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The Model S Plaid Debuts, HarmonyOS Dominates China ONLY, Pony.ai Making Cars - SAI Newsletter 23



This past weekend was our Dragonboat holiday so a bit of a slower news cycle here in China, although not by much. There was however a pretty big pow wow in Chongqing, the ‘China Auto Chongqing Summit 2021’ that brought all of the heavy hitters together to talk cars and the future of the industry. Lei and I will discuss some of the more notable comments and announcements in this week’s Clubhouse room should anyone be curious about any takeaways from the event.

I also spent 30 mins or so watching Tesla’s Model S Plaid launch. I detail my thoughts below but I did want to put something up top here as ‘food for thought’ regarding the interior design of the Model S Plaid vs. what we’re seeing from traditional automakers in the age of EV. One company in particular that I’ll pick on is Merc and their EQS, specifically comparing the front consoles of both.

If you watch the Model S Plaid video, Elon walks you through the redesigned interior and what you see is a simple, contemporary take to a vehicle interior combining traditional vehicle interior design (industrial design) with 21st century UX (user experience) design.

The Tesla leans toward Scandinavia with its ‘less is more’ approach to vehicle interior design but it's clean, things look like they belong or are supposed to be where they are and there aren’t too many gimmicky throwaway elements (with the exception of the steering wheel). Now, look at the EQS front console, does the entire thing really need to be an LCD? I haven’t tested the actual UX on either so will have to get back to that in later newsletters but my first impression is that Tesla follows through on the design ‘promise’ they make and Merc does as well, but all for the wrong reasons.

One interior definitely feels more ‘comfortable’ in its own skin while the other is trying to throw spaghetti on the wall to see what sticks. See for yourself below. UX design is something that the legacies will need to be more understanding of and attentive to.

If you look at Ford, on the other hand, they went VERY conservative with their Mach E and F-150 front consoles, likely because they know exactly who their target market is and felt that additional technology would actually be more annoying than impressive and /or helpful to their users. Two different approaches to interior design and it’s pretty obvious who I think has succeeded and who …not so much. It’s a 17-year head-start that Tesla has that the automakers need to make up in the next few.

Good design is really, really hard as Jony Ive famously said. But good design is also easy to spot, at least for most of us.

TESLA NEWS - For those that missed it, Tesla’s big announcement last week was the Model S Plaid launch. Think of Plaid as the equivalent of Bimmer’s M & Merc’s AMG tuner cars. All the controversies aside with Tesla, this machinery is impressive and should push the entire sector forward. Summary of specs:

  • Range: 390 miles

  • Horsepower: 1,020

  • RPMs: 20K

  • Drag Coefficient: .208 (best ever for a production car)

  • 0-60 mph: ~2 seconds

Further, it can officially be called the quickest production car in the world. You can see in this video with Jay Leno behind the wheel, the Model S Plaid, with the air conditioner ‘ON,’ screams through the quarter-mile in 9.24 seconds at a top speed of 152 MPH. As Jay mentions, $130K isn’t cheap, but that level of performance from ANYBODY else is going to cost you north of $500K easy. And you won’t be able to take the kids with you! BTW, this short video interview is worth the few minutes to watch since Leno talks generally about EVs and their difference with ICEs. The preso itself was a bit of a hot mess though but if you’d like to watch it, the link is here. Elon isn’t what I’d call a great public speaker and it looked like he’d seen his preso slides for the first time when he walked on-stage to present. That said, he’s quite the showman and what resonated with me was his statement at the beginning of the preso referring to Tesla’s mission – ‘We’ve gotta show that an electric car IS the best car. Hands Down!’ Well, Tesla is ABSOLUTELY doing that. IN THE NEWS - Huawei’s ambitions with HarmonyOS knows no bounds. Huawei’s ambitions for its OS isn’t anything completely revolutionary as the US tech giants have been angling for the same type of ubiquity & integration across commerce, social media, fintech, health, and more recently mobility with their systems for quite some time. The main difference here is that Huawei has effectively become a China ONLY brand. There are and will be other brands / countries that will utilize its hardware and software but in the mobility space, brands that partner with Huawei will risk being shut out of the largest and most lucrative auto markets in the world or have to create completely different HW / SW stacks for ‘China’ and ‘not China’ products. Finally, I don’t see the US changing its position on Huawei anytime soon (read: ever) and with China’s current, challenging diplomatic relations with many other countries in the region, the ones that will likely be the growth engine for the world (read: India & SEA), adopting Huawei HW / SW in those places isn’t that likely either. I can see dominance in China but that’s about it. - With Lordstown Motors, it’s survival of the fittest. Their SPAC created a frenzy for the shares and gasp (!) expectations from their shareholders. I’d tweeted about 6-7 weeks ago with commodity prices steadily rising and Lordstown’s money problems becoming more apparent that the September 2021 production start target wasn’t going to hit. It seems that they’re now trying to appease the SEC since their disclosures were not ‘accurate.’ Lots of blame to go around but the bottom line is that even if they got a cash infusion, which they likely will, their product IS NOT going to be competitive vs. a Rivian or a Ford F-150. This company likely sticks around for the foreseeable future and I am predicting it’ll have Faraday Future type zombie capabilities and remain ‘undead’. For those that want to know more about the prospects for some other US EV startups, John McElroy, who I have a ton of respect for and who happens to be a legend in the western automotive world, wrote a good piece evaluating the current likelihood of success for companies like Lordstown that you can read here. This actually needs to happen more in China since it’s healthy for the sector to have weaker players close their doors but alas, there are numerous ‘zombie’ companies that stick around because they need to keep employing thousands of people, whether the company is profitable or not. It’s a unique characteristic of the China market that’s going to make it challenging for many EV startups here, the ones that aren’t in the western headlines on a weekly basis but that have designed and are building credible, competitive products. But that discussion we’ll leave for another day. - Biden administration leans into Trump-era policies that ban investment in certain Chinese companies. It actually expands the list from 48 to 59. According to the administration, all of the listed companies are associated with the military and / or surveillance of certain peoples. - Meet Ample, the US’s version of battery swapping. A great video detailing Ample’s battery swapping service that’s been launched in SF (of course). Major differences between Ample and what’s going on in China is that they are OEM agnostic, they’ve also standardized and modulated battery sizes. There are a few moments with the commentators where I cringe since some of what they say reinforces VERY old ways of thinking about transportation and poorly reflects how the rest of the world works. Specifically, the comment about US car buyers wanting to ‘own’ their battery when they buy their EV. That struck me as a bit naïve and premature since there aren’t that many EVs on the road in the US yet, at least not near enough to provide statistically significant data to allow you to confidently make a blanket statement like that. Further, these are EVs people will buy so that fact alone says they’re willing to change and evolve, even if it takes a bit of prodding. The bottom line, you make it affordable, convenient, safe, and easy then there will be a market for it in the US. The challenge I see with Ample’s strategy is that standardizing batteries is still likely a few years out. Standardizing is almost akin to commoditizing which right now as the US pivots to EVs, is a non-starter for most automakers since range & BMS (battery management system) are key feature differentiators. A convenient, affordable battery swap makes range and a better BMS rendered moot. One of the key ways to look at the current landscape and possible solutions for EV growth in the US is to not look at charging & swapping as an either / or solution. In the future, charging and swapping will co-exist. There is likely a scenario where a carmaker provides both options as part of a ‘Re-Charge’ subscription service and wouldn’t it be pretty convenient if they did? It may even prompt people to pay a decent premium for it. If people aren’t gaming that scenario out, they’re not thinking imaginatively enough. There are also valid use cases for swapping as well. One that swapping lends well to is for commercial EV fleets as was mentioned in the piece. The Biden administration said they’d like to swap out their entire >270K govt fleet to EVs over the next few years so Ample should be first in-line to provide swapping services to those vehicles. The other use case that swapping could play a major role in is providing a solution at the affordable, mass-market vehicle segment. Removing the price from the battery ala NIO would ultimately lower the MSRP of EVs, making them more affordable to more people. This consumer segment is a lot less likely to own their own home making it difficult or expensive to charge their vehicle so swapping could be the most appropriate option for them. Not everyone can own a Tesla or Rivian. I also think that adoption is going to be faster than anyone in the video imagines. China and now the EU are both pushing the US to more aggressively produce & adopt EVs. The timelines for adoption quoted pre-Covid need to be thrown in the trash and reconciled with how much faster the world is adopting alternate technologies to make their lives safe, better, and more convenient. That includes automakers who’ve now made a full embrace towards clean energy vehicles. A simple for instance is that Li Bin over the weekend said that he sees a >90% take rate in China for EVs by 2030. If the take rate is anywhere close to that, the US better keep up or it’ll be left in the dust… - Mashup with Apollo diversifies Arcfox’s HW / SW stack and likely gives them more options if they decide to sell internationally. They’ll officially announce details of this partnership later this week but could we see more of these surprise announcements from other current Huawei partners, I bet we will. - Pony Motor Company? Believe it. It looks like Pony.ai is serious about building passenger vehicles, we’re just not sure yet for which specific use cases though. Perhaps the BYD D1 piqued their curiosity or do they see a path to profitability to compete directly with their current partners? TRENDING ON SOCIAL MEDIA - Jeremy Lin is returning to the Beijing Ducks next season! The guy is still a stud, not to mention an inspiration to all the little Asian boys and girls who see him and think that it’s possible to play whatever sport they want at the highest levels. I’ll certainly be taking my boys to a few games this season! - A mini electric Jeep purchased on Taobao for $1,700 USD, why ‘Yes, PLEASE!’ It looks like a cross between a Honda FourTrax, a riding lawnmower, and a golf cart. The buyer took it off-roading and it looks like it’s a ton of fun to ride around the yard. …if your backyard is a HUGE dirt pit! - SAIC gets a new brand identity. Five years ago, many managers at SAIC likely didn’t know what a brand ‘identity’ was. Now they see the value in becoming a trusted brand (for services), which was likely one of the triggers for this redux. GET SMARTER - People are concerned about data privacy, and they should be. As more and more companies & third parties collect user data, specifically location data it’s much easier now, when using multiple sources to triangulate the location of a specific person. But if this is alarming to you, it shouldn’t be because the maker of that mobile handset that you have in your hand right now has likely known your location and / or habits since you’ve been a mobile phone user. In fact, you gave them permission to track you. Now you may not read a lot of the fine print when it comes to the disclaimers when downloading new apps to your phone or updating its OS but by clicking ‘I Agree’ you are effectively giving them permission to collect that data, package it and sell it along with all the other data they collect from their customers. Whether you’re concerned or not about sharing all this personal information, that’s a choice that each of us has to make for ourselves. Not sharing it will make those apps and services we find pretty convenient not as effective, that’s for sure. The pendulum is beginning to swing back towards more privacy, especially now that Apple has positioned itself as the ‘privacy’ advocates for the technology space. See their latest video about it here. They even launched a commercial that makes it easy, and kinda funny, to understand. Their stance has been pretty controversial though, at least to one other tech giant – Facebook (FB) uses all that data to target ads or posts that think you may be attracted to. You click and buy, they get money. With Apple’s updated OS, you are prompted to either accept or opt out. Facebook knows that many people will likely opt out, which means less data and ultimately less revenues for them. Apple critics say that this is a power move by Apple that strengthens them and weakens others, and they’d be right. This isn’t as ‘black’ or ‘white’ as you may think though. There are compelling reasons on both sides to share and not to share, and I know this post likely oversimplifies things, but at least as an iPhone user myself, I get that choice now. BTW, this VICE article is def worth clicking on if you’re curious about the details of how your location data is gathered and shared. Fascinating stuff. And it’s only going to get more cutthroat as technology companies encroach on the mobility space in an attempt to push themselves to even higher valuations. JUST THE NUMBERS - 21.4 GWh. That’s how much battery power CATL sold from the Jan – April 2021 time period carving out a 32.5% global share. The usual suspects were right behind CATL, 2nd place LG Energy Solutions sold 14.2 GWh, or 10% less than CATL with Panasonic, then BYD ranking 3rd & 4th. CATL’s healthy lead will likely increase as sales increase in China but should level off and begin to shrink in a few years as the other players build capacity and it comes online in the EU & US. PRODUCT & SERVICE INTRODUCTIONS - Sony gets into drones and goes top end with their first product. The Airpeak S1 will be the fastest accelerating drone in the market when it launches later this year. It’ll be $9K when it hits and can fly around with one of Sony’s full-sized mirrorless Alpha cameras without breaking a sweat! I do NOT have a drone …yet. Living in BJ proper, I can’t use it since it’s geofenced. I do seem to be moving closer to finally completing the transaction though and will let you all know when and what I get. - The makers of Vespa launch a new electric moped aimed at younger buyers. The line is called the Piaggio One and starts out with three different models with varying of speed, range, and price. The One line will launch initially in China and start out around the 17K RMB mark or ~$2,800 USD. That seems steep when you consider the specs and that their competition is Niu, Nine-bot, and soon-to-be Gogoro clones. If I see one in the wild, I’ll snap a pic and post it, so stay tuned! —— 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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