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May 22, 2020

Happy Friday! Here we are at Memorial Day weekend! Where did the time go?

  • Today we examine what's changed for electric vehicle startups and how transportation is adapting as the country moves gingerly into the next phase of the pandemic recovery.
  • Got ideas or feedback? Send me an email at [email protected].
  • Smart Brevity count: 1,478 words, a 6-minute read.

1 big thing: EV startups try to keep the spark alive

Illustration of an electric car charging pump with a dollar bill as the prong.
Illustration: Aïda Amer/Axios

At least a dozen electric vehicle startups with dreams of becoming the next Tesla are suddenly in limbo, hoping they can hang on through the coronavirus pandemic for a chance to deliver on their long-shot ambitions.

The big picture: Building a car company from scratch is extraordinarily difficult, requiring billions of dollars in capital. Tesla made it, but not without a few harrowing brushes with death. Add the economic uncertainty of a global pandemic, and the stunning collapse in oil prices, and the odds of success are even lower.

History is littered with the failures of automobile impresarios like Preston Tucker, John DeLorean and Malcolm Bricklin.

  • Elon Musk's breakthrough success at Tesla shows it can be done, inspiring a new crop of innovators, each with their own change-the-world gambit.

What's happening: Some new players are focused on electric trucks or commercial vehicles like Rivian, Nikola, Bollinger, Lordstown Motors, Workhorse and Arrival.

  • Lucid Motors, Byton, Faraday Future, Karma, NIO and Czinger are targeting high-end buyers with plug-in luxury cars.
  • Also in the game: Canoo and Arcimoto, whose personal use EVs will be available by subscription or rental.
  • Most had plans to launch this year, or next, with money provided by traditional venture capital, or rich backers in China and the Middle East.

Then the pandemic hit, changing everything.

  • The cancellation of the world's biggest auto shows in Geneva, New York and Detroit dashed some companies' plans for splashy unveilings that would have brought lots of media attention.
  • Virtual events and social media lack the same magic, making it that much harder to get noticed and build brand recognition online.

Stay-at-home orders and social distancing requirements have created their own set of problems, forcing engineering teams to scatter, and slowing factory construction.

  • The Treasury's Paycheck Protection Program has provided short-term relief to some, while others have been forced to furlough employees.
  • Many companies have said their EVs will be delayed until 2021 or beyond.
  • Flashback: A $465 million taxpayer loan from the U.S. Energy Department under the Obama administration helped Tesla survive the Great Recession in 2009.

What to watch: Those that are well-funded could squeak by, but the outlook for electric vehicles is hazier in this pandemic economy.

2. EV companies with the best shot — and why

Image of Lucid Air, a new electric vehicle challenging Tesla
The Lucid Air is a $100,000 electric luxury sedan coming in early 2021. Photo: Lucid Motors

Two electric vehicle startups — Rivian and Lucid Motors — are best positioned to survive the fallout from the pandemic, industry experts tell Axios.

Why it matters: With solid funding and strong in-house technology, they've got a path to success — provided they can get back on track quickly as the economy recovers.

Rivian could have the best shot at survival for a number of reasons.

  • It's developing a line of premium electric trucks and SUVs under the Rivian brand, but also marketing its core EV technology to other manufacturers, notably Amazon, which has placed an order for 100,000 electric delivery vans.
  • Rivian's business-to-business play sets it apart from Tesla and all the other electric vehicle companies trying to get off the ground, notes Sam Abuelsamid, principal analyst at Guidehouse Insights.
  • The Michigan-based company founded by CEO R.J. Scaringe is well-funded with more than $3 billion raised from Amazon, Ford, T. Rowe Price and others, including Dubai-based conglomerate Abdul Latif Jameel, a big Toyota and Lexus distributor.
  • Production was supposed to start at the end of this year, but was pushed into 2021 because the pandemic temporarily slowed construction at Rivian's Illinois factory.

Lucid is targeting the luxury market — as are many EV startups — but it's the most likely to emulate Tesla's success.

  • Lucid CEO Peter Rawlinson, after all, was the chief engineer for Tesla's breakthrough product, the Model S sedan.
  • "Suddenly, there's a whole phalanx of companies, predominantly in California, saying, 'If Tesla could do it...' without any idea of how the stars aligned for Tesla," Rawlinson tells Axios.
  • Lucid's edge, he said, is its proprietary electric powertrain, which is smaller, yet far more efficient than rivals, freeing up more space for passengers.

Lucid also benefited from some good fortune. Its factory is going up in Arizona, where construction was allowed to continue during the government shutdown — with appropriate health safety protocols, Rawlinson said.

  • Lucid raised $1 billion from Saudi Arabia's Public Investment Fund in September 2018 to launch its first vehicle, the $100,000-plus Lucid Air.
  • Rawlinson said Lucid's next model, an electric SUV, will depend on additional fundraising.

3. Coronavirus is reshaping urban mobility

Illustration of the Google directions dashboard with a coronavirus cell highlighted as the mode of transportation.
Illustration: Aïda Amer/Axios

Many cities are changing street uses and restricting cars to create new and socially distant opportunities for pedestrians, cyclists and diners.

What we're watching: There could be colliding interests as commuting begins to revive while advocates fight to preserve and expand the newly airy spaces, Axios' Ben Geman notes.

What's happening: New York City has begun opening up 100 miles of streets, while Oakland is altering the use of 74 miles and Seattle is permanently restricting 20 miles of streets.

  • The actions — from creating pedestrian-only streets to converting curbside lanes into expanded sidewalks, bike lanes or outdoor dining — help keep essential workers and goods moving, while providing safe opportunities for social distancing.

For city planners, priorities have changed. "It's no longer about moving the most amount of people in the least amount of space," says Tiffany Chu, CEO of data analytics firm Remix, which helps governments visualize transportation issues.

  • Now they have to weigh social, demographic and health considerations alongside traditional transportation issues — with city budgets that have been busted by the pandemic.
  • Remix's newest software lets governments quickly analyze location data for medical facilities and grocery stores, for instance, along with demographic data, to understand how changes in bike paths and transit routes affect different communities.
  • The National Association of City Transportation Officials just released a playbook to help cities grappling with the same issues.

The big question: How many of these mobility changes will be made permanent after cities reopen fully?

  • Public transit systems are running at reduced capacity thanks to social distancing and budget woes, while many passengers say they'll stay away to avoid exposure.
  • A new Harris Poll of nearly 2,000 U.S. adults found half do not feel safe using any transportation that is not their personal car.
  • There's already evidence that U.S. traffic is bouncing back from April's troughs. In China, traffic has returned almost to pre-pandemic levels.
  • "That's the worse-case scenario — that could happen in the U.S. very easily," says Chu.

Yes, but: It's not clear how much the increased driving will be offset by people working from home for the foreseeable future.

The bottom line: "A moment like this — when millions of urban trips are temporarily up for grabs across transportation modes — is exceedingly rare. The stakes for cities could scarcely be higher," said Harvard Kennedy School urban expert David Zipper, writing in Slate.

Go deeper: Coronavirus may prompt migration out of American cities

4. Driving the conversation

Cost curve: The story of cheaper batteries, from smartphones to Teslas (Timothy B. Lee — Ars Technica)

  • Why it matters: Several forecasters project the average cost of a kilowatt-hour of lithium-ion battery capacity to fall below $100 by the mid-2020s, which is essential to shifting the world economy away from carbon-intensive energy sources like coal and gasoline.

No hands: GM developing hands-free system for city driving (Hannah Lutz — Automotive News)

  • Why it matters: GM is competing with Tesla, which says its Autopilot system can now handle some city driving. But like GM's Super Cruise hands-free system for highway driving, Ultra Cruise will require an engaged driver at all times.

Sardines: Airlines pack in customers like there's no coronavirus (Dion Rabouin — Axios)

  • What's happening: The practice shows how a lack of a national policy allows certain companies — like airlines — to put Americans at risk for exposure to COVID-19 while restaurants, retailers and others miss out on revenue by adhering to local regulations.

5. What I'm driving

Image of orange and black Nissan Sentra SR
2020 Nissan Sentra SR. Photo: Nissan

Last week I drove the 2020 Nissan Sentra SR, a car that actually made me do a double-take.

My thought bubble: The Sentra is the kind of value-priced econobox you'd rent in Omaha — or so I thought — until a sporty-looking orange-and-black number showed up in my driveway. That's a Sentra?

  • It looks like a miniature Nissan Maxima, with an athletic stance and tastefully appealing interior.

The big picture: It's hard to compete with the Honda Civic, which has long dominated the compact sedan market and is due to be updated next year. Even the Toyota Corolla, also redesigned for 2020, has struggled to keep up.

  • Nissan upped its game with the 2020 Sentra and it shows.

Details: The Sentra's attractive makeover is attributed to a new platform that allows better proportions; it's about two inches lower and two inches wider than its predecessor.

  • It gets a new 149-hp 2.0-liter 4-cylinder engine, and a new independent rear suspension, which gives the Sentra a smoother ride.

Driver assistance features are standard, a trend that is becoming more common in lower priced cars.

  • Nissan's technologies are packaged together in what it calls Safety Shield 360.
  • It includes both forward and reverse automatic braking, rear cross traffic alert, blind spot warning, lane departure warning and automatic high beams.
  • It doesn't help steer; it just warns you if you're drifting out of the lane.
  • Higher-priced version like the SV and SR trims add adaptive cruise control, which helps you maintain a safe distance from the car in front.

The value is hard to beat: Starting at $19,090, the Sentra is cheaper than the Civic. The SR I drove, with an extra premium package, topped out at $25,825.