Hello and welcome to SAE Tomorrow Today Unplugged. I'm your host, Grayson Brulte. Today's topic is partnerships and markets. Two very important factors in the future of mobility. The future of mobility will not be a go to loan proposition. It's gonna be one that's grounded in partnerships. It'll be one that's built on trial and error.
There'll be things along the way that benefit us and there'll be things along the way that failed to work. History can show us histories, our guide for what's possible. What are the outcomes, we don't know, but history's a guide for us. History access are Sherpa. Let's take a look back in history.
Let's go back to 1980. Age of golden flying, eh? We had interesting fashion too. It was glamorous to go on a plane. First class was a big deal. What happened then? American Airlines introduced the AA Air Pass for $250,000. What'd that pass do? It guaranteed unlimited first class travel for life. How great is that?
Can you imagine that today for a quarter million dollars, you get unlimited first class travel for life? There were stories of individuals. They went from New York to Maine to London to Frankfurt, to LA to Hawaii. All on one thing, just cuz they had nothing else to do and after all, you don't have to pay for the flights you've already paid for, it's a sunk cost as the economist to me would say, but what happened with that offer? It sounds great to you and me. It turned into an extremely proposition for American. So what do they do to counter it? Like any good business, they raised the price from a quarter million to $600,000 in 1990. That's nine years.
It more than doubled then what happened again in 1993? Demand didn't slow down. American raised the price to $1 million and what happened? You guessed it. And they kept losing money cuz of the demand. It was too good to be true. So in 1994, American closed the business. What happened, American, they learned the hard way that sometimes customers who are willing to spend to the customers you don't want, you don't want them as a customer because they're not a profitable customer.
They're going to cost you money in the long term. You're a publicly traded company. You're operating a business. You have to talk to your shareholders. You've gotta make a profit, you've gotta grow the revenue. While the AA Air Pass was a novel idea, it proved to be unsuccessful due to market demand. It's a cautionary tale.
It's a success of the program. It collapsed under its own weight. There's a lot of scenarios in line. There's a lot of scenarios in mobility where a good idea collapsed under its own weight. I'll give you another example from history here, a little different one here. Divorce insurance. Think about it.
Divorce insurance, 50% of all marriages in America and in divorce and separation. That's right. 50% of all marriages in the United States end in divorce and separation. It's sad. It's true. But you ever wonder why you can't get divorce insurance? Our startups tried. They tried really hard. It's been introduced numerous times.
What happened? History can tell us from what happened with America. It collapsed under its own weight. Insurance startups said, okay you're gonna buy our insurance for X thousands of dollars a month and you get divorced. We're gonna cover all your legal fees. They made the classic mistake: wait time.
Divorce is on the horizon. You could feel it. You just know it. I'm getting divorced. Maybe I'll wait six months. Lemme buy the insurance. Eh, the insurance company will pay it. Hence, you can't buy divorce insurance today. The market died. The market collapsed cause it proved it was impossible.
You couldn't underwrite the risk of divorce insurance because the statistics are so not in your favor. Americans saw the same thing there. It wasn't in their favor due to demand. They took chances. They took, the startups, took chances. They created a new company, but they learned the hard truth about markets.
They act as a judge and jury at times. That's right. A judge and jury. It's not to say that all markets or new startups are bad. No, you gotta commend an entrepreneur that's willing to put their financial life on the line to create a new partnership is what happens. And that makes me to my point about the future mobility partnerships.
If those startups that were so ambitious that wanted to do divorce insurance, talk to underwriters, they would understand. And that the, Hey, there's not a market here. Okay, that could have told him. Partnerships are what's gonna define the future of mobility and when you get the partnership, the ones to succeed are gonna be the ones that are bathed in trust.
Trust is gonna be the glue that holds us all together. Trust is gonna allow the partner on either side of the partnership to tell you the truth, the hard truth. Your idea's not gonna work. We have to pivot to this market. Economic conditioners are doing this. We have to do this. That's where the truth comes in.
The truth comes in when your partner tells you the. Companies might come together. Some will succeed, some won't. But if they're grounded in reality and they're grounded in truth and they can have those hard conversations, they will. They will succeed. One of the markets where we're seeing a lot of success is in the autonomous trucking OEM partnership world.
We're seeing some really great successes there. Give you an example here. Aurora has a OEM partnership with PAC Car and Volvo trucks. Well done. Team Aurora on that. Torc has an OEM partnership with Daimler Truck and Daimler's the majority owner of Torc? Well done on that. Daimler, well done.
Well done. Torc. Here's an example of an OEM partnership that didn't work out too well. TuSimple had an OEM partnership with Navistar but that relationship failed due to deteriorating market conditions. You can read the public filings on that one. It just, it deteriorated. Perhaps it was the trust. I'll leave the filings for you to decide that one.
And then you look at the industry as a whole. Waymo's gonna get a deal with a truck manufacturer at some point. Kodiak's gonna get a deal. Plus it's gonna get a deal. All the autonomous trucking guys, they're gonna get a deal. Why? Because the deals are a win-win. They're deals that benefit both parties. As the OEMs get access to the autonomous driving technology, they need it.
We got a driver's shortage, an autonomous driving technology. If you wanna use the term the virtual driver, it's the future of their business. That's where it's going. For the autonomous trucking guys, they get access to a redundant chassis. What does a redundant chassis do? Increases safety and allows them to build the best virtual driver they can.
Isn't this these partnerships between the autonomous trucking companies and the OEMs? It's a classic example of a win-win scenario. Both parties win. Not only do they win, they profit. The OEM can sell the autonomous driver for a per mile fee, increase the revenue, the startups getting revenue from the truck companies.
They could perhaps act as a reseller or. The model might be able to go. more importantly, for the autonomous trucking startup, they have the ability to produce factory grade autonomous trucks right off the factory in the line trucks that look good and operate and that are automotive. Great.
That's a beautiful thing. The same thing's happening on the passenger side of the autonomous vehicle world. Cruise has a partnership with GM and that's going well. We're all seeing what's happening in the news as GM is scaling. And the big thing changed in 2016 when GM acquired the ownership stake in Cruise, everything changed.
Cruise went from a startup run by Kyle Vogt to a GM company with access to resources, access to world-class engineers. These world-class engineers inside of GM, they know how to build vehicles. They know how to scale factory operations to produce new vehicles. Look what's happening with the Cruise Origin now.
It's being built by GM and if you're happen to be in San Francisco, look on the road, they're testing the Cruise Origin on public roads. That's taking Cruise software technology, GM hardware engineering, and ushering in the future of mobility. That's special. How did this happen and happen because of partnership?
Without the partnership between GM and Cruise, this would've never happened. I'll go on the record and say, state the following, that GM allowed crews to reach their true potential, and in my opinion, there's this getting started. Without GM, I'll say it very bluntly. Cruise wouldn't be where it is today. Cruise wouldn't be kicking butt, scaling drive route.
Multiple states, three states drive route operations. They're scaling on the GM side of the house. Cruise gave GM what they needed, an autonomous vehicle strategy in a market that was demanding one. Mary Barra goes on a earnings call back in 2016, 2015, 2014. Ms. Barr, what's your autonomous vehicle strategy?
Blah, blah, blah, blah, blah, blah, blah. Guess what? We've acquired a majority stake in Cruise, Mary Barra, now GM has the strategy, and you gotta give Mary Barra a lot of credit. She's implementing her strategy for crews, she's investing in crews. She's not cutting corners, and she's allowing, as I said earlier, for crews to reach its true potential.
What crews furthermore did it gave GM a star. It turned GM from General Motors, in my opinion, to general innovative motors. And they keep going. Look what GM's doing with BrightDrop in their FedEx partnership. That's scaling. GM is an innovative company today. They're not your traditional Detroit automaker.
How is that done? Partnerships. And you say, oh autonomous vehicle companies they're in the early days, they're not growing. And Ms. Barra has to get on the earnings call. Let me give you some numbers here to justify Ms. Barra's strategy. In 2022 Cruise generated $102 million in revenue.
It's projected to grow to $276 million in 2023 and $525 million in 2024. From 2022 to 2024, 2 years, we're looking over 400% growth. That's over $400 million in growth. Now, imagine Cruise is operating driver route, six states, seven states, eight states perhaps is generating a billion dollars in revenue. By 2025, 2026, and I'll go on a limb and say, maybe it's even profitable by 2030.
You don't know. But what Mary Barra and Kyle Vogt and the CEO of Cruise have a mutual respect and mutual trust for each other. That's what's enabling them to scale. It's the trust of the partnership. GM Cruise partnership's been a home run success. You can use the term a runaway success if you want.
There's been others in the autonomous vehicle industry. They've frankly failed. They've fallen apart. Look at the sad situation, which happened with the Argo Ford VW relationship was a mess. I'll just tell you point blank: it was a mess. It was in fighting. It was, I don't wanna be a part of this. There, there was a lot of disconnect around trust.
There was the IPO that was rumored to go and word on the street. Rumor was the VW plane to sell all their shares of the IPO to dump it. They didn't want anything to do with it. There was a lot of mistrust between VW and Ford there. VW wanted and out with VW wanting out the IPO markets closed. No path.
Ford was left to try and find a co-investor in Argo to keep it alive. Unfortunately, they failed. Ford failed. Argo failed A once young, bright, promising autonomous vehicle startup from Pittsburgh, Pennsylvania abruptly shut down on August 26th, 2022. Sad day in autonomy. Real sad day in autonomy. Great engineers building a great product.
Why did Argo fail? That's the million dollar question. We know one thing for sure, the trust between the parties became fractured and it was never repaired. The partnership lost its trust. The partnership collapsed. That's why trust is one of the most important aspects to a partnership. And you're seeing trust deployed in other sectors is, outside of autonomy, you're seeing trust deployed now in the electric vehicle charging industry has Travel Centers of America and Electrify America partnered together and installed a thousand charging stalls for electric vehicles.
At more than 200 locations in increments of 50 miles. Why is that important? You're going down the highway, every 50 miles you're gonna have access to a reliable charging station. I use Electrify America's charging stations, and frankly, they're reliable. Electrify America. I'm a customer and you're charging stations are reliable and you're teaming up with Travel Centers of America.
Okay, I could charge vehicle get a cup of coffee or get a Gatorade and go on my way. Cause I trust every 50 miles on my journey. I'm gonna have the ability t o charge. Then on the other side, the big competitor to travel centers, America's Pilot Flying J. They've got a partnership with GM where they're rolling out the Pilot Flying J and Ultium Charge 360, powered by EV Go.
Now, what's GM doing? As I said this earlier, they're going big, they're innovative. They're going to Coast Electric Vehicle charging Network consisting of 2000 charging stalls of 500 Pilot flying J travel centers. That's 2000 charging stalls of 500 Pilot Flying J Travel Centers. That's a lot. What's enabling that big infrastructure spend? Trust.
Trust is enabling companies to scale. Trust is enabling companies to build meaningful partnerships that lead to meaningful revenue. And if we look at the current situation in the stock market's, gyrating, we're getting mixed messages from the Fed. Investors are uncertain where we're going.
Frankly, most investors are guessing on the outcome. So where does that lead mobility? It leaves the mobility industry with trust. We have to trust our partners that no matter where the economic conditions are going, they're not gonna abandon us. We have to build the open, honest dialogue with our partners cuz M&A activity is gonna heat up and new partnerships are gonna be formed.
New alliances are gonna be formed. Some of the acquired companies. They're not gonna like it. They're not gonna the way that this is going. But to those acquired companies, give a word of advice, swallow your pride and be thankful for the outcome. You can live to fight another day. You made your investors whole.
Hopefully you've got a job with job security, perhaps a one year or two year contract. Run with it. Absolutely run with it. Some of the partnerships I highlighted today have been a success and others have frankly failed. It's always important to keep in mind that trust and true understanding of the market.
If you don't. There is no partnership. Part of the ways of being a good partner is adapting to changing marketing conditions. We saw what happened with the AA Air Pass. They tried to adjust to a changing market. They couldn't came up with demand. They kept raising prices and raising prices, and they couldn't meet the demand.
They tried, but they didn't truly understand. Will you truly understand market changing conditions? Will you tru, will you truly adapt? Will you be honest with your partners to figure out how to usher in everything? Cause I want you to think for a minute. Imagine a mobility. Without partnerships, it's not possible unless trust is fully evaporated.
If there is no trust, there is no partnership. It's time to build the future. I repeat it's time to build the future. It's time for companies to continue to develop meaningful, trusted partnerships that generate revenue, study history. Study history. Today is tomorrow. Tomorrow is today, and the future is and has always been trusted partnerships.
If you've enjoyed this SAE Tomorrow Today Unplugged, or have general thoughts or questions or feedback, or you don't agree, reach out to me on Twitter at G B R U L T E. I'm looking forward to the conversation and thank you for listening. SAE International makes no representations as to the accuracy of the information presented in this.
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