Porsche's Subscription Service, Learning to Ride, Xpeng Continues EV Win Streak - SAI Newsletter #34
Not much up top today outside of NIO’s recent announcement that they’ll be raising between $1.3-1.5B USD via share issuance. I can’t blame them, like Tesla, they’re just getting in when the getting is good.
IN THE NEWS:
- Byton’s heavy lift. Looks like folks are working on a plan to resuscitate Byton and get the M-Byte into production sometime this month. The plan includes receiving a bailout from FAW, while also agreeing to manufacture an electric vehicle at their Nanjing plant on behalf of Hongqi, an FAW brand and the equivalent of China’s Cadillac. Oh, and BTW, looks like all the foreigners on the Byton team were pushed out as well.
- An amazing story of how Trek went from needing a hug to needing a TON more bikes. To be clear, ALL bicycle manufacturers and retailers needed more bicycles, but it seems that Trek, the 2nd largest bicycle manufacturer behind Giant, may have been the best suited to push their foot on the gas to support the continued spike in sales by refilling the inventory pipeline most efficiently.
- US built Chinese EVs on the horizon? As a follow-on announcement of their introductions of the K27 & K23 models pre/post-subsidy pricing of $19,999 & $29,999/$12,999 & $22,499 the prior week, Kandi has announced that it’s looking manufacturing vehicles in North America this week. They must be confident about their prospects in NAFTA land if they’re willing to make that type of bet. There does seem to be some initial demand, especially since there aren’t many vehicles in general at those price points, let alone EVs. Could this be an ‘If I HAVE to have a car, it’ll be the cheapest one I can find’ alternative?
I am reminded of the Yugo that came to the US in the late ’80s. My friend had gotten one from his parents so I experienced a decent amount of high school in the passenger seat of one. It was slow, the sheetmetal was paper-thin, it broke down often, and the small tires didn’t do well in Michigan winters.
If the Kandi isn’t at least a step or two above the Yugo, it’ll have limited demand in the US. Not to mention how vulnerable drivers will feel next to the Tahoe’s, F150’s, Expeditions, and Suburban’s that rule many American roads.
- Ola Electric, a company spun out of Ola (India unicorn and major rival to Uber) based out of Bengaluru (unless you prefer Bangalore) is planning to enter the 2-wheeled Vespa style electric moped market with its own product. This would explain their acquisition Dutch moped designer Etergo whose specialty is manufacturing Gogoro style battery-swapping electric mopeds. Ola Electric is also planning a massive full-court press to expand its international footprint and profile significantly.
- Legend: Rick Rubin, one of the most influential music producers OF ALL TIME tells us how some of the most iconic songs he’s produced came together. I love these types of insider accounts. Those that know me know that I am a music nerd – love it all (mostly). The artists that Rick worked with and the songs he co-lab’ed on helped define my teen & college years. Yep, I am old. It’s an older article that popped up on my newsfeed if you are wondering about the date.
- Spyker is BACK! Look forward to Spyker continuing to contribute to the supercar genre now that they’ve found someone that’ll bankroll their ambition. I always thought their interiors were a bit much but let’s see how they incorporate ‘new’ digital design (if they do at all) into them as they update their vehicles to today’s standards.
TRENDING ON SOCIAL MEDIA
- Will Silicon Valley & the Bay area ever be the same post-COVID-19? I have a special place in my heart for the Bay area and had aspirations of returning there to work and introduce my boys to the amazing place, but after speaking with the people I trust the most out there I am not that keen anymore. Specifically, the city has become a very challenging place to live, outlined very accurately in this FT article that I’ve linked to. I’ve also heard more stories about how people are leaving in droves to get that balance back into their lives. Another quite illuminating point made in the article is how people don’t realize what and how much they’ve sacrificed by living & working there.
I’ll never say never, but I have moved the Bay area down my list of cities to move back to, that’s when we finally do decide its time.
- If you were wondering about how startups were raising money without IPO’ing, it’s a reverse merger called a SPAC (Special Purpose Acquisition vehicle). It’s what Velodyne, Nikola, used to fundraise and it’s what Canoo, Fisker, and Luminar plan to use to go public as well. I had to quickly get my head around what it is, why it’s different, better/worse, and why it’s now become so popular. For those trying to still get their heads around what it is, here’s a tutorial that should answer most of your questions.
- China’s first-ever supercar will also be China’s most expensive car ever built. Try $1.49M on for size - It’s called the Hongqi S9 PHEV and it’s a 1,400HP BEAST of a hypercar. I’d mentioned FAW & Hongqi earlier in this post, well this company’s parent FAW is the one rumored to be bailing Byton out. This is pretty ambitious. Chinese car companies are really starting to stretch their legs so is it just a matter of time before they can boast a global brand? They’re betting on it!
PRODUCT & SERVICE INTRODUCTIONS
- Would it be weird for me to have a delivery van as my daily driver? What if it’s totally SWEET?? Bollinger Motors jumps into the fray that’s currently being occupied in the US by Rivian (with Amazon’s order) and the EU by Daimler (with Amazon’s order).
- Another high-end carbon fiber e-bike, this time it’s from French bicycle company Look. It’s E-765 Gotham e-bike looks to go head-to-head with GGR’s Eeyo 1S & the Superstrata E as pricing seems to be in the $4-5K range with motor and battery varying a bit as well. The Eeyo & Superstrata are pushing the design envelope more than the Look, but what does that do for comfortability? I guess I’ll have to jump on them to let you know. Stay tuned for that!
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
OEMs Where Merc threw in the towel, Porsche pushes further into a new business. You’ve probably heard me vent in previous newsletters about why Mercedes shouldn’t have shuttered its ‘Collection’ vehicle subscription service earlier this year since it can’t cost them that much to run (in the grand scheme of things) and the data and insights derived could be worth more than the depreciation of those cars. So, for scorekeeping, it looks like the only two subscription services available are Porsche’s Drive & Cadillac’s Book service. READERS: Please correct me if I am wrong. Not only is Porsche refining it’s offering but it’s also expanding it to include LA. There are three subscription types: single vehicle, multiple vehicle, and rental. Since Porsche is the most profitable automaker in the world, this service could be an easier sell for their customers who normally don’t mind paying a premium to drive Porsches. With that said, I believe Mercedes subscription service was attracting ~82% new customers to the brand, which is pure gold although it still wasn’t a convincing enough rate for them to keep at it though. Also, just ask Porsche and Cadillac, the data that can be gleaned from these pilot businesses could lead to future business models and improve customer engagement. Further, it can create insights into more inclusive pricing models that could expand the service to more customers and ultimately gain useful insights into the more digitally savvy, commitment-phobic consumers that don’t want to be tied to their vehicles for 3, 4 & 5 years. Mercedes is likely going to roll another similar program out in the near future, and if they do it just points to the fact that they never should’ve shuttered it in the first place. #Porsche #PorscheDrive #subscriptionservice #varietyisthespiceoflife CITY SOLUTIONS For adults thinking about alternate ways to get to work – It’s just like riding a bike. This may sound silly but there’s probably a good portion of adults in the US that haven’t been on a bicycle in any meaningful way in years, maybe since childhood. That’s why for those looking to stay away from public transit (for now) and are ‘close’ enough to commute, they sign up for a primer on how to ride a bike like the one that’s highlighted in the article. I have parentheses on ‘close’ because depending on whether you have a normal pedal bicycle or an electric bicycle, acceptable distances could vary significantly. These classes are important since most people that do use bicycles regularly do it recreationally not as their primary method of commuting to work. Further, most people don’t know their own city’s biking rules, optimal routes, or have any idea how much time & energy it would actually take commuting by bicycle it wouldn’t hurt to formalize some training to build the knowledge and confidence to know that someone who knew what they were doing walked you biked you through your first time. If this service was offered in a city I lived in, I’d definitely take advantage of it. #morningcommute #bikingtowork #learningtobike #alternatecommute #nopublictransit EVs Xpeng’s worth ~$15B and had a great IPO, but what does mean? I had an opportunity to visit Xpeng’s headquarters back in January and in the limited time I was there and able to explore, I came away pretty impressed with their operations. I definitely saw some early signs of a serious player in the automotive market in the making. I also got a feel for their ambition, which you need a lot of in order to take on the OEMs and be successful in this business. That’s why it was prudent that He Xiaopeng brought on Brian Gu, a former banker with deep connections in both China and the US. I don’t think their IPO last week would’ve been as successful without him along with one or two people Brian brought along with him to oversee it. This is a great time to be an EV Startup. It doesn’t matter if you’re from the US or China. There’s a lot of money going into the sector which has pumped up valuations and market caps so these liquidity events have made early investors and believers a pretty good return on their investments. It’ll be some time before we know whether or not their market caps are justified since there’s no doubt that there are still major challenges ahead for these companies, not the least of which is being able to improve their sales quite significantly. One thing’s that’s a pleasant surprise for the sector is the EU’s growth in EV sales over the last quarter. This bodes well for a sector that’s looking for another region to jump on board along with China to be EV early adopters, and consequently, the growth engines for the sector and for these companies. Many analysts initially thought that would’ve been the US, but with their still quite significant COVID-19 challenges, it may take them some time to dig out of the hole they’re currently in. If we assume the markets are fairly ‘efficient,’ a big leap for many, then it’s telling us that Tesla is way out in front of traditional OEMs and the OEMs aren’t likely to catch up, not anytime soon at least. The market is further telling us via their current market caps, that these much smaller EVStartups have as much potential as the traditional OEMs. What remains to be seen is whether or not these startups on both sides of the pond will be able to separate themselves from the pack ala Tesla. As I’d mentioned before, that’s going to depend first on increasing their sales, and they’ll do that via great product, savvy marketing, and optimal pricing which will get even more challenging as the OEMs launch products into the market. These market caps, I believe, have substantial international sales priced to their current share prices so that’s another HUGE challenge that the EVStartups will have to successfully take on if they earn those valuations. One thing that seems very peculiar, where the silence is pretty deafening – Where are the EU EVStartups? #EVStartups #Xpeng #IPO #US #China #EU #marketgrowth #thetimeisnow AVs An interesting take on who’s the most appropriate party to determine AV readiness. The insurance industry is being completely upended by the promise of the autonomous vehicle. But aside from AV companies telling us, what’s the signal to us that AVs are ready for primetime and daily use? What about the insurance industry? They’d likely be more trustworthy since the AV companies would likely be rushing to get services launched that could help them generate revenues quickly. I’d never looked at this challenge this way but it does seem to make sense. But if carmakers like Tesla are able to provide insurance to their customers, where would these 3rd party insurance agencies fit in? The data is all there in each of the vehicles, and it stands that car companies wouldn’t allow them access to it since they’d just as soon provide their own insurance for their own cars. This isn’t one of our primary focus areas so I am not as versed about this particular disruption as with the others I regularly comment on but would love to get more ‘educated’ on it any of you readers want to take the time to walk me through it. This is one of the cases where I see the current set of companies just blowing up since there’s no logical pivot for them, IMHO, that would drive the revenue they currently generate. #whenAVswilbesafe #insurancedisruption #Wecandoitourselves #dataplay #disuption
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.