Wow, this week is flying by!
Must mean we’re busy here. Lots of interesting conversations this week with new & old friends. I get the impression I am not heading back to the US anytime this year which makes me sad so for those folks that I would normally meet up with during my travels back, don’t be surprised if you get a Zoom invitation from me to catch up!
I had a nice long chat with CK Tan of the Nikkei Asian Review about China batteries and the companies that manufacture them. It used to be there were the Korean & Japanese battery companies and everyone else. That’s not so anymore. There are at least a couple of them from here worth tracking now that they’ve announced investments from VW, Daimler and others. CATL is the 800lb. gorilla here but with the growth, there’s room for others to share in the spoils. CK does a terrific job of quickly summarizing the current situation so I invite you all to have a quick read here.
I should have links to all the panels in next week’s newsletter so stay tuned for that. I think they’re all ‘MUST SEE’ TV but I’ll leave it up to you which you decide to have a watch.
On to the news.
IN THE NEWS:
- Man, that’s A LOT of zeros! The check that VW Group (VWG) wrote to settle dieselgate in the US. was revealed by the Federal Trade Commission on Monday and it was pretty significant. VWG gave affected customers the option to either terminate their lease early w/o penalty (and with some additional compensation) or VWG would buy back their vehicle at fair market value. Most customers chose the buyback. That number represents the liability in the US, the courts in the EU are still working out VWG’s liability there so they should keep that checkbook open and pen ready.
- Welcome BACK to the party Bimmer! BMW will offer an EV version of their most popular vehicles, the 3, 4, 5, X1, and X3. BMW came early to the party with the i3 & i8 but due to internal squabbles decided to sit on that early lead which has now put them behind the likes of Tesla, Hyundai, and many of the China EVStartups.
This sounds like a pretty expensive insurance policy. Their internal global sales forecasts obviously don’t see significant EV growth over the next several years or this play wouldn’t make any sense at all. If we read between the lines, this likely means that the EV versions will be derivative designs from their ICE counterparts so optimizing for the EV platform will be very constrained by the ICE box that they’ll be forced to play in. Read that as EV & ICE versions will mostly look the same.
- Revel, the moped sharing program popular in NYC, DC, and Miami has suspended operations in NYC after the 2nd person in a week was killed in an accident. IMHO, even though the Niu mopeds are governed at 30MPH, American cities still need some seasoning when compared with their EU & Asian counterparts who have a long history of mopeds usage on their roads. Combined with the popularity of huge SUVs in the US, it makes for a lot potentially dangerous use cases that can even turn deadly as evidenced by these recent tragedies.
This won’t be solved by Revel alone though since they’ll need each city’s help to regulate usage and update traffic laws in order to minimize the potentially ‘dangerous’ accidents. If cities are serious about reducing congestion & pollution while increasing accessibility to transportation for everyone, that would likely mean limiting the types of vehicles on their most popular and highly trafficked streets.
TRENDING ON SOCIAL MEDIA:
- A short, poignant essay about making sure we ask about the ‘Who’ as more cities look to reinvent their transportation networks. A very important reminder for those decision-makers - One of your primary goals should be to make transportation affordable, fair, and equitable for ALL, not closed off and convenient to just some.
- I love these types of stories, where a new startup tries to take on the big, old behemoth! This time that behemoth, although HUGE, is NOT so old. The behemoth’s service is so ubiquitous, at least outside China, that the company’s name became a verb. That’s right, we’re talking about Google! The founders at Neeva think that customers are ready for something other than Google. This reminds of another small 17-year-old Silicon Valley company that decided to take on the big guys and is now leading their sector. ...I wonder if they spoke with Elon prior to launching Neeva.
PRODUCT & SERVICE INTRODUCTIONS:
- The German ElectricBrands eBussy, something you didn’t know you needed. Vehicles this size are used in Asia pretty commonly but they’re usually spewing pollution, aren’t maintained very well and straddle between delivery vehicle and go-kart. The motor is teeny-tiny which likely explains the respectable range on the long-range battery. I think the modularity function is going to stick, maybe as a subscription and / or additional fee type of revenue model though. Think Canoo but more for the working class.
- Ducati gets into the electric bicycle game with its E-Scrambler. It comes with a 504-watt battery and a Shimano motor for pedal assist and will cost you around $4.3K. Not much of a looker if you ask me.
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 team
OEMs Innovation in designing for use cases is moving the sector forward. With Covid-19 shuffling priorities at the OEMs and mobility companies alike, what we should see in the next few years are products and services based on these new realities that fill in more blanks and identify more (revenue-generating) use cases for autonomous vehicles being used to help solve problems. If we think about how vehicle interiors are designed, the industry has done an admirable job of optimizing for the constraints that an ICE present on weight, design, safety, and the current requirements of a steering wheel, gas/brake pedal, instrument panel, etc. EVs and autonomous vehicles will eliminate all those constraints and give designers more freedom to give us their interpretation of what an interior should look & feel like. One of the Bauhaus design movement principles is that ‘form follows function.’ Before iPads and touchscreens function normally meant a knob, button, or a lever that helped you perform the function you wanted. Today though, that function can and is being defined & executed by software. If conceptualized properly, user experience design when combined data and the proper hardware, gives companies a way of providing mass ‘customization’ so that the same product that serves all its customers can be unique to each individual. Most companies will look at this as a burden but some companies will take user experience design to the limit and imagine use cases that don’t even exist yet. It’s these unique ‘user experiences’ that customers will pay a premium for and help differentiate the winners from the losers. Think Apple & iPod - There were plenty of music players in the market by the time the iPod launched. Steve had the audaciousness to not only slap a dial on it that wasn’t like anything in the market but on top of that charge people 2-3X what other makers were! People LOVED the iPod. That’s why I am floored when I see articles about VW having only written 10% of the code for their most important launch in decades, the ID.3. Seems to me that VW leadership is thinking like ‘design is a burden’ and not an opportunity and as I stated in the last paragraph, it’s also an easy way for us mobility sector followers to identify who the losers may be in the future. #vehicledesign #userexperience #bauhaus #formfollowsfunction #softwaredesign #winners LAST MILE MOBILITY With private transportation on the rise due to COVID-19, it’s finally the electric bicycle’s time to shine. For those that have followed this newsletter from the beginning, one of the things I predicted close to just after its launch was that the use and sale of electric bicycles would take off. I predicted this because living in China, the use of shared bicycles went from non-existent to a part of (my) everyday life in what seemed like a blink of an eye. Second, I found that people actually preferred using the bikes because it meant that they didn’t have to get on crowded buses or subways, allowed them to be outside even if just for a short bike ride, as opposed to spending much of their day in the office. Finally, people felt like they were getting a bit of exercise without having to go to a gym and get all sweaty. My prediction of course was pre-COVID-19 too so there’s no way I would’ve thought it would grow as it has. Here’s a crazy statistic, Deloitte predicts that there could be >130M e-bikes sold globally between 2020 to 2023! The sector has gotten so hot that many bike shops in the US have a 1-2month wait on bicycles as manufacturers struggle to keep up with demand. If you thought a sector with this much growth potential was going to attract investment you’d be absolutely correct. Recent fundraising announcements by e-bike manufacturers Cowboy, Dance, and Van Moof just to name a few highlights the major opportunity and a bright spot for the mobility sector in general. In addition to allowing their riders to travel farther distances more comfortably, and I’d argue more safely than electric kick scooters, these bikes are smart and connected so there’s more revenue-generating potential for the makers as well. Finally, this renaissance of the bicycle has inspired many of these startups to really push the design envelope on what a bicycle should look like and what you should be able to do on it or with it. It’s not just design innovation though as companies like Dance test new ‘sharing’ models and explore different ways of financing the somewhat expensive products. If one of my other predictions about more cities limiting private vehicle use in their city centers, than the e-bike and all of its derivatives will become a major mode of transport globally, and that’s totally fine with me. #ventureinvestment #VanMoof #Cowboy #Dance #electricbicycle #wildypopular #oneforeveryone Specialty delivery vehicles are going to be a thing. The folks that have lived in China/Asia for any period of time should be used to seeing 三轮车(sanluche or three-wheeled vehicles) riding around with drivers not really obeying traffic laws while delivering things to people. That’s why it’s not a HUGE leap for us to think that this could become a thing in the West as well. There are a few predictions I’ve made in previous newsletters ad-nauseum (like how e-bike usage was going explode) and that I believe more cities limit access of private vehicles into their city centers in order to alleviate traffic while helping reduce pollution. One of the beneficiaries of these new rules could be these types of 3, 4, 6 wheeled vehicles. Even without the benefit of dedicated lanes for these smaller, slower vehicles, they could easily make it to their destination using the sidewalk. They’re electric so they run clean. They can be manufactured in different form factors. Since they’re smaller, they won’t use that much power and if they’re running low, you can swap out the battery and they’re back out there within minutes. They can ride alongside people on scooters & e-bikes, and won’t be a danger to other riders. These vehicles make too much sense – They can deliver your Amazon Prime package, pizza, drug prescriptions, groceries, or anything else you couldn’t be bothered to go out and grab yourself. Finally, and this is one of the main reasons we’ll likely see their increased usage, they can be autonomous. I could see a scenario where just outside the city center there would be a staging area for deliveries with dozens if not hundreds of these vehicles head off to hand over your package or take-out to you. They could be leased or owned by the companies and they could be modular so that they aren’t limited to a single-use case. Oh, and companies Nuro, Refraction, and Meituan are already testing them. #autonomousdelivery #sanlunche #thiswillbeathing #alreadyhappeninginpartsoftheworld
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.