BY AUTOMOTIVE VENTURES | DEC 1 2025 | VIEW ONLINE

🚗

Automotive

"The Knowledge," is the hardest driving test in the world. In a world of GPS and car-hailing apps, some Londoners still want to drive a traditional black cab. First, they must memorize thousands of city streets. The Knowledge is a grueling examination that requires applicants to essentially memorize more than 100 square miles of city streets. Some test takers are asked, late in the process, to describe a route that avoids certain roads, so they prepare accordingly. Hundreds of people still apply each year, and the notoriously difficult testing regimen can take three years, if not longer, to complete. More than 150 years after it was created to train cabmen in horse-drawn carriages, the Knowledge still covers roughly the same area: a six-mile radius of the city surrounding Charing Cross, including some 25,000 streets and 6,000 points of interest. Aspiring drivers must first pass a multiple-choice exam about those landmarks and 320 set routes. Studying for this can consume two years. Only then do applicants get to arguably the hardest part: a series of oral tests at London’s transport authority office in which they must recite the shortest route between two points. Some students take three years or longer to complete the process. Successful candidates receive an oval badge with their cabdriver number and the opportunity to pick up passengers. How much the drivers make varies — some in London have reported to the job-seeking site Indeed that they earn around 50,000 British pounds a year, while others say it’s possible to earn into six figures. | The New York Times ($)For years, it has seemed no sticker price was too high for American car buyers. Even as average new car prices approached $50,000 this year, dealers fretted more over depleted inventories than losing customers to sticker shock. Those days are coming to an end. Increasingly stretched consumers are starting to draw the line on what they will pay for a new car, according to dealers, analysts and industry data. Car buyers are downsizing, buying used vehicles, taking on longer car loans and holding out for deals. | The Wall Street Journal ($)Volkswagen is struggling to adjust to the rise of electric vehicles, big sales declines in China, and lacklustre demand in Europe. Its chief executive, Oliver Blume, warned at the time that the core VW brand faced an unprecedentedly “serious situation”. Rival German carmakers BMW and Mercedes-Benz have also been hit hard by the downturn in China sales and the imposition of tariffs. But Volkswagen, the global symbol of German carmaking prowess, is more reliant on lower-margin mass market cars and employs a disproportionately large number of staff in Germany — two-fifths work there, even though only 19% of its vehicles are manufactured domestically. Production costs in the country are among “the highest worldwide”, says Wisbert. In China, Volkswagen has sought to shore up its position by localizing development and says it can halve production costs for a new battery car compared with Germany, thanks to lower labour costs, quicker development times and stronger supply chains for key components. | Financial Times ($)

French car parts maker Valeo has said the industry is undergoing a “Darwinian transformation” and warned that most job losses at the company will be in Europe unless Brussels protects the sector from Chinese competition. Christophe Périllat told the Financial Times that the declining car market “demands a constant optimisation and adaptation that is permanent”, saying his company had not finished with restructurings that led it to close 38 sites from 2022 to 2025, while opening only four in the same period. The warning comes as the European Commission gears up to respond on December 10 to demands from the industry, including Valeo, to tweak its target to ban new sales of combustion engines in 2035 and introduce rules on the amount of European-produced content in cars. CLEPA, the European Association of Automotive Suppliers, has warned that up to 350,000 jobs could be lost by 2030 unless action is taken. | Financial Times ($)

Amazon tried for nearly a decade to convince brands to list their big-ticket items on its website, with mixed results. Many balked, saying at the time they didn’t want their products to sit alongside knockoffs, or toothpaste. While convincing companies to work with Amazon was slow, this year’s Black Friday shoppers will be able to browse Saks Fifth Avenue’s shoe department, as well as Hermèsés Birkins and ROLEX watches from luxury reseller Rebag. Last week, Ford announced that its dealers would offer used cars for sale on Amazon, joining Hyundai and rental car company Hertz. The question is no longer: Will these brands work with Amazon? Instead, it has become: Will anyone buy this stuff?. | The Wall Street Journal ($)

Elon Musk wanted Tesla’s electric door handles to embody the future — sleek, seamless and emblematic of the cool he envisioned plug-in cars would come to personify. He succeeded: In just over a decade, handles that function at a touch have become hallmarks of modern automotive design, replicated from Detroit to Shenzhen as automakers raced to borrow Tesla’s aesthetic. Now some drivers and industry analysts say this much-imitated style is proving to be a safety hazard. Electric doors are locking people out of their cars or — even worse — making it harder for them to exit, even after a crash. In some cases, the outcome has been deadly. Complaints to the U.S. National Highway Traffic Safety Administration NHTSA about the doors — across all car models — jumped 65% in 2024 from the prior year. Among 520 complaints about electric handles and doors that were filed with federal regulators over the last decade, there were numerous allegations of pets and kids being trapped inside a car after a loss of power. | Bloomberg ($)

🇨🇳

China

How should the rest of the world respond to the staggering pace of Chinese innovation? The competition risks hollowing out Western economies. Where there is evidence of Chinese dumping and subsidies, counter-measures against Chinese exports are justified and necessary. Where there are security risks action is justified, too. The data collected by robotaxis could pose a surveillance threat; Chinese pharma has suffered corruption scandals. Yet knee-jerk protectionism in the name of security or safety would be a mistake. Blocking or limiting the fruits of Chinese innovation would deprive consumers of the benefits of cheaper and better drugs and transport at a time when voters worry about affordability. That is why it would be better for Western economies to rethink how innovation works at home. It is tempting to be fatalistic about China’s rise—to conclude that its dominance over the technologies of the future can be achieved only through authoritarian diktats and wasteful handouts, and that democracies therefore cannot follow in its footsteps. But the inventiveness of China’s private sector and agility of its regulators have been crucial ingredients, too. Here, alas, the West is going in the wrong direction. America has scale and the deep pockets to compete. But in many states, particularly Democratic ones, regulators are blocking or stalling autonomous vehicles. The government is waging war on universities and cutting funding for basic research. As in other Western countries, it is hostile to immigrants, including gifted ones. In drugs, as China’s share of clinical trials has risen, Europe is losing ground. Its economies desperately need to integrate further so that they can finance and develop new technologies. There too, regulators often prize safety at the expense of risk-taking and experiment. Nothing says that China must own the future. But if the West wants to compete in self-driving cars and medicine, let alone EVs, solar power and other vital technologies, it must learn the right lessons from China’s rise. | The Economist ($)

For much of the 2000s and 2010s—and for most OEMs until 2022—China was, simply put, a cash cow. Despite high market access barriers including mandatory joint ventures (JVs) and high tariffs (25% until lowered to 15% in 2018), foreign operations in China required relatively little investment yet delivered outsized returns. Foreign carmakers dominated the market, with Volkswagen alone reaching nearly a 20% market share in 2019. In the 2010s, nearly every foreign carmaker earned substantially higher margins in China than in other global markets. The China boom years are over. Foreign OEMs, once holding around 60% of the market, now sell 40% of vehicles in China, and their market share continues to trend downward. Even as China’s overall auto market expanded, foreign OEM sales fell 22% between 2020 and 2024, and their exports to China dropped 38% over the same period. Several forces have eroded foreign OEMs’ market shares and profits. Domestic competition has intensified, propped up by billions of yuan in state grants aimed at building national champions. The property downturn has curbed demand for high-end vehicles, hitting foreign brands hardest. A sector-wide price war is squeezing margins, while tax changes and trade-in policies encourage consumers to trade down—often to Chinese OEMs’ advantage. Shifting consumer preferences are also a factor. A more patriotic Chinese youth increasingly prefers domestic brands. Aggressive EV adoption targets and supportive policies have left incumbent foreign carmakers trailing in the rollout of competitive new models, weakening their brand image. In the context of the US-China trade war, retaliatory Chinese tariffs on US-made cars have cut into margins for exporters such as Mercedes-Benz AG and BMW Group (which export substantial volumes out of the US). | Rhodium GroupMichael Dunne from Dunne Insights notes BYD's dramatic increase in units exported from China. | Dunne Insights

For Western companies in China, a new reality has set in: The easy money is gone and competition is only getting fiercer. As China’s economic growth has slowed in recent years, consumers have become choosier about their spending. Meanwhile, the rise of formidable local rivals has crowded the market and driven vicious price wars, eating into profit margins. The fierce competition is perhaps most apparent in China’s auto industry, where price wars have broken out and local companies have taken market share from long-dominant foreign car brands. Volkswagen has likened China to a “fitness center” for the company. The German automaker is doubling down on its “in China, for China” strategy of developing and manufacturing products in the country for Chinese consumers. At a recent import expo in Shanghai, Volkswagen said it is developing its own chip for advanced driver-assistance systems and autonomous driving through a joint venture with a Chinese firm. “We are investing heavily in engineering capabilities, and especially here in China, because China is the most innovative hub for driving the automotive industry,” Oliver Blume, chief executive of Volkswagen, said at the import expo. For many foreign carmakers, operating in China is about being near the action and the supply chains. | The Wall Street Journal ($)

Volkswagen has said it can produce an electric vehicle entirely made in China for half the cost of doing so elsewhere, as the German automaker fights to reclaim its share in the world’s biggest market.  Europe’s largest carmaker said on Tuesday that, following a series of investments in the country, it can for the first time develop new cars outside Germany, including testing and deploying new technologies such as assisted driving.  VW is preparing to release about 30 EV models in China over the next five years, in a bet on localized research and development. The carmaker said that, compared with the 2023 production costs for EVs in Germany, the cost for some models in China had been reduced by as much as 50% due to supply chain efficiencies, including battery procurement, shorter development periods and lower labour costs.  The German group has invested billions in its innovation centre in Hefei, eastern China, where it has more than 100 advanced laboratories for testing software and hardware, alongside batteries and EV powertrains. | Financial Times ($)

Volkswagen plans to export cars developed and made in China to more overseas markets, as the German automaker looks to leverage its growing know-how in Chinese technologies to compete with Chinese rivals abroad. The company, which started exporting China-made petrol limousines to the Middle East about six weeks ago, is evaluating what other made-in-China offering could suit other markets, Thomas Ulbrich, chief technology officer of Volkswagen Group China, said. | Reuters ($)Chinese suppliers are inundating Germany with low-cost components, piling pressure on local manufacturers already grappling with muted demand and elevated costs, according to labor officials. The influx of electrical systems and forged metal parts is hitting companies, including Robert Bosch, Mahle, and PWO. The imbalance threatens local production, as China’s industrial upgrades narrow quality gaps that once protected German companies. Chinese car parts are “pouring into the German market at incredible speed,” said Andreas Bohnert, who chairs the works council at PWO, which makes steering columns and other precision-metal parts. “The pace at which these products are arriving — and, one has to admit, at a relatively good level of quality — shows that the Chinese have really done their homework.” Some suppliers are already feeling the squeeze. At Mahle, general works council chairman Boris Schwürz said Chinese rivals are moving into product areas long dominated by German manufacturers. Some offers reaching automakers arrive at “prices that in certain cases are clearly below manufacturing cost,” he said, adding that Volkswagen Group, BMW, and Mercedes-Benz are buying the Chinese parts. | Automotive News ($)

Investors in Chinese electric vehicle stocks are anxious about the industry's future after disappointing earnings results. Chinese EV makers face a challenging demand environment next year, with domestic demand expected to soften as government policy support wanes. Earnings may suffer further with costs seen rising and discounts for consumers likely to continue, hurting margins and making investors cautious about the sector. | Bloomberg ($)

While China’s long-term AI goals are no less ambitious than the U.S. tech titans, its near-term priority is to shore up its role as the world’s factory floor for decades to come. With exports under threat from rising costs at home and tariffs abroad, that is no longer assured. The push can be seen across the giant country in scores of companies—fueled by billions of dollars in government and private technology development—that are transforming every step of making and exporting goods. Executives involved in China’s efforts liken the future of factories to living organisms that can increasingly think and act for themselves, moving beyond the preprogrammed tasks at traditionally-automated factories. It could further enable the spread of “dark factories,” with operations so automated that work happens around the clock with the lights dimmed. The advances can’t come quickly enough for Communist Party leaders, who fear China could lose its status as the world’s factory floor. Its population is shrinking, young people are avoiding factory jobs, and pushback against Chinese exports has intensified in many countries. At the same time, President Trump is pledging to bring home vast numbers of manufacturing jobs through tariffs on China. AI offers a lifeline to head off those risks, by helping China make and ship more stuff faster, cheaper and with fewer workers. Although some doubts are creeping in globally about how quickly AI will transform the world, China isn’t waiting: It wants to deploy what is available today quicker than the U.S. can, locking in any advantages. | The Wall Street Journal ($)

🤖

Autonomy, Robotics & AI

Urban Economies reflect how their residents get around. And before long, that will start to change—more dramatically than at any time since the automobile was invented over a century ago. The robotaxis now autonomously shuttling passengers around the Bay Area or Los Angeles may look like ordinary cars, perhaps with a few ungainly sensors, but as they spread and develop, they will operate under different constraints to human-driven ones, and accordingly reshape cities. Over the next year, robotaxis will become increasingly difficult to ignore. Waymo, Google’s offering, plans to expand to cities including Miami and Washington. London will mark the company’s first international expansion and put it in direct competition with Uber, which is also set to launch a self-driving offering in the city. San Francisco’s experience suggests that public and regulatory resistance—a formidable force in many cities—can be overcome. A thin majority of residents opposed robotaxis in 2023 when Waymos hit the streets. Today two-thirds are in favor. Pioneer cities offer a glimpse of changes to be expected elsewhere. Road safety ought to improve: Waymos are involved in ten times fewer serious crashes than an average human driver. So far, at least, in San Francisco there have not been job losses among cab or rideshare drivers. The cars operate at the top end of the market. A trip with a Waymo costs roughly a third more than a ride-hailing service on average, reflecting the swish Jaguar cars the firm uses and research spending that must be recouped. Despite the cost of a ride, robotaxis’ market share is rising fast. | The Economist ($)

Neighbors have complained that the automated Waymo fleet creates a noise nuisance when operating at night at charging stations in Santa Monica. The Santa Monica City Council voted unanimously to order Waymo to halt nightly operations between 11 p.m. and 6 a.m. | Los Angeles Times ($)

Once robotaxis prove to be sufficiently safe and no more expensive than a human-driven cab, demand may accelerate rapidly. The question then is who will conquer the market. For now, Waymo is the front-runner, at least in America. Its self-driving technology has been designated as Level 4, which means that in pre-approved areas its vehicles can operate without direct human supervision, whereas Tesla’s robotaxis are between Levels 2 and 3, meaning they still need a supervisor in the car. Because of Waymo’s focus on safety, it has kitted out its cars with more expensive hardware than Tesla. For instance, its latest vehicles have 13 cameras, six radars and four LiDARs, whereas Tesla relies solely on eight cameras. That has helped it win over regulators. Once Waymo has proven the safety case “without hiccups”, it may be able to cut costs by shedding some of the hardware. For his part, Mr Musk is betting that Tesla’s approach of relying solely on cameras and AI-enabled software will give it the edge as its technology improves, with less hardware making its robotaxis cheaper than Waymo’s. For now, both Waymo and Tesla are keeping their technology close to their chests. In time, that may change. Waymo could take inspiration from another Alphabet Inc. endeavour—the Android operating system—and try to license its software to others. Mr Musk has said he may do the same with Tesla’s self-driving technology. Amazon's Zoox says it intends to remain a fully integrated robotaxi service. But others reckon its self-driving technology could also be used in Amazon’s logistics operations. Other companies such as Wayve, a British startup backed by NVIDIA, have opted to focus on self-driving software, rather than offering an integrated robotaxi service with all the cost and complexity it entails. Earlier this year Wayve announced it would start selling its technology to Nissan. | The Economist ($)

China’s robotaxi industry is “on the cusp of commercial breakout”, reckons HSBC. Revenues will grow from a little over $50m this year to nearly $50bn by 2035, according to Goldman Sachs, by which time a fleet of 1.9m robotaxis in China will account for 25% of all ride-hailing vehicles. UBS is even more bullish, forecasting that the market could be worth around $180bn by the late 2030s. By some measures, China’s robotaxi industry is already pulling ahead of America’s. Over 50 Chinese cities allow testing of self-driving cars on public roads. In at least ten of them, commercial operations are up and running, double the number in America. And the potential for robotaxis in the country is vast: China has 139 cities with over 1m people and an urban population more than three times as large as America’s. The bigger opportunity, however, could lie in the rest of the world. There are several reasons to believe China may win the race to build a robotaxi industry at scale. One is strong state backing. China’s central government is pushing autonomy as a means of strengthening the country’s technological heft. At the same time, many local governments, which are keen to attract investment, have approved robotaxi pilots at a rapid clip and are installing the necessary infrastructure. In the city of Wuxi in eastern China, for example, traffic lights at 1,723 crossroads have been connected to intelligent networks, while sensors are in place at 330 sites in the city to ease the passage of robotaxis. China’s self-driving cars are also relatively cheap. Waymo, America’s robotaxi leader, spends between $130,000 and $200,000 each on its current generation of vehicles, which are equipped with a multitude of sensors and oodles of computing power. HSBC puts the average cost of a Chinese robotaxi at $40,000. | The Economist ($)

Chinese autonomous vehicle technology company Pony.ai plans to triple the size of its robotaxi fleet by the end of next year as its pace of growth — and aspirations — accelerates. The company, which has about 961 robotaxis in the fleet today, announced the goal during its third-quarter earnings. Pony.ai is targeting a 1,000-robotaxi vehicle fleet by the end of this year. Its goal is to “surpass” 3,000 vehicles by the end of 2026, the company said in its third-quarter earnings report. Pony.ai, which is publicly traded on the Nasdaq Exchange and The Stock Exchange of Hong Kong Limited, has spent the year ramping up its commercial operations. Today, the company offers commercial robotaxi services — meaning it charges for these rides — in Beijing, Shanghai, Guangzhou, and Shenzhen. The company also has aspirations to scale beyond the borders of China. Pony.ai is pushing into eight countries, including Qatar and Singapore, through partnerships with local companies as well as ride-hailing companies Bolt and Uber. | TechCrunch ($)

E-bikes are heavy and fast — in some ways closer to a motorcycle than a manual two-wheeler — and they’ve proliferated in the last few years. So have the injuries associated with them, rising by a factor of 10. Policymakers haven’t caught up. | The New York Times ($)

Our Automotive Ventures "Car of the Week": a 1994 McLaren F1. | RM Sotheby's

Have a great week,Steve Greenfield

📢  On this week's "Future of Automotive" segment on CBT News, we discuss Elon Musk’s vision of a post-work, post-money society—and what it could mean for the future of life, tech, and the auto industry. | CBT News ($)

Enjoying this newsletter? Please share with others!

Share

Share

🌟 WarrCloud completely automates a franchise dealership's warranty processing, reduces costs, improves gross profits, and frees up employees to focus on customer satisfaction. | WarrCloud

🎪 Upcoming Industry Events

AutoTech InvestmentsFeb 4 | Las VegasSpeaker(Link) 

Feb 4-6 | Las Vegas

Speaker

(

Link

)

Are you an entrepreneur looking for funding?

🏎️

Early-stage AutoTech or Mobility founder? We'd love to hear from you.

🚀

Check out Automotive Ventures' portfolio companies. (Link)

📚

Looking for past editions of the Intel Report? (Link)