And here we GO!
The first newsletter of 2021! We did a decent amount of review in the last newsletter of 2020 so I will do my best to focus on what’s going on now (with the exception of my predictions sections) and what I think has been interesting over the last couple of weeks including NIO’s NIO day and GM’s surprises at CES.
First though, I can’t pretend like nothing happened last week. As an immigrant who has experienced the best of what the US is, I am sad and disappointed in what I saw. Gutted actually. I am still worried about where things go from here especially the next 10 or so days but am hopeful that, although it’ll take quite some time, we can ultimately get past the extreme rhetoric and find common ground in order to move the country forward. It’s been pretty difficult to focus on work, to be honest and I am not normally one for excuses, but that’s one of the reasons this newsletter is a bit later in the weekly cycle than usual.
As for Covid, there have been some flareups here recently so some sections of Beijing are under observation as entire neighborhoods or 小区’s are tested within days. Chinese New Year this year is on February 12th but my kid's school decided to pull up their last day so they’re officially off for 40 days as of today.
NIO Day
I wasn’t sure what to expect from NIO Day and am not feeling as warm and fuzzy as some analysts after.
First, I like the ET7 just like I like the ES6 & 8, although not so much the EC6. I could see the EC6 going away <3 years since that’s their low runner anyway. There is a bit of speculation on their ‘solid-state’ battery and we won’t likely get any further clarity on whether or not it’s truly solid-state or not anytime soon. I am a bit skeptical about the range numbers they’re throwing out though, that’s for sure.
They will clearly be in the driver’s seat if they can actually hit 1K km/charge. One thing though analysts, this is going to compete with the Model S not the Model 3. And yeah, maybe I’ll eat my words here but I don’t see battery swapping really catching on in the passenger vehicle segment. Commercial yes. Besides, if I can go 1K km on one charge, why do I need to swap? I guess they’re willing to cannibalize their swapping revenue which can’t be that much anyway against the CAPEX spent on each station? This is the whole issue with swapping stations, battery range & charging time over time will cease to become major bottlenecks to EV adoption. What happens to those stations then?
I love the ambition. How they actually map a ‘second living room concept’ into an actual vehicle and its features is TBD but if that was what I wanted from my car, I’d just as soon get a Canoo or a big, empty van.
GM CES
This is what I AM talking about! For those who are not connected to me on LinkedIn, I posted a short piece on GM’s logo refresh that you can read here. What started out as a comment on another LI post from one of my connections turned into a full-fledged rant for me. As the first company I worked for and a company that I still have family working at, there are some sentimental connections I have with GM but as most of you know, I try to root for all the Detroit Big Three. That won’t stop me from being constructively critical of each when I feel the need which is precisely what that LI post was.
Dare I say Mary was listening? With their major announcements and reveals. We see that GM is working to articulate further what they mean by having goals of zero emissions, zero accidents, and zero congestion. I thought their Brightdrop announcement was pretty significant and could be an immediate, if small, new revenue stream for them. The fact that they’re looking to leverage the Ultium battery platform across multiple businesses shows that they’ve tried to think the strategy through and shows that they really are committed to the EV, which also points back to the logo refresh.
In a nod to XPeng, Cadillac posited that flying drones could be in their future. Where I thought that it may have been a bridge too far for XPeng, I think it’s a step forward for GM since it shows that they are TRYING to extend themselves farther than they ever have before with new ideas, ones that do NOT involve 4 wheels. I also think that the GM team is capable of executing on these new ideas and I don’t think I am the only one here since their share price popped after the preso.
The best thing about both NIO & GM’s recent pressers is that this pushes the entire sector forward and places extreme pressure on other entities & organizations, whether automotive or technology related, to bring their ‘A’ games and to keep pushing the innovation envelope if they want to be players in this sector. It’s nice to see someone other than Tesla leading headlines and having investors and the Street take notice as well.
Apple Car
Apple is NOT looking for an equal partner for their rumored ‘Apple Car.’ And Hyundai probably got thrown to the back of the line by leaking to the public. There's no point in entering this complicated, competitive, cash draining sector unless Apple believes their product is superior in every way. A partner with strong opinions would get in the way of building that superior product.
Whichever partner(s), if any, they decide to work with would need to concede most of the control and decision-making if they're to become Apple's CM. In return, they'd learn design, software & product development, digital service delivery, HW/SW integration, and much more from arguably the best in the biz.
...AND they'd need to be able to keep a secret which looks like is an issue for Hyundai Motor Company.
Besides, with Apple's current cash position, there are plenty of OEMs right now they could just buy outright. That's likely biting off more than they want to chew though. Decisions, decisions...
2021 PREDICTIONS
- Assuming that chip & battery supply issues can be contained in the near term, and there is no other major disruption ie. Covid-19 to the economy, both the ICE & EV sectors will carryover the growth momentum from the end of 2020. I can see EV sales reaching well above >1.6M units with a few brands capturing much of that growth.
- There will be manufacturing issues/growing pains from Tesla, NIO, and the others including the legacy OEMs as they grow sales, or in the OEM’s case, switch from hardware-driven to software-driven companies.
- This will be one of the toughest years ever for the management teams at GM, VW Group, Ford, Toyota. You’ll see conflict bleeding out into the open and more reorgs from each of them. They will struggle to hire enough software engineers to keep their digitization plans on track. Layoffs will also continue to be announced. If you’re an investor in any of these companies if you don’t see this happening, be very worried.
- There will be a couple of pleasant surprises, ala SGM Wuling Hongguang Mini EV, that will sneak up on us and sell well in the China market. I will try to identify which ones could be this year’s Mini EV in coming newsletters.
- The Model Y will sell at a >1.6:1 ration to Model 3s.
- OEMs will struggle to sell services in their vehicles. This needs at least another year or so to marinate in the Chinese market before the ‘habit’ will be picked up, so the promise of connected services revenue will largely remain – a promise. Chinese consumers aren’t used to paying for these types of things and it’ll take more than a year to convince them that the services they’re providing, whatever they may be, are useful enough to pay for.
- CATL is selling the picks & shovels. Will it be too much from a capacity, quality, and reliability standpoint when they make their way into non-China destinations? CATL will have growing pains to go along with those high expectations. It’ll open doors for smaller players to grab share.
- E-Bikes will continue their meteoric rise in popularity, I may even get one, as more cities decide to keep private passenger vehicles out of their centers.
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.