Jul 17, 2020

Axios Navigate

Happy Friday! Thanks for reading, and drop me a line at joann@axios.com if you've got tips or feedback.

Today's Smart Brevity count is 1,571 words, a 6-minute read.

1 big thing: The fabless car company

Illustration: Eniola Odetunde/Axios

Car designer Henrik Fisker this week raised more than $1 billion for his namesake electric car company, but unlike other EV entrepreneurs attracting capital recently, making cars is not part of his plan.

Why it matters: In an industry ripe for reinvention, Fisker's aim is to become the Apple of the automotive world — a fabless manufacturer that designs and markets cool cars but farms out the production to others, avoiding the huge capital outlays and manufacturing pitfalls that have dogged Tesla for a decade.

Driving the news: On Monday, Fisker reached a deal to go public by merging with a special purpose acquisition company backed by Apollo Global Management. SPACs are an increasingly popular IPO alternative also used recently by Velodyne and Nikola to go public.

  • Proceeds from the transaction, which valued Fisker at $2.9 billion, will help bring its Fisker Ocean electric SUV to market by late 2022.

The big picture: We're on the cusp of a historic shift to electric, self-driving cars. But the burden of technology investments is overwhelming for many, requiring even the world's biggest auto giants to partner up on redundant development.

  • Meanwhile, well-funded newbies like Nikola, Rivian and Lucid Motors — none of whom have produced a single vehicle yet — are mirroring Tesla and spending heavily to set up their own factories.

What's happening: A car used to be defined by its engine. But in the electric vehicle era, batteries and electric motors will be mere commodities, predicts consulting firm KPMG.

  • Software-driven features, not hardware, will set cars apart in the future.
  • For Fisker, famous for designing sensuous cars like the Aston Martin Vantage and the BMW Z8, it represents a new business model.
  • "I forced myself to not think like a car guy for a moment," he told Axios.

The Ocean is billed as the world's most sustainable car — an affordable, premium, electric SUV with a solar roof, vegan and recycled materials throughout, and a battery range of 250 to 300 miles.

  • Its patented one-touch "California mode" lowers and slides nine glass windows and panels to open the entire cabin for an open-air feeling.
  • It'll be priced attractively, too, starting at $37,499 before federal tax credits, or $379 per month to lease.

The real innovation is Fisker's business model. Instead of developing its own electric powertrain or sinking money into a factory, Fisker is in talks with Volkswagen to use its modular EV platform and assemble Fisker vehicles at a VW plant in Europe.

  • Instead of dealerships, Fisker will sell cars online but have "brand experience centers" and pop-up locations in key markets in the U.S. and Europe.
  • Vehicle service will be outsourced, too, through Pivet, a unit of Cox Automotive.
  • The plan is for a full lineup of eight plug-in models by 2026.

What they're saying: Fisker's asset-light approach makes it easier for newcomers to break into the auto industry, said Kristin Dziczek, vice president at the Center for Automotive Research.

  • "Imagine if Tesla had done this. They have great design, but struggled mightily in manufacturing."

Flashback: In 2014, Fisker's first startup EV company, helped by a government clean-energy loan, went bankrupt, costing taxpayers $139 million.

The bottom line: With lessons learned from that failure, Fisker says he's plotting a less risky path this time around. But for all EV companies there's still loads of uncertainty about how the future will play out.

2. Tesla kind of sums it all up

Illustration: Sarah Grillo/Axios

Tesla is the company of the moment — the prime exemplar of just about any big and important trend that you might care about, Axios' Felix Salmon writes.

Why it matters: Almost every reader of finance and business news will have at least one strongly-held opinion about Tesla.

  • Those opinions tend to range widely, though, and map onto much broader views of the world.

Climate change: Tesla, especially after its merger with Solar City, sometimes feels like a Utopian project — an attempt to populate a carbon-neutral future with fast, efficient vehicles that don't contribute to global warming.

  • Tesla would benefit from Joe Biden's policies if they're enacted, including a pledge to boost EV deployment and create clean energy jobs.

Economic policy: Tesla has benefited from the Fed's zero-interest rate policy.

  • A $465 million federal loan in 2010 helped too, and federal tax breaks for EV purchases helped drive Tesla's early sales.

The product: Capitalists love and fear natural monopolies. Tesla's flagship product — its cars, software, and charging network — is years ahead of the competition.

The billionaire economy: Depending on whom you talk to, Tesla CEO Elon Musk is the archetypal cartoon-villain billionaire — or the archetypal planet-saving billionaire.

3. How AVs could improve mobility for the poor

Photo courtesy of Nuro.

One of the expected benefits of autonomous vehicles is improving access to transportation for underserved populations.

Why it matters: Transportation is often too expensive, inconvenient or even non-existent in poor communities.

Driving the news: Two pieces of research were shared this week by organizations hoping to prod the federal government on regulatory action governing self-driving cars.

AV delivery company Nuro, writing in a company blog, found that its delivery vehicles could reach 14 million, or 70%, of low-income households in "food deserts" who can't get to grocery stores on their own.

  • Doing so would require the Transportation Department to modernize its regulations to allow driverless vehicles like Nuro's to operate above 25 miles per hour.

Meanwhile, transportation policy experts at Securing America's Future Energy, a lobby group, found poor families using on-demand, automated vehicles could save as much as $5,600 per household, and have access to better jobs.

The bottom line: Access to reliable, affordable transit is a key factor in upward social mobility.

4. Get ready for the new normal in air travel

Photo: Eleonore Sens/AFP via Getty Images

Airline passengers could wind up wearing masks on planes long after the pandemic subsides, experts say.

Why it matters: Masks are required by most airlines today to prevent the spread of the coronavirus, but they could also keep passengers from contracting influenza, tuberculosis and other communicable diseases.

Flashback: Major public health events have often spurred behavioral changes or regulatory action, notes Trish Perle, a fellow with the Infectious Diseases Society of America.

  • "Right now, everybody puts their kids in a car seat and everybody wears a seat belt. Smoking is not tolerated in public places."

In airports, people have grown accustomed to taking off their shoes and belts when passing through security.

  • Wearing masks on a routine basis could be next.

Yes, but: Compliance could take a while.

  • "We have to be more clear about how people are supposed to wear masks … It is absurd that the FAA has not [mandated masks] yet," Sara Nelson, international president of the Association of Flight Attendants, said on NBC's "Today Show."
  • For now, the Department of Transportation is steering clear of federal rules on masks.
5. Driverless semi-trucks picking up speed

Testing a driverless semi-truck. Photo: TuSimple

Heavy truck manufacturer Navistar announced a strategic partnership with TuSimple, a leader in self-driving technology, to co-develop a line of autonomous semi-trucks that would be on the road by 2024.

Why it matters: It's a giant milestone toward deployment of TuSimple's driverless technology and would shave up to five years off the industry timeline for autonomous semis, writes FreightWaves, a trucking publication.

What's happening: TuSimple, which plans to demonstrate its fully driverless technology in 2021, says self-driving semis will enhance safety, increase efficiency and reduce operating costs.

  • The two companies have been working together for two years, including pilot runs between Arizona and Texas.

What to watch: Navistar, maker of International brand trucks, took an undisclosed minority interest in TuSimple, and could increase its stake over time.

6. Driving the conversation

The real Ford Bronco four-door Badlands series with available Sasquatch off-road package. Photo: Ford

That didn't take long: Chinese carmaker previews Ford Bronco-esque SUV (Ronan Glon — Autoblog)

  • What they're saying: "American motorists aren't the only ones who fell head over heels for the new Ford Bronco. Across the Pacific, China-based Wey, [a new luxury division of Great Wall Motors] announced an SUV called P01 that incorporates some of the off-roader's styling cues."

German court says Tesla self-driving claims are misleading (Jack Ewing — New York Times)

  • Why it matters: Tesla has often been criticized for making exaggerated promises about its autonomous driving technology, and consumer groups say even the name "Autopilot" is confusing. Tesla has the right to appeal, but has already rebranded "Autopilot" as "Autodrive" in Germany, according to Forbes.

"Hands free": Automakers race to next level of not quite self-driving cars (Ben Klayman and Paul Lienert — Reuters)

  • The big picture: With full self-driving cars still years away, companies are eager to start profiting from billions spent on autonomous driving research so they're rolling out automated highway cruising within five years. Safety advocates say the technology needs to be regulated.
7. What I'm driving

Aud Q7 interior. Photo: Audi

I just finished driving the 2020 Audi Q7, a top-of-the-line family hauler.

The big picture: Competition in the luxury three-row SUV category is tough with models like the Mercedes-Benz GLE, BMW X5, and Volvo XC90. So Audi refreshed the Q7 from bumper to bumper, with enhanced technologies and various design improvements.

Details: The Q7 comes with a choice of two turbocharged engines — a 248-hp four-cylinder or a 335-hp V-6, which provides better torque but will drop your fuel economy by about 2 mpg.

  • Audi's Quattro all-wheel drive system is standard, naturally.

There is technology galore, as you'd expected in a German luxury car, but I found the touch screens annoying to operate while driving.

  • There's a standard a 10.1-inch infotainment touchscreen on the dashboard and a smaller 8.6-inch screen just below it to adjust the climate control and vehicle settings.
  • A similar setup is found in all new Audis.

Standard driver-assistance features include automated emergency braking and forward-collision warning.

  • My Q7 came equipped with a $10,000 Prestige package that added every bell and whistle you can imagine, including a driver assistance package.
  • Among these features is a system that lets you take your hands off the wheel in slow traffic and an emergency assist system that can detect and alert an unresponsive driver, even bringing the car to a safe stop if necessary.

The bottom line: Be prepared to open your wallet if you buy a Q7. While starting at $54,800 for the four-cylinder base model, my test model carried a sticker of $75,290.