par Gabriel Plassat • Innovation

FabMob Trip in Shenzhen

David Li is a chinese entrepreneur based in Shenzhen. He founded Shenzhen Open Innovation Lab, SZOIL. SZOIL is a space and platform for worldwide markers to communicate and cooperate. One of SZOIL’s four functions is industry chain collaboration service. They aim for example to connect mobility cooperatives and the open ecosystem of LSEV in China.

Interested by innovation and hardware, David analyzes the impact of large mobility service cooperation, introduces the concept of mobility coop and explains how China’s LSEV ecosystem can play a role in helping each community in reclaiming control of its own mobility.

[source SZOIL] LSEV in China represents a different approach in building of the electric vehicles that responds to the needs of the communities. These inexpensive and capable electric cars emerged from the small towns in the provinces of Hebei and Shandong to address the requirements of residents for a more comfortable and affordable alternative to motorcycles. The LSEV came out of local factories making golf cars and motorcycle and sold for on average of $2,000. Solving the right problem for the right group, the LSEV took off in China at rapid speed. By 2018, estimated 5 million units were in use and 1.8 million a year sold mainly in three provinces; Shandong, Hebei, and Henan. The industry established and grew without government subsidies. In comparison, even with all the governmental subsidies, there were only 3.1 million plug-in and hybrids on the road around the world by 2018 and the global sales barely passed 1 million. The rapid emergence of LSEV in China has been noted by Harvard University Professor Clayton Christensen of « Innovators Dilemma » as the next big Disruptive Innovation in Mobility.

[source Christensen] Although many may assume that flashy, high-end options such as the Tesla Model S will blaze the path for electric vehicles (EVs), the Theory of Disruptive Innovation indicates a far less assuming frontrunner: low-speed electric vehicles (LSEVs). Their shortcomings—low top speed and limited driving range—are actually hallmarks of disruption and, like all Disruptive Innovations, they compete on new measures of performance such as simplicity, convenience, and affordability that appeal to nontraditional consumers.

LSEVs have found particular success in China, where they are primarily targeting nonconsumers—customers who cannot afford a more traditional car, and are therefore happy to embrace a low-end alternative. A careful assessment of LSEV makers’ business model, deployment of technology, and competitive landscape underscores their disruptive potential.

LSEV manufacturers have positioned themselves within a coherent network of suppliers and are targeting the low end of the market with a small-scale, low-cost business model. In doing so, they are well placed to earn profits at low price points, while also having the opportunity to make improvements as they obtain customer feedback and explore new practices.

For LSEVs to be disruptive, they’ll eventually need to migrate towards higher-performance, higher profit-margin tiers of the market. Improvements in manufacturing processes, battery, and motor technologies should enable this upmarket march. However, continual innovation will be vital in order to preserve their cost advantage as they aim to appeal to more demanding customers. France can be attractive for these vehicles with an adapted regulation.

Incumbent automakers in China appear to be largely uninterested in competing head-on with LSEVs and show no signs of changing their tune. So long as they remain focused on their traditional customers, LSEV makers’ predominant competition will be nonconsumption.

While LSEVs may not pose an immediate threat to mainstream automakers given their initial focus on the low end of the market, their early moves indicate that they soon will—in China and beyond. To that end, both incumbents and new entrant automakers should not dismiss the disruptive potential of LSEVs, but rather chart their own disruptive paths accordingly. By launching their own low-end EVs in China and selectively exploring other emerging markets, forward-thinking automakers stand to not only stay a step ahead of regulation, but also avoid sowing the seeds for their own disruption while capturing the next wave of growth.

[source SZOIL] David Li also introduce the concept of Mobility Coop which is the banding together of individuals within a community to ensure easy and free movement of people and goods using different types of vehicles, operations and platforms to foster mobility from one location to another. The type vehicles used may vary depending on availability and affordability.

The type of vehicles chosen by the coops is important, as it could have an impact on the future of the community. Over the past several decades, there has been a strong focus on reducing carbon footprint generated by the internal combustion engine vehicles, due to its impact of the environment. Large corporations have stood in the way of the development of cleaner and more energy efficient vehicles as their focus has primarily been on making bigger and faster engines.  Communities across the globe have urged the automobile industry to make more environmentally friendly vehicles, such as electric vehicles. The concerns raised by communities across the globe have mostly gone unanswered since the large corporations own the majority of the market share.

David Li co-organizes our FabMob trip in shenzhen in November (24th-27th) as we want to analyse deeply how LSEV, open hardware and cooperative can change mobility at large scale in Europe.

Don’t hesitate to contact us if you are interested ?