest. The author’s collective list of ‘do-overs’ ALL make sense IF each company’s goals were to provide an affordable, safe, and convenient transportation alternative outside of the normal public and private solutions but within the framework of each individual city’s existing transportation system. These founders weren’t actually trying to solve for that though. The VCs that funded them incented them to build their install bases so that on a chart the growth would look like a ‘hockey stick’ in the shortest period of time. Their valuation would track with that install base growth whether they made money or not. I think most of the companies were very successful at both, growing their install base and valuations. But therein lies the rub. I bet most of the VCs that funded them didn’t tell these startups initially to make nice with the cities they were targeting to ensure a smooth market entry and service launch or to make sure that all applicable laws and norms were met. I would also bet that when Covid-19 landed on US shores, there weren’t many VCs advising these guys to do the ‘right’ thing like offer discounts or even FREE rides to those folks most vulnerable to Covid-19. Prior to the WeWork debacle, Lime and Bird would’ve likely created value for their VCs, founders, and the select few early employees via an acquisition or an IPO. Unfortunately for them, WeWork did happen, and on top of that Covid-19 happened. There are no takebacks in business so now these companies are stuck with a broken business model, no money to try to grow themselves out of it, and competitors that want to see nothing more for them to go out of business. I get the disruption thing. I also get that many of these tech bros. type companies aren’t really solving a major problem for the broader public. When they have problems it infringes on everyone. If the companies made money while doing it, then there would be a profit motive and valid argument. I’ve looked at these models and financials, there isn’t a way for them to make money the way they currently run their businesses. Full stop. "A rising tide floats all boats….. only when the tide goes out do you discover who’s been swimming naked." These companies have ALL been exposed. Further, the whole venture capital method of funding startups is a broken process that also needs revisiting so that increasing valuations at all costs shouldn’t always be the #1 priority. I know it’s needed but we can do better. #Lime #Bird #takeback #MondayMorningQB #increasedvaluationshouldbeabyproductnotagoal AVs Aurora leading a sector-wide pivot to autonomous long-haul trucking? With robotaxis being complex, expensive and ultimately dangerous – until millions of miles have been logged across about every conceivable use case – some of the original startups that focused on developing autonomous passenger vehicles or robotaxis have decided to pivot and are looking to deploy their R&D and knowhow into other transportation-related challenges that they see a shorter timeframe for making them cashflow positive. The latest company to enter the fray is Pittsburgh based Aurora Innovation. All of sudden, if we list all of the major players, the market seems pretty crowded: Aurora, Tesla, TuSimple, Waymo, Embark, Kodiak Robotics, and the previously the now-defunct Starsky Robotics. There are some pretty heavy hitters among that group. Companies like Aurora, Tesla, and Waymo are running double duty, and why not, they are already investing the capital in order to gather the data and refine their machine learning algo. As we are finding out, there are plenty of other scenarios that these companies can ‘dumb down’ their HW / SW stacks to tackle less ominous but potentially equally lucrative challenges like long-haul over the road (OTR) trucking. Not all of them will succeed but ALL of them will burn through capital like you wouldn’t believe. Will being focused on one main use case or many use cases be the ‘right’ way to go? We will begin tracking more closely this particular sector to see who (likely plural) who makes it out on top. #Aurora #longhaultrucking #OTR #TuSimple #Waymo #Tesla #Embark #KodiakRobotics

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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