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Stellantis & Foxconn Mashup, Germany Wants to Test L4, Uber's Lost & Found - SAI Newsletter 20



Two steps forward one step back, at least in Asia. Japan, Singapore and Taiwan, countries that seemed to manage COVID-19 quite well have recently had outbreaks and are now back to vigilance and partial shutdowns in order to get the outbreaks controlled. Friends sending pics from Taipei show pretty deserted city streets and with Japan preparing to host the Olympics, the outbreak complicates things even more for the Japanese govt. These continued struggles to contain the virus would suggest that although the US seems to be getting on the right side of the curve, the rest of the world still wrestles with securing vaccines for its citizens and then convincing them to actually get vaccinated once the vaccine has been received.


As long as much of the world continues to struggle with the pandemic, India being the current global hotzone, it’ll be about impossible to settle on a universal standard of ‘safety’ when traveling internationally. I know a decent number of people itching to travel abroad to visit relatives and take advantage of the summer but it looks as though international travel will be out of reach, I’d guess till at least the end of this year / beginning of next. Since the domestic option is still pretty wide open, I plan to take the family on a tour of Yunnan province to check out Dali & Shangri-La. We may also take a few short trips around BJ, either by car or via the high speed train.


My Didi presentation for the US-China Series has posted so for those who were interested in participating but weren’t able to join the Zoom call, a link to the recording is here. For those interested in more than just the mobility sector in China, I would suggest you take a closer look at the US-China Series, Co-founder Paul Krake has been able to get some terrific guests to share their expertise across a wide range of sectors including fintech, bitcoin, space exploration, e-commerce, data security, chips, you name it they’ve probably covered it.


I also want to highlight a ‘The Atlantic’ article I was interviewed for that I think does a terrific job of setting the stage for what ‘could happen’ with the EV competition between the US & China. Right now, it’s a pretty one-sided match with China Inc doing everything in its power to encourage the manufacture and sale of EVs here. The companies that are blossoming out of this renaissance ALL have global ambitions with companies like XPeng, NIO, BYD, and Aiways ALL making overtures to the EU in order to take the first step towards dominating (and flooding) those markets with products so that they can be called ‘global’ brands.


Can their products compete with the legacy automakers? Right now, they don’t have to because the EU, US, Japanese, and Korean OEMs have all been so focused on selling ICEs that they conceded the future to China. Now, they are all doing the best they can to jumpstart their pivot but it’s starting to look like it may be too late to catch up.


The US alone will take several years to build infrastructure, turn over manufacturing capacity, build battery & chip capacity, and launch products, all in ‘hopes’ that US consumers will even want EVs. Currently 1 out of every 5 customers in the US that have purchased an EV go back to ICEs (thanks for that stat, John). More and more, this looks like a daunting task for the US to take on.


Luckily, we are still in the very early innings. There can be no hesitation anymore and big mistakes MUST be avoided if the US is going to close the gap. Further, let me assure you that China Inc isn’t feeling very charitable and they’re NOT going to move slower either so as Michael Schuman mentions in the article it’s ABSOLUTELY a race, an extremely important one for both countries, and one that they each feel they ‘need to win.’ If the reception and attention that the F-150 Lightning received this week is any indication, great product is going to be the spark for the US.


Lei and I are at it again this week with our Clubhouse room. This one will be Thursday, 10pm EST for those interested in dropping in. We always receive quite a few requests from our friends around the world to schedule them at more ‘friendly’ times, an impossible task when your audience is in Asia, the EU, and the US so we’ve done the next best thing and launched a podcast!


The podcast episodes are essentially recordings of our weekly Clubhouse room. I am confident it’s the best source for getting updates on the latest news in the China EV & mobility sectors so I invite those that aren’t able to join the Clubhouse rooms to check out our new podcast series, you can download them here on Spotify, or Google & Apple Podcasts. We invite you all to provide any and all constructive criticism in order to improve the content.


On to this week’s news.


TESLA IN THE NEWS

- Norway decides to give Tesla a potentially expensive slap on the wrist Looks like the team in Fremont needs a hug. It seems like the world is just piling on. First China, now Norway. In this case, a Norwegian court has found that Tesla reduced battery capacity AND battery charging time during a software update, unbeknownst to the Tesla owners.


This is similar to what Apple did with an iPhone software update so it’s no surprise that both had the same excuse for this inexcusable act – To preserve battery life. This stuff makes me wonder what other companies get away with on their software updates that aren’t disclosed to customers. If Tesla doesn’t appeal or appeals and loses, this could end up costing them $160M according to the article.


Does it seem like Tesla is starting to go off the rails?


IN THE NEWS

- Rivian recycling Tesla employees? That seems to be the case but this isn’t unusual in the automotive sector, nor other major sectors. Case in point, I have several family members that have worked at both Ford & GM, even one that has worked at Ford, GM, and who is now currently at Stellantis. I worked at both gm & Ford (and if you’re wondering – Yes, I have a BIG family).


The one notable exception here is that Tesla isn’t known particularly for its manufacturing prowess so poaching Tesla manufacturing folks could actually cause some challenges in the future. This is where it may be better to hire direct from the legacy automakers since there’s more experience with mass production than anywhere in Tesla’s team.


The other notable and distinct difference is that Normal, Illinois is NOT Fremont, California. Things that Tesla are able to get away with in Fremont likely won’t go over well in Normal (UAW country) for Rivian. Here’s to hoping Rivian treads lightly and aren’t relying TOO heavily on ex-Tesla employees to push them to a successful, reliable, high quality Job #1 and beyond. The assumption is that they’d bring their experience but that could be good AND bad. Finally, Elon ≠ RJ.


- Stellantis trying to make up ground with their competitors by creating a joint venture with the mobility ‘flavor of the month,’ Foxconn. I believe Foxconn has capabilities that their direct competitors (few and far between right now) have, including their expertise in hardware & software integration but they don’t actually develop software or design the UX on anything significant (that I know of currently) so the belief that Foxconn has the secret formula to instantly boost its partners is a bit misguided.


In the case of Stellantis, still without a clear strategy for China, they need to just commit the resources necessary, financial and otherwise, to make China their #1 priority over the next several years even as they simultaneously deal with their current post-merger integration challenges. I’ve been told that GAC, Jeep’s JV partner, still doesn’t trust Tavares, especially since he’s still not indicated when a China plan would be intro’d. The JV board needs to approve the name change from FCA GAC to Stellantis GAC and that still hasn’t happened, you can guess why.


- Germany partially approves ‘no safety driver’ AV pilots on its roads. The law specifically calls for approval of L4 testing in limited areas in Germany which effectively means that the testing areas will be geofenced and pilot will be approved on a use-case basis. They should include low-speed delivery, commercial trucking and even some robotaxi services. The bill has passed the upper house of parliament and now needs approval in the Bundestag, or lower house.


For my EU readers, please enlighten me as to which EU AV startups will be launching or have already launched pilots to test their vehicles in Germany or anywhere else in the EU? Will it just be a US / China party for the right to drive Europeans autonomously around?


- Car free streets potentially better for business. This seems counterintuitive to me but if a city street has vehicle traffic I would think that there would be less business since there are people passing by and parking could potentially be a challenge. Business owners look at it differently, believing that vehicle restricted city streets would limit the interest and hence reduce their business.


According to Yelp, the US version of Meituan, restaurants that were on restricted streets had increased interest on their site and led to more business. This is a preliminary study ONLY and there are other factors that likely attracted the customers but if in digging deeper they deem that restricting vehicles on the street is indeed good for business, look for more cities who originally restricted the vehicles due to COVID decide to make some of those restrictions permanent.


Pulling more cars off of crowded city streets, IMHO is an overall (+).


GET SMARTER

- Alphabet, via Waymo, plans to be a player in the mobility space in the near future and if that is so, it’s time for you auto guys to get a closer look at who wants to come eat your lunch. Alphabet is the holding company that houses Google (which generates >80% of Alphabet’s total 2020 revenues) and other businesses including Waymo, YouTube, DeepMind, and Fitbit to name a few.


Google, the current shining star of the bunch, generates revenue by helping companies advertise to businesses and consumers online. They are the best at it and dominate the sector along with Facebook, with both collectively controlling >50% of the market. Alibaba is a distant 3rd in global online advertising.


Alphabet was established in 2015 in an effort to better manage its other businesses that were either incubated inside of Google or acquired and grew with Google’s nurturing, like Waymo. I won’t bog you down with too many details as this article does a decent job of summarizing where Alphabet is now but the important thing is that Google got really big in a short period of time (22 years old) and is now the 4th most valuable company in the world with >$184B in annual revenues.


Blow them off at your own peril. They think they know how to win, they’re just waiting for the right moment to strike…


TRENDING ON SOCIAL MEDIA

- Checking Uber’s Lost & Found. This is always an interesting list to browse. For the most part, there are things that wouldn’t surprise anyone but entertaining nonetheless and a bit of a relief for me to know that there are other people in this world can be forgetful at times. The amount of cash that’s been left behind stands out. A few notable, forgotten items:


o FBI bulletproof vest

o Part of an ankle monitor

o A prosthetic leg

o A catheter


I am betting that Didi’s list would be even more unusual but would definitely shine a bright light on the cultural differences between where the two companies do most of their business. To my Didi readers, please convince the higher ups to publish YOUR list!


- Amazing watering holes this summer to visit for US domestic travelers. A few of these swimming holes look absolutely stunning so you better believe that if the Le family were going to spend the summer in the US, we’d throw on our swim trunks and head to one or more of them to spend some R&R!


As mentioned in the intro, international travel will be pretty challenging for the foreseeable future so it’s a perfect time to explore more local surroundings. What are you waiting for? Pop open Google Maps to see how far these places are!


- The Joe Louis Greenway in Detroit. This sounds amazing, a Detroit version of the High Line in NYC! I believe that Detroit is one of America’s most iconic cities and treasures so any public works that make it more pedestrian friendly, I applaud.


But having grown up in Metro Detroit, I can sometimes also be a bit jaded about what is actually possible. Here’s to hoping that by the time my kids graduate from college, about 10-12 years from now & coincidentally when the Greenway is scheduled to be completed, they can visit their dad’s hometown and see what I see in the city.


JUST THE NUMBERS

- $3.3B valuation for Plus (formerly known as Plus.ai). An autonomous commercial trucking startup that plans to go public via a SPAC that should help it raise close to $500M in capital. Plus is similar to TuSimple, Pony.ai, AutoX, WeRide and a few other AV startups that has one foot firmly planted in the US and the other in China.


I don’t know much about them but will by the next time they’re in the news. My guess is that they’ll commercialize first in the country that launches ‘AV’ friendly policies and traffic laws faster. My guess is China.


- 240K units. That’s what JAC, NIO’s contract manufacturer, will increase annual capacity to for NIO’s plant. With regard to World domination, that number seems a bit light.


- 1.6M in vehicle sales by 2025. That’s what Li Auto is forecasting will be their sales will be. THIS is what I’M talking about! GO BIG or GO HOME!


These ambitions were actually communicated back in Feb 2021 but seeing as Li Auto will be unveiling their new Li One on May 25th China time, it’s worth recycling. If I were a Li Auto investor though, I’d probably be happy just beating NIO in sales in 2021.


PRODUCT & SERVICE INTRODUCTIONS

- How about a folding, electric bike? For those that said ‘Yes, please,’ meet the Montague M-E1. This isn’t some Brompton with a motor and battery bolted onto it, it’s a proper full-sized bike that gets up to 20MPH. From the looks of it, it folds quite neatly and compact although at 54lbs, it’s still not going to be very easy to lug up to your third floor walkup.


- This retro Opel Manta received a heart transplant and now has a new lease on life. These restomod’d cars are generally pretty sweet looking and the Manta is no exception as Opel does a fantastic job of bringing the exterior design to the 21st century. As an American, I’ve never seen an Opel Manta in real life so I hope that Opel brings this to market because I’d love to give it a spin, even if it only gives me 120 miles of range.


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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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