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UK 2030 Ban of Petrol & Diesel, Farley Right Man for Ford, Hongguang's BIG 11/11 - SAI Newsletter 44



Photo by Josh Hammond on Unsplash Another cycle with plenty of juicy news. I realize that these newsletters border on being too long, but I think for many of you is OK. I will try to be more concise in future iterations. Unless there’s a lot to chew on that week – in that case, all bets are off! Will keep it light up here so you can focus on what’s down below. As always, thanks for reading and send me all your constructive feedback. TESLA IN THE NEWS - Tesla will be added to the S&P 500 on December 21st. This is going to help them in many ways, one important way is that it opens the stock up to more investors as some mutual funds and index-tracking investors will be required to purchase shares just because they’re a part of the S&P. This also validates Tesla as a significant player, if that wasn’t the case already, in shaping the future of the transportation sector whether the traditional OEMs like it or not. Right now, Elon and Tesla are calling the shots and most importantly, are the only EV company that is growing unit sales with any significance in an EV market that’s only going to grow faster due to laws and policies promoting EV adoption all over the world. - Tesla opens its largest Supercharger station in the world. It has a total of 56 stalls and is located in Firebaugh, CA - 150 miles south of SF and about 245 miles north of LA two of Tesla’s largest markets in the world. This new charging station takes over the top spot from a country that has multiple 50 stall Supercharging stations located in you guessed it, China. - Tesla putting a team of GSDs together, 25 to be exact, to solve Giga Berlin’s major challenges ahead of its official opening in July 2021. All this really tells me is that Elon actually wants to pull that July date in and since it’s not likely going to be very similar to Giga Fremont and Giga Shanghai, he needs folks that can get the solve a broad set of challenges with an urgency. Oh, and if you were wondering, GSD stands for ‘Get Shit Done’ a term that’s not uncommonly used in Silicon Valley and just denotes your ‘A-Team.’ IN THE NEWS - GM’s Chevy Bolt is recalled after 5 battery fires. This is NOT an insignificant recall as it affects 69K 2017-19 model year (MY) Bolts with LG Chem the battery supplier on all those vehicles. Only the batteries that were built in Korea are going to be recalled though so seems like a quality issue with that plant’s manufacturing process. GM is just one of a number of auto companies that include Korean, German, and Chinese automakers that have issued recalls for battery fires over the last couple of years. I think the narrative is that the cheap (in price and quality) battery cells all come from China, which as evidenced by this case, couldn’t be further from the truth. What we’ll find and what author Ben Foldy alluded to is that as more EVs hit the road, we WILL (not should) start to, unfortunately, see this become an increasingly prevalent issue. Whether it’s a hardware or software issue isn’t clear but what is clear is that these automakers need to ensure that any new products have been thoroughly screened and are safe & roadworthy, as much as they can anyway. - The UK is making an aggressive move towards zero emissions pulling in a ban on petrol & diesel engine vehicles from 2040 to 2030. The plan is to make the official announcement next week but there are still a lot of ‘behinds the scenes’ lobbying on when hybrids would be banned and negotiations about funding for infrastructure to support that huge shift. Prior to COVID-19, there wasn’t likely an appetite for the ban to happen so soon but as we’ve seen with China and are beginning to see in the US, the pandemic has pushed EVs into the spotlight and pulled in their adoption globally. You can bet that the folks at Tesla, the Chinese EV companies, and all the other sectors that support EVs are smiling ear to ear. - Didi rolls out its EV in partnership with BYD. Called the D1, it’ll help Didi decrease some of the pollution emitted by the petrol engine cars used by their drivers since Didi currently operates about 60M rides/day in China. It should also help their drivers lower operating costs since they won’t have to fill up on petrol anymore and can take advantage of the numerous (and growing) charging stations and network that spans the country. At first glance of the vehicle, before reading the fine print, I thought it was a VW. I don’t know if that says something good about BYD’s design or something bad about VW’s? This will be another beachhead that the manufacturers will compete on for sales. As sales over the last several years have decreased as demand has decreased from car rental agencies, this could be an area where current ‘de-contented’ products fill that void and help keep plants running. Some will need this volume but some will not, especially if they need these vehicles to count towards their carbon credits. - GM’s Cruise is partnering with Walmart on a robo-delivery pilot in AZ. Scant other details have been revealed besides that the program will be launched in early ’21 and there will still be a safety driver. This follows on the announcement in September that Walmart would be partnering with a drone delivery company Flytrex to deliver packages in North Carolina. The question is, with two potential vaccines and a likely turning of the COVID corner by later ’21 will there be enough pilot programs like this that will help make autonomous delivery vehicles acceptable to Americans? With Walmart driving this pilot and likely more between now and then, you can bet they’ll do everything in their power to make this seem as mainstream as possible since it could really help them on the cost side. BTW, this is NOT the first pilot in the US that involves grocery delivery since it seems quite similar to the pilot that Pony.ai launched in Orange County with e-commerce grocery site Yamibuy earlier this year in April. - For those in the States, you may not have known this but the era of autonomous, long-haul trucking has already begun. There are two companies, Plus.ai & TuSimple that are currently piloting routes in the US that have saved their partners 10’s of thousands of dollars already. As more routes are automated, McKinsey forecasts that full autonomy could save the trucking industry $80-125B in operating costs. We won’t see any ‘Maximum Overdrive’ situations in the near future though since these trucks all still have safety drivers as a fail-safe. - Will a Biden administration mean more US IPOs from foreign (read: Chinese) companies? This could mean many more Chinese mobility companies are getting the attention of their western retail investors. Actually, that’ll be a certainty. - Is Farley the leader that Ford needs now? From ex-colleagues I’ve spoken with he seems to be better aligned with where the market is going and is much more of an outspoken leader than his predecessor Hackett. With that said, he’s still a certain vintage and one that some veterans at Ford may take some getting used to. First off, he took NO TIME to push out the old CFO and put his own lieutenant in place who also has a reputation as a hard charger. What’s most important to me is that he’s really highlighting the electrification & services opportunities, and the fact that he’s talking about Ford developing their own battery technology is a BIG plus for Ford IMHO. But it’s all in the execution and that’s why I don’t think he’s done with his management shuffle. We should see more moves as he tries to further transform the company from the inside out. Can he do it with the current set of managers? I am not sure but at least it seems like Ford is back in the game! - There’s a much easier way to have a Carnegie Mellon University - Robotics Institute alumni reunion. The folks at Aurora Innovation are kicking the tires on Uber’s Advanced Technology Group (ATG) for a potential acquisition. Both located in Pittsburgh and filled with CMU grads, especially at the management level. Uber ATG is the division that’s solely responsible for their robotaxi program and is, I was told, the largest AV team out there. Aurora has some pretty deep pockets, but this type of transaction would need more outside capital and a possible ownership stake from Uber. If this happens, this would make an already formidable Aurora team, that much moreso. I’d say it would put them on even footing with the Waymo guys. I’ve been meaning to head back to Pittsburgh whenever it’s possible (hopefully by mid-2021) so I will volunteer to set up the meet, let’s start with a beer in Shadyside somewhere? - The first smart cities development lab has been opened in Singapore. They hope to collaborate with global smart city leaders specifically on 6 core verticals: Advanced manufacturing, digital wellness, intelligent estates, sustainability, smart mobility, and urban agriculture. This creates a lot of potential for startups that are looking for an entry point to the Southeast Asian region. Many opportunities sit like low-hanging fruit waiting to get picked by ambitious, entrepreneurial-minded founders that have solutions that address the specific needs of the region which are vast and diverse just like its culture and citizens. - Will the Biden administration make 5G rollout in the US a priority because right now, China is dominating the move to 5G. Here’s a simple stat that encapsulates the current situation. Right now, the US has ~50K 5G base stations across the country compared to China’s 690K! This doesn’t tell the entire story but we should remember that without 5G next-level technologies aren’t really viable. Think smart cities, autonomous vehicles, automated factories to name just a few. It’s important to note that these technologies that would utilize 5G’s full potential are still in their early stages so there’s a small window of opportunity for the US to catch up. With the pandemic and economic recovery to focus on likely in year 1 of Biden’s presidency though, will he be able to walk, chew gum, while juggling three balls at the same time? JUST THE NUMBERS - Those that track e-commerce in China know that 11/11 is the biggest (online) shopping day in China every year and popularized by Alibaba. It’s the equivalent of the US’s Black Friday, the day after Thanksgiving but on a much larger scale! Well, this year on 11/11 there has been speculation that the SGMWuling Hongguang MINI EV sold ~20K units alone – in one day! If this is anywhere close to true which we will NOT know until the first week in December, the Hongguang could have a November where they sell >40K units. Talk about runaway success. I hope ALL the EV companies, yep Tesla too, are taking good notes. H/T to Twitter: Moneyball - Li Auto shares rallied 100% over the last 30 days after it announced better than expected financial results for CQ3’20 last week in a week and a half that included a recall disguised as an ‘upgrade.’ It hit an all-time high of ~$40 before settling into ~$35 over the last couple of days. - If you thought President-Elect Biden’s post-speech drone light show was impressive, check out XPeng’s Guinness world record-setting synchronized car light show featuring 200 P7’s here. Record-breaking light show on Sunday, sell on Monday? - China’s ‘Uber for Trucks’ raises $1.7B to pad its bank account ahead of a 2021 IPO. This business model reminds me of a company I interned for in Chicago between my junior and senior years of university. The company was called ‘American Backhaulers’ (AB) and it was essentially a platform that matched drivers who would be otherwise ‘deadheading’ back home (driving back with empty trailers) with loads that needed to be delivered close to their final destination. You might get paid by the shipper $2-3/mile and pay the driver, usually, owner-operators who wanted to make extra money, typically between $.90-1.50/mile depending on the urgency of the load and where it was headed. AB would pocket the rest. It was a brilliant business as the employees were mostly fresh grads out of Big Ten universities that you could pay a small salary with a huge bonus depending on how good they were with matching loads to drivers. I learned a lot. First lesson - It’s easier to give yourself a western name when talking to traffic departments or truck drivers since you’ll get hung up on explaining your foreign name to them when all you want to know is where they are and whether or not they’ll pick up that load for you! It was a private company owned by 3 people who made a mint selling it to CH Robinson. TRENDING ON SOCIAL MEDIA - These Porsche concepts are SWEET. You can definitely see the DNA of the Taycan in the Vision Turismo. These are the types of ‘behind the scenes’ snapshots that reinforce Porsche’s mystique and heritage for designing and building amazing cars. Yep, I just checked Amazon to see how much it would cost to make the ‘Porsche Unseen’ my newest coffee table book. - Andy Warhol, prolific watch collector? If you count 313 as prolific then, yes. I have always been a fan of Warhol and living in Pittsburgh, visiting the Warhol museum several times, and being fellow alumni of Carnegie Mellon only made this moreso. His pop art is iconic so it would make sense that he was also a fan of the beauty and fine craftsmanship of a well-designed timepiece. Those that follow Warhol and watches can bid on a Patek Phillippe owned by him on December 9th when it’ll go up for auction by Christie’s. Be prepared though, it’s going to fetch a pretty penny and have its own ’15 minutes of fame.’ - Some things you might not have known about the grandfather of today’s modern scooter – the iconic Vespa. It’s so iconic that when describing scooters (& mopeds) people often say a ‘Vespa style’ scooter meaning it’s form factor but definitely not its coolness factor, something Vespa alone exudes in spades. - Allbirds – a part of the Silicon Valley (SV) uniform along with jeans, t-shirt, and hoodie. They are TOTALLY worth it! As someone who prescribes to the SV uniform (I am wearing a Muji hoodie and t-shirt as I type this) but also a self-admitted sneakerhead, if those aren’t oxymorons, these shoes are the real deal! And there’s a great story behind them. Trust me on this one and try a pair! - One simple design change and a potentially whole new market is created or addressed. Electric kick scooters can’t compete with e-bikes for transporting things and people but with this new form factor, the designers are trying to give them a fighting chance. As I’ve said before, as these mobility vehicles move into the mainstream and more investment pours in, we should start seeing more use cases addressed by design updates and/or entirely different form factors. SEE GLM Electric Mobility Scooter below. - Auto lacing Air Jordan’s. Inspired by the ICONIC Air Jordan XI’s these kicks are EPIC. I’ve been good Santa, I PROMISE. PRODUCT & SERVICE INTRODUCTIONS - Turn your BMW CX400x into an art deco piece of moving art. Definitely worth the click to see what I am talking about. NMotor, a FL based company is developing a ‘Golden Age’ kit to transform a currently, check the ‘OK box’ for everything CX400x into a one-off lux roadster that’ll get you tons of stares as you pass by. No price yet but it’ll likely be hefty, and it’s set to debut in early 2021. - A Japanese all-electric, three-wheeled scooter designed for the elderly but cool looking enough that I want one for myself – meet the GLM Electric Mobility Scooter. Not made to tool around corners or screech its tires it’s still something I could totally see become well-represented in cities across the world by young AND old.

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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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