The tech sell-off that began in late February and that has continued into the earnings releases of the Big Three (NIO, Li Auto, XPeng) is freaking people out. For those EV & mobility-related companies with their head down working hard to build something lasting though, this shouldn’t phase them. The strongest companies with the best management teams that are designing & manufacturing the best products will just look at this as part of doing business in a FOMO & retail investor-driven market. They’re not chasing quarterly results and aren’t likely as worried about how much value they’ve lost over the last few weeks, which for the Big Three has been substantial (>25%).

For the companies who’ve not yet gone public, this shouldn’t dissuade them from moving forward unless they were hoping for astronomical valuations since they’re not likely there or available anymore.

The one thing a huge loss in value could bring is higher borrowing costs so now each of these company’s corporate finance teams are probably staring at their bank accounts and second-guessing whether or not they wrung everything they could’ve out of a favorable capital markets while they had the chance. After all, their lofty ambitions aren’t going to pay for themselves.

两会or the Two Sessions is going on as we speak so the news cycle here has been a bit weirder than normal. That said, there hasn’t been much about the EV sector to chew on but I’ve posted a bit about what we’ve heard so far down below.

Lei Xing and I are at it again this Thursday 8am EST in our Clubhouse room. I invite those that are on Clubhouse to drop-in listen or better yet contribute to the discussion. Looking forward to it, we’ve gotten some terrific feedback about the room and have really learned a lot between show #1 to #3.  

Two EV-related areas that will continue to receive stimulus measures are EV infrastructure & EV battery recycling. Expectations are high on reaching the government’s stated goal of 20% of all vehicles sold in China be NEVs by 2025 (from around ~5% in 2020) so the supporting infrastructure will be needed in order to achieve that lofty goal.

FYI: The Two Sessions is an annual planning meeting for the Chines govt where policies to support industries are discussed and rolled out.

Bhavish Aggarwal, the founder of Ola Cabs, a company that Uber competes within India in the ride-hailing space has now moved onto electric moped hardware design, software development & manufacturing with his newest venture Ola Electric. Spun out of Ola Cabs, Aggarwal’s vision for Ola Electric is to be India’s global player in the EV sector. First, he plans to manufacture 10M vehicles / annum or about 15% of the entire world’s scooters by 2022 at a plant about a 2.5 hr ride southeast of Bangalore. Did I mention that he was ambitious?

Once Aggarwal has reached that lofty goal, he wants to quickly move upstream within the next 3 years to design and build passenger vehicles out of that same $330M facility. He is quoted as saying ‘Our ambition is to build the world’s leading urban mobility EV company’ so I am not sure he can be any clearer with his goal. He has the support of some deep-pocketed, well-connected investors like Hyundai / Kia as well and he was able to grow Ola into the top ride-hailing company in India which was NOT easy to do. More importantly, Aggarwal also has the support of India’s Prime Minister Modi for his ambitious goals. 

Is it the right timing for India to get out from under all that pollution to nurture a few national champions in clean energy and mobility? With >1.5B citizens, Ola could leapfrog some current moped manufacturing front-runners and vie for leadership positions in some of the key South & Southeast Asian (SEA) cities that are currently dominated by Honda & Yamaha. With annual sales of mopeds at ~20M units annually, it’s a region worth competing in.

One announcement that I’d not heard until watching the linked video is that Niu will be working with Lime in the US now in addition to their current moped sharing partner Revel. Lime has a much larger footprint in the US and globally so this could be a pretty significant get for Niu.

There should absolutely be more studying going on with what the author coins as: ‘How’ to sell ‘What’ to ‘Whom.’ A lot of credit for MS’s turnaround should be given to Nadella though since I am certain that pivoting the company and its sales organization was an exercise in management genius and it shows. Since taking over for Steve Ballmer, Satya has grown MS from a respectable $300B market cap to a current market cap of $1.74T, that’s with a ‘T.’

This is the same type of transformation the automakers are currently going through with their sales organizations, or at least they should be. I understand that selling software and cloud space isn’t the same as selling passenger vehicles but there are still lessons to be learned here.

As the author outlines,

Step 1: Rethinking Customer Segmentation

Step 2: Restructure the Sales Organization

Step 3: Use Sales Force Management Instruments to Drive the Right Behavior

For those working in the automotive marketing and sales departments, this should be a ‘MUST READ.’ It’s a lot easier said than done, but it MUST be done if car companies are going to shift their revenue from vehicle sales to a service & subscription-based revenue.

With all the recent turmoil that Nissan has had to go through (Google: Carlos Ghosn Nissan), it shouldn’t be surprising that sales are lagging for them in the largest car market in the world. The revised regional strategy focusing on China, Japan, and the US should help a bit but it’s the product strategy that needs to be realigned globally. This is what I don’t understand completely though about their initiative to reduce parts costs since cost reductions should be considered at every opportunity. If part’s cost too much, that seems to me like an engineering issue as much as a sourcing one. Anytime there’s an opportunity to eliminate unnecessary costs be it parts, overheard or manufacturing costs, they should be pursued as long as it’s not at the expense of quality, manufacturing efficiency, and reliability.  

A final note - It sounds like Nissan will try to pursue the ultra-low cost vehicle segment where the SGM Wuling HongGuang Mini EV plays. Good luck with that! 

The Cross is more for off-roading with similar specs to the Sport although it’ll be a bargain compared to the Sport at $8,549. Both are pretty heavy (~48ish lbs.) considering their frames are carbon fiber and for being branded Porsche, they slow with a top speed of 25km / hr. although that may be due to the legal limit for e-bikes in Germany.