Ex-Byton CEO's landing spot, sedans/EVs the big news @ Auto Shanghai 2019 - SAI Newsletter #15
Just got back from the U.S. and landed in Shanghai to catch the tail end of the Shanghai Auto show and meet with some folks. Since I know there’s been quite a bit of good coverage of the auto show, I’ll try not to focus too much on it myself.
What I have tried to do is pull together some relevant announcements that I think matter and tried to stay away from too many product launches or normal news cycle information. I will summarize below some of the vehicles launches and concepts intro’d this week that I thought were noteworthy and you can Google/Baidu their specs., if any are available, and what they look like.
Mercedes Benz – GQC Concept
Audi – Q2 L E-tron
Volkswagen – ID Roomzz
Aston Martin – Rapide E
Geely – Preface
Icona – Nucleus
BAIC – Arcfox GT
Xiaopeng – G3
NIO – ET
Great Wall – ORA R1
Qiantu – K50
Nissan – IMQ
BMW – Vision iNEXT
It should be noted that Geely introduced a new EV brand, Geometry, that will be used as the brand to compete in the China EV segment. Haven’t had time to process this too much but if they’re trying to wipe the slate ‘clean’ for their EVs especially if they plan to export them internationally which I am sure they are, this is probably a wise move.
P.S. If you take a close look at the picture I posted in the header, you may notice that a company we cover a bit here, decided to skin one of the ‘People movers,’ a Detroit public transportation car, with their logo. I took this picture a two days ago but it looks like it’s been there since the Detroit Auto show this past January so I couldn’t help but think that there are probably adverts like this in many other locations across the world and that this is probably not what the marketing team should be focusing on.
Now on to the news.
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 U.S. I also provide a point of view that I hope educates and sparks debate about how I look at the issues. We will mostly divide our articles into these buckets: AI, Mobility/Ridesharing/Ride-hailing/Bikesharing, OEMs, EVStartups, Investments, and Other. If you know of anyone who would like to sign up for this newsletter please have them visit: www.sinoautoinsights.com. Thanks for reading.
The Sino Auto Insights team
EVs & EVStartups
Chris Udemans of Technode does a good job of summarizing NIO’s current situation and its future challenges as it begins production of its recently launched ES6 on the heels of disappointing sales of its flagship ES8 SUV. In addition to increasing complexity of their manufacturing by doubling their product line, NIO is being sued by U.S. investors, who’ve accused them of misleading statements all while intro’ing a third, concept vehicle, this time a sedan, at the Shanghai Auto show and opening their mobile charging to non-NIO vehicles.
I also share with Chris some of my thoughts on what’s probably happening behind the scenes at NIO as the competition heats up and subsidies begin to get taken away.
Revealing a bit of drama as the Shanghai Auto show launched, Byton confirmed that its ex-CEO/Chairman has decided to leave the company. Within days, it was revealed that Carsten Breitfeld had taken up the CEO role at Iconiq Motors based out of Tianjin. I suppose there wasn’t any non-compete in place at Byton + Carsten?
I don’t really know that much about Iconiq but will track them moving forward since this hiring signals to me that they’re trying to move to into the big leagues. I do know that the vehicle that they showed off to the public before isn’t that great looking, think all the bad elements of electric vehicle design and bolt them on to a full-sized van.
Regarding Byton, of the 2 co-founders Carsten has the engineering and program management chops so for him to leave on the eve of launching production of their first vehicle there’s probably a lot of interesting reasons why will keep you all updated as I find out more.
As for Iconiq, with Carsten set to become the new CEO, not sure what’s happened with Zhang Hailiang, the previous CEO but those that are Chicago Bulls fans may remember Doug Collins, the Bulls coach before Phil Jackson. Doug could never get Chicago past the Detroit Pistons so they hired Phil, who helped lead Michael Jordan and co. to 6 championship rings. I’m just saying…
Enovate has been pretty under the radar but made a big splash this week with the announcement that they’ve secured $298M in Series A financing, a pretty decent chunk of change so they must be impressing some deep-pocketed folks. This brings their total raised to over $760M since its 2018 founding. That’s a lot of cash in a short period of time.
Unfortunately when you’re in the spotlight, it can get pretty bright and hot so maybe, being a bit more under the radar while plugging away helped them learn from others mistakes while rolling up their sleeves to develop a superior product for the China market.
LIDAR is an interesting market to follow. Most automotive companies, with the exception of one major company whose name rhymes with J-esla, utilizes LIDAR as part of a combination of technologies, with radar and cameras being the other major components, to be the ‘eyes’ of autonomous vehicles. The author in this articles maps out the potential of the market for LIDAR and it’s ubiquity outside of the automotive sector. He also notes that there are many competitors in the space with a few giants pioneers who drive a lot of the innovation.
This reminds of the China EVStartup sector, which currently has >500 companies vying to become the ‘Tesla of China.’ While the market is still shaking out, size and cost (driven by innovation and volume), will likely be the main determining factors for success in the sector.
This, and the funding that’s been plowed into the segment could all be for naught if Tesla’s theory is proven accurate, that LIDARs are an unnecessary technology for autonomous vehicles. As someone who’s ridden in a Tesla while autopilot was our driver, they may be on to something.
ECONOMY & MARKET
With the rush of EVStartups intro’ing SUV after SUV over the last few years, it’s refreshing to see that these companies still see enough opportunity in the sedan segment, which was 51% of the China market in 2018, that they would launch concepts at Auto Shanghai this week.
The most notable are: NIO, XPeng, Geely, and Aston Martin
If you squint at the pictures of the sedans, of any of the brands, you can kinda see a resemblance to the A7 / Jaguar / Tesla vehicles. One thing that these startups need to really do a better job of is creating their own design language, something that’s unique to them that customers can instantly know by seeing is ‘their’ vehicle.
Concepts generally are nothing more than design exercises that gauge consumer and media interest, some can be almost ‘production ready’ while others can basically be non-working mockups with one-off parts, no engine and a lot of polish, that have been put together as a marketing tool to get some foot traffic to their stand. I’d guess that these ‘concepts’ are the latter, especially if you’re not able to go and touch, feel, open or sit in them.
Those that follow the U.S. auto sector know that the sedan market has shrunk considerably over the years and that GM, Ford and FCA have all basically announced that they will exit the market entirely within the next 5-7 years with the exception of a few, very popular models.
There’s a lot to digest here since the China market is still very important to the American OEMs is this a huge, potentially crippling move for them to get out of the sedan business? It definitely makes sense in the U.S. and was frankly long overdue for the OEMs to cut spending on new sedans but with 51% of the market in China or about 12M vehicles still, will this come back to bite them?
Do the U.S. OEMs plan to develop sedans at their China R&D centers for the China market ONLY? Unless their product can sell hundreds of thousands of units, it’s difficult to justify the R&D costs for a vehicle that primarily addresses one single market.
As long as the U.S. sedan market maintains a minimal level of volume and demand, a likely scenario in the future could be that the Europeans AND Chinese seize on this and start exporting electric sedans to the U.S. market to fill the void left behind by the U.S. automakers.
Many are predicting what the fallout might look like if the U.S. decides to widen the current list of automotive parts that have recently increased tariffs placed on them. I highlight this article because we still don’t know what the U.S.’s next move will be since negotiations are on-going with China to resolve the trade war.
One piece of information that caught my eye is that although imported vehicles from China make up only .6% of revenue from total imports, China is the 2nd largest exporter of auto parts (Mexico is #1), making up 12% in terms of spend of all parts imported into the U.S.
After reading this article, I get the feeling the author believes that the Trump administration doesn’t realize some of the collateral damage that prolonging, increasing AND widening the list of parts that have tariffs slapped is causing but I disagree, unfortunately, I think the administration has a very good idea of the damage that they’re causing.
As I’ve stated in previous newsletters or if you’ve spoken with me on this subject, this article makes all the same points I have regarding e-scooter sharing as a viable business.
Specifically for the U.S. and EU markets, there will NEVER be enough scooters deployed to get enough rides to generate a consistent profit. I was told that Detroit, which is about 142 square miles (370 square km’s for the metric folks), has a TOTAL of 1,200 scooters deployed by 3 separate companies. I don’t believe that one company that could deploy 1,200 scooters in Detroit could be profitable but to have that divided up by three makes the economics all the more daunting.
China has also learned its lesson from having Ofo and Mobike carpet-bomb cities with bikes, in order to get to that magic number of rides, which didn’t work out after these cities decided that they weren’t going to allow the bikes to be strewn messily across their city blocking sidewalks, roads, and doorways. Mobike recently raised their pricing in order to make up for the reduced number of rides/day but that’s only going to push those marginal users back to more traditional modes of transport so those economics might still not work.
By just looking at the scooters, you can kinda tell that they are NOT durable enough to handle a daily beating from consumers who have no connection to them other than a means to get around. In order for them to last the 6-8 months necessary to be profitable, these scooters need to be bulletproof, which normally means simpler and heavier. Being heavy has its drawbacks though since it’ll drain the battery faster and there are a lot of other tradeoffs that need to be considered in order to design and manufacture a ‘bulletproof’ scooter, all of them likely to lead to a higher cost.
This is why I am long e-bikes as the natural replacement for these e-scooters as the key piece to the ‘last mile’ puzzle.
Toyota made a decent sized move this week selling the tech from their currently shelved eQ microcar to Singulato in return for being first in line to buy its green car credits and access to potential knowledge of the local market that they don’t already have access to.
Singulato’s version of the eQ, called the iC3, will likely have the same underpinnings of the current eQ with a China-friendly design as well as being more of a ‘connected’ car.
There weren’t many details on this announcement and the car is still a couple of years away but people can look at this as an endorsement by Toyota, a normally conservative, risk-averse company, of Singulato.
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.