On Tuesday, during TechCrunch’s annual Mobility event, we had the opportunity to interview three investors who spend much of their time focused narrowly on shifts in the transportation industry and we talked with the three — Amy Gu of Hemi Ventures, Reilly Brennan of Trucks VC, and Olaf Sakkers of Maniv Mobility — about a wide range of related issues to get their take. You can check out that interview below; in the meantime, we’re pulling out parts of the conversation that we found particularly interesting:
How the pandemic is affecting fundraising and the trends they’re watching
Olaf Sakkers: In dense cities, no one is taking transit, so you’re seeing a big shift toward micromobility, but in other cities, there’s been a big uptake in car use and secondhand and new-car demand despite of economic impacts. [You’re seeing this] trade-off between us getting out, and more goods and services that are coming to us than before, [including] food and other things. We’re also seeing a lot of geographic and culture variances, but those are things we’re seeing immediately.
Amy Gu: One thing that COVID has changed a lot is healthcare, which has become more important (during the pandemic) but also raised questions about how we make it more mobile. We’ve been looking at telemedicine companies and remote health care.
Is COVID-19 driving people to buy bikes, scooters and used cars instead of renting?
Reilly Brennan: People fell off micromobility platforms not because they didn’t like them, but they liked them so much, they wanted to buy [the scooters and bikes]. The ways a typical dealership makes money with financing, maintenance and service will come to micromobility. There isn’t much of a used market right now for e-bikes and e-scooters because there aren’t many of them, but that ecosystem will become stronger … [you can imagine] buying outright, leasing, subscriptions, wrapping in theft control … all the tricks you’ve seen carmakers bring to car financing, [meaning] not owning or renting but something in-between.
As for whether the overall mobility market might be smaller than once imagined, given remote work, telemedicine, etc.
Reilly Brennan: People are right now picking transportation to avoid social contact and have the least risk of catching COVID, versus previously trying to optimize for getting to destination as fast as possible, so modes are being picked based on the pandemic. But six months after a vaccine, what does that mode look like? I think people will come back to cities [even if not to a] five-day workweek.
Some people might even live farther away and may fly in.
Olaf Sakkers: Cities will stay relevant, [creating] important and new opportunities.
How are increasingly frayed relations between China and the U.S. impacting the transportation industry?
Amy Gu: We mostly invest in the U.S. but I was born in China, I have a lot of friends in China, my family is in China, We also have a lot of startup friends who are CEOs and partners in China, as well, and [this ongoing] trade war is not friendly to anyone.
I do still think there is a lot of synergy [between the two markets] and that there could be a lot of potential collaboration. I still talk to my friends in China, and mobility, electrification, green energy [are all things] people are talking about [in China, as well as the U.S.]
We recently invested in a company in China that’s focused on electrification of self-driving infrastructure and [the market]. There were also discussions before [the trade war began in 2018] between U.S. OEMs and tier one and tier two [suppliers] about having more business in China, and I think they’re still quite active in China, so we’ll see. Things are very uncertain right now; it’s depressing. But hopefully the picture will be brighter [soon].
Olaf Sakkers: I think the structural tensions will get worse, bifurcating around silicon. China is relatively weak compared to other tech areas, but it’s hard to replicate the complexity around silicon, which is why you are seeing this fight around Huawei centered around access to silicon technologies.
I don’t think this is just a Trump policy. I think divisions around the U.S. and China are hard to get around and, as it pertains to mobility, you get two ecosystems forming. There’s overlap, and I think Tesla has been the most successful at bridging that gap, and there are some Chinese EV companies that are looking to export. But you’re seeing companies that are building much more [for] the domestic market, the most obvious examples being autonomous vehicles. Baidu has an ecosystem that they are setting up in China, whereas Waymo I don’t think is targeting China in the long run, and I don’t think those things will be bridged.
Reilly Brennan: I think the EV supply chain, if you just kind of look forward a few years, China just owns so much of the value stack within a battery electric vehicle — both in terms of its actual access to materials and then some of the moves [China] has made globally to lock up the supply in rare metals and things like that. So as much as we think about the future of the car business specifically around EVs, there really hasn’t been a lot of thought put into the structural disadvantage the U.S. has at the moment around a lot of components of those, and I think in addition to the [autonomous vehicle] discussion, the EV part of the U.S.-China relationship is going to get really complex.
Olaf Sakkers: Europeans are in the middle ground, where they are trying to invest in battery technologies but the regulators are forcing much more dependency on the East Asian supply chain for batteries, etc., so that’s creating really interesting tensions, with Tesla coming in and setting up a plant in Berlin and tensions and sensitivities in Europe around U.S. tech.
Europe is this huge market — it’s a bigger market than the U.S. even, with around 700 million consumers — but it’s trying to straddle the gap between the U.S. and China, and it’s hard not to be polarized in some way.