Investors and politicians embracing a vision of an all-electric car future believe that path will significantly reduce global carbon dioxide emissions. That’s far from clear.

A growing body of research points to the likelihood that widespread replacement of conventional cars with EVs would likely have a relatively small impact on global emissions. And it’s even possible that the outcome would increase emissions.

The issue is not primarily about the emissions resulting from producing electricity. Instead, it’s what we know and don’t know about what happens before an EV is delivered to a customer, namely, the “embodied” emissions arising from the labyrinthine supply chains to obtain and process all the materials needed to fabricate batteries.

All products entail embodied emissions that are ‘hidden’ upstream in production processes, whether it’s a hamburger, a house, a smartphone, or a battery. To see the implications at the macro level, credit France’s High Climate Council for a study issued last year. The analysis found that France’s claim of achieving a national decline in carbon dioxide emissions was illusory. Emissions had in fact increased and were some 70% higher than reported once the embodied emissions inherent in the country’s imports were counted.

Embodied emissions can be devilishly difficult to accurately quantify, and nowhere are there more complexities and uncertainties than with EVs. While an EV self-evidently emits nothing while driving, about 80% of its total lifetime emissions arise from the combination of the embodied energy in fabricating the battery and then in ‘fabricating’ electricity to power the vehicle. The remaining comes from manufacturing the non-fuel parts of the car. That ratio is inverted for a conventional car where about 80% of lifecycle emissions come directly from fuel burned while driving, and the rest comes from the embodied energy to make the car and fabricate gasoline.

Virtually every feature of the fuel-cycle for conventional cars is well-understood and narrowly bounded, significantly monitored if not tightly regulated, and largely assumption-free. That’s not the case for EVs.

For example, one review of fifty academic studies found estimates for embodied emissions to fabricate a single EV battery ranged from a low of about eight tons to as high as 20 tons of CO2. Another recent technical analysis put the range at about four to 14 tons. The high end of those ranges is nearly as much CO2 as is produced by the lifetime of fuel burned by an efficient conventional car. Again, that’s before the EV is delivered to a customer and driven its first mile.

The uncertainties come from inherent—and likely unresolvable—variabilities in both the quantity and type of energy used in the battery fuel cycle with factors that depend on geography and process choices, many often proprietary. Analyses of the embodied energy show a range from two to six barrels of oil (in energy-equivalent terms) is used to fabricate a battery that can store the energy-equivalent of one gallon of gasoline. Thus, any calculation of embodied emissions for an EV battery is an estimate based on myriad assumptions. The fact is, no one can measure today’s or predict tomorrow’s EV carbon dioxide ‘mileage.’

As more dollars flood into government programs and climate-tech funds — 2021 is on track to blow past record 2020 climate-tech investments, with three firms alone, BlackRock, General Atlantic and TPG, each announcing new $4 to $5 billion cleantech funds — we’re overdue for paying serious attention to embodied emissions of EVs and other presumed technological panaceas for reducing carbon dioxide emissions. As we will see shortly, the attention may not reveal the expected outcomes.

Data (on) mining

The goal for any vehicle is to have the fuel system take as small a share of total weight as possible, leaving room for passengers or cargo. Lithium batteries, as revolutionary and Nobel-prize worthy as they are, still constitute a distant second place in the metric of merit for powering untethered machines: energy density.

The inherent energy density of lithium-class chemicals (i.e., not a battery cell, but the raw chemical) can be theoretically as high as about 700 watt-hours per kilogram (Wh/kg). While that’s roughly five-fold greater than the energetics of lead-acid battery chemistry, it’s still a small fraction of the 12,000 Wh/kg available in petroleum.

To achieve the same driving range as 60 pounds of gasoline, an EV battery weighs about 1,000 pounds. Not much of that gap is closed by the lower weight of an electric versus gasoline motor because the former is typically only about 200 pounds lighter than the latter.

Manufacturers offset some of a battery’s weight penalty by lightening the rest of the EV using more aluminum or carbon-fiber instead of steel. Unfortunately, those materials are respectively 300% and 600% more energy intensive per pound to produce than steel. Using a half ton of aluminum, common in many EVs, adds six tons of CO2 to the non-battery embodied emissions (a factor most analyses ignore.) But it’s with all the other elements, the ones needed to fabricate the battery itself, where the emissions accounting gets messy.

There are many combinations of elements possible for lithium battery chemistries. Choices are dictated by compromises to meet a battery’s mix of performance metrics: safety, density, charge rate, lifespan, etc. Depending on the specific formulation chosen, the embodied energy associated with the key battery chemicals themselves can vary by as much as 600%.

Consider the key elements in the widely used nickel-cobalt formulation. A typical 1,000-pound EV battery contains about 30 pounds of lithium, 60 pounds of cobalt, 130 pounds of nickel, 190 pounds of graphite, and 90 pounds of copper. (The balance of the weight is with steel, aluminum, and plastic.)

Uncertainties in the embodied energy begin with the ore grade, or share of rock that contains each target mineral. Ore grades can range from a few percent to as little as 0.1 percent depending on the mineral, the mine, and over time. Using today’s averages, the quantity of ore mined—necessarily using energy-intensive heavy equipment—for one single EV battery is about: 10 tons of lithium brines to get to the 30 pounds of lithium; 30 tons of ore to get 60 pounds of cobalt; 5 tons for the 130 pounds of nickel; 6 tons for the 90 pounds of copper; and about one ton of ore for the 190 pounds of graphite.

Aerial view of trucks loading brine from the evaporation pools of the new state-owned lithium extraction complex, in the southern zone of the Uyuni Salt Flat, Bolivia, on July 10, 2019. Image Credits: PABLO COZZAGLIO/AFP via Getty Images

Then, one must add to that tonnage the “over-burden,” the amount of earth that’s first removed in order to access the mineral-bearing ore. That quantity also varies widely, depending on ore type and geology, typically from about three to seven tons excavated to access one ton of ore. Putting all the factors together, fabricating a single half-ton EV battery can entail digging up and moving a total of about 250 tons of earth. After that, an aggregate total of roughly 50 tons of ore are transported and processed to separate out the targeted minerals.

Embodied energy is also impacted by a mine’s location, something that is in theory knowable today but is a guessing-game regarding the future. Remote mining sites typically involve more trucking and depend on more off-grid electricity, the latter commonly supplied by diesel generators. As it stands today, the mineral sector alone accounts for nearly 40% of global industrial energy use. And over one-half of the world’s batteries or the key battery chemicals are produced in Asia with its coal-dominated electric grids. Despite hopes for more factories in Europe and North America, every forecast sees Asia utterly dominating that supply chain for a long time.

The wide variability of power grids and batteries

Most analyses of EV emissions don’t ignore the embodied carbon debt in batteries. But that factor is typically, and simplistically, assigned a single value in order to calculate the variabilities arising from using EVs on different electric grids.

A recent analysis from the International Council on Clean Transportation (ICCT) is usefully illustrative. The ICCT, using a fixed carbon debt for a battery, focused on how the EV carbon footprint varies depending on where it’s driven in Europe. The calculations showed that, compared to a fuel-efficient conventional car, an EV’s lifecycle emissions can range from as much as 60% lower when driven in Norway or France, to about 25% lower when driven in the U.K., to tiny emissions reduction if driven in Germany. (Germany’s grid has roughly the same average carbon emissions per kilowatt-hour as does America’s.)

Their analysis used average grid emissions data that don’t necessarily represent emissions that occur when plugged in. But the specific time, not the average, determines the actual source of electricity used for ‘fueling.’ No such ambiguities attend to the location and time of gasoline use; it’s always the same anytime and anywhere on the planet. While the EV time factor has minimal variability in Norway and France where most electricity comes around the clock from hydro and nuclear respectively, it can vary wildly elsewhere from, say, 100% solar to 100% coal depending on the time of day, month and location.

The lignite-fired power station of Boxberg in Germany. The region of Lusatia in the east of Germany and its economic infrastructure is heavily dependent on the coal-fired power plants in Jaenschwalde, Schwarze Pumpe and Boxberg. Image Credits: Florian Gaertner/Photothek via Getty Images

Another recent ICCT analysis also used annualized grid averages and calculated that, compared to an average car, lifecycle emissions reductions range from about 25% for EVs in India to 70% in Europe. But, as with the similar exercise for intra-European comparisons, a single, fixed carbon debt for battery fabrication was assumed, and a low value at that.

There is good reason to consider the implications of the range of embodied battery emissions, rather than a single, low average value, because the IEA (amongst others) reports that most mineral production today entails processes at the higher end of emissions “intensity.” Adjusting the ICCT outcomes for that reality lowers the calculated lifecycle EV emissions savings to about 40% (instead of 60%) driving in Norway, to little or no reduction in the U.K. or the Netherlands, and about a 20% increase for EVs driven in Germany.

That’s not the end of the real-world uncertainties. The ICCT, again typical of many similar analyses, made calculations based on batteries 30% to 60% smaller than the size required to replicate the 300-mile range needed for widespread replacement of conventional cars. The larger batteries are common on high-end EVs today. Doubling the size of the battery leads to a straightforward doubling of its carbon debt which, in turn, dramatically erodes or eliminates lifecycle emissions savings in many, maybe most places.

Similarly problematic, one finds forecasts of future emissions savings often explicitly assume that the future battery supply chain will be located in the country where the EVs operate. One widely cited analysis assumed aluminum demand for U.S. EVs would be met by domestic smelters and powered mainly from hydro dams. While that may be theoretically possible, it doesn’t reflect reality. The United States, for example, produces just 6% of global aluminum. If one assumes instead the industrial processes are located in Asia, the calculated lifecycle emissions are 150% higher.

For EV carbon accounting, the problem is that there are no reporting mechanisms or standards even remotely equivalent to the transparency with which petroleum is obtained, refined, and consumed. The challenges in having accurate data are not lost on the researchers, even if those concerns don’t percolate up into executive summaries and media claims. In the technical literature one often finds cautionary statements such as a “greater understanding of the energy required to manufacture Li-ion battery cells is crucial for properly assessing the environmental implications of a rapidly increasing use of Li-ion batteries.” Or in another recent research paper: “Unfortunately, industry data for the rest of the battery materials remain meager to nonexistent, forcing LCA [lifecycle analysis] researchers to resort to engineering calculations or approximations to fill the data gaps.”

Those “data gaps” become chasms when it comes to expanding the world’s mineral supply chain to support the production of tens of millions of more EVs.

Turning up the volume

Perhaps the most important wildcard is the expected rise in energy costs associated with obtaining the necessary quantities of “energy transition minerals,” (ETMs) as the International Energy Agency (IEA) terms them.

Earlier this year, the agency issued a major report on the challenges of supplying ETMs to build batteries as well as solar and wind machines. The report reinforces what others have earlier pointed out. Compared to conventional cars, EVs require using, overall, about 500% more critical minerals per vehicle. Thus, the IEA concludes that current plans for EVs, along with plans for wind and solar, will require a 300% to 4,000% increase in global mine output for the necessary suite of key minerals.

The fact that an EV uses, for example, about 300 to 400% more copper than a conventional car has yet to impact global supply chain because EVs still account for less than 1% of the total global auto fleet. Producing EVs at scale, along with plans for grid batteries as well as for wind and solar machines, will push the “clean energy” sector up to consuming over half of all global copper (from today’s 20% level). For nickel and cobalt, to note two other relevant minerals, “transition” aspirations will push clean energy use of those two metals to 60% and 70%, respectively of global demand, up from a negligible share today.

Tesla Inc. vehicles in a parking lot after arriving at a port in Yokohama, Japan, on Monday, May 10, 2021. Image Credits: Toru Hanai/Bloomberg via Getty Images

To illustrate the ultimate scale of demand that EV mandates alone will place on mining, consider that a world with 500 million electric cars—which would still constitute under half of all vehicles—would require mining a quantity of energy minerals sufficient to build batteries for about 3 trillion smartphones. That’s equal to over 2,000 years of mining and production for the latter. For the record, that many EVs would eliminate only about 15% of world oil use.

Set aside the environmental, economic, and geopolitical implications of such a staggering expansion of global mining. The World Bank cautions about “a new suite of challenges for the sustainable development of minerals and resources.” Such an increase in mining has direct relevance for predictions about the future carbon intensity for minerals because acquiring raw materials already accounts for nearly one half of the life-cycle carbon dioxide emissions for EVs.

As the IEA report also observes, ETMs not only have a “high emissions intensity,” but trends show that the energy-use-per-pound mined has been rising because of long-standing declines in ore grades. If mineral demands accelerate, miners will necessarily chase ever lower grade ores, and increasingly in more remote locations. The IEA sees, for example, a 300% to 600% increase in emissions to produce each pound of lithium and nickel respectively.

Nickel mine, Thio, New Caledonia, French Overseas Collectivity, France. Image Credits: DeAgostini/Getty Images

Trends with copper are illustrative of the challenge. From 1930 to 1970, advances in the post-mining chemical processes led to a 30% drop in energy use to produce a ton of copper even though ore grades slowly declined. But those were one-time gains as optimized processes approached physics limits. Thus, during the four decades after 1970, as ore grade continued to decline, energy use per ton of copper increased, and returned to the same level as in 1930. That will be the pattern for the near future as ore grades continue to decline for other minerals.

Nonetheless, the IEA, like others, uses today’s putative average supply-chain emissions intensity to assert that EVs in the future will reduce emissions. But the data in the IEA’s own report point to rising embodied emissions for ETMs. Add to this the implications of far more solar and wind construction, which the IEA notes require 500% to 700% more minerals compared to building a natural gas power plant, and we’ll see even more pressure on the mining supply chain — which, in the commodity world, points to a dramatic rise in prices.

If the EV share of vehicles rises from today’s less than 1% and begins to approach a 10% share, the resource experts at Wood Mackenzie see untenable material demands: “Unless battery technology can be developed, tested, commercialised, manufactured and integrated into EVs and their supply chains faster than ever before, it will be impossible for many EV targets and ICE (internal combustion engine) bans to be achieved – posing issues for current EV adoption rate projections.”

There’s no evidence of capabilities to accelerate industry-class chemical development and manufacturing, or mining, in the short time-periods common in policy aspirations. Nearly three decades passed after the discovery of lithium battery chemistry before the first Tesla sedan.

Chasing carbon efficiencies in the battery supply chains

There are, of course, ways to ameliorate some of the factors that are dragging the world toward a future with increasing EV supply-chain emissions: better battery chemistry (reducing materials needed per kilowatt-hour of stored energy), more efficient chemical processes, electrifying mining equipment, and recycling. All of these are often offered as “inevitable” or “necessary” solutions. But none can have a significant impact in the time frames contemplated for rapid EV expansion.

Even though popular news stories frequently claim some “breakthrough,” there are no commercially viable alternative battery chemistries that significantly change the order-of-magnitude of the physical materials needed per electric-vehicle-mile. In most cases, changing chemistry formulations merely shifts burdens.

For example, reducing the use of cobalt is generally achieved by increasing nickel content. As for chemistries that eliminate the use of energetic atoms of, say, carbon or nickel, using instead, for example, more prosaic and low-energy-intensity elements like iron (e.g., the lithium-iron-phosphate battery), such formulations have lower energy density. The latter means a bigger, heavier battery is needed to maintain vehicle range. Still, it is reasonable to imagine the eventual discovery of a foundationally superior classes of battery chemistries. But once validated, it then takes many years to safely scale-up industrial chemical systems. Batteries put into cars today, and for the near future, will necessarily use technologies available now and not theoretically available someday.

Then there’s the prospect for improving the efficiency of the various chemical processes used in the mineral refining and conversion processes. Improvements there are inevitable, in no small part because that’s what engineers always do, and in the digital era they will more often find success. But there are no known “step function” changes on the horizon in the well-trod field of physical chemistry where processes already operate near physics limits. Put differently, lithium batteries are now well past the early stages where one sees rapid improvements in process (and cost) efficiencies and have entered the stage of incremental gains.

As for electrifying mining trucks and equipment, Caterpillar, Deere and Case (and others) all have such projects, and even a few production machines for sale. Promising designs are on the horizon for a few specific applications, but batteries are not up to the 24×7 performance demands to power heavy equipment in most uses. Moreover, the turnover rate in mining and industrial equipment is measured in decades. Mines will use a lot of oil-fired equipment for a very long time.

Finally, there’s recycling, commonly proposed to mitigate new demands. Even if all batteries were entirely recycled, it couldn’t come close to meeting the enormous increase in demand that will arise from the proposed (or mandated) growth path for EVs. In any case, there are unresolved technical challenges regarding the efficacy and economics of recycling critical minerals from complex machines, especially batteries. While one might imagine someday having automated recycling capabilities, nothing like that exists now. And given the variety of present and future battery designs, there’s no clear path to such capabilities in the timeframes policymakers and EV proponents have in mind.

Legal chaos and EV emissions credits

The unavoidable fact is that there are so many assumptions, guesses, and ambiguities that any claims of EV emissions reductions will be subject to manipulation if not fraud. Much of the necessary data may never be collectable in any normal regulatory fashion given the technical uncertainties, the variety and opacity of geographic factors, as well as the proprietary nature of many of the processes. Even so, the Securities and Exchange Commission is apparently considering such disclosure requirements. The uncertainties in the EV ecosystem could lead to legal havoc if European and U.S. regulators enshrine “green disclosures” in legally binding ways, or enforce “responsible” ESG metrics regarding carbon dioxide emissions.

For policymakers eager to reduce automotive oil use, engineers have already invented an easier and more certain way to achieve that goal while awaiting revolutions in battery chemistry and mining. Commercially viable combustion engines already exist that can cut fuel use by as much as 50%. Capturing just half that potential by providing incentives for consumers to purchase more efficient engines would be cheaper, faster—and transparently verifiable—than adding 300 million EVs to the world’s roads.

Newly reported financial data from Bird, an American scooter sharing service, shows a company with an improving economic model, and a multi-year path to profitability. However, that path is fraught unless a number of scenarios all work out, in concert and without a glitch.

Bird, well-known for its early battles with domestic rival Lime, is pursuing a SPAC-led deal that will see it go public and raise fresh capital. The former startup is merging with Switchback II Corporation in a deal that values it at around $2.3 billion, including a $160 million PIPE (private investment in public equity) component. (Note: The group purchasing TechCrunch’s parent company from its own parent company, is part of the Bird PIPE.)

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COVID-19 hasn’t been kind to Bird and similar companies around the world. As many around the world stayed home, usage of shared-asset services and ride-hail applications fell sharply. Bird saw rides decline. Airbnb took a temporary hit. Uber and Lyft saw ride demand fall.

Responses to the crisis were varied. Airbnb cut costs, and raised external capital. Lyft cut expenses and focused on its core model, while Uber grew its food delivery business, which saw transaction volume soar as demand fell for its traditional business.

Meanwhile, Bird flipped its entire business model. That decision has helped the scooter outfit improve its economics markedly, giving it a shot at generating profit in the future — provided its forecasts prove achievable.

This morning, let’s talk about how Bird has changed its business, their impacts on its operating results, and how long the company thinks its climb to profitability is.

Fleet management → Fleet managers

In their initial forms, Bird and Lime bought and deployed large fleets of electric scooters. Not only was this capital intensive, the companies also wound up with costs that were more than sticky — charging wasn’t simple or cheap, moving scooters around to balance demand took both human capital and vehicles, and the list went on.

Throw in vehicle depreciation — the pace at which scooters in the wild degraded from use or abuse — and the businesses proved excellent vehicles for raising capital and throwing that money at more scooters, costs, and, as it turned out, losses.

Results improved somewhat over time, though. As scooter-share companies increasingly built their own hardware, their economics improved. Sturdier scooters meant lower depreciation, and better battery tech could allow for more rides per charge. That sort of thing.

But the model wasn’t incredibly lucrative even before COVID-19 hit. Costs were high, and the model did not break even even on a gross margin basis, let alone when considering all corporate expenses. You can see the financial mess from that period of operations in historical Bird results.

Gopuff, the startup that’s helped kickstart a new category of food delivery in the U.S. — “instant” delivery of essential groceries and other home goods for a flat fee of $1.95, 24 hours a day — has closed a huge tranche of funding to help it scale its service further across the country and globe. It’s raised $1 billion in a Series H round that values the Philadelphia-based company at $15 billion.

New backers Blackstone’s Horizons platform, Guggenheim Investments, Hedosophia, and Adage Capital, and previous backers Fidelity Management and Research Company, Softbank Vision Fund 1, Atreides Management, and Eldridge Capital all participated in the round.

This news confirms our scoop of last week, when reported on this Series H as it was still being closed.

Gopuff said it plans to use the funding to continue expanding in North America, the UK (where it has already acquired one company, Fancy, and, sources tell us, is acquiring another, Dija), and Europe; on more hiring; and to continue building out the tech platform that bridges an ecosystem that includes customers, drivers, suppliers and distribution centers.

It currently operates 450 sites across North America and the UK, with includes more than 285 dark stores (or “micro-fulfillment centers” in Gopuff’s words), plus more than 185 retailers by way of its acquisition of BevMo earlier this year.

One of the reasons that Gopuff has raised such a large sum is that building out food-based, logistics-fueled, transportation business along all of those parameters is capital-intensive.

But also, that effort to grow is coming amidst a strong surge of competition. Getir out of Turkey, backed by Sequoia and others and most recently valued at $7.5 billion, is also aggressively expanding. And just looking at Europe, there are a wave of others such as Flink, Gorillas, Glovo, Zapp, Cajoo, and Weezy also bulking up their bank accounts to throw their delivery bags into the ring. (In the U.S., established delivery giants like DoorDash will also be moving deeper into Gopuff’s territory.)

Gopuff believes it can give all of these and others a run for their money. Founded back in 2013 by Rafael Ilishayev and Yakir Gola — now co-CEOs — while they were still in university to fill a gap they saw in the market for students like themselves, Gopuff has expanded well beyond that by catering to anyone looking for a quick and relatively low-cost way of getting essential goods without physically going out to get those items themselves.

In a stretch of time where many of us were either being ordered by our municipal governments, or acting on our own decisions, to stay in place to curtail the spread of Covid-19, Gopuff’s star rose quickly as an easy way of complying without compromising our consumerist tendencies.

But Companies like Getir out of Turkey — which has been around for years also building out a model of “instant” delivery of essential goods — have demonstrated that there is staying power to the concept, and that is what Gopuff is betting on, too.

“Gopuff has quietly built a very strong business and solidified itself as the leading player, continuing to define this evolving category,” said Scott Minerd, Global Chief Investment Officer of Guggenheim Investments, in a statement. “Rafael and Yakir are focused on maintaining fiscal responsibility while having the ability to successfully execute on strategic growth opportunities. This measured approach along with Gopuff’s impressive offering has only just scratched the surface. We are thrilled to support this incredibly strong company and look forward to being part of Gopuff’s journey and continued expansion.”

Part of Gopuff’s strategy has been to augment the basic instant delivery of essentials model with more efficient distribution along with a wider vision of what constitutes essentials.

So in addition to building out more localized “dark” stores to more easily distribute goods to customers who buy them, that has included starting “Gopuff kitchens” to make and deliver ready-made food; buying alcohol retailer BevMo for $350 million in November 2020; and acquiring more logistics technology, in the form of buying rideOS for $115 million.

Gopuff itself has been on a fundraising tear to finance all of this. It was only in March that it raised $1.15 billion at an $8.9 billion valuation, which came just months after a $380 million round at a $3.8 billion valuation. Together the three most recent rounds total around $2.5 billion in funding in the space of 10 months, and the idea here seems to be that there may be more of where that came from.

“As Gopuff continues to define the Instant Needs economy, we are thrilled to have new leading global partners onboard, along with the support of our longtime investors. This funding round is further validation of the success of our model and will enable us to continue to do what we do best: deliver an unmatched customer experience,” said Ilishayev in a statement.

“We have truly doubled down on our key business priorities, accelerating our geographic expansion by entering new markets in the US and abroad, innovating for our customers, and continuing to invest heavily in our technology, our people, and our partners. We look forward to continuing to enhance the customer experience and to bring the magic of Gopuff to new customers around the world,” added Yakir Gola.

Shares of Chinese ride-hailing business Didi are off 22% this morning after the company was hit by more regulatory activity over the holiday weekend. The recently public company traded as high as $18.01 per share since it held an IPO last week; today, shares of Didi are worth just $12.09, off around a third from their 52-week high.

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The decline in value follows a review by a Chinese cybersecurity agency that led to Didi being unable to onboard new users, a decision that arrived as last week rolled to a close.

Over the weekend, Didi was hit with more regulatory action. This time, the Cyberspace Administration of China said, via an internet translation, that “after testing and verification, the ‘Didi Travel’ App [was found to have] serious violations of laws and regulations in collecting and using personal information,” which led the agency to command app stores “to remove the ‘Didi Travel’ app, and required [the company] to strictly follow the legal requirements and refer to relevant national standards to seriously rectify existing problems.”

Being yanked from relevant app stores was enough for Didi to alert investors that its mobile app “had the problem of collecting personal information in violation of relevant PRC laws and regulations.” Didi said that the change in its app availability “may have an adverse impact on its revenue in China.”

Understatement of the year, I reckon.

But there’s more going on than what Didi is enduring. As CNBC reported:

Shares of Chinese ride-hailing provider Didi are sharply lower this morning after news broke that its domestic regulators are investigating the newly public company. A loose translation of the probe’s official notice indicates that the cybersecurity review is “in order to prevent national data security risks, maintain national security, and protect the public interest.”

Yesterday, regulators ordered Didi to stop registering new users during the investigation.

The move comes amid a larger reset of relations between China’s burgeoning technology sector and its autocratic government. Other fallouts from the campaign included the effective silencing of Jack Ma, the embarrassing cancellation of the Ant IPO, and a crackdown on data collection from technology companies more broadly.

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China is not the only nation grappling with its technology sector; India has made consistent noise in recent months regarding tech firms inside its borders, for example. And there is effort inside the U.S. Congress to put some cap on Big Tech’s scale and power, though of the trio, the United States appears the least likely to take a real swipe at technology companies’ market influence.

That Didi has run afoul of China’s regulatory bodies is not a surprise; it’s a well-known tech company in the country with lots of consumer data. Similar data-rich tech shops in the country have come under increased scrutiny as well.

But to see Didi get taken to task mere days after its U.S. debut puts a bad taste in our mouths.

The way that this saga reads from the cynical perspective is that the Chinese Communist Party was willing to let the company go public in the United States, allowing it to raise billions of dollars from foreign sources. And that the ruling party was then content to leave them holding a mid-sized bag by announcing its cybersecurity probe.

Hanlon’s Razor is at play in this situation, naturally.

Didi has not published a new SEC filing since June 30, and, as of the time of writing, its investor relations page is devoid of any information regarding today’s news.

While going public, it’s worth noting that Didi did warn investors that it faces a host of risks relating to its status as a Chinese company, namely its government, and as a Chinese company going public in the United States. Observe the following risk factors that it shared while going public (emphasis added) that dealt with the company’s business operations:

• Our business is subject to numerous legal and regulatory risks that could have an adverse impact on our business and future prospects.
• Our business is subject to a variety of laws, regulations, rules, policies and other obligations regarding privacy, data protection and information security. Any losses, unauthorized access or releases of confidential information or personal data could subject us to significant reputational, financial, legal and operational consequences.

Years ago, U.S. ride-hailing giant Uber and its Chinese rival Didi were locked in an expensive rivalry in the Asian nation. After a financially bruising competition, Uber sold its China-based business to Didi, focusing instead on other markets.

The two companies are coming head-to-head again, however, as Didi looks to list in the United States. The company’s IPO filing was big news for the SoftBank Vision Fund, Tencent and Uber, thanks to its stake in Didi from its earlier transaction.

But Didi appears set to be valued at a discount to Uber. By several tens of billions of dollars, it turns out. And we can’t quite figure out why.

This week, Didi indicated that it will target a $13 to $14 per-share IPO price, with each share on the U.S. markets worth one-fourth of a Class A share in the company. In more technical language, each ADR is 25% of a Class A ordinary share in Didi, if you prefer it put like that.

With 288 million shares to be sold in its U.S. IPO, Didi could raise as much as $4.03 billion, a huge sum.

What’s Didi worth at $13 to $14 per ADR? Using a non-diluted share count, Didi is valued between $62.3 billion and $67.1 billion. Inclusive of shares that may be issued thanks to vested options and the like, Didi could be worth as much as $70 billion; Renaissance Capital calculates the company’s mid-point valuation using a fully diluted share count at $67.5 billion.

Regardless of which number you prefer, Didi is not set to challenge Uber’s own valuation. Yahoo Finance pegged Uber at $95.2 billion as of this morning.

Why is the Chinese company worth less than its erstwhile rival? Let’s dig around in their numbers and find out.

Didi versus Uber

As a reminder, Uber’s Q1 2021 included adjusted revenues of $3.5 billion, a gain of 8% compared to the year-ago quarter. And Uber’s adjusted EBITDA came in for the period at -$359 million.

Scale co-founder and CEO Alex Wang joined us at TechCrunch Sessions: Mobility 2021 this week to discuss his company’s role in the autonomous driving industry and how it’s changed in the five years since its founding. Scale helps large and small AV players establish reliable “ground truth” through data annotation and management, and along the way, the standards for what that means have shifted as the industry matures.

Good data is the “good bones” of autonomous driving systems

Even if two algorithms in autonomous driving might be created more or less equal, their real-world performance could vary dramatically based on what they’re consuming in terms of input data. That’s where Scale’s value prop to the industry starts, and Wang explains why:

If you think about a traditional software system, the thing that will separate a good software system from a bad software system is the code, the quality of the code. For an AI system, which all of these self-driving vehicles or autonomous vehicles are, it’s the data that really separates an amazing algorithm from a bad algorithm. And so one thing we saw was that being one of the stewards and shepherds of high-quality data was going to be incredibly important for the industry, and that’s what’s played out. We work with many of the great companies in the space, from Aurora to Nuro to Toyota to General Motors, and our work with all of them is ensuring that they have really a solid data foundation, so they can build the rest of their stacks on top of it. (Time stamp: 06:24)

Solving the varied challenges that arise in autonomous driving is an incredibly complex task, but even attempting to get started means ensuring you have quality data that’s accurate and well-annotated. That’s where Scale comes in, having identified early on that the AV industry would require annotation of huge swaths of data, including specialized LiDAR imaging. Now, co-founder and CEO Alex Wang tells me at TC Sessions: Mobility 2021 (ExtraCrunch subscription required) that it’s moving into mapping with a new product that’s coming later this month.

“Our role has continued to evolve,” Wang said, regarding how it works with its transportation industry partners, which include Toyota among many others. “You know, as we work with our customers, and we solved one problem for them around data and annotational data labeling, you know, it turns out they they come to us with other problems that we can then help solve as well around data management, we launched a product called Nucleus for that. A lot of our customers are thinking a lot about mapping, and how to deploy with more robust maps. So we’re built a product, I’m going to announce that probably later this month, but we’re helping to address that problem with our customers.”

Despite my prodding, Wang wouldn’t provide any specifics, but he did go into more detail about the challenges of mapping, and what’s lacking in existing maps available to companies working on integrating those with AV systems that include other signals, like sensor fusion and vehicle-to-infrastructure components.

“I think a big question for the overall space has been that historically, the industry has relied very, very heavily on mapping — we relied very, very heavily on very highquality, high definition maps,” he said. “The tricky thing about the world is that sometimes these maps are wrong, and how do you deal with that? […] How do you deal with kind of this challenge of robustness, or updates. Even, if you think about it, Google Maps, which is the best mapping infrastructure in the world, by a huge margin, you know they don’t update quickly enough for [human] drivers.”

Wang said that the challenge isn’t all that different from the one that Scale has been actively solving for most of its existence, which is that of the data flywheel. With autonomous driving, it’s of utmost importance to be able to collect and annotate data quickly and accurately, which results in ever better collection and annotation of future data, and more reliability for the assumptions the system is making about its environment.

“Figuring out how to deal with the real-time nature of how the world changes, is one really big, one really big component,” he said. While we still have to wait to see what exactly Scale has planned, it seems safe to assume that it’s all about building confidence in maps and mapping accuracy as a key ingredient in whatever they launch.

Freight forwarding — the process of organising how and where items will be shipped around the world, and specifically the technology that underpins that work — continues to be a huge area of the logistics market, not least because of the huge boom in e-commerce in the last year, and because of the Covid-19-mandated need to simply be more efficient in how things are being moved around. Today, one of the bigger players in that space is announcing more funding to capitalize on the opportunity.

Sennder, a digital freight forwarder that focuses on moving cargo around Europe (and specifically focusing on trucks and “full truck load”, FTL, freight forwarding), has raised $80 million in funding, at a valuation that the company confirms is now over $1 billion.

The Berlin-based startup has been on something of a funding tear this year. In January, it announced a $160 million round, and this $80 million is closing out its Series D. Baillie Gifford has led this latest Series D extension, with Hedosophia, Accel, Lakestar, HV Capital, Project A and Scania all participating in the previous part of the Series D.

The funding makes Sennder, which has now raised some $350 million, one of the most well-funded of the freight forwarders, but it’s a hot area at the moment. Another player out of Europe, Zencargo, picked up $42 million just last month. Other competitors include the likes of Flexport in the US.

Sennder is growing organically, but it’s also making some acquisitions to scale up — a mark not just of the activity in the market but also the fragmentation. In May, it acquired Cars&Cargo to give it a stronger presence in France and Benelux. Other companies that it has acquired have included Uber Freight Europe and Everoad in 2020, and it also operates a JV with Poste Italiane, Italy’s postal service. Altogether it now has eight hubs in Europe.

The plan will be to make more acquisitions of this kind, the company said, to expand a network that now covers 12,500 trucks that it says works with ten German DAX 30 and eleven Euro Stoxx 50 shippers and is expected to move more than 1 million truckloads in 2021.

“We are delighted to have carried our momentum from 2020 into 2021, having already made one acquisition and signed several strategic partnerships,” said David Nothacker, CEO and Co-Founder of sennder, in a statement. “We look to expand our European footprint, bringing more carriers and shippers onto the sennder platform, while expanding our digital offering – such as SaaS. Acquisitions and strategic partnerships are part of this strategy – the additional funds give us the flexibility to capitalize on the right opportunities. Baillie Gifford has backed a wave of revolutionary tech companies; their commitment to sennder is a vote of confidence in our team, technology, and business model.”

Stephen Paice, Co-manager, Baillie Gifford European Growth Trust PLC, added: “We are delighted to join the sennder team on its journey to disrupt Europe’s logistics industry. We strongly believe its technology has the potential to create tremendous value for stakeholders and society in an industry plagued with inefficiencies and needless CO2 emissions. What’s particularly impressive, beyond the progress shown so far, is the purpose-driven and entrepreneurial mind-set instilled within the company. This will no doubt be an important factor for long-term success.”

Portside, an aviation startup that is building a platform for managing the backend of a corporate flight department, charter operation, government fleet and fractional ownership operation, today announced that it has raised a $17 million funding round led by Tiger Global Management, with participation from existing investors I2BF Global Ventures and SOMA Capital.

The idea behind Portside, which was founded in 2018, is that it lets business aviation companies and flight departments manage everything from flight operations to maintenance, crew and staff scheduling, expense management for crew members and staff, and financial data to help them operate more efficiently. It’s basically everything you need to run your flight department in a single solution, but it also integrates with virtually all of the existing scheduling, accounting, expense management and maintenance tools a flight department or fractional ownership operation is likely using today.

Image Credits: Portside

While the COVID pandemic put a halt to most forms of private aviation early on, that market saw a quick rebound. Portside says it saw its revenue grow almost 300% in 2020 and that it added more than 50 aircraft operators in multiple countries to its user base.

“This infusion of new capital will be used to accelerate investment in product innovation, support further engagement with large enterprise customers and grow our global engineering and customer success teams,” said Alek Vernitsky, co-founder and CEO of Portside. “We appreciate the strong support we have received from both our existing and new investors in this round. They have collectively demonstrated their confidence in our strategy and intentional approach to cloud-based digital transformation of the global business aviation industry.”

Portside is not alone in this market. Companies like Fl3xx, for example, offer similar solutions for flight departments and at the lower end, tools like Flight Circle offer a subset of these features for general aviation clubs and partnerships.

“Portside has progressed rapidly since inception and is entering the next stage of fulfilling its vision of becoming the undisputed leader in cloud-based solutions for business aviation,” stated John Curtius, partner at Tiger Global Management. “In our view, Portside represents the future of the industry, and we are pleased to partner with a company we believe will continue to create significant value for many years to come.”

Car ownership has become pricey and untenable in many towns and cities in Europe: between congestion charges to reduce emissions, parking fees, and traffic, many consumers opt instead to use public transportation, two wheels, cabs or their own legs to get around. To add to that mix for longer journeys, today a startup that’s building a new take on car rental is announcing some funding to scale out its service.

Virtuo, a Paris-based startup that has built a very streamlined, all-digital approach for those who want to rent a car for a few days, or up to a few months, has picked up $96 million, money that it will be using to invest in its tech; to expand to more markets beyond France (12 cities including Paris), UK (London, Manchester and Edinburgh) and Spain (Barcelona, Madrid and Valencia); to add in a tier for business users; and to add more vehicles into the mix. The company currently has 150,000 active users, and grew 100% (2x) this last year, said co-founder Karim Kaddoura.

“The rise of the ‘staycation’ boosted our business,” he said. “And we saw a surge in the average duration of a rental.”

All-digital and streamlined in the case of Virtuo means exactly that: currently there are only two models to choose from outside of France — either a Mercedes Benz A-Class or a Mercedes GLA SUV — but there is no paperwork, with everything handled through an app, and you have the option of getting a car delivered to and picked up from you, meaning no lines in airports or hotel garages, and you get a virtual key to operate it.

The funding is coming in the form of a $60 million Series C and $36 million in asset financing. AXA Venture Partners, the strategic investment arm of the insurance giant, led the equity round, with new investors Bpifrance, Alpha Intelligence Capital and H14; and previous backers Balderton Capital, Iris Capital and Raise Ventures, also participating. Natixis, members of Banque Populaire and Caisse d’Epargne Group handled the asset financing.

While companies like Zipcar, Getaround or Turo (which has, interestingly acquired Virtuo as a Google search, and even writes “Virtuo” on its search resultshave made it easy to rent cars for a day or as little as a few hours in cities, Virtuo provides a modern take on the more traditional use case for renting cars: when you need a vehicle for longer journeys that can take up to several days, and specifically in the case of Virtuo between one and 90 days.

As Kaddoura — who co-founded Virtuo with Thibault Chassagne — notes, traditional car rental companies serving that market are typically still pretty rigid with how they do things.

Even if you initiate a process online, there is usually still paperwork that needs to be filled out in person; and you need to go to a rental hub — in an airport or a hotel, but not necessarily in your neighborhood — to pick up the car. The process for checking them out and in can also be tedious and the costs for all of this quite high, with many moments where the rental company might upsell you to make a basic price suddenly quite premium.

“The car rental industry itself is huge but consumers in it are completely underserved,” Kaddoura said.

And on the other side of the equation, there is a growing case for not owning a car if you live in a city or large town.

“Our aha-moment was when we looked into the numbers,” he said. “In Paris, there are 700,000 cars parked in the streets, with twice that in London. The average European spends €7,500 per car per year when you calculate parking, insurance, damage, taxes, and the price of the car averaged out. That’s €5 billion spent by Parisians, yet those cars are idle 95% of the time. Forget the financial part and look at the impact cars have on our lives and livelihoods, occupying 50% of our urban space.” It’s all the more ironic, Kaddoura noted, given that his father is a car dealer who completely expected his son to go into business with him one day.

It’s partly because of this environmental angle that Virtuo is also going to be expanding its fleet to include more electric vehicles: it already inludes Hyundai’s Kona Electric vehicles in its fleets in France, and the plan is to expand to have 50% of its fleet electrified by 2025, with 100% of it covered by electric vehicles by 2030. It also has been offsetting 100% of its carbon footprint since January of this year.

The funding round being announced today comes after what has been a challenging period for any company with a business model predicated on people leaving their homes to do things, not least to do things in spaces others have recently occupied. That is to say, Covid-19 has encourage people to stay home and socially distance, so a car rental — which encourages travel and specifically travel in a vehicle someone else has been in — may be a challenging sell.

Although revenues grew in 2020, it’s perhaps partly because of the bigger market conditions that Virtuo somewhat slowed down its roll. When we covered its last round of funding, in 2019, the company said the money would be used to expand to Spain and Germany, and more markets in the UK, that year, and it was also live in Belgium. Now, Kaddoura confirms that now Germany will only be coming online in 2022. Milan will be as soon as later this month, he said, with the bigger plan being to be live in 10 countries by 2025. (And Belgium is no longer online, it seems.)

Added to its own scaling ambitions, however, the opportunity that Virtuo is targeting is not one that others have ignored. In addition to others like Getaround, Zipcar and Turo providing more streamlined rental and car-sharing experiences, recently Uber also expanded a car rental offering in partnership with a third party called CarTrawler. This is not a fully integrated service like Virtuo’s, nor a peer-to-peer offering like Getaround, but something that appears to aggregate and search across the same traditional car rental companies that Virtuo is competing against. That makes it, potentially, a direct competitor.

“We are very proud and excited to be part of the Virtuo adventure alongside the Virtuo team, led by Karim and Thibault,” said Benoit Fosseprez, general partner at AXA Venture Partners, in a statement. “Virtuo has quickly become a tech leader disrupting the car rental space, with a clear long-term vision and strong ambitions for growth into new markets. We have been impressed by the Virtuo team and look forward to working closely together on the next stages of their development. With this investment in Virtuo, the first for our Growth II fund, we are confirming our ambition in the tech-led high growth companies segment.”

“We are delighted to support Virtuo in its development,” said Caroline Lebel of Bpifrance’s Large Venture fund, in a separate statement. “The company offers a true alternative to owning private cars for city dwellers who wish to use more sustainable shared mobility solutions. Born in the digital era, Virtuo’s 100% digital experience is backed by powerful technology and artificial intelligence to optimize its operations. We are convinced that the mobility of tomorrow must be built with strong technology at its core, addressing new behaviors and with the freedom of choice of a multimodal offer.”

When a founder has a work history that includes the name of the parent company of one of their key investors, you probably assume that was one of the first deals to come together. Not so with May Mobility and Toyota AI Ventures, which connected for the company’s second seed round, after May went out and raised its original seed purely on the strength of its own ideas and proposed solutions.

That’s one of the many interesting things we learned from speaking to May Mobility co-founder and CEO Edwin Olson, as well as Chief Product Officer Nina Grooms Lee and Toyota AI Ventures founding partner Jim Adler on an episode of Extra Crunch Live.

Extra Crunch Live goes down every Wednesday at 3 p.m. EDT/noon PDT. Our next episode is with Sequoia’s Shaun Maguire and Vise’s Samir Vasavada, and you can check out the upcoming schedule right here.

Meanwhile, read on for highlights from our chat with Olson, Grooms Lee and Adler, and then stay tuned at the end for a recording of the full session, including our live pitch-off.

A different approach to corporate VC

One thing Adler brought up early in the chat is that Toyota AI Ventures likely takes a different approach than most traditional corporate VCs, which are often thought of as being more incentivized by strategic alignment than by venture-scale returns. Adler says the firm he founded within the automaker’s corporate umbrella actually does behave much more like a traditional VC in some ways than many would assume.