Diamond: EHang
The appeal of the flying car is apparent to anyone used to crawling along in heavy traffic and dreaming of taking to the skies any time you're stuck in gridlock.
The sector has had moments of excitement and promise over the years, but has never progressed past regulatory challenges and safety concerns. This changed when the Chinese decided to apply their minds to it with the benefit of a supportive regulatory environment and world-leading battery technology.
It takes a considerable leap of faith to strap yourself into an unmanned electric vertical take-off and landing (eVTOL) machine and trust that the technology will get you to your destination and not to a fiery doom, as happened when two eVTOL aircraft made by Xpeng collided at an air show designed to showcase the wonders of said technology.
EHang seems to be having more luck with its EH216-S, which is the first pilotless eVTOL to achieve the full suite of regulatory certifications. The company is about to start selling tickets for short sightseeing trips in Guangzhou and Hefei.
Tourist flips are a milestone, but the real potential is in developing a viable robotaxi service. This will need significant volumes and considerable investment in infrastructure such as landing pads.
EHang has achieved about 73,000 safe flights. It recently demonstrated the EH216-S in Africa for the first time, in the Rwandan capital Kigali. There is clearly potential for drones to leapfrog all manner of mobility challenges where road infrastructure is weak, if the economics make sense.
Print head: Time to lower the flag
Dog: Tricolor Holdings
Hang on a minute, haven’t we heard a version of this story before? Dodgy operator borrows from large institutions to lend expensively to low-income customers with limited credit scores, then bundles its loans into securitised bonds to flog to institutional investors.
Gravy all round until the music stops, it all comes crashing down and the only people smiling are the lawyers. Fortunately the collapse of Tricolor, a regional subprime auto lender operating in Texas, California and Nevada, is not going to plunge us into another global financial crisis, but it does suggest that certain big name institutions have poor memories.
Tricolor sold second-hand cars and offered financing mostly to Hispanic immigrants working in the cash economy, about half of whom didn’t have a social security number and many of whom didn’t have a driving licence. It asked its customers for unusually high deposits, charged average interest rates of 17%, took its interest payments fortnightly and installed GPS trackers so the vehicles could be repossessed when its customers defaulted.
Its customer base was under economic pressure even before the Trump administration prodded the Immigration & Customs Enforcement brigade into a programme of raids and mass deportations, and Tricolor plunged into bankruptcy in a matter of days.
The company had quadrupled in size over the past five years, funded with a $1bn revolving credit facility by five lenders led by as august an institution as JPMorgan Chase. Now the concern is how much more utter junk might be out there, with US banks sitting on $1.2-trillion of loans to nonbank financial institutions.
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