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    Technology

    Vehicle 2.0 Podcast with Scot Wingo

    There are four waves of innovation sweeping through the automotive industry that will disrupt vehicles more in the next 10 years than they’ve changed in the last 100. Each week, we explore connected cars, electrification, changing ownership models, and autonomous self-driving vehicles, as we seek to understand and prepare you for the future of transportation.

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    Latest Episodes:
    CEO and Founder of Your Location Lubrication (YLL), Zach Zeller Nov 13, 2019
    Show notes

    EP021 - CEO and Founder of Your Location Lubrication (YLL), Zach Zeller http://www.vehicle2.getspiffy.com Episode 21 is an interview with Zach Zeller, CEO and Founder of Your Location Lubrication (YLL); recorded on Thursday, November 7th, 2019. Scot and Zach discuss a variety of topics, including... How Zach got his start in the industry with YLL YLL’s last 10 years of growth, driven by their fleet-focused approach The creation of YLL’s proprietary high volume oil change system Spiffy and YLL joining forces for Fleet Management as a Service Zach transitioning into his new position as SVP of Fleet Business Development at Spiffy Zach’s thoughts on the Vehicle 2.0 framework from a fleet maintenance perspective 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: Welcome to the vehicle 2.0 Podcast. This is episode 21 and it's being recorded November 7th, 2019 welcome back to vehicle 2.0 listeners. We took a little bit of a fall break there on the podcast and are excited to be back with you here today. It's 50 we recently announced that we are merging with your location lubrication, also known as YLL. So we took this opportunity to have the CEO and founder Zack Zeller on the podcast. Zach has been working in the industry for over 10 years, so we're really excited to get his insights about the automotive industry and his experience. Welcome on the show, Zach. Zach: Thanks Scot. Scot: And I think this is your first podcast ever. Zach: So it is. Scot: So we're excited to land the big first interview here on vehicle 2.0 let's start off by you and I have had the opportunity to spend a lot of time together and I've got to hear your story, but listeners haven't. So tell us how you got into the automotive space. Zach: Yeah, so, you know, I got into automotive, the mobile onsite oil change space by having a bad experience at a, at a brick and mortar business. So, you know, had to go get the oil changed, you know, trying to upsell and, and do all these services that I didn't think were necessary. You know, it was cold, snowy, and so, you know, after my experience, bad experience yeah, I needed to, the thought there had to be a better way to do oil changes, right. There had to be somebody that could come to my house and provide this service, you know, while I'm at, at that, at home or at work. And so I started looking around and this was about 10 years ago and couldn't find, couldn't find that service. So, you know, with some research and idea, I thought, you know, I'm, I'm going to go out there and do this myself. Zach: So jumped on Craigslist, went out and bought an old 2000, two 40 Econoline van and it put some oil in it and filters and started going door to door and knocking on people's doors to, you know, offer this service. Quickly realized that doing it one at a time, I wasn't making any money. Right? It's pretty quick. So, you know, I determine that, you know, for, for, for a while L that you know, our opportunity was in, in the fleet business and where could I go to find large fleets? And that led me to Orlando, one of the largest rental car company locations in the U S so moved down to Orlando and start knocking on the door of the rental car companies. And that was kind of my first end. So, you know, start off by doing four, five, six, 10 oil changes a day. And you know, I could start seeing the opportunities there and seeing that there was at the airports, right. Large fleets, large concentration of cars. And that's kinda how I got started. So, you know, by, by doing the one and two a day to five to 10 a day to, you know, now we're doing, you know, several hundred a day at the, at large airport locations. Scot: Yeah. Awesome. and then one of the things that's pretty interesting is, so first of all, congratulations. Most businesses don't make it like five years. You've made it 10 years. I'm very successful. That's awesome. One of the things that we got excited about is you guys can handle, you know, something like four to six oil changes somewhat simultaneously. Talk a little bit about, so you've developed some proprietary technology, we don't want to go too far into that, but you know, how did, how did you realize you needed to be able to do that? You know, that many oil changes simultaneously did to really capture the high volumes. Zach: Yeah. So, you know, it started you know, I w the day I got a phone call that there was about 200 oil changes at, at the airport location there in Orlando. And I went out there by myself. It was just me and one van. And, and you know, I had thought I had developed a system that to work, to be able to handle that. And what I realized was about after 10 cars that the system I had developed couldn't handle high volume. You know, I mean it was good for the five, 10 cars and, and it just wasn't working right. So it was really that I, I realized that, you know, to service 200 cars to do it efficiently, to do it. So the rental car companies could put those cars back on rent that we need to develop a system that could be high volume, right. That that could do four, six, 10 cars an hour. You know, so those cars can get back on the road. And so that's where we, we started trying all these different systems. We went to different manufacturers and trying different ideas and you know, over the last 10 years, we think that we finally found the right system that allows us to, to do what we consider high volume oil changes. Scot: Yeah, yeah. If you're doing 200 oil changes and it takes 30 minutes per, that's a hundred hours separate. Zach: Right? Yeah. Just doesn't work. Yeah. Scot: So there, you know, that's weeks and weeks of time, which, which doesn't work. Cool. So what locations are you guys in? So you started in Orlando and have expanded quite a bit. What are some of the locations where you're in now? Zach: Yeah, so we start in Orlando and then you know, through, through word of mouth. You know, we expanded into Tampa. We went down to Miami, Fort Lauderdale, West Palm beach. So we kinda cornered the Florida markets, Fort Myers, and we worked our way up to Atlanta and then kind of out to out the West coast. So then we, San Francisco, Los Angeles, Seattle, Denver. So kind of the, the major, what we consider major airport locations is kind of what our target market's been. Scot: Hmm. Okay. And then talk a little bit about, so you spend a lot of time with rental, large rental car fleets. How do they think about the life cycle? Like how often are they buying vehicles selling them and, and how, what does that life cycle like for those kinds of really large fleet owners? Zach: So, you know, I think what we've learned in the businesses, you know, the rental car companies are in the business of buying and selling cars, right? And making money off those you know, they're, they're keeping them in fleet and renting them out to really for the depreciation. So they're an asset to the rental car companies, right? And so providing the service and maintaining the vehicles is in the best interest of them. Right? They want to maintain that value of that vehicle so they can turn around and sell for the most money. So what we found is, you know, they're going out there and they're, they're buying cars there, pain to maintain them. Right? And that's part of the, you know, it's part of the service we offered the preventive maintenance service, right? They want them to, first of all, they want him to be safe on the roads. Zach: So, you know, they care about the tires, they care about making sure the cars are rentable and ready to go. And then, you know, again, trying to get the most value out of them at the end of their life cycle. And you know, they're only keeping them for six months a year, right? They're putting 30,000 miles on these cars. You know, and they've got a lot smarter people than me that can figure out, you know, the life cycle of these vehicles and, you know, when's the right time to send them to auction and when to sell them and, you know, so we're there to support them and to help maintain those vehicles to the highest standards. Scot: Right. And then you started in preventative maintenance. And then if they go out and buy a bunch, you know, I think today you're actually dealing with a situation where they went out and bought a bunch and you have to help them on that and they and then when they get rid of them, do you guys do anything there? Zach: So currently, no. Yeah, you know, we help them, you know, there's, there's times that they have an increase of business and they need to go out and buy cars quickly so they'll go out to the auction. Right. And the goal is to get those cars on the road as quickly as possible. So, you know, doing a safety inspection, and getting the oil changed and helping them there. But as far as, we haven't been able to get in that market of the D fleeting of the vehicles a lot of opportunity there. Scot: Awesome. anything else kind of on the YLL history or, you know, so you've, you guys maybe give us, give us an idea of the scale of the company today. Zach: Yeah. So, you know, 10 years ago, start off with, with one person, one van. And you know, now whileL he's just,just over a hundred employees, we've got just about 70 vehicles on the road. You know, and more in 12 cities. Scot: So it depends on how you count cities. Yeah. Yeah. We get that a lot. Awesome. Well, we're really excited to, well, let's talk about you know, so you, so you approached us a while ago and talked about how do we combine forces with what was your thinking there? Zach: Yeah. You know, I started to see spiffy and learn, learn a lot about what spiffy was trying to do. You know, what I saw is, you know, we've, we've got, you know, while Al had this niche, right, the high volume oil change at airport locations soft, spiffy, had a lot of other interesting, you know, you guys rolled out your fleet management of services, which is really what caught my eye of, you know, you guys saw the need of fleets from the beginning of the inflating through the whole cycle to the D fleeting. And that's really where I thought that there could be, you can see the benefit to the rental car companies, the one stop shop, right? And so instead of sort of, you know, spiffy and while L kinda going at it against each other and being the competition, let's, let's join forces and let's, let's be the, to be the leader in the industry for the entire life cycle, those vehicles for the fleets. Scot: Awesome. Well, we're real excited here at spiffy to join forces with Weill L a we feel like this is going to be, you know, put jet fuel behind the fleet management as a service division. And my favorite part is we can kind of go through the numbers combined. We'll be in over 20 locations. Our goal is to get to 50, so we're almost at that halfway Mark now. So that's good. Well together we'll have over 200 vans out there with all the equipment to do the variety of services we offer. And then the high volume capabilities you have. And then, you know, driving and servicing the vehicles. We'll have together over 300 technicians that are trained. They're W2 technicians versus kind of random 10, 99 kinds of folks. So we, we share a vision in that. We, we, you know, to make the consumer or the B2B consumer customer happy, you really have to have a trained technician there. Scot: It can't be just kind of a random consult contractor. And then I think together we're servicing about 1500 vehicles a day. So that's a little scary as a software guy to get my head around. But that's a, that's kind of a, a good size of the scale over 40,000 services a month. And for all the people that are excited about oil I did some math and I think we're we're changing over 50,000 gallons of oil every month is combined company. So if there's anyone in the oil industry on the podcast would love to work with you. Cool. So you know, the topic of the podcast is vehicle 2.0 where we talk about the cars are going to change more in the next 10 years than they have in the last 110 years since the introduction of the model T. And we use the, the vehicle 2.0 framework where we talk about the four big waves that are changing vehicles connected car changing ownership, Evie and AB. So, so you guys are really you're kind of, I would say in that ownership side. So you've, you've been deepened the rental car model for a very long time. So we can spend the bulk of our time there. And if you wanna talk about anything else, that's fine too. But do you see any interesting trends with the future of car ownership? Zach: Yeah. You know, I mean if we're looking at car ownership and, you know, for the rental car companies, you know, we're seeing a lot more shared services. So, you know, riddled car companies are, are working with, you know, the big ride share services, you know, they're trying to try to get them to use their rental cars, provide, you know, new cars that are, you know, safer and, you know, provide a better experience for the riders. You know, we're also seeing a lot more the car shared, I guess when I say car shared services, but you know, commutes, the Scot: Kind of pulling and yeah, those are all the areas one out there. Yeah. Zach: Yeah. And we're seeing a lot more of that to where, you know, especially on the West coast, that's becoming a big part of the fleet business. You know, the Facebooks and Goggles and all that are trying to provide ways for their employees to get to work instead of bringing individual cars. Let's, let's start doing this car pooling and they're going to turn into the rental car companies task for the help. Yeah. So we've started to see that quite a bit. Scot: Yeah. I was I was listening to one of the conference calls with the Hertz CEO. And they got a question from one analyst, which was essentially you, you would think the Uber's and lifts of the world would start eating into the rental car companies. I know I consciously, a lot of business trips all, all kind of just use ride sharing instead of renting a car if I'm only going to one or two locations. And they, it was interesting, they, they actually said they have lost kind of like 5%, but it's like they're real short kind of, you know, kind of half a day kind of rentals but actually lose money on those. So it's actually been okay to lose that because then what have been able to do to your point earlier about keeping the cars they're keeping the cars longer and they're using that, they're adding a little tail period of three or four months there where they're now running them into the rideshare networks and that's, that's actually increasing their profitability because they get rid of the less profitable stuff and now they're keeping the cars longer and they're, they're getting a little bit of a longer life cycle out of the vehicles. Scot: So it's pretty interesting how it's to predict the unintended consequences of how some of these things will, w…

    Full show notes at the publisher

    CEO of MuvMe, Inc., Steven Messino, and Senior Carsharing Consultant, Dave Brook Sep 25, 2019
    Show notes

    EP020 - CEO of MuvMe, Inc., Steven Messino, and Senior Carsharing Consultant, Dave Brook http://www.vehicle2.getspiffy.com Episode 20 is an interview with Steven Messino, CEO of MuvMe, Inc., and Dave Brook, Senior Carsharing Consultant for Carsharing.US; recorded on Thursday, September 12th, 2019. Scot, Steven, and Dave discuss a variety of topics, including... Steven and Dave’s individual career paths in the automotive industry, and how they first met each other The seven primary ownership models, such as leasing, financing, ridesharing, carsharing, and subscriptions A present-day look at the carsharing space and the potential for a tipping point for more car-sharing miles driven than owned vehicles The key differences between gated and ungated carsharing Steven and Dave’s thoughts on the potential for autonomy, both in the carsharing space and the industry as a whole Be sure to follow Steven Messino and Dave Brook on LinkedIn. 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: Welcome to the Vehicle 2.0 Podcast! This is episode 20 and it's being recorded, September 12th, 2019. In this episode, we are excited to have two guests from the car sharing industry. First we have Steve Messino CEO of move me and he's joined by Dave Brook senior car sharing consultant. Welcome to the show guys. Dave: Thank you! Steven: Thank you for inviting us. Scot: Oh, Steve let's start off with you. Let's we, we like to take listeners through a everyone's career path. So, so how did you get into the exciting world of automotive and car sharing? Steven: Okay. Basically I was consulting in Silicon Valley for various companies, so I came across a car share that started around the same time around 2011, 2012 as get around and what you now know is zero. And they were in a very similar business. They were all doing peer to peer car sharing. Ended up working with them for awhile. Them I went and did a project with probably at the time was the biggest car sharing software provider in the world, which was not a vera out of Toronto. And during that episode, Oh, we need to be create demand. So he thought of doing webinars because lots of people had an interest in car sharing but did not know a lot about the business or the market. So I went and did research and found out who were the leading experts in the industry of which Dave Brook was one of them. Steven: And the person who originally started the industry in the United States. So we, Dave and I ran a series of webinars. Oh, format, Avera. And then after, and we ended up finding a large number of people who wanted to get into the business. But it's very similar to a large number of people who want to start a laundry or a restaurant. Most of them didn't know a lot about it. And this got tied with Metta. Vera sold to enterprise, so there was no longer a major provider in North America. My phone rang constantly and I started talking to Dave and I said, we have all these people who want to do this. Why don't we offer them a package of, we'll teach them how to run once you've successfully run one days and we'll put together the technology and get them operational. And from that point on, David has been doing this or probably every major car share car company insurance company in the world, but I'm sure you'll be a little more humble. Dave, you want to give your additional background? Dave: Sure. Thanks. I guess I'm a serial entrepreneur and in the mid nineties, I started reading about this a wacky idea called car sharing that was starting in Europe at the time. And it seemed like a, a, an interesting idea that would have some application here in the United States. So I talked to people in Switzerland that had been involved in their very earliest car shares 10 years before in the late eighties. And it was sort of realize that, well, this wasn't rocket science. It was pretty, you know, straight forward to moving parts. So I stepped off the cliff a couple of years ahead of anyone else and started car share in Portland, Oregon. I was financing it out on my own pocket to, it was kind of before the VC and angel investor world sort of got to interested in mobility and transportation things. Dave: And after starting my company I was approached by another group of people from Seattle who wanted to do the same thing, only they wanted to do it on a much better finance scale than what I was doing. So I help them get going and after not to, after a couple of years it made sense for me to merge my company with what was flex car which had not only national aspirations, but did expand the in a 10 or 12 different cities all over the country. And they were going head to head with another company out of Boston that started two years after mine called Zipcar. And eventually the two merged and you know, under the Zipcar banner. And so that was the birth of you know, commercial car sharing in the United States. It, after a couple of years working for Flexcar, I decided that the corporate life was not, not for me. Dave: So kind of weighted out my noncompete agreement and then started consulting and I had been approached by a fellow Shelby Clark who had this idea of using private cars, privately owned cars, your, your car, my car, and being a platform to rent out those cars to other people. The same car sharing concept. And so the big challenge for any car share starting is finding insurance. Cause most people don't understand. Most insurance companies don't understand the special requirements of, of car sharing. But so get around Shelby's company was a relay rides, which is now called we're o, t,U , R, o. And m. Again, almost at the same time another company was starting, which is get around know, which is the other peer to peer company. And they've grown. And so for the last 10 plus years I've been working with they're startups. I've been working with auto manufacturers, insurance companies, helping them understand the, the, the car sharing space where it fits into overall mobility and okay. And having a good time at it. And then it's, that's how I met Steve as he, as he said. Scot: Very cool. So we definitely wanna dig more into that d what I find interesting is you guys were so early with the zipcars flex car you know, and then the f the iPhone came along, which really seems to have enabled these models to, to be a lot easier or at least more consumer friendly, right? Because with Zipcar, you'd have to Kinda go to your desktop, see what cars are there, run over there and hope that no one rented them out. Whereas with the phone now you have it all in your pocket and you can get more real time from a consumer's perspective, you know, know where the cars are. Steven: Yeah. Right. That technology shift actually happened about June, 2012 if you watch that, nobody really bought applications on iPhones and android and all of a sudden in that period it just jumped. And then everybody wanted an app on their mobile phone. Dave: Yeah, yeah. It it really did change things quite a bit. It, you know, the better, the more convenient you can make access to a shared car, the easier it will be for an individual to decide, well, this is so easy. I don't really need to own the car, spend all that money owning a car just to have it waiting for me out front. So it's a challenge for the operator to make it as convenient as possible. And you know, there's kind of multiple levels of convenience. One is finding the car and being able to reserve it. The next challenges, being able to kind of unlocked the car, you know, without having to go through a big a lot of steps and then taking the trip, returning the car and locking it up. And you know, that, so conveniences is what it's all about. And of course, keeping the car clean is the challenge for the for the car sharing operator. Scot: Yeah, we're, we're learning a lot about that here, here on our side. So that's super helpful. Thanks for given the backgrounds. I feel like you guys are elder statesman of, of the industry. So it's going to be a fun discussion. And here on our podcast we call it the vehicle 2.0 podcast cause we've come up with this framework where we talk about the four of innovation that are just kinda crashing through the automotive industry. We talk about connected car electrification, autonomy, and then changing ownership models. Since you guys are really steeped in that, that, you know, car sharing side, we want to spend the bulk of our time there today. So, so let's start, you know, kind of the history is really good to know. And here we are, 2019. Steve, we'll start with you. Scot: How do you feel, how do you think about the car sharing space? I'll look into it a little bit. There's you know, dug into this, there's some data points out there that say by 20, 30, maybe 10% of cars will be kind of, you know shared or not individually owned ownership. If that's a word and then a, I've seen another one that's the exact opposite where they'll say, you know, some kind of amazing thing, like 80% of cars will, will be you know, outside of the ownership as we know it today. Do you have a point of view on where we're going to be in kind of the next 10 years or so? Steven: Well, this is actually a great question because I spend a lot of time, usually in the summertime thinking about where the market's going since I build technologies for it. And you always have to anticipate three to five years in advance of what's going to be coming. Dave and I, when we speak, we frequently get asked this question, the big mover and shaker here, we'll be the autonomous car as it comes along. But it's going to take awhile. Everyone likes to say it's going to be here next year, but it's only in trial. Car sharing is going to be here for quite awhile easily and now 20 years and it just gets convenient if you spend much time talking to millennials, they are not really fans of cars as the previous generation, so they're, they're more inclined to do car sharing, which has already proven out in all the demographics and still approves out today. Steven: The, yeah, as they, as they get older they are gonna start buying cars because they're going to end up having families and that's going to be in cars so, but if they could get away with not having a second car, I think they'll do it in a nanosecond and it's easy to just spiral a second car to take kids to soccer practice on Tuesdays and Thursdays. If that's the only time you need the car or you needed a third time on Saturday to go shut up. I see this business being solid for 20 years. The primary technology change is as of 2018, 25% of all cars now have their telematics devices, which is what the smartphone shock to built into the cars. So probably in four or five years I'll, those of us who build technologies, well we'll be using the car is built in devices in order to talk to them. Dave: I I would, I'm not sure how much or they are going to be the car's built-in devices because I think the manufacturers are going to keep that information to themselves in case their, to start their own business. So I think that the, this is the market for you should third party after market type telematics devices is going to continue for quite a while. Okay. As Steve and I differ slightly about the, how quickly autonomous vehicles are going to be a major factor, I think that they will start happening quite soon. I mean without, without 'em a driver without a, whatever you call it, the person sitting in the driver's seat. But I think there are going to be specialized applications. You know, Tesla's clearly shown there's a lot of that a possibility, but there may be autonomous taxis going in, you know, 10 years on a, on a fairly large scale and you know, some, something really basic to to sort of keep in mind. Dave: There's no difference between autonomous Uber and autonomous Zipcar. There is just who, you know, what's the origin of the company? Scot: Yeah, yeah. I think Travis a the founder of Uber, Travis Kalanick is famous for saying that they have a good business today, but they'll have a great business once they can get rid of the drivers. But you know, I mean, just because, you know, at that point he had like 2 million drivers. He's kind of a PR oopsies there that he was famous for. So cool. So that's good. Let's, let's kind of dive in a little bit. In peel that onion, there's, I kind kinda track, I call it seven different ways that people own cars. You've got your traditional ownership. You can obviously finance, most people do. You can lease a, and then we start to get into the newer models. You can rent a car. Scot: So we've got the traditional rental car models out there. And then you've got ride sharing, which is kind of what Uber and Lyft represent today. And then car sharing when you've got peer-to-peer and then you've got, I call it B to c, but you guys probably have another name and then their subscriptions. First of all, I know you guys probably have what I've found in this industry. Everyone's got a little bit of a different vocabulary. So does that jive with what you car stop you guys call stuff or would you dispute and say no, there's different words. Dave: This is Dave. I would I agree. I mean traditional ownership leasing or financing, you know, strategies for traditional ownership. Then you got rentals. There's daily, I mean we think of daily rentals, but a car sharing is, shall we say, hourly rentals and subscriptions is basically monthly or, or six months. You could call it a rental or lease and it really depends on how it's structured. But all of those are, are where you're doing the driving. When you get into taxis and when you get into what you're calling ride sharing you've got somebody else doing the driving and arguably autonomous vehicles are the machine is doing the driving. So the just basic, when when car sharing started in Europe, they started calling it self-drive taxi which is not quite accurate but a sort of make it captures that distinction. And you Scot alluded to the, to the distinctions of different ownership models of car sharing. The ease of the business owns the car sharing business owns the vehicles or leases, the vehicles. That's most common or it's the what in the industry we call peer-to-peer where it's private, it's a privately owned car that is being, you know, rent it out covered by the insurance of the platform that handles the rental. Scot: Steve, any other input on the, on the models that we're talking about? Steven: Yeah, I think w the up and comer that everyone's been talking to mine for the last year has been the subscriptions and that was, that was actually heavily driven by Uber and Lyft drivers and eating vehicles. All right. Actually it's existed for over about 15 years. It just became popular. We have a customer in Long Beach who's been doing it and provides cars under a subscription model. So if you want to drive a Ferrari, you can have a Ferrari for a week. If you want to afford C-max, you can have that for, and he just basically a…

    Full show notes at the publisher

    Future of Ownership Deep Dive Sep 11, 2019
    Show notes

    EP019 - Future of Ownership Deep Dive http://www.vehicle2.getspiffy.com Episode 19 is a deep dive into changing ownership models, recorded on Wednesday, September 4th, 2019. Scot breaks down the past, present, and future states of car ownership, including: The three phases of auto ownership; from birth, through the lease and financing adolescence, and into the digital present. Who will claim the largest share of the $1.2 trillion transportation industry in the US? A look at where car ownership stands today and identifying the largest shifts from traditional dealerships. Breaking down the pros and cons of every rising trend in ownership, such as ride-sharing, car-sharing, and subscription models. Conservative and radical projections for the impending shift in vehicle sales, expected over the next decade. The hopeful future, where you can turn your car into an autonomous taxi. We recommend following along with Scot’s presentation from the Auto Intel Summit, which you can download here. 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: Welcome to the Vehicle 2.0 Podcast. I'm your host, Scot Wingo. This is episode 19, being recorded on September 4th, 2019. We hope you've enjoyed the last six episodes, which we recorded live at the Auto Intel Summit. And today we are going to do our first in a series of deep dives. A deep dive episode is where we spend the entire episode. It's going to be a little bit longer, so that may take you a couple listens to get through, but we're going to do a deep dive into one of the vehicle 2.0 concepts as a refresher. The Vehicle 2.0 framework has four components. We talk about the electrification of vehicles, autonomous vehicles, connected car, and then last but not least, ownership. And that's what we're going to spend today on. This is actually a version of a presentation I presented at the Auto Intel Summit. This is going to be a unique podcast because it actually does have a pdf that goes along with it that will enhance the podcast. Scot: So if you're listening in your car or while you're exercising, the audio will be fine alone. But if you are at a computer, you may want to pull up the PDF. If you go to our show notes, you'll find the link to that pdf there. And I do recommend you pull that up now. So we'll assume that you guys have found that and jump right into this. So one of the, I come from the ecommerce world and one of the things I found interesting about the auto world is in the ecommerce retail world, everyone is squarely on board with the fact that the pace of change is logarithmic now. So for example, Sears was started like 150 years ago and then now is almost bankrupt because that company did not keep up with the pace of change that's happening coming into the auto industry. You're looking at another industry that's kind of over right around a hundred years old. Scot: And it's really interesting. I don't think I'm, as I've talked to folks from the various constituents of dealers and OEMs and whatnot I don't think that the industry has really caught up to that pace. So one of the things that I like to show is a chart which is for those of you falling along is essentially slide two, page two. And this shows the rate of adoption of different technologies. So what's happening is we as humans, you know, we wake up every day and we kind of work our work our eight hours and, and our awake for 12 to 16 hours and we go to sleep. And every day is very linear. A lot of the change we're dealing with is logarithmic. So logarithmic change happens in a, you know, powers of 10 effectively. So what used to take a hundred years can now take 10 years. Scot: So I'll give you a real world example of that. So for example microwaves I remember I'm from a small town in South Carolina. I remember our first microwave was like $900 is a huge investment. And we were one of the first people in, you know, not only my neighborhood, but probably our city to have a microwave. Microwave's took a good 50 years to get to the adoption rate where they're at over 90%. Now. You'd go to Walmart, you know, now they're essentially a, and everyone has one. If you look at the adoption rate of this kind of technologies, what's happened in the last 10 years and this is because we've got all these platforms now, like smartphones and digital payments and whatnot, it's taking a lot less time for things to get to 100%. So if you look at social media, Facebook went from zero to over a billion users in about five years. Scot: Uber went from zero to, you know, near a billion users very, very rapidly. So, so what we're dealing with is a rate of change that we as humans, and especially if you're in an industry that has been slower moving is frenetic. And I think that's a good backdrop as we think about these different ownership models. You know, will, how fast will these things happen and what should, should you do if you're in one of the, the industry and you're going to be impacted by that. So let's dig into ownership. So what we're going to talk about today is a little history about car ownership. I think it's always helpful to make sure we're all on the same page about where we're coming from. And then also in that vein, what's at stake, why, why should we even think about this, these new ownership models. Scot: Where are we today with these models and then what's the future hold? So I think of the US ownership and kind of a model of three phases. The first phase we'll call that the birth of car ownership. And that's from 1908 with introduction of the model t by Henry Ford to 1945. So kind of post World War II. Then we go from 1945 to 2006. That's the ownership adolescence phase. And then last, what we're in now is what I call the digital phase, which is 2007 to 2019 let's dig into the birth phase. So in the birth phase, we had kind of the first cars coming out in 1908, as I mentioned. And those were essentially, you had to buy them outright. So there was no purchase plan or anything like that. But a an interesting company started called the Ford Delivery Company and they were the first rental car company and they did this per mile, so you would pay, you know, something like 10 cents per mile. Scot: So cars were very novel. They wanted to get people in them. And they came up with this interesting kind of rental car model. So real cars didn't really become super popular until later, but that was the first introduction of that model of car ownership essentially is a, almost like a, a, a test drive, an extended test drive. Then in 1919 GMHC came out and introduced financing. So you used to have to pay for cars upfront and then they actually introduced financing so you could pay for them over a year. So that's kind of fun to think through, you know, all right. Now you know, let's say one of these cars was the equivalent of I don't know, $30,000. Essentially the financing back in those days was essentially in a, it was almost more like a Stallman plan to pay for it over a year. Scot: Obviously a financing has changed dramatically over the years, but that was, those were kind of the ownership models in the early phases. So buying outright a financing was introduced. And then rental car, then we go into the adolescence. And so an after 1945 in the fifties, leasing was introduced, leasing was before then before the fifties, leasing was popular for commercial vehicles, but it had not been applied to, to non-commercial or individual ownership type models. A company called U s leasing came out and, and essentially brought that in. Did we had a really long period of time where there wasn't a lot of innovation and car ownership. So we go literally from 50 years, from 1950 to 1999. And the big innovation in 1999 is Zipcar. So Zipcar was founded by two folks that went on a European vacation. And they were really surprised and pleased that in, I believe they were in Germany where they found this car sharing model. Scot: We're in Germany. They could go and find a, a car in a dock area rent that car and drive it around for the day and then return it. They thought that model would do well in the United States. So they founded the companies of car. So now we have the introduction of car sharing here in the very early days in 1999 now that brings us to where we're gonna spend the bulk of our time, which is the digital phase, which started 2007. I anchor this on 2007 because that's when the iPhone was introduced iPhone one. And if you remember, remember iPhone one, it was very controversial, a Nokia and Microsoft laughed at it and said you know, not only is it a terrible phone for making calls, but it's pretty much useless. No one's going to own these things. Boy, were they wrong? So the, the genius of the iPhone, and this didn't come along until iPhone two was the app store. So that's, that's where the iPhone became this open platform that exposed you know, caused the creation of a lot of these new models that we're going to dig into. So it's really important. And, and that's why I anchor the digital phase on the birth of the iPhone. Scot: So what, what the iPhone has allowed to be created is a whole new model called ride sharing and ride sharing. Has an interesting history. In 2008 Uber Cab launched, which was essentially going to put an app overlay on top of the existing taxi infrastructure. That didn't work out very well. And then Uber moved to more of a model around black cars sort of limousine type vehicles. And then they had a competitor in San Francisco called lift that launched in 2012. And Lyft was really person to person ride sharing. So, so trying to figure out you have all these folks out there that are willing to drive other people around. They don't know each other. But could we use our phones as a way to not only connect those people but get to a destination safely? In response to lift, I'm kind of going to the person to person ride sharing model. Scot: Uber launched, which was well into the ride sharing world on the taxi side or the, the limo side Uber came out with Uber X, which is the person to person writing platform. So from there we were off to the races and here we are in 2019 and obviously both those companies are, are quite large and public. Now the other interesting model that has been introduced a couple of years ago is it kind of person to person car sharing. So, so you know, when I think of Uber and Lyft, that's ride sharing. So someone owns a vehicle and they're going to drive you. That's ride sharing. Car Sharing is where you're essentially you know getting a vehicle in, from someone in, it's either a, B to c kind of model like Zipcar. So that business is car sharing with you or a person is car sharing with you. Scot: These, these businesses were kind of born out of the airbnb ethos of all right. People have a second home or a vacation home or a room in their house or a guest house or something like that. And they want to rent it out to folks you know, person to person. That's how airbnb was born. So a lot of these care show, car sharing, person to person, car sharing, companies use that. A lot of the same language and a lot of the same thinking in their businesses. The, the two big guys here are Toro and get around. So this is where you're seeing a lot of innovation right now. It's kind of the next wave behind the ride sharing companies. Uber and Lyft is in the person to person car sharing segment. So we have Toro Toro has raised 438 million obviously a, I think that puts it into what they would call a unicorn status in silicon valley. Scot: So over a billion dollar evaluation. And their competitors get around who hasn't raised 443 million. So you know five, 5 million more than Toro. So these companies are raising significant capital, which indicates that they're kind of in their hyper-growth phases and making a run at, at, you know, becoming large companies, possibly ips. In the B to B side of car sharing, you have maven and cargo, which we'll talk about later. Another area that's really popular from a press standpoint but less popular consumers is vehicle subscriptions. So there's a soccer company called clutch, which is now owned by Cox Automotive and they they essentially power a lot of the car sharing subscription programs out there. And then some of the companies have actually done their own. So a lot of the OEMs are expanding, experimented with this. So Volvo has care by Volvo. Scot: Cadillac had, they actually closed us down book by Cadillac. BMW has accessed by BMW, Mercedes bins has the Mercedes Benz collection and Porsche has Porsche passport. There's also some individual dealers that are experimenting with this model. And a lot of other kind of startups in this area like drive, black tie and prime flip. So in conclusion, if we kinda think about these three phases, what we end up with is seven different ownership models for cars that are out there today. If we go back to the birth, we have number one, which is outright ownership, and then number two, finance in three rent. Then as we go into the adolescence phase, we have leasing. So that's our fourth car sharing and I kinda count car sharing as one. But there's two flavors of car sharing. There's the B2B side and the person to person side. Scot: And then we have ride sharing and subscriptions. So those are our seven ownership models that we're going to dig into. Before we do that, let's look at what's at stake. Why are people investing 500 million, you know, over $1 billion just in one of these segments? Well, the u s consumers spend over $1 trillion a year on transportation and they drive over one and a half trillion miles just in the u s alone in passenger vehicles. There's 280 million vehicles on the road today. So, you know, this is a really big addressable market. If you could just get, you know, 10% of that, that's $120 billion market. Essentially. And if you can get 5% of that you know, just 5% of the market, it's $60 billion. So while we see these companies all have very, very small market shares, we have such a big number that spent on transportation every year that you can build really big companies here. Scot: Even if they're going to be having a one, 2% type impact. So that's very attractive to both entrepreneurs and investors. Also, you know, I mentioned earlier, you have an industry that's been around for over a hundred years and the car ownership experience, you know, I remember going with my dad when I was like 10 and buying a car and then now when I buy a car, it's almost exactly the same experience. You know, you, you go, you meet that sales guy, no one really loves that process. Then you have to negotiate with his manager. Then you sit down and you go through a very long kind of you know, process to, to end up buying the vehicle with all these financial options and things thrown at you. So, so you're looking at an industry that, that I think has, you know, hasn't really changed in a hundred years, has pretty low customer satisfaction. Scot: You know, the, the wh…

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    Managing Director at Maryann Keller & Associates, Jeremy Alicandri Aug 28, 2019
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    EP018 - Managing Director at Maryann Keller & Associates, Jeremy Alicandri http://www.vehicle2.getspiffy.com Episode 18 is an interview with Jeremy Alicandri, Managing Director at Maryann Keller & Associates; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. Scot and Jeremy discuss a variety of topics, including: Jeremy’s journey through the automotive industry; from an e-commerce startup to automotive strategy with Maryann Keller & Associates. Dealerships combating margin compression following the first operating loss in over a decade. The current and rising impacts of carsharing and ride-hailing on new car sales. The acceleration of digital retailing as a solution for new and used car dealerships, including services like Carvana. Fair as a leader in subscription-based digital retailing 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: Welcome to the Vehicle 2.0 Podcast! We are live podcasting from the 2019 automotive intelligence summit here from sunny Raleigh, North Carolina. It's Wednesday, July 24th, and we are excited to have on the show. Jeremy Alicandri. He is the, oh, we'll have to find out your title. You're with Maryann Keller and Associates. And what's your official title? Jeremy: Managing Director. Scot: Managing Director. Wow. The MD. Not a medical doctor. Thanks for coming on the show. Jeremy: Great. Thanks for having me, Scot: Yeah, I know you, I this shows your, you're crazy busy. So let's start by giving listeners an idea about your career path. We were chatting before the show about you and I share e-commerce. So that's kind of fun. And then I would love to learn more about how you got into your role. Jeremy: Sure. I just want to issue one clarification. You called it sunny Raleigh. It's hot, humid and sunny. So I do have a background in e-commerce. Actually before automotive, I started a company when I was 16 was a retailer. E Taylor ran that for about eight years moved into doing consulting services for a number of different companies both inside and outside of the automotive space. And one of those consulting opportunities led to a full time opportunity within automotive group where I was an executive for I guess about seven years. And then after that I went into consulting at a price Waterhouse coopers and then now where I am now at Marian Keller and associates. So we are in automotive strategy consultancy and what we do is we help clients both inside and outside of the automotive industry get a better sense of where it's going help them answer some of their strategic questions, do a ton of research topics and write papers and, and offered a detailed analysis to, to help them with whatever it is that they're thinking about. So that's kind of a little short summary of my background. Scot: Awesome. Are Most of your clients like dealers or are they the OEMs or are they the parts manufacturers or which part of the ecosystem do you touch? Jeremy: I'd say most of them are large companies. I touched the automotive space, so, so it could be a, a, it could be a large publicly traded dealership group. It could be a large part supplier and auto maker or lender. Even in short, so we're seeing all different types of companies come to us with with common concerns about where the industry's headed and they want to run some scenarios, bias. And that's what we, that's what we do. Scot: Very cool. Do you guys, are you kind of, I'm the type of firm that will actually publish a bunch of stuff or is it more we do publish thought leadership and be published Jeremy: A few papers, a in connection with the Auto Intel Council which is actually a, I guess a sub division if you will, to the auto intel summit. So the council and the summit kind of hand in hand. And then we also issue study. So earlier this year we issued a, a study on franchise dealer advertising where we interviewed nearly 400 dealerships and published where we think a dealership advertising is headed and where it is now and what's working and what's not working and kind of give a very granular level understanding to those that may be interested in that space. Scot: Very cool. And then here at the show you're a talk is tomorrow and you are talking about the the Costco car buying program, right. Jeremy: I'm going to Mc, I'm going to be interviewing the person that runs that program. Very successful program sold over 650,000 cars last year, which is really amazing. And yeah, we're going to be talking with Rick Borg of of Costco. Should be fun. Cool. Fun. 30 minutes. Scot: Yeah. So they don't give you a ton of time to do this thing, so it's hard to get it off all the data in there. This in the, if you don't know the answer to this, that's fine. But this is the Costco program is an individual dealers that are in there or is it powered by some other company? Jeremy: It's a, so it's individual dealers that are the ones that are actually providing the cars to consumers. But the types of dealers that participate those are some of the questions that I hope to find out tomorrow, the answer to because I don't know 100% Scot: On the show to report what we learned. So here on the vehicle 2.0 podcast, we have a framework where we talk about the four waves of change kind of coming to the auto industry. You are in the ecommerce industry as I was and you know, we've seen trillion dollar companies created out of the changes that have happened there in retail. But we use it, the framework that has essentially four components to it. So we've got the change in car ownership, connected car, electric suffocation, and then autonomy. You're out there talking to dealers or these kinds of things on their mind or it sounds like, you know, some of the reports you're putting out are more tactical, you know, like how do you do advertising in the franchise level and that kind of thing. Jeremy: Yeah. So you certainly touched on a lot there. Some of those what I would call very let's say high level trends, but essentially that's what they are probably still very far away, not, you know, on the, on the top of mind issues for dealers. I think dealers right now are more concerned about things like margin compression. Where for the first time since the great recession, the operating profit of the average dealer in 2018 was a net loss. Dealers are concerned about vehicle affordability. Vehicle prices are an all time high today, making them financially out of reach for many consumers. In fact, the average new car buyer is age 54 and has an income of $122,000 a year. Compare that to the rest of the U S and it's easy to see a tremendous delta in income. And NH dealers are also concerned about the effect of consolidation. Jeremy: Consolidation means that there's less and owner's going to be in the automotive retail space between now and 2025 and more dealerships are getting gobbled up into larger groups. So whereas we have an estimated 8,500 owners right now, within the next five, six years, we're probably gonna see about 6,500 and that's going to give a further economies of scale to some of the larger groups some of the publicly traded and also some of the privately owned dealership groups that may further jeopardize the small mom and pop mom and pop independent store and doesn't have access to the scale economies that would be associated with the larger group. So these are some of the issues that our dealers are really concerned about. And, and I would add that the, the biggest is the fact that more so now than ever before, automakers control the profitability of dealerships via incentives. Jeremy: So what we've seen here is that while the operating profit of dealerships in 2018 went into the red, again, this is the first time it has since a great recession dealerships are still profitable for as a net profit. Okay. And the reason for that is because of automaker incentives that favor dealerships to engage in certain types of activities that the manufacturer incentivizes. So that can mean investing in, in a project to improve the look and feel of the dealership. That can mean, and most most common, it means meeting certain sales quotas. So dealership may sell a cars for loss. Actually, it's quite common now, net profit. In fact, most new car price departments in the u s or dealers are not profitable. So dealerships will sell cars for a loss and then make up the money at the end of the year or maybe every quarter, every month through income incentives that come from the auto maker. Jeremy: And so when you have a dealership that loses money that that will be unprofitable without making sure that it does what the automaker wants. It's kind of a kind of a major concern, frankly for dealers. And another term for this would be stair step programs. It's kind of all similar, all group together where dealerships are concerned about how these these trends are going to ultimately affect their ability to, to grow and, and make money and, and, and survive just over the next five, six, seven years. I don't think anything cataclysmic is going to happen, but these issues are, you know, really what's on the top of mind for, for dealers as far as what you're talking about with I mentioned earlier rather autonomy and electrification. Maybe we can dig into each one. Depending, depending how, you know, like a brush on, yeah, I'm a, I'm a, you know, total newbie when it comes to dealers. So I imagine dealers have essentially three lines of business. They've got new cars, used cars, and then kind of the service area. I guess finance kind of fits in there. And, you know, that's Kinda like maybe maybe it's kind of, I kind Scot: Of imagined it being this horizontal between the new and used car sales. How, so if they're not making money on new car, do they make enough on the service and the used car to make up for that? Jeremy: Trying to, yeah, they're, they're definitely trying to, so what we've seen over the past few years is that dealerships continuing to invest more of an emphasis on service and parts. There's been nearly a 49% growth and sales between, I believe it's 2010 and 2018 in dealership service departments and parts department. So really a tremendous amount of growth there. There's been tremendous amount of growth in FNI where dealerships are making more money on selling things like protection products vehicle service contracts, in fact, penetration for theoretical service contracts, et Cetera, and your all time high. And they're also looking at used cars. So one of the the topics that's come up over the past over the past couple of years at these used car summits that Cherokee has the same organization that runs ais is that dealerships continue to figure out how they can be more competitive in use cars, how they can more quickly turn inventory because they see that as a profit center. So dealerships definitely are looking at other profit centers to make up for the fact that they're not making it in new cars. And then also they're looking for ways to cut back on expenses. Expense reductions always been a big area. Frankly, sometimes it's difficult for dealers to be able to master it, but you know, it's always always a way to, to cut back if needed. Scot: Hmm. If if there's a pie chart at a dealer between those three lines, how much is new cars used? Cars and services it pretty equal or service like a small slice and yeah, so, Jeremy: So it varies. The absorption rate, which is basically looking at the service department's profit as a percentage of, of the dealership's overall profit can vary significantly. And so rather than give any general stats cause it can vary by franchise and also size of, of groups. I would say that the service and parts is probably the number one area that, that dealerships are looking for in terms of profitability in terms of a department. And then, and then, you know, it's depending on what the penetration is with used cars and depending on what FNI looks like those could be other priority areas. But I would add that the new car incentives or the incentive income that comes from selling new cars is technically considered below the line. So it's not actually being put into the new car department, but the new car department is what generates that incentive income. So you could say, you know, you can make the argument that the new car department is, is, is the most important department because it's what's, what's keeping the dealership afloat, right? And now that, that negative operating profit, but the way dealerships look at it in terms of where they compartmentalize what's happening in each department, they'll say, well Scot: Incentive income is something else interesting. I hope that makes sense. That's very helping by a, I've been dying to ask someone that and you're the only person that's been able to answer it. So kudos. So then it seems like the, the one that's most on the horizon, I get the, you know, avs you can kind of push off and say, ah, yeah, who cares? That's like 20, 30 kind of thing. But it does seem like these changing ownership models, you know, with Uber and Lyft going public and really kind of ride sharing is a thing now. And then now there's more and more car sharing out there. You've got Toro and get around really kind of strange or mixed the million dollars days. There's some real dollars there. Is that starting to weigh on, on the minds of, of dealers? So, so the short answer to that is, is Jeremy: No in the u s okay. Car sharing in the u s right now in terms of taking ownership away, personal vehicle ownership a is very, very insignificant. We don't, not that we, we and as well as many other professional organizations have reached consensus like car sharing in the u s it's probably not going to affect personal car ownership in a significant way in, in either now or in the next five years or 10 years. In other markets maybe like the UK and in other markets where public transportation is more readily available, where car ownership is not as, as affordable as it is in the u s as well as just also the desire of the population to own vehicles. You may see a rise of car sharing. Of course, there's a funny story about how the Japanese are adopting cars, Sha sharing to sleep in the cars. Jeremy: More often than not, they're not even using the cars. They're just sleeping in the cars. It's actually funny that their apartments are so, yeah. So they still like a way to get out in the middle of the day and take a nap. But I mean that car sharing is one issue or one trend at that won't have an effect on ownership based off of what we've seen. Ride sharing, you know, using the Uber's and the lifts that May 1st for some people who live in the city. But the actual result is, is, is that it's increased vehicle ownership because now you have these drivers that are going around buying vehicles so they can drive and, you know, for whatever ride sharing fleet it is that they drive for. So it's actually resulted in a, an benefit. I th…

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    Founder/CEO and VP of Sales & Business Development at Rodo, Nathan Hecht and Patrick McKeever Aug 21, 2019
    Show notes

    EP017 - Founder/CEO and VP of Sales & Business Development at Rodo, Nathan Hecht and Patrick McKeever http://www.vehicle2.getspiffy.com Episode 17 is an interview with Nathan Hecht and Patrick McKeever, Founder/CEO and VP of Sales & Business Development at Rodo, respectively; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. Scot and his guests discuss a variety of topics, including: The founding of Rodo as “the cheapest and easiest way to lease a car on the planet” How the Rodo app connects customers with the vehicle and lease price they want The challenges of Rodo expanding their dealership network and customer base How the current digital shift impacts car dealerships and who will survive the impending drop in new car sales Subscription services as a fusion of leasing and carsharing, and their potential for growth moving forward 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: Welcome to the Vehicle 2.0 podcast. We are at the 2019 automotive intelligence summit here in Sunny Raleigh, North Carolina. It was rainy yesterday. So you guys are getting to experience the, the real Raleigh. It's July 24th. And we're really excited to have on the show. A couple of folks from Honcker. They're from Manhattan, so excited to have folks from the big city down here and in Mayberry of North Carolina. So we have Nathan Hecht. He is the founder and CEO. Welcome. Nathan: Thank you. Thanks for having me. Scot: And he brought along his partner in crime, Pat McKeever, who is VP of Sales and BD. Patrick: That's well said, Scott. That's correct. Thank you. Scot: Also in our pre discussion in charge of keeping Nathan out of trouble. So it's good to have a,. Patrick: That's my main job actually. Scot: You go with, come with security. Nathan: He's not kidding. Scot: Uh so Nathan, tell us about you know, the founding, I'm a fellow entrepreneur, so I'd love to hear the founding story and all the background on yourself and how you got into this. Nathan: Sure. Thank you. So the founding of the company is actually real interesting. It was actually from a personal experience in trying to lease a car in New York. I went into a local car dealership and basically went through the runaround of trying to choose and price of vehicle for a monthly lease. It took about five hours to ultimately realize that I don't, I don't even think I'm going to take this car after, after this whole experience and during, during the five or six hours that I was in the dealership I was searching for a way to do the same thing online and quickly realized that there was no way to do a new vehicle transaction on the Internet. And in my case specifically at least. So at the end of that day did a little more research and I I committed to trying to do this and that's how the company started and as they say, the rest is history. Cool. How long ago was that? That was about two and a half years ago. Half years ago. Cool. Scot: Awesome. And then Pat, how do you intersect into the story? Patrick: Oh I had met Nathan from a previous my previous place of work where we played in the, in the automotive data dms data space and actually had approached Nathan had learned about the company in today. If you have a need for dms data, we can help you. He said, no thanks. But we kept in touch and at that point kind of kept an eye on him and he was starting to get some, some traction, a real traction and I immediately saw sort of the need or the hole if you will. Patrick: There had been other services out there that could present a savings to the consumer, but at the end of the day, and I'm a huge leasing fan, both of my cars are currently leased and have been leased for the last 10, 12 plus years. I saw kind of the fit immediately. So we met in Brooklyn about a year and a half ago and I think I made an offer at that first meeting. I'll pretty much maybe the next day. I think it was the next day. We, we had a really good sort of connection where similar but very different at the same time. And we work well together. So it's been a, it's been a blast. It's all, it's been about a year and a half. It feels like 10 years, but but it's been an awesome ride so far. Scot: Awesome. So I, I also have a lot of co-founders and partners. Usually I'm described as the arsonist and they're the firefighters that kind of what you guys have going on here, probably like the fires you get to put them out. Patrick: That's pretty well said. Yeah. Yeah. Scot: So Nathan, you had the idea you wanted to solve this. So give us kind of some highlights. Over the last two years, Nathan: I knew nothing about car leasing, car financing almost zero about the overall industry. I actually was an investor in a, in a solar panel integration business right around 2008. After I sold my previous company and one of the companies that we did this solar panel array for was a very large Mercedes Benz, Mercedes Benz dealership in Queens. And the owner Michael Cohen was just a really friendly guy and as I started to think about this business, I said, who do I know in auto? And I knew nobody. And I said, okay, well I'll reach out to this Guy Michael Cohen. I went to one of the operators of that business that I was in investor and I said, can you make this introduction? He said, sure. I met Michael and I told him about what we were doing and I'll never forget it. Nathan: I think this is the first time I'm actually saying this publicly. We were sitting around his board table and he goes, you sure you want to do this? And I was like, no. He goes, I'm warning you. This is really, really hard. And I don't, I don't even know if anybody can solve it. And by that he meant providing an accurate monthly lease payment for a consumer in real time on an app and then actually giving the consumer the Amazon experience of completing the transaction. And that just fired me up and I was like, Yup, I'm going to do this. I had already spoken to my team that was working on me with something else and I said, we're going to sort of pivot into this. And again, most of the team were actually based in Israel engineers, developers and so on. Nathan: And they were like, Carly seeing what there is no car leasing there. They had no idea what I was talking about. And we just dove into the deep end of the pool from day one and started to figure it out. And Michael made some introductions and very quickly learned how this works. We understood, but we, we started to focus on, on the, on the technology side of it and we then focused on the brick and mortar side of it and then the consumer side of it and so on and so forth. And slowly over time things started to come together. And finally we needed to sign up a few dealers because we're a marketplace. And I was like, okay, so this is like an entirely new beast. How am I going to do this? I'd never come in, you know, face to face with a, with trying to sell something to a, to an owner, principal at a dealership. Nathan: And myself and my creative director said, you know what, let's do this. We took screenshots of the app, we put them onto a big whiteboard type of placard and we printed them. And I walked into these car dealerships in Brooklyn, New York, a a fine Jewish kid with the Omnicon has had into these car dealerships. And I said, can I speak to the owner please holding up this big placard of screenshots of an app? And they was like, you need a car, can I help you with a Honda? And I was like, no, no, no. I want to show them something. And believe it or not. Some first general managers came out and they looked at it for a mint and they said, what are you selling? And then I eventually got to own our principals. They looked at it, they immediately saw the value prop and what we were doing and how different it was. It was available on the Internet at the time. And some of the largest regional dealer groups in New York and New Jersey and Connecticut signed up very, very quickly once they saw the value prop. And then we slowly grew from there to where we are today over a thousand dealerships and approximately 15 markets and hundreds of thousands of consumers using the app. And it's still really, really early days. So there's a, there's a long road ahead. Scot: Awesome. So so I'm gonna ask a bunch of Newbie questions to make sure I understand. So you guys go into the dealers are you competing with their alternative leasing thing or are you partnering with that? We're part, we're completely partnering with them. So, if I'm a Mercedes and I have a Daimler finance thing that's doing the lease, you guys partner with those guys to make it easier for the consumer. You're not, you're not competing with example. Nathan: So we’re a marketplace where there’s the dealership on one side offering their vehicles and their consumers on the other and our technology right in the middle that sort of makes this an incredibly fast, seamless lease transaction without ever talking to a dealer without ever walking into the dealer. So we're really the first company to take what is normally such an arduous brick and mortar process and, and turn it into a seamless online experience. Scot: Do I have to be kind of like outside of the dealership to do this or can I be in the dealer using the app? Nathan: You can be anywhere is when, as long as you've got Internet you know, and you can download the app or go to the website. You can be anywhere you want. Scot: So I go to the dealer and I say, I want that car. And then they say how do you want to finance it? And then if I choose lease, then I have to download your app. Nathan: No very different. So we're like imagine you wanted to buy an airline ticket and you went to Expedia. So you'd see basically an aggregation of all of the airlines and flights. If you were flying from let's say JFK to Raleigh and you'd see a list of flights and prices next to it, it's essentially a marketplace for airlines and for hotels and what have you. So we do the same thing. You don't need to go into the dealership, you download the app or go to our website, you type in the vehicle that you're looking for or the vehicle type. And you will see actual vehicles from dealers near you with pre-calculated monthly payments that are probably unbeatable as far as price goes. Scot: I gather enough information about me that you're using that as an input into the underlying credit scores and all that kind of jazz. Exactly. So when you register, Nathan: We gather some personal information on you. And then behind the scenes were taking all of the necessary industry data about the vehicle from the dealership. You know, from the manufacturer, so you know, you know, rebates and incentives that may reduce your monthly payments and reduce the selling price of the vehicle or what have you. And in real time in the background, we're calculating all of that to show you a monthly payment with an actual due at signing and you shop the way you would shop on a regular ecommerce site. You choose what you like, you put it into your cart, you place the order, you upload your driver's license and answer some credit questions. The dealer then gets that transaction, that order, and they process the order for you and deliver the vehicle to you the next day. Patrick: Oh, so I don't have to sit there for 12 hours telling them a million times. I don't need this. Scot: Exactly. Exactly. Patrick: Wow. That's awesome. So you've kind of taken that Carvana level experience, applied it to leasing. Okay. I got it. I didn't, I didn't realize this direct to consumer on the front end. That makes a lot more sense now. Yeah. Cool. And then the so, so padded, it sounds like dealers are gobbling this up. Is it, you're just essentially an order takers? Am I understanding that? Scot: I wouldn't, I wouldn't call it order just yet. We've got a, it's my favorite thing to say. It's got a lot. Hilary entailed interests, great dealer in that interest. Patrick: We've got, we have built a good sales team that is, is literally boots on the ground knocking on doors, you know, very similar to what Nate did in the very early days. But yet to your point, we've got five of the 10 largest national auto auto dealer groups on the platform today, including Lithia and Asbury. So there the dealers are seeing the value pretty quickly when we, you know, have 10 minutes to sit with a dealer, principal and owner GM. Because really for, for them it's a similar experience to a consumer where by the time we pull a dealership into the fold or alert them on a, on an order, it's a VIN-specific structured lease with a driver's license and a credit app. So it's essentially here, Mr Julia, here's a silver platter, confirm inventory, get the credit approved and we're off and running. So it's a really pretty hyper efficient process for both consumer and dealer. Yeah. Awesome. So I looked at crunchbase. Looks like you've raised according to crunchbase, they're not always right at about $30 million. Yup. Tell us a little bit about the, had you raised venture capital before? Is this your first venture back to business? Nathan: I had raised early stage venture capital in the past in two previous startups that I founded. And in this specific instance we've raised just under $30 million to date in a friends and family seed round and then a series a and Patrick: Do series a series a in North Carolina was like $1 million. Scot: Okay. It's a bay area. Susan. Nathan: We did a, our series a was 23 million. And actually it was interesting because we had a lot of interests a lot of inbound interest. And then one company took the entire series a IAC, which is the a, which is a, a media and, and a technology conglomerate out of New York City. We're very lucky to have them as investors. At this early stage, they just invested a big chunk. And Toro I saw that. Yes, they just invested about a quarter of $1 billion in Touro. Scot: Nice. Good. You can get get series being wind up. The so it seems like you're at the sweet spot, so you're kind of like, you're in this, you're you're, you know exactly what investors are looking for. So you're, you know, don't have a lot of employees or marketplace. You're a Fintech, you kinda check and then you're in the auto category. So you're, you check a lot of boxes there. Congratulations on figuring that out. Nathan: Thank you. I, I can't take all the credit for that. And I also would say investors will never tell you you're exactly what they're looking for. We were lucky enough that, that things sort of clicked for the, for the right investor group at the time that we were looking for capital. Scot: Cool. So, so I get the supply side and the dealers are there. Do they help you bring consumers into the app or do you have to promote the app yourself? Nathan: We have to promote the app ourselves. And that's not an easy task. As you know, customer acquisition is is difficult, especially when they're bombarded with, with so many ads and so many people, so…

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    Automotive Research Leader at Deloitte, Ryan Robinson Aug 14, 2019
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    EP016 - Automotive Research Leader at Deloitte, Ryan Robinson http://www.vehicle2.getspiffy.com Episode 16 is an interview with Ryan Robinson, Automotive Research Leader at Deloitte; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. Ryan and Scot discuss a variety of topics, including: The digital transformation of the car buying experience How declining consumer confidence in autonomy has created a cooling trend Common use cases for AVs, such as geo-fencing in cities The electric vehicle battery of the future: is it lithium ion? Measured impacts and projections of ride hailing and carsharing The potential for connected car as a revenue stream 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: Welcome to the vehicle 2.0 podcast. Today we are recording live from the automotive intelligence summit. And we have a real special treat for listeners. We have here live on the show, Ryan Robinson, and he is from Deloitte where he is the automotive research leader. Welcome to the show, Ryan. Ryan: Thanks Scott. Yeah, glad to be here. Scot: Cool. Well, let's start off. I would love to hear, you're obviously deep in the auto space. Would love to hear a little bit about your career path and how you ended up in this space. Ryan: Well, it's, it's a, it's a bit of a long story. So I started off with a kind of a boutique consultancy in the automotive sector in Toronto, in Canada where I'm from. And from there I moved on to a pwc where I did some vehicle forecasting work on the sales and production side in Detroit. And then I got a chance to move back to Toronto with JD power and I was with them for eight and a half years before I got an opportunity to join Deloitte. So that was three and a half years ago. So it's a, been a bit of a whirlwind. Scot: Awesome. So we've you know, we've, we've read a lot of your, your research and it's been really helpful for us. Kinda, I'm relatively new to the auto industry, have obviously had a car for a long time, but my, my previous life is e-commerce. So I'll also, it's interesting that Deloitte cuts across both. I can kind of like feel the, the influence there of kind of, you know, understanding digital, you know, coming from like the retail world that I like. I do. Then you guys are pile out of that to your research on, on the auto side, which actually helpful. It's helpful for me, at least audience of one at least. Ryan: So I sit inside a a thought leadership center here in the U S and I've got a counterparts that that, that cover off on the retail space consumer products and and also the travel and hospitality sector. So, you know, we get together on a, on a very regular basis and we're always looking for kind of synergies to kind of crossover our research. And and I think that's, it's actually a good a segue to get into, you know, what I think is happening in the auto space particularly with where the consumer is concerned. Cause I think there's, there's a lot of crossover and convergence when we talk about how consumer expectations are being taken from one sector over into another. So, and I think it's having a, a pretty dramatic effect on how vehicles are, are a retailed going forward. Scot: Yeah, let's jump into that. So a, I'm a big fan of the research that talks about the value oriented consumer into convenience oriented consumer. My e-commerce buddy Casey Luba over at Deloitte talks a lot about that. The cost, the bifurcation and then as it is, are you seeing that, you know, we've, you know, so Carvana for example, has made it insanely easy to buy a car. It kind of applying that e-commerce level of experience to, to that. Ryan: Yeah, I mean certainly there's, there's a level of of digital transformation that's impacting the, the car buying experience. In terms of the, the retail bifurcation analysis. It's, it's a little more difficult to, to think about it in the automotive context. Cause for a number of reasons, one, over the years there's been a, a real a real significant shift down market from some of the luxury brands to, to try to attract and, and discover new customers, if you will and get them on their, their product ladders. There's also a lot of a lot of segmentation or sub segmentation of the consumer basis caught on. So to try to identify you know, what, what would be a a pure kind of budget brand versus a luxury brand. It's not so clear cut anymore in in, in order to apply to, to, to that kind of analysis. So I'm a bit different. Scot: Okay, cool. Well, here on the vehicle 2.0 podcast, we have a framework where we talk about the four big changes coming to vehicles. So we have changing ownership, connected car, EV and AV. I'll, I'll give you kind of, you know, spin the wheel and pick your favorite topic amongst those are you know, we'd love to hear your thoughts on, on those. Yeah, for sure. Sure. Ryan: So so we should, we can dig into say the autonomous space first. And we, we do a a global consumer survey. Every year we talked to, last year we talked to this are they, I should say this past year we talked to about 25,000 consumers covering off on 20 different countries. And we asked them a variety of questions around some of these, what you might call the case technologies, right? And in terms of the autumn the autonomous space, something very strange is happening. I think on the one hand, when you, when you see technologies coming into view for the consumer, as they get more information about them as the as they get more comfortable with them you tend to see consumers really gravitate towards them. And our data is telling us something quite different. And we think it's got a lot to do with the, the small number of of accidents involving autonomous vehicles in the last 18 months to two years. Ryan: Considering that we're in a space now where the ubiquity of of social media and the echo chambers that get created around some of these topics it doesn't take very many of these you know, sometimes very tragic incidents to, to really have a, a negative impact on the consumer psyche overall relative to that technology. So as far as the percentage of consumers that don't think the technology is going to be safe it's it's actually flattened off, actually leveled off a year over year from where we were last year. So I think it's a, it, it's indicative of a bit of a cooling trend. The consumers are really taken a second thought on this, on this technology and whether or not they're really bought in going forward. Scot: Yeah. So That's interesting on the consumer side, when, when do you think the technology will be ready? Do you have a point of view on that? Ryan: Yeah, it's, it, you know, for as many people that that talk about this, this technology in the space, that's probably how many opinions you're getting to yet. It's interesting though, if you're, if you've been going to the consumer electronics show like I have for a number of years, it's fascinating to me how that conversation has changed, or at least the tone of that conversation has changed. So two years ago, for example, even as, as recently as two years ago the, the, the messaging was, you know, this is, technology is right around the corner. You better get ready for it because, you know, it's almost here kind of thing. And now I think we're starting to get just this past January a lot more maybe realism being injected into that conversation. So you know, I've, I've been hearing you know, thoughts around 20, 30, 20, 35, even 20, 40 before we start to see, you know, any kind of a real penetration for that technology. Scot: Interesting. Yeah. And I saw at ces this year, a lot of the, it went from a kind of a general use case to very specific, you know, this could be on a corporate campus, this could, you know, there's a lot of talk about long haul trucking. So, so it seems like they've pruned the tree down from, you know, any point a to point B to very specific use cases as well. Ryan: Yeah. On the one hand you, you, you have those kind of very specific geo-fence kinds of applications which I think are fine. I mean if the, if the, if the location that we're talking about is very well mapped it doesn't, it doesn't change very much. In terms of the in terms of the, the routing and things like that sure. I think that makes it a lot easier to, to find a use case for it. The thing about long haul trucking I've always been of the opinion that that would be a very good use case because it, it really does cut down on the number of variables involved. I mean everybody is going in the same direction. Everybody is, you know, going at it at relatively the same speed. All you really have to do is figure out kind of the last mile when they get off the, the highway itself. Ryan: But when you ask consumers whether or not they're comfortable sharing the highway at, you know, 65, 70 miles an hour with, you know, a multi ton vehicle that's driving itself, you know, they're, they're actually quite skittish about that reality. Yeah. It's hard to ask that question in a positive way. Yeah. Yeah. Interesting. Cool. So how about electric vehicles? Do you see that kind of being closer on the horizon? Yeah, I mean, on the other side of the, of the technology coin I guess is, is electrification. And, and you know, we, we look at it as a bit of a spectrum. So, you know, electrification could mean, you know, anything from hybrid to kind of full battery electric. But the, and I think it's a lot closer in, in terms of you know, when, when we're going to start to see you know, a lot of that critical mass getting achieved, but it's not going to be a rising tide lifts all, all boats kind of scenario where, you know if you talk about it from a geographic standpoint certainly markets like China are are very aggressively following a a path that will take them to, to critical mass of electrified or electrified vehicles a lot faster than say, we're going to see here in North America. Ryan: And that's got a lot to do with the fact that, you know, they're very concerned about things like urban pollution. And beyond that, you know, it's it's, it's it's a very distinct decision that's being made to, to be a a global leader on, on, you know, the next generation of, of mobility. And I think that you know, Europe's gonna is, is starting to follow pretty quickly in the wake of the diesel gate scandal. There was there was a desire on the automaker front to kind of rebrand yourself away from, from diesel technology. And, and the the only forward-looking kind of propulsion technology that was in view at the time was, was electric vehicles. So I think that we're seeing a lot of, a lot of that in North America here. Ryan: We're still we're still lagging behind for a number of reasons that range from, you know, not quite as as strict a policy on environmental regulations to you know, what, what amounts to be still a relatively low fuel price environment. And also the type of vehicles that that we, we like to drive here are keeping us in that kind of combustion engine. A story for a little bit longer. Yeah. Do you think lithium ion, is the technology going forward or do we need some breakthrough new battery technology? They keep talking about some, some new battery technology and in terms of the kind of, the kind of materials that are being used, a solid state batteries are also, you know, obviously still being talked about. I think, you know, it really comes down while a lot of the discussion is around the, the dollars per kilowatt hour and trying to get that down into a range where consumers don't really have to compromise on costs to be able to get access to that technology. Ryan: I think that a lot of companies are taken and battery producers are, you know, hard at work trying to find that next step in the, in the development of the technology itself. You know, solid state is, is a great technology to think about in terms of the increased charge discharge time that would go a long way to consumers fears around or their concerns, I should say around the, at the time it takes still to refueler that electric vehicle. And if, even if it's 20 minutes to half an hour you know, that's still too long, you know, and there's also, you know, some safety concerns still with the lithium ion technology. If the batteries can puncture and you know, can start I think it's a terminal cascade failures or whatever they call it. And Elon Musk phase for splinting and, you know, solid state technology would help on that front too. Ryan: Or at least that's the that's what's being talked about. So I think there is another step in battery technology that we're going to get to. Very cool. How about different ownership models? Do you guys see, does ab kind of have to happen for that to change or do you see that happening before we get to full AAV? The ownership models, I think that there's, there's a couple of ways we can we can attack that topic. If we're talking about things like, you know, ride hailing models and things like that. I think that's how, I mean it's, it's been happening for, for a few years now. And, and I think that our data will, our data shows us just in the last couple of years that you know, there it was a very disruptive technology ride hailing itself. And I think it was, it was really born on the back of the, the, the digital interface that allowed people to, you know you know, call a ride and and see the ride getting to them. Ryan: And probably most importantly, being able to, to utilize an integrated payment system, digital payment system for that and that, and that really was very disruptive. But now, you know, the, the price of, of getting a very slick act cap out the door is coming way down. It's almost, you know, at a, at a commodity type level now. So that's not the barrier to, to entry that it once was in a lot of the disrupted, you know, traditional players like taxi fleets are reasserting themselves and getting their own app at the door. So I think that the the, the competitive landscape is, is, is changing quite dramatically on that front. If we talk about things like subscription models as a way to, you know, offer the consumer more flexibility or more choice. I, it's a great idea. I think it's a very, it's very promising. The, the only issue is, is around pricing I think. And I think that's, I think there's still a little ways to go in terms of finding the sweet spot to attract a lot of people to that model. Scot: Yeah. It all sounds good. And then you look at the prices and it's like, you know, $1,500 a month and you're like, so it's two to three x kind of like what you're currently paying. Right? Ryan: And it's, you know, there, we have to remember that there is there, there's, there's the specter of an affordability issue that's, that's growing I think in, in, in the marketplace. And particularly when it comes to younger consumers that might…

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    Director of Automotive Analysis at IHS Markit, Mike Wall Aug 07, 2019
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    EP015 - Director of Automotive Analysis at IHS Markit, Mike Wall http://www.vehicle2.getspiffy.com Episode 15 is an interview with Mike Wall, Director of Automotive Analysis at IHS Markit; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. Mike and Scot discuss a variety of topics, including: His 16+ years of experience in automotive industry forecasting and trend analysis with IHS Markit. The role of IHS Markit as a leader in automotive research and insights. A realistic breakdown of EV adoption, from the US to China. Cities where AVs will likely compete with mass transit in the 2020s The true impact of changing ownership models on new car sales The rise of AV and EV partnerships between automakers in the industry 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: Welcome to the vehicle 2.0 podcast. We are live podcasting here from the 2019 automotive intelligence summit from Sunny Raleigh, North Carolina is Sunday today. Yesterday was rainy, so it's good to deliver that to the attendees is Tuesday the 24th and we're excited to have on the show. Mike Wall. Mike is Executive Director of automotive analysis at IHS market. Welcome to show. Mike: Thank you Scott. Appreciate it. Scot: Cool. Well uh I have I come from the ecommerce world and I wasn't really familiar with you guys, but now I've been in the auto world. You can't kind of swing a cat without hitting your research, so it was really excited to have you on the show. But for folks that haven't had a chance to check that out, maybe give us a little bit of background about yourself and then IHS and, yeah, absolutely. We'll jump in. Mike: Yeah. So I've been covering the auto industry for IHS over 20 years now and spent some time in the supply chain. So working with an auto supplier, large tier one supplier, but over the last really 18 years or so, really working in them more consulted consultative phase, you know, working with in forecasting realm, forecasting, late vehicle sales, light vehicle production working with suppliers, automakers, financial firms, pretty much anybody with an interest in stake in the industry. And I just market, we are a broad and diverse business intelligence from coming, covering a wide variety of, of really business verticals, energy chemical financial markets. And in one of our larger verticals is automotive as well. So we've been steeped in research and analysis and covering this industry. Scot: Very cool. And then you have a certain cadence that you publish for things? How does that work? Mike: We do! It does vary depending on the, the discipline and the are the, the forecast itself. But our production forecast is an example, is updated every month as well as our powertrain forecast. We do have very wide and deep powertrain forecasts and we forecast vehicle sales down to the model level. All this is very granular and it's also global so you can see it both globally and regionally all the way down to some very minute levels of detail including model level detail call. Is your role kind of North America or do you remind goal is, I work very much with, with all of our various diverse groups around the world, but my primary background has been in North America, certainly is where I cut my teeth in the forecasting space as it were. But we have folks on the ground all around the world that do the forecast themselves and then we globally coordinate it. Mike: So just a great group of colleagues that are really trying to cover this ever-changing industry. And where are you based out of? I'm based out of Michigan. I'm, I'm actually on the west side of Michigan. Grand rapids. Our automotive headquarters is our, one of our major offices out of Southfield to suburb of Detroit. We have several hundred folks working out of that location. IHS market as a broad group is actually over 14,000 employees. But our automotive practices is quite large in and of itself. Scot: Cool. so what are you speaking about here at the show? Mike: So I'm basically going to kind of give everybody hopefully like a 10,000 foot view of the industry as a whole, particularly focusing on the u s market. What's the sales outlook touching on some of the mega trends that, that we've been hearing about a lot. So electrification, mobility as a service, autonomous driving where we see the market playing out for that. We'll also sprinkle in some global trends as well in some, some global dynamics because it's hard to talk just about us without having a broader context of how the market's behaving or how the industry is behaving in other markets as well. So this is a, a, it is a very interesting industry in that there are a lot of different drivers impacting it and some of them are very tactically focused. Like, you know, we've got to sell pickup trucks if we want to pay for everything we want to do in, in the next 10, 15, 20 years. So there's very tactical side of it. And then there's a very strategic megatrend side to it too. Yeah. Intersect. Scot: So in the vehicle 2.0 framework, we talk about four topics. We talk about changing ownership connected car and then electrification and autonomy. I'll give you kind of a toss up. Which of those do you, would you like to jump into first? Mike: I think electrification would be an interesting one to jump right into. Yeah. Because, that is where we're seeing the amount of, there's, there's activity in all of those categories. So I don't want to, I'm not trying to diminish any of them, but boy, in terms of electrification, if you were to ask me three or four years ago, I would say, yeah, there's a lot of talk around electrification, but you know, we still haven't necessarily seen as much of the rubber hitting the road as it were. The capital being spent. Well that's changed mightily over the last few years. And we are seeing the capital being deployed and in fact we're on the cusp of seeing a multitude of new electrified vehicles being launched. Mike: Now that begs the question, will there be consumers are you know, ready to buy right now? Last year, I think the market was about 1.3% was true fully electric vehicles. Now the devil's in the details there as to when that inflection really starts, but for sure there won't be a lack of offerings. And that's the interesting thing. You look at a Tesla who has really just done a fantastic job kind of assuming leadership in that, in that space. Now we'll start to see some and other initial a competitors starting to enter in. Scot: Yeah. And then I, I know it's a small percent, but if you start, you know, I've seen some reports where if you look at a certain slice starting to be material like you know, there's like this 50 to $60,000 where has that disrupted some of the German makers? And there's this kind of reaction. Mike: No, absolutely. So when you look at, when you look at that space, and again, tussle is a great example with that. They've come in and entered that in really started to disrupt the luxury category as an example. And it's not, you know, shouldn't be as a surprise that we see new players coming out, whether it be Jaguar, I pace Adi, each run new sort of existing luxury players saying we're getting into that, we're jumping into that space. We, you know, we need to have compelling offerings and they're coming to market some very, very solid offerings in their own right. But it is very material in those, I don't want to, I don't want to diminish that either by saying those was 1.2 1.3% when you start sliced slicing and dicing it down the vehicle segments. Yeah. Boy, it's, it's important in the automakers see the need for it as well, frankly, because a lot of times we can sometimes think of the u s almost in a vacuum and maybe get constrained by, Oh, you know, it's not a huge percentage rate just yet. Um too. There's growth certainly. But then when you look at Europe and you look at China, we're really other Asia, a lot of growth coming down the pike. So it behooves the automakers to have that sort of broader strategy to be thinking about it. Scot: Okay. And then within EV, do you guys project when will it like a 10% or number or anything like that? Mike: That's a good question. It depends on the market. That would be my first, my first caveat. But when we look at the u s market, the North American market as an example, we see that as probably closer to 2028, 2030 timeframe. Whereas if you look at China in and Europe, it's going to be, it'll be sooner than that. It'll be an advance of that. And part of that is we've got a government and regulatory decrees and, and rules and regs coming down the pike in Europe and in China as an example that are really helping to foster that acceleration as it worked. It's not that we're not focused on it here. We sure are. When you look at the California resources board and Carb, but at the same time we're a little bit at loggerheads between that and cafe and, and there's still that is yet to be fully vetted yet or fully decided and once we get some more resolution to that, we could see some additional acceleration on that front as well. Scot: Cool. Awesome. What do you want to talk about next? Mike: Yeah, you know, autonomous is another hot topic. Obviously when we see all of the, the, the executions out there in terms of different deployments in, in, out west and well almost anywhere really. You've got a lot of different deployments. So it's really stoking a lot of interests and frankly, the technology development going on within that space has been nothing short of phenomenal. Mike: I sometimes I do worry that maybe we missed the forest through the trees in that whenever we talk about autonomous, it's oftentimes as anchored by l four and l five and for any listeners in, we'll have your l four l five means that the vehicle can essentially drive itself. L four, it can drive itself, but it's still a steering wheel and pedals, l five no steering wheel, no pedals. And to be sure if you look at our forecast, we see that true call it mass deployment further down the line, 2030, 20, 35 really when we start to see mass volumes on that end, because of a lot of hurdles we still need to really surmount. Probably the least of which is technology. The more focused right now is regulatory, legislative in liability and insurance. There are a lot of things that we're going over and we will overcome those. Mike: But in the meantime, I don't mean to diminish that either, to say that it's not happening because it is, we're seeing it than being deployed in certainly fleets scenarios. We're seeing them deployed in, you know, obviously geo-fenced areas, controlled environments even to this day. And there is a lot of opportunity out there within that space. But the other side of that coin, which I do think sometimes gets forgotten, is what would be considered sort of the classic l two l three, you know, autopilots the, the driver assist the advanced driver assist systems. And we're seeing just a lot of development in capital, in investment in that space and technology deployment in that space. So I kind of view both, both, both sides of that coin and you'd look at automakers, automakers themselves as well are, are thinking very dynamically about that. Yes, we have to invest in think about all four oh five, but at the same time they're also looking very strategically at that l two and l three and having solutions out there for consumers to help maybe with more of that consumer pull rather than a push. Um I, and I do think we're going to see maybe a little bit of bifurcation where you see 'em, you know, a fleet environment around mobility as a service that is supported and enabled by autonomous as that technology develops further. Scot: And then so just make sure I understand that. You mean? So like long haul transportation maybe or? Mike: That's a great example too. I D I even, yeah, I wasn't even referring to that, but you're absolutely right. But yes, elements of that long haul transportation can even bridge between sort of that l two l three into l four l five and in on that medium and heavy space. So when we were thinking about that, so class eight vehicles, the big rigs, semi trucks and trailers, As they're moving freight, there are opportunities around there as well at talk to folks out in the sort of the central us when they're thinking about some of the the, the legislative bodies in some of these states are actually contemplating creating highways that are autonomous zones, autonomous lanes in being able to, so maybe it's not autonomous on the city streets, but once you hit the highway, you can enter into more of an autonomous mode. Maybe you need a safety driver for certainly a period of time, but there are those activities going on on right now as well within this, within this space that even kind of transcend sort of the consumer quote unquote consumer market or the light vehicle market. Scot: Do you, so in electrical it was interesting because you have China, we'll probably get there before the u s do you see other countries ahead of us in AV, maybe it's the, if the technology's there and I'm a Waymo maybe I just kind of bail on u s and go to a children's thing or another country. Mike: AV can enable it can enable mobility differently in different markets. I would say that that's how we're kind of envisioning that as well and sort of that disruption. So it's a fair point. I think the, the, the interest in the of intensity and investment is certainly significant here in the u s so I'm not downplaying that. But at the same time when you look at a China in, in the congested areas and it's, it's definitely an emerging market for sure. And there is a high where it's going through a bit of a rough patch. We saw a sales contraction last year. We've gotten a little more forecasted this year, but at the same time there is, we do expect there to be growth in that market, but I do think that that growth in that market will, it will resemble maybe less of a developed market as we traditionally think about it less than the sort of the u s profile and more of a mixed profile that's going to be enabled and aided by autonomous and sort of that mobility as a service. So there's no doubt we are seeing investment going on in China too in the autonomous space as well. But I, I don't see it necessarily as a zero sum game yet where we lose in China winds necessarily on this. Mike: It's, it's kind of going where the money is in terms of where there's the potential to move people. You look at the u s in maybe the Midwest where you've got maybe a little bit more of a suburban sprawl if you will. In rural, maybe it's a little bit more challenging, but I'll tell you, we've got a lot of very large cities and don't even have, they don't even have to be the large metropolises talking today in an area that can be very conducive to moving people like that. And so there can, there definitely can be some very p…

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    Co-founder and CTO of ACV Auctions, Dan Magnuszewski Jul 31, 2019
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    EP014 - Co-founder and CTO of ACV Auctions, Dan Magnuszewski http://www.vehicle2.getspiffy.com Episode 14 is an interview with Dan Magnuszewski, Co-founder and CTO of ACV Auctions; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. Dan and Scot discuss a variety of topics, including: The road from Dan’s upbringing to establishing a startup community in Buffalo, NY How ACV Auctions serves dealerships with real-time, 20-minute auctions The technology behind the scenes at ACV Auctions, from condition reports to payments & titles His experience with blockchain and co-founding the Blockchain Buffalo group His role as an investor and advisor for Drone Energy, an industrial IoT and smart grid solution Be sure to follow Dan on Twitter and LinkedIn. 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: [00:51] Welcome to the Vehicle 2.0 podcast. We are live at the 2019 automotive intelligence summit here in big beautiful Raleigh, North Carolina. It's Tuesday, July 24th, and we are really excited to have a special guest on the show. We have Dan Magnuszewski,and he is the co founder and CTO of ACV auctions. Welcome to the show, Dan. Thanks for adding me. So appreciate you. We're doing this at lunchtime, so appreciate you kind of skipping lunch a little bit so I know sacrificing the lunch and, you know, pretending the fast. Yeah. Awesome. Uso let's start with your background. We'd love to know, you know, as a fellow technology guy, you know, did you do comp sire engineering and then take us to how you ended up, at ACV auctions? Dan: [01:42] Sure. So born in in really raised in Buffalo, New York as I was going through school always had an interest in computers. I initially wanted to be an astronaut, but it was, wasn't good at math, so I said, okay, well I can work on, you know, you know, computers and stuff. That's cool. And then, you know, that, that, that's my contribution. So I got really interested in computers. In high school we had a Cisco Network Academy course and this is kind of like 97 through 2001 took some web design classes. And then like I said, this is go network academy. And so I got into networking graduated high school and was going to University of Buffalo for computer science. The summer leading up to it, I was fortunate to get an internship with a a regional bank and I was working in their network operations center and writing software that was helping monitor the network and you know, the systems and things like that. Dan: [02:46] So worked, worked there throughout college. And a couple of years after I left there, went to a kind of a growing startup in buffalo called Synacor. I was there from, you know, there was about a hundred people and when I left a little under, four years later, there were about 350 people prep and we're preparing for IPO and all this other good stuff. They tried the first time, it was 2008 when they're attempting that. So yeah, not, not quite the timing. So I left there. They, they IPO a couple years after I left, but so I left there and to go do a startup with a buddy of mine. We did that six months in, went to south by southwest, didn't necessarily launch. So kind of went around and started becoming a technical cofounder for hire worked with people out of the west coast, New York City, Chicago who had an idea and had some money and were looking for someone to kind of make this into a real thing. Dan: [03:50] So I would, I'd really take it, take the product idea, like work through it, figure out what the MVP is, really try to focus it and then would go and build it. So I was doing that for a while and kind of along the same time, I was doing a lot of things in the in the local community around how are we building, you know, startups and coworking and a whole bunch of other stuff. So, so I was doing that and we were opening, well, a couple of people were opening a an incubator in buffalo in five point $2 million seed fund and you know, so that was really the first of what a first of the incubators and things like that in Buffalo. So a kind of career shifted a little bit and went into venture capital and how do you build businesses? Dan: [04:38] And studied under a couple of guys who had a Jordan lovey around triber who had built a couple very successful companies and with Softbank capital in New York. So I was working with them and kind of understanding how do you build a business, how to vcs, look at investing in companies how do you pitch your company? How do you do all these different things that just building how do you build a great business, but then also how do you then go and pitch it and raise capital and things like that. Did that. And so after a while it felt like it was kind of sitting on the sidelines a little bit, you know, trying to help mentor companies and things like that. But I wasn't really fully getting my hands dirty at the end of the day. So I had an itch to kind of get back into it. Dan: [05:24] I was working on some things on the side. And then somebody applied to the incubator they, they had just moved to buffalo from Albany and basically say, I have this idea and I, you know, I was a used car dealer. I went and I was selling 50 cars a month and it was a nice little business, but I'm running around all these auctions all the time. And so he moved to Buffalo, worked at a, at a decent sized new car dealership and saw a lot of inefficiencies in their wholesale process. And he's like, you know, I, as a, as a used car dealer, I would love to get access to this inventory where they're taking a couple of photos and just putting it in their dms. I would love to have, I would love to have access to this. So it's like, I have this idea and you can get a push notification and you know, you can buy this inventory ahead of time. Dan: [06:14] And it was really, you know, so it was really the initial, a seed of ACV auctions. How do you take mobile phones and mobile adoption, smartphone adoption in the industry was, you know, starting to really pick up, you know, my, my dad's a used car dealer and as I was building it he still had his flip phone, so it was like just around as we launched that he ended up getting a smartphone. I think I kind of forced them a little bit into it. So so, so the timing seemed right. So I talked to him. I said that, yeah, this, this makes sense. I could build it. Let's start working on it. So this was about five years ago, so it was a summer of 2014. We just started kind of nights and weekends, started talking to dealers started talking to some investors as well. Dan: [07:07] And but really it seemed like, you know, we had something there. So by the end of 2014 we left our jobs and sold our houses, downsized, and we were all in a building the product. And so kind of that first half of 2015 we were building the product, going around trying to sell it just in the buffalo market. That was going to be our initial launch market. And we had 250 dealers signed up and January 1st of 2015 we were sitting around one day we were like, okay, let's just, let's just launch it. You know, the app was an app was out there, people are asking for it and we're like, you know, Shit, let's go do it. So, so we did and a sold our first car and you know, we were kind of off to the races from there. Scot: [07:56] Yep. So, so for listeners that don't know, I've learned a lot about this coming from the ecommerce world, it seems crazy, but most auto auctions you, you bring the vehicles with you, like physically you put them on a car carrier. So I'm a dealer and I have 50 cars that have been sitting on the lot for a long time and I want to wholesale them. So I put them on a travel trailer and I go to usually a location that's out in the middle of nowhere because these places take a lot of land. So I'm near a city, but usually like 50 miles outside of the city. And then I, I, you know, I unload my cars and they go into these lanes. And then there's you know, there's this kind of phase set up time. So there's like a day or two where you set up and then the auction starts and then you have literally other dealers, kind of a big group of dealers walking down a lane and they're kind of like, all right, now I'm at car number 84, and it's a red, you know, Toyota Camry. Scot: [08:44] And then you have a little auction right there. And then someone went quote unquote wins it and then you're onto the next vehicle. And then, you know, the winners take all their cars back with them. You know, they'd load them up onto a travel trailer and they'd take them back. Yeah, yeah. And that's, you know, really there, you know, you're, you're kind of moving the car twice. You've got the super inefficient, you know, walking down a lane, it could be raining and you know you don't have, you know, an old nurse, there's almost no technology in these things, right? There's no alert that kind of says I've been looking for a 19, you know, a low mileage BMW or anything like that. Dan: [09:18] Yeah. And you know, that's really the core of the inefficiencies. So my co founder, Joe he was on the road three, four days a week, a hundreds of miles in different directions nobody at, at his, his lot doing what he needs to do to make money, which is selling vehicles. Dan: [09:36] And even when you get to the auctions, you know, multiple lanes, there could be five cars you want to buy and they're all running in five different lanes at the same time. Murphy's law kicks in, well, what, what are you going to do? So, so there's that efficiency. You know, a lot of times, you know, kind of the industry standards, 50% of the time the vehicles aren't selling at those physical auctions. So, you know, you go and you wait a week, it runs, it doesn't sell. Now as the seller, you're saying, okay, do I send this to a different auction and kind of Plinko it all the way through the system or do I let it sit there for another week and see what happens again? So, so there was just a ton of inefficiencies. And with mobile, mobile smartphones at the stage, they were at the adoption. Dan: [10:21] It's like, why, why are we not? Why, you know, why is no one done this? Why is nobody doing this? And why are they traveling all over the place, moving vehicles multiple times, just super inefficient and, and as time goes on and that vehicle's sitting on a lawn or you're moving at place to place the vehicles depreciating, things could happen to it. So our, our concept was this never has to leave the lot. It can stay on your lot. No one's moving it. No one's, you know, you don't have to worry about someone stealing a mirror off of it or denting it. It's, it's, it's there and we can, we can have it sold in 20 minutes. Scot: [10:57] Cool. and then so, so it's always smart to go try to disrupt something where you can kind of do a 10 x better user experience, it seems like. Yeah. Uber was genius or going after taxis because the tax experience was so bad and it still hasn't caught up, you know, so it definitely much better. It was so easy to provide a 10 x better experience. Dan: [11:12] And, you know, what, what Uber did a taxis we felt we could do to the auction industry, which, you know, really the, you know, the Internet era and Silicon Valley in New York City, you know, the wholesale market specifically, it was just very much a pass by, and it was, it was a lot of the big incumbents and not a lot of you know, it really wasn't that sexy silicon valley, a problem that people were trying to solve. You know, it was, it was a perfect Buffalo Tech you know, startup idea for us to go after. Scot: [11:49] Yeah. Yeah. We get the same thing. They're like, you know, the traditional vcs were like, you have employees, oh my God. But we don't invest in those types of businesses. Like, okay so less flash forward. It's five years later. You guys have had crazy success. You raised 150 million. That's not always the bar of being successful. Correct. But you've had a lot of success on the revenue growth and I don't know what you've give us an idea for the scale of the business, like how many cars are auctioned or, or anything like that. Dan: [12:15] Yeah. So, and we had some stuff out in the previous months selling over 20,000 vehicles a month. We have, you know, we're in, you know, about 115 hundred and 20 territories. We're well over 700 people total. And that's across from, from sales, through engineering, technology, things like that. Scot: [12:38] And you've so, so walk us through the, the kind of the new digital user experience. So I'm a dealer and I have the same 50 vehicles now. Do I list them? I think you guys have an option where you can even have a team come in and do the whole thing, right. Kind of a full service operation. Dan: [12:53] Yeah. And really iterating initially what we did was allowed the dealers to do with themselves. And you know, there was a lot of issues with that and created, you know, there, there wasn't really all that trust and transparency, which is what we really pride ourselves on. So kind of, you know, normal startup thing. People were, certain dealers were, oh I was too busy to list the cars or the kid I had hired to do it, he quit or he left or whatever. So were like unite. All right, great. So we're in, we're going to remove all excuses. We're going to hire someone and all they're going to do is show up on certain days and do condition reports. And, and it was really to keep the supply of inventory going in and the benefit of it was people are like, Oh, I love that you guys are doing the condition reports. Yeah. Scot: [13:40] So buyer's side, there's consistency too, right? Right. So, you know, your definition of good, better, best or fine, very fine or a bad scratch, a good scratch, any of that stuff is going to be much more consistent than, than the actual seller. Dan: [13:52] Yeah. We, we try to be super, you know, very objective condition reports. We're not trying to make it look better or worse, we're just trying to call it for what it is. So we've built out, you know, a huge network of, of, of these inspectors now. And really it's, it's, it's the main way that we're doing a inspections and people just really like that they can trust in us and we can be that, that trusted source. And for anyone who knows the automotive industry, dealers rarely ever trust each other. Right? So that was a really huge benefit to that having those inspectors and having people with their, you know that are trained by us, that are using our software that's custom built to build the best condition reports in the industry. That's, that's really what we've done and it's, it's worked out really well. Dan: [14:43] It's not the pure software play that a silicon valley type company would want, but at the end of the day we're going to end up with the largest inspection network in the country. So so there are some real benefits that when you're dealing with these tangible physical assets. Scot: [15:00] Yeah, yeah.…

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    Auto Intel Summit Recap with Joe Overby Jul 25, 2019
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    EP013 - Auto Intel Summit Recap with Joe Overby http://www.vehicle2.getspiffy.com Episode 13 is an interview with Joe Overby, Senior Editor of Auto Remarketing & Auto Remarketing Canada; recorded live at the Automotive Intelligence Summit in Raleigh, NC on Wednesday, July 24th, 2019. Joe makes his return to the podcast to talk with Scot about all of the happenings at AIS; from their favorite sessions and what was covered to the diversity of this year’s show. 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. This episode was produced and sound engineered by Jackson Balling, and hosted by Scot Wingo. Transcript: Scot: [00:56] Welcome to the vehicle 2.0 podcast. We are live recording here at the 2019 Automotive Intelligence Summit from sunny Raleigh, North Carolina. It's Wednesday, July 24th. It's been a long day. We're here at the end of the day, end of day two. So two thirds are a little bit more than that through the show. And excited to have Joe over beyond Joe is as a reminder to listeners as senior editor of auto remarketing. Also, you're the first guest we've had on the show twice. So, so you're famous. Joe: [01:24] That's awesome. That's a come back, man. I feel special. Scot: [01:29] So in addition to your role there, you guys put on this show. So you've been kind of, you know helping with a lot of the content and everything. So we thought we'd check in now that we're through the bulk of the show can get a read from you. What's been kind of the topical top of mind with it? Joe: [01:45] Yeah, I, I think I think yesterday some of what stood out to me kind of in the, in the general sessions at least was the cybersecurity. It was, I, I don't know if scary is the right word, but the the ability of, of hackers to be able to generate, to get into you know, dealership systems and automaker systems and, you know, even even you, our personal data or personal credit card information, I think it was really eye opening, especially that, that last panel a with or that last a fireside chat with Ryan Bachman. GM financial. I thought I thought, you know, I, I got to sit in on your session yesterday, Scott. And I thought it was a couple of things really came up in that session that was interesting to me that just the I think it was one of the first charts you showed with how fast the rate of change and digital automotive has been compared to what I would the last 50 years prior. That the retail model is just you know, changed so quickly. And then you know, I think look Scot: [02:52] At how fast Carvana came out of nowhere. Like I've never heard of them two years ago, maybe 18 months ago. And you know, you've got the Joe: [02:59] Vending machines everywhere and, and you know, everyone here is talking about their experience. I, I'm new to this digital retailing that's kind of, it has been a big topic that I've picked up on. Yeah, absolutely. And I thought, I thought today, you know, really was a big kind of digital, digital retail day. The particularly that dealer panel where we, we had four, four dealers and the, the president of the North Carolina auto dealers association talk about for a good bit of their time, you know, on the panel they talked about the digital retail experience and how, you know, I believe it. Okay. I think it might've been the, the gentleman from, from flo who talked about how dealers have the infrastructure and an inventory to do digital routes, the best of that to do their best position that guests to do digital retailing. Joe: [03:52] And you know, they had some, some interesting thoughts on Carvana as well. And you know, as part of that panel and then also a couple other, you know, just discussions was the fact that I guess the key to digital retailing, you know, whether you're a dealer or whether you're, you know, Nordstrom's or whomever is offering kind of a blended experience between the online and in store based on what the customer wants. And I'm sure you've seen some of the same things with any commerce's. We, there was a long phase where we called it Omni channel and now they call it harmonized. So omnichannel was kind of trying to just like make your inventory counts work across online in the store, just kind of the basics x's and o's. And then harmonized is things like I add something to my cart on a tablet and then I go into the store and the sales associate can like know what's in my cart. Joe: [04:47] So it's interesting to see the same conversations going on here. The dealer network makes it more complicated. It's almost as if every store was its own little business. Yeah. So imaginary Nordstrom's was independently owned and operated in a way, you know, a, or a franchise. I bet that's gonna make it really hard because you may have one dealer that's kind of, you know, within a, an OEMs world, far along the spectrum. But then another one's not. If the consumer starts at the OEM site, they're gonna have very different experiences. They go into different dealers. So it feels like a lot of it's going to have to come down from the OEMs. And I haven't heard a lot of talk about them. And it's interesting too, because a lot of these digital retail, you know, providers that work with dealers, you know, if a dealer wants to do digital retailing and you know, they work with one of these tech providers, you know, to do so, you know, you have these companies that are providing it on a dealer level, kind of a dealer group level, and then also the OEM level. Joe: [05:46] So it's, it's Kinda, it can be, you can imagine where the messaging kind of gets mixed up in that process. Yeah. Yeah. The consumer wants to look across inventory, right? Yeah. You don't just, you don't, as long as the target, you're looking at it, you know, the target store is within 10 miles and you're looking for a very specific thing. You have some flexibility there. So it's gonna be interesting to see how that Nav, how that evolves. Yeah, absolutely. The another, another thing that jumped out to me today was it was also during that, that dealer panel where the head of the NC auto dealers association, Bob Glazer, he asked the panelists, the, the dealers when they thought, you know, he was using Raleigh as an example when Raleigh would have fully autonomous vehicles on the road. And, and you know, one of them said, Oh, you know, 2020, 23, another one set out, it'll be like 20, 40. Joe: [06:41] And then the woman from crossroads automotive, who's there, she's there, court corporate counsel. She said, you know, this is the lawyer speaking to me, but never, you know, she said it's the insurance companies will be playing a bit of a, her term was, you know, having a punting match on who's going to take liability. So I think that that just illustrates some of the, you know, I don't know if I would say never, but it illustrates some of the complicated you know, issues out there with autonomy. But I think you could say the same thing about, to certain degree about subscription and other shared shared usage models. You know, who's gonna take insurance liability, who's going to pay for x, Y, and Z. I think those are, those are issues that are going to be raised for sure. Yeah, it's interesting. I can kind of argue either side. Joe: [07:31] I see, I totally see your point. But on the other side, if you believe some of the stats, like even just kind of the level two in three stuff reduces accidents by like 80%. The insurance industry should be happy for autonomy and you know, I think they have a business reason to get around it and say we'll take on more liability because the liability we have today is going down by 80 or 90%. So that's how I talked myself into the other side of that. Again, and they, I think one of the one of the panelists or not panels, one of the sessions talking about the, you know, there's insurance companies now that are working with some of these subscription platform providers to figure out, you know, they, they to write specific policies that, you know kind of all the different usage cases of subscriptions in it and what kind of policy that driver would need and the you know, companies would need to do those types of things. Joe: [08:24] So to your point, I think a lot of the companies are seeing it as a business opportunity. Yeah. Okay. Any other big trends? Well, I think that one of the funnel sessions was interesting to me. The the startup portion where they were talking about, you know, just opportunities for collaboration. And Quinn Garcia, who the managing director of, of autotech ventures mentioned that, you know, a lot of times we see startups as, or they're referred to as disrupting, but you know, in a, in in many ways they kind of help solve problems within a traditional industry like automotive because they, they have the ability and willingness to, to innovate and move quickly. The other side of that, he said they're challenged. Scaling can be a challenge, but what they're really good at is innovating and, and, you know, changing you know, being willingness to change and, you know, company we refer to lift, you know, and their their ability to work with some of these more traditional players in automotive. You know, for working with dealerships, for example, to provide loaner fleets or transporting service customers to and from dealerships. I thought that was an interesting point. And as a side note, I thought it was interesting that when he was talking about having two guys live at his house and while they started Lyft, I just immediately thought of the show Silicon Valley Scot: [09:57] There Erlich Bachman's house. And started the company there. Yeah. He always says that co that car that's like from like six companies again, he always says it was Bob before its time. Wait, none of us, I don't think we've ever learned what that company did. That's funny. Yeah. And then they lived in his parent's house or something. Yeah. Very silicon valley thing to do. Yeah. I thought that was arresting. We, we see that in the retail world where a lot of retailers have these innovation centers. They kind of go through this cycle where they'll open up the Silicon Valley Innovation Center and they realize how expensive that is to hire engineering talent out there. And then also it creates a weird thing internally, right? So imagine you're not in the innovation center and you're just aligned level executive or developer and you just feel like you're outside of the innovation. Scot: [10:40] So then that, that's one cycle they'll go through and then they'll, then they'll, they'll kind of make it more of their overall DNA. And then part of it is being able to partner with startups and, you know, definitely spiffy. We're feeling that from the automotive industry where a lot of these parts manufacturers, so for example, Mon humble is a, an investor in us and they are a filter company, you know, what you'd think is a very boring uninnovative innovative space. But they've realized that, you know, they need to understand what the consumer's behavior is changing. So, so we're seeing a lot of the auto companies you know, really I think very quickly invest in this space much more, you know, the retail industry took kind of 20 years, but it seems like the auto industry is moving very fast. Joe: [11:20] Yeah, absolutely. And I would add one of the one of the other points that kind of stood out to me in the past couple days was one that you, you raised yesterday about the car sharing companies, the two largest ones having raised a combined $900 million combined. And it's interesting to see that, that that there's that much interest in car sharing, which I don't, I don't know that car sharing is as talked about as other segments of, of this mobility. Scot: [11:53] Yeah. It's kind of under the radar. Joe: [11:54] So they, they, those companies go out of their way to kind of call themselves rental car companies, but they're essentially longterm rentals. So they're kind of like, I think their average is three or four day kind of rental kind of things. And so, so the two companies are Touro and get around. What's other, what's also interesting is you kind of see kind of to quote unquote godfathers in the auto space forming. So you've got Interactive Corp IAC. We were talking to the folks at honker and I didn't realize they had, they had led a very significant round for those guys, for example. So I see a, I see bought they have their own Angie's list. They started Expedia. So it's a very Diller's company and they have this whole suite of family home service type businesses and then in travel. Joe: [12:41] And then they're also in the dating world. Oddly enough, this kind of smattering of Internet companies seems like they've got a directive to, to get really involved. And then the other big one is Softbank. So Softbank you know, just investing, they have like this $80 billion fund and they're investing a ton in the auto space. I know they're in a bunch of parking companies. They're in they're the ones that are funding get around. So, you know, there, there's two really big anchor investors there that are, seem to be driving a lot of that investment. Yeah. I think there's you know, just moving, moving appetite from Silicon Valley and even Wall Street, you know, towards, towards automotive and, you know, cause it's, you know, it's an industry that has been around for, you know, a hundred years and has only, it's only been in the last you know, five to 10 years. We're seeing this level of disruption. And then, you know, of course, the, the huge part of that is, is the used car market, which is 40 million annual sales. And then you have and that's just retail. Then you have a whole wholesale market that's 20 million each year. So it's, it's a, there's a lot of room for, for such investments in growth and quote unquote disruption. Scot: [14:02] Yeah. I think, I think Amazon has shown us that, you know, digital technology can create such a better zero friction experience and then every time you do something in the car world you'd kind of, or you know, you encounter a lot of friction. So I tried to buy a car about a year ago and I had set it up where I was, I only had two hours cause I knew they would try to drag it out and it took like four hours and you know so and then, you know, no one ever gets really excited about, Gee, I'm going to go and get my car, you know, my oil changed or anything like that. So there's, there's a lot of opportunities to really increase the user experience around everything auto, which I think the VCC and they're pouring a bunch of money into that, just like Uber and lifted with taxis effectively Kinda saw that there was a really bad experience there that that could make much more 2019. Absolutely. Joe: [14:52] And I think, you know, the, one of the biggest pain points automotive at least in the consumer buying process is that, is that financing process, you know, that it takes hours to get in there and find it to deal. And you know, one of the coup…

    Full show notes at the publisher

    Electric Vehicle Analyst at EVAdoption, Loren McDonald Jul 03, 2019
    Show notes

    EP012 - Electric Vehicle Analyst at EVAdoption, Loren McDonald http://www.vehicle2.getspiffy.com Episode 12 is an interview with Loren McDonald, Electric Vehicle Analyst at EVAdoption; recorded on July 1st, 2019. Loren and Scot dive deep into the world of EVs, including such topics as: The growth of total EV market share in the U.S., broken down by state. Exploring Loren’s CARMA EV adoption framework. Breaking down lithium-ion vs solid-state batteries, as well as their 7-year cost trajectory. Emerging companies like Rivian and Workhorse, who are pushing for EV usage in non-traditional segments. The expansion of EV charging infrastructure, including where charging stations are growing and where they’re still needed. Tracking federal EV tax credits as they begin to phase out. Check out Loren’s work at EVAdoption.com, as well as his book Gas Station Zero! 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. This episode was produced and sound engineered by Jackson Balling and hosted by Scot Wingo. Transcript: Scot: [00:56] Welcome to the Vehicle 2.0 Podcast. This is episode 12 and it's being recorded July 1st, 2019. Welcome back Vehicle 2.0 listeners. Uh, we're recording this here in early July. Hopefully this has given you some content for your July 4th travels. Uh, in this episode we have a real exciting treat for you. We're excited to welcome on the show, Loren McDonald. He's the author of the book "Gas Station Zero", editor and contributor to EVAdoption.com contributor to Clean Technica and an all around EV expert. Welcome to the Vehicle 2.0 Podcast. Loren! Loren: [01:31] Great. Thanks for having me, Scott. Really excited about the conversation today. Scot: [01:35] Yeah, me too. We've, uh, I've, I've been a f a Twitter follower and, and read a lot of your content. Um, you know, I think what I've found as I've dug into, I come from the ecommerce world and as I've dug into this world, uh, there's, there's not many people that actually have original content. There's a lot of republishing of the same kind of stuff. And, uh, what I love about your content is, you know, very originally sourced and in a lot of unique thinking there. Before we dig into that though, um, let's talk about your career path. What, what got you into this automotive motive space and writing on this topic? Loren: [02:10] Yeah. So I, I'm, you know, complete outsider, if you will, to the, the automotive and in EV world. I started my career in marketing and PR way, way back in 1984. So 35 years into kind of my, my marketing consulting career have been, uh, you know, CML marketing executive consultant at, uh, a variety of companies over the years. Mostly sort of BDB professional services. But the last a sort of 15, 20 years in the marketing technology space, um, and really kind of the last 15 years spend functioning as a, as a marketing evangelists are flying around the world. Uh, speaking at conferences, meeting with clients, doing a lot of writing and research and stuff. And ultimately that's, you know, kind of the transition to what I'm, I'm doing in the electric vehicle space. Uh, about five years ago I started a blog where I was writing about all things green. Loren: [03:04] The use the, the name Loren Green. If, uh, you, uh, older people on this, they'll get the, uh, the connection there with Lauren Green, the old a actor from the high chaparral. But, uh, what I was doing was writing about a bit of everything and sort of the green space, everything from how to reduce, uh, you know, packaging and, uh, increase recycling and reduce use of water. This was back in the days of, uh, the drought in California, solar power and electric vehicles. And what I quickly found was as I couldn't sort of be an expert on all of those topics and I decided, uh, to sort of pick electric vehicles and that was the one that I was sort of most intrigued by about how are we going to sort of solve this problem, right? Well, what is going to drive people to actually want to, uh, uh, you know, transition to electric vehicles. Loren: [03:58] So that sort of when I started about three years ago, uh, the Evie adoption site and as you mentioned also sort of riding for clean, technical, etc. And so really have, you know, taken my career as sort of a marketer and consultant and strategist and somebody focused on research and data and have tried to focus, uh, on that aspect of them solving the problem, using data of when, you know, when are consumers going to, uh, you know, adopt, uh, electric vehicles, uh, in a, in a really significant way. Well, and is this your first full time gig now or are kind of still a hobby? Wish it was Scott. I'm working towards that. Um, but, uh, it, it is something I do is sort of, uh, on the side, if you will. So a lot of, a lot, a lot of weekends, uh, uh, and, and, and evenings and things like that. Loren: [04:55] But, uh, you know, instead of, uh, instead of being out working in the yard or, or riding a bicycle or spending time with my wife on weekends, I'm uh, you know, chained to my laptop, writing articles and doing great research. But I have to ask, uh, do you drive an Evie? I do. At the moment we actually have two Tesla model essence. Uh, so, uh, got our first one, two and a half years ago and actually just picked up or actually it was delivered to our house. Uh, the second one last, last Sunday. And I've gone from the low end model s which had, uh, about, uh, 200 and a little under 210 miles of range to one that now is 335 miles of range. And so I'm really excited to, uh, put that to the test on road trips when we take our daughter back to us college in southern California later this summer. So a show, we'll, we'll, we'll dive into these and road trips a little bit later in this conversation. Yeah. Cool. Yeah, I'm a, Scot: [05:58] I had a model s or a pretty early on in 2012 and then a side graded to a model three, so, so also live in that as la UV lifestyle with you. Loren: [06:07] Nice, Nice. Scot: [06:09] Cool. We're here on the podcast. We have a framework for the Vehicle 2.0 framework where we talk about the four big changes coming to the auto industry. We talk about connected car changing ownership models, uh, autonomy, and then of course, uh, evs. So we want to spend the bulk of our time with you talking about evs. I thought it'd be good to kind of, you know, talk about kind of from a timeframe perspective, uh, where you see things today in the u s and then we can kind of expand from there. Loren: [06:36] Yeah. So we're, we're really quite, quite early for any, uh, sort of, uh, techie geeks. I, I refer to this, we're probably in the palm trio phase. I don't know. Scott, did you ever own a palm trio? Uh, I did. Yes, you did. Yes. And you'd know what I'm talking about, right? We're, we're in that phase of, of where primarily sort of early adopters and I, and I use technology and, and I'm a big fan of, of um, uh, the sort of that w what's commonly known as the technology adoption curve. This idea of how consumers, basically, with any sort of new technology product, they start off kind of the innovators, uh, you know, really, uh, only, uh, for geeks people that are willing, uh, and can afford to sort of pay more for products they want to, uh, own or drive, whatever the latest and greatest thing is. Loren: [07:29] And then it Kinda goes up ultimately into, um, what's called sort of the, you know, early majority, late majority then, then, then laggards. And in, in most markets in the u s and around the world, we're still in that sort of innovator phase of, you know, kind of under two and a half percent. Um, it obviously varies dramatically by market, but in, in the u s today across the u s worried about 2%, meaning, uh, two out of every 100 a new vehicles that are purchased across the US today are electric vehicles. And when I say electric, um, I'm including in that both what we call PHEV plug in hybrids. Those are things like the, the Chevrolet volts and the um, the Ford fusion energy where it has a small battery pack and you can uh, uh, drive on a what's typically anywhere from sort of 20 to have a little under 50 miles range on electric. Loren: [08:30] And then gas engine kicks, kicks in, but you can then recharge that battery, um, by, by plugging it in at home or the workplace or whatever. And then a, what we refer to as be evs, battery electric vehicles. And those are things as you and I talked about, the Tesla model s uh, and three, the Chevrolet Bolt, uh, many, many other factors that, uh, only have electric motors and battery packs is so fully electric. And, um, so again, where we are today in the u s is, uh, is about 2%, but then when you break the country down, it is sort of, we have a fascinating picture, Scott, in that it varies sort of dramatically by sort of state and market. So California finished 2018 at just under 8%, meaning, uh, you know, that almost, and we should hit and we actually hit the 10% in the last few months of, of 2010, we'll probably finish 2019 little under 10%. Loren: [09:31] But in essence, in California, across the entire state, one out of 10 of every new vehicles purchased, uh, is an electric car. And, uh, and most of them, in fact, about 40% of them are, are the Tesla model three these days. But then if you go to a state such as, you know, Oklahoma or Louisiana or whatever it is, it's like 0.2, 2%. And so literally what we have is we have this sort of huge dichotomy and chasm in the United States where you have California, where people are literally buying evs at a rate of 40 to 50 times that of people in, in sort of southern states. And so it's, it's sort of really fascinating. And then if you break that down even further in a, in a city like Palo Alto, which is obviously a sort of a wealthy higher income, high tech community, we're approaching 50%, literally one out of every two cars being purchased there are, are electric. Um, and now where I live in, in the bay area, in the suburbs, we're at about 15%, 20%. And so, you know, that's a long answer to your question Scott, but, but fundamentally, no, across the u s we are still really, really early. But if you look at sort of individual markets, we are sort of well down in the path of adoption. Scot: [10:53] Yeah. Very cool. Um, and then I've seen, I think I've seen Tesla or I can't remember who talked about it, but there's a certain definition of a car where, where they're one of the top sellers where, you know, I think they put the model three into a, uh, you know, a price range, and then it's like a four door, and then in that category of they're outselling the BMWs and Mercedes, the Honda's and the, you know, so another interesting slice where you're starting to see, you know, the, a fair amount of adoption within a pretty narrow definition. Loren: [11:22] Yeah. If you look at sort of the, that sort of luxury sedan market, if you will. So the, the, uh, as you mentioned, sort of, you know, the, the, the BMW three series, Audi a fours, uh, the Mercedes c class, uh, the, the, uh, Lexis, yes. I believes in that market and stuff. The Tesla model three is actually crushing it, right. In sort of that, uh, sort of, you know, 30 to 40, you know, 30 to thousand dollars, depending on what configuration you get of those different vehicles. The, you know, the model three is, uh, uh, is, is, you know, outselling all of those cars by a pretty significant way. And so what's, what's interesting about that, Scott, is that, well, we're seeing the most of the u s and Japanese automakers still sort of laggards on, on launching new models. The German car makers get this right because they're the ones that are actually seeing sort of direct competition from Tesla. I actually start to eat it into either end of the market share and I know we're going to sort of dive into that a little bit more, uh, in a bit. But that's sort of a, a fascinating sort of side effect of, of Tesla success. Scot: [12:33] Cool. And then, um, I know you've done a lot of really interesting research kind of putting on your, your consumer marketing hat about, you know, what I guess what's, what's driving adoption in, in areas like California and Palo Alto, and then, you know, what's slowing down adoption, what are, what are some of the consumer insights you've drawn from that? Loren: [12:53] Yeah. So, you know, fundamentally, again, what I came up with this framework, uh, about three years ago that I called Karma c a r m a the sort of as a way to kind of think about, um, what are the different factors that that will ultimately drive mass adoption of electric vehicles and, and you know, sort of the, the letter Stanford charging range and speed, affordability, range model availability and awareness and understanding and well, fundamentally that's why the Tesla is sort of, is, is doing so well and that it's, it's pretty much solved most all of these problems, right? So first and foremost, as we all know, consumers that, that are thinking about, uh, potentially. And in Evie you're considering it or just learning about it, there's sort of first, you know, common concern is his range and what we call range anxiety, right? Mo, most cars available in the u s today, especially with sort of the, you know, SUV as larger SUV have north of 400 miles of, of a range and the gas car right and sort of varies anywhere from about three 50 to almost sort of 500. Loren: [14:08] And so consumers have been trained that their car should go, you know, roughly three 50 to 400 miles on a, on a tank of gas. And so their expectation is, is that an electric car should sort of match that. Right. And so know that's where sort of, you know, again, Tesla has done really well in sort of reaching that sort of higher income market that has been able to afford their luxury cars with over 300 miles of range or in some cases a little bit under that. But, uh, and they're going to come out, uh, the, the rumor is by the end of this year with a model s that we'll actually have 400 miles of range. So they're sort of getting to that point of you, at least from a range perspective, consumers who can afford the electric cars will, will not be able to sort of use sort of the, the lack of range of an issue, but fundamentally w you know, range is sort of sort of that, that sort of first starting point. Loren: [15:06] In other words, if you're, if you're going into a car dealer and considering a car, that is sort of the sort of the first step that, that people have to get over. The second one, uh, is, is, uh, I think, um, you know, just sort of affordability, right? And again, the, the challenge today with, uh, sort of both sort of supply and demand of electric vehicles is, is because of the, the cost of the battery packs is still pretty significant and it tends to be about a 20 to 30% of the cost of the vehicle. And so the, the battery pack prices are coming down significantly, but there's still, you know, too high as a, as a percentage of the vehicle. And so when you're looking at comparable vehicles, so if you're looking at a particular car model that has both the gas, uh, uh, you know, motor and an electric motor, and there…

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