Google vs. HERE – Perfect parking

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HERE has more potential but needs to execute.

  • Google is upping the ante in the race to provide value-added services on top of digital maps, but with the right execution, HERE should be able to provide a much better service.
  • In January Google launched its parking difficulty icon on Android Maps which give the user an idea of how difficult it will be to park at the user’s destination.
  • This was initially launched in 25 US cities but this has been: 1) extended to another 25 locations (Canada, Europe and Brazil), and 2) expanded to offer parking suggestions in the area.
  • This service is based on historical parking data as well as data gathered from smartphones using Google services within a certain location to ascertain how busy that location is.
  • This is similar to the popular times and visit duration data that Google provides for businesses and will give the user an idea of how long he should expect to spend looking for a place to park.
  • While this will be a useful addition to Google Maps, I think that HERE should be able to offer a service that is vastly superior.
  • This is for two reasons:
    • First, data quality: While Google’s service is based on estimates and AI, HERE’s service should be based on much more specific data.
    • This is because HERE has access to automotive sensor data while Google does not.
    • For example, when HERE’s location platform detects an ignition start, it can be almost certain that the space occupied by that vehicle is about to be vacated.
    • It will also know from ignition switch-off which spaces are occupied and which are not.
    • This gives it a highly accurate, real time picture of the parking environment meaning that it’s HERE ON-Street Parking service should be much more accurate than Google.
    • Second, positioning. Vehicle positioning is often much more accurate than that offered by mobile phones as the antennas are larger and are almost always open to the sky.
    • This means that HERE should have a more accurate real-time picture of exactly where the devices connected to its platform are.
    • Combining this with the highly granular data it gets directly from the vehicle, should allow HERE to provide its users with a more accurate and relevant parking service than Google Maps.
  • This is exactly the kind of differentiation that HERE needs to win the attention of users but there are caveats.
  • Google is present on almost every smartphone in the market (except China) meaning that although its data set is much less accurate, it has a much fuller picture of the environment.
  • HERE by comparison is at a very early stage in getting devices connected to its location platform meaning that its lacks the visibility of the environment to make its service work really well.
  • This allows Google to offer a workable service today, while HERE is still at the stage of building out its network of data collecting devices.
  • Furthermore, should Google manage to get access to the sensor data generated by vehicles (Android Auto offers no access), then HERE’s key advantage will be lost.
  • However, most automakers have recognised that Google represents a meaningful long-term threat and are keen to keep their sensor data to themselves.
  • Google has done a deal with Volvo and Audi but whether it has managed to gain access to sensor data is still unclear.
  • The net result is that HERE has an opportunity to roll-out a much better service and win over users, but it needs to quickly achieve scale or risk being swamped by Google should it gain access to sensor data.

Research Publication – Automotive ecosystem – Sitting ducks

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August 9th 2017:  Radio Free Mobile deepens its coverage of digital ecosystems with the publication of: Automotive Ecosystem – Sitting ducks.

RFM research subscribers will receive their copy directly by email. 

Click here for a sample and here for purchase options

 

 

 

 

 

 

 

 

Transport is the next industry to be digitised and almost all vehicle makers are unprepared. Electric Vehicles (EVs) and autonomy could reduce overall USA transport spending by 65% which needs to be supplemented with digital services by players wishing to survive. RFM thinks that sensor data is the one area where vehicle makers have an edge and hence, is critical to their future. They must control this asset or face becoming sitting ducks for those that would reduce them to handsets on wheels.

  • Digital differentiation. Transport is ripe for disruption. Furthermore, there is a real possibility that demand for vehicle shipments falls substantially over the next 10-15 years. RFM thinks that embracing digital, controlling sensor data combined with a completely new way of thinking is required by vehicle makers wishing to survive for the long-term.
  • Sensor data will be the new vehicular currency. RFM thinks that Digital Life services from smartphones will become ubiquitous and unlikely to offer value for vehicle makers. However, sensor data is unique, required for autonomy and critically, they still have a lock on access to it. RFM sees sensor data as the opportunity for vehicle makers to avoid severe disruption.
  • The infotainment unit could become the most important part of the vehicle as it is where all the sensor data can be accessed in one place. Furthermore, it is the main digital interface with the user meaning that the digital user experience will be defined here.
  • The gatekeepers. Despite the threat, RFM believes that the fact that OEMs are the gatekeepers to sensor data will give them a seat at the table as well as the opportunity to differentiate. How they execute on this is likely to define who survives and who does not.
  • Monetisation. RFM calculates that Digital Life (smartphone only) in the vehicle could be worth $112 per user per year in USA or $32.1bn in revenues. The use of sensor data could drive that figure higher. Potential substantial falls in both the radio advertising ($17.7bn) market and transportation ($2.6tn) market provide a plentiful source for spending on new digital services.
  • EVs and autonomy have the capacity to cause substantial declines in both vehicle shipments and transport spending as a whole. RFM calculates that manual EVs could reduce cost per mile to $0.40 per mile from $0.88 where it is today. Autonomy promises to reduce this still further to $0.29 per mile. There is huge economic incentive for consumers to switch to EVs which together with autonomy, could cause a 44% reduction in USA vehicle shipments.
  • Sitting ducks. While vehicle makers are aware of the threat, many are in denial and few have any real idea how to address it. Most are easy targets for those that would reduce them to handsets on wheels.

Uber vs. everyone – Colonial times

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Uber’s dreams of colonisation are slipping away.

  • First Uber lost China, then Russia and now it looks as if South East Asia may go the same way.
  • I am sure that Brazil and India are taking feverish notes.
  • SoftBank and Didi are investing $2bn investment in Grab, the Singapore-based ride-hailing company that offers its services in 6 countries including Malaysia, Singapore, Indonesia, Thailand, Vietnam and Philippines.
  • The total round is expected to be around $2.5bn with a post money valuation of $6bn.
  • Grab is present on 50m devices with 1.1m drivers and fulfilling 3m rides per day.
  • Grab has two advantages over Uber.
    • First: dominance. According to Grab, it already has 91% market share in taxi hailing and 71% in private vehicle hailing in the markets it serves.
    • This is crucial as RFM’s rule for online marketplaces states that to become to go to place to buy or sell a product or service, the marketplace has to have 60% market share or be double the size of its nearest rival.
    • Assuming these figures are accurate (there was a lot of dispute in China), then Grab has already become to the go to market place although the opportunity is very lowly penetrated.
    • I suspect that this is why it needs such a large fund raising as this position has to be maintained while the ride hailing becomes much more prevalent in the region.
    • Second: GrabPay. One of the problems with ride hailing in emerging markets is the fact that credit card penetration is very low.
    • A large part of the ride-hailing experience is the ease and simplicity of payment and GrabPay is way to bring this experience to those with no credit cards.
    • GrabPay credits can be purchased at ATMs, stores and banks (in a similar way to mobile phone airtime popups) which can then be used to pay for Grab services.
    • I think that this will remove one of the major hurdles to uptake of the service as this issue has made life difficult other offerings like EasyTaxi which operates in Latin America and the Middle East.
  • Uber’s rivals overseas are making the most of its turmoil at home as while management attention is focused in USA, I suspect not much is going on overseas.
  • This gives its rivals more time to establish themselves and none of them appear to be wasting any time.
  • The net result is that Uber’s dreams of colonising the world appear to be slipping away.
  • I suspect that it will remain dominant at home and some key Western markets (like UK) but it will have to do much more than just ride hailing in those markets to justify a $65bn valuation.
  • This is why autonomy may end up being so important as if Uber can capture a large piece of the gigantic $2.7tn transportation market in USA by operating a fleet of autonomous vehicles, then it could conceivably be worth 10x that figure.
  • However, Uber has a very long way to go before it gets to that point as its autonomous offering ranks dead last by RFM’s reckoning (see here) and the car makers could well be fighting in this market for their very existence.
  • I would not be surprised to hear of secondary transactions in Uber stock at well below $65bn and I can’t see much that’s going to push it up anytime soon.
  • One to avoid for now.

Uber & Yandex – Russia on top.

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Uber bails from another fight it was not going to win.

  • Yandex and Uber are merging their ride hailing businesses in Russia and surrounding countries but it is clear to me that the real winner here is Yandex that has managed to send Uber home with its tail between its legs.
  • Yandex and Uber have announced that they will create a new company and contribute both cash and their assets to create a company that will offer ride-hailing and associated services (like food delivery) in Russia, Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia.
  • Yandex is contributing $100m while Uber is putting $225 into the new company.
  • Critically, Yandex will own 59.3% of the new company while Uber will own 36.6% with the employees holding 4.1%.
  • The CEO of Yandex.Taxi will become CEO of the new company and I have no doubt that all of the key operational roles will be filled by executives from Yandex.Taxi.
  • The new company has an agreed valuation of $3.73bn after the transaction.
  • The fact that Yandex has ended up with 59% of the company and outright control despite only putting in less than half the money that Uber has put in, indicates that its existing ride hailing business is far stronger than Uber’s.
  • I see this is an almost exact repeat of what happened in China when Uber sold out to Didi and withdrew from the country.
  • I also think that Uber had very little choice as it was competing against the local champion and was only around half of its size.
  • Uber and Yandex.Taxi are market places meaning that to really make money, one has to have 60% market share or be twice the size of the nearest competitor.
  • I suspect that Yandex.Taxi was already almost at that point and that seeing the writing on the wall, Uber took the wise decision to sell out.
  • The net result is that Uber has a 37% stake in a company that will now dominate 5 countries and should be able to show very healthy profitability.
  • This is a much better outcome than the alternative which was holding 100% of a money losing company and being eventually being driven out of business.
  • Uber is currently beset with real problems in addition to the management issues it is facing at home.
  • Russia is the second huge market from which it has been driven which will give competitors in Brazil and India hope that they can do the same.
  • This makes its global domination strategy look somewhat questionable, leaving its real opportunity being to take control of autonomous transportation and creating transport as a service.
  • The problem here is that analysis of autonomous driving data strongly indicates that Uber is by far the worst at autonomous driving (see here), casting doubts over whether it will be able to live up to that ambition.
  • With both of these outcomes looking decidedly shaky and management turmoil, it is not a surprise that Uber investors are feeling somewhat nervous.

 

LeEco – Bleeding out

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LeEco could be acquired by one of the BATmen.

  • Despite closing the vast majority of its US operations, LeEco’s troubles are far from over as its cash problems have intensified which I think could lead to its eventual acquisition.
  • Leishi Internet Information & Technology (listed parent of LeEco) held its AGM last week and admitted that the cash crunch that first appeared towards the end of 2016, is now far worse than expected.
  • LeEco raised $2.2bn in January from Sunac (see here) but instead of using the money to fix its financial problems and invest in its fledgling businesses, Leishi used it to pay down debt.
  • Some of the debt was in the founder’s (Yueting Jia) name which may explain why debt was paid down rather than being used to keep its subsidiaries going.
  • The result was that all of the operations (especially USA and Faraday Future (see here)) appear to have received no cash injections at all, leaving them in dire straits.
  • This is why the company has had to exit its acquisition of Vizio, sell the land in Silicon Valley it bought from Yahoo, close most of the US business and the founder has also been forced to sell his stake in electric car company Lucid Motors.
  • Yueting Jia also admitted at the AGM what I have long suspected which is that the real problems have been caused by LeEco’s automotive ambitions, Faraday Future (see here).
  • The company is now seeking funding for this venture but given that many participants in the automotive industry and the state of Nevada (where the factory is being built) have grave doubts with regard to its viability, raising money will be extremely difficult.
  • Consequently, I see two outcomes for LeEco.
    • First: It sells or closes all of its automotive operations and pours everything into its core business as a provider of Chinese media over the Internet.
    • This would mean a return to its more humble origins and not something that I think its founder has seriously considered.
    • Second: It continues trying to create an ecosystem around televisions, mobile phones and cars for which it is very unlikely to see any success.
    • I do not think that Leishi has the capital, management depth or credibility to bring this ambition to fruition meaning that I see an intensification of the cash crunch if this option is chosen.
  • Given management’s commentary at its AGM, I suspect that it is going to go for option 2 which I believe will end in failure.
  • This is likely to cause the real value of the shares (currently suspended since April 2017) to continue their free fall.
  • This would make the Internet media asset a good tuck in acquisition for Baidu, Alibaba or Tencent (BATmen) all of whom are aggressively vying to become the leader in the Digital Life segment of Media Consumption in China.
  • In the absence of real fiscal discipline, I fear that this will be the ignominious fate of a once great ambition.

Digital Car – Sitting ducks pt. II

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The best automotive infotainment unit is the one in my pocket

  • A car maker with a future is a car maker that realises how vital its data is and pays the buyers of its vehicles for the right to use it.
  • This also has the added benefit of creating a relationship with the buyer of the vehicle which is something car companies have not really bothered with to date.
  • The latest survey from IHS examines the technology that consumers are and are not willing to pay for when they buy a new vehicle (see here).
  • The data shows that consumers across the world are most willing to pay for a sunroof and rear seat entertainment systems with things like telematics and in-car Wi-Fi trailing significantly.
  • The survey also revealed that consumers expect technology in vehicles to evolve as quickly as it does in mobile devices.
  • This creates an enormous problem for an industry with a 4 to 5 year design cycle where even the top end infotainment systems costing thousands of dollars are using hardware that is 5 years out of date.
  • The result is that they can be outperformed by a $150 Android device.
  • This means that the user is likely to have a better digital experience in a top of the range vehicle with a cheap smartphone rather than with the infotainment unit.
  • This strongly encourages the user to access his Digital Life with his smartphone in the vehicle rather than to use the infotainment unit.
  • This is the last thing every car maker needs.
  • Users still buy cars based on performance, form factor, safety and economy but increasingly digital services will play a part in the user’s decision of which car he buys.
  • If the infotainment unit is not being used and everything is being done on a smartphone then the digital battle will have already been lost and cars will have moved closer to being commodities.

 

  • Furthermore, I think that the automotive industry has its strategy with regard to telematics completely back to front.
  • Instead of forcing users to pay for telematics, they should be giving users a discount or free services for agreeing to grant access to the data that these systems generate.
  • Using digital ecosystems as a benchmark, I think that car companies could give users meaningful discounts on the price of the vehicle and still end up with higher revenues and margins.
  • This is because the data that these vehicles generate could be very valuable to other companies who provide services based on collecting data.
  • For example, using cars as weather or traffic probes would cut down on the need to install expensive infrastructure.
  • However, to be valuable, all cars need to be generating this data and while car makers continue to charge users for this feature, penetration will remain low leaving the door open for disruptors.
  • One only has to delve very briefly into the world of start-ups to see this disruption coming.
  • For example, many start-ups are providing their automotive related digital services on smartphones and not infotainment units and there is significant development of technology that could by-pass the car companies entirely.
  • For example, a quick tour of the automotive section of a technology trade show revealed two companies that use vibration to work out exactly what is happening within the vehicle rather than use the traditional sensors.
  • One of these claimed that it could, using 10 vibration sensors on a helicopter, completely replace the 160 sensors currently being used.
  • This data could easily be relayed to a smartphone app and cut the car companies out from the only data source which remains proprietary to them.
  • I found these start-ups on the stands of the very companies which they intend to disrupt, further reinforcing my opinion that most of the automotive industry still has its head in the sand.
  • Instead automakers should be aggressively moving to obviate the reason to be bypassed by making their infotainment units and sensor data easy to use and readily available with simple APIs.
  • Currently, by far the best infotainment unit I have is the one that is in my pocket which is further enhanced because I can use it in any vehicle (including trains and planes).
  • While, this reality persists, the automotive industry remains a sitting duck for the ecosystem companies who have long understood the value of that which the car industry seems to ignore.

 

  • RFM would like to acknowledge John Ellis of Ellis and Associates which was the starting point for some of the views presented here (see here).

 

LeEco – Le-trenchment

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LeEco looks to return to its roots at home.

  • LeEco’s foray into the United States looks like it is coming to an end which combined with a major restructuring at home, probably brings to an end any realistic hope of becoming a digital ecosystem.
  • I understand that LeEco is about to lay off all of its employees in the US that are involved in developing, building and selling the devices and ecosystem that LeEco is offering.
  • Those that remain are thought to be staying to look after existing customers but I suspect that most that remain will be the ones that are working on the automotive ambitions of Faraday Future.
  • On top of this, Jia Yueting, the mercurial founder of LeEco, is also stepping back from his position as CEO of Leshi Internet Information & Technology Corp. (LeEco’s parent) although he will remain chairman.
  • He will be replaced by Liang Jun who has been running the content business since joining from Lenovo in 2012.
  • LeEco’s CFO has also been replaced with the CFO of the China business.
  • Furthermore, it looks like all of the content related businesses will be merged into Leshi while the automotive business is spun out as a separate unit.
  • All of this points towards a big retrenchment where LeEco will once again become a Chinese digital content company with a shareholding in an electric car company.
  • I think that this means that all LeEco’s activities in the US will be focused on Faraday Future which is trying to build an electric vehicle at a yet-to-be-completed factory in Nevada.
  • At the end of the day, I think LeEco tried to do things much too quickly and did not pay enough attention to the fundamentals of creating an ecosystem.
  • If I take LeEco’s ecosystem as it is today it has weak coverage of the RFM Digital Life Pie as it really only covers Media Consumption.
  • It also gets a poor score against RFM’s 8 Laws of Robotics mostly due to the fact that it has not paid enough attention to detail when it comes to the user experience.
  • I get the impression that the software was simply ported over from the Chinese version and not enough time has been taken to adapt the user experience for the US consumer.
  • The devices themselves offer great value compared to competitors with an 85 inch 4K TV for $5,499 being the best deal available by quite some margin.
  • However, it all falls to pieces when it comes to software and this is where LeEco was hoping to make its money.
  • I have long held the opinion that LeEco did not have the resources to create both a digital ecosystem and an electric vehicle and that it should close its automotive operation and focus on its core business (see here).
  • However, it appears to have gone one step further in closing its ecosystem ambitions and spinning out automotive where I suspect it will be seeking participation from other investors.
  • I suspect that Leshi will now return to competing in the Chinese market which is heating up with increasing levels of investment in content coming from the BATmen.
  • Consequently, the outlook is pretty bleak as Leshi’s ability to out invest the BATmen is highly questionable especially given the troubles that it has had with expanding into the US.
  • I would pick Tencent as my favourite Chinese ecosystem for investment.

 

Google Auto – Greek gift pt. II.

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Tinkering with Android for cars is a dangerous game.

  • Ahead of its developer conference, Google i/o, Google has demonstrated another version of Android that will be able of running many more aspects of the car beyond infotainment.
  • While Android Auto is limited in terms of what it can do and the data that it can access, this version of Android for the car is much more deeply embedded.
  • As a result, I think it will have access to everything as the infotainment unit is the nerve centre of the vehicle where the 4 data networks in the car (CAN bus) meet.
  • This means that Google services such as Maps, Search and Assistant will be fully embedded in the car enabling these services to be far more contextual and relevant.
  • It also raises the possibility that Google will be able to suck all of the data out of the car, robbing the OEMs of one the most important pieces of exclusivity that they have.
  • Audi and Volvo have signed up to use this software which will be demonstrated on the Q8 and the V90 SUVs at Google i/o this week.
  • The two most important issues are:
    • First, Code control: Who is in control of this code is crucial to the outlook for the OEMs.
    • From the presentation, I get the impression that the manufacturers are nominally in control of the Android code going into their cars but I seriously doubt that they have done the implementation themselves.
    • This was most likely done by their tier 1 suppliers or even Google itself.
    • While this means that the OEMs will have control over software updates and feature releases, there are almost certainly going to be hooks in the code that Google can still use.
    • Second, Google agreements: If the OEMs have a similar relationship with Google that the handset makers do, it is important to understand what the OEMs have agreed to.
    • Google controls Android through its agreements with the handset makers and given that the OEMs are getting Google services deeply embedded in their systems, something similar is likely to be demanded by Google.
    • Parts of those agreements are likely to include aspects of user interface design as well as the sharing of data.
  • I view this software as a replacement for the OEM designed software that resides in the head unit of the vehicle.
  • Android Auto and Car Play run on top of the OEM software but have limited access to the rest of the system.
  • This is likely to be the same such that CarPlay will still run as before but Android Auto will obviously be obsolete.
  • Google has said that the new software will not be draining the vehicle of data but I suspect that Google is referring to how the software behaves as it leaves the factory.
  • Once it is in the hands of the user and he has agreed to a pop message requesting access to data to improve Google services, the reality could be very different.
  • Sharing this data will make Google services on other devices better for the user but critically, this is the data that the OEM needs to hang onto in order to differentiate itself in all things digital in the car.
  • This is the risk of deploying software that has not been written in-house as the reality is that the OEMs will have no real idea about what they are deploying on what is becoming the most strategically important part of the vehicle.
  • Tesla and BMW are the only ones that seem to understand the importance of this which is why they are the only OEMs I know of that write their own code.
  • Google has everything to gain and little to lose by helping OEMs use Android instead of their in-house software which is exactly why OEMs need to look in minute detail at this gift before letting it into their holy of holies.

 

Autonomous Autos – The back foot.

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Uber is now even more on the back foot.

  • The partnership between Waymo and Lyft puts Lyft streets ahead of Uber when it comes to developing autonomous cars but is likely to cost it heavily in the coinage of data.
  • Uber has described autonomous autos as “existential” to its long-term future and in that regard this partnership represents a huge threat.
  • This is because when it comes to autonomous driving, Uber is by far the worst.
  • It is worse even than the dull old OEMs that everyone derides as being hopelessly unprepared for the changes coming in their industry.
  • Data from the California DMV analysed by RFM (see here) showed that Waymo is 5000x better at autonomous driving than Uber is.
  • Furthermore, Uber was also comfortably beaten by BMW, Nissan, Tesla and Mercedes.
  • Uber, Lyft, Didi and the other ride hailing companies operate market places where drivers and riders are matched making their economics exactly like that of classifieds.
  • This means the to make money a player, needs to have 60% market share or be double the size of its nearest competitor.
  • This is why I am of the opinion that its time Uber started trying to make money in the US (see here) and Didi should be trying in China where it is now unopposed. (see here).
  • Against that backdrop, Lyft looks doomed except that by signing a partnership with Waymo, it is now in pole position to have by far the best autonomous solution and be there first.
  • From this partnership, Google gets a route to market and a source of data whereas Lyft gets access to technology that it is unlikely to be able to develop on its own.
  • The problem that all the ride hailing companies face is that if all cars become autonomous, then their current businesses become obsolete as, while there will be riders, there will be no drivers.
  • This is why they must be present in this space as it will give them the ability to migrate from human to robot drivers as the technology comes to market.
  • I have long been of the opinion that this is going to take much longer than expected.
  • This is not because the technology is not ready but because the market is unprepared to receive it (see here).
  • This gives Uber time to catch up but the example of Waymo indicates that developing this technology is more difficult than many think and it requires a vast amount of practice (miles driven).
  • I still think that autonomous vehicles will not become a market reality much before 2030, meaning that the field is wide open but this partnership puts Uber even more on the back foot than it already was.

LeEco – Le Crunch.

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Crunch time appears to be fast approaching.

  • The LeEco proposition seems to be quickly unraveling as a flurry of bad news reinforces my view that this company only really has a chance if it dumps automotive.
  • New blows upon the already bruised company include:
    • Vizio: LeEco and Vizio have called off the $2bn acquisition by LeEco stating that regulatory hurdles got in the way.
    • Vizio was supposed to give LeEco a US brand with which to get a toehold in the US market while the Chinese market would become more open to Vizio.
    • I suspect that LeEco was having difficulty getting the money it raised from Sunac (see here) out of China giving it a good reason to back out of an acquisition that now makes less sense given LeEco’s current predicament.
    • 2016 revenues: LeEco appears to have massively missed its 2016 US revenue target but given that it launched in October this is hardly a surprise.
    • It looks like 2016 revenues were just $15m compared to a target of $100m but given the late launch, this target looks to have been way too ambitious.
    • Consequently, I don’t think that this reflects as badly as it would seem on the management of the US operation.
    • Job cuts: LeEco also appears to weighing up more job cuts with 175 of the 475 US workforce expected to be cut.
    • This does not come as a big surprise given the cash crunch that the company admitted to at the end of 2016 and the problems the company is having in getting money out of China.
    • However, growth companies tend not to need job cuts raising questions about the products being offered and the services that come with them.
  • This news comes on the back of abandoning its ambitious plan to build a US HQ with 12,000 employees (see here) and severe pressure being placed upon its automotive strategy.
  • Giving up the acquisition will massively increase cash for investment in the ecosystem but if it remains unable to get money out of China, not much development is likely to happen.
  • I find this situation strange as its competitors, Xiaomi, Baidu, Alibaba and so on all have substantial overseas operations which are most likely to be financed from China.
  • In my view, the biggest issue remains automotive as it has very little to do with the development of an ecosystem and is hugely capital intensive.
  • Apple and even Tesla have found that building cars is a difficult business that requires a lot of time and very deep pockets.
  • Faraday Future clearly needs hundreds of millions of dollars of new investment which LeEco simply cannot afford if it is to have any chance at delivering on its ecosystem ambitions.
  • Hence, I think that LeEco’s best interests will be served by not having this millstone hanging around its neck.
  • I continue to believe that for LeEco to have the best chance of succeeding, it needs to extract itself from Faraday Future and forget about self-driving cars.
  • Building a thriving ecosystem is difficult enough and throwing in cash constraints and management distractions can only make it next to impossible.