Kinetic Automation bowed its second San Francisco Bay Area ADAS outsourcing outpost Sept. 4, and a third is “coming very quickly, weeks not months,” said CEO Nikhil Naikal. The region’s 5 million metro population, give or take, has a 10% collision rate.
Now, Naikal won’t say where No. 3 will be, but a quick glance at the GPS notes the commercially real estate friendly burg of Milpitas, just north of San Jose. Kinetic’s first two sites, in San Leandro and San Carlos, are 25 miles apart across a bridge. Milpitas is at the bottom of the bay, on the map anyway, some 25 miles from each of them. Silicon Valley has the kind of “current” cars Kinetic likes: newer, complex, electric.
Not so fast, Naikal said. The company “could do another in the East Bay. It’s a fairly large belt” — he means I-880, roughly Berkeley to Fremont, within which is another thing warming its energetic cockles: a high density of collision repair centers.
‘More Than Three’
Have no fear, Meta-Alphabet-Apple employees. Naikal said one more thing about the region: “More likely it’s more than three, rather than three.”
That’s locations, or in Kinetic speak, “hubs.” And Northern California Thomas Guide aside, that’s how Kinetic goes about opting its next one: where can it build several. That’s “dense” in a good way, for collision centers and their vendors anyway, and “hub” in a couple ways as well: the single site, as well as the hub-and-spoke for particular areas Kinetic itself follows.
Areas so far: Northern California, Southern California, Las Vegas and Salt Lake City — “population-dense and hence collision-dense,” Naikal said. It seeks anchors, often MSOs, to fill its calibration dance card, including in Northern California Chilton Auto Body and Fix Auto, or Young Automotive Group in Salt Lake, as well as maybe “insurance carriers with local focus or a regional manager who wants to streamline operations.”
Example of Kinetic "hubs" servicing several nearby body shops.
From a company, macro-view it will fill those markets — “geographic density first” — though that needn’t be strictly linear or sequential. “We might build a third one in the Bay Area and a first one in another market,” before a new site in a current market.
Of course, Kinetic has national aspirations. They’d go to Chicago, for instance, for that density thing.
“National aspirations” typically translates to “private equity.” Kinetic is so-far venture capital-backed only to Series A and $21 million. Cofounders Naikal and Sander Marques and other early bird owners would be keen to find their financial sweet spot where ownership and capital intersect before deciding how to grow big.
Best of Cars, Best of Customers
The third way to think of hubs is that a Kinetic location is aimed at becoming a hub for dozens of shops nearby — whether MSO or not.
Kinetic’s car parc median today is 2022: three years old. It works with more electric vehicles than Americans drive. National buying is at about 10% of all cars; Naikal won’t give percentages for all hubs all the time, but during an interview, that day, he checked the tally for its first Bay Area hub: 25%.
Commonly it sees cars with at least two or three sensors from “high-quality operators with that mindset, don’t cut corners, and that’s who we treat as anchors: an anchoring of ‘quality of customer,’” Naikal said.
From these, there’s no required minimum use for shop operators. “They’re not promising X capacity; we ask to be their primary vendor, and we earn that right. There’s a natural gravity to repairing cars correctly and the best operators want to get that quality as fast as possible, and see Kinetic as the way to get there.”
A hub can do up to 80 calibrations a day with under a 60-minute cycle time, Kinetic’s website said.
San Carlos is at “hundreds of cars a month, growing 50% each month since May,” Naikal said.
The focus is on shops: no walk-in traffic.
Why Outsource ADAS At All? Well, Maybe You Shouldn’t
“We want to be the ‘Intel inside’” in the industry, he said, and even shops building in-house ADAS operations are licensing Kinetic’s “hardware-as-a-service,” as Naikal calls it, to do so.
“It’s American-made hardware and software and just sort of works, right?” he said.
Keeping ADAS in-house can carry benefits on cost, installation, cycle time, documentation and self-education within the shop. Kinetic counters with licensing, and sounds ready to take on all comers.
There’s the turnaround time, virtual piles of documentation, and Kinetic indemnifies its work if there’s a claim, insurance or legal, on work it did or approved. “They usually go our way,” Naikal said.
He said outsourcing aids shops in Kinetic’s dense markets, lacking internal space for ADAS, and those unsure what its three-year-old vehicle ADAS work will be month-to-month. Meantime, Kinetic load-balances its work, shifting techs to different stores in its markets.
Sure, shops can build individual ADAS, but will each one teach one? Will every unit of an insurance-focused MSO add ADAS? It could be a single calibration location to serve its sites — which sounds a lot like Kinetic.
In-house “will always make sense for some people,” he said, “as an ROI calculation in a constantly changing landscape. It’s about space and time: collision repair is a geometry and physics problem, not an AI problem.”
Paul Hughes