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Deep Dive on NIO, Cadillac's Time to Shine, VW's Substantial Bankroll - SAI Newsletter #23



One important announcement this week.

Please mark your calendars for Thursday, July 23rd 8AM – Noon EST. Sino Auto Insights is co-sponsoring – Mobility 2.0: The Quest for Mobility Supremacy.

It’s a virtual conference with panels and a fireside chat on electric, autonomous, connectivity, and urban mobility. There will be some killer panelists that should educate, inform, and entertain. Specific details to follow shortly.

Let’s get at it right away.

IN THE NEWS:

-   Tesla is going to be tough to dethrone – After another solid month of sales. Makes April sales which were not great, look like an anomaly, although this may say more about China’s recovery than Tesla’s dominant sales. If these Chinese EV Startups aren’t careful, Tesla’s lead may become insurmountable.

-   Tesla gets approval by the Chines govt. to use lithium-iron batteries for their China made Model 3s. Pros are: cheaper, don’t use cobalt – Cons: less dense which means that using the same number and size of battery cells would equal less range. That’s unless you’ve developed the technology (HW + SW) that can close that gap. Looks like they and / or their partner may have done just that. The rich keep getting richer.

-   The next set of unicorns? Forbes, with some help, predicts which startups have the most ambition & ability to get to that lofty valuation. This shouldn’t surprise anyone but mobility / transportation startups are nowhere to be found on the list so for those that work at these shops currently, it’s time to roll up those sleeves, put your head down and get to work making an amazing product or service since your time in the ‘investment’ spotlight has passed if you hadn’t already known that.

TRENDING ON SOCIAL MEDIA:

-   Triumph Motorcycles decides it wants in on electric bicycles. The high end of the e-bike market (>$3.5K) seems to be pretty crowded so I must be missing something because I can’t imagine that their market research ALL points to that being the ‘meat’ of the market and that the average e-bike consumer is willing to spend that much on one.

-   Nikola Motors all smoke and mirrors? That seems to be the case as the CEO is found to have exaggerated, some would call it lied, about the hydrogen-powered Nikola One’s capabilities. An easy way to put this to bed since he made those bold claims in 2016 is to roll out a prototype tomorrow and show us that it CAN indeed do what he said it could NOW. That’s not likely to happen though as he’s flaming Bloomberg on Twitter as opposed to pushing back on the story. I follow him on Twitter – He tweets A LOT. Like in so much that he probably doesn’t do enough REAL work. That probably reminds you of someone else in a pretty important leadership role …but I digress.

-   July 9th is confirmed to be the re-birthdate of the Ford Bronco. I know many people, including myself, are looking forward to this reveal. Let’s hope that Ford re-Does it right.

-   Ford Motor COO, Jim Farley already talking trash about how SUPERIOR the Bronco will be vs. the Jeep Wrangler. Stuff like this keeps the sector light AND interesting but coming from the COO – even better! Jeep owners, I AM CERTAIN are like ‘Bring it!’

-   For those car fanatics that appreciate some of the more unique cars that weren’t sold in the US, I have some good news for you, these cars have all turned or are all older than 25 years old! For those wondering what I am talking about, the US allows cars 25 years or older to be imported without having to meet safety / emissions standards. Who knew Holden made their own version of an El Camino!

- Lyft pledges to have 100% Zero Emissions vehicles by 2030. That’s 10 years away so it seems very doable and they seem to be the first notable transportation company to make this pledge so kudos to them. Actually, I think there may be one or two more that have also made similar pledges so if I find them, I’ll update in next week’s newsletter.

PRODUCT & SERVICE INTRODUCTIONS:

Lucid Air reveal scheduled for September 9th. Worth it to tune in and see if this is a viable competitor to Tesla’s stable of cars or just another ‘also-ran.’

-   Testing out new electric bicycle form factors. Check out the uber-expensive Civilized Cycles – Model 1. It’s what you’d get if a Trek road bike and a Vespa scooter had a baby. What makes it unique and I still haven’t decided if it’s in a good way or not yet, are the saddlebags that cover both sides of the rear tire. Oh and surprise! It’s not cheap – As in $6K expensive. Makes the Eeyo, which weighs 1 / 3 of the Model 1’s 75lbs, look like a total bargain!

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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 NIO – In the spotlight. I had a few conversations with Dan Xin Huang for this NIO deep dive he wrote and I give him a lot of credit for writing a well-rounded piece since over the last few months NIO seemed to make headlines in every weekly news cycle. I speak with journos pretty regularly and I know most would rather do longer, deep dives like these, and I also prefer reading these longer forms since it will normally educate me a lot more about the subject or industry.  He doesn’t get too much into the details of the bailout from the Hefei govt. so I feel there’s going to be a follow up to this article that’ll update on NIO’s post Covid-19 progress, especially as their newest investor begins to influence some of their business decisions. A must-read for those who want to know more about the China EV sector and one its main protagonists.   And the best part – I got the credit for calling out the NIO rule! #TheWireChina #NIO #deepdive #6monthsinthemaking #TheNIORule #mustread OEMs Cadillac trying AGAIN to redefine American luxury for the EV era. Long before Bimmer, Merc, and Lexus became the must-have luxury / sports sedans in the US, Cadillac was the ‘Standard of the World.’ Alas, that was almost 100 years ago! For the better part of the last 100 years, Caddy has slowly and painfully become a shell of itself from a brand and product standpoint. Historically, a big part of their issues resides with GM, but recently over the last few years, Cadillac has been given many chances, and the budget to go along with it, to try to capture that old glory via new CEO’s, headquarter moves, rebranding efforts and product refreshes with very little noticeable progress. To put it bluntly, that past glory is gone and it’s never coming back …got it? Good, now let’s move on. There’s a negative stigma towards American ‘luxury’ vehicle brands that many Europeans, Japanese, and even American consumers generally have and that’s why globally in 2019, BMW sold over 2.5M cars vs. 390K for Cadillac. Cadillac doesn’t even sell enough in China (about 219K in 2019) at this point to render a verdict about the Chinese consumers view of Cadillac (generally positive) but there’s no doubt if you wander the streets of Shanghai, Beijing, Shenzhen or Guangzhou there are plenty of German branded cars roaming the streets. With the EV era upon us though, this could be Cadillac’s one last chance (until the next ‘last’ chance that is) to really make their comeback into the luxury ‘game.’ The way they’ll succeed though is NOT through the visual design of their vehicles but on their ability to translate their old ‘Standard of the World’ tagline to their next-generation EV’s user experience and any ‘valet’ type services associated with that user experience. The vehicles need to ‘look’ and ‘feel’ luxurious and high end but those attributes are just qualifiers now, the real winners in the luxury segment in the future will help their clients ‘feel’ like they’re being provided a lux, custom experience. Each of the luxury brands are all scrambling to identify and most importantly translate their branding and positioning into a digital world and right now and with the exception of Tesla, they’re all struggling with their interpretations. The reality is, most of the luxury OEM brands make billions of $$$ / €€€ doing exactly what they’ve been doing for the last 60 years so the incentive isn’t there, creating a real cognitive dissonance in their CEO’s minds since they know it needs to happen sooner rather than later or the EVStartups here and in their home markets will begin to eat their lunch – See Tesla. This takes us back to Caddy and their opportunity – since any real, pushing the envelope kinda changes shouldn’t depress sales much further than they already are, THIS IS CADILLAC’S OPPORTUNITY to GO FOR IT. Luck is the intersection of opportunity and preparedness so I wonder if the Cadillac team is prepared? Specifically, will the design team finally take their training wheels off and be given the thumbs up for bold design, and will it be reflected in their next set of products and services? #GM #Cadillac #EVs #newdesignlanguage #userexperience #StandardoftheWorld   BATTERIES VW keeps their spending streak alive with a follow-on investment in Silicon Valley battery startup QuantumScape. VW is keeping its foot on the ‘gas’ so to speak and have increased its investment in a Silicon Valley solid-state battery startup by $200M. VW originally invested $100M in a JV with QuantumScape back in 2018 so it seems their team and its technology is promising enough for VW to double-down on their bet. Solid-state batteries are supposed to be safer, faster charging, and offer higher density which should translate into longer range. The only challenge with solid-state batteries is that no one’s been able to mass-produce them so for now they’re still a far-out ‘promising’ technology. I try not to be too hyperbolic with my words or descriptions but the one firm that’s able to get that formula right is sitting on a ‘gamechanging’ technology, one that could catapult them into another world, one that would leave their competition wondering what just happened. #VWGroup #QantumScape #solidstatebatteries #nextlevel #futuretech #doubledown MICRO-MOBILITY I’ll just grab an e-scooter into work. As cities and economies open up, even as Covid-19 still hangs over many people’s heads, it shouldn’t be surprising that ~2 / 3 of people surveyed in the UK would be open to riding an e-scooter to and from work. A small survey of about 200 people taken by Venson Automotive Solutions, it nonetheless reinforces the assumption that micro-mobility will play a bigger role in the post-COVID 19 transportation system. ~67% of people skew young (18-24 years old). In this instance, e-scooters are the Lime / Bird type kick scooters. The respondents would also use e-bikes and e-motorcycles (likely Vespa style scooters) to commute but e-scooters rank ahead of both in preference. #wouldratherscoottowork #micromobility #lastmile #beatsdriving #covid19 #escooter #kickscooter Calculating the ‘true’ range of an e-bike. As those of you who’ve followed this newsletter for a while likely know, I’ve highlighted a number of electric bikes that have launched within the last 2 years, that range from <$1K all the way up to >$4K. One thing that may be confusing for you all is how to do side by sides when trying to compare their range. There’s good news – we can do a ‘back of the envelope’ calculation that should give you an ‘apples to apples’ look and help you do a true side x side features comparison that could now include range. First, though the disclaimer, battery range will vary depending on your weight, the bike’s weight, size of the bike, battery, the width of the tires, weather, effort, and a few other factors so for the intents and purposes of guesstimating, let’s assume that all that data is held consistent and call them our control. That means battery size should be the most important number for calculating range. Oh, and one other important variable, hand / thumb throttles will almost ALWAYS drain your battery faster than any pedal-assist system so that should also be kept in mind for the sake of comparisons. In order to measure range, you need to get to Watt-hours or (Wh) and you can get to that by Voltage (V) x Amp-hours (Ah). The example in the article is using a battery that is rated for 48V and 10Ah. This means that the battery is going to have 480Wh. Now, and this is where mileage will vary depending on the above factors I called out earlier so let’s just assume that under normal conditions a bike ridden at 20MPH will get ~25Wh / mi (15.6Wh / km) which means a 480Wh battery would give me a range of 19.2 miles /  30.8km. The more effort you put in yourself should add life to the battery incrementally and bump up the range and the more ‘assist’ you use should shorten that range. This should give you an easy way to ‘normalize’ all the different ratings you read about these e-bikes so what’re you waiting for??! #ebike #rangesmayvary #applestoapples #sidebyside #pedalmore #throttle #pedalassist I’ve heard this song before …in the US – Take out delivery fees to the restaurants are too high. Covid-19 has forced many restauranteurs globally into survival mode as customers follow local shelter-in-place rules and have stopped physically dining out. 外卖or takeout has become the only way for restaurants to generate revenue, keep their staff, and make just enough money to keep their doors open. When I was in the US a few months back I downloaded just about every delivery app in order to try them out, get a feel for each’s user experience, compare their selection of restaurants, menu items available, and delivery cost. What I found BLEW my mind! Food delivery apps generally charge easily >10% of the order cost to deliver food to you. This may make sense for large orders but not when I was ordering one Wreck sandwich from Potbelly! When I returned to China, I’d already had experience using delivery apps here but what I noticed was that their delivery fees were substantially higher than before! Percentage-wise, the fees are comparable to those of the US now. Further, the delivery fees for the apps that cater to foreigners are MUCH higher than the fees for the apps that Chinese consumers typically use. I also found that Covid-19 in China kept these delivery folks VERY busy as you can see by how many delivery mopeds parked in front of any high-rise in BJ around lunch or dinner time any day of the week. Here’s the rub though, labor costs here are much lower than in the US so the Chinese delivery apps are closer to profitability than their western counterparts. Covid-19 has been a boon for the food delivery startups in the US and China and they’ve done their part to take full advantage it seems. Since they’re the only game in town, they have all the leverage when it comes to delivery fees they charge to the restaurants. This is on top of the less than honorable ways the delivery apps have been known to ‘sign’ restaurants up to their service. Even with these exorbitant fees that are charged many are still unprofitable, a common problem for gig economy companies. Now we know from the WeWork’s, Lime’s and Uber’s of the world that blitzscaling won’t magically make them profitable, so what’s their next move when Covid-19 is contained and the people who’ve been cooped up in their homes for months begin to head out for dinner? It’s already starting to happen with Just Eat Takeaway’s $7.3B acquisition of GrubHub. We should start to see more consolidation and these delivery startups use more of their raised capital to acquire other firms or look for themselves to be acquired. Again, it doesn’t seem like scale is going to move them to consistent profitability but it may buy them more time to figure out the right biz model. Unfortunately, all the shuttered restaurants left in their wake may be the collateral damage of this ‘on the job’ training. #fooddelivery #gigeconomy #waimai #notprofitable #consolidation #itcostshowmuch AVs The argument for 5G not being a ‘gamechanger’ for autonomous vehicles. What’s the deal with the race between the US and China in upgrading their telecom systems to 5G? Many people I spoke with about the importance of upgrading telco infrastructure to 5G here in China initially (this was over 2 years ago) said it was essential for the growth and development of autonomous vehicles. I think it’s safe to say that China will upgrade their telco infrastructure to 5G before the US since it’s being pushed by the central govt. The Chinese central govt. can require changes to be made and also help subsidize that cost. Federal govts. in the EU and the US have no such luck and must rely on local govts. to do their parts to upgrade in their respective locations and lead to a patchwork of coverage throughout each country not to mention be prohibitively expensive for many municipalities. China Unicom’s Research Institute estimated that 10M 5G base stations – which translates into a ~$282.5B investment in order for all of China to be converted. China and the US make up almost the same land size so by simple math, the US would need about the same type of investment in order to cover the entire country, and right now, they’re in no position to make those types of technology infrastructure investments. In the end, this could become one of the major differences between the US vs. China’s AV ecosystems since the Chinese could rely more heavily on the 5G (C-V2X) infrastructure for redundancy and build additional safety into the traffic system via this network. We won’t actually know if 5G would make things ‘better’ yet so for now let’s just say it would be ‘different.’ What it could do is give the Chinese ANOTHER advantage in adopting AVs en masse much sooner than the US though.  #5G #upgradingthesystem #biginvestment #ChinavsUS #notthatimportantforAVs #EdgeAI

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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