Inside Transportation

For April 28, 2023

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Hey Insiders. Today we're bringing you extra analysis of Mobileye's outlook and Red Power Bikes' fourth round of layoffs.

Scroll down for some quick hits, then let us know if you'd like to see more in future issues!

Nicolas
/p/mobilitynerd

Mobileye, an Intel unit that develops advanced driver-assist systems, reported an increase in revenue by 16% YoY to $458M in Q1. The company increased its system price per unit from $51 in Q1 2022 to $53.90, as its systems went into the Zeekr 009 luxury minivan in the first quarter. Mobileye's operating margin, however, decreased from -12% in Q1 2022 to -18% this past quarter, and its net loss widened from $60M to $79M. While the company was able to pass on an increased production cost of the EyeQ chip to its customers, its research and development expenses were driven up by increased headcount and costs related to future products.

Mobileye lowered its expectations for 2023 from an originally estimated range between $2.19B and $2.28B to $2.06B and $2.11B, despite Polestar launching sales of its fourth model in Q4 with the Supervision "hands off" ADAS. The company attributes its outlook to lower electric vehicle demand in China.

Mobileye is highly dependent on its contract with Geely, expecting to deliver hardware beyond the Zeekr brand for two additional sub-brands in China in H2. The new shipments would include those for the launch of the Polestar 4 in China. Mobileye also holds a deal with EV company NIO, which sold 31,041 vehicles in Q1. NIO has been under pressure from Tesla's price cuts in China, which in January cut its prices by 13% to 24% versus September. This was followed by BYD, which cut sticker prices by up to ~$1,440; however, NIO CEO William Li said, "We will certainly not join the price war," despite new vehicles launching in the market.

Units across brands sold under the "new energy vehicle" category in China, which includes plug-in hybrids, decreased in January by 35% YoY to 1,649,000, attributed to a shortage in semiconductors stemming from COVID-19 outbreaks. Yet, as the supply chains recovered through the course of Q1, customer demand decreased as the global market downturn impacts product exports, thus, affecting the local economy.

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Rad Power Bikes announced it would conduct its fourth round of layoffs within 12 months. The company attributes the reduced headcount to the wider economic downturn. The e-bike manufacturer currently claims more than 550,000 riders globally as the mode of transport gained unprecedented popularity during the pandemic. This is reflected in the vast difference between the amount of Rad Power Bikes' Series C versus its Series A. By its Series D, the company had a $1.65B post-money valuation. Despite its rise in funding and valuation, Rad Power Bikes' multiple rounds of layoffs likely involve concerns over a prior increase in headcount by more than 2X within 12 months and miscalculations in the reduction of roles to extend its run rate.

Despite the increase in demand and funding, Rad Power Bikes has had to deal with issues along the way, including lawsuits over a wrongful death accident and property damage, in addition to the recall of 30,000 bikes over a misaligned rim strip on the tire, which increased the risk of crashing or falling. The company then laid off 100 employees in April 2022 and 62 in June. By November, Rad Power Bikes replaced CEO Mike Radenbaugh with former Sony executive Phil Molyneux. Under the new CEO, the company again laid off an undisclosed amount in December. Regarding the most recent round of layoffs, the company released a statement that reads, "We hoped the changes we implemented last year would put Rad in a better position to withstand the current economic downturn."

Prior to securing mezzanine financing and other debt, Rad Power Bike competitor Vanmoof reported it had been close to collapse as it could not keep up with the rise in demand and supply costs. Similarly to Rad Power, Vanmoof had last raised in 2021. The Dutch company was able to close a $128M Series C, a substantial increase from its $40.28M Series B in 2020 and a world away from the $2.95M it raised through crowdfunding in 2017. According to Pitchbook, Vanmoof had grown from 260 employees in September 2021 to 1,000 at the start of 2023, which leads to speculation about it having impacted its run rate in Q4. Similarly, Rad Power had gone from 280 employees in September 2020 to 615 in October 2021; thus, in order to extend its runway without incurring debt, raising a VC down-round, or impacting its supply, it is likely the bike manufacturer would have had no other choice but to reduce headcount.

Top News Stories:

Tesla is opening five Superchargers in each of Shanghai and Beijing. The EV company operates 1,600 Supercharger hubs with 10,000 connectors in China.
The Federal Highway Administration is opening the application process for $160M for projects that lower emissions from idling trucks at ports.
Hawaiian Airlines plans to begin cargo flights on behalf of Amazon in Q4, using an initial fleet of 10 Airbus A330-300 aircraft.
Aurora Innovation signed a deal with Continental for the hardware of the future versions of the Driver autonomous trucking system.

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Nicolas Saravia

Sr. Analyst

Nicolas S. is a Sr. Analyst at Inside, covering transportation and startup trends. He is an avid map maker and data nerd. Nicolas has worked in the shared-scooter space, as well as advised e-bike and moped startups. Follow him at @MobilityNerd.

This newsletter was edited by Aaron Crutchfield

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