Vehicle 2.0 Podcast with Scot Wingo

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The four pillars of Vehicle 2.0 are electrification, connectivity, autonomy, and changing ownership models. In the Vehicle 2.0 Podcast, we will look at the future of the auto industry through guest expert interviews, deep dives into specific topics, news coverage, and hot takes with instant analysis on what the latest breaking news means for today and in time to come.

Episode Date
CEO and Founder of Smartcar, Inc., Sahas Katta
49:15

EP003 - CEO and Founder of Smartcar, Inc., Sahas Katta

http://www.vehicle2.getspiffy.com

Episode 3 is an interview with Sahas Katta, CEO and Founder of Smartcar, Inc.; recorded on Thursday, March 7th, 2019. Sahas and Scot discuss a variety of topics, including:

  • The origins and purpose of Smartcar
  • Sahas’ experience pitching to investors
  • Smartcar attending hackathons across the country
  • Impact of software developers on the future of connected cars, vs innovations from automotive brands and companies like Google, Apple, and Amazon
  • How Lyft looks to change traditional car ownership in light of their IPO filing
  • Growth of electrification in regards to range and convenient recharging, including Tesla’s V3 Supercharging announcement
  • Realistic expectations for the wide use of autonomous vehicles

If you enjoyed this episode, please write us a review on iTunes!

The four pillars of Vehicle 2.0 are electrification, connectivity, autonomy, and changing ownership models. In the Vehicle 2.0 Podcast, we will look at the future of the auto industry through guest expert interviews, deep dives into specific topics, news coverage, and hot takes with instant analysis on what the latest breaking news means for today and in time to come.

 

Transcript:

 

Scot:

[01:00] Welcome to the Vehicle 2.0 podcast. This is our third episode and it's being recorded Thursday, March 7th, 2019. Today on the show, we are excited to welcome Sahas Katta, CEO of Smartcar. Welcome to the show, Sahas.

Sahas:

[01:16] Thanks for having me.

Scot:

[01:17] Yeah, so let's start off. Um, you and I have known each other for a little while here about six months. Um, but the listeners don't know you. So let's start off with a little bit of your career path. How did you become the CEO and Founder of Smartcar?

Sahas:

[01:30] Yeah, absolutely. So my background, I grew up in a Silicon Valley, uh, studied computer science and engineering at UC Davis. And as I was growing up, I was someone who'd always be tinkering on my family or parents, cars, not per se on the engine itself, but actually oddly enough, more on the, uh, software and infotainment side of vehicles trying to figure out how to get lossless audio codecs, deploy on my stereo system or create a way to play videos on my infotainment system or things along those lines. I never really thought the world of software engineering would really collide with automobiles or mobility. A few years later after I had left UC Davis, I ended up, uh, on a weekend deciding to try to build an application for a car, uh, just for fun and realize that that was actually very difficult to do and, uh, uh, decided I want to do something about it and started prototyping and trying to build a car platform. And that was kind of the early genesis of a Smartcar coming about and me ending up starting that company.

Scot:

[02:42] Cool. The, uh, so I've met a lot of people in Silicon Valley. You're, I think you're the only person I've ever met that's actually from Silicon Valley. How is that? Is that, uh, is rare for most people as it has been for me?

Sahas:

[02:53] I think so. Um, uh, it's been very exciting being here just because a lot of the founders do know are all Silicon Valley born and bred, but there are people from pretty much every corner of the world who are building really incredible things. So, uh, it, it is pretty exciting to get to work with at least people.

Scot:

[03:12] Yeah. Awesome. Um, so give us a little perspective on Smartcar how, what's your kind of elevator pitch when you're at a cocktail party and people ask you what you're building?

Sahas:

[03:21] Yeah. Smart car is the API for your car. Uh, if you're a software developer, you can write a couple lines of code after reading our Api docs on our website and you can actually do a lot of really incredible stuff to your car. Uh, whether that's, uh, getting the location of the vehicle YLC over the Internet. It's a domino reading or even sending signals to the Karta lock or unlock it stores remotely over the Internet so it could write it literally a couple of lines of code on your computer and the car in your driveway will magically unlock. That was something that was very difficult to do. And we somehow figured out how to turn it into a process where developer can go from start to finish in making that happen. And no matter no more than a few minutes.

Scot:

[04:06] Awesome. And then I should have said it at the top of the show, but full disclosure, we are partners. So over here at Spiffy, we were using Smartcar as part of our connected car initiative and, and you know, by, uh, our developers are using your, your wonderful Api Apis to help us get access to vehicles for surfacing them. So, uh, we, we can vouch that it's real and it works and we've enjoyed working with you guys.

Sahas:

[04:28] Appreciate it. Thank you very much. It's been great working with your team as well.

Scot:

[04:31] Yeah. So, uh, as a, as a fellow startup guy, uh, one of my first questions is, you know, how, how big are you guys? Um, I know I saw that you guys have raised some capital, so the extent, whatever you're comfortable sharing, you know, obviously I don't want to get into, into dicey territory, but, but how, how big are you guys and how big do you think this could be?

Sahas:

[04:49] So taking a step back, um, the company started off, uh, with myself and a female into kind of getting the idea. I started working on convincing my brother who now happens to be the co-founder and CTO of the company to quit his job at Linkedin and join me on this journey to build this company. And that was maybe three months in of me trying to start the company. And he was a little resistant at first. He thought it was a crazy idea. And I've worked on that for probably about six months or something of that sort of trying to join. And finally, by the nine month mark or 10, 10 month mark, he finally said, okay, I'll quit. And let's do this. By that point, even though he was working his full-time job, he was on weekends and evenings, uh, um, helping prototype the first version, very, very early version of the product.

Sahas:

[05:43] And we use that very early prototype, uh, that, uh, he built, um, with me while he was still working another job to take that to investors and pitch idea. So the company at this time, it was just him and me and we were living in a small in South San Jose. And, uh, we went out to pitch a lot of ECS and uh, start off with a lot of angels and incubators. We unfortunately got rejected from a lot of the incubators. Almost everyone said, this is a ridiculous idea. Uh, I don't see, oh, you could actually make this work. But within about a few weeks, um, we ended up meeting, uh, Ben Horowitz and Marc Andreessen and entrepreneur partners at the firm, Andreessen Horowitz. And we pitched to him. We really didn't know who they were at the time. Uh, for those who aren't startup, we're holding, um, it's a really famous from a, they've been early investors in a lot of incredible companies like Airbnb, Lyft, Facebook and uh, octa and a lot of really a well regarded companies today.

Sahas:

[06:44] But we walked in not really knowing who they are. Uh, we should have probably done her homework, but we hadn't, uh, we didn't spend all their time reading about vcs. We were just focused on our product and we give them a genuine pitch of what we do. Uh, we brought a couple of cars so there are parking lot and demoed or tech working. So we were standing in the parking lot and writing a couple lines of code on her command, prompt our terminal on our computer and showing them how we're pulling data out of these cars and unlocking the doors to these vehicles. And they got pretty excited and they ended up up, uh, writing a check to us. It just the two of us, uh, for $2 million. And that's how the company got started and fast track to kind of where we are now. Since then, we've now raised a little over $12 million in venture capital from both Andreessen Horowitz and another firm called NEA I, which is not as new enterprise associates. And, uh, the team is approximately 20 people and this year we're actually on traction doubling the head count. So, uh, we've had a pretty exciting journey and, uh, we're really looking forward to what's coming next.

Scot:

[07:49] Pretty cool. Um, yeah, the, I'm a huge fan of, uh, Ben's book, "The Hard Thing About Hard Things." It's uh, it's one of my go tos so I have not met him. I've met mark a couple times, but I'm, I'm super jealous that you got to meet and pitch him. I bet that was fun.

Sahas:

[08:06] Yeah, no, I love that book. There is just a, I think the first time I read it was before I uh, or right after I started the company. And uh, um, I didn't really understand most of it because I have not really gone through any aspects of building a company. Uh, but I actually re-read it, um, uh, just a few months ago, a second time and it added so much more value. What the context, having tried to build something, uh, with learning how to hire people, manage people, uh, unfortunate circumstances of learning how, what and to let go of people and a tough decisions when it comes to your finances, numbers and scaling the company. So I think it's a really great book for entrepreneurs who are maybe pass their seed stage and maybe at least around the series a stage of their company and uh, figuring out how to get it to scale.

Scot:

[08:56] Yeah. Last time I was in your office, it seemed like half the folks there were coming back or going to a hackathon. And that seems to be a big way you guys get your APIs and the in the hands of folks don't tell us about the hackathons that you guys sponsor.

Sahas:

[09:10] Yeah. Um, so when we think about are the connected car market, when we, when we look at the industry, what we see is the innovation that's happening moving forward is no longer necessarily hardware innovation but really software innovation. The next generation of companies and ideas that are making the world a better place and turning mobility in general into something that's more accessible for more people than ever is really being driven by a software bill. Uh, advancement, suffer advancement. So she'd say or applications. And when you answer the question of who is, uh, uh, built software, it comes down to developers. Most of the innovations until today in the soft or in the automobile or mobility space weren't really being driven by, uh, application developers. And that's because there hadn't been really a platform for them in the space. What we realized is we need to figure out a way to get this in front of all sorts of developers, even if it's a girl in her dorm room, uh, who, uh, as a hobby is building the next killer app without knowing it.

Sahas:

[10:21] So that meant we had to figure out how to get our product in the hands of a lot of really talented students. And what we've been doing for the past year or so is actually going to some of the top universities in the country where they're hosting. These are actually pretty large hackathons where, uh, in some cases over up about a thousand people show up to these and spend 48 hours building an application. And we've been bringing, uh, vehicles to them, uh, to the back. Athens are real Tesla in person and uh, these students are issue, see the passion in their eyes. They get super excited and within 48 hours to have some incredible application actually built that's working and they're able to actually test it on a real car that's parked right in front of the building. And we've seen this as a really great way to get our product into the hands of a lot of innovative early developers and you think a lot, a lot more companies should actually be doing something in that space.

Scot:

[11:15] Cool. Any, um, uh, what are some of the things that you can talk about that people have built it, these hackathons using, using Smartcar?

Sahas:

[11:23] There has been, there's been a lot of uh, really incredible and so maybe I'll tell you one of the sillier are fun ones, but, um, we had someone, actually I want to hurt first hackathons. We had this uh, API endpoint. We were still testing in the early days, uh, to let you actually hook the car. So someone bill actually an alarm clock app that honks your car in the morning to wake you up. And uh, I think everyone got a really good laugh out of that. Um, but, um, and if you actually kind of look some of the more serious things people are building, we've seen people build some really cool things from voice assistance, uh, Alexa integrations or Google home where you can do things like when you're going to bed, say, Hey Alexa, lock my car for me. And it sends a signal to your vehicle and locks, locks the car in your driveway or parking the sidewalk in front of your home. So people are building a lot of really, really neat things that can actually build in a pretty short timeframe. But um, in some way or another actually, uh, could be utilized by a lot of people. Um, if that application, we're a distributed into the marketplace with a little bit of marketing. I do think a lot of these are really incredible valuable ideas.

Scot:

[12:35] Awesome. Yeah, those are, those are good examples. I like the skill. I'm actually have to, uh, hopefully they're release that and I, I can use that myself. Absolutely. So, so here on the Vehicle 2.0 podcast, we have a framework where we talk about kind of what I think of as the four big changes that are rocking the car world. Um, so there's connectivity, uh, there's electrification, autonomy, and then changing ownership models. I wanted it to spin through those with you and kind of get your, your, your thoughts for what's going on there. Uh, let's start with conductivity cause that's obviously near and dear to your heart. Where do you think we are as an industry right now with connectivity? Uh, and then where do you see it going over the coming years?

Sahas:

[13:15] So this is one of those things where when you look at vehicles today, most people who are kind of bystanders or just the average person driving their vehicle may not realize it, but all these new cars that are now shipping our, uh, shipping, uh, right off the factory law or dealership lot. When you, when you pick it up, uh, with a cellular Modem Builtin, that means that the car itself is talking to the Internet, uh, through, uh, one of the Telcos, the same seller carriers you use for your smartphone as the service provider. The number of cars that are actually shipping now, uh, with the seller Modem Builtin is growing very dramatically. Um, I think the last number I heard was, uh, nearly two out of every three cars shipping this year are now shipping with some form of a four g cellular connectivity Builtin. Mm. And the neat thing here is that, uh, within the next few years, uh, essentially 100% of all new cars hitting the streets will be internet connected, almost guaranteed. And this opens the doors to an insane number of possibilities where these cars can now integrate dramatically more easily, uh, with all sorts of applications and services without having to still retrofit on some form of aftermarket hardware or any pain points of that sore. It can, these cars are, are good to go around in the box just like your cell phone is.

Scot:

[14:40] Cool. So, um, so that's sort of kind of foundationally we're going to have 100% of cars connected. Uh, and then what are some of the use cases that you, you had forecast once we have that platform in place?

Sahas:

[14:51] Yeah, there is a lot of fun, but let's go back to the topic you asked me about right before that, which is actually developers, um, water, at least developers, uh, kind of building this platform and what are the use cases that they're coming up with? And, uh, one of those companies, uh, who's developers is using us as you guys, you guys have figured out a way to take advantage of these APIs and enable your customers to not have to be present at a vehicle to be able to unlock their vehicles stores and vacuuming, cleaning the interior. And ideally that hopefully is creating a much more compelling experience for people who want to have an on demand, a carwash, uh, make that happen. Um, but if you kind of continue down that thread, there are a lot of really incredible companies for utilizing this technology. We have companies who have fleets, large fleets of cars, and they didn't really have an easy way to build some sort of a dashboard to know where their cars are at any given time.

Sahas:

[15:53] And they're able to use this technology to build those internal dashboards and uh, or even a tablet applications for themselves so they can keep an eye on, uh, where there vehicles in their fleet are at any given time. Uh, we've also seen companies in the insurance tech space utilizing our tech. Uh, one of the new trends that's really taking off recently is a new models of pricing insurance, uh, specifically models of insurance where you're charged by the number of miles you drive. And, uh, our technology lets developers really use an endpoint to get an abdominal reading from a car or I'll see over the internet. And that actually makes it very, very easy for some of these insurance companies with, of course the customer's consent to be able to get their odometer reading and price them based on the number of miles they drive.

Sahas:

[16:42] And all of these may seem really, really small, but when you kind of put together that whole future picture, uh, you end up in a world where you have all sorts of really incredible applications that kind of makes the whole car ownership experience a lot better than it is today. Very cool. Um, are there use cases as you think out where it makes sense for the cars to talk to each other? Um, so this is something that I think, uh, the industry's been going back and forth on. Um, the term you just mentioned, cars talking to each other is under a label called VTV vehicle to vehicle communication. Uh, that's something that's been under discussions by the industry for probably over a decade now. And it's seen in a lot of ups and downs. And, uh, I think when we end up looking at the world we live in today, um, I personally am starting to lean towards realizing that centralized communications have been for the most part, um, the more successful and mechanism of enabling devices to communicate or vehicles to communicate with one another.

Sahas:

[17:45] Uh, and if you look at anything from file sharing your Dropbox on your computer or your cloud storage or how you send emails, all of these today or even this podcast we're on, uh, it's not happening peer to peer for the most part, but most of our mobile devices or computers and services we use are all reliant on centralized infrastructure. And we do think there is a valid need in some cases to have HIV. Uh, we think if when the latencies come down and you have things like five g and a bandwidth is available at even larger scale instead of being just, you know, megabits, but gigabits of bandwidth and latencies are milliseconds, you may not really need VTV. Um, I think that's going to be, uh, not as big of an opportunity as a lot of people do think it is today.

Scot:

[18:37] Okay. Um, one thing, uh, whenever I start talking about connected car a, I've always been a little surprised. There's a lot of people that the first thing they bring up the security, I guess I've, I've been in it enough, I don't really worry about it, but what's, what's your standard answer when people say, oh my gosh, you know, what, what about security?

Sahas:

[18:54] Yeah, I think first of all, um, that's a great question because there today isn't really much regulatory policies around automotive security. When you look at the financial sector, you have requirements like PCI compliance, uh, what comes to having to store, um, data like a customer's credit card number on file. There were a lot of, uh, regulatory steps that you need to take in terms of being compliant to be able to do that. When you look at the healthcare industry, you have things like Hipaa, which when it comes to storing anything, data about medical records, about a patient or whatever it might be, there's regular regulatory frameworks and, uh, you need to comply with a lot of those, uh, that structure to be able to actually store medical records or anything on a patient. But when it comes to cars, unfortunately there isn't yet something of that sort.

Sahas:

[19:51] Uh, I think that's something that's on the horizon that will come and companies like Smartcar like us are probably going to be on the cusp of helping define that as it happens. Um, but today, uh, it, it's, it's, it's a good, it's a blessing and a curse. The blessing is that, um, we have a lot of freedom to operate. The curse is that there may also be bad actors in the space who don't take consumer interests at heart, who don't take data privacy at heart and are building things that aren't in the best interest of the average person who may not know what's actually happening with their vehicle data or vehicle information. So to Kinda answer that again, like what is it that we're doing a Smartcar, uh, we fundamentally at smart Smartcar believe that data is a fundamental human right. Uh, we believe that people should have control over their information.

Sahas:

[20:39] Uh, we don't believe that people's automotive data should be sold to marketers or advertisers or anyone who is willing to pay a for it. But rather our mission and belief is that we want to really empower the end consumer, the person who drives a car. Uh, we want to empower them to have control over the information and voluntarily be able to opt in to use applications and services of their choice. So if they want to go ahead and say, hey, I want to, uh, install the spiffy app and I want to allow spiffy to be able to locate my car so they can find it, and then they can unlock it during that, uh, surface order delivery window, do that service and leave. Um, and they choose to give, uh, that company access. They should have the tools to be able to do that. But what shouldn't happen is if some insurance company says, Hey, uh, I'm considering selling a policy to this person and I want to go buy this customer's data from them, and I don't want them to know that I'm doing this.

Sahas:

[21:39] That should never happen. Um, if a consumer voluntarily chooses to say, hey, I'm fine sharing it because I choose chose to do so, they should be able to do that. But there should never be a practice in the industry where information about a cut infancy tumor, whether it's worth Victor van, where they're going, where they've been, or any of their telementory like how much they've driven their car, who's driven their car, when they drove their car, anything of that sort that should all be controlled by the user. They should be able to make their decisions as to who gets access to that, why they would give it access to it and actually do the actual final clicking of the button to say, I approve this.

Scot:

[22:17] That seems like a good framework. I like where you're going with that. Yeah. Um, well then connected car, it's been interesting to watch. So it seemed like, you know, so, so we talked about the car itself being connected to, to the Internet. Uh, but then there's also a lot of the in dash experience kinds of things and it seems like the OEMs and kind of the early days, they tried to do stuff there and then, you know, consumers are like, well, I've got this phone in my pocket, I'll just connect to Bluetooth and, and use that. So all this dash stuff was happening and people weren't using it. Um, now we see, uh, all the big players. So, so apple, Google, um, and now you're in the Apple really doing things like CarPlay and um, what's the Google one called to the, was that, yeah, there you go. Android auto. Uh, and then, uh, you know, now Amazon has an Alexa for, for insight. Alexa auto I guess is what they call. Um, how do you view those things as far as the topic of connectivity and is that going to be the winter or are we going to see another cycle where the OEMs now come back and they've done a better job?

Sahas:

[23:17] Yeah, it's, it's, it's hard to tell, but I can kind of give you a couple of examples of, uh, how I think it may play out. Um, so, uh, it's kind of funny because, uh, let's take a platform that's like Google's Android for instance. Uh, it's today worldwide, uh, the predominant market share. It's a very successful platform. Uh, I personally use it on my mobile device as well. I have a android device. Uh, however, if you take a step back and ask the question, uh, where else has android in successful? Google had this vision where android would be running on all form factors, all platforms, all types of devices. And now let's look at where, what's happened with it. Um, they tried bringing into tablets and it had a little bit of success for maybe a few months or a year, about several years ago, but that really faded away. Uh, Google try to bring android two watches and that also never really took off.

Sahas:

[24:20] They also try to bring android to TV's, android TVS. Um, they tried it still kind of around, but it's just hanging in there. It's never been anything. I would call an outright success by any means. Uh, and in fact, Google has competing services to themselves, like Chromecast, which doesn't run on Android, uh, uh, and Google home doesn't run on android or a lot of these products that they now have had successes with to not use android. So now let's talk about the car. Um, Google is undoubtedly putting a dramatic amount of effort into turning, convincing car companies to make android the default operating system, uh, for the maps, navigation, uh, music and, uh, infotainment system as it's called in the vehicle. Uh, but it's still at the end of the day begs a question, we'll android succeed in this ecosystem on this form factor, which is a vehicle when it has repeatedly failed on everything from televisions to watches to tablets.

Sahas:

[25:18] And so that's, that's where I kind of have to say I leave it at, but, um, if I would also look at it from another perspective, Google is hilariously actually at a race with itself and there's, they're working in one group and the organization as part of the sibling company of Waymo, which is under the alphabet parent company. On during self-driving cars to market. And another end of the spectrum, they still have this other group called android under Google that is building an infotainment system for cars. And here's why they're at a race with each other. In my opinion, if the self-driving car ends up winning, uh, you won't need an infotainment system in a vehicle because the moment that you know, the seats turnaround, the front seats are facing the rear seats, there are seats are facing forward. It's kind of like a living room in your car, uh, traveling on the road.

Sahas:

[26:06] Uh, in any of those situations, you're likely gonna end up choosing to pull all the brand new smartphone or maybe a tablet out of your pocket and choosing to use that device over whatever is built into the car. And the reason for that is what our is building in the car by definition is probably already three or four years old because that's the time cycle, product lifetime cycle that it takes a car company to get something into a vehicle. So what that means is that if the autonomous car comes first, any efforts Google has in terms of trying to make their infotainment system, uh, prevalent in the market is going to be relevant. Uh, but if the car doesn't come around and for you know, a decade or something longer, there will be definitely an opportunity for Google's android infotainment system to have some lifespan span before the autonomous vehicle eventually does show up.

Scot:

[26:55] Yeah. Cool. And then, uh, how about Apple and Amazon? Any, any point of view on those guys?

Sahas:

[27:00] Yeah, so apple, apple hasn't yet taken to my knowledge so far, uh, an initiative to bring some form of Ios to run natively in a vehicle itself. And that's going to be, in my opinion, the biggest roadblock for their success. Uh, if, uh, today that depending on a smartphone to project the end of the vehicle, uh, and, but the vehicle can't have nothing in the car if your phone isn't there because your phone might be out of battery or we may break it, which means you can't use infotainment system if your phone's broken or something of that sort, which means that the car companies still needs to have an operating system, uh, that need to be present in the vehicle as you're, everyone's familiar with. Apple's always had a strong stance about having apples upbring systems only running on apple hardware that we'll watch a watch. Ios only runs on an apple watch. A ios only runs on iPads and iPhones and Macintosh only runs on Mac books. Even there are television, the apple TV that they're Tbos only runs on apple TV hardware. So they would need to be breaking something that's culturally been part of their core philosophy to decide to for the first time, bring their operating system to run on a hardware and experienced that is not built. And designed by apple. So if that does happen, it'll be very interesting. But I see it unlikely to happen anytime soon.

Scot:

[28:24] Cool. Um, so stepping outside of connected car, let's talk about car ownership. So you had a, you'd entered that there's some fleets out there using Smartcar to kind of know what's going on. Um, do you see individual ownership, uh, diminishing pretty rapidly and, uh, I was, I'm sure you've read the Lyft S1. This kind of been the most interesting reading in the industry for awhile. Uh, you know, they're, they're projecting a, uh, you know, the end of car ownership here pretty quickly, so, so where do you fall on that?

Sahas:

[28:53] Yeah. Um, so I read that as well, and I think, uh, um, one they need to create an optimal outlook for their own business as their IPO. So, uh, it's a nice for them to ever in that, uh, that outlook. Um, and I've met both John and Logan, who are the founders of Lyft a couple of times are incredible people and I'm very supportive of, uh, uh, an admiration of the incredible company and they built. Um, but, uh, when you actually look at what's happened today, um, yes, there is definitely a decline amongst a certain age demographic of people who are buying vehicles. Uh, but, uh, the, when you look at the end result of it, there's also the fact that the market size itself is just growing. There is also a lot of room for more modes of transport that include private ownership to coexist as well. And I think there is always going to be a pendulum swing. Sometimes people thinking, Hey, we'll uh, uh, use everything as a service and then people go back to us saying, hey, we should run this infrastructure or have ownership of this ourselves. So that shift back and forth I think happens every 10 or 15 years in the industry right now. I think you're correct that there is a trend towards using vehicles as a service. I think it will sway back and forth and I don't think that it's, it's settled anytime soon. I'm just yet.

Scot:

[30:15] Cool. Um, so the next kind of pillar is electrification. You're the only person I know that has an electrical Volkswagen. So you must be a true believer to have taken that plunge. Where do you think we're going? On the eve slope of the curve.

Sahas:

[30:29] Yeah. Um, so definitely a very early adopter of all sorts of technology, not just cars is some, is the way I would kind of describe myself. I actually convinced my father to buy a one of the first hundred or so Tesla model s's as they rolled out. Um, so definitely a very early her on the front end, a huge believer in electrification and electric vehicles. I currently, as you mentioned, uh, drive a Volkswagen Eagle, which is very limited I should say with a 80 mile range. Uh, I am fortunate enough that I live very close to our, my apartment is, um, but there are undoubtedly a lot of challenges that need to be resolved. As an example with myself, um, I used to actually live in a house, um, before moving into my current apartment since I was trying to move closer to work and my home had a, a one to 40 volt outlet in my garage.

Sahas:

[31:26] So I was fully charged, uh, in my, with my vehicle and ready to go every day and never really had to worry about charging my car, waiting somewhere for my car to charge, cause, uh, plugging in at night and I would be ready to go in the morning. Uh, but since moving to my apartment, my apartment complex, which probably has a couple hundred apartments in that block, offers one ed charging style and there's probably a couple dozen people who now how evs in my complex. So there's this problem with infrastructure not being ready. Uh, people who do live in cities who don't have residential homes with the traditional, you know, two car garage may not be able to have a bible to even consider an electric car is an option unless there is infrastructure provided to them by their apartment complex. Or maybe their workplace is willing to provide them a network of chargers so that they can charge while there cars parked your work. So there are undoubtedly significant challenges. Um, but I do think that the future is undoubtedly electric.

Scot:

[32:30] So how do you solve that? And now I'm worried that you're going to get stuck somewhere.

Sahas:

[32:35] Um, well, uh, I think, uh, I don't know if you saw the news, but last night, uh, Tesla actually announced a version 3.0 they're supercharging. And it was very interesting. Uh, and part of why is Tesla is laid out, you know, something like over 10,000 superchargers across the country. And, uh, and they were already starting to, in some certain areas, uh, reached peak, uh, acid. And the reason for that is when they just had the model lesson x, there weren't that many cars on the road. Uh, there wouldn't be too much congestion at any of these charging stations for instance, and mountain view or something in San Jose, California. However, now with model threes in the road and then likely shipping, you know, millions of these cars over the next few years, if there's going to be no way to satisfy a large, and where people with the number of stalls they have to charge these vehicles.

Sahas:

[33:29] So what Tesla actually, well everyone thought they would do would be to simply put twice as many or three times as many charging stalls and every grocery complex or in every supermarket complex or wherever it is, where these charging stalls are, but they actually did something rather interesting. They actually solved the problem in a different way. Uh, what they've done with supercharging 3.0 is they make it now possible to charge your car from zero miles of charges, 75 miles a charge in five minutes. They brought the time it takes to charge your vehicle down by nearly 50%. So what that means is when someone previously had to wait maybe 30 40 minutes to charge their car, you're not finishing that and maybe 10 or 15 minutes tops, meaning that during the same number hours during a day, you can actually satisfy twice as much capacity without even having to go around getting around to add in more stalls. So I think there are a lot of creative, ingenious ways to solve this problem. And if you get to a point where it's even faster than the s version 3.0 they just announced within the next few years, you're practically at the same speed and time it takes to fill up your gas at a gas station, which is no more than a couple minutes. And when you get to that point it, you, you don't need women think about or worry about this being a challenge. So it's actually very exciting to see a trend going in this direction.

Scot:

[34:45] Yeah. The, uh, the other thing they've done, um, I've, I had a model s and now have a model three is they've introduced idle fees. So, uh, because the superchargers usually weren't that full. A lot of times I would just charge and go shopping and the vehicle will be done and I'd still be shopping. Uh, and now they start to hit you with a little fee as, as you kind of sit there idle. So they're creating an economic disincentive for idling at the chargers, which is interesting.

Sahas:

[35:10] Yeah, that makes it a lot of sense. And it's pretty brilliant. Did you say it? You said you just said you had a Model 3.

Scot:

[35:15] Yeah, I do.

Sahas:

[35:16] So your car is actually compatible with this out of the box. So yeah, as they are rolling out this update and announcement, um, within the next few months you'll probably have a supercharger somewhere near your home where you can likely charge up the entire car from empty to nearly full, probably within, you know, 15 minutes or so, which is pretty incredible. Yeah,

Scot:

[35:37] yeah, yeah. I'm looking forward to trying that out. Do you, uh, uh, one thing that always surprises people that come from the e-commerce world is we're really only of fiscal items. We're only at about 15% are bought online. And I think when people look at their individual usage, they would expect it to be more like 20, 30, 40%. Because a lot of times people are on Amazon prime and they're, they're, they're, they're really overindexing on that. When do you think we get to kind of that material amount of, of electric vehicles? Like, like let's call it 15% or 20, somewhere in there?

Sahas:

[36:10] Uh, honestly I haven't been keeping up with the numbers, so I couldn't tell you off the top of my head. Um, but what I do know is, uh, there is one market where there's undoubtedly that level of transformation actually happening in a very short timeframe. And that's China. That's early due to the fact that there are the right garment incentives likely in place too, and courage, um, uh, OEMs to actually make these vehicles, make them available at certain price points and also incentives to enable consumers to actually be able to afford and buy these vehicles. And I think that if, uh, the United States also figures out something similar, if that sort, whether it's on state levels or whether it's on the federal level, that could help drive that transformation sooner than later.

Scot:

[36:59] Pretty cool. Yeah, China's can be fascinating to watch to see, see how that comes up. Um, so the, the last pillar of vehicle 2.0 is autonomous vehicles. And, uh, what are your thoughts on that as a guy that tinkers with cars? Is are, are we going to get there or is it always going to be some kind of a limited use or maybe a public transit kind of a thing?

Sahas:

[37:19] I think we're going to get there. Um, and I think we're going to get there quicker than most people think. Uh, I once again, I have the unique luxury and privilege to live in mountain view California. And uh, if I walk out of my office or out of my home and just watch the street for no more than 10 minutes, I will likely in that short window of time have seen multiple self-driving cars drive by, whether it's Google's Waymo or Apple’s self-driving car or something out of Ford's R&D lab or BMWs or Honda's Nissan's or one of the self-driving car startups like Nero or drive AI or deep map or any of these companies. While you may not see it in most parts of the country, if you are a mountain, you don't even need to be an you downtown are you?

Sahas:

[38:10] I'm not even talking about standing in front of Google's campus, pretty much any street in this town. You probably won't go 10 minutes without seeing more than at least two different types of self-driving cars driving by with all sorts of Berlin, um, engineers and mine's working at working on solving this problem. So I am very optimistic that some modes of transport will become fully autonomous. Whether specific types of routes between, let's say the SFO airport in San Francisco, downtown or some, some farms, some specific paths. At the very least, uh, I'm quite confident will become so well mapped out and so well structured that you can confidently send someone down that road in an autonomous vehicle with almost zero risk. And I think something of that sort is probably no more than months away from actually occurring.

Scot:

[39:04] Okay. So very bullish on autonomous vehicles. It's interesting. Yeah.

Sahas:

[39:08] And to be clear, it's not a, I'm not saying you're going to have the dream that everyone has where you can really get into your car, press a button and it navigates anywhere you want it to go. What I'm saying is you, there are specific routes between, let's say the, uh, UC or Stanford campus and San Francisco airport, specifically that route that's specifically mapped out with almost guaranteed confidence. Something of that sort will be more like be possible in a short timeframe before we get to kind of the all in one purpose, self-driving car that can do anything and everything.

Scot:

[39:42] Yeah. One of the things that kind of blows my mind is a software guy is, you know, so these, these vehicles are gathering so much data, terabytes and terabytes of data at night. They plugged them in and they just download all that into the cloud and then what they're able to do is run the simulated miles. Right. So, uh, so now and then, and then because you can, you know, now that you're in the cloud, you can run parallel simulated miles. So they may go, uh, I dunno, 500 miles a day, but at night, you know, they could virtually take that experience and 10, 20, 30, 40,000 exit if they wanted to too. So kind of very much being in the matrix and it hurts my head to think about it too much. I just sort of, yeah,

Sahas:

[40:19] Funny story where, uh, some of these self-driving car companies that have a test fleet, let's say in Arizona where there's a lot of them are running right now at quarters and Silicon Valley. There's just simply not enough bandwidth, uh, to actually transmit the status between r and d centers and their actual test fleet in a different state. So the way they're actually transporting the data is by briefcase with an engineer flying hard disks, a back and forth on an airplane. And that's apparently faster than uploading it through in fiber networks because just the sheer size of volume of information they're collecting from these cars. So I thought that was pretty interesting to hear about.

Scot:

[40:57] Yeah, we're still living in a sneaker net world sometimes. Cool. Um, last topic, uh, another way to think about what's going on with cars is kind of the, the lifecycle of cars. You talked to a little bit about, you know, some of these innovative insurance models being per mile and, and that kind of thing. Uh, I can't watch TV without the whole set of commercials being, you know, one of these Carvana or room and one of these kind of companies. So all of these new ways of buying and selling and owning cars, um, what are you seeing out there in Silicon Valley from innovation around that?

Sahas:

[41:31] Yeah, I'll give you examples of where we're at at the same time. And you know, 2019 or let's say a year ago in 2018 one, uh, my Volkswagen e golf and then the Tesla model three, uh, I went ahead and leased my Volkswagen. I went to my local dealer. I love this car by the way, but it did take me nearly four and a half or five hours. Maybe I'll spending time at that dealer from when I walked in to actually leaving with that car, just to do the paperwork and get everything done and out the door. And then at the same time, uh, helped, uh, my mother, uh, order her model three. Um, it took maybe two or three minutes, um, through the webpage on tussles website. Uh, it was, no, it took no longer than ordering a new pair of socks off amazon.com and you're living in a world where both of these are happening still in parallel. So when I look at that, I think it's quite clear that one is going to be the future. And I wouldn't be surprised if we see that level of a car purchasing experience emerging, uh, across all brands within the next hopefully year or two.

Scot:

[42:49] Yeah. What, what, um, I often think what's going to happen to the dealers, right? So Tesla doesn't have this, this kind of, you know, dinosaur dealer type model or, or you know, uh, uh, incumbent innovator's dilemma style thing. But the other OEMs would really struggle with that, right? Because they've, they've got all these dealers that kind of hold the inventory and everything like that. But do you have a point of view of what happens to, to car dealers down the road?

Sahas:

[43:14] I think that they will need to go away. Um, if he, you know, they were, the dealership was introduced in a way to protect consumers from the car companies that consumers are buying cars from under the circumstance that they don't, um, uphold some form of contract when it comes to effects and a vehicle or workmanship issues and things along those lines. And that time was very necessary a long time ago when automobiles were introduced. However, let's look at any other industry again. Um, you can buy your iPhone directly from apple or you can buy it through what you may want to call a dealer, whether it's a best buy store or another retailer like target that may sell your an iPhone. It's the same thing for your Dell laptop or you're a Samsung android device. Uh, you always have a way in 2019 across the most technology products to purchase it directly from the manufacturer or through a distributor.

Sahas:

[44:17] The automobile today, aside from Tesla, the only way to get it is through a licensed dealer or distributor. You cannot get it for the most part, uh, directly from the OEM unless it's some sort of exception, uh, fleets or something of that sort. So I think that aired, I'm needs to change. I think there needs to be both options. And I do think that, uh, the R and d capacity for innovation to happen, uh, it's not sitting in the hands are on the laps of dealers who can reinvent the diverse experience. Uh, if someone wants to innovate the direct sales model, uh, OEMs, even though, uh, it may take them some time, they do have the capital and the willingness to actually create an example or an experience that rivals Tesla and they do have the capital to do it. But there are some regulatory stuff that's in the way for them to make that happen. But I do think consumers at the end of the day should have the option to buy it a vehicle that they want in the way they want it, whether it's direct from the manufacturer or from a dealership that they're comfortable with.

Scot:

[45:22] Yeah. And over back in my e-commerce world, this is a, you know, it was never was rarely thought of a brand could good, right? She had almost be like Nike level. Uh, and then now that that damn has broken every brands going direct, it's total chaos. And uh, and now every retailer is trying to be a brand and every brand is trying to be a retailer. So it's interesting to watch these things kind of reached this tipping point and then like go through a massive acceleration. So we'll, we'll kind of, it'll be fascinating to see what happens to these dealer networks. Absolutely. Cool. Uh, so we're, we're getting up against time here. Any last thoughts for listeners? So you want to share her, cause you're, you kind of spend all your time marinating in this world and in any other thoughts on the future of, of vehicles and where they're going, you want to share?

Sahas:

[46:03] Yeah, sure. I'll let, maybe we'll leave everyone with one thought. Um, when we look at what is the purpose of vehicles in most of the United States, the automobile is the only way to get to most places. Whether it's work, whether it's your school library, Grocery Star Hospital, or you know, to visit your family or friends is the only viable option because there isn't really a strong public transit infrastructure, uh, in most parts of the country, which means that mobility and cars are really more than just a luxury. It's, it's actually a necessity which really makes mobility fundamentally a human rights issue. Uh, to be a productive, successful member of society and to have a path to opportunity in a better life. You need mobility. So in our opinion, we want to really figure out a way to empower these developers to build all of these new forms of transit, new forms of car sharing, new forms of car rental, new forms of insurance, all of these things to become possible and ultimately will hopefully see a world in the near future where transportation is more accessible to the demographics that have kind of have been left behind in the dust where transportation is more affordable, it's more efficient, it's environmentally friendly, and ideally safe as well.

Scot:

[47:25] Cool. It's a, it's a deep thought. I'm gonna, I'm gonna spend some time pondering that one. Um, and last question, if a, if folks want to find follow friend tweets, uh, whatever, uh, with you, where do you hang out online?

Sahas:

[47:39] Smartcar.com is our company's website and you can actually find my email, my phone number, everything on the about page. I'm also on Twitter and Linkedin, so I'm very easy to find.

Scot:

[47:54] Awesome. Well we really appreciate you taking time out of your busy schedule, connecting all the cars in the world to join us on the Vehicle 2.0 Podcast.

Sahas:

[48:02] No, I appreciate it, Scot. I think, uh, what you guys are doing is pretty incredible and you're one of the key companies, I think driving a lot of innovation, you know, the vehicle 2.0 evolution. So we're really excited to be working with you. We think you guys are working on something incredible and I think companies like you are really those, uh, FM, the data companies that are helping make this transformation happen. So thank you very much for having me look forward to continuing working with, with you guys.

Scot:

[48:27] Awesome. And listeners. If you enjoyed today's podcast, please take a minute and go rate us in your favorite podcast listening app. Five-stars is always appreciated. Vote with how you feel and we will join you on the next episode.

Mar 13, 2019
Senior Editor of Auto Remarketing & Auto Remarketing Canada, Joe Overby
42:36

EP002 - Senior Editor of Auto Remarketing & Auto Remarketing Canada, Joe Overby

http://www.vehicle2.getspiffy.com

Episode 2 is an interview with Joe, Senior Editor of Auto Remarketing & Auto Remarketing Canada; recorded on Wednesday, March 6th, 2019. He and Scot discuss a variety of topics, including:

  • Joe’s position at Auto Remarketing
  • Vehicle lifecycle - how people are buying and selling cars
  • How changing ownership models (car-sharing, subscriptions) are influencing rental car agencies and dealerships
  • The evolution of automotive auction, both physical and digital
  • The progression of technologies for more connected cars
  • Affordability of electric vehicles, as well as the availability of used EVs
  • Slow down in autonomous vehicle hype
  • It looks like dealers, auto auction companies (KAR/Cox) and rental car companies are on a collision course around the fleet maintenance/reconditioning/remarketing space

Check out the multiple events hosted by Auto Remarketing and Auto Remarketing Canada, such as the Auto Intel Summit and Used Car Week.

If you enjoyed this episode, please write us a review on iTunes!

The four pillars of Vehicle 2.0 are electrification, connectivity, autonomy, and changing ownership models. In the Vehicle 2.0 Podcast, we will look at the future of the auto industry through guest expert interviews, deep dives into specific topics, news coverage, and hot takes with instant analysis on what the latest breaking news means for today and in time to come.

 

Transcript:

 

Scot:

[01:01] Welcome to the vehicle 2.0 Podcast. This is our second episode and it's being recorded Wednesday, March 6th, 2019. In this episode we have our first guest and I'll give you a little background. So here at Spiffy we are doing a lot of work at automobile auctions. It's a whole industry I've always heard about but never had experienced. So I was, I was reading online at a great site called Auto Remarketing and I kept seeing some content there by a guy named Joe Overby. And I said, "Wow, I've got to meet this guy some time" and went to his bio and discovered he is here local. So Joe is going to be our first guest here on the show.

 

Joe:

[01:37] Scot, thanks for having me.

 

Scot:

[01:38] Yeah. When we have 500 shows out, you'll, this'll be, you'll put it on your resume.

 

Joe:

[01:42] That's right, first ever guest on Vehicle 2.0.

 

Scot:

[01:43] Yes. We really appreciate it. And you're the senior editor of Auto Remarketing and Auto Remarketing Canada. So that's interesting. So you speak Canadian apparently as well as English.

 

Joe:

[01:56] I try to. My southern accent, a little bit, gets in the way.

 

Scot:

[01:59] Is that on your title? So you can go get some of the delicious Canadian beer or?

 

Joe:

[02:04] You have delicious, delicious Canadian beer and they have the gravy fries, which are out of this world.

 

Scot:

[02:11] Yeah. Yummy.

 

Joe:

[02:12] Going up there in two weeks for that.

 

Scot:

[02:15] Cool. Let's start off and kind of orient every, all the listeners about your background. How did you get into the industry and where you are today?

 

Joe:

[02:23] So I went to went to NC state and I majored in political science, did a minor in journalism and had worked in for technician for a few years. And the student newspaper and then had a job in sports writing at a newspaper in Georgia right after college and worked there for two years and decided I want to try something different and get into magazines and applied for the job back here in Raleigh at our S&A Cherokee, which is the parent company of Auto Remarketing. And I've been covering the auto industry for about 12 years now.

 

Scot:

[02:54] Awesome. Cool. Yeah. And NC state. Awesome. Go pack.

 

Joe:

[02:59] Yes sir.

 

Scot:

[02:59] Tell us more about Auto Remarketing. So is it print and online? Just online? And what kind of audience do you guys have? We'd love to know more about the publication.

 

Joe:

[03:14] So we're print online and we have a digital edition are online. You know, we have our website obviously, and then we have a wide range of e newsletters that we send out, kind of that's how we get our stories out. Our largest e-newsletters, a daily morning one that goes out to about 22,500 subscribers. And then we have, you know, various other daily and weekly newsletters. They're about the same size or smaller. And then we have a print publication that goes out to 36,000 subscribers and then a digital edition of our same, of the same magazine. It goes out to 50,000. And then we have the same another publication Auto Remarketing Canada for our Canadian audience. And that also has a weekly and daily newsletters, and also a digital edition as well along with print. And then a colleague of mine, a guy by the name of Nick Zulovich, he heads up a couple of automotive finance publications. So we have one kind of specializes in the fin-tech space and then one that specializes in kind of the subprime lower tier financing in automotive as well.

 

Scot:

[04:28] Yeah. And then the broader Cherokee, are all their publications automobile-oriented or do they go into a lot of different kinds of B2B verticals?

 

Joe:

[04:35] Most of it actually is automotive B2B. I think we have four prints, automotive publications, but then we've also got two local lifestyle magazines. Folks here in the Triangle area, probably know Cary Magazine and we just launched a magazine for Holly Springs and Fuquay called Main & Broad. And then our company also has done several custom publications where, you know, maybe it's a, an association or a, you know, company that will publish a custom custom job for them. But mostly, yes, our bread and butter is the automotive space.

 

Scot:

[05:11] Very cool. Yeah, it's interesting. The, you know, you read the headlines, print is dying out, but I think that's the daily newspaper. But it seems like where there's a lot of vibrancy is in kind of hyper local. So people want to know a lot more about what's going on with their community. And then also in, in kind of a lot of the B2B verticals, seems like you have those bases covered.

 

Joe:

[05:30] We've got a, we've got a captive audience, so to speak for the, for the B2B as well. Yeah.

 

Scot:

[05:35] Well, cool. We've got a ton of stuff we want to talk about. Let's start with what I call the vehicle life cycle. It seems like you guys got financing and then then kind of like, you know, the, the used car side, the remarketing refurbishing side. What are you seeing there, you know, around behavior around how people buy and sell cars. Is that changing or it's kind of the same it's been over the time you've tracked it?

 

Joe:

[05:59] Certainly. Probably since about 2013, well, 2014. It's become a lot more digital in terms of the actual transaction. I mean, you had, you know, back then you had a lot of companies like Carvana, you know the BPs of the world, the rooms that have launched in the last five years. And more consumers, even if they're not maybe signing on the dotted line and buying completely online, they're doing, if there's five steps to car buying, they might be completing four of 'em online and then going and picking it up at the dealership or, or, you know, setting up the deal online. So I think you're seeing a lot more movement to completing some or all pieces of the process online. And, and, and it's not just these, the startups that are doing it, dealers are getting into the game as well. And you know, using software providers to get in the game themselves in terms of online buying and selling.

 

Scot:

[06:56] Yeah, I think one of the Superbowl commercials that was my favorite was, I can't remember if it was Kia or Hyundai. Bt they had the commercial where the guy was in the elevator and it was Jason Bateman, and there was like root canal. And you know, like all these things and then like the bottom kind of the bottom level was buying a car and they were that company that, oh, that OEM was rolling out a model that was very Carvana [inaudible] will come to you, you have a return period. That kind of a thing. So I think it's been interesting to watch that.

 

Joe:

[07:25] Yeah, for sure. I mean the automakers are doing it and they're, they're doing it through their dealers. I mean partly obviously cause a franchise dealer laws that they have to go through their dealers. But you know, they, they've got the infrastructure of, of these large dealer networks that they can set that up. Yeah.

 

Scot:

[07:40] How about, I'm kind of staying on the topic of the vehicle life cycle. You mentioned your sister publication around finance. What's, what's new there? I know I've seen some data that leases are, are quite kind of, you know, continue to be the most, one of the increasingly popular ways to, to, to finance a car. What else are you seeing in that?

 

Joe:

[07:59] Well, I'm one of the, one of the alternatives now is some of the cult subscriptions and they, you know, instead of in one of the, one of the models that has launched recently is one called Fair, which was launched by a guy named Scott Painter who was the CEO and founder of True Car. And he brought in a guy named George Bauer who's a former executive with the German automotive. And I believe, you know, it's had a lot of, a lot of experience in, in that, in that space as well. But you know, they models like that kind of had, I've taken on the approach of, you know, why jump into a 60, 66, 72 month loan when you can subscribe to a vehicle for, you know, a year if you want it at three months, if you want it. And then kind of get out and move on to the next one. And it's, you know, not to get in the weeds too much, but it is a different little bit different model than say, you know, a rental or a lease. But it just gives another flexibility for, for someone who doesn't want to set up financing for the next six years of their life.

 

Scot:

[09:04] Yeah. Yeah. That, that's a good segway. So part of the reason we started this podcast is we at Spiffy. We've put out this framework, we call the vehicle 2.0 framework and it's got four components, changing ownership, connected car electrification and autonomous vehicles. And you know, Fair is a good example of kind of the changing ownership going from kind of long leases to kind of micro leases. Then you've got Getaround, and Toro. That's more Airbnb kind of like, you know, sharing almost car sharing. And then it's really topical because I'm sure you saw Lyft filed their IPO and it's kinda caused this whole raft of in there, you know, Lyft talks about long-term, they don't think everyone's going to own a car. And then now I've seen like six top level articles about, you know, what's happening with car ownership. Any other interesting car ownership trends you're seeing?

 

Joe:

[09:53] Well, I just, I think that the, in terms of car ownership, there's just such a variety of alternatives. Now, I mean the, you mentioned Lyft, I mean one of the stories we had this week was Lyft has partnered with Cox Automotive, which owns kind of a variety of different vendors in this space. And they're on the service side. You know, when, when you, there's a dealership service department platform where, you know, when you take your vehicle to get serviced, they've got an automatic partnership with Lyft. So instead of having a, a loaner fleet, that dealership can just get set you up with the Lyft vehicle for that, you know, for the time period that you're, your vehicles in the shop. And, you know, you've seen those Enterprise commercials with, I think it's Joel McHale where he says, you know, you can rent a car from enterprise, you can, you know, car share with enterprise or you can buy it from enterprise. So I think companies are realizing the, the amount of variety of, of different ownership models and the way people want to interact with their cars these days.

 

Scot:

[11:00] Yeah. So sometimes you know, the articles kind of doom and gloom for kind of the traditional dealer. Do you think the dealer is kind of a dinosaur in this model or did they, they have to kind of just pivot and become more of like the service center? So if we kind of go to the extreme, right, and we, we kind of, I think, you know, we believe car ownership's going to be more of kind of fleets owning cars and people kind of, you know, using them on a smaller kind of timescale. It's not, all these things are never going to be 100% either. I come from the world of eCommerce and we're like 15% of the city of retail is on the commerce. We've been at it for 25 years. So, but you know, imagine there's a day where more like 20% of cars are, are kind of a fleet kind of a model. Where do you think the dealer falls in that spectrum?

 

Joe:

[11:45] Well, I think at this point there's still, there's still very much in the game. I mean, a lot of these models that we talk about Fair and, and some of these subscription models, they, they worked through the dealership. So, you know, you may, the end consumer may go to their app and, and you know, subscription program or some sort of alternative ownership program that they access through an app. That company, a lot of times we'll still buy the car, you know, the delivery of the vehicle still through that dealership and a lot of the dealerships are offering these services themselves. So I think that they, I think it's more of a pivot that a dealer, you know, may shift part of its business from, you know, 100% retail sales to portions of it being, well part of our inventory is going to be first subscriptions or car sharing, you know, for a ride hailing drivers and that sort of thing. I do think there's an opportunity as well for dealers to be in the service business. I mean, for these vehicles, the service business of, of a dealership has long been the most profitable anyway. So, you know, they're, I think they're very excited about, you know, the ability to change their model. I mean, I was talking to a dealer recently who said that it's in dealer's nature to sell what the consumer wants. I mean, it's a simple statement, but, you know, dealer, a dealer wants to sell, however, you know, whether it's an electric vehicle and autonomous vehicle or, or an alternative method of ownership, a dealer wants to be the person selling that car and they're going to do it.

 

Scot:

[13:25] Yeah, absolutely. How about, and this may be out of your purview, but we were doing a lot of work now with rental car companies and I had kind of assumed that they would be on the decline because I've gone through a phase where if I go to a city now, I kind of do some math and figure out am I just gonna kind of Uber around or am I going to rent a car? And you know, that that bar is kind of increasingly leaning towards more ride sharing. But I was surprised to find rental car companies that are actually growing pretty nicely. What do you think, you know, are they kind of going to start competing? The other argument could be maybe rental car companies are better equipped to manage these kind of future fleets than dealers are. Do you have any point of view on that?

 

Joe:

[14:06] That's, that's interesting. I mean, I think they certainly have the, if you think about what they already do, you know, a lot of them already sell cars. Just like dealers, you know, they have, they operate in many ways like dealerships.

 

Scot:

[14:21] Yeah, and they have more flexibility because like, you know, dealers get kind of locked in, if you bought it here, I want you to service it here and you know, and they're locked into one type of vehicle. Like I'm not going to take my, my Honda to a Lexus dealer for now. They may actually, sometimes you talk to dealers and they would actually do that, which always surprised me. I never knew that was a thing. Yeah. But most consumers don't think that way. Whereas whereas Hertz, Avis, etc. Are, you know, manufacturer agnostic.

 

Joe:

[14:44] And they do have, I mean, you know, a dealer, a dealer wants to get that, that new car sales there. They are going to take a trade in and then, you know, either use it on their own lot or, or take it to auction or, or you know, dispose of it via wholesale. But, as far as rental companies, I mean, I think, you know, they certainly have the type of infrastructure, national footprint that automaker or franchise dealership system has. They also recently, I mean, if you'll notice that a lot of these companies, either their, you know, the, the large rental car companies are either outright buying some of these smaller alternative, physical ownership platforms or they're working very closely with them to partner, you know, cause they know that they know that, you know, when, when you go, when, when somebody goes to travel there, they're doing the math that you just described. You know, it actually be cheaper for me to take a Lyft to and from a hotel rather than, you know, renting a car. And I think, I think those companies are doing the math and partnering with some of those companies. And, you know, they, I know that they're even getting into the connected vehicle space as well, these rental companies. You know, I think they're just as progressive, you know, in terms of this technology as the dealership and automakers are.

 

Scot:

[16:22] Yeah. And I mentioned at the top of the show that, you know, you guys put a lot of great content out there about auto auctions. That's when, as an eCommerce guy, it's kind of interesting to think about, you know, I haven't visited one, but a lot of people at Spiffy have, and then they seem to be these giant fields full of cars. And you know, there's, there's a point in time like a Wednesday morning and three days before Wednesday, you know, tractor trailers are showing up with cars and unloading them and then they're getting washed and they're putting them through an auction process and they're loading them back up. It just seems like a hugely physical analog kind of a thing in today's world. Is digital hitting auto auctions and, and what's that look like and give, give listeners that maybe they don't even know the industry, like maybe a high-level overview of and what's going on.

 

Joe:

[16:57] Yeah, absolutely. I mean, I think the, I mean, first of all, the physical auction space definitely is still happening. I mean that, physical sales, you know, are still going on every single week, every single day. But you do have where the two, the two largest corporate physical auction companies in the US, Manheim and Adesa, Manheim is owned by Cox Automotive, which is part of this global huge company, Cox Enterprises, Cox Automotive. And then you have Adesa which is owned by Clorox and services, which is a publicly traded large company. Both those companies are pushing more and more on their auction side to digital. I mean, I don't have exact stats in front of me, but it's about 50/50 of their auction sales involve some digital element, whether it's somebody buying via simulcast or you know, somebody sitting on a computer and buying through an online auction. They're pushing, those two large companies are pushing more of their business to the digital side.

 

Scot:

[18:08] But digital, is like an overlay on the physical or, or is it actually a separate digital thing so I could buy one and it's not actually in a physical auction?

 

Joe:

[18:15] Right. So a little bit of both. Actually. The, for example, car and services, which owns Adesa also owns a online auction company called Trade Rev. And that is completely digital and you think, oh, it's kind of cannibalizing. But no, it's, it's really a compliment to their existing auction business. Cox Automotive has, you know, dealer to dealer sales platforms. They have online auctions. So you know, these companies, the approach that I've seen them take is they want to sell however the buyer wants to buy. I mean, and dealers are just like consumers and that a lot of them are moving more towards making purchases digitally. That said, I mean, there's still a huge role for these, for these auto auctions. I mean, there's, some of them, for example, at Manheim, there's a former Manheim location that now has been turned into a mobility fleet servicing center. So what they do is they, you know, they do all of the things that need to happen with a fleet of, of mobility vehicles. So gassing them, washing, reconditioning. All of this sort of services you might think have to happen on the backend, this former auto auction does. And I think you're going to see a model where you know, an auto auction might do a little bit of both. They might still have those physical sales in the lane every Wednesday morning, but also sell vehicles digitally and act as a service center for all kinds of, you know, they already do a lot of ancillary services anyways. Now they have a new client and these large fleets of, you know, ride sharing, car sharing, you know, subscription services that it's a new clientele that they can serve as those vehicles as well.

 

Scot:

[20:15] Yeah. So it kind of sounds like we've got three factions fighting for this future of, of you know, fleet management. So you've got the dealers and the OEMs kind of aligned on one side. And in the eCommerce world, it's interesting. So, you know, you have kind of brands and retailers and, and those guys have fractured themselves because there's been a lot of channel conflict where the brands are starting to go around kind of their traditional channels. So it'll be interesting to see if that happens. But that's one faction do, we had the rental car kind of faction and the now it seems like the auto auction guys kind of also want to put their hat in the ring for managing this.

 

Joe:

[20:48] Yeah, absolutely. And, and even then, you also have a, aside from the, the large kind of corporately owned auctions, you have a lot of independent independently owned auctions. I mean there's, I don't know the exact count, but there's hundreds of independently owned auctions and they're, you know, they're just as innovative and then getting into the same type of a, the same type of play that, that these, you know, large corporate auctions are as well.

 

Scot:

[21:16] Yeah. And I saw a company called ACV Auction, am I saying that right? And they just announced, I forget the amount, but it was like a big raise. Was it 70 million, a hundred. It was like a, it was kind of eye popping. Let's see if I can find that. But that's more of just kind of a new new entrant. Right. So just pure digital if I understand?

 

Joe:

[21:35] Yeah, absolutely. They are a digital dealer to dealer online auction and they have been, I mean it seems like for a while there, almost every other store we had was about them than raising capital. I mean they, they have been, they hired a relatively new CEO I think has somewhat of a Wall Street background and funding background. A guy named George Simone and they have just been raising money and raising money and then, you know, Trade Rev, which I mentioned earlier is I guess it would be a competitor to theirs. And they're, they're owned by, you know, one of the publicly traded large company in the auction space. And then you have, there was a new, a company from Canada called Eblock, which they just launched in the US in Burlington, Vermont. And then you have just tons of other companies into this, in this digital, wholesale space where if you think about Carvana and Vroom and some of those companies and just think about, you know, those they're in customers or retail customers like you and me, ACV, Trade Rev, their customers are, they're doing essentially the same thing, but their customers are dealers. Yeah. And there's just, they're well capitalized. There's lots of them. And you know, I think it's a growing space. And then you, and then to add to that, there's, you know, a company like a Smart Auction, which is a piece of Ally Financial. They'd been around for 20 plus years doing this. And there's, it's, it's a growing space.

 

Scot:

[23:09] They're coming at it from the financial side?

 

Joe:

[23:11] Well, they're an online auction, but they, you know, it's, it's a similar concept to me as it were. Dealers can go in and buy car wholesale cars online for their inventories. Yeah. Got It. Does Cox so, so noticeably absent for that was kind of Cox, do they have a digital auction platforms? They do. They have OVE. They have Manheim Express, which is a dealer to dealer platform. And you know, they're, they're very much involved in digital wholesale. Yeah. Cox Automotive.

 

Scot:

[23:42] Cool. And while you were talking, looked it up. So they raised a ACV auction, raised 93 million in December and they've raised 150 million total. So that's a pretty considerable. It's interesting because watching, so I come from the marketplace world and they've, they've kind of gone through this kind of touchless to high touch. So, so kind of the famous example is a lot of people use Open Door. I don't know if you've ever shopped for a house now, but they'll go in and buy the starter homes and a whole area of, so here in the triangle they've bought like any house, but between kind of 102k, they'll go buy it and then they'll run a marketplace. So, so imagine like, you know, Zillow went out and bought all the houses and was selling them. So it'll be interesting to see if we kind of go full circle and see someone like an ACV actually taking some inventory risk or something. You would imagine with raising that much capital there, there's gotta be something going on there that's all that it's a lot of engineers behind the scenes deal for $200 million. Okay, cool. So changing ownership, some interesting trends there. How about connected car? What, what did, what do you think happens in a world where our car is kind of connected to the cloud and, you know, it lights up a lot of nice new features for, for the consumer, but what else does it mean for the future of cars?

 

Joe:

[24:56] Well, I think that this number one, it's sort of been progressively happening already. I mean with, with Onstar, with General Motors, you know, having the, having that kind of feature. And then, you know, on the way over here I had my, how to podcast and music and directions going through my phone. So there's already a level of connectivity in cars and, and I think that is a bigger, not worry, it's going to be here faster, I guess, than autonomous vehicles. Yeah. I've, I've heard that, I've heard that in the industry that, you know, that's, people aren't talking about that as much as they are autonomous cars, but I think there's a greater chance that we have connected vehicles much quicker than we have self driving vehicles. It'll be interesting it, you know, what's the, you know, what are some of the purposes to that, you know, is it safety? I mean, that, that would be a, to me, you know, cars communicating with each other, you know, could be a big help for safety is that, you know, when cars are too close together or, you know, does it help avoid accidental oil, you know, or accident avoidance. I think that's a potential play there. I mean, obviously the infotainment is, we're already there. Yeah. But I think there's a lot of, a lot of room for growth there and I think you're going to see that quicker than, than you are autonomous cars.

 

Scot:

[26:26] Yeah, it's been interesting. So a lot of, a lot of companies kind of went with their own kind of, you know, app, App store thing and now it seems to be kind of standardizing on a, you know, the Apple system or the Android and kind of Amazon. It seems to be having some legs with Alexa, kind of, in the car. Yup. It's interesting to see what happens there.

 

Joe:

[26:46] And another point to that. There's a, there's been a couple companies that have come out with basically devices that you plug into the onboard, got an onboard diagnostic port. And so as long as the vehicle is something, it's either sometime in the 80s or sometime in the 90s that if your vehicle was made after a certain point, you can turn it, you know, 1995 Toyota Camry into a connected car by plugging in their device to a, to the onboard, the OBD two sensor. So it's, it's really interesting. Even used cars are becoming connected cars.

 

Scot:

[27:21] Yeah. And some companies like a Verizon has Hum where now that not only do you plug that in, so sometimes you can plug the sensor ended, it'll talk to your phone and get to the cloud, but sometimes it will have its own cell phone connection in there so it can, you know, to your point it can, it can add retroactively add connect to capabilities. Yeah. Electrification. So there, there's a, you know, avi is a autonomy is like the shiny bulp, but in the industry, but electrification seems to be kind of grinding out a lot faster. What do you think about that?

 

Joe:

[27:51] Well, I think the biggest issue I see is affordability. I mean, new car affordability in general is already an issue. And it's driving a lot of people to the used car market right now. And that is partly as a function of consumers more interested in trucks and SUVs and crossovers than they are sedans. It's a, naturally the price goes up on those vehicles. But you know, I, I think you look at it like the Tesla's of the world and some of these, you know, electric vehicles or are too far past a price point where they don't make up for the gas savings. But I think there, there are people working on that. I mean the, actually the next, next couple stories I'm working on, one of them is about a, a company called Current Automotive and they are a used electric vehicle dealership that sells primarily online. They're actually one of the co-founders is part of the, or has families that the built Jacobs Automotive Group up in Chicago. And then the other co-founder I believe is a former Tesla executive, but they are, you know, having, having the point now we're where there's enough used electric vehicles that are hitting the market. Having that infrastructure of a, of a dealership type of organization that can sell them, you know, I think should help some of the affordability around electric vehicles.

 

Scot:

[29:23] You don't think a $35,000 Model 3 is, we think we have to go lower than that?

 

Joe:

[29:29] Well no, I mean I don't think so cause I, I think that the way new car prices are now, that's probably about what average for a new car now.

 

Scot:

[29:38] Yeah I think average is between 30 and 40k. Right?

 

Joe:

[29:39] So, you know, I don't know there has to go lower than that, but I do think it is a positive sign that there are going to be used vehicle options for people that, you know, don't necessarily want to shell out 35 grand at the low end for an electric vehicle. And then, you know, you had another, another kind of story we're looking into is the the former House majority leader Richard Gephardt,is signed on as an advisor with Fisker Automotive. And they're in that same kind of electric vehicle space in there. They're looking to basically solve the pain point of, you know, creating a, a workforce for people to build electric vehicles. And so I think with more options I think the price will come down on, on electric vehicles. And again, going back to the kind of the different types of ownership models, there's several different iterations of electric vehicles. You know, you have your hybrids, you have your-

 

Scot:

[30:44] Different plug in hybrids.

 

Joe:

[30:45] Exactly. Yeah. I know a lot of people that are doing the plug in hybrid thing kind of helps with the range anxiety to have an internal combustion engine there. So I think there's, there's more options come to the table. I think you'll see the price come down and more people get into them. I don't think we're going to get it go away from internal combustion engines. I mean, not only because of the infrastructure challenges, I mean there's, there's political challenges do it as well. I mean, there's entire industries that would lobby against that. So you know, I think, you know, I know certain countries are probably will go 100% evs, but I don't think that's going to happen in the US.

 

Scot:

[31:26] Yeah. China seems to be very aggressive. So they're, you know, they've got massive pollution problems and they're pushing for that big subsidies. And they're building out of the, all of the infrastructure will be interesting to see what happens there. Do you guys cover electrical infrastructure at all? Like, do you know how many chargers and companies like Chargepoint? There's a lot of startups trying to dissolve the charging challenge.

 

Joe:

[31:46] Not yet. I'll say, we, you know, our focus has mainly been in the the used car retail and you wholesale space and sort of the, that side of the industry. But in the past, you know, three or four years, we've really ramped up our, for lack of better word, automotive technology coverage, whether it's mobility, whether it's, you know, EVs online buying eCommerce as become a huge part of the industry. And so it's kind of been a huge part of our, of our coverage. So I think as, as more of those models gain traction, that that'll be something we'd probably open, open ourselves up to a little bit.

 

Scot:

[32:24] Yeah. I think the industry is not really ready for electric cars because when we visited an auto auction and they had almost a whole, there were helping Tesla do a kind of a bunch of refurb kind of stuff. And their biggest, one of their biggest challenges was having so many Teslas there, they couldn't charge them all.

 

Joe:

[32:41] Yeah.

 

Scot:

[32:42] So they would like, you know, they had a line of a hundred Teslas and over, you know, over a period of time the batteries, you know, they're, they're using some electricity and they would kind of brick the, the vehicle and have to go figure out like once it's bricked, it's hard to get it to two power. So, so, you know, it's interesting to like, you know, the, the infrastructure we always think about on the consumer of the retail side of charging, but it kind of flows through, you know. Imagine a rental car company trying to do this and you know, having to add, you know, they're going to have to charge hundreds of vehicles overnight and the infrastructure, on that side, I don't think a lot people think about that. But that's big too.

 

Joe:

[33:15] And there's probably companies out there that eventually if they're not already, would go and work with the rental car companies and the auto auctions that they can set up charging stations. You know, if they say we've got too many Tesla's here at the auction, the charge, all of them, you know, at this company as I'm sure it could come in and do that.

 

Scot:

[33:34] Yeah, they're expensive though. Each one of those is like, you know, a hundred to 200 k and like with, when you put it all in with the, the backend electrical plus the wiring and the head unit. Yeah. It's expensive. Yeah. Cool. And then the, the shiny bulb in the industry is autonomous vehicles. What do you think about that?

 

Joe:

[33:52] I think it's going to be awhile before they gain a whole lot of traction. I think there's, you know, what I've seen mainly is that it will be like as a staged rollout where it's, each level is kind of staggered I guess. But you know, I think last year the, the much publicized, you know, unfortunate, you know, the accidents that resulted in fatalities involving self driving cars. I mean I think that kind of slowed it down a little bit. I think the, there's too many, too much safety concern right now. Whether that's overblown, it's still there. I mean I think, there's a lot more testing that needs to be worked out before those gain any kind of real, you know, measurable market share.

 

Scot:

[34:40] Yes. Yeah. It's been interesting to watch it CES. I haven't been to CES in a while, but I watched the coverage. And this is the beautiful thing about social media, you don't have to go to these things anymore. Save a trip. And it seemed like the last three CESs is prior to 2019 we're all a lot of autonomous vehicle hype and then this year it was kind of like the reality of more of the things they were showing were, you know, really constrained public transit kind of thing. Just so you know, these vehicles are going to go in a very predetermined route with its own lanes and a very safe kind of approach and they're only going to go 20 to 30 miles an hour and they'll have a human in there. And so really kind of pulling back from that, you know, I'm just going to hop in a car and it's gonna drive me coast to coast and I won't, I can sleep or something like that.

 

Joe:

[35:22] I think it's more of a pragmatic approach. It's cities looking at how do we solve these mass transit issues, you know, whether it's a or, you know, even even companies, I mean who were, you know, if it's a, if it's a self driving a shuttle at a company or something that it goes around the campus or, or you know, helping cities out, solving those, solving those issues, more of a pragmatic approach rather than a retail consumer just wants a self driving car, like, you know, on the Jetsons or something.

 

Scot:

[35:51] Yeah. So any other trends in Auto Remarketing that, that are kind of top of mind with you?

 

Joe:

[35:58] Well, I think going back to the, just the increasingly digitize digitalized presence of, of the auto auction industry. I mean I, I think there is, it's an interesting time because so much of it is, is going digital, you know, and despite there being still the need for the physical auto auction because you're moving these large assets and it's, you know, there's a lot of physical movement. It's still needed in the industry. It's interesting to see how you'd mentioned the ACV investment. It's, it's been really fascinating to watch how much money and how much attention is, is getting paid to, to that side of the business. And I think it's a, it's only going to grow from here. You know, that the digital wholesale environment.

 

Scot:

[36:45] Cool. Awesome. And you guys have, you mentioned earlier that you spend more time on kind of, you know, some of the future vehicle technology stuff. And I noticed that you'd put a lot of events on this seem to be kind of anchored around this. Tell listeners about some of the events you guys host and how they can learn more about this.

 

Joe:

[37:02] Sure. So we do, we have four automotive conferences each year. Two of them were actually coming up in Canada. I'm heading to Toronto in a week and a half. That'll be for the Toronto used car industry. But this summer in Raleigh we have the Automotive Intelligence Summit. This is our second one. It really, it focuses on just the, you know, a lot of what we've talked about today, you know, autonomous vehicles, the connected vehicles, digital retail, the use of big data and data analytics and artificial intelligence and the, you know, things, you know, what role does blockchain management have in, in automotive. So a lot of these tech driven changes in automotive. This conference, you know, we'll address, and again, it's our second year of doing it. It's going to be July 23rd through 25th in Raleigh at the Marriott Crabtree right across from the Crabtree Mall. But if, if people are interested in learning more, they can go to autointelsummit.com. That's autointelsummit.com. Or they can holler at me on Twitter @AR_JoeOverby and I can share more information there as well.

 

Scot:

[38:25] Cool. So I think you said four, so two in Canada, Auto Intel, is there a fourth one?

 

Joe:

[38:30] Yeah, absolutely. Our signature event. I'm glad you reminded me. Our signature kind of flagship conference is Used Car Week and each year we host that in the fall and it's typically in the southwest. This year we're going to be in Las Vegas at the Red Rock. Last year we were in Phoenix or Scottsdale, Arizona. And what it is is it's four separate conferences that are all kind of part of the used vehicle life-cycle. So we have a retail focus conference on pre-owned. We have a finance auto finance conference, we have the repossession and recovery space. And then we have our National Remarketing Conference, which is the kind of wholesale, the auto auctions, that sort of thing. And we're actually going to be celebrating our 20th anniversary of that National Remarketing Conference. But that's going to be November 11th through 15th in at Red Rock in Las Vegas. And folks who are interested in that can visit usedcarweek.biz. And that and that again, you know, it is kind of an overall auto industry conference, but given the nature of, of automotive these days, it is going to be tech. You know, there's going to be some tech focus, some innovation, some, you know, talk about digital and that sort of thing as well.

 

Scot:

[39:55] Yeah. So just kind of reading the between the lines sounds like the Raleigh one is maybe like hundreds, low, hundreds, a couple hundred folks. Anything in Vegasis going to be at least single digit thousands if not tens of thousands. T

 

Joe:

[40:08] Yeah, the Auto Intel summit, we had about two or 300 last year, very kind of boutique conference, but you know, everybody there was very engaged and there to, you know, be in the sessions. And again Used Car Week is a broader, larger, you know, we've been doing it for a couple of decades, it is in the, you know, I think last year we had about, attendance was about 1600, I believe. Yeah.

 

Scot:

[40:36] Yeah. Cool. Yeah, it's fun to go to kind of both cause you kind of, you know, the smaller shows are more in a minute and literally deep on something but maybe not as actionable sometimes. And then the networking is good and then the bigger ones you can kind of go and have a list of here's five vendors I want to meet. And it a lot more to kind of tactical get, get business done. So it's good to kind of go to both, I think.

 

Joe:

[40:57] It's like going to a basketball game at Cameron indoor stadium versus going to a football game at Carter Finley. It's just, one's a big crowd and loud and once you know, it's small intimate atmosphere, so, yeah.

 

Scot:

[41:09] Absolutely. Cool. Well Joe, we don't want to take more of your time. Appreciate you coming over to Spiffy to record the podcast. Excited to have you as one of our first guests. You mentioned your Twitter handle. If folks want to, that's one way to kind of get in touch with you. Are you active on Linkedin or other social media and maybe let's definitely kind of bring them to the website too.

 

Joe:

[41:28] Yeah, absolutely. Certainly active on Linkedin, just Joe there. And my email, if anybody has any questions about our conferences or about our publications. It's at joverby@cherokeemediagroup.com. The website for all of our publication is Autoremarketing.com.

 

Scot:

[41:53] Great. Thanks for coming and thanks Jackson on the audio engineering side.

 

Joe:

[41:59] Well thank you Scot. This has been fun!

 

Mar 13, 2019
Welcome to the Future of Vehicles
35:57

EP001 - Welcome to the Future of Vehicles

http://www.vehicle2.getspiffy.com

Episode 1 is primarily news-focused, with a concrete definition of what we will refer to as the “Vehicle 2.0 framework”; recorded on March 8th, 2019. Scot discusses a variety of topics, including:

  • Defining “connectivity”, “changing ownership models”, “electrification”, and “automation”
  • Several OEMs and even countries have announced plans to move to 100% EV by timeframes like 2025/2030
  • LIDAR and the levels of autonomy
  • Lyft files for an IPO -- read the S1 here -- and what that can mean for the future of vehicle ownership
  • Daimler AG and BMW AG announce jointly-owned car-sharing and ride-hailing business called SHARE NOW
  • China’s leading EV car company in sBYD - just announced they sold 43k in the first 2 months of 2019 - up 175% y/y
  • Waymo continues to lead the autonomous vehicle push, but CEO John Krafcik continues to temper expectations
  • Waymo to start selling LIDAR technology in stand-alone format

If you enjoyed this episode, please write us a review on iTunes!

The four pillars of Vehicle 2.0 are electrification, connectivity, autonomy, and changing ownership models. In the Vehicle 2.0 Podcast, we will look at the future of the auto industry through guest expert interviews, deep dives into specific topics, news coverage, and hot takes with instant analysis on what the latest breaking news means for today and in time to come.

 

Transcript:

 

Scot:                               

[01:00] Welcome to the Vehicle 2.0 podcast. This is our first episode and it's being recorded Friday, March 8th, 2019 to kick off the podcast, we're going to catch everyone up on some breaking industry news. But first, we want to take a minute and walk everyone through the vehicle 2.0 framework and some of the terminology that we'll be covering on this podcast in the coming weeks and months and hopefully years. As we talk about future car, there's gonna be a lot of new vocabulary and we will make sure everyone has this reference podcast to go back to so I won't have to cover it every single time.

Scot:

[01:32] Let's kick it off by looking at the vehicle 2.0 framework. There's four pillars to the framework. The first is connectivity. Most new cars are include a connection to the Internet and then also that enables a lot of cool in cabin functionality. And then also interesting conductivity of the car. I don't want to say too much about that because one of our episodes coming up here soon is going to feature the CEO of Smartcar and we're going to talk about that one a lot.

Scot:

[02:00] The second pillar is ownership. Car ownership is changing in dramatic ways. There's a lot of innovative companies. We all are familiar with the ride-sharing companies, Lyft, an Uber. And then we have a lot of new models out there, their subscription models. Uh, there's micro rentals, and a lot of things like that. So some of the companies we'll talk about, our Turo, Fair Getaround, and companies like that. A lot of people are also familiar with Zipcar. The third pillar is electrification or electric vehicles or EVs as we commonly refer to it in the industry. You'll hear another acronym that we hear a lot as we talk about this topic is ICE or internal combustion engines.

Scot:                             

[02:41] We have hybrids, plug-in hybrids. So all those are kind of in this topic of an electrical vehicle. One of the industry trends here is many of the car makers, uh, which we call OEMs, uh, and even countries have announced plans to really get to 100% EV and timeframes like 2025, 20, 30. So it's still early days in the cycle. But as we look at the larger green movement, um, and, and taking care of our environment and climate concerns, EVs are a top topic there. The fourth and final pillar is autonomy or autonomous vehicles or AVs. Uh, it's easy to confuse AVs and EVs. So EVs or electric vehicles AAVs are autonomous right now. None of the AVs are EVs, but down the road, I think we'll have AVs that are EVs. So I say all this. So you guys get used to hearing and saying, Eh, yourselves, this terminology.

Scot:                                

[03:38] A big thing that you'll hear about when we talk about autonomous vehicles is LIDAR and that's essentially, it's like radar with light. Um, so it's a shooting out a beam of light. These vehicles are able to build a 3D map of their environment and use that to navigate. Lidar is an acronym that stands for light detection and ranging. So we're going to be talking a lot on this podcast, not only about autonomous vehicles or AVs, but also LIDAR. Uh, another thing that comes up a lot when you talk about autonomous vehicles is there are several quote unquote levels of autonomy out there. Um, and uh, so this was first proposed, I believe by the Society of automotive engineers and then as now been adopted by the national highway traffic safety admin or the NHTSA. So, so the level started zero and they go up to five.

Scot:                          

[04:30] And I'll just briefly walk you through those levels. Zero is essentially no autonomy. The control, the human, the driver controls everything. Um, including the steering, the brakes, the throttle, the power. Uh, it's what we've been doing all along. You have some assistance from things like cruise control, uh, and now some cars are having light radar, uh, but generally that the human is 100% in control. Level one takes us up with a driver assistance. Uh, and that means most levels are controlled. Most pieces are controlled by the driver, but a specific function, one function like steering or accelerating is down, done automatically by the car. So some of the kind of advanced cruise control systems fall into level one. Then we move up to level two and level two, at least one driver assistance system of both steering and acceleration, uh, is automated. So here the driver is disengaging from physically operating the vehicle and but does not take hands off the steering wheel, hands off the steering wheel or foot off the pedals at the same time.

Scot:                               

[05:34] Level three, you're now, uh, the vehicle is driving and accelerating on its own with a driver, an interruption. So the driver is still engaged and can take over at any time and frequently the vehicle will detect when it's gotten into this situation and say, Hey, I need you to take over. Um, and this is called level three. This is kind of where Tesla is right now. Uh, with their, their autonomous vehicles. They are by far the largest manufacturer out there with this, uh, ab type functionality and they're at level three. Then we step up to level four. And this is called fully autonomous. And, uh, the definition is they're designed to perform all safety-critical driving functions and monitor roadway conditions for an entire trip. Um, this, uh, so this is close to full autonomy that the one layer that's out there is it does allow for very specific domains.

Scot:                              

[06:32] So, for example, if a truck went from a highway from one location to another, maybe in a specified lane, that's level four, because you've put some constraints around that, uh, the constraints being either a lane, a designated lane, or you're on a highway, you're not going, you know, do a complete ride journey. And that's level five. Level five is full autonomy anywhere, any place in the environment, uh, the driver can kind of essentially disengaging a spin around and play cards, uh, whatever, take a nap, uh, et cetera. So, so those are, we'll, we'll probably be referring to those over the life of the podcast and I just wanted to get that definitionally out there. We'll refer back to it here in episode one when appropriate. Uh, another interesting debate we're going to explore on the show is I talked about LIDAR. So some of the more advanced companies, uh, out there, uh, I have obviously used light are the one that seems to be ahead is Waymo and then you have Uber, etc.

Scot:                            

[07:32] Um, and you know, they're definitely kind of full-on having the vehicle build a 3D map of its world and navigate that and understand everything going on. the, uh, the counter-story to that a w which is kind of the minority point is, you know, as humans when we drive, we don't have LIDAR, we essentially have, our eyes are effectively two cameras that are offset to give us a 3D view of the world that we then make a lot of inferences about. And that's how we drive. Um, so this is the system that Tesla uses and a couple of the other vendors out there, uh, are, are using this. Um, so it's going to be interesting to kind of see who wins that debate because obviously if you can use cameras, it's much less expensive and complicated than using LIDARs. So, so, you know, right now the one, you know, I think the Tesla folks would argue they're ahead because they've got many more vehicles out there actually driving a at level three with cameras than the LIDAR guys do.

Scot:                                  

[08:30] So, so that's going to be something we'll talk a lot about on the show. Another area that's interesting, kind of outside of this vehicle 2.0 framework is the lifecycle of the car. So there's a lot of trends, uh, in addition to vehicle two o that, that are also changing how we buy, sell, ensure finance and maintain vehicles. Uh, this is an area near and dear to our hearts here at spiffy because you know, we believe the whole maintenance of part of the lifecycle is, is not optimized for today's consumer. Um, the other day I rarely watch linear TV, but I was watching I think a basketball game and uh, you know, I haven't seen a commercial in a long time and every commercial on TV I was shocked was for Carvana and vroom. Those are two examples of companies that are really turning the auto industry on its head as far as how you buy a vehicle.

Scot:                               

[09:19] So what they're doing is the vehicles coming to you. You have an online shopping like experience. They've gotten rid of the test drive by bringing the vehicle to you and giving you a return policy. So we hope to have in future episodes, uh, several companies in, in analysts looking at this part of the market as well. So the goal of this podcast is really to take you, the listener on a journey with us because we're learning a lot about this as well. And we want to explore this vehicle to a framework. Um, we want to understand what's going on, when did the best minds in the industry think it's going to happen, uh, and then how are these changing ownership models, uh, and the way that you, you buy, sell and maintain and insure cars. How is all that adding up and what's it mean for the future of automobiles?

Scot:                           

[10:06] So with all that foundational kind of definitions and, and the frameworks in place, let's pivot and look at some of the big news items that have come out so far this year. Uh, I think the biggest news item, uh, to come out this year so far and the vehicle to 2.0 world is the lift IPO. So, uh, this is pretty exciting. So Lyft has filed for an initial public offering. Uh, and uh, during the Obama presidency, he put in place what's called the jobs act. The jobs act allows you to file an IPO confidentially, uh, and then, uh, reveal the IPO after you've had decided you are going to go public and you've had your communications with sec prior to that, everything was transparent. Um, which is, you know, the downside of that is many times you would want to test the waters of the market and then pull the IPO without getting a black eye.

Scot:                                

[10:56] And you couldn't do that. So this, this allows you to have confidential communications with the sec and get everything done. So, um, a little background on me, I took my last company, ChannelAdvisor public, so I've got a lot of experience with this whole IPO process. What the one thing that you need to know is when you file to go public, the SEC, the Securities Exchange Commission, they want the consumer that that could be buying the, you know, the public investor. They want them to understand everything about your company. So they make you really kind of create this pretty comprehensive document that's called an S1. And we've lived, we've linked it to the Lyft S1 in the show notes. And I strongly recommend, if you are interested in this topic, which you by definition are because you're listening to this, uh, take a peek at that.

Scot:                    

[11:44] Now. It's kind of daunting. So, um, the weird thing about the IPO process is because there's so many lawyers and lawsuits out there, taking a public is a very risky proposition. It's very easy for people to sue you and say you misled them. So you end up with this kind of weird thing in theS1 where you have this 250-page document where you're trying to convince people to buy your company and own equity in it. But essentially the first third of it is essentially you telling everyone how your business is terrible. So, uh, just because what you want to do is really lead and make sure everyone knows all the risk factors, all the things that can go wrong, uh, et cetera. Then after you get that out of the way, you have this kind of 20 or 30 part, uh, page part and it's Kinda like, you know, it's like a sandwich, right?

Scot:                            

[12:32] So you've got this kind of wasted, this kind of exterior part that you have to kind of slog through. And then you get to the really juicy middle part there about the business and that's called the management discussion and analysis. So for the lift IPO, this section is really, really a fascinating. Uh, it starts on page 76, uh, if you want to pull up the pdf we've put out there in the show notes and I think it's a must-read for everyone. Uh, even, I'm going to kind of say in the, not only the vehicle world, but the e-commerce world too, because essentially Lyft is a marketplace, um, between drivers and riders. I'm and, and it's really fascinating how they talk about that. And I found there was, there was a lot of connective tissue to my previous e-commerce world. So, um, uh, another interesting output of this as the news kind of ramps up around the IPO.

Scot:                             

[13:20] What happens is a lot of reporters start reading this one, right? And their natural inclination is, this is terrible. Oh, you know, why would anyone ever invest in this company? Because again, the first 100 pages are about how Lyft is a terrible business. Um, so I saw several articles come out that, you know, Lyft is $1 billion business, but as hemorrhaging cash and we'll never get profitable. Um, and you know, lift in there and in the risk factors, you list all these things that could potentially go wrong. Um, so, uh, I would, uh, I would recommend everyone listening not believed that hype. Uh, it's just part of this process and I think people are misreading it. So I want to spend time today walking you through the positives. So here's some of the highlights. Lyft has 1.9 million drivers. I think that's, that's pretty amazing that, you know, there's effectively 2 million people.

Scot:                           

[14:10] Uh, that just on the lift system, um, that are, are getting, uh, you know, part-time or even full-time employment from this marketplace. And they have 31 million riders, Lyft’s revenue in 2018 was $2.2 billion. So this is a multibillion-dollar business that has been created from ride-sharing very, very rapidly. Um, a couple of other trends. So, so, uh, I'm not going to spend the whole podcast on this, but there were kind of, in the spirit of this podcast I wanted to tease out a Lyft does kind of add some, some meat on the bones around some of the trends I've already introduced here with the vehicle 2.0 framework. Um, the first one, they, they pontificate on his car ownership. So, so I'm going to read directly from this one here. Quote, car ownership has also economically burdened consumers. US households spend more on transportation than on any other expenditure other than housing.

Scot:                               

[15:02] In the United States alone, consumers spend over one point $2 trillion annually on transportation on a per household basis. The average annual spend on transportation is over $9,500 with the majority spent on car ownership and operation. Yet the agile, the average car is utilized only a 5% of the time in his parked for the other 95%. So, so a couple of data points there. Um, you know, the average household is spending about $10,000 on, on vehicles and transportation and it's only you're putting that into an asset. You're only using 5% of the time. Uh, and then continuing, we believe that the world is at the beginning of a shift away from car ownership to transportation as a service. So this is really interesting and they call it, uh, you know, t a s. Uh, so in the soccer world we have Sass, you have software as a service platform as a service.

Scot:                          

[15:51] Now, Lyft has introduced this transportation as a service, um, kind of platform. Uh, they continue lift is at the forefront of the massive societal change. Our ride-sharing marketplace connects drivers with riders and we estimate it is available to over 95% of the US population as well. In select cities in Canada. So, so another thing to know about Lyft versus Uber is Lyft has decided to really stay in North America, whereas Uber went international. Um, and subsequently is going to end up being larger than lift. Once we see their numbers, uh, continuing on in 2018, almost half of our writers reported that they use their cars less because of lift. 22% reported owning a car becomes less important. And as this evolution continues, we believe there's a massive opportunity for us to improve the lives of our riders. Uh, essentially lift to saying here that they're going to decrease car ownership.

Scot:                                 

[16:40] And, and, um, you know, when you're starting to read these articles coming out now, um, many of them will highlight one or two consumers that have decided to get rid of their car in favor of using a rideshare. Uh, another kind of common vocabulary that was new to me, I want to point out is, uh, we're most, most people are familiar with the ride sharing networks and obviously cars, um, most of them have are, are experimenting with what they call multimodal solutions. Many of them have either invested or bought some of the bike and scooter sharing programs. Um, and then, uh, the way lift says it is as follows, quote to meet these needs, lift his, created a multimodal solution with four components. Number one, ride sharing. And that's what we're familiar with. Number two, bikes and scooters. Number three, public transit, and then number four autonomous vehicles.

Scot:                               

[17:30] So, so this is really interesting and you know, they kind of envision a world where they'll piece this together for you. So let's, let's come up with a use case where you're in Boston and you are taking a flight to silicon valley, um, to this SFO airport. So they're envisioning, you know, maybe you scooter to a public transport, you that you get to the Boston airport, you fly to Sfo, you ride share, then you take the Bart, uh, and then you take a scooter. So they want a piece, all of that together in one centralized way. Oh, and maybe somewhere in there you take on autonomous vehicle from SFO to, to the public transport. Um, another really interesting tidbit here is, you know, kind of anticipating people wondering should I invest in Lyft or Uber? They talk about how they're going to win, which implies how are they going to beat Uber?

Scot:                               

[18:18] Um, and they talk about being very driver centric, uh, as one of their attributes. Um, so here's a quote. We focus on providing drivers with a best in class experience. From day one, we offer inapt tipping to help drivers maximize earnings. Uh, drivers have access to 24, seven support and earnings tools as well as career coaches, education resources in flexible car rental programs. We're also making significant investments in driver hubs, driver centric services, service centers, and community spaces to cis drivers on and off the road. They've also got several different programs. They talk about them. So this is a really interesting, one of the collision points in this future of vehicles is who's going to own vehicles going forward? Are they going to be kind of fleet type vehicles? Then the subsequent question is who's going to service them? So we have, everyone is kind of got a role in this and we're going to explore this topic on the podcast going forward.

Scot:                       

[19:11] So, uh, so that's just a tidbit of what's in that liftS1 a again, I strongly recommend you read it and we'll talk a little bit more about it as we go on. Oh yeah. One other area I wanted to highlight was they do talk about autonomous vehicles and there's two sections there. They say, quote, we're investing in autonomous technology employing a two pronged strategy to bring AVs to market. Our open platform provides market leading developers of autonomous vehicles, technology access to our network to enable their vehicles to fulfill rides on our platform. So what they're saying there is any ab company can effectively plug in and say, hey, here's some available vehicles, uh, if anyone wants a ride on them. Uh, simultaneously we're building our own worldclass AB systems at level five that they're level five engineering center, uh, with the goal of ensuring access to affordable and reliable AAVs.

Scot:                            

[20:00] Uh, Yep. So they're, they're kind of doing a two prong strategy then later in the document. They do say that they've got several people on the platform and they say active has enabled the commercial deployment of a fleet of Avs in Las Vegas, and they've facilitated over 35,000 rides on that platform, uh, since January of 2018. So, so Lyft is partnered with a company in Las Vegas. Uh, and it's interesting to hear them talk about that. Okay. Now, outside of lift, um, we're going to skip over connectivity. We're going to use the vehicle to a framework as we talk about news to kind of bucketize it. Uh, so, uh, there is a lot going on with connectivity. I'm not going to go into it, uh, in this show because we do have the smart car, a CEO coming up here in a couple of episodes. Um, so let's kick it over to ownership.

Scot:                                 

[20:49] So this, in addition to kind of the negative and positive views of Lyft generally coming out of the IPO, it's kind of shaken loose a whole bunch of articles now about, um, you know, ownership. Uh, also another interesting reaction is on February 22nd, uh, Daimler and BMW out of Europe announced that they're going to invest over a billion pounds into a new joint owned a car ride hailing business called share now. So the auto makers are looking at, uh, what's going on here with ride sharing and, you know, uh, I think you could kind of talk yourself into a doomsday scenario where, you know, there's the cars become these commodities and if someone's else driving it, what do you care, what car you have, et cetera. Um, so they're, they've thrown their hat in the ring and kind of, you know, made interesting bedfellows. These are very competitive companies, but they're kind of doing a JV here to create their own ride sharing network effectively.

Scot:                              

[21:47] So, so that's interesting. Um, another point is there's a lot of articles out now kind of talking about, uh, you know, the end of car ownership. I think this is really, really early, but it is kind of interesting to read the articles and kind of read some of the stats in there. Um, one of my favorite ones came out here just in the last couple of days from business week, which is now owned by Bloomberg. So Bloomberg Business Week. And it was called, is this what peak car looks like? And the subtitle is car trouble. So, so a couple of stats I wanted to share with you from that. Um, so, uh, one of the premises of the article is effectively young folks, uh, driving less. So it says, quote young people continue to turn away from cars with only 26% of us, 16 year olds earning a driver's license and 2017.

Scot:                             

[22:34] And that was a rite of passage that previously, uh, just 36 years ago was more like a 50 to 60%. Um, so their premise there is it's down by half. Now I can kind of speak from personal experience. I think people are just waiting a little bit longer to get their driver's license. So I think if you looked a little bit broader than kind of like when people are 16, they get their driver's license, um, that, that the trend is they kind of end up at the same place after a couple of years. But it is an interesting data point. The same, they echo the same data point in the UK where the number of 17 year olds taking the driving test there is down 30%. Now, uh, you know, I don't know the UK market as well as I do the yes. So we'll have to kind of keep an eye on that.

Scot:                                  

[23:15] Um, so, so another data point they use to support this fact that we're at peak car ownership is they say quote 10 years ago, so that'd be 2008. The auto industry predicted annual global vehicle sales with top 100 million by now, but instead they've stalled and we seem to be stuck kind of around 94 million. Uh, and, and, uh, that was in 2018, which is actually down a million from 2017. So kind of using this trend here to, to illustrate that they believe we're at peak vehicle now, that that could be what's going on. Um, but at the same time, you know, what you're finding is people are just owning their cars longer and I think, you know, cars have gotten more reliable and, and, and people are holding onto them longer. Um, to that point they do talk about, uh, you know, prices of cars are increasing. So, uh, here's a quote, automakers have been loading cars with extras and high tech touches, which pushes the average price of a new car in the u s to a record, 37,000, $777. So that's a, that's kind of a high point in that has increased the average age of vehicles. They're now owned about 12 years, uh, w which is kind of a pretty dramatic increase. It was around six, about 15 years ago.

Scot:                                  

[24:27] So, uh, then the final kind of point from this article I thought was interesting kind of in this topic of, of where, where are the dollars going? Kind of where's the puck going? Um, they have a quote from Accenture that says by 2030, $634 billion of the auto industry is actually going to be in mobility services. So, so kind of going from buying and selling cars to consumers to more of a services industry. So it's gonna be interesting to see some of these projections are out so far. It's hard to tell. Uh, you know, again, I come from the ecommerce industry and we're just at 15% of ecommerce as digital. Uh, which, you know, 10 years ago everyone was projecting 30, 40, 50%. So these things take a lot longer, uh, and we'll be tracking them here on the podcast and electrification news. Um, the market I kind of keep a close eye on is China because they're actually pretty far ahead of us as it comes to electric vehicles.

Scot:                                  

[25:22] Now, um, you know, I'm not saying that's bad for the US. China has a government, this act will be involved in is really got incentives, heavily aligned, ongoing electric, uh, and they're also building out infrastructure at the government level, which we don't have here in the US at this point. Um, so there was an article out this week, the, um, uh, it will put a link to it in the show notes as with the Bloomberg article I mentioned earlier, um, and it says China is China's leading EVO are Evie company is called BYD. Uh, and they just announced their results and they sold 43,000 electric cars and the first two months of 2019 and that represents a 175% year over year increase. So that alone is more than all the electric cars sold in the u s I believe, or are pretty close to it.

Scot:                                  

[26:06] I think there's about 50,000 sold last year. So you have one company that's kind of in two months selling more than the entire us. Um, so that, that's really interesting. Uh, and we'll be tracking and having some guests on to help educate us all about the China Evie market. Because I think that's a really good harbinger of things to come into other markets. Another key part of the market share and viability of electric vehicles is the battery cost. So the industry has standardized on lithium ion batteries and you know, a Elon Musk at Tesla, he's built a one factory that that really is kind of working to drive down the cost of batteries. Uh, and then, uh, it's called a Giga factory and then they're building another one in China that they have announced. Um, so another thing we're going to be talking about on the podcast a lot is what's going on around the battery technology because that's going to be the key driver.

Scot:                                  

[26:56] One of the measures that we look at in the battery technology is the dollars per kilowatt hour. Um, so there was an article out from Bloomberg this week, um, the, that really started to kind of dial in on that this, and what they found is the prices fallen 85%. If you look at the last eight years, so from 2010 to 2018, the focus on EVs has driven down the battery cost. Uh, and now we're sitting at a battery cost of $175 per kilowatt hour that was closer to $1,000, eight, just eight years ago. So you know, as that continues down is going to lower the cost to get into the market. Uh, also this week Tesla has announced a couple of interesting things. They finally have come out with the $35,000 model three, and then they also, um, because there's capacity challenges at their charging stations there supercharging network, they've come out with supercharging 3.0 so you can now charge vehicles faster and improve the throughput of the charging network.

Scot:                                  

[27:53] Uh, so those are all some really interesting topics. We'll keep tracking the news for you on around EVs. Uh, and then last but not least around autonomy. Most of the car companies there, there's a lot of these pilots I mentioned Lyft is working with a company in Las Vegas. Waymo is active in, uh, I think Phoenix, Arizona as well as the California silicon valley or the bay area. So, um, the state of California does this interesting thing where you have to get a license to operate autonomous vehicles and they're actually publishing the data out of the DMV. Um, so we've been tracking this pretty closely and we'll do a blog post on this to give you all the data and we'll link to it and show notes, but just some highlights. Um, so what you see is Waymo and again, Waymo is a division of Google.

Scot:                                  

[28:42] So Google has a parent company called Alphabet. Uh, and Google is one of the sub-companies in there. Uh, and then you have nest and a bunch of others companies. Waymo is one of those. Um, and I think Google has set that up so eventually they can kind of spin Waymo out as its own company. Um, so as we look at the annual data coming out of California a, it indicates that 2018 Waymo vehicles, Dru drove 1.2 million miles, uh, and they have 2.6 total driven over at the time. The other interesting thing about AVs that blows my mind is, so these vehicles are out there driving these physical miles. Um, and then they pull all that data and uploaded up into the cloud and they can run the simulated miles. So, um, you know, I've heard folks in industry say for every real mile they simulate another 10 to a hundred miles.

Scot:                                  

[29:32] So, so that's where the car can kind of in simulation land, you can kind of do a lot of interesting things, right? So at this point you're kind of in the matrix. So, uh, let's say these physical are, are gated to only go 35 miles an hour and simulated land. Maybe they could crank them up to a hundred miles an hour. And that forces the software. It really kind of helps you in a very safe environment because you're just simulated right to figure out what's going to happen. Or You could throw a bunch of bad acting cars at, at the automated car. Uh, so it's really interesting to think about that aspect, but continuing with this data. The second is GM. Uh, their subdivision is for autonomy is called cruise. Um, that one, um, so if we, if we kind of look at 2018, uh, again, we had Waymo at 1.2 million cruise a second at 500,000 miles and number three is apple.

Scot:                                  

[30:22 ] So Apple has an autonomous vehicle pilot going on. Uh, I think they call it tightened internally. Um, it's very secretive. It only drove 80,000 miles. Then you have a couple of books, Aurora, neuro, auto x, Baidu has is in there. And all those are in kind of like the 30,000-mile range. So a, if miles driven is important and with machine learning it, it is, uh, a kind of a big and mapping, uh, miles driven is, is kind of a proxy for how far ahead you are, you know, some of these companies. So there, so, so Google Waymo is essential. Eighth, four x ahead of Cruz and you know, oh, let's see, what does this like 50 x ahead of Apple? So it looks like they're pulling away. Um, when we use this one metric as a way of measuring what's going on there.

Scot:                                  

[31:07] Uh, another popular, uh, autonomous vehicle company is called drive.ai and they are in Dallas. Uh, and full disclosure, there are spiffy customer. So we, we help them maintain that fleet of autonomous vehicles and it's almost like public transport. So it has a very designated routes and they're timed and, and you can kind of, you know, it's almost like a bus schedule, you know, when they're going to come by. Um, there's an article out there that, uh, that company is for sale. So, uh, it's gonna be interesting to see if there's some consolidation in this space here or not.

Scot:                                  

[31:38] Kind of pivoting back to Waymo. Uh, as we talk and news on the podcast, we're going to be tracking Waymo probably the closest when it comes to autonomy there. They're kind of like the Amazon of autonomy. Um, their CEO, uh, hopefully, I can get his last name right here. His name is John Craft Kick, and in November at a Wall Street Journal conference. He kinda surprised folks by saying, you know, uh, by really tamping down expectations and saying, hey, you know, while it's true, we have these, you know, level five ab vehicles out there today, there's going to be a lot of constraints. Um, so he mentioned the light are really has a hard time, uh, in bad weather. Uh, so snow obviously, so these, these LIDARs and cameras are looking at the streets for cues on where to go.

Scot:                                  

[32:25] So if they can't see the lines in the street very clearly, uh, then they run off the road, which is obviously scary. I've also read articles that, uh, things that don't hurt confused the human eye can, can view light LIDAR. So they'll look at like, uh, trees with, with leafs, and that'll kind of, they'll think that's a big blob of something and they'll kind of steer out of the way of it when it could just simply be a couple of leaves that would brush up against the car kind of a thing. So, so there's, we're still early days and he effectively said, I don't see a day when we'll be at 100%. So that was interesting. Uh, but at the same time he did kind of talk about more of this level four stuff where he said, you know, I do see a day pretty soon where we're trucks is where there's the biggest problem.

Scot:                                  

[33:04] There's a shortage of truckers out there. Um, so you know, uh, I think where we're going to see a lot of activity, and we'll cover this on the podcast, is trucks carrying goods where you have a big part of the trip is kind of a highway driving. Maybe at some point we even have a lanes, but you could see a situation where a driver gets a truck to a certain area. Um, hit some kind of AAV technology probably stays in the cab for the first phase of this. But, uh, but um, you know, is, is there an emergency situation but then the trucks do the long haul without the human involved. And then there's the kind of downgrade back into level one, level zero more current news out of Waymo. Just this week they announced that they are actually going to sell their LIDAR technology in a standalone format.

Scot:                                  

[33:49] Um, so it's kind of funny. They're calling it laser bear honeycomb. I don't know where they came up with that name. Uh, and, uh, in a blog post they announced that they are going to actually sell these units to third parties. Uh, you could say, wow, you know, that, that's crazy. Why would they do that? There's going to be competition. Well, really the bulk of the innovation here is in software. And I think what they're looking for is people to do, you know, when you open these things up to an army of entrepreneurs, crazy things come out of the other side. Um, they also, uh, disclosed this same breath that the cost of LIDAR units has come down substantially. So, so effectively one 10th. So these units, uh, as much as two years ago used to cost $75,000, and now they're down to 7,000, 500 per.

Scot:                                  

[34:35] So we're, we're going to see, um, it's gonna be interesting to see what kind of innovations come out of Waymo licensing their LIDAR units to other folks. And we'll put a link to that in show notes in case any of you want to get a LIDAR and dote on your roof and do some experimentation. So that's the foundation of what we're gonna be talking about on the podcast. Hopefully you've gotten a little flavor of it as we went to the news. Um, and we look forward to, to really kind of digging into these topics and going really deep, uh, but also at the same time going broad. With that, it looks like we are out of our available time. We appreciate you joining us for the first podcast. If you enjoyed what we talked about and where we're going here, please go to iTunes or your favorite podcast app and leave us a five-star rating. Also, thanks to our audio engineer and editor Jackson Balling.

Mar 13, 2019
Introducing the Vehicle 2.0 Podcast
04:24

Welcome to the Vehicle 2.0 Podcast with Scot Wingo, presented by Spiffy!

 

Transcript:

[01:03] Hi everyone, I am Scot Wingo, the host of Spiffy's Vehicle 2.0 Podcast. Today I wanted to give you a preview of what's coming up in our new podcast. We're going to be exploring all of the changes coming to automobiles, including:

Ownership: There's a lot of new models for vehicle ownership, including subscriptions, ride-share, and fractional ownership, or renting. They're popping up quickly and driven by companies such as Uber, Lyft, Turo, Getaround, and Clutch.

Connectivity: Newer makes and models are coming out with cloud, 4G LTE connections, and soon vehicles will come out with 5G connections. What's that mean for the user experience in the car, and what new use cases will come out of connected car?

Electrification: Electric vehicle (EV) sales in the US are still relatively small, but in China, they reached over 7% last year, so we all know electrification is coming. But when, how will it play out, and how will the infrastructure be built out to support this new model?

Autonomy: Finally, the biggest buzz area in the industry is around autonomous vehicles, or AVs. What we're learning in 2019 though is that there's a lot of buzz, but it's a lot harder than anyone thought to have a general purpose AV and most companies are now scaling back their ambitions. There's also a lot of questions in AVs around LIDAR, which is the light-based radar system, safety, and of course the legalities of autonomous vehicles. We'll be digging into a lot of those topics as well.

The Vehicle 2.0 Podcast is going to be published every other week, and we're going to have several different types of shows. We're going to have Guest Interviews, where we're lining up a lot of great guests from all areas of the automotive landscape and with some of the companies I've already mentioned. There are Deep Dives, where we go really deep on single subject to help you learn more about it.

There is also plenty of news coming out about the future of vehicles: new investments, new companies launching, and what are the top OEMs are doing to make big moves in the Vehicle 2.0 world. We'll be covering that in our News episodes. Hot Takes: when really big news breaks you can check this podcast, where we'll have instant analysis for what that news means today and for the future of the automotive industry.

We'll be dropping our first episode soon, so use this opportunity to go to iTunes or visit vehicle2.getspiffy.com and hit the subscribe button so that you're automatically subscribed to the podcast when it launches.

Thanks and we look forward to talking to you about the future of vehicles on the Vehicle 2.0 Podcast, presented by Spiffy.

Feb 26, 2019