What's Your Data Strategy, Cheap LiDARs Are Gamechangers, Foxconn & Thailand - SAI Newsletter 21

Not much up top today except for highlighting a Reuters article that I was quoted in last week that details, or at least attempts to, what automakers here are doing with the data they’re collecting on their customers. This follows Tesla’s announcement last week that they’re building a data center in Shanghai to store all of their customer data locally. This actually shouldn’t be that newsworthy. What should be more newsworthy is that other automakers, at least in their responses to the question ‘What’s your data strategy for China?’ didn’t seem to have very good answers. It’s tough to create insights into your users if you don’t value the data they’re providing you. These automakers have begun to ‘say’ the right thing to media about pivoting to EVs, connected, and becoming ‘Digital First’ companies but this is where I am still looking at their actions. My guess is that in some cases, the move to localize data storage has not likely been completed or if it has it's not been thought through very well. The law has been in place here since 2017 so being caught flatfooted tells me that they still lack a cohesive global IT strategy or more specifically, one for their most important market. I’d also surmise that the wrong people at the top are likely still in control. Tesla drives a lot of the market moves here & ROW (rest of the world) and Elon famously said during Battery Day last year, they’re only going to move faster. That doesn’t bode well for those that are already finding it difficult to keep up as it is. Because it’s not enough to collect it, you have to manage it, and analyze it so you can coax some insights out of it in an attempt to develop services that provide revenue-generating opportunities which will be key as vehicle sales revenue begins to wane. It’s the companies that are able to do that the best that’ll be the ones we’ll still be talking about 10 years from now. The other part of this that’s ‘to be continued’ is if companies are accessing Chinese data to combine it with the data they’re collecting from other regions to bolster their machine learning algos. There seems to currently be a grey area in the China law that does NOT specifically state that it’s illegal to do that but at some point will that change? If so, the companies will really need to localize almost completely if they’re wanting to compete on equal footing with their domestic Chinese counterparts, right? As I’d mentioned last week, Lei Xing and I have formally launched our podcast, here’s the link to Lei’s Medium post that announces it to his followers. We believe it’s the best one out there that specifically talks about the week’s biggest news across the China EV & mobility sectors and gives two distinct perspectives from Lei and I. I learn something new every week listening and discussing these topics with Lei and I’d like to think he learns a bit every week from me. ;-) I’m not too much into hyperbole but for those that closely follow the sector, this is a must listen to. I’ll take it a step further and say this to my US subscribers, if you want to know what’s going to happen in the US in the coming months, we talk about it every week because it’s happening here now. Give it a try and give us some feedback, we’d love to hear from you. IN THE NEWS - All ride-hailing in CA needs to be done with clean energy vehicles by 2030. These are the types of mandates necessary if the US stands a chance of not getting completely left behind by China in the EV race. BTW, 2030 is a lifetime away so that date should be pulled in by a good 3-4 years unless the US OEMs really lead the way by providing US consumers with compelling, feature-rich, competitively priced EVs. - Cheaper LiDAR is not just coming, it’s already here. For those who’ve sided with Elon about LiDAR being unnecessary for successful autonomous driving systems, that argument is about to made moot due to the strides LiDAR companies like Velodyne, Luminar, Hesai, and others have made in reducing not only the size but the price of them. Whether LiDAR is necessary is not what most AV companies are asking when price-points are <$1,000 / vehicle for multiple LiDARs. These AV startups see LiDAR as a redundancy that backs up the other hardware creating a HW / SW stack that makes the AVs safer to operate, and ultimately an affordable, safer robotaxi that’s faster to market will be the winning formula. - Micro innovations like Pebble from Sidewalk Labs that help municipalities determine & communicate to drivers where open parking spaces are located not only help people save time but also save a ton of petrol as well (<petrol = <pollution) since we’ve all likely been in our cars driving around and around waiting for that person to finally, exit their space. BOLD STATEMENT WARNING: Within 10-12 years, my prediction is that parking will be unnecessary for most people as they will not own their car or more cities will limit the use of private passenger vehicles in city centers which will also consequently open up that precious land for other, more productive uses. - Foxconn’s auto ambitions extend into Thailand. Foxconn has partnered with a local Thai SOE to offer an EV platform to manufacturers in Thailand and the rest of SEA. Anyone who thought that Foxconn was just dabbling in EVs can put that theory to rest. But where are they going to get all these people with auto experience to support all of these accounts? I see Foxconn perhaps spreading themselves too thin. Maybe they’re underestimating how heavy this lift is? Their current set of partners outside of Stellantis isn’t what you would call a ‘Who’s who’ of brands. - GAC taking it a step further with Didi by committing $200M to their self-driving company. GAC announced earlier last month that they’d jointly develop a smart EV with Didi so the relationship is getting more complicated. According to Didi, this would push their valuation above’s who is currently the largest China-fornia AV unicorn, which is currently >$5B USD. GET SMARTER - Pinterest uses neural networks or what some people know as deep learning, an advanced form of artificial intelligence, to power their computer systems and help them recognize patterns in what customers pin to their ‘boards.’ The patterns power the ‘predictions’ or suggestions of other photos & ads Pinterest users may like. The system works so well, user and ad revenue growth is higher for Pinterest than for their other main social media competitors, Facebook and YouTube. Neural networks make it easier to analyze unstructured data which includes pictures (where Pinterest plays), text, and speech. Users actually help train the neural networks to be more accurate by clicking or rejecting suggestions being made to the by Pinterest’s algorithm. This is also how Pinterest ‘knows’ what ads to push to its users as they base it on relationships between images the user has pinned, who they follow, and how an image they’ve pinned is related to other images or themes. You can bet that neural networks and deep learning are already being used in some smart EVs, especially the ones with voice commands and as more data is collected, neural networks will become an even more important tool being used by tech companies, EV startups, and the legacy automakers in an attempt to make the driving / riding experience even more pleasant and memorable, just enough that you’d want to have that experience again …and again, and again. TRENDING ON SOCIAL MEDIA - A bespoke Rolls Royce Boat Tail by their Coachbuild program that’s rumored to cost ~$20M and is for Jay Z. We’ve all likely heard about and seen pictures of the megayachts that only the truly, obscenely rich can afford, well this vehicle is right up there with it. A truly one of a kind, only for them car where the customer is able to influence the actual design of the vehicle, and we’re not just talking interior and paint, but the physical lines, mechanicals. and features, to their exact specifications. If it sounds over the top it’s because it is, but the end product is a work of art. A custom Boat Tail can take up to 4 years along with multiple meetings at Rolls Royce headquarters in West Sussex, England to build. The cynic in me can’t help to think that < 15 years, the demands for things like this will wane and huge cash layouts will be used to purchase more experiential purchases ….like a trip to Mars on a Space X rocket ship! JUST THE NUMBERS - 2035. When Thailand plans to phase out ALL Internal Combustion Engines (ICEs). Thailand manufactured 2M vehicles in 2018 with more than half of that output shipped to >100 countries. Also known as the Detroit of Asia, Thailand is currently the largest SEA hub for vehicle manufacturing and the Thai govt. believes that a fast transition to clean energy vehicles will allow them to keep most of their manufacturing there. Thailand joins Japan, California which has also declared a ban on all new vehicle sales of ICEs by 2035 which again like 2030, seems like a lifetime away. - 200K RMB (~$31,400) – What Jidu Auto has announced their first car with partner Geely will be priced at. They also plan to launch a new vehicle every 1-1.5 years starting in 2023 with an investment of 50B RMB ($7.84B USD) over the next 5 years. - 100K RMB ($15,700) – Qihoo 360 (China’s Norton’s Antivirus) has announced target pricing for an EV it plans to co-produce with Neta Automobile, a startup EV brand from Hozon Auto, one of the lesser-known automotive OEMs outside of China. PRODUCT & SERVICE INTRODUCTIONS - Introducing the Alpha & Beta by Oneobject. These design concepts look great and at least on paper make a ton of sense. Features like a HUD (Head-Up Display), the use of sustainable materials, and radar on the moped to help provide a safer ride, take mopeds and kick scooters to the next level. Can’t wait to see how they do in the real world! They’re designed in HK so perhaps next year, I’ll get to actually try one out! - Did someone request an all-wheel drive motorcycle? Zaiser Motors, with their Electrocycle, fills that order. What, at first glance looks like a Harley hog is nothing like it at all. The electric motorcycle has hub motors in both wheels in order to make the motorcycle safer and more stable. It also sports a long-range battery that’s estimated to have a 300-mile range, making it the longest-range motorcycle out there currently. If true, it ups the ante across a few different aspects for everyone else in the segment. What’s not to like? —— 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.

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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