Most Iconic American cars, Beijing taxi's go electric, Bike-friendliest cities - SAI Newsletter #25
Happy 4th of July all!
I’ve booked tickets back to the U.S. and will be traveling to both California and Detroit in late July/early August so if you’re around and want to grab a beer, please reach out!
One thing I realized this week with the continued trade war and weak China automotive sector (which includes the sales of EVs) is that the dynamism of the past 24-36 months, when money was pouring into the sector and everybody talked about EV/AVs and how close we are to getting them on the road, has largely vanished and that the traditional automotive health indicators have really become relevant again.
Before the trade war, a lot of automotive companies thought increased sales in EVs would soften the blow of weakening ICE sales but with both in China slowing significantly, as long as the Chinese govt. decides to not play favorites, we can expect all-out war between the OEMs and EVStartups as companies on both sides get closer to launching new products into this challenging market.
If I were a Chinese EVStartup, I’d conserve cash wherever possible and re-examine my pricing and customer engagement strategies not to mention make sure I launch on-time and with the quality and reliability that can compete with the OEMs, especially since VW Group in particular has committed a few Brinks trucks worth of RMBs to market their new SUVs and NEVs over the next couple of years.
On another note, although I did not highlight any article about it, I think Jony Ive leaving Apple really closed the door on the 'Steve Jobs' era of the company. Apple has a brilliant management team that will carry them forward and keep them among the most valuable companies in the world, but I fear the ‘vintage’ years of Apple, say between 2000 – 2011 when Steve passed away, were likely Apple’s greatest, most innovative.
I hope I am wrong and that Apple is able to carry on innovating, disrupting sectors and delighting its customers since I still have friends that work there and will be a cheerleader for them and the company for the foreseeable future.
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
The cars selected are hard to argue with since they do have their place in American automotive history:
Ford Model T – first mass produced vehicle
Ford Model 18 – first mass produced V8
Duesenberg Model SJ – first true luxury car
Jeep MB – the name says it all
Oldsmobile 88 – first muscle car
Chevrolet Corvette – first iconic American sports car
Ford Mustang – started the pony wars
Ford GT – car built specifically to beat Ferrari on the track
Chrysler Minivan – launched a new segment into the market that’s still strong today
Tesla Model S – made electric vehicles cool
A few I may have considered that are NOT on the list: Ford F-Series, Chevy Bel Air, Cadillac Eldorado, Ford Taurus, Ford Explorer, Chevy Camaro, Ford Bronco, Chevy Suburban
Would be great to hear which cars you all think are missing from this list. I know there are several that I am not thinking of.
Deepening their ties which already includes a mobility partnership (rideshare, charging stations, etc.), Bimmer and Daimler decided that they should work together on booting drivers out of their cars, aka the holy grail - Level 5 autonomous driving (where there is no steering wheel, accelerator or brake pedal).
These non-exclusive partnerships are more of a CYA (cover your ass) transaction since these companies are all looking for that ONE partner that will help them achieve fully autonomous driving. The odds of two car companies the size of BMW and Daimler, along with their embedded legacy policies and procedures, being able to work together to put the best mobility service or AV product on the market without MAJOR contributions from a technology partner in the mix, are about slim to none.
Where this could go sideways is, in the future, if a significant portion of BMW and Daimler’s revenue begins to shift towards services, and if they co-developed everything how will they be able to differentiate themselves?
Currently, the only formula that will work IMHO is that there will need to be a commitment from one (or two) auto OEMs and one major tech (AI) company that’s exclusive, includes equity (read: merger or acquisition) with a bunch of entrenched management from the auto side getting the ‘boot’ before there will be ANY major breakthrough from anyone. Right now, no one is desperate enough but that’s going to change.
If they were successful though, I could see a scenario in the EU where the Bimmer/Daimler partnership allows them to become the the biggest boys on the block, they could then undercut the smaller players on price till they run out of money, and take over the market. This does not encourage innovation, it destroys it. And it doesn't allow for competitive pricing for the consumer. Same for the U.S. I am being a bit harsh in order to make my point and VW would likely have something to say about it as well. #waitingitout #frenemies #BMW #Daimler #whoismynextdancepartner
Klaus Fröhlich didn’t actually say this directly but he may has well have. To put it in mathematical terms, the rate of change (you could say progress) is directly & inversely proportional to the number of naysayers, like Klaus, a company has in management.
Fröhlich’s expertise, he’s the VP of Engineering, is likely NOT electric motors or batteries so these comments could stem from fear, what I have seen in abundance, from some of the OEM’s old guard who aren’t willing to concede their title or decision-making powers to anyone that may be (much, much) younger let alone not have any significant auto experience.
To be clear, this is NOT just a BMW problem. Each of the major OEMs, be it German, American, Japanese or Chinese ALL have some managers that feel this way and are doing everything in their power internally to slow the transition of their company’s product portfolio from ICEs to EVs.
This isn’t to say that Klaus doesn’t have some valid points, because he does, but that train has already left the station and ALL major OEMs have jumped aboard. Believe me when I say that it’s difficult enough to convince people the way they’ve done EVERYTHING for the last 30 years needs to be updated and that the new way involves doing the same task in half the time!
Too many insiders trying to sabotage the transition (aka keep their jobs) will surely push the ‘almost impossible’ tasks over to the ‘truly impossible’ side.
Lee Iacocca, a Detroit automotive Icon, passed away earlier this week. His passing reminds me of how big, powerful and influential the automotive sector and Detroit used to be to the rest of the U.S. and the world.
Lee was also one of the last standing, true ‘car’ guys (ex-Ford, Chrysler, BMW, GMer Bob Lutz may be the last) and I encourage anyone that’s interested in the traditional automotive sector or mobility sector to read Lee Iacocca’s autobiography to learn about some of the crazy, ridiculous things he was able to accomplish!
He led development of the Ford Mustang while at Ford AND of the Minivan while he worked at Chrysler, either of which would’ve cemented his status as an automotive stud.
I remember as a kid watching Lee Iacocca on TV trying to sell everyone Chrysler K cars and minivans. He was a BIG reason I became such a car freak, it’s just hard not to when you grow up in Michigan!
The other side of this is that there’s still a lot of folks that are trying to hold on to those memories in disbelief that the automotive sector has fallen so hard so fast. There is a real chance that none of the Big Three will be around in the next 25-30 years since they’ll likely not be able to get another bailout from the U.S. taxpayers.
Lee, in his prime would NOT have let some random tech startups/companies step in and take over the industry without a MASSIVE, bloody fight, something I hope the current managers at all the OEMs globally don’t lose sight of.
For my readers that are also American sports fans, this seems like a scenario that often occurs in the NFL, NBA and MLB. A team hires a coach or manager that was just fired from their previous team due to a lack of success hoping that the last case was an anomaly and that a new setting, team and circumstances will unleash the coach’s true abilities and he will then lead them to a championship.
One of the main reasons Tesla is in the situation it’s in is due to its manufacturing challenges, right? Does Lucid think that they have a much better situation for success than Tesla did? I do not know Hochholdinger and he was not around when they began manufacturing the Model 3 so I don’t believe he was responsible for the manufacturing issues but he WAS there the last 3 years while they weren’t resolved so I guess time will tell if Tesla has moved passed their ‘manufacturing hell’ as Elon put it. If that’s the case, Hochholdinger will likely receive a lot of the credit for sorting those issues out.
Since Lucid’s CEO Pete Rawlinson used to work with Hochholdinger at Tesla he likely knows the truth, or he would rather have a known commodity work for him than any new, unknown commodity but either way let’s hope that both of them took their book of 'Tesla Lessons Learned' with them to Lucid.
Waymo, who joins Zoox, AutoX, and Pony.ai, has been granted a license to give rides to passengers utilizing their autonomous vehicles in California.
Limits include: Driver remains behind the wheel, Waymo employees and their guests ONLY, service provided in selected cities within the South Bay.
I lived in the South Bay for almost 6 years so I can tell you that it’s a lot like Phoenix, albeit a lot cooler in the summer, sunny on most days without a ton of variation with the exception of a bit of rain in the winter months.
This reinforces my theory that any type of paid, autonomous ridehailing service launched to the public by any of the current players (OEMs + tech AI co.’s) would likely be limited to 1 or 2 season states (south and west) so those midwestern cities like Detroit and Pittsburgh, two cities where AVs are driving around town gathering data, will likely not see those services launched until enough Fall and Winter season driving data is collected, a pretty long way out.
Had a good exchange with Louise Lucas from the Financial Times about NIO and their worsening situation including the recent developments about some of their high-level managers leaving the company, two who are detailed in the article.
When companies struggle, it creates an opportunity for those companies to dump ‘dead weight,’ letting go of underperforming people/teams under the disguise of ‘restructuring the organization’ to optimize output.
Also, recruiters are ALWAYS out in full force to poach talent when they see a good amount of bad press and NIO has definitely had a bit of that recently. If NIO isn’t able to keep their good players in house this could turn a dire situation into a life-threatening one.
My prediction though is that NIO is one of the companies that the Chinese govt. will hang their hat on in order to showcase to the world their leadership in EVs, they were already bailed out by the Beijing govt. but it’s anyone’s guess how many more lives they have if they’re not able to ‘right’ the ship on their own.
Bottom line is that any significant, sustained sales growth can wash away the scrutiny and keep employees happy since it should also bump that stock price up, so hopefully management is working towards making some really tough decisions in order to fight another day.
Xu Heyi, chairman of BAIC Motor Corp, one of the Chinese SOE automobile companies announced at a conference this week that Beijing will have a 100% electric taxi fleet within the next two years all being supplied by BAIC.
There are already a number of taxi’s that I’ve seen in and around Beijing that are already electric but for those keeping score according to trusty old Google, Beijing currently has a total of ~60K taxis (NYC has about 13K of them).
This is a BIG win for BAIC since they’ll have access to all the data that comes along with these taxis and be able to use the data to reinforce their AI/machine learning system AND/OR have a captive audience they can sell products and services to.
Two years is not a lot of time but they likely will not need to replace ALL 60K, nonetheless this is going to be happening fast!
If this were one of the larger American or EU cities, how long would it take to get the proper agreement for something like this to happen let alone implementing the new policy, I’d say at least 3-4x’s longer than 2 years.
LAST MILE MOBILITY
The fifth edition of the Copenhagenize Index, a ranking of the friendliest cities in the world for bicycling was recently published and for the Europeans that subscribe to this newsletter, the list is probably not that surprising for them. For the Americans, none of our cities made the list.
There’s no real explanation about the 14 criteria or how the differences between cities are normalized since quite a few of the European cities with the exception of Berlin are WELL under 2M inhabitants. My major takeaway from this is that if the local govts. have the will to prioritize bicycles over cars, then they too can join the list at some point.
One size does not fit all in this case though so maybe in the future the list could be separated into cities with populations of 5M so we could see how the largest cities in the world stack up against each other.
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.