Intel Report: Mobility News

BY AUTOMOTIVE VENTURES | NOV 6 2023 | VIEW ONLINE ➡️

The November Automotive Ventures Intel Report is out: why we're bullish on early-stage Mobility investments despite (or rather, because of) the challenging environment for entrepreneurs. (Link)

What We're Reading:

The UAW signaled the next step in the union's campaign to capitalize on its success in bargaining with the Detroit Three: launching organizing drives at Toyota, Tesla, and other nonunion U.S. auto factories. (💲Link)

Riding high on historic contract wins against Detroit’s automakers, UAW President Shawn Fain is confident he can take on Tesla and its anti-union CEO Elon Musk. (💲Link)The UAW campaign against Detroit’s three automakers can be described as one thing for the union: a win. But the deal portends difficult times ahead for the Detroit Three with the new pacts expected to push the companies’ labor costs higher than initially expected when talks began. (💲Link)GM will be slowing its electric car (EV) production in North America due to lower-than-forecast demand, pushing its manufacturing targets well into 2025. The decision saves the company $1.5 billion next year. (Link)Early indications suggest that gains won by the UAW will not be as much of a blow to Ford, Stellantis and GM as early rhetoric suggested. (💲Link)Panasonic, which supplies Tesla, cut automotive battery production in Japan in the September quarter and shrank the division's annual profit forecast by 15%, underscoring a global slowdown in EV sales. (💲Link)EV sales are on track to hit 9% of all cars sold in the US by the end of the year. That’s a 50% year-over-year increase, the second year in a row that EV sales have surged in that amount. The US is on track to buy 1 million EVs through the end of the year. So why does everything seem so out of whack? The news lately is full of production delays, factories postponed, models canceled, and, of course, the ever-present low-grade anxiety buzzing around a charging infrastructure that is both constantly broken and lacking in prevalence. (Link)

EV sales growth has stalled. Battery-electric vehicles made up 7.7% of U.S. light-vehicle sales in September, down from 7.8% in August, according to S&P Global Mobility. Early estimates show share declining again to 7.5% in October. (💲Link)When it comes to EVs, Toyota has an alternative narrative. It has not been on the back foot at all as Tesla and others have advanced and land-grabbed, but biding its time. It has been allowing the early days of the EV market to establish standards on pricing, range, charging time and reliability that it believes it can comfortably surpass. It envisages, in other words, a leap from laggard to leader on EVs. During this time-biding, runs the narrative, Toyota has been developing the solid-state battery that will make the laggard-to-leader leap possible, and is close to being able to mass produce the miracle. For all the doubts still swirling around this, investors clearly relish the story and are prepared to take the bet that it will work out. Toyota’s strategically timed progress updates on solid-state batteries have sent its shares to multi-decade highs, driving them up 47% this year alone. (💲Link)“The amount of materials we need for one electric-vehicle battery, we can build 90 hybrid batteries.” - Sean M. Suggs, Toyota Battery Manufacturing, on the company’s investment in a new North Carolina battery plant. (💲Link)

Foxconn may be the single most important manufacturer in the world. There’s an excellent chance you’re reading this article on a Foxconn-made device: The company builds roughly two out of every three Apple iPhones, along with the Google Pixel and Amazon’s Kindle. The Nintendo Switch? Foxconn. Ring doorbells? Foxconn. The list goes on, including Cisco switches, Dell Technologies laptops and Sony PlayStations. Next up? Come to us, and we’ll supply, design or assemble any part of your car, or the whole thing, faster and cheaper than you can. (💲Link)

StoreDot, the Israeli battery fast-charging specialist, claims to have made a breakthrough allowing battery electric vehicles to be charged in 10 minutes without stressing the battery pack and shortening service life. StoreDot says its silicon-dominant extreme fast-charging battery cells have successfully passed a long-term set of trials. Its results claim that consecutive extreme fast charging did not degrade battery cells, even after 1,000 consecutive charging cycles. (Link)Subaru will adopt Tesla’s NACS charging port starting in 2025. (Link)

As Toyota, Honda and other Japanese carmakers seek to make up for lost ground in the shift to electric vehicles, they’re starting to embrace a disruptive technology that’s become one of the industry’s hottest topics: gigacasting. Tesla pioneered the use of huge machines capable of casting entire sections of a chassis in a single step, replacing dozens of parts that were welded together previously. The process helps manufacturers squeeze out savings — in terms of time, equipment, labor and cost — from every EV they assemble. (Link)To get an idea of the type of "subscription services" coming with the next generation of cars, look no further than Lexus. For example, they've developed software that, on command, remaps the performance of a Lexus RZ to mimic several other vehicles including a Toyota Tundra, a Japanese econobox "kei car" and a Lexus LFA. "The software switched to allow the RZ to act like a Toyota Passo, a discontinued Kei car powered by a 1.0-liter engine with less than 90 hp. The RZ struggled to accelerate and emitted a loud, fake whine in the cabin... Finally, at a temporary stop on the back straightaway...a small Lexus LFA was dropped into place. The RZ's final costume change roared to life under full acceleration, mimicking the limited edition sports car's 550-hp V-10 in both artificial sound and fury. Its suspension and handling seemed to lighten considerably." (💲Link)Audi wouldn't say which "on-demand" features are coming, but was adamant that paid, downloadable features will be "quite normal in the future." "With our next generation of electronic architecture, we will bring more offers to 'function on demand' and you will see year by year we will bring new functions in the cars...I think there is a demand from the customer to bring new functions in the car, and this is a profit pool for us." (Link)Of the 100,000 Teslas acquired by Hertz, half were to be allocated to Uber drivers. Uber drivers said they loved the Teslas, but also tend to drive their vehicles into the ground. This higher rate of utilization can lead to a lot of damage — certainly more than Hertz was anticipating. Hertz said it tried to mitigate “higher incidents of damage among EV rideshare drivers” by siphoning some of its fleet into its leisure segment. But that didn’t work out as well as the company hoped. “With hindsight, this left leisure over fleeted with EVs. As a result, RPD [revenue per day] for our electric vehicles in leisure dropped." (Link)An astrophysicist who studies exoplanets orbiting distant stars, dark matter and gravitation is also tackling another impenetrable riddle of the galaxy: What is the best way to board airplanes? (💲Link)SpaceX’s STARLINK service has reached breakeven cash flow, according to CEO Elon Musk, a milestone for the space-based internet provider. (💲Link)

The share of American young adults who said they could cover a $400 emergency expense with cash or equivalent dropped for the third quarter in a row. With the number of people who are delinquent on their auto loans rising, as well as the number of people who bought vehicles during COVID at prices above MSRP, this is troubling. (💲Link)Cruise has hired a law firm to investigate how it responded to regulators, as its cars sit idle and questions grow about its CEO’s expansion plans. (Link)Amazon drone delivery is a reality — on the outskirts of College Station, Texas, northwest of Houston. Some customers are not sure what value it actually delivers. (💲Link)Cleveland Clinic plans to begin using Zipline drones to deliver certain medications directly to patients’ homes, starting in 2025. Patients will be able to track their deliveries in real-time. (Link)The number of ships that can travel through the Panama Canal has fallen sharply this year because of drought: a lack of water for the locks, raising costs and slowing deliveries - disrupting global trade. (💲Link)TechCrunch notes: The median value of software companies growing more than 30% a year is 11x their forward revenue; those growing 15% to 30% are worth 7.5x their forward top line; and those growing less than 15% are worth 3.4x their forward revenues. (Link)

The Bessemer "Cloud Index" is useful for private SaaS companies to track as a valuation benchmark: it monitors the performance of emerging public companies providing cloud software to customers. (Link)

Great post from Altimeter Partner Jamin Ball. If you're a private SaaS company and interested in market comp/valuation data, this is worth subscribing to. (Link)

If there was any doubt that it's been a challenging fundraising environment for entrepreneurs, check out the data below from Carta on the percent of all fundraising that was bridge/extension rounds. (Link)Endeavor researched the career pathways of 200 unicorn founders. This chart traces the pathways that those 200 founders took to starting a unicorn. Each line represents a founder of a unicorn company in an emerging market or the United States. The oval nodes represent key experiences along their journey to founding their unicorn company. (Link)Matic, a startup developing robots that can navigate homes to clean “more like a human,” has raised $29.5 million, including a recent $24 million Series A round. (Link)

Have a great week,Steve Greenfield

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Notable & New

🎥 On this week's Future of Automotive segment on CBT News, we outline the current environment for entrepreneurs and fundraising. (💲Link)

📢 Automotive Ventures portfolio company Kinetic, an Infrastructure-as-a-Service company that delivers digital maintenance and servicing for EVs, AVs and vehicles with Advanced Driver-Assistance Systems (ADAS), opened its Las Vegas service center this week. (Link)Steve caught with Paul and Kyle from ASOTU to discuss what folks can expect next week at Used Car Week and NAVIcon. (Link)

🎤 Steve caught up with Jen Suzuki from eDealer Solutions to discuss the automotive industry. (Link)

📢 Thanks to Formant for their new case study on Automotive Ventures portfolio company RoboTire. (Link)

Steve caught up with Kathryn Schifferle from Work Truck Solutions to discuss the future of the Commercial Vehicle segment. (Link)Reposting an insightful post from Recurrent founder Scott Case with a perspective on why "days to sell" for EVs dealerships are longer than for ICE vehicles. (Link)📢 Steve had a chance to catch up with Kaylee Felio from PartsEdge to discuss the automotive industry and its future. (Link)📢 We've been very intentional in building the Automotive Ventures brand. Interested in finding out more? (Link)

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🌟 Classic.com is on a mission to empower classic car buyers, sellers, and enthusiasts with insights to inform their next purchase or sale. They are laser-focused on solving two problems that plague the classic and exotic car industry: the difficulty involved in discovering classic/exotic cars for sale; and the lack of dependable, unbiased market pricing information. (Link)

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