Mobility Tech 10

Dear Friends,

Here are some thoughts which I hope we can discuss and debate at our Workshop.

For a very long time now the car business has been global business. To pay for the massive up front developmental and capital costs for each new generation of cars, the car companies need to sell on a global scale. 

The electrification transition presents unique challenges because EVs are so different from ICE cars and the up front costs are considerably more than for just rolling out new ICE models. Most OEMs still have not made the necessary up front investments for EVs. They face a chicken and egg problem, because in order to prove out the new technologies and reach scale, consumer demand for EVs needs to ramp quickly. But in the West this is not happening because the price of EVs and operating them is still too high compared with ICE vehicles. Further, the US charging network for non-Tesla cars is very poor and the electrical grid faces many challenges.  

Prices in the West are high because China controls much of the supply chain for EVs (especially for batteries), labor costs are higher in the West, many Chinese costs have been subsidized by the government, and because of Western tariffs. So consumer demand for EVs in the West is sluggish and the OEMs have delayed some of their rollout plans. 

Compounding all of these challenges for Western OEMs are China's exports. The overall Chinese car market has been in decline since 2017, but underlying that is a dramatic growth of EV sales and a corresponding fall in ICE sales. Chinese ICE vehicle factories are facing huge excess capacity and many of them will have to go under unless they find new markets, ie unless they export. Thus, Chinese ICE car exports are rapidly taking over many second tier markets, including Australia, LATAM, Southeast Asia, other emerging markets, and of course Russia. (We don't necessarily see this sitting in the US because Chinese imports are being kept out.) The Chinese are greatly undercutting the Western OEMs in these markets, so the latter can no longer count on ICE sales there as a reliable source of profits. And this is even before the coming onslaught of Chinese EV exports. 

In China EV prices are perhaps half of the West and continue to plummet, while penetration rates are already high and are soaring. This permits Chinese EV makers to scale, build out their technologies, and perhaps reach profitability sooner. They have momentum.  

All of this leads me to worry about the future competitiveness of the mobility industry in the West.  If OEMs in the West can't get the electrification flywheel spinning then they will not stay at the forefront of the technology. This differential will permit Chinese companies to take ever greater market share and extend their technological and supply chain lead. I don't think tariffs are going to stop this. 

I just came back from an extended visit to China and met with quite a few mobility related companies there. The economy is hurting, the mood is glum and price competition among Chinese carmakers is ferocious. There are way too many car companies in China, most are losing money and many will go under. But the market leaders along with the Chinese tech giants which have entered the market (like Baidu, Huawei, Xiaomi) are rapidly developing new EV and AV technologies and will be formidable global competitors. The technological rollout is faster than what we are seeing in the US.  For example, the commercialization of robotaxis (Level 4) by Baidu and others has Chinese government support and is happening very quickly. I met with Zelos (a startup who will be presenting at our event), who have developed autonomous electric delivery vehicles and have already deployed over 800 units in 100 cities in China. There are many other stories to tell.

In the US we have fallen into the habit of assuming we will always be the technological leader, but we can't take that for granted. This is particularly true because we have developed a blind spot with respect to China. Decoupling has meant that many in the tech community don't pay attention to Chinese technological advances, perhaps on the theory that the China market is no longer available to them. But geopolitics and regionalization notwithstanding, we continue to compete in a global marketplace and we need to understand what is happening in China. 

You may have noticed that there are very few Chinese business people coming to the US anymore, and similarly in China there are far fewer foreigners. I don't think this is healthy, since we need to understand each other to get along. Plus, you need to know what your potential competitors and collaborators are doing! In that vein, I have invited several China related companies to make presentations at our Workshop (Zelos, B-ON, and Enpower Greentech) and I have also invited several Chinese private business friends from the mobility sector to attend. I expect their participation will enrich the discussion.  

(The above slides were provided courtesy of my friend and our sponsor Bill Russo of Automobility Ltd.) 

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This is of course not the only subject we will be discussing at our Workshop! We will have 10 top startups presenting, and a host of technology leaders from companies and investors in the auto sector and aerospace speaking on two panels and numerous mini-sessions. The day program will happen at a beachfront meeting facility in Santa Cruz and the evening festivities will happen at my mountain retreat at Bonny Doon. So you will get a view of the sea and mountains as you exercise your mind! For more information and to register, click on the AI generated painting above.

Further, we are hosting a companion event the day after on Manufacturing for Mobility in Mexico on November 13. A prominent delegation of Mexican government officials, industrialists and investors will be speaking about the advantages of manufacturing in Mexico and the accelerating importance of Mexico as a near-shoring center. To learn more about this event, take a look at the website:

Manufacturing for Mobility in Mexico, Workshop at Bonny Doon, November 13, 2024

Username: friend

Pass: 1818

I look forward to welcoming you to Santa Cruz and Bonny Doon in November!

warm regards

Howard Chao

Doon Insights

Time

We will begin promptly at 8:45 am. Please plan on arriving in Santa Cruz by 8:15 or 8:30 am for coffee/tea, pastries, and visiting. The day will end with a fine wine and beer reception in Bonny Doon.

Shuttle services back to the Santa Cruz Beach Boardwalk Parking Lot will begin at 7:30 pm and end at 9 pm. 

Attire

Casual mountain wear (jeans, flannel shirts, outdoor shoes or boots and other comfortable attire are all welcome, especially if you plan on doing the walk around the pond. No suits, ties, or dresses necessary!)

Socks

Our evening venue is a "shoes off" household, meaning you should wear your best socks to display at dinner. We will be holding a "Best Socks" contest where you might get the chance to win... more socks! 

Travel/Flights

SFO or SJC. The San Jose airport is 20/30 minutes closer to Santa Cruz, but either works.

Places to Stay

There are many hotels to consider. A few of our favorites are below. 

1. Dream Inn Santa Cruz​​, a Joie de Vivre Boutique, is our preferred hotel vendor. (0.4 miles from daytime venue). The Dream Inn ​has kindly offered us a Courtesy Block on a first come first served basis. These rooms have an ocean view and one king bed, for Nov. 11 - Nov. 13/14. Please click here​ to reserve a room or call 844-291-9681 and tell them you're in town for the Doon Insights event. 
2. Sea and Sand Inn​​ (0.4 miles from daytime venue)
3. West Cliff Inn, A Four Sisters Inn​​ (0.4 miles from daytime venue) 
4. La Quinta Inn & Suites by Wyndham Santa Cruz ​​(0.3 miles from daytime venue)
5. Hotel Paradox​​ (0.9 miles from daytime venue) 
6. Bella Notte - The Inn at East Cliff​​ (8 min. drive from daytime venue)   
7. Fairfield Inn & Suites by Marriott​​ (12 min. drive from daytime venue)

If you have any questions or need help with travel plans/transportation, please reach Katie at katie@dooninsights.com.

Doon Insights began 11 years ago as a simple concept by Howard Chao: bring together handpicked startups with leading investors and strategics for substantive discussions, and good things will happen.

Please visit dooninsights.com​​ for more.

Doon Capital is Howard Chao's investment and consulting vehicle.

Please visit dooncapital.com​​ for more. 

We understand that plans change! The following policy is designed to ensure your satisfaction and understanding of the purchase process on our site.

• Refunds requested more than 60 days prior to the start of the event are eligible for a 100% refund.
• Refunds requested more than 15 days prior to the start of the event are eligible for a 50% refund, or you may transfer credit to a future event.
• Refunds requested fewer than 15 days prior to the start of the event are not eligible for a refund.
• If you contract COVID prior to the event and cannot attend, we will provide a full refund.

How to request a refund:

For inquiries about refunds, please reach out to Katie at: katie@dooninsights.com