Photo courtesy of That’s Beijing

Some of the big news this week besides what’s down below was VW’s version of Tesla’s Battery Day yesterday. I didn’t get a chance to tune in but did read some of the summaries posted about it. I’ll carve out some time to watch for myself later this week but from what I gather it seems that VW is still riding Tesla’s coattails on much of their transition to a 100% EV future.

Some of their priorities include most of what Tesla is already doing:

• More Supercharging stations
• Bi-directional charging
• More efficient battery technology
• More capacity for battery manufacturing (building their version of a Gigafactory across the EU)
• Moving faster
• Powerbanks
• OTA capabilities

You’d think that with the scale and collective experience of VW Group that they’d be able to articulate a grander picture of how they plan to ‘lead the world into a clean, mobile future.’ Alas, it seems that they’re just not that imaginative.

Every year on 3.15 China Central TV or CCTV produces a show that puts a company that isn’t great to their customers here in China on blast and there were rumors that this year it would be Tesla but they were not targeted. I am certain Fremont was on HIGH alert and relieved that they weren’t the subject of this year’s show.

The other big thing that happened that received global coverage was the Beijing sandstorm that blanketed the city most of yesterday. Beijing is right next to the Gobi desert so sandstorms aren’t something new for us, they occur at least 2-3 x’s / year. This particular storm happened to be the most serious that Beijing’s seen in 10 years according to news reports. The good thing is that today, everything was back to normal and the sandstorm actually cleared the pollution that was hanging over the city the last few days.

Finally, Lei Xing & I are at it again on Thursday 9am EST hosting our ‘China EVs & more…’ Please do tune-in as we’ll go over some of what’s covered in this newsletter as well as take questions and open up discussion the last 20 or so minutes. We’ve had to cut-off the room at the 90-minute mark the last two sessions so guests have been very engaged and we are expecting that to continue. If you do NOT have an invitation to Clubhouse and would like one, please contact me directly.

There is a companywide belief that each and every product that comes out of Cupertino IS going to be a hit, and the fact that their products are obsessed about the world over reinforces this (with the exception of the post below). Their formula for product design, marketing, and branding works well. For computers, tablets, watches, phones, and entertainment services at least.

Bottom line, there is NO company that wants to build a car to Apple’s specs and then have a vehicle that they themselves have designed, engineered, and manufactured; whether in Germany, the US, China, Japan, or Korea, go head-to-head with the Apple car that they had a hand in building!

Finally, and I know this is pretty obvious but I’ll say it anyway - Cars are a whole new ball game for Apple. Not in a disrupt the ‘old watch industry’ kind of way though. This IS different so just ‘Thinking’ different isn’t going to cut it in this case. This is really where they need the combined hit-making capabilities of Steve and Jony. Unfortunately, neither of them is there anymore.

For Apple to think that they’d do it ‘better’ than all of the current carmakers out there doesn’t surprise me because against most, I believe they could. But taking the metaphorical ‘steering wheel’ away from an OEM that’s been successful at building AND selling cars for the last 50-100 years and telling THEM how to do it (That’s the key: Apple has to both design and sell), seems a bit naïve and problematic.

This time, a Didi driver got into an argument with a passenger and tragically ran the passenger over after he’d gotten out, killing him. I use Didi quite often but I wonder now outside of the larger cities is it a safe service? It makes me very uneasy to think that my wife and children use it sometimes as well. Something needs to change drastically at Didi or their reputation among customers and the Chinese govt will put that $60B valuation and pending IPO in jeopardy.

These supply shortages mean that the sourcing, materials, logistics, and planning folks will be earning their keep for the foreseeable future because supply shortages put production behind taking sometimes months to catch up that lost production.

Back when I worked in GM’s Production Control & Logistics (PC&L) group (which no longer exists), I learned how to ‘chase’ parts. In other words, my job was to babysit suppliers to make sure that parts were shipped according to the master production schedule (MPS) and arrive at the specified time in the quantities that were ordered. No more no less. No more because that meant additional inventory that would sit on our ‘books’ and that, unless we increased production and reduced our orders in equal amounts, those excess parts would never be bled out of the system. No less because that meant I had to chase a ‘partial’ aka a partial shipment that would make the order whole.

Most folks don’t understand and hence don’t appreciate the level of coordination it takes to keep manufacturing plants going without interruption AND without additional costs associated with running it. That’s called efficiency. OEMs are some of the best at this, running plants efficiently, and at capacity which most in the industry will tell you is well over 90%. One small issue affects the entire operation, hence the name ‘supply chain.’ In the current situation, most OEMs' supply chains will take some time to get back to running efficiently.

Each of those qualities creates such a huge advantage! IF they could only learn how to use it. While we’re at it, why wouldn’t one of the OEMs that are cash-rich acquire Canoo? Their current market capitalization of ~$3.7B doesn’t seem too unreasonable, although with all the SPAC craziness, it’s difficult to justify most of these EV & mobility-related company's valuations.

There is nothing in ANY legacy OEM’s portfolio that’s doing what Canoo is doing with the exception of Bright Drop perhaps? But Canoo has taken it a step further and really leaned into the box design and carried it out to the use cases of everyday people. Who knows whether Canoo’s business model will work but their vehicles seem to be designed and thought out pretty well, they could just look at this as an acquihire, something that’s not that unusual in Silicon Valley but isn’t utilized much in the auto sector.

Most large American cities are currently optimized for individual passenger vehicles. Just look at the # of gas stations, parking spaces, and street lights in a city like Chicago alone. Also, the current layout of New York City doesn’t allow for that high of an e-bike take rate unless there are major revamps to the system.

This should be seen as a tremendous opportunity though since this type of growth also implies that there will be many fewer passenger vehicles on the roads. This could mean parking lots can be rehabbed and parts of the city can be taken back and converted to green space, low-income housing, or anything else that benefits the city’s citizens.

With the gridlock in the US though, will there be an appetite for these types of revolutionary changes in how we live, work, and commute? Maybe, but it’ll also take a big change in how we think about transportation and mobility and that might be the toughest reset of all.

I am NO city planning expert by any stretch but it’s been something I’ve been learning more about recently sitting in on some Clubhouse rooms and reading more reports and studies about what cities around the world are doing to better understand what’s possible. And it’s a lot. If local govts. have the appetite to place the needs of their citizens ahead of making their cities more ‘car’ friendly.