Nio's AI Phone Launch, BMW's 10-Year Warranty, and Foxconn's EV Push: This Week's Auto Innovations

Nio Launches New Phone (Link) (Link)

Summary

Chinese electric vehicle (EV) maker Nio has launched its second-generation smartphone fitted with an artificial intelligence (AI)-powered chatbot tool, reinforcing its capabilities as a leader in innovation. The new Nio Phone, starting at 6,499 yuan (US$896), has enhanced technological capabilities, allowing owners of the company’s intelligent vehicles to have a better car-driving experience, according to William Li, co-founder and CEO of the Shanghai-based carmaker. Nio, founded in 2014, launched the world’s first phone as a companion device for its vehicles last September. The second-generation phone comes with Nomi GPT, an AI-powered voice assistant, offering users improved voice-activated control experience. Nio’s push into smartphones comes at a time when an EV’s appeal in China is defined by how intelligent it is, not range or cost, as these two factors are fast losing significance because of falling production costs and competition. On Saturday, Nio also launched its SkyOS operating system and unveiled the Shenji NX9031 autonomous driving chip, further displaying its tech prowess.

Why does this matter?

1. OEMs, particularly NIO, are realizing that the software they develop for vehicles is quite similar to the software found in high-end smartphones. Given that the hardware for smartphones is becoming much more commoditized, this seems to be a smaller risk to take.
2. Ecosystem play: Opposite of what Apple wanted to do. Instead of starting with the smartphone and then moving to the car, they start with the car and then move to the smartphone.
3. What they may be underestimating: Consumer expectations for software are completely different between a vehicle and a smartphone. Excelling in both areas is a completely different challenge.

BMW gives 10 year guarantee in India for the first time (Link)

Summary

All new BMW vehicles in India come with a Two-year warranty. With Extended Warranty, you have complete peace of mind for a period of your choice. Extended Warranty packages can only be ordered within the standard warranty period. Extended Warranty is only applicable to original factory-built product specifications. The package terminates when either the kilometer limit or the time limit threshold is reached, whichever occurs earlier. Extended Warranty is transferable to subsequent owners but not transferable to another car.

What's behind this move?

1. Spare part infrastructure and warranty distribution network are in place, likely requiring significant upfront investment. This opens up new revenue streams in the existing market.
2. The rolling fleet volume and customer base have reached critical mass, making this financially viable.
3. Improved infrastructure in India leads to fewer accidents and less need for warranties.
4. Customers can now afford a single package, eliminating the need to rely on third-party dealers and allowing them to stick with BMW authorized dealers.
5. Better customer relationships over time lead to repeat purchases. Let's face it, car brand loyalty isn't what it used to be.
6. BMW has homologated their cars to a high degree with Indian-manufactured components, resulting in locally produced parts that are much cheaper than importing spares from abroad. This applies not only to existing models but also to new models, thanks to established processes and partners.
7. Over the years, Indian-spec vehicles have evolved to suit Indian driving styles and terrain, resulting in better products that can withstand the local demographics and geography.

Foxconn entering EV manufacturing (Link)

Summary

Foxconn has taken yet another step closer to producing cars. On July 24, parent company Hon Hai Technology Group reported that its subsidiary Foxconn Technology Group had signed a strategic cooperation agreement with the Henan provincial government. Under the agreement, Foxconn will create trial production plants for electric vehicles and solid-state batteries in the Zhangzhou Airport Economic Comprehensive Experimental Zone. Foxconn is investing a total of around 1 billion yuan (138 million USD), and the construction area in Zhengdong New District will be about 700 acres and consist of seven centers including a business headquarters, R&D center, and engineering center, industrial research institute, marketing center, and supply chain management center. Despite Foxconn displaying various vehicles over the last few years, the company has yet to put any into production. In January 2024, Foxconn set up an NEV company in Henan province with a registered capital of 500 million yuan (69 million USD).

The big picture:

1. Foxconn wants to be a contract manufacturer for EVs, similar to how it did for iPhones with Apple.
2. They have an open platform and have invested heavily, yet they have not successfully attracted an OEM customer.
3. They are trying to take another route instead: a joint venture.This helps offset some risks for the OEM.At the same time, it keeps the IP within the JV.
4. Potential OEMs fear that Foxconn might manufacture for competing OEMs, unlike with Apple, where it became lucrative by itself and the company grew alongside the growing iPhone market.

Automakers selling data: A missed opportunity? (Link)

Summary

Your car has been spying on you and collecting data. The New York Times reports Senators Ron Wyden of Oregon and Edward J. Markey of Massachusetts — both privacy advocates — sent a letter to the FTC on July 26th. In it, the senators called out General Motors, Hyundai and Honda for collecting driving data from customer vehicles. The letter then says this data was sold to insurance companies so they could gauge driver risk. According to the letter, data analytics firm Verisk paid Honda $25,920 over four years for information about 97,000 cars, which works out to 26 cents per car. Senators Wyden and Markey hope that FTC chairwoman Lina Khan looks into it, with their letter saying Americans' driving data should not be sold without their consent.

What did they miss?

1. Even though the feature was opt-in, they could have made it more legitimate by including it in the vehicle price instead of making it "one more" service customers have to pay for.
2. From a privacy point of view, this would have been a much better business if the insurance and data analytics firm were within the OEM group. Not only would this be a green flag from a privacy perspective, but customers would have a lower hurdle to jump to get the "in-house" insurance package rather than a third-party one. By design, the in-house insurance company would be able to offer better packages as they have all the data that other firms don't have.