The smart cities market has witnessed significant growth, with a valuation of US$ 656.8bn in 2022 at a CAGR of ~25.8% from 2023 to 2030. This growth can be attributed to various factors, including increasing urbanization, resource management needs, and the demand for sustainable energy utilization.
While the concept of “smart cities” promises improved urban living and increased efficiency, a perplexing challenge arises – there is no universal definition of what truly constitutes a smart city.
From AI and IoT to 5G and renewable energy sources, some focus on technological integration and data-driven governance, while others emphasize citizen-centric approaches and sustainability as defining factors. Nonetheless, it becomes evident that “smartness” goes beyond technological advancements.
The following sectors play a crucial role:
Urban Mobility: Shared Mobility and Mobility-as-a-Service (MaaS) platforms form the backbone of smart urban mobility. This sector is a dynamic and rapidly evolving landscape, characterized by high valuations. The micro mobility sub-sector has experienced significant growth in recent years, leading to consolidation and IPOs among big players. New entrants may struggle to compete without access to substantial capital or groundbreaking technology, limiting their competitive advantage.
In peer-to-peer carsharing, growth is evident, but success heavily relies on network effects, making it difficult for newcomers to catch up with established companies. However, there are still untapped markets to explore, and the sector is projected to grow at a considerable rate from 2021 to 2030. IPOs are emerging, but certain challenges related to company practices and user protection need to be addressed.
Autonomous shared mobility is an area with promising potential, despite the technology not yet being ready for commercialization. We will keep an eye on key players and supporting systems, as well as other applications like autonomous delivery robots. Regulations will play a significant role in the sector’s future development.
Delivery and Transport: First Mile Delivery and Last Mile Delivery present unique challenges, with a landscape dominated by established companies. Early excitement and high expectations give way to a more realistic assessment of challenges and limitations. For instance, in B2C deliveries, customers are primarily concerned with receiving their goods quickly and reliably. How the deliveries are made, whether by conventional methods or through drones, is of secondary importance to most customers.
Despite these hurdles, the delivery robot industry still attracts both established companies and new players. Major players like Amazon are partnering with manufacturers like Rivian to develop next-generation electric delivery trucks. Smaller players are also attracting attention from large delivery conglomerates for deals or acquisitions. Delivery robots could potentially offer a cost-effective solution for smaller, on-demand deliveries, including applications in the eCommerce sector.
Energy and Utilities: Various sub-sectors can be further categorized, including Energy generation and renewable energy resources, energy transmission and smart grids, and energy consumption.
In terms of energy resources, solar power is the most common and efficiently distributed energy resource for residential use. Solar technology is continuously improving, creating opportunities for companies with good tech and interoperability with residential BEMS and solar charging solutions. Wind and fuel cells, on the other hand, are deployed in situations where load balancing and complete off-grid capabilities are needed.
Within the Energy Consumption sector, Micro-grid Battery Energy Storage Systems (BESS) and Smart Metering and Monitoring are gaining considerable attention as the demand for clean energy solutions rises. The BESS industry is dominated by major players but is expected to experience significant growth in the future. It will be intriguing to observe how the market divides between smaller-scale systems (1-5 MWh) and larger-scale solutions. These systems play a crucial role in balancing loads from renewable sources and safeguarding against power outages.
Smart Infrastructure, Sensors, and Data Collection: Smart Infrastructure encompasses sensor networks, water and waste management systems, and digital twins for infrastructure planning. It also includes environmental monitoring and parking technologies integrated with connectivity to facilitate real-time data exchanges.
The deployment of environmental sensors plays a vital role in the sustainability elements of a smart city. Currently, this sector is dominated by major sensor market players. M&A is a common route for growth in this sector.
Within this sector is also the parking management industry, where APAC is expected to be the most rapidly growing market, driven by the development in connected road and parking infrastructures. The challenge lies in integrating all the of traffic control hardware and software components into a unified platform, which acts as a barrier for new entrants.
Public Safety and Security: This sector covers surveillance and monitoring, emergency management, smart healthcare systems, and cybersecurity, a sector that is not entirely fitting to our investment focus.
However, automotive cybersecurity is a notable area where it is increasingly applicable to smart energy grid and EV sector, where there are growing concerns over user privacy and data integrity between smart meters and grid entities. Moreover, traces left by EV charges may lead to user profiling and privacy violations. Established companies such as Intel and Continental are actively invested in this industry. It is likely that a standard will be developed, and OEMs will integrate their operations and product developments in the solution. We are seeing the rise in demand for automotive cybersecurity solutions such as communication protocol, encryption solution, and Public Key Infrastructure (PKI) to prevent data tampering, which, going forward, this would be an interesting area.
In conclusion, the complexity of smart cities lies in the interconnectedness of urban mobility, energy generation, and infrastructure developments. The possibilities are limitless, and we will continue to monitor the latest development and take on a collaborative approach to this quadrant.
Updates from GLy Team
Our Shanghai team had the privilege of attending the International Hydrogen and Fuel Cell Vehicle Congress & Exhibition 2023 and the World Artificial Intelligence Conference. In both events, the potential for advancements in technology and applications was evident, with hydrogen and AI being significant areas of focus for various industries and sectors.
Key takeaways:
International Hydrogen and Fuel Cell Vehicle Congress & Exhibition 2023 (July 5 – 7)
The event highlighted the significance of hydrogen as a crucial green energy source serving as a valuable supplement to batteries. Its downstream applications are mainly commercial vehicles (range extenders), marine applications, and stationary power stations.
However, the adoption rate of hydrogen was still low, and its application was in the early stages. In China, approximately 1.5k fuel cell vehicles sold in the first five months of 2023 (~192% YoY increase). The country had around 14k fuel cell vehicles in operation and had constructed 350 hydrogen refuelling stations, making it one of the world leaders in hydrogen application.
The hydrogen sector shows potential for growth in areas such as hydrogen production, storage, different fuel cell technologies, and key fuel cell components. The cost of hydrogen fuel cells remained high, but with technological advancements, it was expected to become more economically attractive.
World Artificial Intelligence Conference 2023 (July 6 – July 8)
The conference focused on the growing attention towards large language models (LLM) and GPUs, especially in China, as the demand for AI chips was strong. Traditional technology, media, and telecommunications companies had an advantage in developing LLM due to their existing data and resources, as running an LLM was costly.
Apart from AIGC’s infrastructure, the most prominent downstream application observed is around content generation and marketing.
The concept of embodied AI was a subject of interest and discussion. But humanoids are yet to reach a practical implementation stage with inductive and deductive learning capability.
13th China Auto Forum
During the 13th China Auto Forum held in Shanghai from July 5 to July 7, GLy’s senior partner, Li Li, participated as a panellist in the discussion on “Exporting New Energy Vehicles and Charging Infrastructure to Overseas Markets”. The focus was on the opportunities and challenges of expanding the NEV industry chain to global markets amidst the demand for low-carbon sustainable development and carbon neutrality goals.
Updates from GLy’s Ecosystem
Farizon, a maker of electric and hybrid trucks owned by Geely, has raised $600 million in a Series A funding round to further develop its technology and expand outside of China. The company plans to establish a presence in markets like Asia-Pacific, the Middle East, South America, and Europe, with a key focus on Europe, where it aims to become one of the top three electric cargo van suppliers with its Super Van, set to be available as early as 2024.
Geely has announced plans to invest $10 billion in developing Malaysia’s main auto-making hub. Geely, which already owns 49.9% of Malaysian car maker Proton, conveyed the investment plan to Prime Minister Anwar Ibrahim, and the project is expected to create thousands of job opportunities in the region.
Geely and Renault are forming a new equally held joint venture, investing up to 7 billion euros, to develop gasoline engines and hybrid technology for automobiles. The new company will have its headquarters in the UK and aims to become a global leader in low-emission hybrid technologies. The venture comes as much of the automobile industry shifts focus on electric vehicles, and there are plans to evaluate a strategic investment from Saudi energy giant Aramco.
Carwow’s Founder, James Hind, will be stepping aside as CEO after 14 years, moving into an Executive Director role on the board, while current COO John Veichmanis will take over as the new CEO. Veichmanis brings over 20 years of senior leadership experience from innovative public tech companies and is expected to lead carwow to further success in its position as Europe’s largest online new and used car marketplace.
Nexeon has entered into a long-term supply agreement with Panasonic, making it the first significant use of Nexeon’s energy-dense Silicon Anode materials in commercially supplied lithium-ion cells for EVs. This breakthrough will not only enhance battery performance and EV range but also lead to cost savings for automotive manufacturers on their EV battery pack systems.
OCI will also supply $55 million worth of a raw material for silicon cathode Nexeon. The company has recently invested 20 billion won in its plant in Gunsan, Korea, to build a monosilane line with annual capacity of 1,000 tons by the first half of 2025. Nexeon will buy land around the facility for construction of a silicon cathode materials plant.
ECARX announced plans to increase its investment in and obtain a controlling stake of JICA Intelligent Robotics. JICA possesses end-to-end research and development capabilities in autonomous driving technology, and the increased investment will enhance ECARX’s advanced driver assistance systems capabilities and allow them to participate in the development of more centralized vehicle electronic and electrical architectures.
What We’ve Been Reading This Month:
Volkswagen has announced a partnership with Chinese EV startup Xpeng and joint venture partner SAIC to develop new models and potentially co-create platforms. Under this partnership, Volkswagen will produce two models (release in 2026) targeting the middle-class segment, carrying the VW logo but featuring Xpeng’s software and autonomous driving technology. Volkswagen will invest ~$700 million in Xpeng and acquire a 4.99% stake in the company. Under the JV, Audi will obtain EV manufacturing technologies from SAIC, focusing on the electric powertrain system and intelligent driving system, while retaining design autonomy.
Volkswagen has also launched an autonomous vehicle test program in Austin equipped with Mobileye’s technology, forming a new subsidiary called Volkswagen ADMT (autonomous driving, mobility, and transport) in the United States. The plan is to expand to at least four more American cities over the next three years, with intentions to launch commercial operations in Austin by 2026 for delivery and ride-hailing services.
Seven major automakers – BMW, GM, Honda, Hyundai, Kia, Mercedes-Benz, and Stellantis – are joining forces to create a North American EV charging network, with plans to install at least 30,000 high-speed EV chargers by 2030. The joint venture aims to offer easy-to-activate DC fast chargers along highways and urban areas, offering an alternative to the Tesla Superchargers network for partnered automakers EV models. All stations will include the standardized Tesla North American Charging Standard (NACS) ports and the current widely used Combined Charging System (CCS) plugs.
Voltpost has raised $3.6M in Seed funding led by RWE Energy Transition Investments. Voltpost retrofits lampposts into modular and upgradable charging platforms powered by a mobile app, with plans to use the funds to commercialize the platform and deploy its lamppost chargers. The company participated in the DOT Studio program, enabling a successful pilot of lamppost charging in NYC and progressing towards the DOT’s goal of installing 10,000 curbside chargers, with a second pilot underway at the Detroit Smart Parking Lab in Michigan.
Toyota is preparing an extensive strategy for next-gen electric vehicles, with plans to introduce solid-state batteries with ranges of 900 miles or more. Toyota aims to double battery range and halve required investment by 2026, introducing various battery technologies and ultra-aerodynamic designs, giga casting technologies for accelerated vehicle production.
4.screen, the world’s first driver interaction platform, has raised €21 million in its Series A funding round led by S4S Ventures and Continental Corporate Venture Capital. The Munich-based company allows global and local brands to interact with drivers in real-time through their car screens, leveraging car sensor data to provide contextual information about nearby businesses and enabling targeted marketing with unmatched precision.
Tesla stated that the $7,500 federal tax credits for its Model 3 and Model Y electric vehicles are likely to be reduced after December 31, possibly due to stricter battery rules enforced by the government. The tax credit reduction, in addition to potential reliance on controversial price cuts, could impact the company’s margins. To be eligible for the tax credit, EVs must meet specific battery and critical minerals requirements.
Tesla has also launched a new feature called “Charge on Solar” that allows owners with home solar panels and a Powerwall charger to exclusively charge their vehicles using excess solar energy. The option is available in the Tesla app to customers in the US and Canada with Tesla vehicles from 2021 onwards.
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