1. GM’s Ultium Highlights Tesla’s Lead in Battery Technology
GM made two significant announcements at its electric vehicle investor day this past Wednesday. It aims to:
1) Reduce battery costs to $100/kWh in the next few years.
2) Reduce cobalt content in its new NCMA chemistry by 70%.
In comparing GM’s progress to Tesla’s, we found these announcements illuminating. GM’s next generation battery is comparable with Tesla’s from 2018, putting GM at least three years behind Tesla in battery cost and chemistry.
In mid 2018 Elon Musk claimed that Tesla would lower battery costs to $100/kWh by the end of that year.1 Though no update on price has been given, even if this projection was off by a year, Tesla would be well ahead of GM in driving down the cost of the most important differentiator in EVs.
During 2018, Musk also announced that cells in the Model 3 had less cobalt than next generation NCM 811 cells. As shown below, if GM achieves a 70% cobalt reduction in its battery cells (NCM 622), then GM would have a cobalt content similar to Tesla’s cells from 2018.
We look forward to learning more about its battery breakthroughs at Tesla’s Battery Day in April.
2. Cash App Now Is the Cheapest Way to Transfer Money Between the US and the UK
Earlier this week, Cash App launched a new feature that enables money transfers between the US and the UK. The new cross-border feature is free and based on real-time mid-market exchange rates, making Cash App the cheapest way to transfer money between the US and the UK. Cash App is undercutting the pricing of established exchange companies like TransferWise. While a UK Cash App can transfer $1 to a US Cash App user instantaneously for free, TransferWise would not facilitate the same transfer because its fees start at $1.10 per transaction. We believe Cash App is subsidizing these transfers, and probably will impose fees in the future as it did with Bitcoin.
3. Competition Is Intensifying in the Digital Spatial Profiling Market
Digital spatial profiling (DSP) is a rapidly growing biological technique that combines genomics, optics, and pathology. Prior to DSP, researchers analyzed stained tissue slides manually, an approach that didn’t scale and wasn’t consistent. DSP protocols allow researchers to barcode tissue regions of interest (ROIs), analyze them quantitatively, and detect intercellular phenomena with stunning clarity. When combined with next-generation sequencing (NGS), DSP should accelerate our understanding of immune-oncology and accelerate the adoption of targeted immunotherapies.
In our view, NanoString’s (NSTG) GeoMx DSP is best-in-class but is facing some competition. Readcoor, a private Boston-based company, recently unveiled its RC2 platform at the Advances in Genome Biology and Technology (AGBT) conference. Vertically integrated, the RC2 platform includes consumables, hardware, and cloud bioinformatics. Based on a 2015 article in Nature, RC2 uses a derivative of the SOLiD sequencing chemistry originally developed by Life Technologies. Unlike GeoMx, RC2 is capable of both DSP and sequencing, ostensibly eliminating the need to purchase two instruments.
Most DSP customers already have access to sequencing instruments, limiting the advantage of a combined system. In our view, GeoMx will remain the preeminent DSP platform because of an impending extension to whole transcriptome analysis, reagent partnerships with vendors such as Abcam (OTCMKTS: ABCZF) and Bio-Techne (TECH), and an extensive library of peer-reviewed publications. That said, the RC2 probably will commercialize successfully and, by validating and expanding the DSP market, it should add to NanoString’s total available market.
4. India’s Supreme Court Lifts the RBI’s Ban on Cryptocurrencies
In April 2018, the Reserve Bank of India (RBI) restricted banks and any other companies it regulated from interacting with cryptocurrency-related companies, specifically, any individual or business dealing with or settling cryptocurrencies. The ban forced crypto firms based in India, including Zebpay, Koinex, and CoinDelta, to shut down their businesses or relocate.
In a ruling this week, India’s Supreme Court struck down the regulation, deeming the crypto ban unconstitutional. As Sumit Gupta, co-founder and CEO of CoinDCX exchange notes, “The uplifting of the ban by the Supreme Court is going to open new opportunities for India in terms of investments, economic growth, financial inclusion, and market maturation.”
In response, the RBI has announced plans to file a review petition, citing concerns that cryptocurrencies could put the banking system at risk. Until the Supreme Court reviews the RBI’s petition, crypto platforms in India are free to operate. Meanwhile, the RBI has other reasons to worry about the stability of the Indian banking system: this week, it had to rescue Yes Bank, one of the largest banks in India, from financial collapse.
5. DocuSign Acquires Seal to Track and Augment Contract Law With Artificial Intelligence
At the end of February DocuSign acquired Seal, a leading provider of contract analytics and artificial intelligence (AI). Seal helps companies find, analyze, and extract data from contracts, reducing the time to and cost of reviewing legal documents. Seal’s optical character recognition and natural language processing (NLP) expertise will bolster DocuSign’s Contract Lifecycle Management offering. Today, with NLP, neural nets can read, write, and answer questions in English.
We believe DocuSign will leverage Seal’s NLP to identify non-standard contracts and potential risks more efficiently and effectively. Highlighting the potential value of this capability, here are two examples of mismanaged contracts that Seal might have helped companies avoid:
- Park City Mountain Ski Resort failed to renew its lease for the top of its mountain. Its competitor, Vail Resorts, leased the top of the mountain before Park City realized its mistake.
- During the nineties, Aviva sold fixed price life insurance contracts at prices published every Friday. Aviva allowed its clients to switch among contracts at those published prices at any time during the following week until it updated them on Friday. The arbitrage opportunities were enormous, benefiting its clients but depleting its own coffers.
Valued at nearly $800 billion in 2018, the legal services industry is likely to top $1 trillion by 2025, according to Grand View Research. In our view, however, it is ripe for disruption by companies like DocuSign that are transforming how contracts are signed, generated, and managed.