Daimler's Global Reset, NIO Intro'ing Assisted Driving, E-Bike Growing Pains - SAI Newsletter 39
It’s been a pretty quiet week or so here after all the big announcements from the Beijing auto show (BJAS). Again, the break was a combination of China’s National day and Mid-Autumn festival, two major Chinese holidays, especially if you like mooncakes - a holiday week that saw 637M Chinese travel over the October break. There’s definitely a western vibe to this week’s newsletter as I get you all caught up on the interesting stuff that’s happened over the last couple of weeks. There promises to be a flurry of news coming out of the sector by year-end both in Asia and in the US so stay tuned here for your updates. I am also going to experiment a bit with the format of the newsletter to try and improve, consolidate, and hopefully give all you a better experience. Of course, if there’s anything you’d like to see added/subtracted/changed please feel free to shoot me a note. With less than a month left before the US elections, there could also be more challenging times ahead in the US-China relationship as the candidates make that final push to secure support & votes. I went on a short trip over to Yanqing (延庆), a new-ish built area about a 2 hr. drive northwest of Beijing. We stayed at a ski resort-style vacation spot that literally had a Jackson Hole, Wyoming theme to it down to the sewer caps! It was a bit surreal since there weren’t any mountains anywhere close to ski at but it was a good day and a half away from Beijing for the family. Now we are back into the groove rounding the corner to close out this weird, many would say forgettable 2020. I'd mentioned last week that I was participating in a couple of different events this month and here is one of them. I invite you all to register for Webinar | Auto China 2020 Debrief which will be held virtually on October 20th from 9am – 11am China local time. This event is sponsored by the American Chamber of Commerce in Shanghai and will be moderated by my friend and auto/mobility expert and enthusiast Bill Russo. Last but not least, congratulations to Lewis Hamilton. Rafael Nadal, and Lebron James and the LA Lakers. Lewis Hamilton for tying Michael Schumacher's 91 Formula 1 wins record. He's far from done with racing so it'll be interesting to see how many more wins he can notch on his belt. I am not a big F1 fan, but I do appreciate greatness, and all the folks that I know that do follow F1 say this is quite an impossible achievement. Rafael Nadal for tying Roger Federer with 20 Grand Slam wins. Another 'impossible' achievement achieved. Like Lewis, Rafael has a long career ahead of himself so let's see how far Roger, Novak, and Rafael can push each other. Lebron James (& the LA Lakers) for winning his 4th NBA title under the weirdest of circumstances - being trapped in a bubble for over 100 days! Michael is still the GOAT but like I said, I can appreciate greatness in all its forms. IN THE NEWS - NIO is upping its assisted driving chops to try to keep up with Tesla. EVERYBODY’s jumping in the pool! NIO’s version comes out sometime this month. Can’t wait to see all the Douyin (China’s TikTok) short video’s with people sleeping or in the backseat while their cars seemingly drive themselves. Seriously though, I hope there is some clear regulations on this otherwise it’ll be like the Wild West on China’s roads! - Daimler heads back to the drawing board as sales drop 5% as COVID-19 still lingers across many of its most important markets. Their plan is to decrease costs by 20% by 2025, focus on SUVs and higher margin, luxe vehicles and phase out ICEs. One of their biggest concerns, although not articulated to their investors, is being overtaken by Tesla in global sales. A real possibility within the next few years if they can’t right the ship. - Growing pains hitting the electric bicycle market. The meteoric rise in popularity of e-bikes globally has caused a void in customer support for all those bikes hitting the global roads. With prices averaging well >$1K, expectations of appropriate support from customers is high and with a motorized engine, battery, lights, and in many cases an app to bring it all together things can get VERY complicated. Especially if there are any quality spills, which when you combine a team lacking experience managing contract manufacturers (CMs) with CMs that aren’t used to small(er) lot orders is more likely than not to occur. All these things can sort themselves out but it does take time in order to test out processes, communications pathways, investment, and a lot of OT from the OEM not to mention patience on the part of the customer. - A week after Uber won its court battle to keep its operating license in London Softbank backed, Indian unicorn Ola was thrown the Heisman (think stiff arm) by Transport for London (London’s transportation regulator) stripping Ola of its operating license Ola has been accused of operating with unlicensed drivers & vehicles similar to what Uber was accused of before it won its appeal. London ride-hailing competition is about to heat up! - German micro-mobility startup Tier who competes with Lime, Bird by renting e-(kick) scooters prioritizes profitability overgrowth and it worked for them. A much smaller player than Lime & Bird that currently focuses on the EU market proves that it’s possible to make money renting scooters as a stand-alone business. - DO NOT SLEEP ON DETROIT. I am a BIG fan of and am long Detroit - if for no other reason the music, food, and people have contributed and will continue to contribute disproportionately to America’s soul. Yes, I am a homer but that’s not why I am able to see what Detroit can grow into. I’ve lived in some terrific towns and Detroit possesses the qualities that made those cities amazing places to live: history, legacy, diversity, an infectious, positive energy, (in some cases) one or two struggling sports teams (#RestoretheRoar), and a messiness that makes you think you could make a difference if you were there. There are still some staggering struggles that need entrepreneurial, won’t take ‘no’ for an answer ass-kickers to tackle and the jury is still out on whether the auto sector can reinvent itself into a worldbeating mobility sector (hint: it’s going to take A LOT more software engineers and a lot less ‘car’ guys) but it’s those struggles that make that pull back to my hometown almost irresistible. Stepping off my soapbox now. - Waymo pressing on the gas and consequently putting pressure on its competitors by introducing it’s ‘fully’ driverless service to the public. The service will launch in the Phoenix ‘burbs and then fan out to other areas where Waymo currently operates. Waymo will supplement the ‘driverless’ robotaxis with robotaxis that have safety drivers in order to accommodate increasing demand. This is a BIG deal and a HUGE step for the US. As far as I know, WeRide in China has already begun ‘driverless’ testing so Waymo looks to be taking this one step further. - Lime, in order to survive like Uber and Lyft before it, pivots from an operator to a platform. The Lime model takes it one step further by allowing customers to reserve other operators’ scooters/bikes in which they’ll take a service fee. This platform focuses on trips that are - COVID-19 has increased the need to quickly develop tools that allow communication between bicycles and vehicles in order to make it safer for bike riders. Think V2X with sensors on bicycles with multi-level communication capabilities with passenger vehicles, street lights, other bikes, and mobility devices. If e-bike sales get anywhere close to where they’re forecasted to be over the next few years, we will need this tech available – STAT. - With battery prices plunging, 2020 looks to be the tipping point globally for NEVs. Good buddy and VC Alfred Chu argues that plummeting battery prices bodes well for the Chinese EV manufacturers who have been out front since the beginning. - India jumping into the electric vehicle fray in a BIG way. This time it’s trying to entice battery manufacturers to build Gigafactories there with a $4.6B carrot. With growth prospects on the rise, I think they’ll easily find Japanese, Korean, and Chinese takers. TRENDING ON SOCIAL MEDIA - Smaller, more nimble delivery vehicles are nothing new – just go to China, India or pretty much anywhere in SEA and you’ll see them. The main difference here is that they can be powered by petrol as well as electric and they normally operate in a grey area. As more and more cities try to eliminate pollution in their cities by reducing traffic congestion we should start to see more of these ‘one-hit’ delivery vehicles sharing bike lanes in order to quickly, and cleanly deliver your goods that last-mile. I know a couple of companies that are working on these pods and can see a whole other set of use cases that slot right in between the large UPS style delivery vans and the low-speed autonomous delivery vehicles. - Tesla customer gets a topless Model X – An option that he DIDN’T order! - This is COMPLETELY Bonkers! Customized, inflatable mobility devices. Yes, please! - Tesla is launching a ‘Full Self Driving’ (FSD) beta to a limited # of expert drivers on October 20th. Your guess is as good as mine as to how it’s different or better than the current ‘Autopilot’ with the exception of being able to interpret the world in 4D (vs. 2D currently) and being an eye-watering $8K option. I think of it as Autopilot 2.0. - In celebration of Steve Jobs's life, he died 9 years ago October 5th here are some of his best interview moments from all of the ‘D: All Things Digital’ conferences he attended. - Battery cells - Make or Buy: GM and Ford have to get to the same place; a linear supply of reliable, high-quality, low-cost battery cells for their future stable of NEVs. It’s how each decides to get there that’s interesting. Another way to look at this – Are batteries a strategic difference-maker? No one yet knows, but Tesla seems to think so. One thing that’s not so clear cut but VERY clear historically when China enters a vertical, which China, Inc. has aggressively, it usually means overcapacity - Is the Qiantu K50 coming to the US? If Mullen Technologies has anything to say about it, then that’s an affirmative! It’ll be rebadged the Dragonfly K50 but has not been homologated to US specs so who knows if it’ll actually make it here. This is one of those headscratchers – I don’t see any K50’s in China other than the one that’s parked in the Sanlitun retail/coffee shop location. Mullen should really get a second opinion on this one and maybe part ways with whoever they have as an agent here in China. - Predicting what will happen once Tesla releases its FSD. Pretty predictable. Many people are sheep. STATS OF NOTE - China September 2020 new car sales rose +12.8% YoY and +17.4% MoM totaling 2.56M units. - China September NEV production: 136,244, +80.5% YoY - SGM Wuling Hongguang MINI EV September sales: 20,150 units, Tesla sales: 11,329 - GM reported a 12% jump in CQ3’20 vehicle sales, the first growth they’ve seen in China in two years with the Buick and Cadillac brands leading the way. - Hot off the press: Enovate is about to close a ¥5B round from yet to be determined investors. PRODUCT & SERVICE INTRODUCTIONS - A toy for the 1%ers. An electric hydrofoil for surfing. Efoiling took off about two years ago so it’s not technically a ‘new’ product but its quickly gaining popularity in places like Hawaii and Lake Tahoe. As mentioned, it’ll set you back $12K so not a toy for most. - Is it an e-bike? A moped? It’s both? Take a look at the Juiced HyperScorpion – It has some killer specs, especially that 30MPH (in Race mode) top speed which is technically not allowed in most areas which cap the speeds of Class 3 e-bikes to 28MPH. - Amazon unveils the vehicle that they think will help them fulfill their ambitious ‘Climate Pledge.’ It’s an electric delivery van, one that’ll replace to the tune of 100K units, all their current petrol-powered vans in use currently. They’ll take first delivery in 2022. Think of it like ‘Conceptualized by Amazon, Delivered by Rivian.’ - With its sights on Niu, Segway who was acquired by Ninebot (itself a Xiaomi backed startup) in 2015 introduces a pumped-up version of its C80 to US and Canadian markets. Since it has pedals, it technically qualifies as a Class 2 bicycle which makes it street legal in most of the US and lots of Canada. —— 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 automotive and mobility sectors here and in the US, we also provide a point of view that we hope educates and sparks debate. The Sino Auto Insights
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.