OEMs

GM’s outlines its future …in China.

As a follow on event to EV day in March held in Warren, GM hosted media in Shanghai for a China EV day outlining the products that will be launched and built for the China market along with the technology that’ll be used to connect and power those products.

If you’re sitting in Detroit and wondering why they would outline their China strategy, you haven’t been following GM very closely over the last few years. China is key to GM’s ability to succeed in the future. I’d go as far as saying that if GM isn’t consistently in the top 2-3 automakers in China moving forward, they will have tremendous difficulties in launching all those vehicles they intro’d back in March in Warren to the US market. I would even go a step further than that and say that GM management believes that China will eventually be a bigger, more profitable market than the US, that’s if they can design and build vehicles that the Chinese want.

Here are some numbers to back me up. In 2017 & 2018, GM globally sold a total of 7.7M & 8.38M vehicles. Of that number, how many do you think were sold in China? They sold 3.6M (43% of total sales) in 2018, and that was a down year! In 2017 they sold over 4M (52%)! Compare that with 3M (39%) & 2.9M (35%) vehicles sold in the US for 2017 & 2018. GM’s largest market is now China NOT the US. The bad news is that they’ve lost significant share in China over the last few years, selling just above 3M vehicles in 2019. That’s a pretty steep decline and something that Mary and the team in Detroit/Warren are most likely losing sleep over.

Getting that 1M units back isn’t going to be easy either. The market is only getting more competitive as the China market is a few years ahead of the rest of the world (ROW) in EV adoption. Reinforcements are on the way as outlined last week at GM’s Shanghai event but will GM be able to compete with Tesla when it comes to EVs? Currently, ALL automakers are struggling to put something on the road that can go toe to toe with Tesla, but that’s not going to last and Elon knows it. That’s why he’s pushing to increase his lead in technology innovation and expand his manufacturing footprint to China and soon Berlin & Texas.

There will be some amazing products launching in the next 18-20 months by some of the automakers, ones that happen to have batteries and electric powertrains, but will GM’s branding be on any of them? We will have to wait and see.
#GM #China #EVDay #Chinathemostimportantmarket #strategy

CITY SOLUTIONS

NYC is ready to implement congestion pricing, so what’s the hold-up?

Following in the footsteps of London (the OG) & Singapore, NYC has decided that it will implement congestion pricing in order to reduce congestion on its streets and pollution in the air. There are proven benefits to doing this as long as it's planned well and implemented properly with the key being to take into consideration EVERY citizen that may be affected negatively and updating support services to ensure that those people’s needs are accommodated.

For those that can afford to absorb the tax, their lives will not likely be impacted that negatively. Manhattan is the densest area in the US so implementing congestion pricing could be a HUGE improvement on the average speed of traffic in the congestion zone and surrounding streets, improving most people’s lives in around NYC.

I believe that it’s only a matter of time before more cities around the world, including the US & China, study these types of programs that alleviate congestion and pollution. If limiting traffic into their downtown areas, and it doesn’t have to be by congestion pricing, it should make their cities MUCH more attractive to tourism, investment, and inhabitation, and isn’t that what cities hope for?

Attracting the best and brightest to contribute to their local economy. NYC has its advantages just because it’s one of the coolest towns on the planet, but when you’re competing with the likes of Singapore, Shanghai, London, Tokyo, SF, & LA every little bit helps!

My final comment on this is that I am running on the assumption that it's a done deal. Right now, that's highly speculative since the entire premise of the article is that the federal govt. hasn't completed its environmental review of the change which holds up implementation and has not given the local NYC govt. any timing on when that will be completed.

#NYC #congestionpricing #lesspolliution #lesstrafficjams #firstintheUS

EVs

NIO tries it’s hand at creating a recurring revenue business, introducing BAAS (Battery as a Service).

Seems they’ve realized that their cars are overpriced and this is their way of reducing the price without admitting that mistake. There are clear potential advantages and disadvantages to this.

First, since NIO had this swapping business in mind from the start, ALL their products: ES8, ES6, EC6 are good to go. Second, it should help with residuals for their cars. NIO can also license this battery swapping technology to other automakers who aren’t keen to invest the time and capital necessary to develop their own platforms, opening up another revenue stream that could get into the hundreds of millions.

If NIO is able to increase sales of their vehicles significantly at any point in the future, they could recoup the costs of building this swapping network out much sooner helping their balance sheet AND income statement. With the Chinese govt. chipping in, the costs are likely much less than it would be if they were going it alone.

Therein lies the rub though, right now their sales volume makes them a niche player. In order to command or influence the market, they’ll need many more of their vehicles on the road increasing usage of these swapping stations substantially before others will likely sign up as partners. Will lopping 70K RMB off the price of their vehicle significantly increase demand for their cars? NIO IS surely betting that it will but I’d say it’s a solid – MAYBE.

Some challenges in implementing this and this could easily be mitigated in their domestic market, not so much in the international markets is convincing other automakers, the ones that are looking at battery swapping as a part of their differentiation strategy, that NIO’s standard is better than anything they could bring to market. That’s it, creating a standard that can be used by multiple brands is the ONLY way to get a return on the swapping station investment. Is battery technology, charging stations, and/or battery management software really that far off from eliminating range anxiety for good? This type of pivot would suggest that NIO seems to think so, but I on the other hand am not so sure.

#NIO #batteryswapping #youdonotpayforabattery #makesourcarscheaper #allaboard 

Fisker trying to contract manufacture themselves into an EV player.

For those that have followed EVs since the beginning, you probably know the Fisker story pretty well. An established, well-respected car designer whose past employers include BMW, Ford, and Aston Martin. Like ambitious car guys before him, Fisker thought he’d have a go at designing and building his own car. In between his time at large OEMs and going off on his own, he did a stint at Tesla as a design consultant as well so Henrik has a pretty high profile history in the automotive space.

Inspired (or envious depending on who you speak with) by what Elon was trying to do with electric cars at Tesla, Henrik’s first try at doing his own thing was a company called Fisker Automotive which launched the electric powertrain’d Fisker Karma. He was able to deliver quite a few of them (~2K) before production was shuttered because their battery supplier, A123 Systems filed for bankruptcy. A few management issues later, Fisker left the company which then also filed for bankruptcy protection.

Long story short, that company was acquired by a Chinese Tier 1 called Wanxiang and renamed Karma Automotive (very original…) who was able to get on track and develop and sell electric vehicles for the North American market. Undeterred Fisker started another company – Fisker Inc. and is now looking to get an SUV called the Ocean into production. He’ll be raising funds through a reverse merger (aka SPAC) and believes that it’ll be better for the company if they outsource all operations with the exception of design, and all aspects of the customer touchpoints.  

Unlike the auto traditionalists who think the only successful way to build an auto company, electric or not, is to control and own the manufacturing process I think there’s a way to be successful with being the Apple of automotive. Now, can Fisker be the one that proves my theory, I am not so sure. I think a model like that would have a better chance of being successful in Asia where contract manufacturing is not so unusual, especially now with Foxconn getting into contract manufacturing vehicles. There’s also a ton of uncertainty and danger if you’re unfamiliar with how China/Asia works, just ask Steve Saleen. There will be a company within the next 5-7 years that’s going to make it work, mark my words. Just not sure it’ll be Fisker.
#Fisker #Ocean #contractmanufacturing #outsourceeverything #itwillwork

Canoo joining the party via a SPAC, but do they and their business model have what it takes to succeed?

A few, quick observations about Canoo. I think the vehicle looks pretty cool with a definite ‘form follows function’ aesthetic, but it’s not going to win any performance contests and that’s ok since it’s not meant to. The VAAS (Vehicle As A Service – I just made that up) model hasn’t really been tested yet, not to the level that Canoo plans to at least. Also, due to the consumer’s increasing openness to electric vehicles, the continued popularity of private vehicle use (that has much to do with COVID-19) – launching the service now (or in 2022 to be precise) may be the ‘right’ time for optimizing Canoo’s chances to succeed.

One thing that’s NOT completely clear is their pricing strategy and how many different configurations will be available although its pretty clear on the B2B side, they’ll lean heavily on the last-mile delivery segment. Depending on the flexibility of options, I could really see it being a useful alternative to vehicle ownership and even taking the place of the yellow school bus, that’s normally never full, in the future. Having first mover advantage on this could be HUGE as well, especially if there’s a way to incent customers to get tied into a Canoo ecosystem that’s difficult to untangle themselves from. My prediction is that it’ll the service model and the stickiness of it that’ll be the keys though since the vehicle design will be something that can be mimicked pretty quickly by the folks in Detroit and in China.

I do know that owning and servicing all those vehicles will place a heavy burden and some big, red (or black in China) numbers on the balance sheet so it’s going to be important that the recurring revenue growth is significant and sustainable. That’s why I am tracking this company pretty closely. The SPAC will give them some breathing room to get maybe a few production units out the door but other than the VAAS (how else will they generate revenue to pay for those vehicles?

#Canoo #subscriptionmodel #platform #tophat #SPAC #reversemerger