Uber Making Moves, Sidewalk Labs FAIL, Audi & Augmented Reality - SAI Newsletter 18
I’ve been asked my opinion about the economic recovery in China so let me explain my thoughts in a bit more detail here. Having recently returned from the US, I’ve been able to see first-hand how Covid-19 is affecting both countries and I believe that China’s economic challenges are NOT as serious as the US’ and with a bit of help from the Chinese govt., the economy could get back on track before the end of this year.
Having said that, if the US and to a lesser extent the EU, cannot straighten out their coronavirus issues and get their economies moving in the right direction quickly, the Chinese economic recovery will be capped. China still relies heavily on exports fueling their economy and if the US isn’t buying then that becomes a real issue for China.
On to the next topic - Is Elon upset about not being able to build cars in Fremont OR is he fired up because his inability to build cars in Fremont creating the bottleneck to making Model 3’s at his Shanghai Gigafactory? Specifically, and this is pure speculation, but my thought is that he’s desperate to get the Fremont facility back up and running because he may need it to build modules that get shipped to China to build the Model 3s here.
The other hypothesis is that without Fremont up and running he can’t bully the suppliers into building parts for his cars. Either way, the sourcing, ops and materials teams at Tesla are likely chasing and shipping all kinds of parts so when both plants do open back up they can get those jobs coming off the line with a quickness.
IN THE NEWS:
- Uber and Grubhub in discussions to join forces and become the largest player in the food delivery business in the US. This news should get Doordash and Postmates working a bit harder to find suitors for themselves since a mashup between Uber and Grubhub would likely allow the combined entity to dictate pricing, service levels and create the economies of scale necessary to eek out that profit, at least on paper. Now it’s been documented that DoorDash and Postmates are both eyeing IPOs later this year so not sure how this will influence their decisions on going public.
- Wireless charging coming to China courtesy of a company called WiTriCity. This could be a real gamechanger if the charging speed and efficiency can match or surpass that of the current, wired charging systems. It would help avoid some of the vandalism that occurs to some charging systems as well.
- Digital contact tracing at the workplace – could be coming to the US whether we like it or not. I am not sure how I feel about it yet, since there are so many questions regarding data privacy and an individual’s civil liberties. What I do know is that the data is already there – on your mobile phone AND most tech companies are already collecting a lot of data about you. Anonymously they claim of course.
If there is a way to track personal data without there ALWAYS being a profit motive then maybe it could work? Speaking of which, if PwC commercializes this software, what will they do with their client’s data? Sell it back to them? From what I’ve researched AND experienced, contact tracing is a KEY enabler to getting countries back to normal so there’s going to have be give on both sides of this debate to make it work.
- RUF – The German tuner synonymous with Porsche is celebrating its 80th birthday and they’ve launched a 30 min YouTube documentary about their history with plenty of money shots of the true stars – the modified Porsches.
I used to valet at a bar / restaurant in the summers during my uni days at a place in MI called Duggans. Duggans in the summer was always packed and had a deck upstairs with outdoor seating overlooking the entrance and valet stand.
One random day, a yellow Ruf conversion Porsche 911 rolled up to the parking lot needing to be parked. As the owner hands me the keys he says ‘Watch it, she’s a bit wild.’ Of course as a 19 year old kid who loved fast, sweet cars, I took that exactly as I should - a challenge.
As I stepped in I looked around and saw that the interior of the car was stripped out – no rear seats, no sound deadening, a roll bar for stiffness – I thought to myself, GAME ON.
Of course I floored it, then lifted my left foot off the clutch, there was a long chirp of the tires as I rocketed uncontrollably onto Woodward Ave., almost t-boning two cars as I simultaneously freaked out while trying to regain control of the Porsche.
Suffice it to say, when I got back to the valet stand, I got a standing ovation from everyone on the deck watching - including the owner, the folks waiting for their own cars, along with the other valets! Best thing about that story though is that when I pulled the car up for the owner so he could leave, he slipped me a $50 tip!
- VanMoof, a Dutch e-bike manufacturer has raised $13.5M to grow their business and get more e-bikes on the road. A global brand with stores all over the world, the funding should help them get more of their e-bikes manufactured and shipped to their various locations.
TRENDING ON SOCIAL MEDIA:
- GM sends their electric bicycle the ARĪV to the same place it sent their EV-1 – out to pasture. When sales are growing for e-bikes in Europe and the US, GM decides the investment is not worth it. Guys, this is the FUTURE. Just like Maven was. Two promising, but not yet profitable endeavors, met their demise waaaaay too early IMHO. Will they come back, perhaps packaged differently, in future service offerings from GM, we will have to just wait and see.
- Hyundai picks up where GM’s Maven left off. They launch short term rentals out of dealerships in order to allow for ‘extended’ test drives. Can they get the numbers to work when GM couldn’t, and does it even matter to them?
- This is AWESOME. I have no idea how it works yet, but will try to test it (if I can port into India somehow) and report back. Augmented reality is going to be a BIG part of the customer journey for car sales in the future I predict. So this is a BIG first step from one of the majors. Golf clap to the Audi folks. Oh and you really need to package those instructions so that their aren’t 10 steps.
PRODUCT / SERVICE INTRODUCTIONS:
- Since we’re all head down working to get past Covid-19, I thought I’d give everyone a little reminder of some of the really cool EVs that’ll be launching in the next 18-24 months. Covid-19 likely pushed out some of these dates and some of these vehicles will likely be US only but bet that there will likely be versions for many of them in China in order for the OEMs to spread those R&D costs over a larger volume. Once the majority of these vehicles and their derivatives are ready for delivery, we should see interest levels for EVs really spike – more choice, means more competition and more competition is often MUCH better for the consumer.
- Specialized is upping their electric bicycle game with their latest introduction the Turbo Vado SL. Weighing in at a svelte 33lbs., it should be one of the lighter e-bikes out there but seems the price is what makes it pretty heavy for potential customers. I would love to see the research these high-end bike companies are basing the pricing of their bikes on since I can’t imagine this bike cost Specialized anywhere close to the $3,350 MSRP to make.
- I am specifically highlighting this 2nd gen Riide e-bike because of two unique items that I haven’t seen as part of most other e-bikes. First is the ability to finance the bike over 2.5 years and with a price tag of $2,799 I’d think a few people may take that option. Second, this bike uses a belt drive rather than the traditional chain drive. This is supposed to be result in easier and cleaner maintenance but I am not sure about performance and durability. Will try to find out more about the advantages of the belt drive though.
Looks like a solid mid / high price range bicycle with the easy step through design. One of these days, I am going to take the plunge and grab one of these e-bikes I’ve covered in the newsletter and make it my daily driver – so many choices though!
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.
The Sino Auto Insights team
I don’t want to beat on this too much more since readers in the West are living it – but it’s a pretty difficult time for the companies that normally rely on brick and mortar stores and / or F2F interaction due to Covid-19, specifically in the US. Many stores, malls, dealerships and restaurants are still closed due to ‘shelter in place’ policies and for the establishments that are open, people are still apprehensive about their safety and hence staying away nonetheless. With these traditional sales channels effectively closed, these companies are being forced to explore and implement new ways to engage the customer.
Brands that have a presence in the China market have discovered the use of livestreaming apps like Douyin & Kuaishou combining that with key opinion leaders (KOLs) / celebrities to help sell their products & services, think of it as Home Shopping Network Version 2.0, and are finding sales success and as a bonus, customer loyalty in some cases.
TikTok, the most popular livestreaming app in the US, and owned by Douyin, has been downloaded 165M times. This is where brands are going to likely find their next customers. Just because it works in Asia though doesn’t mean that it can be a ‘one size fits all’ strategy for the US, Canadian, Mexican or EU markets.
People’s habits, tastes, technology familiarity, comfortability with buying online, as well as other aspects depending on the product, all need to be considered when engaging the customer in a particular market.
For the US market specifically, there still needs to be a level of education that comes along with digital marketing. Also, even if the customer engagement is designed properly, the entire business needs to be realigned to support the new ways transactions are handled. Thoughtful, end to end consideration of the customer journey can create an amazing user experience. A great user experience can lead to stickiness and the creation of Net Promoters. That’s an important point that needs to be remembered.
I am in discussions right now with some companies looking at AR / VR and social media as some key tools for their pivot to digital but I also see the challenges in learning this ‘new’ language. Before Covid-19, most companies all planned to engage consumers digitally, but decided that the road well-travelled suited them fine.
My blunt response to them – Get over it. Their customers were already headed online and Covid-19 just pulled their timing in. For those slow to embrace digital - Right now is NOT the time to be indecisive – As the wise Yoda once said ‘do or do not, there is no try.’ Your company’s future depends on it.
I carry no money in China. I just pull out my mobile and pay with everything through WeChat. I’ve been doing this for the better part of 3-4 years. When I go ANYWHERE else in the world, it’s NEVER this easy or convenient. As a matter of fact, I have a US credit card that claims to be specifically made for travelers but whenever I use it in a country not named the US, it blocks my transactions.
I literally average about 2hrs on the phone with their customer service teams to correct this error, an error that’s happened multiple times. I’ve had to be on the phone with them while at the airport, while I am at a store trying to use it, you name it basically all the MOST inconvenient times.
I will concede that WeChat Pay and by extension Tencent knows probably too much about me (since WeChat is the dominant chat app in China as well), but I’ve been over it for quite some time. I have to be if I want to live a productive life in China.
That could be naïve thinking but to me it just IS. We will definitely get to this point in the US, where carrying cash and change is something only luddites will do but man, here’s to hoping that the US can figure out a secure way to do it sooner rather than later.
Since a project this ambitious was literally one of the first of its kind in the Western world there was a ton of uncertainty coming into it from both sides. Sidewalk labs decided to GO BIG and with a city like Toronto, that was ultimately the showstopper. This type of public / private partnership WILL happen. No predictions yet from me on city or even country yet though - outside of China. That’s because China is already experimenting with these pilot programs and have ambitions of not just transforming a major city but creating new MEGA cities. Ones with 100M people inhabiting them.
China is not the rest of the world (ROW) and ROW is not China – I get that, but these failures, for both sides, are an opportunity to gather data points. For the tech companies - It’s a chance to roll out bold ideas and idealistic setups and for the cities - It’s a chance to gauge how much and how fast the public will accept embracing technology that in theory ‘should’ makes their lives easier, safer, more affordable and ultimately more fulfilling.
In this instance the differences between both sides were a bridge too far. But that gives another city a chance to step up. If I were Mayor Duggan, maybe I ring Sidewalk Labs and see what Version 2.0 of their solution has to offer to the city of Detroit.
As part of last week’s deal where Uber led a $170M investment in Lime, a company they’d invested in in a previous round and a competitor of Uber’s own Jump micro-mobility solution, Uber gives Lime control of all the Jump assets. Clear?
What is clear is that Lime is now the largest micro-mobility company in the world and will likely redeploy the Jump e-bikes at some point in time in the near future after it’s been able to incorporate the Jump ecosystem into its own.
Apparently, Lime was close to profitability prior to the Covid-19 pandemic so Uber’s hope is that the additional investment in and the transfer of assets to Lime will help with scale AND profitability, at least I hope so.
What’s still not clear is how Lime will use this new ‘heavyweight’ status against their competitors. They will likely ‘lean’ on them by experimenting with different pricing models, perhaps test a subscription service that includes the Jump e-bikes? They’ll also likely redeploy their e-scooters and eventually the e-bikes with renewed vigor. Now that they have a more complete solution than many of their competitors, they could also approach these cities and cooperate WITH them as opposed to fighting AGAINST them to roll out a custom solution? A public / private co-op is really the only way I see these micro-mobility businesses surviving.
On the other hand, we can really begin to see how Uber is trying to pivot to this multi-modal, all-in-one platform / app in order to push THEMSELVES to profitability. even if it’s able to integrate all these different services (food delivery + micro-mobility + ride-hailing), it’s crazy to think the original ride-hailing business that got them so much investment and notoriety could possibly be the one business that pulls the entire company down.
Had a good discussion with Soon Chen Kang regarding the China’s extension of subsidies and the 10% tax exemption on NEV purchases. She captured much of my thoughts in the linked article but to summarize, Covid-19 definitely threw a monkey wrench into China’s plans regarding the sector but with the damage to the domestic economy being done, the priority is to get the entire economy back on track with the sales of passenger vehicles, NEVs and ICEs together, being one of the more influential levers.
What should help with ICE passenger vehicle sales are low oil prices. It’s still not clear how serious the damage is to the economy since we just saw an uptick to auto sales in April but it’ll take more than a month of increasing sales to show that the Chinese consumer has regained its confidence in the economy so right now we wait to see what, if any, ‘next’ steps need to be made.
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.