Weekly Intel Report: Mobility News

BY AUTOMOTIVE VENTURES | OCT 16 2023 | VIEW ONLINE ➡️

The definition of teamwork. The F1 pit stop world record was broken in Qatar, as McLaren Racing changed Lando Norris' tires in an eye-watering 1.80 seconds - the fastest pit stop ever! (Link)

What We're Reading:

The UAW's strike for a rich labor contract may have an unintended consequence: a less competitive (and therefore less profitable and less stable) Detroit Three. (💲Link)

Even before the raise they are striking for, Detroit’s unionized auto workers are probably the best paid in the world after factoring in benefits such as healthcare. Their employers can afford it for now, but high labor costs box them in strategically. (Link)

The United Auto Workers’ historic standoff with Detroit’s three carmaking giants is centered on an age-old tension: The union says corporate greed is keeping workers from earning fair wages, while Ford, GM and Stellantis say they can’t afford union demands. While both arguments have some merit, one fact stands out: The 10 individuals who’ve served as chief executive officers of the companies since 2010 have collected more than $1 billion of compensation. Meanwhile, wages of US auto workers — unionized or not — have declined around 17% in that time frame. (💲Link)

Auto factory jobs used to pay a big premium over a lot of other blue-collar work. Not so much anymore. (💲Link)Opposing electric cars — and the industry’s ongoing shift away from internal combustion engines to battery power — allows Republican candidates to criticize China, the dominant economic force in the battery industry. It also pleases G.O.P. voters still hostile to the notion of climate change and to all things environmental and “woke.” And it evokes a nostalgic halcyon past, the same one that Mr. Trump conjured when he promised in 2016 to bring back coal mines, steel mills and basic manufacturing. (💲Link)The auto industry’s push to boost sales of EVs is running into a cold, hard reality: Buyers’ interest in these models is proving shallower than expected. While EV sales continue to grow—rising 51% this year through September—the rate has slowed from a year earlier and unsold inventory is starting to pile up for some brands. (💲Link)The auto salvage and scrap industries have spent decades processing petrol-powered cars, harvesting pieces from camshafts to hubcaps for resale as spare parts or scrap metal. Now they are contemplating how to process a wave of battery-powered cars when they reach the end of the road. EVs will require salvage businesses to find new buyers for the battery, the most valuable part of the vehicle, and develop new ways to determine its vigor and safely handle it. (💲Link)According to AAA, the average annual cost in the first five years of new-car ownership rose to $12,182 this year, from $10,728 last year, reflecting increased purchase prices, maintenance costs and finance charges. That’s 16% of the median household income, before taxes. (The figure includes depreciation.) (💲Link)Tesla’s top-selling electric vehicles now compete directly with gasoline cars on price after the latest round of price reductions. The lower prices could cost the company $1.2 billion a year, according to at least one investor. Tesla started cutting prices at the start of the year, twisting the screws on legacy automakers that were already struggling to make electric vehicles profitably. (💲Link)The U.S. Treasury issued new guidance on how a $7,500 electric vehicle tax credit can be used as a point-of-sale rebate starting in January. Currently, consumers can only take advantage of the $7,500 new EV credit or $4,000 used EV credit when they file their tax returns the following year. Starting Jan. 1, consumers can transfer the credits to a car dealer, effectively lowering the vehicle’s purchase price, a change that may help boost EV sales. (💲Link)Chinese battery companies critical to electric vehicles are pursuing deals with U.S. free-trade partners South Korea and Morocco, hoping to supply car and battery makers eligible for incentives doled out by the $430 billion Inflation Reduction Act, which rewards businesses that source materials domestically or from free-trade partners. (💲Link)Tesla has pioneered the use of massive casting machines, also known as 'gigapresses', to make large single pieces of vehicle underbodies, streamline production and reduce labor on the production line. Toyota, Ford, and Hyundai are now talking about incorporating the same technique. I'm not sure what this does to vehicle insurance premiums if small accidents are incredibly hard to repair? (💲Link)Toyota expects cast bodies to reduce production complexity, costs, and preparation time, not to mention make more efficient use of factory floor space. Fully optimized, Toyota anticipates it'll generate 20% higher productivity than its competitors, and could halve body assembly time from 10 hours. But, cast bodies might be more difficult to fix in the event of major damage, such as a crash. It's possible any significant damage could total a vehicle with a cast unibody. (Link)

Tesla launched its own auto insurance arm in 2019 and has since put pressure on third-party providers by offering lower rates to Tesla drivers. Elon Musk thinks insurers assess “unreasonably high” premiums for his company’s vehicles. Could other automakers follow the EV manufacturer's lead? (Link)This may be a leading indicator that the luxury EV market is about to get a lot more competitive. (Link)

Volkswagen AG’s new orders for its electric vehicles failed to meet the company’s targets in the third quarter, amid weaker global demand and European customers’ reluctance to buy battery-powered cars. (💲Link)

The Hyundai WIA autonomous parking robot lifts and parks vehicles by raising the underside of the car. (Link)Redwood Materials is launching a tool that allows dealers, automakers and vehicle dismantlers to instantly price and sell end-of-life electric and hybrid vehicle battery packs. The online portal is similar to tools that dismantlers employ for catalytic converters and platforms that dealers employ to price used vehicles. (💲Link)

By 2027, A.I. servers could use between 85 to 134 terawatt hours (Twh) of electricity annually. That’s similar to what Argentina, the Netherlands and Sweden each use in a year, and is about 0.5 percent of the world's current electricity use. (Link)

The General Dynamics TRX SHORAD suggests a future of robot-assisted combat, where attacks by drones are met with the automated speed and power of a companion robot built to destroy quadcopters. (Link)

Have a great week,Steve Greenfield

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Notable & New

📢 Jim Roche from Automotive Ventures portfolio company WarrCloud was featured in Automotive News. (Link)

📢 Automotive Ventures portfolio company Go Eve has obtained a U.S. patent for its electric vehicle charging tech ahead of expanding into the country next year. The U.S. patent will protect Go Eve’s ‘DockChain’ method of creating additional vehicle charging points. Existing EV charge points typically charge one or two cars at once. Go Eve's technology creates a “daisy chain” of rapid charging terminals, with its software managing a virtual queue to provide power. (Link)

📢 Steve's presentation from Dealerware INSPIRE 2023. (Link)🎥 On this week's Future of Automotive segment on CBT News Steve introduces our latest investment: Kinetic (💲Link)

📢 We had a great time at the MEMA Aftermarket Suppliers conference at the NAPA Auto Parts / Genuine Parts Company office in Atlanta. (Link)🗞️ Steve had a chance to catch up with Mark Hollmer from Automotive News to discuss the trend of auto dealers investing directly into AutoTech startups. (💲Link)🗞️ Interested in why Automotive Ventures made our latest investment in Kinetic? (Link)🗞️ How does Automotive Ventures support the companies we invest in? (Link)🎤 Automotive Ventures' Andrew Gordon will be at Digital Dealer this week in Las Vegas. (Link)

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Companies to Watch

🌟 Joyride combines a hardware IOT device with fleet management software to enable micromobility fleet operators to launch their own white-labeled app, and provide their customers with a full software marketplace. The result? You get to manage your fleet of vehicles with up-to-the-second analytics and a one-stop backend dashboard system. (Link)

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