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VW bros - Hug it out, Say NOW to Digital Transformation, Lucid Takes it SLOW - SAI Newsletter #22



The US has calmed a bit after 12-13 consecutive days of protests so I am hoping cooler heads can prevail. Congress seems to be on board with making some potentially historic changes to laws that many Americans feel are racist and unfair to minorities. I am not sure if anything will get passed by the US Congress or if it will be signed into law by the President but the opposition and determination of the protestors does feel different this time, moreso than previous times, even as I sit 6K miles away.

For instance, the NFL admitted that they should’ve listened to their players about the racism the players were protesting (read: Colin Kaepernick) 4 years before. Also, both the NFL & NASCAR have condemned racism and NASCAR even banned the confederate flag at ALL its events. That really is something.

The calming tensions is one big relief but prior to the protests the US was never really ever able to contain Covid-19 so there’s still that. Seems like it could be a long and hot summer for the US as each state redoubles its efforts to contain the virus as they’re simultaneously re-opening to get the economy going again. Covid-19 cases spiked last week in a few places including FL and CA, two of the larger states in the US so that does not bode well for the rest of the country.

On the business side, Covid-19 has really ‘exposed’ the brands that are completely reliant on ‘bricks and mortar’ retail locations to drive their sales. These brands have seen their revenues fall off a cliff during Covid-19. The bright spot has been the direct-to-consumer (DTC) brands that sell via their websites, apps or digital partners and have subsequently been able to salvage a good portion of their sales.

Chris Baker, Managing Director at Totem Media and I, posit in an essay for the Beijing office – American Chamber of Commerce that – NOW is the ‘right’ time for the brands without significant online and / or a digital presence to quickly and strategically embrace the ‘digital transformation.’ We highlight a few examples across different sectors including: autos, restaurants, luxury brands that all need to take on this evolution in order to follow and engage where their customers are.

Finally, I am working on one or two major projects that I’ll try to share in the next few weeks so stay tuned for that!

IN THE NEWS:

-   Tesla share price hits $1K making Tesla the most valuable car company in the world. WOW. Unbelievable.

-   Life is moving towards normal in China. Beijing last week reduced the Covid-19 alert to a ‘Level 3’ as more and more people are out and about and companies have announced that employees should finally head back to their offices to work. Children, including my two boys, are also headed back to school. The entire country is getting back to the pre-coronavirus levels of normal, with a few new wrinkles.

The good news for my friends, family and subscribers in the EU & Americas is that as long as your local govts. stay vigilant, you too should also start to see the ‘light’ at the end of the tunnel. I hope for a speedy but safe re-opening for you all!

-   The combination of Covid-19 and ridehailing to lead to a renaissance in interior vehicle design? For those wondering how permanent some Covid-19 driven changes are look no further than vehicle interior design. With avoidance of contamination now potentially being an important design aesthetic to be included with the traditional fit, form, and function parameters, will we see interior design approached differently? I think that will be an emphatic ‘AFFIRMATIVE!’ 

-   HK is still the reigning champ when it comes to the world’s most expensive for expats. It’s a bit unnerving to see that BJ is #10 but I’ve been telling people for at least the last 3-4 years that BJ ceased to be an affordable city years ago.

-   I am predicting that the loss of Robin Ren to be pretty significant for Tesla. He was the head of AsiaPac / China Ops. It’s happening at such an important time for the Tesla China team. I wouldn’t be surprised if he resurfaces at one of the China EVStartups or one of his own. That’s my WAG.

TRENDING ON SOCIAL MEDIA:

-   Number of cars shipped in 2019: Nikola – 0, Ford Motor – ~5.5M

    Market Valuation as of 06/09/20: Nikola – $29.799 Billion, Ford Motor – $28.794 Billion

Oh yeah, they don’t plan on being delivering any vehicles until 2021. And they’re hedging their bets by developing battery electric & fuel-cell electric. Bill Ford & co. can’t be happy about this.

-   Cybertruck: The O-fficial Lunar vehicle of NASA? Elon does run both companies and they are already doing business together so this is NOT as far-fetched as some of you think.

-   Meet the new Batmobile! It looks to have been plucked straight out of the Mad Max / Road Warrior movies.

-   Three China EV pioneers sit down for a quick pic. He Xiaoping, Li Bin and Li Xiang – who all made the jump from tech to EVs – get together to celebrate Bitauto’s 20th birthday. Bitauto is the company that Li Bin founded.

-   What does an Audi have to do to earn the RS badge? Lots of miles of testing, try millions of miles. In the cold. And heat. I am SO getting a used RS6 Avant when I finally decide to head back to the US. Yep, that’s right – a 787 HP family truckster will be in my future. Hopefully.

-   You’ve heard of the Tesla ‘Frunk’ well make way for Bollinger Motors ‘Frunkgate.’ It’s essentially a passthrough through the entire vehicle! The B1 & B2, Bollinger Motor’s first products I think will do fine.

PRODUCT & SERVICE INTRODUCTIONS:

-   When an electric scooter and electric bicycle have a baby – you get the Vighen Ti1.

-   Doing away with apps altogether? Google wants to, maybe. For those that are over voice control but get overwhelmed when they see the dozens of apps that never get used, except that one-off time you need it, on their phones Google is testing a new way of ‘de-cluttering’ your mobile. SOLD!


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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

OEMs Are Ford’s fortunes about to take a turn for the good? Make no mistake, the next 18-24 months will be some of the most important in Ford’s iconic history. Actually, I could say that about a lot of companies and not just automotive ones – but I digress. Ford has 3 ESSENTIAL product launches: the Bronco, the Mustang Mach-E and the granddaddy of them ALL – the F150 – that they HAVE to get right. If they don’t, it might not matter if they’re able to get China cleaned up or not. To put it more bluntly though, the F150 needs to be a ‘home run’ for them or else their 5-year product plan is going to be missing one key ingredient – funding. One thing we do know is that Ford does trucks ‘right.’ The Bronco should also be a sales winner but even if it doesn’t bring the profit thunder that the F150 does, bringing back this iconic model will breathe some life back into the 116 year old company that they can hopefully turn into momentum going into a 2022 and beyond post Covid-19 US economic recovery. This will also be a make or break moment for Jim Hackett and determine whether he’s a hero or the goat. #Ford #Bronco #F150 #Mustang #MachE #biglaunches #IthinkIcan The pressure to succeed may be getting to VW. There’s been a ton of upheaval in the auto sector over the last 5-7 years. Several OEMs have had their share of challenges but you could argue the VW Group has gone through the most existentially threatening one due to their diesel-gate scandal. Diesel-gate led to a number of lawsuits, firings, arrests, fines, restructures and leadership changes. It also led to arguably the mother of all company pivots – moving from internal combustion engines to electric powertrains – in the shortest period of time. The billions of €€€ committed, the number of new products across all their brands planned, the partnerships & investments inked, and the need to execute to plan flawlessly have all weighed heavily on the VW management team. The person leading that pivot, Herbert Diess, has been adamant and seemingly resolute in pushing VW Group to become the world’s largest EV maker much sooner rather than later. This has obviously led to internal conflicts and recent technical (read: software) issues for their brand new ID-3, arguably one of VW’s most important product launches in its storied history that’s set to replace their iconic Golf. The launch issues left an opening for Diess’s detractors to knock him off his pedestal, taking the VW brand CEO title from him in the process. He still holds the Group CEO title, which is ironic since it seems that they don’t believe Diess can lead one brand but DO BELIEVE he can lead >8 brands. The growing pains & complexity associated VW for the first time really designing, developing and building software that is to be backbone for one of your most important products was too much to handle apparently. The software development issues shouldn’t come as any surprise. Be it minor or major, we should also expect this from the other automakers as they begin to kick off production of their NEV product offerings. Something as abrupt & extreme as redefining / remaking an 83-year old car company within a few year time period was bound to p*ss a few people off. First, although he’s an automotive lifer, Diess is still an outsider having made his bones over at Bimmer. Seems like it upset more than a few though and it finally bled into the public. This is where I applaud Diess since there were bound to be power struggles regardless of how ambitious his turnaround plan was going to be. His plan is pretty ambitious. As other automakers begin to feel the heat – we will likely see similar conflicts (see Ford / Joe Hinrichs) bleed out into the open. That just means the internal battles, aka the ‘politics’ over control of design, engineering, quality, manufacturing & spending decisions – pitting the old guard vs. new guard are still being fought and, in VW’s case – the old guard won this round. That will need to change if VW Group or any other OEM is going to successfully pivot their product lineup in order to compete with Tesla and all the other EV Startups in the US & China that don’t have any baggage to dump. Tesla went through these growing pains too. I was living in Silicon Valley when they did and from my vantage point, it didn’t seem like they’d make it. It wasn’t until they figured out the right mix of ‘tech’ folks & ‘car’ folks starting with their hiring of Deepak Ahuja (a fellow CMU alum I might add) who’d left Ford to become Tesla’s CFO in 2008, did we really see them begin to ‘hit their stride.’ Have VW Group added any ‘tech’ guys? Has ANY major OEM added any ‘tech’ guys? I mean at significant, decision-making levels? Once we do, it’ll signal that the OEMs are starting to get ‘it.’ #VW #ID3 #growingpains #politics #powerstruggles #softwareissues #bugs #demotion BATTERIES Another way to spell ‘1.2M mile battery’: O-V-E-R-E-N-G-I-N-E-E-R-E-D. CATL is not shying away from the spotlight as they’ve partnered with Tesla to make a long-lasting, Duracell type battery cell that, if as advertised should last for over 1.2M miles / 16 years. CATL further says they’re ready to produce once Tesla gives them the greenlight. Outside of bragging rights and the shine of saying they’re the first, having an actual battery that lasts that long seems of limited value miles since I don’t know one person that’s kept their car for 1M miles! How much of this is Tesla tech being licensed to CATL is uncertain but again from a marketing standpoint, it’s definitely a coup for CATL and it implies that CATL batteries last as long, potentially longer than ones from the traditional battery powers – Panasonic & LG Chem – their main competitors outside of China. #CATL #Tesla #1millionmiles #longlifebattery #overengineered #builditandtheywillcome   MOBILITY Didi says its back to business as usual. The fact that Didi’s China ridehailing business has reached pre-Covid levels doesn’t surprise me. First, the Chinese govt. acted decisively and extremely to contain the pandemic here in China. Second, and this is more anecdotal, I have gone back to calling Didi’s quite often, a few times / week or almost as often as I did pre-Covid days so I could see other consumers also feeling safe enough to trust and use their service again. Finally, with people cooped up in their homes for multiple months, I think there’s a social ‘itch’ that many folks are anxious to scratch which likely also contributed to increased # of rides. Will that last into the summer – I think it may since there aren’t a lot of options for going away for summer holiday. My prediction is that this summer, the people that own their vehicles will be ALL about domestic road trips in lieu of traveling abroad this summer but the folks that don’t own their own cars will more often decide to stay local. With the heat of summer, it’ll be much more attractive for those people to call a Didi vs. walking or riding a Mobike. It could be MUCH different in the US. We could see more of a struggle with Uber & Lyft getting their ridehailing businesses back up to pre-coronavirus levels due to the fact that the US has struggled to contain the virus which could lead to a lingering safety and trust issue. If that’s the case, it’s going to be a VERY long summer for the US ridehailing companies. #Didi #China #backtonormal #ridehailing #onthewayto100million EVSTARTUPs Lucid seems to be taking the right approach. Taking a much slower, deliberate approach to launching their first product may end up working out much better for Lucid Motors, founded by ex-Tesla Chief Engineer Peter Rawlinson. That delay in funding that led many to believe, including myself, that Lucid may not make it past the prototype stage again, was likely a blessing in disguise since there was no need for them to lay off factory workers and idle an assembly plant, blunting momentum before it even got going. It also allowed Lucid more time to analyze the market to see where it’s headed post Covid-19. This could be just the ticket for the scrappy startup that’s looking to be ‘friends’ with Tesla but compete directly with Merc and Bimmer at the high end of the luxury sedan market. I think the Lucid Air looks great so far and if the production vehicle specs out where Lucid claims, this will be a VERY formidable opponent for the German brands AND Tesla. It doesn’t hurt that Peter cut his teeth launching that Model S either so he knows where Tesla went wrong and should be able to avoid the same mistakes that Tesla had manufacturing it. I’ve been keen to chat with someone from Lucid, but like everyone else, my travel plans for the foreseeable future specifically to Detroit and Silicon Valley / CA, are up in the air. Once the borders open back up though, you can bet that I’ll try to head over there to check out their operations. I have no inside information here but being late to the party could’ve been the best thing that could’ve happened to Lucid. That and the fact that they’re not lining up to market themselves as the next ‘Tesla’ killer.  #Lucid #Air #Tesla #latetotheparty #readyfor2021

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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