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Gogoro SPAC'ing, Tesla FSD Still Just a BETA, 10 Commandments of 'Self-Driving' - SAI Newsletter 37


Happy Mid-Autumn festival (中秋节)or in Vietnamese as "Têt Trung Thu" to those that celebrate this very important Chinese/Asian holiday! It’s celebrated a bit differently in China than it is in Vietnam where there’s more of a focus on lanterns and children. It’s a time when the moon, which represents reunion, is at its fullest and brightest. It’s also at the end of the autumn harvest which is a time to celebrate and give thanks. Fast forward to the present and in China, it normally means moon cakes! It also means a long weekend which we’ve been taking advantage of to take short trips and visits with old friends. My family spent a day at the rain-soaked Great Wall on Sunday/Monday but were able to come back to the city to enjoy a nice dinner with friends outside in the perfect autumn and sun-soaked evening. Since it’s a holiday weekend, we’ll have a shorter newsletter this week. Although the news didn’t have a rest. One of the biggest pieces of news is what’s going to happen with Evergrande. Evergrande fallout concern is bleeding over to the US markets and there is a ton of speculation as to what’ll happen with them, will they be allowed to fail or will there be a move to restructure their debt getting much smaller and manageable. I think many people here in China believed that Evergrande was pushing the edge and doing too much too fast and levering up too heavily to make it all happen – think Luckin. I didn’t closely follow Evergrande but knew of them since they are such a high-profile company. They’re also not in BJ so it was never front and center. That is until it got into EVs. They moved quickly and aggressively into EVs too! Only establishing themselves in 2019, they made all types of promises while spending billions of dollars to accumulate assets, hire staff, secure land, and break ground on multiple factories. What will happen to their EV company? If there’s any real IP, it’ll likely get sold off to pay for the mothership’s debt. But if not, it’ll likely be allowed to dissolve. The other major news was commentary from the MIIT minister calling for EV consolidation. My thoughts about consolidation were captured in this Asia Nikkei article that outlined much of the notable quotes coming out of the World New Energy Vehicle Conference in Haikou including what the MIIT minister said. Congratulations to Rivian for getting Job #1 rolled off the line last week. A HUGE accomplishment for a company that’s supposed to be one of the US’ top contenders in the EV space (outside of Tesla that is). Early reviews coming in for the R1T & R1S, Rivian’s truck and SUV, have been good to great so they should do very well considering Americans’ appetites for trucks and SUVs. It doesn’t hurt that Amazon and Ford are major backers with Amazon also ordered 100K commercial electric trucks from them. That should keep the plant busy! On a side note, my family took a pre-opening trip to Universal Beijing Resorts (UBR) prior to its official September 20th grand opening. If you are wondering how I got tix, the park had allotted tickets to partner companies and employees were also able to provide tickets to friends & family. This opening was years & about ~$6B in the making. Remember that there is already a Shanghai Disney that’s been open since 2016 so Universal was a bit behind. Luckily for us, the park is <20 miles away from where we live so its very, very convenient. Since we were later among many of our friends to visit the park, we had a lot of good advice aka ‘pro’ tips that allowed us to optimize the day. We also decided to spend the night at one of the two hotels on location in order to get started bright and early the next morning. Let me tell you that the boys loved the park! Universal IP (Jurassic Park, Transformers, Minions, Harry Potter, The Fast & the Furious, Shrek, and others) isn’t as familiar to Chinese audiences (especially kids) as Disney IP is so the park is Universal’s opportunity to reach the young audience, educate them about all of the franchises and carve out a place in this market. The rides & small areas were great and I was asked more than once by my kids if they could ‘watch Jurassic Park or Waterworld’ so Universal – Mission Accomplished. We will be back. Not likely for a while since tickets are sold out several weeks out and they’re not going to be opening to full capacity due to COVID concerns. It was the small things that reminded me of the US & the great times I had as a kid going to Disneyland/world, and other amusement parks. Lots of smiles, waves, and generally helpful and enthusiastic employees to help, guide and make the park for welcoming. The other thing that stood out was the hiring of women that tended to be a bit older. It wasn’t ALL young employees and it was noticeable in a very good way. These jobs normally have decent pay with the ability to learn new skills so I really applaud Universal for emphasizing the hiring of women of all ages to work at the park. Last Friday I participated in the Technode Emerge conference and sat on the ‘AV: What’s Next as the Industry Develops along with Founder of QCraft Fang Da. We had a great discussion and I am keen to visit Fang Da and his team and of course, try out their robobus pilot in northern Beijing. I Will report back when I do! And last but not least, congratulations to friend of Sino Auto Insights - Gogoro who announced last week they’d be going public via a SPAC which would value them at ~$2.35B. Horace Luke, Bruce Aitken (the CFO), and the rest of the team have worked really hard to get the company to this point so I applaud and celebrate with them on this HUGE step forward. They’ll look to raise about $550M that should allow them to move into even more markets and expand those existing relationships they have in place. I am good friends with one of the management and was lucky enough to visit Gogoro in TPE in 2019 and talk to Horace and others on the management team about their ambitions and how they planned on achieving all their goals. Let me just say that I am very proud OF them and very pumped FOR them! Next time I visit guys, let’s go HIGH-end Taiwanese beef noodles soup! EVs & More will be hosted on Twitter Spaces as per usual but we will move the time back to Thursday – 9pm EST. We will post the topics later this week on Twitter so if you’re free please drop in or better yet, come with some questions or comments. We plan to experiment a bit further with the show and I hope we’re able to reach an even wider audience very soon. And of course for those that can't make the Twitter Spaces, you can go and download our latest podcasts posted weekly. TESLA NEWS - Tesla FSD 10 Beta is still REALLY not ready for primetime. No matter what Elon says about how much the software has improved, his beta-testers show us otherwise. There are currently about 1M Tesla’s on the road globally so anytime there’s a legitimate video or livestream of a Tesla driver intervening while FSD is engaged, it means that the vehicle perhaps would’ve caused an accident. The number of close-call videos tells me that we are nowhere near where we need to be statistically for FSD to be deemed safe for use ‘most’ of the time. I am not FOR or AGAINST Tesla or any other company for that matter. With regard to ADAS, I am for truthful, objective evaluations that prioritize safety FIRST above all else without the apologists that make excuses for the wrong decisions these systems make. I am also for more pilot programs, continuous education, and demonstrations to help familiarize more people with system capabilities AND just as importantly limitations. FSD could be great for a limited number of use cases but there is NO system in the world that should be trusted completely without multiple safety failsafe’s in place. IN THE NEWS - Since we linked you to videos of FSD usage this week & last, It’s only fair to link you to a video of XPeng’s version of FSD called NGP or Navigation Guided Pilot. In this particular video, we see a newly manufactured P5 navigate through Guangzhou city traffic. For those westerners who often hear about how different Chinese roads are compared with US or EU roads, here is your chance to see first-hand the difference. If you are getting any kind of anxiety just watching the video, imagine having to actually be behind the wheel of this car. Fortunately, this P5 is equipped with 2 LiDARs which we know from our ‘Get Smarter’ section helps with redundancy in making the vehicle safer. - GM finally has the Bolt quality issue under control? It looks like GM will do the right & expensive thing by replacing the modules that seem to be the cause of potential battery fires in most Chevy Bolts on the road. This also likely means that LG has come up with a fix or at least a safe workaround for their cells. As I’d mentioned before, this case may be extreme for how long the problem has lingered without a solution and the sheer amount of capital needed for this particular recall but there will be more recalls and software updates to fix bugs from other automakers & EV startups alike as more and more EVs hit the roads. - XPeng and SK to partner on batteries. At least that’s what’s being reported. No OEM wants to be beholden to a single source for strategic commodities and currently, that’s likely the case for most of the OEMs unfortunately with that single-sourced supplier being CATL. If you read past newsletters and I know you have, you’d know that Farasis has Daimler’s future EV manufacturing in a real bind due to its quality challenges and delayed investment in increased capacity for the EU. Unless they can offload their demand to another supplier, in this case, CATL, Daimler could be in real jeopardy of not being able to manufacture EVs in the quantities or quality necessary to be a player in China, the US, or EU. XPeng pulling SK in makes me think of a few things. They don’t trust CATL’s product, it’s too expensive, they want to mitigate some risk by dual sourcing, or SK has better technology. All, some or none of these could be the true reason for working with SK. GET SMARTER - The 10 commandments of ‘self-driving.’ A simple summary of what, at a minimum, an autonomous vehicle MUST be able to do in order to be legitimately considered L4 capable, which NO CURRENT vehicles on the road are. No matter what Twitter or certain CEOs say. Worth the click. The author, Dr. Brett Browning is the CTO for Argo AI a Pittsburgh-based AV company that VW & Ford have invested heavily in since the company launched in 2016. Consequently, Argo’s system will be used by VW when it launches a pilot robotaxi program in Munich in 2022. Argo is one of the top dogs of the sector. Globally. Those companies that DO NOT use LiDAR would likely completely disagree with this entire piece. But it seems to make a ton of sense to me. TRENDING ON SOCIAL MEDIA - Remember Byton and Bordrin? Well, they now are considered zombie companies, the ones that scare the MIIT minister enough that he was quoted last week as saying that the EV sector needs consolidation. He’d be right. You may be wondering, but if the sector is still so young why would there need to be consolidation? This article essentially states what I wrote in a LI post last week along with what Lei and I talked about in last week’s pod. Saying there needs to be consolidation and it actually happening though are worlds away from each other. Here’s a mind-boggling stat from the article: In 2020, 5M units of capacity was added for a market that was selling about 1.4M units. That isn’t sustainable. If I were the EU & the US, I’d be monitoring China's domestic capacity for EV manufacturing VERY closely moving forward or they could find themselves with a glut of Chinese exported cars at their doorstep that undercut their domestic champions by thousands of $ or €. - E-bike etiquette. Who knew? So when a trip is too far to walk (and still be on time) but a Didi will take too long or isn’t available, I will jump on my Niu moped and ride to my destination. For a city like Beijing, it ends up making my journeys much more convenient and timely. We can weave through traffic and not have to deal with most of the congestion that passenger vehicles have. Many of the rules outlined in the article seem pretty logical but you’d be surprised, at least in China, how many pedestrians, other bikers, moped riders, delivery vehicles, and even cars will do anything they can to get just ahead of you. That’s one of the most frustrating things about driving in China. If there is a meter of space between you and the car ahead of you, within 1 minute there will ALWAYS be a car that inches over to enter your lane to cut in. I promise. I am equating riding an electric bike with riding a moped in China where your head needs to be on a swivel and you need to be aware of what’s behind, next to, and in front of you. That said, with the popularity of electric bicycles growing exponentially, it’s important to know what to do in the usual situations that occur while you’re riding. Didi too big to control? I was interviewed for this CNN article that spotlights the latest on Didi and how they got to this point. The latest speculation this week involved Didi President Jean Liu stepping away from the company. There was a denial posted shortly after this story broke but I have to say, to me it’s likelier than not that this could happen. Another credible scenario is that the BJ municipal govt acquires a piece of Didi while taking one or two board seats ala Bytedance. JUST THE NUMBERS - $2B. That’s what NIO wants to raise by offering additional shares to the market. This will dilute current shareholders and sentiment was negative as the share price dropped on this announcement. Money is still cheap for NIO though relatively so this makes sense. They anticipate a tougher fight in their domestic market as well as significant increases in spending in order to set up sales, distribution, battery swapping, and service channels into the foreign markets it plans to operate in. - 1,700. That’s how many satellites Elon Musk’s SpaceX has deployed in low earth orbit, just 350 miles above the Earth’s surface. Many of them will be used to eventually communicate and share data with autonomous vehicles. Again, Elon is playing 3D chess while everyone else seems to be playing checkers. —— 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.

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