The Changing Landscape of Mobility Markets
The conversation begins with Pete discussing how the automotive industry is preparing for a potential economic recession and the impact that Tesla’s price cuts are having on the market. The other major effect that Tesla is having on the market is the adoption of software-as-a-service in vehicles today.
Tesla’s FSD (Full Self-Driving) is highly profitable and it’s success from an economic standpoint is changing global automakers in-vehicle software strategy.
The business strategy behind it is very sound and enticing.– Pete Bigelow
Not all global automakers are feeling the Tesla pinch just yet. Ferrari with €1.38 billion in cash a 23% profit margin and no pension liabilities is currently over subscribed in terms of their order book. But looking to the future, Ferrari like all of the other global automakers will have to adapt to a world with autonomous vehicles.
Personally owned autonomous vehicles are coming and Ferrari owners will want one. Will Ferrari listen to their customers and introduce an autonomous Ferrari at some point in the future? Grayson and Pete discuss the possibilities. Or could it be Mercedes-Benz that takes the plunge first introduces a personally owned autonomous vehicle?
Over at VW under Oliver Blume, the company has been focused on IPOing their iconic brands starting with Porsche. Could a Lamborghini or Bentley IPO be next? Possibly. But what we do know is that under Mr. Blume’s leadership, VW is unlocking value for shareholders.
While Mr. Blume has taken a diligent approach to the VW brand IPOs, the autonomous vehicle industry over the last 24 months rushed into SPACs and IPOs with limited and sometimes no revenue. Now they are struggling as the reality of public markets begins to set in and Mr. Market does his job to paraphrase the famed investor Howard Marks.
Everyone saw the EV SPAC succeeding and raising so much money that they did not want to be left out. It was fear of missing out, fear of missing out on that big burst of cash upfront and they thought they were going to make it through to the other side. Now that is very clearly flat not the case in a lot of places or it puts a lot of people in a very precarious position.– Pete Bigelow
The autonomous vehicle companies that stayed private such as Cruise and Waymo are now in a position of greater strength as consolidation has begun to sweep the industry and certain competitors have ceased to exist. It’s in this market that Cruise and Waymo along with Motional will be able to gain market share thanks in part to their strategic financial partners.
Wrapping up the conversation, Pete shares his thoughts on how he sees mobility changing over the next decade.
Recorded on Thursday, April 20, 2023