RedBlue Newsletter: 17Jun22

Date
June 17, 2022

A concise yet comprehensive picture into all things mobility

Podcast: The Auto Analyst Series

Episode 3: Dan Levy, Senior Equity Research Analyst at Credit Suisse

The Automotive Analyst Series: Each episode opens the floor to an equity analyst covering the space. We go beyond the latest earnings to dive into the narratives & frameworks to understand where and why the industry is moving.

You can listen on Spotify & Apple as well

This episode we speak with Dan Levy, head of US autos research at Credit Suisse. Dan gives an overview of the transformation of autos from a sector defined by its cyclicality to one rocked by existential questions and secular forces. We touch on stories of how Elon Musk shook up the expectations for handling earnings forecasts to where Mary Barra and Jim Farley have struggled or excelled in managing the evolution of their carmakers.

Commentary

You can listen to a short discussion between RedBlue Partners Olaf & Prescott about the themes in this newsletter here:

You can listen on Spotify & Apple as well

📱 The software-defined cabin

At WWDC 2022, Apple unveiled the “next generation” CarPlay:

image

The updated offering integrates with all the screens in the vehicle (including instrument cluster) and allows deeper control of vehicle functions, including climate control.

I have seen this console - which has a lot of information like a calendar displayed - described as overwhelming in comparison to the minimalist Tesla Model 3. The critical thing is that the comparison is a natural one to make - Apple’s software allows carmakers to offer a customer experience that compares to Tesla’s. It is on digital experience that carmakers have fallen behind, while the digitized driving experience has increasingly come to define Tesla’s brand dominance (see: Is TSLA a tech stock or a fashion product?).

This critique that it is overwhelming also misses the key advantage of software: when Apple owns digital real estate, just like with the Apple Watch, it can mold according to each user’s preferences.

The question is how deep this goes. In 2016, I wrote about the automotive opportunity for Apple. Rather than building the full car, I argued that Apple can integrate deeply into vehicles leveraging its strength in silicon and UX design to capture value while avoiding the liability and pain of vehicle manufacturing:

https://medium.com/maniv-mobility/understanding-business-model-disruption-in-the-mobility-industry-980fa276b70e

This integration is still relatively shallow compared to where it may go. The silicon in vehicles is still very distributed and the opportunity for Apple to get deeper into the brain of a vehicle is a fascinating though complicated one.

The power of smartphone app ecosystems have seeped into consumer expectations of their cars. Tesla’s shown consumers they can expect more. But this process elsewhere has been relatively slow in comparison to China. Whereas our grandparents bought cars similar to the ones we still drive, in China, most car-owners were smartphone-owners first. They expect digital integration as a default.

So while Apple (along with Google), a smartphone company, is increasingly moving into the car, it is notable that Geely, perhaps the most important carmaker in China (which also owns Volvo and Lotus) just acquired Meizu, a once-leading smartphone company and seems interested in manufacturing phones (link). Meanwhile, it also just started launching its own array of low earth satellites with the goal of enabling low latency connectivity to its vehicles and positing to enable autonomous functionality. Finally, Geely has launched a JV with Baidu to make an “autonomous vehicle”… creatively named Jidu (as in Geely=Ji and Baidu=du) (link). The company has aggressive plans to commercialize their first vehicle, the delicately named ROBO-01 which they just unveiled (link).

Baidu is the Google of China and has been developing autonomous technology for years. But this car is not designed to be fully autonomous any time soon - autonomy here is a feature targeted at “users who like cutting-edge technologies.” Much like Tesla’s perpetually delayed FSD, the point of “autonomy” in this context is more about cabin experience and brand mystique than it is about changing the business model of transportation as Cruise or Waymo aim to do. But for now, this is a key part of the battleground in order to sell vehicles that are electric and digitized to the masses.

🍔 American car obesity

Tesla is seen as the most important company in one of the most important revolutions in a century. It happens to shine brightest in the world’s most significant market, too. Though its global leadership is very strong, at home in the US Tesla is a complete behemoth. Its brand and stock have benefited accordingly.

Source: Evercore ISI
Source: Evercore ISI

The revolution Tesla is credited for launching is now bigger than Tesla itself. Much of the growth in the EV market needed for the world to get to 60m new units sold by 2035 (60 times what Tesla sold last year) isn’t coming from Teslas or cars that look like them. Instead, a major portion of that growth has been and will continue to be from mini-cars in China. At $5k, cars like the Hongguang Mini EV or the QQ Ice Cream are affordable for the mass market while solving for the most important trips one takes - short drives, largely by yourself or with one other person.

Hongguang Mini EV
Hongguang Mini EV

These are completely unlike the vision for electric mobility Tesla has evangelized. Teslas are fast, sexy and large - everything Americans want. When asked about BYD, a maker of many small Chinese EVs, Musk laughed dismissively, saying “have you seen their car?” (link). Granted, the most popular minis in China aren’t technological marvels - they’re defined mostly by what has been removed than what has been created (link). And they only follow the technological trails that high-ticket automakers like Tesla blazed.

What is groundbreaking is that SAIC-GM-Wuling, the maker of the Hongguang Mini EV, says its car is profitable before government subsidies. That’s a breakthrough as important as anything (link).

EVs designed to succeed in the American market are structurally expensive. The biggest issue is range - to meet consumer preferences, 60kWh to 100kWh packs are becoming the norm. And as scarcity of inputs and manufacturing capacity reverses and battery price declines, it’s obvious that EVs are going to go in the same direction - American EVs now average over $60k (link).

Per our interview with Bloomberg in Singapore last week (link), this is a uniquely American problem of car obesity. Like medical obesity, it stems from our individual lifestyle choices, but it is solidified by how we have designed our food - err, transportation system. The decades-long unhealthy trend of growing car size and urban design built around parking lots and ten lane freeways has made it increasingly dangerous and unpleasant to walk or bike - or even drive a smaller car.

Just as obesity is bankrupting the American medical system, automotive obesity is a vicious tax on everyone and everything - with battery costs to haul hefty SUVs only the latest example. As we discussed in the last newsletter, car obesity is a driver of decade-high rates of traffic injuries & death, too (link).

The result is that American EV adoption not only lags Europe and China, but has little hope of catching up without an astronomical expansion of government subsidies for people to afford these cars.

This probably doesn’t matter for the legacy car makers like Ford, GM, Toyota and the like. They can exit from low cost markets, resigning themselves to the comfortable position of selling what effectively are “luxury” products in these places. So long as the US continues to be a market defined by $100,000 mega-EVs, they can grow nicely.

But environmentally and socially, electrifying the miles we travel is the actual goal. Insofar as smaller, more affordable EVs accomplish this, they’re likely as or more important than Tesla to the decarbonization of ground transport.

Your thoughts?

We’d love feedback on our newsletter! Let us know here.

News

Priority

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Priority

All news

NameRelease dateCategoryLink
Cupra shares three 'electrified' models to arrive by 2025 alongside plans for global expansion
June 8, 2022
EVOEM
Bird Laying Off 23% of Its Staff
June 7, 2022
Micromobility
Exclusive: Elon Musk wants to cut 10% of Tesla jobs
June 4, 2022
Conflict or crisis
China's Geely launches first nine low-orbit satellites for autonomous cars
June 2, 2022
SpaceChina
China’s Car Sales Begin to Rebound as Government Revs Up Subsidies
June 9, 2022
ChinaIndustry trends
Announcing Teleo’s Series A
June 8, 2022
EVClosed environmentRobotics
Tesla Faces Questions From Regulator Over ‘Phantom Braking’ Complaints
June 3, 2022
Regulation/Policy
Apple's car vision extends far beyond music
June 10, 2022
Cabin Experience
Massachusetts court rejects ballot to define gig workers as contractors
June 15, 2022
Future of work / Gig economy
Self-driving cars now being tested in Boca Raton, could hit the roads in matter of months
June 3, 2022
Ridehail
Toyota Now Offering The AV-Ready Sienna Autono-MaaS To Automated Driving Developers
June 7, 2022
EVAutonomy
Sony and Honda create joint EV company, and Sony gets top billing
June 16, 2022
EV
Billionaire Larry Ellison is leaving Tesla's board of directors
June 13, 2022
EV
Waymap’s app helps the visually impaired navigate public transit
June 17, 2022
Transit & adjacent
Fit for 55: MEPs back objective of zero emissions for cars and vans in 2035 | News
June 8, 2022
Regulation/Policy
Tata Motors bags an order for delivering the biggest EV fleet in India
June 6, 2022
EVIndiaOEMRidehail
Tesla is considering sites for new factory in Canada, Mexico, along with US
June 13, 2022
EV
Electric mobility is hot, but its lithium-ion batteries are burning
June 7, 2022
Batteries
Kodiak Robotics releases new tech to simplify autonomous truck maintenance
June 12, 2022
AutonomyTrucking
Lucid, Rivian Each Awarded CEOs More Than $400 Million in Pay Last Year
June 8, 2022
EV
Lime is trailing shared electric motorbikes
June 14, 2022
Micromobility
Southwest Airlines is investing in a sustainable aviation fuel pilot program
June 3, 2022
Aviation
Dual-chemistry battery tech could push BMW’s iX EV to 600-mile range
June 14, 2022
EV
How to Make Electric Scooters Safer
June 11, 2022
MicromobilityIndustry trends
Apex.AI tapped to implement its autonomous tech into swarms of electric farming robots
June 9, 2022
RoboticsClosed environment
Hyundai Launches Driverless Ride Hailing Service In Korea
June 9, 2022
AutonomyOEM
Jaguar Land Rover rolls out what3words geocoding tech to vehicles already on the road
June 10, 2022
Cabin Experience
Solid Power Announces Installation of EV Cell Pilot Line
June 6, 2022
Batteries
Volocopter’s longer-range drone taxi completes its first test flights
June 7, 2022
VTOL / AAM
Faraday Future says it plans to open a Chinese factory by mid-decade
June 9, 2022
OEMChinaManufacturing
The Future of Trucking Isn't Batteries Yet, Says Volvo
June 7, 2022
BatteriesHydrogen
Are Cruise's self-driving cars ready for prime time?
June 10, 2022
AutonomyIndustry trends
Cruise can finally charge for driverless robotaxi rides in San Francisco
June 3, 2022
RidehailAutonomy
ZiGGY: A robot that saves you a spot and charges your EV
June 14, 2022
Charging/Grid
Taxi medallion values inch up for first time since 2014
June 9, 2022
Ridehail
Cadillac CELESTIQ to be Built at GM’s Global Technical Center
June 15, 2022
OEM
Ford dealer service techs get headsets to connect with vehicle experts
June 4, 2022
Aftermarket / auto retail / dealersOEM
Gatik’s self-driving trucks to haul Georgia-Pacific goods to Sam’s Club stores
June 7, 2022
AutonomyLogisticsFreight
Tesla Raises Prices Amid Surging Costs
June 16, 2022
EV
Russian tech giant Yandex removes national borders from Maps app
June 10, 2022
Conflict or crisisRegulation/Policy
Why everyone is freaking out about Target’s inventory
June 9, 2022
E-CommerceLogistics
Polestar to debut first electric performance SUV, Polestar 3, in October 2022
June 7, 2022
EV
Ford Recalls Nearly 49,000 Mustang Mach-E Cars, Stops Deliveries
June 14, 2022
EV
Audi's charging hub proves successful in pilot phase, several more charging sites to follow
June 8, 2022
Charging/Grid
Old Electric-Vehicle Batteries Are Getting a Second Life
June 13, 2022
Batteries
QuantumScape’s Manufacturing Chief Leaves Over Management Clash
June 11, 2022
BatteriesConflict or crisis
Scott Introduces Addict eRide High-Performance Electric Road Bike
June 6, 2022
Micromobility
Ford to invest $3.7B in U.S. factories, add 6,200 union jobs in push to build more EVs
June 2, 2022
OEMEV
Tesla expands Supercharger pilot program for non-Tesla EV owners to a large part of Europe
June 16, 2022
Charging/Grid
Honda announces a smart new e-scooter that balances itself - It's named Striemo
June 14, 2022
Micromobility
Autonomous vehicles topic of West Virginia law Land Line State
June 2, 2022
Fleet management / telematics
Power Company NextEra Plans to Cut Carbon Emissions to Close to Nothing by 2045
June 14, 2022
Industry trendsRenewables
Amazon Is Closing Its Gig Economy Delivery Service in Germany
June 7, 2022
Future of work / Gig economyQuick commerce
EV SPAC Faraday Future now has the attention of the DOJ
June 10, 2022
Luxury / enthusiastEVConflict or crisis
Teslas with Autopilot a step closer to recall after wrecks
June 10, 2022
Autonomy
Toyota and Woven Planet Have Developed a New Portable Hydrogen Cartridge Prototype
June 2, 2022
HydrogenSmart City / Urban Renewal
EVs Now Average Over $60,000 as Tesla, Rivian, Ford Raise Prices
June 16, 2022
EVAftermarket / auto retail / dealers
USPS Revises Vehicle Plan, May Add More EVs
June 7, 2022
EVLast-mile
BMW didn't update Middle East social account with pride flag
June 3, 2022
Luxury / enthusiastOEM
Brompton recalls folding e-bikes sold between May 2019 and March 2022 over risk of debris getting trapped between mudguard and tire causing front-wheel lockup
June 10, 2022
Micromobility
Uber Eats will now deliver your waffles across the country
June 7, 2022
SuperappE-CommerceFood delivery
Segway Unveils New AI-Powered Scooter at Micromobility Europe
June 6, 2022
Micromobility
Stellantis battery-grade lithium deal sets sustainability benchmark
June 13, 2022
Batteries
Bird plans to layoff 23% of staff
June 8, 2022
Micromobility
Lawmakers stall over self-driving cars
June 7, 2022
Regulation/Policy
With ride-hail and delivery launch, Fenix wants to be the Bolt of the Middle East
June 6, 2022
RidehailMicromobilitySuperapp
White House announces plan for new standards for first-ever national network of 500,000 electric car chargers
June 9, 2022
Regulation/PolicyCharging/Grid
Mazda vows to make factories carbon neutral by 2035 while it continues to build ICE vehicles
June 6, 2022
OEM
Ghent to Get e-Bike and Cargo Bike Sharing Services
June 10, 2022
Micromobility
Amazon to Make Deliveries by Drone in California Later This Year
June 13, 2022
E-Commerce
Universal Hydrogen and Connect Airlines Announce Firm Order for Conversion of 75 ATR 72-600 Regional Aircraft to Be Powered by Green Hydrogen
June 9, 2022
HydrogenAviation
Rivian’s Great EV Expectations Meet the Harsh Reality of Manufacturing
June 4, 2022
EVManufacturing
Ferrari to Debut SUV-Like Model in September
June 16, 2022
Luxury / enthusiast
Musk: FSD Beta Version 10.13 Will Handle Roads With No Map Data
June 5, 2022
Autonomy
Electrifying Fleets One Solution to World's Car Obesity Problem
June 13, 2022
EV
Jumia’s venture into quick commerce could slow its path to profitability
June 16, 2022
Quick commerce
Thousands of Mobike users’ passports and IDs exposed online
June 8, 2022
Cybersecurity
Hexagon | NovAtel and Xona Space Systems Sign MoU
June 2, 2022
Space
Zoomo Has a Fully-Functional Prototype of Its Moped Killer Delivery Bike That Hits 28 Mph
June 6, 2022
MicromobilityLast-mileFood delivery
UBCO announces new U.S. ride and service Hubs as it ramps up growth
June 7, 2022
Micromobility
Biden Plan for EV Chargers on Highways Meets Skepticism in Rural West
June 13, 2022
Regulation/Policy
Bolt to deploy 16,000 e-bikes across Europe
June 7, 2022
Micromobility
Waymo Via and Uber Freight partner to accelerate the future of logistics
June 7, 2022
FreightAutonomy
Amsterdam-based Rockstart invests in micro-mobility platform Lanterne
June 3, 2022
Micromobility
UPS begins US testing of its cute mini electric vans based on four-wheeled e-bikes
June 16, 2022
E-Commerce
Reports: Rapid Delivery Provider JOKR Pulls Out of U.S. But Still Plans Latin America Expansion
June 16, 2022
Quick commerce
Gorillas enters the private label market
June 7, 2022
Quick commerce
Singapore’s taxi operator ComfortDelGro enables tourists from Malaysia and South Korea to use mobile wallets apps for paying fares
June 9, 2022
RidehailSE Asia (SEA / South East Asia)
Scania launches its regional long-haul electric truck
June 13, 2022
Trucking
Solid Power’s pilot production line brings road-tripping solid-state batteries closer to reality
June 7, 2022
Batteries
Lucid partners with Bank of America to launch Lucid Financial Services
June 7, 2022
FinancingEV
Former Amazon Executive Dave Clark Named CEO at Flexport
June 8, 2022
LogisticsFreight
Uber loses appeal as top Swiss court rules company is an employer
June 3, 2022
Regulation/Policy
Tesla Tops List of Crashes Thought to Involve Driver-Assistance Technology
June 15, 2022
EV
Baidu's electric vehicle firm Jidu unveils first 'robot' car
June 8, 2022
Robotics
Meet Sparky, the electric tugboat operating in the Ports of Auckland with 2,784 kWh of power
June 8, 2022
MaritimeEV

Fundraises

Priority

2 views

Priority

All fundraises

NameRelease dateCategoryLink
Greaves Electric Mobility Partners with Abdul Latif Jameel. Abdul Latif Jameel Commits Total Investment of US$ 220 million
June 2, 2022
MicromobilityEVIndia
Rock the Kasbosch? Bosch has a new $295M VC fund
June 3, 2022
Renewables
AI-powered parking platform Metropolis bags $167M
June 15, 2022
Parking
Imaging sensor startup Vayyar lands $108M to fuel expansion
June 6, 2022
AutonomyCabin Experience
Yummy’s super-sized round helps grow its delivery, ride-sharing super app in LatAm
June 2, 2022
Quick commerceRidehail
Nimbus launches a tiny EV prototype that’s like a motorbike with a roof
June 8, 2022
EVMicromobility
Marc Lore’s Food-Delivery Startup Wonder Is Valued at $3.5 Billion After Capital Raise
June 14, 2022
Food deliveryQuick commerce
The delivery market is coming down from its pandemic highs
June 3, 2022
Quick commerceIndustry trends
Onfleet nabs $23M to further develop its last-mile delivery software
June 7, 2022
Last-mile
ABB delays IPO of E-mobility business citing 'challenging' market
June 7, 2022
EVCharging/Grid
Echodyne’s compact, steerable radar spots $135M investment and prepares to diversify
June 13, 2022
Autonomy
Shield AI raises $165M at a $2.3B valuation to fuel development of its military autonomous flying systems
June 9, 2022
AutonomyAviation
Mexico City’s Kolors wants to disrupt intercity busing in Latin America
June 3, 2022
LATAMTransit & adjacentRidehail
Starting with Ontario, Kruzee aims to become North America’s leading online driving school
June 7, 2022
Regulation/Policy
Overair nabs $145M to produce eVTOL prototype by 2023
June 14, 2022
VTOL / AAMAviation
China’s Jidu Robo-1 Looks Like It’s From the Future. Maybe It Is
June 8, 2022
ChinaIndustry trends
Chinese COVID lockdowns prove a big break for delivery robots
June 7, 2022
RoboticsLogistics

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