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GM's EV Day, Tesla's Bait & Switch, Selling cars online in SEA - SAI Newsletter #9



There was a lot of news packed into this cycle so up top there’s a quite a bit to chew on. I’ve added a small section where I’ll highlight some notable product/service/company announcements that don’t need a deeper dive.


As for the bottom section, this week is dedicated to a few broad topics mainly in the automotive space. Thought that was apropos with GM’s EV day event & Bimmer’s i4 reveal. We are really starting to see how these companies see themselves in the future and as importantly, how they hope to contain Tesla’s rise (company and share price). I love the ambitiousness of these announcements since it SHOUTS to the market that they’re ready to put their best foot forward via exciting products, a lot more acceptance of risk and potentially game changing innovation. All things the sector should be about.


In the future, I’ll be a bit more balanced with more mobility and ‘last’ mile stuff, but with the coronavirus still a HUGE concern, the automotive sector is dominating the headlines.

Lastly, went to Autorama last week with my kids. It was great seeing all the classic, mostly American muscle cars a few that I secretly covet all in one place – this week’s cover photo being one of them.


For those that are curious, still no scheduled return flight to Beijing for those wondering but I am trying to make the most of being in Detroit by revisiting old haunts, learning about all that’s going on and making a lot of great new friends.


IN THE NEWS THIS WEEK:

- China Tesla owners file complaints to a consumer watchdog when they find out that previous gen hardware (V2.5) ‘aka’ the brains that run Autopilot had been installed in their Model 3s although they should have V3.0 hardware. Could Tesla be using the old ‘bait & switch’ trick in order to bleed old, excess inventory?


- EV subsidies in China are BACK! Two local govts, Guangzhou and Hunan province have announced they will provide subsidies for EV purchases in an attempt to get the market moving back into growth mode. Look for this to be a green light for other cities/regions to follow.


- No surprise that California leads the US in EVs since NorCal is home to Tesla, but putting a spotlight on SoCal as a hub as well tells you how really far ahead the rest of the US the state is in terms of sales and production (both US and non-US manufacturers in California). These could be considered missed opportunities for the Midwest if the EV value chain decides that it doesn’t need to be there long term. Let’s see what happens when GM, Ford and FCA begin to really ramp up EV production though.


- CATL, China’ national champion for battery cells is short on cash and is looking to raise just under $3B in capital in order to fund its expansion and research projects.


- Waymo raises $2.25B and decides it wants to get into the delivery of goods.


- Jim Farley, Ford’s newly minted COO, steps up to the mike to address Ford’s issues and direction but the local papers where Ford resides, the Detroit News and Free Press were largely unimpressed. I guess we’ll just have to wait and see who gets the last laugh though.


- Another major automaker ‘reviewing’ their future product portfolio and likely eliminating platforms and powertrains, this time its Daimler. This will likely mean layoffs for the company likely being announced later this year.


TRENDING ON SOCIAL MEDIA:

- The coronavirus is even having negative effects on summer blockbuster movies. The James Bond movie ‘No Time to Die originally scheduled for release in April has been pushed out all the way to late November. The late date is hoping to ensure an audience with no restrictions on gathering together in large crowds.


Geely announces it’s in the satellite making business now. Does this make sense? Still noodling on this one, but they’re pretty serious since they’re investing $326M and should have something up in the skies by the end of this year.


- BMW decided to simplify and turn their logo retro with a flat design. Of course, folks were eager to voice their opinions and flame this update.


- Anthony Levandowski needs a hug.


- Waymo drops a short video that visually illustrates all the ways it will be a player in the autonomous vehicle services future.


PRODUCT/SERVICE INTRODUCTIONS:

- WM Motor launches long range version of their EX6 called EX6 Plus 400.


- In lieu of showing off this puppy at the Geneva Auto Show which was cancelled last week, BMW unveils the i4 this week. Plans are to begin production and sales by mid-next year. At an estimated price of ~$50K, this could be a significant competitor to Tesla’s stable of cars …assuming BMW can execute. Finally, Bimmer – Welcome to the show!


- Jeep joins the e-bike fray with one of their own. This one is available now for the bottom basement price of $5,899!



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

OEMs

GM decides it wants in on the EV & battery market in a big way with EV day announcements. (www.techcrunch.com)

Until now, GM has carefully dipped their toes in the EV ‘waters’ with products like the Chevy Volt & Bolt.


This week though, they officially made their intentions known in a BIG way. First, Mary (Barra) announced that they’ll be spending $20B over the next 5 years to develop a modular battery architecture, EVs (including trucks for Chevy, Hummer, an SUV for their lux brand Cadillac called the Lyriq and flagship sedan called the Celestiq), and AVs.


GM sees this as a ‘once in a lifetime opportunity and a chance to redefine the company and the perceptions people have of it’ according to Mark Reuss, GM President. In order to succeed, GM has partnered with LG Chem to collaborate on battery technology hoping to eliminate cobalt from its batteries, a difficult to supply and hence costly element that’s mostly found in the Congo. Tesla has announced something similar for their batteries as well.


The first vehicle to be launched under this ‘future’ GM strategy will be an updated Bolt which will be due to launch later this year.


I think this was a great first step in addressing to the market how they plan on redefining who GM is and what products will get them there. Wall Street seemed to like it too as Tesla stock was down after the event.


It’s as important to see that GM believes its battery technology and modular architecture will be the horse they ride to victory. Tesla right now has claim on the ‘best battery tech’ in the biz but with numbers like 400 mile range on a battery with 200kWh storage capabilities that lead could slip or at least be reduced significantly. With LG Chem in their corner, I wouldn’t count GM out either.


Things are starting to get exciting! I get pretty fired up about this because this shows that GM has had about enough of Tesla getting all the shine and now with GM & VW Group aggressively tackling the EV sector, the other OEMs are going to get pulled into the fray whether they’re ready or not. But seriously GM, can we work on some of these names?

#GM #EVDay #400milerange #200kWh #Ultium #20billion #Celestiq #Lyriq#


A first for Southeast Asia, Renault has launched an e-commerce website where customers can buy or subscribe to their vehicles on-line. (www.techwireasia.com)

‘Digitalizing the customer journey’ is such a HUGE opportunity for the automakers to explore I am shocked that they haven’t made much more of an effort at doing so. In China, it’s now commonplace for cars to be purchased on the Alibaba – T-Mall e-commerce website. O2O or ‘Online to Offline’ marketing / sales has really started to gain traction in Asia and it’s only been relied upon moreso with the coronavirus keeping foot traffic at dealers to a minimum.


Unfortunately, I think this is where the dealers here in the US have a disproportionate amount of influence and more critically, a lack of incentive to innovate the sales process. I hope that changes soon.

#O2O #innovatingthesalesprocess #happeningelsewhereintheworld #Renault


How Microsoft’s (MS) culture shift to a growth mindset helped it become a Trillion dollar company and how the auto OEMs could learn from them. (www.businessinsider.com)

Some of you may know who Carol Dweck is and her research on how having a growth mindset can predict ‘success’ in kids. I know about the growth mindset through all the research I did when I was about to become a father for the first time. The logic resonated with me and it’s something I definitely have tried to instill into my kids as well. Seems that Satya Nadella was able to implement this on an enterprise level!


I picked this article less to promote the growth mindset and more to give an example of how a seemingly stagnant, behemoth of a company, in this case Microsoft, that was a leader in its vertical but lost that leadership to up and coming upstarts was able to reinvent itself to become even more successful than their previous version.


It goes without saying that each company has its own unique culture and challenges and there isn’t a ‘one size fits all’ solution that’ll make any of the OEMs the next trillion dollar company but MS should definitely be used as an inspiration and model for pivoting your company to face the oncoming challenges the market throws at you.


Leaders need to create a bold vision for their companies & teams, then map that vision into tangible, measurable short & long term goals, while giving each lieutenant the autonomy to move quickly and decisively as well as an incentive structure that matches in order to reinforce what’s really important and to stay focused on those goals. It’s not just the company financials either, I have a few very good friends that have been at MS for some time and they are as excited as ever to go to work to contribute to MS’s resurgence. I didn’t get that impression when Steve Ballmer was their CEO so Satya seems to have really been able to reinvent the culture as well.


Now is NOT the time to be timid. There is a tidal wave coming from Asia and the West Coast that could wipe out all you’ve built over the last 100 or so years. In Nadella’s own words, “Our industry doesn’t respect tradition – it only respects innovation.” That’s right automakers, I am talking to you. From the looks of GM’s EV Day yesterday, maybe Mary has talked to Satya?

#Microsoft #growthmindset #SatyaNadella #gamechanger #trilliondollarcompany


Tesla caught Europe’s Big Three flatfooted when it launched the Model 3 there, but why? (www.nytimes.com)

It seems quite clear now that Elon has everyone’s attention. How a car company that sold a TOTAL of 367K vehicles last year against the 77M sold worldwide in 2019 could create such a frenzy among the global traditional OEMSs seems quite amazing but should it?


Tesla has been around for 16 years, so to me this is more akin to a Rocky movie where in the beginning Tesla began by scrapping and fighting above its weight class, as they took their beatings year after year but were able to still stick around and build better, more desirable products, they gained confidence till finally THEY became the one to beat. I am an avid movie watcher if you can’t tell.


Living in Beijing where most of the German OEMs/tier 1s have their China operations HQ’d, I still get the impression in speaking with some of the rank and file at these companies they still feel what Tesla is doing is sorta an anomaly and that once their EV products are on the road, Tesla won’t stand a chance. The leadership is starting to pay some respects to Tesla for sure but I am not certain that their messages are trickling down. Let me say this again though, Telsa is NOT going anywhere.


I have rigorous debates even now about how difficult what Tesla is doing well actually is to execute, but alas for some it just doesn’t compute that some startup company from Silicon Valley could eventually render their storied brands, engineering and tradition moot.

#Tesla #DLBigThree #notscared #waittill #Daimler #BMW #VWGroup #DavidvsGoliath


ECONOMY

In the race to be maintain a city’s relevance this is what one country has on offer. (www.technode.com)

In a nod to slowing growth and their ambitions of becoming world leaders in technological, medical and AI sectors, the Chinese govt. has drafted updated regulations that should make it easier for foreign investors and ‘tech’ talent to gain permanent residency.


I know for a fact that the US is in the same position, being short on the talent necessary to keep them in the lead positions for sectors we currently dominate. Detroit is a case in point. Each and every product we have in our homes will likely have a TON more code in it than it does now and we don’t have enough talent currently or in the pipeline at our universities to support that type of growth.


Just a reminder that the competition for talent is GLOBAL now and that competition is growing more and more fierce. Here’s to hoping that whoever wins the presidency later this year recognizes the importance of importing talent in order to keep innovation and progress going here in the States.

#globaltalents #workvisaissues #acouplepeopleshort #globalcompetition #wherewilltheycomefrom

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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