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Hertz Tesla Tom Brady, XPeng's Tech Day, Too Much Tech in EVs, GO GREEN! - SAI Newsletter 42



This week's picture is courtesy of Axios. A lot of big news this week that I’ve linked to below but the biggest when I woke up today was Tesla’s 100K unit order from the car rental agency Hertz. XPeng also had its Tech day late last week, it’s third to date and we are starting to see a bit more maturity and some continued ambitiousness from XPeng. They seem like a pretty confident team with their recent P5 launch but I’ll get into it a bit more down below. WM Motor also launched its first sedan, the M7 that will come with 3 LiDAR and will likely compete directly against XPeng’s P5 sedan, Tesla’s Model 3, and a slew of domestic mid-priced smart EVs. WM has lately been in the news quite a bit with their recent capital raise and this new sedan that should hit the streets later next year. Maybe they’ve turned a corner? Some housekeeping as well. For those that were interested in watching the China Institute investment panel that I sat on a couple of weeks ago but weren’t able to join live, here is the link to the entire two days. I wasn’t able to join the entire event but a lot of the panels were really informative if you have the time. I am going to try to circle back myself and catch the few that I missed. Also, I have finally checked the ‘Being on Spanish TV’ box! Technically, this channel is Barcelona based so more Catalan than Spanish technically but Great Wall Motors is in negotiations to acquire a Nissan factory in Barcelona so I was asked for my take on the potential transaction. Lei and I will be hosting our Twitter Spaces room again on Thursday, 9pm EST for those that are free to listen to us wax poetic about EVs & More. If you’re not able to join, but would like to still listen you can check our podcast on Apple Podcast, Spotify, or wherever you get your pods from. If you ARE free, please drop in or better yet come with some questions or comments. To join the room all you have to do is follow me: sinoautoinsight or Lei Xing: leixing77 There's a HUGE game this weekend between the Spartans and the Wolverines - both are undefeated and ranked in the top 8. It's so big, ESPN & Fox Sports will be in East Lansing to cover the festivities. Man - I wish I could be there. I wish I could take my boys to that game, the atmosphere is going to be just electric! On top of that will be about 40K college kids, many of them wearing costumes since it is HALLOWEEN, so they can head out to trick or treat right after the game! GO GREEN! TESLA NEWS - Hertz and its bulk order of Model 3s. Tesla announced yesterday that Hertz has ordered 100K Model 3s to be delivered before the end of 2022. HUGE NEWS from Tesla and the market reacted accordingly pushing Tesla’s market capitalization above $1 Trillion for the first time ever and only 1 of 5 currently. A couple of observations since this transaction has already been overanalyzed in the articles and on Twitter. Hertz was looking to get back on track since its re-emergence 4 months ago from a May 2020 bankruptcy filing so this was as much an announcement about Hertz creeping ‘back’ into the consciousness of consumers, newly free to travel consumers that is. Elon tweeted that the cars weren’t sold at a discount so I’ll take him at his word although transactions like this have NEVER happened that way. Fleet transactions by definition are normally, sold at a discount due to the numbers of vehicles being purchased and/or their reduced level of features (content). Another way to look at this could be if pricing was NOT discounted on the vehicles, perhaps there are some ancillary benefits like free (or significantly discounted) supercharging that wouldn’t touch the price of the vehicle but would be an incentive to purchase. Will see in the coming weeks if they threw in any ‘off the books’ kickers to close the deal. One of the reasons for Hertz selecting Tesla was likely due to its extensive supercharging network in the US. My outlook was always that the Model 3 was likely to have a decent sales slowdown in 2022 since more direct competitors will launch and there are no plans (that we know of) for any major refreshes for the Model 3 and this helps Tesla in a few ways. It keeps utilization rates higher in Fremont and Austin. It makes the Model 3 numbers look better than they otherwise would. It gets more Tesla’s on the road to hoover up more data to feed their FSD algo. This order moves the needle significantly for Tesla as evidenced by the market cap jump, helping further push back the FUDsters while giving the STANs more ammo. I don't think Tesla had anything to do with it, but having Tom Brady help you launch your EV service seemed a bit strange. Finally, I do remember when selling to a rental agency crushed residual values of cars but Tesla has managed to turn this into something to celebrate. Bravo Elon – you’ve fooled them again! IN THE NEWS - XPeng, with its flying car, is aiming to be the arbiter of ‘Mobility.’ I spoke with Eamon Barrett of Fortune for this article on XPeng’s flying car ambitions. First, yes it is real. XPeng believes that they can get a flying car to market by 2024 for under $170K, with the help of a company it’s invested in – HT Aero. XPeng isn’t the first EV company with flying car ambitions as Geely has also openly touted its goal of putting one on the road by 2024 as well. I have a meeting over some adult beverages with someone very knowledgeable about the aviation industry to discuss in more detail, what it would take from a regulatory standpoint for these to be viable. As a I learn more, I’ll report back! - The key takeaways from XPeng’s Tech day 1024. For the sake of full disclosure, I had the benefit of being on a call this AM with Brian Gu (Vice Chairman & President) & Xinzhou Wu (VP of Autonomous Driving) who went over the 4 priorities in some detail over and above Sunday’s Tech day.

  • Their supercharging network in the future will be powered using its next-generation X-Power superchargers that use Silicon Carbide allowing the chargers to re-charge up to 200km in 5 mins. Those will likely be available for use by 2023.

  • XPeng’s X-Pilot 4.0, which they’re targeting to be launched in early ’23 will be their city-level NGP system and point-to-point navigation but still L2 autonomous. It won’t be till X-Pilot 5.0 where the capabilities jump to L4.

  • The robotic unicorn isn’t just a toy for kids. They plan on designing it to have multi-tasking capabilities including being an office helper and being able to identify facial expressions and voice recognition.

  • The flying car which I’ve outlined in a separate post.

Some takeaways from the call. The current P5 orders have about a 60% take-rate on the P version that includes the 2 LiDAR. The specific roadmap for X-Pilot 3.0 = Highway & Parking, X-Pilot 3.5 = City environment, X-PILOT 4.0 = City environment (point to point). - The challenges to car sales that appeared during the pandemic seem to have permanently altered how people purchase cars. The upside of dealing with a pandemic and current tight supply of new and used cars limiting price negotiations is that it’s created a better sales experience (or customer journey) for the customer who’s looking to purchase a vehicle. Dealership groups have had to reduce their staff, with the salespeople bearing the brunt of the downsizing and because of still in place ‘in-person’ restrictions much of the customer engagement is being done online, consequently helping those salespeople that that didn’t get laid off develop a new skill. This also means that these salespeople are able to make more money via higher commissions in many instances. Now, why would we want to go back to the old way? It seems the current way is a ‘win’ for everyone. - Current tech features in cars too tech-y? JD Powers did a survey of 10K new car buyers in the US and the findings aren’t anything surprising really (if you’ve been paying attention). First, more than 1 in 3 advanced technology features in a car go unused for the first 90 days. Its due to the fact that the users don’t feel they need or are compelled to use those features. Some of it revolves around forming new habits that don’t include utilizing services that you would normally access via your mobile phone. This is great insight but it shouldn’t be surprising to automakers as they try to re-invent themselves into being service providers. It takes time to form new habits, 66 days on average. This also means that the automakers shouldn’t give up and take those features out. The key here is incentivizing them to form these new habits. This could be via partnerships, simpler (or more compelling) design, or providing exclusive services that can’t be accessed outside of the vehicle. Automakers could also create their own customer journeys via an app, which most already have, that seamlessly integrates with the car buyer's mobile phone including integrating with the user’s data in order to make the transition to a new habit less painful. Again. This WILL take time. And good design. Now, how many of them will be patient enough to wait that out – my guess is not many… TRENDING ON SOCIAL MEDIA - And the winner is… Congratulations to the Technical University of Munich (TUM) who won the inaugural Indianapolis driverless vehicle race! There were 9 teams from 21 universities around the world that competed in the event with the TUM team taking home the $1M grand prize and the bragging rights of being the first-ever champion. Not to take away too much from the victory, but I’d call the race more of a time trial that clocked the fastest speeds since the vehicles didn’t actually race side by side against one another. Let’s hope they introduce side-by-side racing next year! Perhaps I’ll actually be able to attend it in person as well. - The iconic iPod turns 20! Yes, I am very old. But I do remember when the iPod launched as I thought to myself $500!?! It is absolutely mindboggling how this product was such a huge catalyst that began the buildup of momentum and hit products including future generation iPods finally culminating into the iPhone leading to Apple becoming the world’s more valuable company. And it’s not even close. This is a must-click for any Apple fanboys that subscribe to this newsletter and I know there are a few of you. - Bosch & Carnegie Mellon mashup to work on spatial computing and extended reality (XR). The research being done by this collaboration will help bring the real world and the digital world together and further blur the lines of reality. This is NEXT LEVEL science fiction – COOL! JUST THE NUMBERS - 4680. The new battery tech that Elon has been touting since last year coming to an EV near you soon? According to Tesla’s battery partner Panasonic likely sometime in mid-2022 if they can get their planned March 2022 production launched. Panasonic has now also increased US capacity to a hefty 38-39GWh which translates into enough capacity to build 400K Model S’. They are preparing for the flood. My prediction is that within 3-4 years, the US will turn itself into a major EV player and not just on the backs of Tesla. - $2M. That’s what River raised in seed capital in order to join the race that includes Honda, Ola, Hero (& Gogoro) to be India’s 2-wheeled, electric mobility provider. Trusty old Google says that there are currently about 296M mopeds in India with annual sales of around 20M give or take. Currently,>95% of moped sales are for petrol engine mopeds so the opportunity for companies such as River, Hero / Gogoro, and Ola is ENORMOUS. It’s going to take ingenuity, innovation, leadership, and A LOT of capital for those companies to help move India into clean energy transport but I’d say it’s the perfect time for companies like River to carve out their own little market share. As of right now, they can all grow and dominate the market and won’t likely need to compete directly with each other for customers for another few years. INTRODUCING - The hubless Pilot bicycle. This electric bicycle is something straight out of Tron and I love it. It’s just an over-the-top version of a daily commuter bicycle whose designer seems to have thought about it all including an app that can control almost everything on the bike. #WANT - The WM Motor M7. Some vital stats: 32 sensors including 3 LiDAR units. 4 Nvidia Orin chips. Target pricing: <300K RMB. The sedan will be available to customers before the end of 2022. With 3 LiDAR but not available until late 2022, it seems like Freeman anticipates that competition will be stepping up their HW stack as well and lean into the safety aspects of an affordable smart EV sedan by packing it with sensors. Make no mistake – This segment will be one of the most brutal coming into 2022 and there is still room for WM to up the specs on the M7 since final pricing and specs will not be frozen until the Beijing Auto show in April 2022. - The Gogoro of city cars. The S04 from Silence, a company that up till now has been known for its XL-sized 2-wheeled scooters is moving upmarket to take on the micro-EV passenger vehicle segment, one that I am confident will become a thing. On top of their new product form factor, the most interesting part is that they’ll be incorporating battery swapping into the vehicle which should up the ante for anyone looking to enter the space. And at ~$9K, there should be plenty of takers. —— 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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