OEMs

Where Merc threw in the towel, Porsche pushes further into a new business.

You’ve probably heard me vent in previous newsletters about why Mercedes shouldn’t have shuttered its ‘Collection’ vehicle subscription service earlier this year since it can’t cost them that much to run (in the grand scheme of things) and the data and insights derived could be worth more than the depreciation of those cars. So, for scorekeeping, it looks like the only two subscription services available are Porsche’s Drive & Cadillac’s Book service. READERS: Please correct me if I am wrong.

Not only is Porsche refining it’s offering but it’s also expanding it to include LA. There are three subscription types: single vehicle, multiple vehicle, and rental. Since Porsche is the most profitable automaker in the world, this service could be an easier sell for their customers who normally don’t mind paying a premium to drive Porsches. With that said, I believe Mercedes subscription service was attracting ~82% new customers to the brand, which is pure gold although it still wasn’t a convincing enough rate for them to keep at it though.

Also, just ask Porsche and Cadillac, the data that can be gleaned from these pilot businesses could lead to future business models and improve customer engagement. Further, it can create insights into more inclusive pricing models that could expand the service to more customers and ultimately gain useful insights into the more digitally savvy, commitment-phobic consumers that don’t want to be tied to their vehicles for 3, 4 & 5 years. Mercedes is likely going to roll another similar program out in the near future, and if they do it just points to the fact that they never should’ve shuttered it in the first place.

#Porsche #PorscheDrive #subscriptionservice #varietyisthespiceoflife

CITY SOLUTIONS

For adults thinking about alternate ways to get to work – It’s just like riding a bike.

This may sound silly but there’s probably a good portion of adults in the US that haven’t been on a bicycle in any meaningful way in years, maybe since childhood. That’s why for those looking to stay away from public transit (for now) and are ‘close’ enough to commute, they sign up for a primer on how to ride a bike like the one that’s highlighted in the article. I have parentheses on ‘close’ because depending on whether you have a normal pedal bicycle or an electric bicycle, acceptable distances could vary significantly.

These classes are important since most people that do use bicycles regularly do it recreationally not as their primary method of commuting to work. Further, most people don’t know their own city’s biking rules, optimal routes, or have any idea how much time & energy it would actually take commuting by bicycle it wouldn’t hurt to formalize some training to build the knowledge and confidence to know that someone who knew what they were doing walked you biked you through your first time. If this service was offered in a city I lived in, I’d definitely take advantage of it.

#morningcommute #bikingtowork #learningtobike #alternatecommute #nopublictransit

EVs

Xpeng’s worth ~$15B and had a great IPO, but what does mean?

I had an opportunity to visit Xpeng’s headquarters back in January and in the limited time I was there and able to explore, I came away pretty impressed with their operations. I definitely saw some early signs of a serious player in the automotive market in the making. I also got a feel for their ambition, which you need a lot of in order to take on the OEMs and be successful in this business. That’s why it was prudent that He Xiaopeng brought on Brian Gu, a former banker with deep connections in both China and the US. I don’t think their IPO last week would’ve been as successful without him along with one or two people Brian brought along with him to oversee it.

This is a great time to be an EV Startup. It doesn’t matter if you’re from the US or China. There’s a lot of money going into the sector which has pumped up valuations and market caps so these liquidity events have made early investors and believers a pretty good return on their investments. It’ll be some time before we know whether or not their market caps are justified since there’s no doubt that there are still major challenges ahead for these companies, not the least of which is being able to improve their sales quite significantly.

One thing’s that’s a pleasant surprise for the sector is the EU’s growth in EV sales over the last quarter. This bodes well for a sector that’s looking for another region to jump on board along with China to be EV early adopters, and consequently, the growth engines for the sector and for these companies. Many analysts initially thought that would’ve been the US, but with their still quite significant COVID-19 challenges, it may take them some time to dig out of the hole they’re currently in.

If we assume the markets are fairly ‘efficient,’ a big leap for many, then it’s telling us that Tesla is way out in front of traditional OEMs and the OEMs aren’t likely to catch up, not anytime soon at least. The market is further telling us via their current market caps, that these much smaller EVStartups have as much potential as the traditional OEMs. What remains to be seen is whether or not these startups on both sides of the pond will be able to separate themselves from the pack ala Tesla. As I’d mentioned before, that’s going to depend first on increasing their sales, and they’ll do that via great product, savvy marketing, and optimal pricing which will get even more challenging as the OEMs launch products into the market. These market caps, I believe, have substantial international sales priced to their current share prices so that’s another HUGE challenge that the EVStartups will have to successfully take on if they earn those valuations.

One thing that seems very peculiar, where the silence is pretty deafening – Where are the EU EVStartups?

#EVStartups #Xpeng #IPO #US #China #EU #marketgrowth #thetimeisnow

AVs

An interesting take on who’s the most appropriate party to determine AV readiness.

The insurance industry is being completely upended by the promise of the autonomous vehicle. But aside from AV companies telling us, what’s the signal to us that AVs are ready for primetime and daily use? What about the insurance industry? They’d likely be more trustworthy since the AV companies would likely be rushing to get services launched that could help them generate revenues quickly.

I’d never looked at this challenge this way but it does seem to make sense. But if carmakers like Tesla are able to provide insurance to their customers, where would these 3^rd party insurance agencies fit in? The data is all there in each of the vehicles, and it stands that car companies wouldn’t allow them access to it since they’d just as soon provide their own insurance for their own cars.

This isn’t one of our primary focus areas so I am not as versed about this particular disruption as with the others I regularly comment on but would love to get more ‘educated’ on it any of you readers want to take the time to walk me through it. This is one of the cases where I see the current set of companies just blowing up since there’s no logical pivot for them, IMHO, that would drive the revenue they currently generate.

#whenAVswilbesafe #insurancedisruption #Wecandoitourselves #dataplay #disuption