Riding robotaxis in PHX/CAN, My Note to the D, Grand Challenge revisited - SAI Newsletter #47
Received some good feedback on the new format since there’s more meat in short form on top for readers to browse. Still trying to keep it interesting and reserve the right to massage some of the in general ‘What’s happening’ stuff. Since we’re closing out the year and the decade, I thought I’d also include in the last few newsletters some year-end pop culture lists up top as well, I hope you don’t mind.
I’ve also just booked my tickets for Chinese New Year and will be spending a decent amount of time in both California, Michigan and plan to make a trip out to Pittsburgh as well for some site visits, meetings and catchups. If you’re in either location and would like to get together, please reach out.
Again, thinking there will be at least a one/two week breather on the newsletter starting next week or the following due to the holidays but it’ll also depend on my productivity levels the next couple of weeks.
IN THE NEWS THIS WEEK:
- First EVER known (US) cross-country long haul, over the road (OTR) goods delivery (in this case butter) by a Plus.ai autonomous truck – even more impressive is that it was completed with ZERO disengagements.
- NIO lays off 141 from its San Jose office.
- Chinese govt. has ordered all govt. offices to remove ALL foreign hardware and software and replace with domestic within 3 years (more down below on this one).
- Porsche SE invests minority stake in Silicon Valley self-driving startup Aeva.
TRENDING ON SOCIAL MEDIA THIS WEEK:
- With Elon driving a proto Cybertruck in Malibu – M plate and all, people still talking about #Cybertruck
- Best tech from the decade.
- The irony is NOT lost on me that it’s blocked where I live but here are the most googled subjects of the year.
- Business trend of the year: Livestream e-commerce
- Will pull out a few predictions either in next week’s newsletter or the first one of 2020
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 US, 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/Ride-sharing/Ride-hailing/Bike-sharing, 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
This shouldn’t be much of a surprise for those who’ve closely followed the China / US relationship. Neither country wants to be beholden to the other with ANYTHING and consider it a matter of national security to not be. Both parties are still playing nice for the most part but recently, due to tensions from the trade war among other things, that relationship has gotten much more challenging.
If we think of the Huawei and ZTE situations, US technology, both HW & SW, are extremely important to Chinese designed and made products currently. Chips, firmware you name it, much of it likely has roots in the US.
It we game this out to the AV sector, this means the heart and brains of current AVs use a TON of American tech including the best processors, software, and sensors from Nvidia or other cutting edge, American chip designers & developers that are needed to run the onboard machine learning systems and/or cloud servers. Most companies have likely already analyzed the impact of getting cut out of the China market and for most companies, I am certain it’s quite ugly. In Nvidia’s case, they had to hire basically an entire department of Washington lobbyists so they didn’t become collateral damage from the trade war.
There is a lot of pressure on the domestic players to come up with viable HW/SW replacements so that the American tech can be swapped out so these Chinese companies have been and are likely to continue to be supported by the Chinese govt. which in turn could lead to further tension.
No predictions about this yet, but let’s just say if you haven’t forecasted what a much smaller China market will look like for your income statement and how or where you may make some of that revenue up, you’re just burying your head in the sand.
GETTING ON MY SOAPBOX
Yes, Detroit you DO know how to design, engineer and build cars BUT in order to be competitive in the future YOU will need to have the skills and expertise necessary to design, build, and sell the products and services that will be in demand over the NEXT 100 years that still likely hasn’t been developed yet. We’ve all been warned that car ownership will become a thing of the past and that ride-hailing, robotaxis and other forms of ‘last mile’ mobility will become the norm.
I recognize that it’s still another 15 years out at least for China, and much longer potentially for other countries so this is the time for YOU to make that pivot since you’re not CLOSE to being ready to compete yet. Let’s also recognize that your toughest competition isn’t just coming from Silicon Valley but ALSO China.
Clearly, you’re having challenges attracting the talents that will help you transform your teams in order to design and build these future products. Folks with e-commerce, product management, UI/UX design, data analysis app/OS development, machine learning experience, just to name a few – this is where the market is moving and that’s why each and every major OEM, Tier 1 or 2 has an office in or around Silicon Valley – because they currently don’t have those skillsets in-house, and most of the people with those skills don’t live in the Midwest.
On top of that, if you are a Detroit based mobility startup and you have a promising product, you’re still going to need to make that pilgrimage to Silicon Valley since that’s where the talent and the money will be in order for you to scale.
If you are NOT able to transform your companies by attracting those types of talents en masse so that you can compete directly with Silicon Valley & China in the future, history will look back at this period in time and clearly grant you the title of ‘Home of Car Manufacturing,’ but it will likely label another place the home of ‘Mobility.’
I love you Detroit, but now is NOT the time to get cocky and overconfident! My advice would be to keep your head down, stay humble and keep working your BUTT off. I’ve spent considerable time with you and your two competitors and their wills to win are unlike anything I’ve ever seen and this time really, it’s different.
OK, I am climbing off my soapbox now.
Seems eerily similar to riding in a Waymo robotaxi in Phoenix. Both systems are very conservative and had ‘safety drivers’ sitting in the driver’ seat just in case. The user interaction/experience also seems quite alike with a screen in the back so the rider can follow along with what the car sees and how it’s proceeding making the rider feel safer.
Both links have videos of the rides but neither are that exciting to watch. That’s a good thing btw. If I had one comment, I’d imagine driving in Guangzhou would add at least 2-3 levels of complexity more than what the Waymo vehicle has to deal with on a daily basis in Phoenix. Those that don’t know why have probably never driven or ridden in a car in ANY Chinese city.
So there IS progress on the robotaxi front, just another few million miles of real world testing to go before all the bugs are worked OUT of the system …and that’s just for sunny weather!
Need to give Argo some airtime here since they’re one of the leaders in the AV race AND they happen to have close ties to Carnegie Mellon (CMU) AND are based in Pittsburgh, where I spent two years studying. Great town with a TON of smart, friendly people btw. Worth visiting, especially if you like beer. Gotta try Primanti Brothers while you’re there too.
Their ‘proposed’ revenue model is different as well (mile based w/o hardware ownership) when compared to the competition since they’re not trying to build the hardware themselves. That makes them platform AND vehicle type agnostic, although Ford and VW have a combined just under ~40% ownership of them, so the bulk of Argo’s system initially at least would be used for ride-hailing/sharing services deployed by both in the US & EU. I am certain there’s a clause in that investment contract that allows Argo to buy out those positions if their relationship with either or both OEMs sour.
It’s, and I really don’t like to use the term, a ‘Win-Win’ for all those involved since it pumps capital into the Argo, significantly reduces the capital necessary compared to Ford and VW developing the machine learning system in-house BUT still gives Argo the flexibility to develop their own business model and select their own partners.
I am scheduled to be in the US (Midwest and Left Coast) for a lot of Chinese New Year so will see if I can’t make a visit to Argo – stay tuned for an update if I do.
I think I’ve linked to this article in a past newsletter but it’s worth posting again.
A small, govt. sponsored competition called the Defense Advanced Research Projects Agency (DARPA) Grand Challenge (self-driving competition) way back in 2004 was the competition that got MANY of the current leaders, most of them just grad students at the time, from companies like Aurora, Waymo, Argo, Uber to name just a few, their start in the autonomous vehicle space. It was a multi-year challenge that got progressively tougher each time with CMU (technically) winning in 2004, Stanford in 2005, and CMU again in 2007 (Wiki-page of the challenge).
Definitely a bit wonky but if you want to know about the how’s, who’s and why’s, it’s one of the best articles to read and will help you connect a lot of dots.
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.