Sam Abuelsamid 0:00 Welcome back to the guidehouse insights transportation podcast. I am Sam Abuelsamid, Principal Analyst here on the transportation Team guidehouse. And it's been a little while, since we posted anything. We've had some changes in our team. We've got some new members of the team and like to introduce them first, we'll start off with Oliver Dixon. Oliver, give us a quick intro to to you to yourself and what you're working on here on the team. Oliver Dixon 0:31 Hi, hello, everybody. Nice to meet you. Yeah, I'm Oliver Dixon. And I guess I have to call myself a veteran of the trucking industry, which always makes me slightly nervous. I come I come from the heavy commercial vehicle. Heavy capital goods back space. Right now I'm trying to tread my way through what is the increasingly thorny issue of fuel cell fuel cell electric vehicles and heavy truck space? It's certainly I have to say I'm, we are in a time where this is a really great time to be involved in transportation, mobility, it's energizing. It's exciting. There was an awful lot of change afoot. And so I'm being pretty busy right now. Sam Abuelsamid 1:24 Thanks. And Mike Austin. Mike Austin 1:28 Hello. Yeah, glad to be joining the team. I am working primarily on EVs, and then also some of the other advanced mobility. I come from a background in automotive journalism, where I was frequently the technical expert, just you know, using the the technical background I have, and applying it to new cars. And then in the last few years, I've been more into classic cars from a career standpoint, but I've always kept an interest in the transforming landscape. So I'm just really excited to be here and dive back into you know, what's coming next and not just with EVs, but also how you know, again, people are reconsidering how we approach transportation and cars and all forms of mobility. Sam Abuelsamid 2:09 And thanks, Mike. And we've also got Elizabeth Wilson joining us for the first time, Ed. Elizabeth Wilson 2:15 Hi, I'm Elizabeth or Ed and I'm a research analyst focusing on fleet decarbonisation in transportation and mobility was previously working in Beijing, along with Thailand in New York. So around the world, and I focus on or right now I'm working on SAF evey charging and marine electrification related project. So kind of across the board. Sam Abuelsamid 2:46 Thanks, Ed. And we've also got our returning member team members Saji empanada based in the UK and Scott Shepherd. Morning, everybody. Let's start off with with Mike today. What have you got to talk about today? Unknown Speaker 3:02 Yeah, so earlier this week, I went to the battery show, it's in suburban Detroit. And it's just a huge battery industry trade show. It was it was quite remarkable actually. Because it was it was just hugely packed. It was like trouble getting in and out of the show. The parking lot was full, the show floor was was jam packed. And it had, you know, every single level of battery manufacturing and supply chain from, you know, adhesive tapes to, you know, full battery packs. And there were a number of seminars. And the the main thing that that I learned in these talks, I was speaking about raw materials. So you know, a big question, especially to skeptics, people say, well, we don't have enough raw materials to make these EVs we're never going to get to full electrification. And nobody is, is assuming that we're going to get to 100% electrification, even by, say 2030. But from a material standpoint, the surprising thing to me was, no one's really worried about lithium, the two main minerals that that come up are lithium and nickel. And lithium, there is a shortage. So in the news today, actually, lithium hit an all time an all time high as demand is surging, and one of the Chinese automakers or maybe there's a Chinese Vehicle Association that forecasts it, like predicted that they raised their projection upward for next year again. So lithium is in a bit of a crunch right now. But there's anticipation that as the more lines come on, there's going to be you know, that's going to slack in a little bit. And then again, as Evie production ramps back up, we might have like another spike, but low long term, lithium will be fine. And one of the interesting reasons why was as we're moving to more silicon and batteries replacing graphite, they're increasing the density of the battery, which decreases the need for lithium. The other piece was nickel, which is it sounds Seems like it's going to be more of a shortage and is going to be a little tighter. And that was also fascinating, just a bunch of levels. Because getting a nickel mine, you know, there's nickel in places like Canada and in northern, the northern us, it's an incredibly long process to get those things permitted and up and running, which is relevant to the inflation Reduction Act, which has a lot of provisions for where the minerals source from to get clean vehicle credits. And the other interesting thing about nickel was it's primarily used in, in stainless steel. And that's first of all, once it's in stainless steel, you can't get it out. But second of all, as all this nickel demand ramps up for battery production, it's going to put pressure on stainless steel, which means construction prices will probably go up. So all Scott all sorts of really interesting things about the minerals. But the the main takeaway was, you see seeing lithium in the news right now the price is really high, but long term inside the industry, it seems that nobody's really worried about lithium prices. Sam Abuelsamid 6:06 Yeah, look, lithium is actually a lot more common around the planet, you know, pretty much everywhere on the planet than most people realize. It's just it hasn't. There hasn't until relatively recently there hasn't been the demand for it. So we haven't developed mines or extraction for lithium in most regions. So most of it that we get today for batteries is coming from South America and Australia and being processed largely in China. But I'm interested on the nickel side. You know, over the last couple of years we've been hearing a lot about a lot of alternative chemistry is most of the most of the Evie batteries today are using some nickel rich chemistry like nickel, manganese, cobalt or nickel cobalt aluminum. Was there much discussion about some of the other non nickel based chemistries that that are being developed? Unknown Speaker 6:59 At a time it was it was mostly focused on you know, anode and cathode materials, and, and a lot of it, not a lot, but one of the presentations was stating that a lot of these companies are saying their chemistry is or are agnostic to whatever the anode or cathode is that they can work with whatever ends up being the dominant, or the or the useful chemistry, and we'll probably see several of them. So, I, if I remember correctly, I think for the most part, they were saying that about a third of the mix would be NMC. And, or no, sorry, a third. A third is going to be LFPS, lithium, iron, manganese, and then two thirds would be phosphate. Sorry. And then the other two thirds would be the nickel cobalt one. So there wasn't a lot of there wasn't a lot of talk on like, what are the next chemistry is coming along? A lot of again, a lot of it focused on on moving to Silicon anodes. Unknown Speaker 8:00 Was there any talk about how the Department of Energy Loan Programs Office has been trying to shore up the battery supply chain? I know that they invested in a graphite processing plant, or provided a loan for that and Louisiana? Unknown Speaker 8:18 I didn't know the talks I attended. I didn't. There weren't any on that subject. I think there might have been at the conference. But Sam Abuelsamid 8:28 no. What about any discussion around, you know, now that we've got the IRA enacted, and you've got these content requirements for those critical minerals in order to qualify for the clean vehicle credits? As it was there any discussion about pushing for expedited approval of new mining permits, or new, new new extraction permits for any of these materials? So that it can be localized? Unknown Speaker 8:59 Yeah, there was a little bit of that, and that's where, you know, that's when I, when I touched on the nickel piece, it was there was a representative from a mining company on a panel and I think he said, You know, one of their, one of their minds has been, you know, something like five years in process and like $100 million, and they haven't even started digging. And the other one, the other one is been longer and more expensive. And, and yes, they have, they didn't get into specifics, but it was you know, basically this consensus of you have the department of energy which is which understands the need to expedite this and then you have the EPA which isn't other you know, or even your of Land Management, you have other divisions of the of the government that aren't necessarily trying to hold things up but also have their own process and you know, there wasn't anything specific on you know, this is going to come down and happen but it was it was recognized that with this bill, things need to move quicker and there's there's pressure on And it probably will get some expedited permits. Sam Abuelsamid 10:03 Okay. All right. Thanks, Mike. All over Europe. Unknown Speaker 10:11 Thanks, I'm ready to, to link to pieces of news this week around electric trucks, something of an amuse Bush as an appetizer, Volvo announced a couple of days ago that it was actually going to start serious production up to 44 tonnes, so up to class eight in the United States. And it says production at both of its European plants in Gothenburg and Ghent in Belgium. That in of itself is kind of interesting, because it's not so much a toe in the water as a foot firmly in the water for Volvo. The this has taken capacity from its ice lines, and moving it towards electric trucks. So that is a vote of confidence in battery electric trucks, on the part of Volvo, which is a reckonable truck manufacturer is significant. But it kind of became overshadowed yesterday, by the vaco. I should put this into some context. Next week is the biannual gathering of the clowns in Hanover for truck manufacturers as the the big agenda setting Truck Show, which happens every two years. So we're gonna get a lot of news like this over the next month anyway. But it's interesting that these are the teasers. Anyway, a vehicle announced a new entity called gate, which is green and advanced transport ecosystem. What this is suggesting, and as I say, details at the moment are a little bit sparse. But this effectively offers a paper use routes to heavy electric trucks. Now, it's difficult to understate the significance of those. I started to overstate the significance of this. Moving the adoption of electric trucks from capex to OPEX, is I think, removing a huge barrier to adoption. Yeah, if what vaco is suggesting actually comes to fruition, then we will go to a true APS paper model model, which removes an awful lot of the calculation and worries amongst, you know, the not necessarily the early adopters of electric trucks. But if you like the sort of the second group, who are notoriously conservative in their technology choices, that this will, this will create a very significant opportunity for adoption. So it's early days yet, I'm expecting. I'm expecting to learn an awful lot more about this over the next few days. And I think key to all of this is if another OEM announces a similar deal as the vaco deal, then we actually have a situation where, if you like the PPS capex to OPEX model is legitimized. If you get to a to OEMs, offering it, then it's pretty much game over long term. I think this has to make our consideration of fuel cell trucks, I think we have to revisit a number of assumptions on this. If the heavy truck market is going to coalesce around battery electric vehicles, then, you know, trucks are bought on the basis of three, three decision points regulatory compliance, utility, total cost of ownership, regulatory compliance is ticked on both sides by FCV and be the utility. This gives that the utility side of things this model gives battery electric trucks, a very significant utility advantage. And again, with TCO, moving into OPEX is very significant indeed. So this is this a major inflection point for heavy commercial vehicles? The more I think about it, the more I think it probably is. I think, you know, we will look back on this time and think, oh, yeah, that could have been the moment. So interesting times. Sam Abuelsamid 14:51 So, couple of questions for you on that. First off, with moving to a pay per use model, would that mean that Iveco are other truck OEMs. They would continue to own the fleet and are on Yeah, on the fleet of trucks and then essentially offer them to fleet operators as on a subscription basis. Unknown Speaker 15:15 Yeah, I mean, it's a, again, you know, caveats here is that this is a press release ahead of a tradeshow show. We all know what these are about. But yeah, I mean, if we take this at face value, I suspect what it means is, you know, vaco will operate will offer a true turnkey solution. Basically, all the truck operator needs to do is to provide the body via the steering wheel, that, you know that that is it acres is going to carry an awful lot of risk on the basis of that, but yeah, I mean, it, one of the big arguments within transportation within freight transport over the past decade or so, has been the notion of core competency. Trucking fleets live or die by utilization, if they run with a full trailer, 95% of the time, they're making money, if it's 85% of the time, they're probably going bankrupt. So this allows the trucking fleets to actually focus on, you know, their core competency utilization, the ownership of the vehicle, the management of the vehicle, the management of the trading cycle, that all goes away. So it's a sort of, it creates a situation where it's not quite an SI asset light model, but it's a sort of a medium weight asset model, if you like. So, yeah, I mean, it's, it literally is a sort of a, you know, a very basic transaction, 100 miles a day, equals, you know, cents per mile, under the month, here's the check. Sam Abuelsamid 17:07 The other thing you mentioned, was around more of a shift towards battery electric from from fuel cell, that's been looked at a lot for trucks recently. And I guess, I'm not sure necessarily how this particular change has that impact? Can you dive into that a little more, you know, because fuel cells, you know, especially for long haul trucking, you know, like for for short haul regional trucking, definitely makes sense to go battery. But for long haul, you know, does this really impact that? Unknown Speaker 17:41 Sounds very, it's a very reasonable question. And it's one that as I say, I've been wandering around this morning muttering to myself about it's, the truth of the matter is that, again, what does a truck by alarm, what does a truck operator want, he wants utility. Now, he doesn't care if it's a blue truck, or a red truck, he just wants the thing, or she wants the thing to move to haul freight. So the means by which that freight is actually moved, and the means by which that movement is propelled are really, you know, that they're a nicety. But at the end of the day, you know, they're very much a secondary consideration, if there is a charging infrastructure, if the payload is acceptable. And basically, if you look at this, from an hours of service, prospective truck driver in Europe can drive for four and a half hours before he has to take a 45 minute break. So you need the ability to move, you know, a reasonable payload, and you need the ability to move that payload for four and a half hours before everything needs to stop and be recharged. If we can actually get to that point, then the incremental value of the fuel cell truck, which I have to admit is, you know, superficially, a far more attractive proposition for long haul, you know, that that that advantage begins to dissipate very quickly, indeed. And, you know, at the end of the day, truck operators are, they're not after, they're not pretty technology averse at the end of the day. So they want, you know, they want that which allows them to be in regulatory compliance. To, you know, pet basically the old right, that's what they want, you know, blue truck, red truck, it doesn't matter as long as it's a truck. Sam Abuelsamid 19:52 Okay, interesting, interesting perspective on that. I guess I hadn't really thought of it that way. And, and, you know, perhaps you Another potential model to throw into that mix to think about is if, if an OEM is actually owning that owning the tractors at least, if not the trailers, you know, there's the potential maybe for some sort of relay model, where after, excuse me, after a few hours of driving, the driver pulls in to somewhere a truck stop or somewhere and actually switches tractors, hooks up the trailer to a different tractor, that tractor goes off, gets charged, and then they continue on after their break with a fresh tractor. That's it's fully charged until they're until their next break. You know, is that something that could potentially happen? Unknown Speaker 20:54 Yeah, I mean, I think there are an awful lot of secular issues within transport at the moment, which is slightly away from the truck, I mean, for example, was a very significant driver shortage. Both in North America and in Europe, drivers do not want to be out all weekend, they don't want to be sleeping in a tin box. So I think the relay system is going to be based more on a drop and swap deal with trailers, but the truck actually getting back to base each night and the driver sleeping in his own bed. That being said, I think, you know, this. And I don't want to get ahead of myself here. But this really could redraw the value chain within the commercial vehicle industry. I don't see. I don't really see what I'm very glad I'm not a truck dealer at the moment, because I didn't see how those guys can be making any money in the future. And, you know, it is actually one step away from what discussion has been ongoing, really, ever since I've been in this business. You know, at what point does the truck manufacturer actually provide a staffed truck, a fully managed truck? The driver shortage is very significant. You know, is this an enabler for a truck OEM to actually provide a complete transport solution? I don't know. I think we're probably getting a little bit ahead of ourselves on that one. But you know, the, the significance of this the impact of this is going to be felt throughout the industry throughout the value chain. Sam Abuelsamid 22:46 Alright, fascinating lot, lots to think about and still a lot of a lot of uncertainty as we make the transition towards fleet decarbonisation. Unknown Speaker 22:55 I'm not that I'm looking for any sympathy here at all, Sam but and also a lot of rewriting of a fuel cell electric. Last week, so anyway, but there you go. Sam Abuelsamid 23:05 All right. Thanks, Oliver. Saji What do you have? Sagie Evbenata 23:12 Hello. Yeah, I thought I'd share an announcement from the electric two wheeler wells so so Honda they this weekend out so they plan to introduce at least 10 or more electric motorcycles by 2025. I guess firstly, when honda says electric motorcycles, they have their own kind of segmentation. So they that includes things such as E bikes, which they classify as vehicles which travel up to 60 miles an hour, ie mopeds or the seat of scooters are capable of traveling up to 30 miles an hour. And beyond that, and probably what classes conventional motorcycles. But I think Honda have their own platform, which is called something like fun, Evie, which covers that category. So the stages, it's not really clear details on specific models as such, but this is part of their larger strategy to become carbon neutral, or at least their motorcycle business. By 2014. They have some sales targets of trying to hit around a million units in the next five years, and about 3.5 million units by 2030. So a couple a couple of the bicycle that they plan to launch are probably classified as CTD scooters, they call them business bikes, which are essentially, yeah, low speed, electric mopeds. So the plan is to launch a couple of those in Asia, Japan, of course And Europe, probably around 2020 24 to 2025. They tend to launch a couple of personally, personal vehicles. So once again, those are going to be in Asia, Europe and Japan. And from there, they're fun category. They're the higher powered and higher speed vehicles looking to launch about three vehicles, they're in Japan, Europe and also in the US in this in this case. Finally, they also have a kids ebike as well which that they've been working on. So interestingly, in terms of batteries, it seems that these, these new models are likely to use Honda's mobile power pack which enabled battery swapping. Furthermore, they've also it's also been announced that they do plan to use all solid state batteries probably towards the end of the end of the decades, I believe or sorry, Andover that they're they're planning periods probably around 2024 to 2025 period. So I guess related to that, Honda have been using these these power packs and, and in battery sharing applications. So in India, for example, they've been working on battery swapping for electric three wheelers, ie rickshaw rickshaws, as well as in other Asian markets such as Thailand, and, and Vietnam. I guess also related to that, you know, Honda being the biggest motorcycle company, and we M they've partnered with the other big OEMs, including Cal Cal Sakhi, Yamaha Suzuki, to try to form a battery swapping company called Good chessell, if that's currently past correctly, so that was announced a couple of months ago. And they plan to start rolling out their battery swapping network in Japan, initially in Tokyo later this later this year. So it's it's kind of showing Honda's ambition. Firstly, in terms of electrifying their electric two wheeler fleet, I think it seems quite an ambitious target, launching 10 or more new models in the next few years. And, of course, it's interesting to see that there seems to be very limited plans for launching these vehicles in the US or North America at this stage. And I guess in addition to that, globally, it'll be interesting to see what they did what they want to do in India, given the recent policy changes to try and encourage battery swapping there. So perhaps they'll try to also increase their presence in that market too. Sam Abuelsamid 27:59 So with their with Honda Honda's battery swap system, are they using a standardized battery form factor across the range of different vehicles so that whether you're using a moped or a bike, or a larger motorcycle, you could utilize the same batteries? And I guess is the the intent is that the battery would basically be just removable by the owner to take it in their home and charge it? Or to do something like what Gogoro does where you have a battery as a service module model? Sagie Evbenata 28:39 Yeah, that's a good question. I think that's it's probably most likely the latter and helping to try and bring down the partner the initial upfront purchase costs for for consumers. I think that with regards to the compatibility of the battery, I believe it's the same battery units they want to use in all of these different motor motorcycle segments. I'm not too sure about the, the higher powered vehicles or the high powered or fun category vehicles, so they may be some kind of modular system using more than one of them, but it's not really clear at this stage, what they want to do, but they're already using these power packs in the electric rickshaws in India, so it's likely we'll be continuing to use those. Sam Abuelsamid 29:29 Okay. And with the the partnership with the other motorcycle OEMs. Did I guess the intent there that the batteries would be interoperable across the vehicles from from different manufacturers? Sagie Evbenata 29:46 Yes, that's right. So yeah, so So the partnership has actually formed a new entity, a new company that should should be having cross compatible batteries for the different VMs. And as I said, I think they haven't rolled out yet, but it should be later this year, starting in Tokyo and expanding throughout Japan, and I think they do have plans to try and roll that out to further afield as well. Sam Abuelsamid 30:18 All right. Anybody else have any other questions for Saji? Unknown Speaker 30:23 Yeah. So I've been I was a little sad to hear that. It sounds like the plans for the US are not that ambitious, because I have a Honda metropolitan moped. And I've been to me, and electric moped makes a ton of sense if you have one of these one. But have they given any hints as to the form factor or the size? I'm thinking to the years ago, they showed the E cub? Which made a bunch of sense, because the cub is sort of like the iconic model? I think it's the best selling motorcycle of all time. But so are they, the question is, are they going to finally bring out an electric cub? Or is it going to be something else, or they're not saying Sagie Evbenata 31:00 that they'll say, I mean, there were some images really released for their, like their business bike segments. So those just appear to be of a typical moped form factor in terms of its terms of its size. And I think that's intended to be used by commercial fleets like postal companies, and so on. But perhaps the, the fun segment where the vehicles are likely to be a bit bigger is, although it's not, they haven't really, given any details on what those those are going to look like or, or any specifications on those. So it's a bit unclear at that at this stage. Sam Abuelsamid 31:46 I will jump into into my topic then, earlier this week, I visited San Francisco for a couple of days, because Cruz was holding an open house at their headquarters. And Kyle Vogt, who's co founder and CEO of cruise, spoke along with GM CEO Mary Barra at the Goldman Sachs Technology Conference in San Francisco on Monday of this week. And then, as part of that presentation, Kyle announced that within the next 90 days, Cruz intends to launch driverless Robo taxi operations in both Phoenix and Austin, Texas. They launched a similar service in June of this year in San Francisco. Their Cruise is based in San Francisco, and they've been testing they're doing development there ever since the company was founded in 2013. So this is a big news that because particularly for Austin, to launch a service within the next 90 days, because unlike most of the companies in the automated driving space, typically they are testing in a city for usually several years before they launch any kind of commercial service. Crews up to this point, has not done any physical testing in Austin, they have not had any vehicles there. They've not they've not even mapped the city. And they plan to have their vehicles a fleet of their vehicles up and running, offering ride hailing driverless ride hailing services to the public by the end of this year, which is pretty phenomenal. It took them, what, eight years, nine years almost, to go from starting in San Francisco to being able to do that in San Francisco. And I remember from a conversation I had with Kyle, a couple of years ago, one of the things that he emphasized when I asked him about expanding into other cities, because mostly a lot of the other big companies like way mo motional, Argo. Zooks. And Baidu and others do their testing in multiple cities, because you've got different environments, different operating environments, different rules of the road road configurations, driving patterns. And what Kyle told me was, you know, they were putting a lot of emphasis on simulation. US running the vehicles on the road in San Francisco, which is, tends to be a very complex environment to operate an AV, and gathering information, and then simulating other cities and you know, based on data that gathered from other cities, doing the simulation, so that they can minimize the amount of testing they have to do on site in that city before they can launch commercial operations that start to generate revenue. So this is going to be a fascinating test for crews as to how well that strategy can actually work. It's, it's we'll definitely be watching that one very closely. And along with, you know, when I was in San Francisco, I got to, we got a group of us got a tour of cruises headquarters there. And I last visited their headquarters in 2019. And at that time, crews had a little over 1000 may think about 1200 people working there, they now have over 3000 employees. And since I last visited their headquarters, they have moved all of their software teams out of the building into another building nearby. And they're doing a lot more. They've added new labs, hardware labs, where they are building and testing a lot of hardware that they are now designing in house when they when they started off, like most AV companies, they started off using off the shelf components from various companies from including their compute platforms, their sensors, and then integrating all that together into a system and developing the software to control it. What they're now doing, is they as they've gotten gotten closer and closer to commercializing the technology is they've started working on actually replacing those off the shelf components with in house designed systems that are more highly optimized for the task, and that they feel can significantly reduce the costs. And one example of that is the compute platform today, they use a compute platform that consists of a combination of Intel CPUs and Nvidia GPUs. Doing all of the processing for a single sensor signals the perception, the path planning and control. They are, they have been designing their own silicon custom silicon to do that. And there's two chips that they've got one as a signal processing chip. And then the other one of the main processor is doing all of the perception and path planning and control. They've already received samples of their doom chip, which is the signal processor and they're getting the Horta chip which is their, their main processor for samples by Thanksgiving. And they've they've said that with this, they expect to be able to reduce the cost of their compute platform by almost 90% With this much more highly optimized system, and also reduce the power consumption of the system by about 60%. And it's also a much smaller package with a lot less power requirements, a lot of those thermal management requirements. So it's going to be fascinating to watch. They're not planning to roll that out into their production systems and their commercial systems until 2025. But right now, the the computer that runs the Chevrolet, the modified Chevrolet bolts they use consumes about four kilowatts of power, their in house design system consume is expected to consume about one and a half kilowatts. And that's a major difference when you're talking about an electric vehicle that has that's operating and has to be driving around the city all day long, and carrying passengers and, and cargo. After our tour of the building, we also got to take rides in their Robo taxis. And I had my first ride in an automated vehicle in January 2008 At CES in the Chevy Tahoe from Carnegie Mellon University that won the DARPA Challenge. And that was driving around a pre programmed course, in a parking lot outside of the Las Vegas Convention Center. I've written in many AVS over the almost 15 years since that and from a lot of different companies. And this was the first time that I got into one with no safety driver, no minder to come from the company to come along and make sure everything was okay. No preset course. They just handed me a loaner iPhone with the cruise app on there, the ride hailing app that the public can use today. And here you go. Pick any destination you want. In the service area. It's just like using Uber or Lyft. You put in the address of where you want to go. And it'll take you there. And so for the next 40 minutes or so I just wrote around the Richmond and Pacific Heights area of of San Francisco. Completely uneventful, which was really amazing. You know, the vehicle handled all of the, it's not that it was this was about 999 in the evening. In an area of San Francisco. That's not the most heavily trafficked, but still, you know, there was other traffic there were pedestrians or cyclists and the car did every thing exactly as you would expect it to do it, it stopped for pedestrians, it detected pedestrians, it came up to a four way stop. So it was all clear started to move and then suddenly a pedestrian decided to cross the street in front of it and so stopped and waited. Same thing when making left turns, there was a double parked vehicle. It slowed down, pulled up, pulled over slightly, so it could see around it saw that it was all clear and moved along past it. It everything just worked exactly as it should be, which is exactly what you want from an autonomous vehicle. So there's some pretty impressive progress being made. And also earlier that day, before going to cruise I also paid a visit to Zooks. And their new factory in Fremont. Where they are building prototypes of their purpose built Robo taxi and saw how they're how they're manufacturing that mostly assembling subsystems that they're getting from a variety of suppliers. And then we went for a ride in that one as well. And that one was not out on public roads, yet. They've done all their safety testing. But they're still waiting on the permits from regulators in California to allow them to test it on the road. But we wrote around the parking lot around the building. And again, very uneventful. There's, I think, a really promising future for automated passenger sharing and delivery vehicles. Scott Shepard 41:31 That's really interesting. Sam, I was wondering what your thoughts were for, I guess, maybe a few years, maybe more than a few years from now, when these commercial services have evolved a little more? How do you think they're gonna charge these vehicles? What's like, what's going to make sense in that, that use case that we're starting to see pop up? Sam Abuelsamid 41:56 Yeah, so this is, you know, most of the vehicles that are being utilized by AV companies are either plug in hybrid or battery electric vehicles, you know, because they're, they're looking, you know, part of what they're trying to achieve is reduced emissions, and lower operating costs as well. And today, those vehicles, when they need to be charged, you know, they'll go into a depot, and a human will plug them in. But one of the things that Cruz showed us during our tour of their hardware Labs is work that they're doing on a variety of automation, for the back end services. So not just driving around the city, but they showed us a robotic system for charging the vehicle. That is funny, you know that the vehicles they have today are based on the Chevy Bolt. They also have a purpose built vehicle that they've designed with Honda and Ford and General Motors, called the origin that they're, they've been testing it on the track in California and here in Michigan, and they're again waiting for a waiver approval from the National Highway Traffic Safety Administration to operate them on the road that both of those vehicles have, like any other Eevee on the road, today, have a little port door over the charging port similar to the door you have over there, your fuel filler on gas cars. And so this robotic system that crews developed, basically has a couple of little fingers on it that can pop up in the charge port door. And it's unlike a few years back, Tesla released a video showing a silvery snake like mechanism that would go in and plug in and automatically charge a Tesla vehicle. This was not you know, anything so fancy like that. It looked like a pretty standard industrial robot. You know, that didn't doesn't look especially high tech, but it's very functional. So and because it's a it's an automated vehicle it can pull into exactly the right position. So the robot robotic arm comes over pops the door open, sticks the plug in, charges it when it's done, it pulls out and goes on its way. And they also showed another thing that they've been developing, which is a robotic cleaning system to vacuum the seats and clean the seats. Again, using a modified industrial robot goes in, cleans off the interior. And when you've been carrying passengers around eight around all day, things are gonna get dirty and people don't want to ride in a dirty vehicle. So they've automated that process. And they also showed us one of their origin prototypes that's been modified with a wheelchair ramp. And you know, one of the the challenges of course, you know it for today, you know for paratransit services. for people in wheelchairs, typically there's there's a human driver. And when the the person in the chair pulls into the vehicle, there's usually there's someone there to assist them with locking it down, so does the chair doesn't move around while the vehicle is in motion. On this origin, again, they took out one of the regular seats, you got roll up the ramp back into the seat, and then there's an automatic mechanism that clamps onto the wheels to hold the chair in place for safety. So they've been looking at all these, in order to have a viable commercial service, you have all these other pieces of the puzzle that you actually have to get in places not just building an automated driving system, but you have a whole slew of other things, to support those vehicles. And they're trying to mechanize as many of those systems as they can, in order to drive down the cost of the service. To make it accessible to more people. Scott Shepard 46:01 It's starting to sound sort of like that Amazon grocery store, where you just walk in, you take the product and walk out and and you don't have to interact with anyone. Sam Abuelsamid 46:13 Yeah, kinda like that. Well, and one of the other things that Drew's also showed us is a locker module that can go into the origin. So the the origin and also the Zooks Robo taxi are both designed with carriage style seating. So everybody's facing the center of the vehicle, there's an there's no forward or for back. And they have sliding doors that open up. So the the locker module that goes into the origin is like the Amazon lockers that you can find and all kinds of locations. And so they can, if there's lower demand for rides at certain times of the day, they can use it to slide that locker module in, clamp it down, and then loaded up with deliveries. And it can go out and make deliveries and have the same kind of contactless delivery, you know, that you just go up and scan the QR code on your phone screen, one of the doors opens up, you take your take your package and close the door, and it goes on and does its thing. And talking to the folks at Zooks, which is of course owned by Amazon now. You know, they that is, you know, they're focusing on Robo taxis first, but they do recognize that at some point, you know, they'll probably have a version of their vehicle that has lockers on it to do those sort of last mile deliveries. And there's there's other companies working on similar systems as well. So yeah, it's it's, they're all over mentioned, you know, with trucking, you know, utilization, maximizing utilization is crucial to making a viable business. And so, you know, Robo taxis are not going to have constant demand throughout the course of a day. But if you can use those vehicles use those same vehicles for other uses, like goods delivery, then you can get a lot more out of it and gently, potentially, hopefully, at some point actually reach profitability. Scott Shepard 48:11 Yeah, I'd say that's a pretty key one. Yeah. And it kind of goes along with my last question about, you know, if Cruz is able to deploy to a new city, you know, within nine months, instead of what might have been nine years in the past, is that accelerating your predictions for how quickly automated vehicles might roll out? I guess, on the understanding that they're not profitable yet, of course, yeah. Sam Abuelsamid 48:37 So somewhat, you know, one thing to keep in mind is that even the cities that the Cruz is talking about expanding to now you know, Phoenix, Austin, Texas, they've also a couple of last year, I think announced a deal with Dubai, to deploy their vehicles and Dubai. One consistent theme of all this, these are all relatively warm weather locations, where, you know, severe weather is relatively uncommon. Let's put it that way. And so, you know, even even in San Francisco, you know, they don't really have winter weather. So, weather is still a challenge for all of these companies, and getting these vehicles to work in places where you have less consistent weather is still something that everybody's working on. So I think, you know, being able to more quickly go into a new venue and get up and running is going to be important. And that will probably have an impact on the next update of our of our forecast. If you know if we see that Cruz is able to do that successfully. But and even you look at whammo who has been the leader in this space for a decade. You know, they've been doing this in Chandler, Arizona, for you know, they started offering public ride hailing with WeMo one and Chandler, which is a suburb of Phoenix, in 2019, they've only just in the last month, expanded that service into downtown Phoenix. You know, and Cruz is still isn't telling us where in the Phoenix area they actually plan to operate or where in Austin, they're going to be operating. And, you know, even San Francisco, which is not that large of a city, they're only able to operate in about 1/3 of the city right now. So, certainly, you know, being able to get up and running in a new city quickly, is important. But we also have to rely on expanding to other environments. Sagie Evbenata 50:40 Our quick question, Sam, when you were being driven around in San Francisco, how did the other road users interact with your in fact, did they did they realize that you are not driving the car? Sam Abuelsamid 50:53 Yeah, I mean, some people looked over and saw, you know, saw the car and waved. But I think, you know, in San Francisco, in particular, is kind of an outlier. You know, because the people in San Francisco have been seeing these cars, driving around for the better part of a decade, from a variety of companies, you know, from WeMo, Cruz, Uber, Zooks, and numerous other companies. And you can just go out and stand on any street corner in San Francisco anytime of the day. And you won't have to wait more than about 10 minutes to see an automated vehicle drive by. So I think, you know, the people in San Francisco are getting fairly used to it at this point. But yeah, I mean, people will still do a double take, you know, when they, when they see a car driving by with nobody in the driver's seat, and somebody's sitting in the back. Sagie Evbenata 51:45 Yeah, to do the other drivers try and take advantage of the fact there's no human driver, or Sam Abuelsamid 51:50 they didn't during my time in the vehicle, but I have heard from other people and other companies that it does happen. Yeah, I mean, people will, will do things like, you know, suddenly slam on the brakes, you know, or, you know, do you know that they'll do a variety of inappropriate things, to see how the vehicle responds. Unknown Speaker 52:15 So, Sam, when you're talking about the expansion in the cities and the limited use now, what is the general consensus with these companies? Are they talking about it as they expand to other cities that the services will typically be geo fenced? Are they still really bullish and say, like, you know, no, the, you know, we can definitely see, you know, covering an entire city area, Sam Abuelsamid 52:38 it's still going to be geo fenced for the foreseeable future, at least for probably, you know, the next five, probably through most of this decade, it's going to be geo fenced. And those geo fences will, will gradually move as they gain more experience and confidence in various locations. And to get regulatory approvals, those geo fences will expand. But it's still going to be geo fenced and it's going to be a while before, for example, you see the vehicles, you know, Robo taxis going out into suburban areas, or rural areas. That's going to that's going to take quite a long time. It's still going to be primarily in the urban centers for for quite a while yet. All right. Nobody's got anything else. We'll wrap it up there and say thanks to everybody, and we'll talk to you in a couple of weeks. Bye. Thanks, everyone.