Byton – End of the road?

Byton’s trouble is an opportunity for others.

• One of my favourite electric car makers is in the kind of trouble from which it may not recover which I think spells a great opportunity for an OEM who has not yet figured out how to deal with the issues facing the industry over the next 20 years.
• Byton is my favourite EV company not for financial reasons but because prior to its launch, the company had recognised most of the issues facing the automotive industry and attempted to deal with them in its designs.
• The main issues are:
  • First, platform: The biggest competitor for the vehicle infotainment unit is the smartphone.
  • With the infotainment unit product cycle tied to the vehicle’s cycle (4 years), every infotainment unit is obsolete before it leaves the showroom.
  • To have any chance of keeping the smartphone from taking over, the OEMs have to decouple the digital product cycle from the rest of the vehicle.
  • Second, user experience: which remains poor in almost all vehicles today.
  • OEMs have to figure out how to delight the vehicle’s occupants and keep the smartphone in the user’s pocket.
  • Failure to do this will ensure that many of the digital services that are related to the vehicle, its location and destination will be offered by the smartphone and not the vehicle.
  • This will prevent the OEM from accessing some or all of the digital revenues pertinent to the vehicle which I think will spell disaster.
  • This is because electrification and autonomy have the potential to substantially reduce demand for vehicles and the OEMs will need these revenues to make up for the loss of vehicle sales.
  • Third, ship and remember: Most car makers today forget about a vehicle the minute it leaves the factory.
  • As the digital ecosystems have clearly demonstrated, to monetise one’s users by any method requires the service or product provider to have some kind of relationship with that user.
  • Consequently, any OEM who intends to monetise digital services must begin to build a proper relationship with the users of its products.
  • Very few, if any, have had any success or even attempted to do this with the exception of Tesla.
• What has always impressed me about Byton is that the company has long recognised these problems and has built solutions into its designs to deal with them.
• In my opinion, Byton is the closest to being able to match the digital experience and integration that Tesla offers in its vehicles.
• Unfortunately, Byton has yet to ship a single vehicle (I don’t count pre-orders) which means that it effectively has no revenues.
• The pandemic has really hit short-term automotive demand and greatly exacerbated the financial pressure that Byton was already struggling with at the end of 2019.
• The net result is that Byton has furloughed almost all of its 800 staff building vehicles in China and I suspect many of its other employees around the world.
• There is a distinct possibility that it never starts up again, meaning that this is the end of the road for Byton in its current form.
• This means that its owners will be more willing to sell the company and I think that there is some valuable IP to be had at a bargain price.
• Hence, I think Byton could easily end up selling itself to one of the bigger OEMs and becoming the electric vehicle part of the company.
• This is precisely what Volvo has done with Polestar which could become a model for the industry.
• There is more consolidation to come in the already crowded electrical vehicle industry which is being greatly accelerated by the pandemic.