In this latest MAX episode, Tu & Lei chat with Zack Anderson, Co-founder & CTO of ClearMotion.
ClearMotion's mission is to transform the quality of time in motion and its solution uses a combination of hardware and software to drive comfort, productivity, performance and safety to new limits for modern vehicle platforms.
Zack shares with Tu and Lei his journey from Darpa Grand Challenge participant as an undergrad all the way through to his current role as CTO of ClearMotion and why he thinks now is the right time for their company.
He tells a great story and gives a blueprint for how tier 1s can evolve to become major players in what's become the largest-ever disruption of the transportation space by embracing software, technology and data. And yes, all roads lead to China.
In this latest MAX episode, Tu & Lei chat with Zack Anderson, Co-founder & CTO of ClearMotion.
ClearMotion's mission is to transform the quality of time in motion and its solution uses a combination of hardware and software to drive comfort, productivity, performance and safety to new limits for modern vehicle platforms.
Zack shares with Tu and Lei his journey from Darpa Grand Challenge participant as an undergrad all the way through to his current role as CTO of ClearMotion and why he thinks now is the right time for their company.
He tells a great story and gives a blueprint for how tier 1s can evolve to become major players in what's become the largest-ever disruption of the transportation space by embracing software, technology and data. And yes, all roads lead to China.
CEM MAX#12 Zach Anderson, CTO & Co-Founder, ClearMotion
Recorded on November 14, 2022 in San Francisco
Tu Le:
Happy New Year, everyone! Tu Le here, one half of the China EVs & More duo. Outside of hosting our weekly live Twitter Spaces room, and China EVs & More podcast, Lei and I are always kicking around ideas for new ways to inform you, our audience, on all that’s been happening around the world on EV, AV and mobility sectors. When I approached Lei about launching this podcast almost three years ago, I had anticipated that what had happened in China in these sectors would have huge implications globally. And that’s precisely the case especially in Europe and the U.S., the two other largest auto markets. Despite all of the drama of 2022, China was still able to lead the world in NEV sales, around 6.7 million units. And it wasn’t close. That’s almost 100% year-over-year growth by the way. What’s more, of the 1.8 million EVs sold in Europe between Q1 and Q3 of 2022, 11% came from Chinese automakers, a significant increase form just 2% in 2020. And that number is only going to grow.
That’s why it’s so important to learn and know more about these companies, executives, brands, products, features and services that are already hitting your shores. Whether you are a consumer, analyst, consultant or banker, but especially if you are a legacy OEM or a tier-1, I’m pretty confident that there isn’t anyone out there that can provide you, the type of detailed, up to date and accurate coverage, insights and opinions that Lei and I do. Our audiences have grown significantly as the podcast piled up. And with this drop, we’ll have reached 100 episodes and that wouldn’t be possible without our loyal audience. So thank you for being curious and keeping us honest.
I’m very pleased to introduce our latest MAX episode, where we bring you conversations we’ve had with special guests from the EV, AV, chip, battery and mobility space. In this MAX episode, Lei and I get a chance to sit down with Zach Anderson, founder and CTO of ClearMotion, an automotive tech growth company thats mission is to transform quality of time spent in motion by making transportation more productive, comfortable, fun and safe. Zach’s passion for the transportation space started at a young age and continued on during his days at MIT when he participated in the DARPA Grand Challenge as an undergrad. Lei and I met Zach outside a café in Noe Valley in San Francisco, so we apologize for the recording quality.
Tu Le:
Zack, thank you for joining us. I don't know a ton about ClearMotion, Lei had kind of introduced the company to me. So can you please tell us about, first of all, your personal journey, your experience and how you became a co-founder in ClearMotion? How long have you been around? What products and services you provide? And is it specifically to the automotive sector? What other industries you're looking at?
Lei Xing:
I guess, tell us the inspiration behind this company?
Zach Anderson:
Yes, let me just start out with a little bit of sort of personal background. I’ve been pretty interested in the transportation, mobility space since really a young age. So my first business was building electric go carts that started out as a hobby in middle school. And I started driving around with electric go carts and kids in the neighborhood saw them and basically started coming to me, hey, can I actually purchase one of these? So started a business doing that. I started to actually add some sensors onto those vehicles and started just for fun. So at the time this was like sonar sensors, I was driving around sort of the alleyways of Los Angeles making these semi- autonomous. This is before even that word really was a thing. In 2004, the U.S. government put out this competition, the DARPA Grand Challenge, to create an autonomous robot, or autonomous car that would drive themselves.
Lei Xing:
I was just reading about this, but do continue.
Tu Le:
I’m a Carnegie Mellon grad, by the way.
Zach Anderson:
Oh, nice. CMU was, they were definitely the kings.
Lei Xing:
CMU plus GM.
Zach Anderson:
Absolutely. Yeah. But I guess it was a Hummer. And we had, Honda sponsored a team that I co-founded. So basically, it was mostly universities. I was still in high school at the time. So I started the only high school team, that actually made it in the final race. So we were in the Top 10, competed against Carnegie Mellon. I think that was really interesting. This was in the early days of self-driving, but it really got me pretty interested in kind of where the industry was going in the future. Ended up going to MIT, studying computer science and electrical engineering at MIT. I was always sort of thinking about starting a company, transportation space was something that was interesting to me. I met Shak there, my co-founder, and we were thinking of ideas about how we could make an impact. And we came up with an idea that initially was something slightly different than what we're doing today. But then as we were looking at sort of the industry in 2012, we sort of had this realization. The realization was that with some of the trends that were still very early at the time. So, driver assistance systems, ride sharing, Uber had just been sort of founded around that time. We saw this transition towards the passenger experience. We had this realization of the future of automotive was going to be a lot more about kind of that passenger experience in the car, than it was about horsepower and handling and all these things that sort of driven differentiation in the past.
We saw that, the passenger experience, we said, what needs to change, what technology needs to be developed to really allow that future of kind of this mobile office on wheels, this kind of living room on wheels, this environment in a car that's pleasing, comfortable and safe. And we looked at it and we said basically motion control. We need to control the motion to make for a stable ride where we can reduce motion sickness, and actually enabling a comfortable and safe ride.
Lei Xing:
So Uber was also in its early days I believe, 2012. So…
Zach Anderson:
That's right. We happened to be in New York City, one of the first cities that they deployed in and we were trying it out, and we were in the backseat. And we're coming from a meeting and I had my laptop and it was, we were like downtown going uptown. So I was trying to work in the laptop in the back seat. This car was just moving all over the place, from just the city roads. We would look at each other and we are like, this is just, this is not the future. Cars, the whole point of driver assistance is to actually give people back time once you get to Level 3. And cars today just don't enable that. So that was sort of the moment where we are like, this technology, we need to solve this problem.
Lei Xing:
So then, the next question is, it's been 10 years. How, why has it taken so long? What, because I've known you guys for at least half of that time, right? What's the secret sauce behind the technology? What has changed? What's hard about it? Why has it been so long?
Zach Anderson:
So we sort of launched into this, and I think we initially didn't appreciate how hard of a type of challenge this is. Probably a good thing. I didn't realize that.
Tu Le:
I think most EV startups can say the same thing, right? And autonomous vehicles startups would say the exact same thing.
Zach Anderson:
Because you could get something working in a limited environment pretty quickly. If you look at like Cruise, Kyle Vogt got the first autonomous cars moving pretty fast, but then really developing out all the different use cases and meeting all the requirements, that ends up being really difficult. The industry has been trying to make active suspension, what we're doing, for about 35 years. So almost all the car companies and auto suppliers have tried to do this. They haven't been able to make a mass market system that really is able to control the motion in the vehicle across the bandwidth of motion inputs that happen. And we came at it with a very simple hardware solution. So the secret sauce is basically using a motor attached to a pump that's in lockstep with the wheel. It's really simple. Basically, we use hydraulics to create mechanical gain, so we can create very high force levels with a small motor through leverage. The challenge with that is you have this motor that's spinning bidirectional up to thousands of rpm in milliseconds. So to do that without causing noise issues, to do it without causing issues with fast and transient inputs, it's very difficult. We basically had to invent a bunch of technologies, mostly software controls.
Tu Le:
Yeah, so let me interrupt you there, Zach. Because there's a lot of companies doing suspensions, Delphi, ZF, and they were just evolving, right?
Zach Anderson:
That's right.
Tu Le:
And moving the needle a little bit, a little bit forward. So talk to us about the software part, right? Where, because you took a leap and now is a revolution, or you believe your product is a revolution, not an evolution. And so why software is such an important component that they missed out on, the legacy tier-1s and tier-2s?
Zach Anderson:
I think it's just a very different way of sort of thinking about the world. I mean how we thought about things. So let's keep, create a really low cost, simple hardware system, and then use software to sort of plug those gaps, and then create a platform to enable software functionality to actually enhance functions even after the car is sold. And I'll give you an example of that. Our system cancels motion, but it also can create motion. What we're doing now is we're actually developing software to actually even enable our system to interact with the infotainment system in the car to create motion like, movie experiences.
Tu Le:
Like Dolby Atmos type of stuff.
Zach Anderson:
Exactly.
Lei Xing:
Yeah I’ve experienced that, so I know what he's talking about.
Zach Anderson:
And actually our first customer is pretty excited about this very sort of application being able to actually integrate infotainment in the vehicle. Eventually I think you're going to start to see Metaverse experiences in the car. It'll go pretty far. We're not there yet. But this is pure software. So once you have that platform and you add software control. If you think about the evolution of chassis control within the auto industry, when I was working on the DARPA Grand Challenge, we had to hook up a bunch of motors, steering columns, to even like actually turning this car. Today, it's digitized, it’s electronic, electric power steering is on every car. It was on no cars 20 years ago, that hardware has now enabled all the software for lane assistance and driver assistance. Once you digitize motion in the car, in that case, the Y-axis as steering, you can use software to create all those new functions. It's a pretty interesting way of thinking about things: creating a hardware platform to control motion, and then having all these software features and functions actually create value.
Tu Le:
So, is the hardware pretty standard off the shelf? Or is it customized? Or do you have a big mechanical engineering team and a software development team? Or how does that work?
Zach Anderson:
We do. So we're about 50:50. So about half the team is software, about half the team is mechatronics, so electronics and hardware. It's a one size fits all solution. So what we make is basically active valve device that is the same on all vehicles, but it is a relatively customized component. We're using some off the shelf components such as a brushless DC motor. But for the most part it is a customized part.
Tu Le:
Very cool. Now, you said it's a one size fits all, so it's, you can use it commercially and as well as with passenger vehicles, or?
Zach Anderson:
So our launch product is one size fits all for basically passenger cars that range anywhere from sort of smaller pass cars through pickup trucks.
Tu Le:
Ok, got it and do you see this being one of those cutting-edge technologies that will start in luxury vehicles first and then trickle its way down into to more mass market vehicles?
Zach Anderson:
When you look at most technologies, typically they'll start at a slightly higher price point, premium segment and then move down market. That's basically the trajectory we're on. What's exciting I think, is, right now, we have concrete plans to achieve pretty meaningful volumes pretty quickly, which allows us to bring cost down and start to sort of move into that mass market faster. We're starting up more premium, initially.
Tu Le:
Tell us about the NIO Capital investment. How did that come about?
Zach Anderson:
So historically, we've brought in basically investment from mostly financial investors interested in the space. It's undeniable sort of auto tech is a massive sort of market opportunity. What we were really looking for always was somebody in the boardroom as an investor that really deeply understands bringing automotive technologies to the market. And in addition to that, as we look at especially the last 2 years, just the innovation that's happened in China within the auto industry is just, it's been vast. So it's unbelievable.
Tu Le:
Let me be clear with this Zach, you just said innovation in China. So you believe that the Chinese are innovating, because I think a large portion of Western audiences still don't believe that. I think that's why I wanted to stop you for a second and emphasize that, an MIT-educated engineer is saying innovation is coming out of China. I think that's really important.
Zach Anderson:
Ultimately. I think there's a huge amount of innovation across a number of industries in China, especially the EV space.
Tu Le:
And it's because there's so much competition.
Zach Anderson:
There is a ton of competition. Things move really fast. And there's a lot of, there is a very large market. It's the world's largest automotive market. It's the world's largest EV market. It's growing faster than any other sort of market for EVs. So you are bound to have a lot of opportunities.
Lei Xing:
What is your positioning? Are you a Tier-2? Tier-1? Are you competing with the suppliers that are investing in you, like Conti, ZF, all these players? What's the dynamic there?
Zach Anderson:
We have two models. Our launch, we actually are a tier-1, that's what the OEM is looking for. So it'll be a system integrator. But we are working with some of the traditional tier-1s to supply components such as the shock absorber.
Tu Le:
So you're their frenemy.
Zach Anderson:
I would say, no, I would say we have a pretty good relationship. It's pretty symbiotic.
Tu Le:
Until it's not.
Zach Anderson:
For the companies we are working with, it's symbiotic. I think our partners understand that this is the next revolution in chassis and sort of vehicles. And we've got a leading technology, so it's symbiotic to partner together. They also have capabilities we don't have. So it's a partnership.
Tu Le:
Scale.
Zach Anderson:
Scale and a lot of customers and a lot of knowhow in how to manufacture high quality suspension components.
Tu Le:
I'm just giving you a hard time because having been in Detroit now for the last almost 3 months, catching up with some of my traditional automotive friends. I feel that they're starting to get it. It's evidenced by these companies laying off a lot of traditional engineers and moving more towards this mechatronics and the software developers, right? And begrudgingly, they are moving to EVs. We'll see that more and more in the next 4 or 5 years. I feel that there's huge opportunities for companies like yours to really make a difference here, because you're going to be the catalyst for these Contis to move faster, for these ZFs to move faster. So.
Lei Xing:
So, the first applications of this? Is it going to be on an EV or on an ICE?
Zach Anderson:
I would say that almost all of the customers we are talking to now, they're not all sure play EV players, but they're all looking at EV launches. And I think that's just because an EV is more than an electric motor and batteries. It really is where most of these automakers are bringing out their latest technology. It's appealing to new type of consumer that's really looking at the car is more of a technology device and a smartphone.
Tu Le:
That begs a good question. Is your technology more suited to software driven vehicles like electric vehicles? Or are you, you're obviously platform agnostic, but is it easier to work on a NIO and a BYD or a Tesla versus a traditional Tahoe or Mercedes?
Zach Anderson:
The system works on ICE or an EV but there are some cost advantages to directly integrating into an EV given the power systems that are already on board. And also, I would say that a lot of EVs have pretty advanced infrastructure for over the air (OTA) updates. A lot of EVs coming out have pretty powerful GPUs and CPUs for processing, which allows you some of more advanced functions that I'll talk about maybe a little later. So there are some advantages in EVs.
Lei Xing:
Talk about this plant, manufacturing and Shanghai where you're headed.
Zach Anderson:
So as I can't say, exactly where the location is yet, we're actually still in sort of final negotiations to determine the exact location. It's in China. We're currently in discussions to finalize that location. This is going to be for final assembly. So basically it would integrate the components, the active valve, which we work with some contract manufacturers, and the damper body, and putting this together, then sell to our OEM customers.
Lei Xing:
So this is not a greenfield. Is this what you are saying?
Zach Anderson:
This is probably going to be a brownfield operation.
Lei Xing:
And that's supposed to come online…
Zach Anderson:
2024.
Lei Xing:
2024. What kind of volumes are you looking at? And where do you see yourself, let's say, in 5 years, or end of the decade?
Zach Anderson:
Yeah. So I'd say within 5 years, it is a huge market opportunity here and we're really hoping that we're going to grow as fast as possible. We're also really looking at what does it take to actually build an auto tech business? And you need to launch, nameplate by nameplate, and there's some growth curve to that.
Tu Le:
Traditional auto automakers, they're used to being the 800-pound gorilla and can beat up suppliers left and right. And so you are a company that has IP that they desire, puts you more of what I would consider more of a partnership. But I think psychologically, they still need to get over this “we are the 800-pound gorilla, you do as we say” right? And so how are you dealing with some of those growing pains like understanding what the customers’ needs are, even though they might be wrong at times? Can you tell us a little about how you're managing accounts and talking to your potential customers about stuff like that?
Zach Anderson:
Maybe just quickly to get back to your last question, we are looking at like millions of vehicles, basically. It's sort of the projection. It's sort of the like 6-year horizon.
Lei Xing:
That’s huge.
Zach Anderson:
We've got sort of a clear plan for what that takes, nameplate after nameplate. I'm talking about basically number of vehicles.
Tu Le:
So just being more of a tech-focused engineer than an automotive-focused engineer. When you're dealing with these traditional automakers, can you tell us anecdotally some of the challenges, some of the funny stories or anything that you can say, well you know, I don't, because I've been in meetings where I know the vice president doesn't even know what languages are being coded, what systems are being used, but they're trying to dominate the meeting. And so I'm not trying to have you get anybody in trouble, but could you just tell us some of these stories, because I think they're worth kind of mentioning.
Zach Anderson:
Probably need to be careful.
Tu Le:
I mean just kind of like crazy stories where you're like. I just got out of this meeting where this guy did this, right? Or this person did this, because there's always those meetings, which is as a startup. A lot of the traditional auto guys at a director or VP level, they're not dealing with startups, right? They're dealing with their underlings who are dealing with startups. And so, if you're as a startup important enough to get in front of the VP of purchasing or whatever supplier quality, that's a big deal. But they sometimes are all thugs because they think there's this established process that you probably have, and you're like, okay, we're still trying to figure that out, our team is growing, blah, blah, blah. Maybe you can just like a 30,000-foot level, kind of being of a startup that is trying to work with 120-year-old companies that are very set in their ways, just a general kind of.
Zach Anderson:
So here's what I've learned. You need to play the game. So here's what I’ve learned. You need to sort of play the game. And that means walking through all the technical diligence, walking through the grueling process, and like an insider in automotive. And we hired about half our team is sort of automotive, has automotive backgrounds, other half is more technology and pure tech, but you also need to really inspire a couple, you don't need that many, maybe a couple like high-level leaders that really see the vision where this is going and why this is really important. And this isn't a typical automotive product that goes through a cycle. You need those people driving things internally. When you get that vision, inspiration, one or two key decision makers, and then you play the typical process with people that understand how it’s done, that's when you make progress.
Lei Xing:
I think what some of the Chinese smart EVs, their type of experiences, or features they are introducing, for example, that Nreal in NIO cars, these, they are putting up these screens for backseat passengers or rear seat passengers.
Tu Le:
BMW.
Lei Xing:
That's the perfect opportunity because when you are having a conference on AR, the ride is very important for you to not be sick. And I just spoke, I actually just interviewed Ola Kallenius in the Paris Auto Show, and he was kind of skeptical about that NIO thing in the back. He said, oh, nauseous, what can you do? That's the pain point that you want to solve.
Tu Le:
But this is coming from the CEO of Mercedes who probably sells half of their S-Classes as Ls, right? Long wheelbase, right?
Lei Xing:
And the people sit in the back, that's what they do, right? And that's, how do you further improve the experience?
Tu Le:
If you look at the latest commercials for NIO, for Li Auto, it's all about family, it's all about entertainment, watching videos in the back seat and stuff.
Zach Anderson:
You are seeing this as this bridging the gap, because Mercedes S-Class long version, this is a very niche model. Once you get to L3, and as you get to lower cost more and more, so entertainment for the full family in the car, these use cases become much more mass market. So like this is the time as we think about one of the things you asked how long it took. And I said technology takes time and now we're there. But the other thing is like the market today is really at the point where I think these immersive experiences, being able to like work, not get motion sick, be entertained in the car. This is like now, basically. I think that's an exciting opportunity for us.
Lei Xing:
What, because I talked about the last 5 years or yeah, 5 years since I last met you and was there, because I felt like I didn't hear much about ClearMotion. Was…
Zach Anderson:
That was intentional.
Tu Le:
They are stealth, man, they are stealth.
Zach Anderson:
It wasn’t like we were coming down the runway and we turned on stealth.
Lei Xing:
So it was more about, let's say, patience, perseverance, rather than, let's say, it was other difficulties, or the market is not already and you kind of stuck to it.
Zach Anderson:
It wasn't that. No, we've had like enormous market demand I’d say, like pretty consistently, like it has been strong market demand. The tech wasn't ready early on. So when we first met, technology wasn't there. We were able to create demonstrations, the system worked, but it didn't work every single use case very well. Because the level of refinement, just to give you an example, 1,000th of our force capability. If that's cyclic, you’d hear it as noise in the car, 1,000. So we had to eliminate down to such a precise level to make the system work. And that took time, what we realized was that we had more demand than we were ready to service when the product wasn't ready. So we said we need to bite it down, work on the tech, pick our first customer really strategically, get in the market and then open the funnel. And now we're at the point where we're sort of ready to start opening the funnel.
Tu Le:
I think you're making an example of what auto grade is, right? Because if you're a consumer’s product, you'd have been fine to launch the product. But auto grade is like bumps, like every single scenario is like this thing is going to fall off because there's so many bumps in Michigan, right? And so I think it was pretty smart of you because I think the startups that get that funding, they have pressure to launch products, and that's where they fail a lot of times because they get a bad reputation, because a couple of the early set of products is not great, and they're not able to update the software as quickly as possible. So I think with the IRA happening and I mentioned this before we started recording, the United States is ready to move forward with a lot of new technology. One of the things that Lei and I believe is that the LiDAR that's already standard in most Chinese EVs at a certain price point, that's already bleeding over to American cars, right?
Lei Xing:
And following on that point was one of my questions is so much has changed, the world has changed, the auto industry has changed, China has changed, all of that, the supply disruptions, COVID, geopolitical climate. Does that affect you in anyway, for what you're doing?
Zach Anderson:
It's definitely had some effects. I would say that the global economy, especially in the automotive space, is pretty intertwined and symbiotic and reliant on each other. And I think those symbiotic relationships will prevail and they have to. But I mean there have been some near-term sort of challenges.
Lei Xing:
Okay. Are you happy with your finances?
Zach Anderson:
Yeah.
Lei Xing:
Do you need, are you looking for additional investment or how is that?
Zach Anderson:
Yeah we are just kicking off a round. So, we're going to be talking to investors.
Lei Xing:
But it's, looking toward 2024 production, that’s…
Zach Anderson:
That’s getting the launch. So the next round is get us to SOP, start of production.
Lei Xing:
So you have the countdown, basically.
Zach Anderson:
2024.
Tu Le:
How has the IRA benefited you, hurt you? Or how do you look at that? Because I mean it's a game changer for the United States. And so can you comment on when it first came out? Did you think it was going to happen? Because me living in Beijing, I was trying to be the cheerleader for Detroit, the United States. Unfortunately, there was only Tesla, Rivian and Lucid that I could really kind of cheerlead for, but I believe that there will be in the next 5 years some fledgling EV startups because now you can Frankenstein together a vehicle pretty quickly. You still need that billion dollars to get it to production, but it's a little bit easier now. So can you comment on what you think, or how you think the IRA may help you or create more challenges for you?
Zach Anderson:
I'd say in the United States, I think you've got a lot of entrepreneurs that are pretty excited about the auto space, both at the OEM level including new…
Tu Le:
You're talking to two nerds here.
Zach Anderson:
Yeah, I think there is two levels of innovation. One is like addressing market needs. And I think Rivian is really interesting like they saw a market need in sort of the EV space that was totally untapped at the time. Now a lot of people are catching up, but it was untapped, and they said this is a real opportunity, let's do this and I think they've been successful. I think the cost to start a car company has come, it's still very expensive and difficult, but it has come down. And I think there's more availability of parts that are more standardized.
Tu Le:
And I think another realization, I didn’t mean to interrupt, is that investors now know the time horizon for return of investment is going to be much longer than 3 to 5 years, right?
Zach Anderson:
That's important. And I would say that the, when we started the company, there weren't too many investors investing in auto tech. Really, we were finding investors that had been really successful going to a completely sort of new area that didn't have much venture capital, but like they were really successful. I'm doing something different, doing something hard tech. But now it's like, okay, you have a lot of investors that understand the horizon, and understand the opportunity. You could build, like how many industries could you really build, like a really large multi-billion dollar in a company, revenue company.
Tu Le:
There's so many branches that come off of that like tier-1, like the automotive companies and Tesla all talk about this services revenue that's supposed to pop up. I'm skeptical because the Apples and the Googles and the Amazons will, you have to pry that from their dead hands. But that's what makes it super exciting by 2030, we're going to see in the top 10 mobility and transportation companies, probably some tech companies, probably some contract manufacturers like a Foxconn, maybe in the top 10, and then traditional legacies. So do you also see kind of this amalgamation of different, currently different players that become leaders in the space?
Zach Anderson:
Definitely, I think as consumer kind of interest shift, it creates new opportunity. I'd say as consumer interest shifts, regulation shifts, as we just talked about some of the states that are starting to create EV mandates, such as California, that’s driving sort of new market opportunities, and then technologies are enabling market opportunities as well. So I think those three things, which means tech, consumer interests and regulations. It's creating this environment that's really right for innovation, for new players entering the market, for existing players doing things differently. I think that there's a place for, there is kind of a place for everybody, to some degree, as long as…
Tu Le:
The passenger vehicle market is huge, 80-90 million units a year. So.
Zach Anderson:
I think you'll even see an expansion of sort of opportunity about services. There's an expansion of sort of monetization opportunities, because again, it's more than just selling a transportation tool. It's also about the people's time. If you think about like Facebook or Meta, these companies, it's all about capturing people's attention and monetizing that attention. If you think about people spending maybe an hour average per day in a car, that's a significant opportunity.
Lei Xing:
Are you looking to serve the robotaxi market or purely focused on retail now?
Zach Anderson:
Are we focused or was I just talking about?
Lei Xing:
No, are you looking to serve, to supply the robotaxi market?
Zach Anderson:
Right now we are very focused on the market opportunity today, which is…
Tu Le
We’ve talked for over 40 minutes, not one time about autonomous vehicles until now, right, that’s awesome.
Zach Anderson:
Have you seen some Cruise around?
Lei Xing:
We're going to definitely try it. Hopefully to experience.
Zach Anderson:
Constantly there’s Waymos.
Lei Xing:
Yeah, we saw one just on our way.
Tu Le:
So I’ve gotten to ride in most of or not most but quite a few of the Chinese ones. And so I'm anxious to go driverless (on Cruise).
Zach Anderson:
Who are you most impressed by, which company do you think?
Tu Le:
So I think Baidu has done a really good job, but you would expect them because they're the most well capitalized and technology forward company, companies like WeRide. I think they're kind of chugging away and Lei had coined this term, Chinafornia, and there's all these Chinese companies.
Lei Xing:
Pony.ai, WeRide, DeepRoute, these companies.
Tu Le:
DeepRoute really quickly. So there's this first wave: Baidu, WeRide, Momenta, and then you move into the second wave where it's DeepRoute, QCraft, who don't need as much capital and DeepRoute, for instance, launched an L4-capable hardware/software stack for $10,000. And Baidu, their Apollo, they haven't announced a manufacturer for it, but they announced a Level 4 robotaxi for $33,000 or $37,000. And so this is what I'm talking about before we started recording where the Chinese innovation is pushing into the west and the western companies instead of building technologies and R&D for two different platforms, ICE and EV, they're just switching over.
Lei Xing:
I think the Chinese companies they really made companies like NVIDIA, Qualcomm into what they are because they talk about the top-notch products, the 8155s, the Orins. That's their signature, that's their brand. If you don't have those, you're, right?
Tu Le:
And this is where it's going to get really interesting. And I think this is probably where you as a leader of this company also need to start paying, I'm sure you have, paying attention, because NVIDIA is, it’s going to bifurcate, right? Because the server chips they couldn't sell those, but now they have a China only server chip that can be sold. And so how that's going to work in the future? Because if it's an ASIC, you can just turn on and turn off features pretty easily.
Lei Xing:
On the flip side, these companies are also very, in the rearview mirror, there's Horizon Robotics. There's these type of Chinese companies that are going after NVIDIAs, Qualcomms and possibly you.
Tu Le:
Not only that I mean GM now has their own ASICs designing, NIO is designing their own ASICs, and so it goes back to the Amazons and the EVs and the ride hailing and mobility companies. And so we're going to see competitors that we wouldn't have even thought of 5 years ago, right?
Lei Xing:
That's what I was saying in terms you guys want to, the branding needs to be carefully thought whether it's “keli mengxing” or something that’s just like ClearMotion, something in Chinese, that's very important.
Tu Le:
You need some social media Ninjas too. Like in China I mean.
Zach Anderson:
There's a real opportunity, I'd say for building a brand around this because we're ultimately selling an experience if you think about Audi in the early days and that was…
Lei Xing:
You're probably going to be something of a Nreal for a NIO, and let's say, right, we have ClearMotion. That's our selling point.
Tu Le:
It's like Intel Inside back in the day for the X86. If you can carve, because there are, I can't think of any company right now, because everything is either back end or tier-1, but if you could brand it, so it's like ClearMotion inside or ClearMotion keeps you sane or whatever, I don't know, but.
Zach Anderson:
Totally agree. I think this is ingredient branding. I remember the story of when my mother was buying a car in the 90s. I remember the criteria she wanted, was she wanted the Bose sound system in the car, that was like, so what automakers offered the Bose sound system, right? It's like she bought a car based on this one technology that created this experience in the car, and then you narrow it down at two automakers at the time, and she chose one of those cars, and it's an opportunity and creates value for the automakers.
Lei Xing:
So maybe probably at the end of it, speaking of Bose, you acquired Bose’s ride, comfort ride business, I believe, right? And then on the acquisition side, are you all set, are you good with your technology in terms of who you're working with? That's done, right?
Zach Anderson:
I say we have all the pieces we need right now on the tech side. I want, I'd say, in the future, we always might be open to sort of the right opportunity on acquisition side but I think we're set for initial launch right now. We're pretty focused on really getting that launch out.
Tu Le:
So is your product roadmap pretty robust over the next several years? Or are you kind of because quite frankly, I’ve spoken with a few of the Chinese EV startups that are either going to launch and this next year. And they've had to make certain adjustments due to market conditions between U.S. and China, things like that, right? And so do you feel that your product roadmap for the next 3, 5, 7 years is kind of geopolitics proof, or do you think there's some flexibility in that? Because when you talk software, there's data, right? And when you talk IP then right?
Zach Anderson:
I mean IP, we've got global like, we’ve filed patents in all the major auto markets. So I think that's not an issue from a geopolitical perspective. Data is maybe the one area where needs some thinking. So we've developed a platform and this is sort of a second product in our pipeline, but it's basically a platform that we're developing to crowd source, road surface data. And we can actually stream into cars, road conditions to make better decisions. So both for suspension, but even for driver assistance like automatic emergency braking, we could tell it if there's ice in that lane up ahead. We can also use the road surface itself to localize cars. So it's actually enhanced localization technology using that road fingerprint, which is very unique and actually a few centimeters. But that's something that collects data, has a mapping component. And there are some regulatory sort of issues there. Our strategy for that is probably sort of local partners, data that resides in specific countries to make sure we're following all laws as we look at that opportunity.
Tu Le:
Because it took Xpeng almost 2 years to get Guangzhou HD maps approved.
Lei Xing:
For their city-NGP so.
Zach Anderson:
So it's difficult.
Tu Le:
And I smirk because there was a, I went to the Robotics Institute at Carnegie Mellon before the COVID lockdown. And there's a company, a startup in the Robotics Institute that was using public buses to map the bumps in the road. And they said that none of the cities wanted it, because it would, basically the construction people, the transportation people would be out of work. So that's kind of the irony of it.
Lei Xing:
But I think, my, now that Xi and Biden they have met, I hope that's a starting point of a thawing of this kind of the tension. But on the flip side, I think, for the foreseeable future, this protectionistic instinct is going to be there for the foreseeable future, because you, right? And you want the best for your interest. But I think so that's going to be an issue of how they balance that out. And hopefully that won't affect what you're doing.
Tu Le:
So Zach, thank you for joining us, very illuminating. First of all, if you have any questions for us, we'll take the next few minutes. If not. Let's keep in touch because I would love to, first of all, being a nerd, love to actually try out your technology.
Lei Xing:
Come down to Boston, anytime.
Zach Anderson:
If you're in Boston. Seriously, if you're in Boston, like we could set up a demo, okay?
Tu Le:
Ok, thanks again.
Lei Xing:
From my side. Thank you, Zach. I wish, ever since I've met you guys, China has always been a factor and now it's playing even a more factor. So I wish nothing but the best for you guys and hope everything works out as planned and good luck. Thank you and thank you for this awesome conversation.
Zach Anderson:
Absolutely. It was great chatting.
Lei Xing:
This is your co-host Lei Xing. There is a Chinese saying that goes like this: it takes 10 years to forge a fine sword, which basically means persistence is the key to success. This applies perfectly to ClearMotion as they move onto the next chapter of their 10+ year journey, which is manufacturing and actually putting their products onto vehicles that consumers can finally buy. Zach recently informed us that he was in China for a couple of weeks to iron out some of those details and meet with potential customers and was impressed with the growth of the EV market there. We wish Zach and his team the best of luck and are looking forward to seeing ClearMotion “inside” many of the upcoming new vehicle launches in China and the rest of the world.
Tu Le:
Lei and I will be sharing more of our conversations with the men & women around the world moving the EV, AV and mobility sectors forward as part of this China EVs & More MAX series. Some folks will be instantly recognizable, but some will just be people that are doing amazing things in the space that we think deserve to be highlighted. Don’t worry though, Lei and I will continue to host our live weekly China EVs & More Twitter Spaces room that summarizes that week’s most important news coming out of the China EV, AV and mobility space. For those that can’t catch the live show, you can find the China EVs & More pod on all major platforms or wherever you normally get your podcasts.
As EV adoption reaches its global tipping point, it’ll be even more important to stay updated on everything that’s happening here. Lei and I are confident that China EVs & More is the best resource to do that. Until next time, as always, thanks for listening!