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April 25, 2024
Drive Shift | April Edition: EV Ancillary Markets on the Rise, Humanoid Robots, the Hydrogen Race
As Electric Vehicles Become Popular, Complementary Markets Flourish
As electric vehicles continue to gain traction in the automotive market, an often overlooked but crucial aspect of their rise is the flourishing ecosystem of ancillary services surrounding them. Beyond the vehicles themselves, a multitude of ancillary services are becoming increasingly vital components of the EV ownership experience. These services not only support the growth of the EV market but also present new business opportunities and challenges for industry players, including innovative startups.
One type of service deals with EV financing and solutions such as EV loans and leasing programs. While these services bear resemblance to those offered for traditional gasoline vehicles, EV financing providers must confront distinct challenges, including accurately assessing EV depreciation and considering the impact of charging infrastructure on vehicle and battery condition. Failure to employ effective evaluation methods may result in an unattractive loan or leasing terms and potentially alienating potential customers. However, innovative startups are addressing these challenges head-on. For example, with substantial funding of over $70 million in the past year and a half (last round in November of $30M) the US-based Tenet offers digital EV financing solutions along with supplementary services aimed at reducing overall EV ownership costs and monitoring carbon emissions. Another intriguing example is the France-based Pelikan Mobility, which secured an initial funding of over €4 million earlier this year to provide fleet leasing solutions, in which it utilizes digital twins technology and optimization algorithms. Currently, the company oversees the activities of approximately 100,000 EVs across several fleets and has plans to introduce leasing programs in the near future.
Another key area of growth lies in addressing the challenges related to EV insurance and warranties. The EV insurance and warranty coverage challenges revolve around the need for insurance policies and warranties that adequately address the unique technology and components of electric vehicles, which may differ from traditional internal combustion engine vehicles. This includes aspects such as assessing risks associated with battery degradation or electric drivetrain components. One company that is trying to tackle the warranty challenge is Amber. The company, which raised a little more than $3M since it was founded about a year ago, launched an aftermarket service that allows owners of Tesla vehicles to extend their vehicle warranty and extend their access to EV repair services. Another example for a startup that tries to confront these challenges is the Indian Vidyut, which secured $10M last September to further develop its EV services which include EV insurance, EV resale and battery rental (mainly for 3-wheel EVs).
It's likely that startups in sectors like EV financing and insurance will rapidly expand alongside EV adoption, quickly transforming these blue ocean markets into competitive red ones. Who will lead in each area? Time will reveal the winners.
Will Humanoids Revolutionize or Disrupt Auto Manufacturing?
Once confined to the realms of science fiction, humanoid robots have now entered the real world, shifting from imaginative concepts to tangible innovations. In recent years, the field of humanoid robot startups has seen explosive growth, pioneering advancements that are set to transform efficiency, productivity, and human-robot interaction across various sectors, including healthcare, manufacturing, and customer service. The automotive industry, known for its relentless pursuit of innovation, is keenly exploring this technological frontier.
In recent months, several leading car manufacturers have unveiled partnerships with humanoid robot startups to explore the integration of robots into their production processes. In January, BMW initiated a commercial collaboration with Figure AI to assess potential applications for the company's robots at its factory in South Carolina. In March, Mercedes-Benz announced a commercial agreement with Apptronik to evaluate the incorporation of its robots into its manufacturing operations. And finally last month, Magna, a leading automotive Tier1 company, revealed its collaboration with Sanctuary AI, in which it had previously invested, to deploy robots within its manufacturing facilities. When considering Tesla's endeavor to develop its Optimus humanoid robot, it becomes clear that this trend is rapidly gaining traction.
Certainly, major corporations are embracing humanoid robots for good reasons. These robots offer a myriad of opportunities for the automotive industry, promising to revolutionize traditional manufacturing processes and enhance overall efficiency. These advanced robotic systems can streamline assembly lines, significantly reducing production times and costs while maintaining precision and quality control. Moreover, their ability to handle repetitive and physically demanding tasks with precision and consistency can alleviate strain on human workers, leading to improved workplace safety and employee well-being. Additionally, humanoid robots equipped with advanced sensing and AI capabilities can facilitate predictive maintenance, detecting potential equipment failures before they occur and minimizing costly downtime.
However, the integration of humanoid robots into the automotive industry also poses several challenges. Ensuring seamless collaboration between robots and human workers, addressing high upfront costs, and navigating regulatory complexities are key hurdles. Additionally, concerns about reliability in manufacturing environments and potential job displacement, which are sure to arouse the workers' organizations, require careful consideration.
Undoubtedly, the integration of humanoid robots heralds the onset of a transformative era in production and labor across various industries, particularly within the automotive sector. The unfolding developments in this realm promise to captivate attention as they unfold.
What's Behind the Mixed Trends for Commercial and Private Hydrogen Vehicles in 2024?
In our report published earlier this year, we explored the advancements in the hydrogen economy, highlighting its potential for cleaner and more efficient energy. Additionally, the report touched on the rise of hydrogen mobility and its parallel growth with the hydrogen economy. Since the report's release, the hydrogen mobility market has seen notable progress that warrants attention.
The first quarter of 2024 presented a mix of trends. While there have been encouraging signs of growth, especially in the heavy vehicle industry, the private vehicle sector has encountered some notable challenges.
Let's begin with the positive updates. Exciting news has surfaced this month from France, as local hydrogen mobility provider HysetCo secured €200 million in a recent funding round. This company specializes in providing comprehensive hydrogen mobility rental solutions for businesses, utilizing Toyota Mirai for private vehicles and Hyvia's light commercial vehicles (a Renault subsidiary). With this financial boost, HysetCo plans to expand its services throughout France and across Europe.
Another positive development is in the heavy vehicles field. In the realm of buses, there appears to be a recent surge, with frequent reports of new commercial agreements between public transportation authorities and hydrogen bus providers. For instance, Solaris, a leading manufacturer of hydrogen buses, has announced several agreements recently to supply hydrogen buses across Europe. Another notable deal involves Korean OEM Hyundai, which intends to deliver 1,000 hydrogen buses to Seoul’s public transportation fleet by 2027.
In the trucking industry, there have been several positive developments. General Motors plans to introduce a fleet of medium-duty trucks powered by hydrogen fuel cells as part of a pilot project funded by the US Department of Energy. Additionally, the DHL Group is deploying hydrogen trucks in Germany, while MAN, a truck manufacturer, will produce a limited series of 200 vehicles equipped with H2 combustion engines.
In contrast, the private vehicle market shows a less optimistic trend. Official data indicates that in 2023, most markets experienced significant declines in purchases, with decreases of around 55% in South Korea, 50% in Japan, and 40% in Europe. Although the US saw a moderate increase in demand in 2023, the first quarter of 2024 revealed a decline in sales, aligning with the downward trend. The only market that experienced growth in hydrogen vehicles over the past year is China, where the majority of sales were for commercial vehicles.
The significant decrease in sales is concerning for private hydrogen vehicle manufacturers, especially given that Toyota has been offering its Mirai model at a 60% discount, including $15,000 worth of free hydrogen fuel and interest-free financing.
The coming year will be very significant for the hydrogen vehicle market and will determine which path it will take - as a solution mainly for heavy vehicles or also a vehicle for the masses that can compete with the EVs?
As Electric Vehicles Become Popular, Complementary Markets Flourish
As electric vehicles continue to gain traction in the automotive market, an often overlooked but crucial aspect of their rise is the flourishing ecosystem of ancillary services surrounding them. Beyond the vehicles themselves, a multitude of ancillary services are becoming increasingly vital components of the EV ownership experience. These services not only support the growth of the EV market but also present new business opportunities and challenges for industry players, including innovative startups.
One type of service deals with EV financing and solutions such as EV loans and leasing programs. While these services bear resemblance to those offered for traditional gasoline vehicles, EV financing providers must confront distinct challenges, including accurately assessing EV depreciation and considering the impact of charging infrastructure on vehicle and battery condition. Failure to employ effective evaluation methods may result in an unattractive loan or leasing terms and potentially alienating potential customers. However, innovative startups are addressing these challenges head-on. For example, with substantial funding of over $70 million in the past year and a half (last round in November of $30M) the US-based Tenet offers digital EV financing solutions along with supplementary services aimed at reducing overall EV ownership costs and monitoring carbon emissions. Another intriguing example is the France-based Pelikan Mobility, which secured an initial funding of over €4 million earlier this year to provide fleet leasing solutions, in which it utilizes digital twins technology and optimization algorithms. Currently, the company oversees the activities of approximately 100,000 EVs across several fleets and has plans to introduce leasing programs in the near future.
Another key area of growth lies in addressing the challenges related to EV insurance and warranties. The EV insurance and warranty coverage challenges revolve around the need for insurance policies and warranties that adequately address the unique technology and components of electric vehicles, which may differ from traditional internal combustion engine vehicles. This includes aspects such as assessing risks associated with battery degradation or electric drivetrain components. One company that is trying to tackle the warranty challenge is Amber. The company, which raised a little more than $3M since it was founded about a year ago, launched an aftermarket service that allows owners of Tesla vehicles to extend their vehicle warranty and extend their access to EV repair services. Another example for a startup that tries to confront these challenges is the Indian Vidyut, which secured $10M last September to further develop its EV services which include EV insurance, EV resale and battery rental (mainly for 3-wheel EVs).
It's likely that startups in sectors like EV financing and insurance will rapidly expand alongside EV adoption, quickly transforming these blue ocean markets into competitive red ones. Who will lead in each area? Time will reveal the winners.
Will Humanoids Revolutionize or Disrupt Auto Manufacturing?
Once confined to the realms of science fiction, humanoid robots have now entered the real world, shifting from imaginative concepts to tangible innovations. In recent years, the field of humanoid robot startups has seen explosive growth, pioneering advancements that are set to transform efficiency, productivity, and human-robot interaction across various sectors, including healthcare, manufacturing, and customer service. The automotive industry, known for its relentless pursuit of innovation, is keenly exploring this technological frontier.
In recent months, several leading car manufacturers have unveiled partnerships with humanoid robot startups to explore the integration of robots into their production processes. In January, BMW initiated a commercial collaboration with Figure AI to assess potential applications for the company's robots at its factory in South Carolina. In March, Mercedes-Benz announced a commercial agreement with Apptronik to evaluate the incorporation of its robots into its manufacturing operations. And finally last month, Magna, a leading automotive Tier1 company, revealed its collaboration with Sanctuary AI, in which it had previously invested, to deploy robots within its manufacturing facilities. When considering Tesla's endeavor to develop its Optimus humanoid robot, it becomes clear that this trend is rapidly gaining traction.
Certainly, major corporations are embracing humanoid robots for good reasons. These robots offer a myriad of opportunities for the automotive industry, promising to revolutionize traditional manufacturing processes and enhance overall efficiency. These advanced robotic systems can streamline assembly lines, significantly reducing production times and costs while maintaining precision and quality control. Moreover, their ability to handle repetitive and physically demanding tasks with precision and consistency can alleviate strain on human workers, leading to improved workplace safety and employee well-being. Additionally, humanoid robots equipped with advanced sensing and AI capabilities can facilitate predictive maintenance, detecting potential equipment failures before they occur and minimizing costly downtime.
However, the integration of humanoid robots into the automotive industry also poses several challenges. Ensuring seamless collaboration between robots and human workers, addressing high upfront costs, and navigating regulatory complexities are key hurdles. Additionally, concerns about reliability in manufacturing environments and potential job displacement, which are sure to arouse the workers' organizations, require careful consideration.
Undoubtedly, the integration of humanoid robots heralds the onset of a transformative era in production and labor across various industries, particularly within the automotive sector. The unfolding developments in this realm promise to captivate attention as they unfold.
What's Behind the Mixed Trends for Commercial and Private Hydrogen Vehicles in 2024?
In our report published earlier this year, we explored the advancements in the hydrogen economy, highlighting its potential for cleaner and more efficient energy. Additionally, the report touched on the rise of hydrogen mobility and its parallel growth with the hydrogen economy. Since the report's release, the hydrogen mobility market has seen notable progress that warrants attention.
The first quarter of 2024 presented a mix of trends. While there have been encouraging signs of growth, especially in the heavy vehicle industry, the private vehicle sector has encountered some notable challenges.
Let's begin with the positive updates. Exciting news has surfaced this month from France, as local hydrogen mobility provider HysetCo secured €200 million in a recent funding round. This company specializes in providing comprehensive hydrogen mobility rental solutions for businesses, utilizing Toyota Mirai for private vehicles and Hyvia's light commercial vehicles (a Renault subsidiary). With this financial boost, HysetCo plans to expand its services throughout France and across Europe.
Another positive development is in the heavy vehicles field. In the realm of buses, there appears to be a recent surge, with frequent reports of new commercial agreements between public transportation authorities and hydrogen bus providers. For instance, Solaris, a leading manufacturer of hydrogen buses, has announced several agreements recently to supply hydrogen buses across Europe. Another notable deal involves Korean OEM Hyundai, which intends to deliver 1,000 hydrogen buses to Seoul’s public transportation fleet by 2027.
In the trucking industry, there have been several positive developments. General Motors plans to introduce a fleet of medium-duty trucks powered by hydrogen fuel cells as part of a pilot project funded by the US Department of Energy. Additionally, the DHL Group is deploying hydrogen trucks in Germany, while MAN, a truck manufacturer, will produce a limited series of 200 vehicles equipped with H2 combustion engines.
In contrast, the private vehicle market shows a less optimistic trend. Official data indicates that in 2023, most markets experienced significant declines in purchases, with decreases of around 55% in South Korea, 50% in Japan, and 40% in Europe. Although the US saw a moderate increase in demand in 2023, the first quarter of 2024 revealed a decline in sales, aligning with the downward trend. The only market that experienced growth in hydrogen vehicles over the past year is China, where the majority of sales were for commercial vehicles.
The significant decrease in sales is concerning for private hydrogen vehicle manufacturers, especially given that Toyota has been offering its Mirai model at a 60% discount, including $15,000 worth of free hydrogen fuel and interest-free financing.
The coming year will be very significant for the hydrogen vehicle market and will determine which path it will take - as a solution mainly for heavy vehicles or also a vehicle for the masses that can compete with the EVs?
