Zoox an Amazon Prime Robo-Casino?
May 5, 2024
This Week in The Autonomy Economy, The Road to Autonomy Index returned 0.66% and we explore the possibility of Zoox becoming a robo-casino in Vegas.
Scaling Zoox outside of gaming and Vegas, Amazon could potentially look to introduce a Prime Mobility tier. Both scenarios are possible as Amazon looks to turn Zoox into a profitable enterprise. We shared our thoughts on Zoox in an interview with Pete Bigelow of Automotive News who featured them in his Possible clues emerge on Amazon’s mystery plan for Zoox robotaxis article.
Waymo announced that a large group of riders are actively utilizing the service to take rides to and from medical appointments in San Francisco.
Aptiv announced they are reducing their equity interest in Motional from 50% to 15%. After the announcement, Hyundai, their JV partner in Motional announced they are investing $475 million into Motional to stabilize the business. The $475 million dollar cash infusion will not get Motional far and Hyundai will have to make a decision on the business sooner rather than later.
From the road to the house, autonomy and automation are expanding into the food processing industry, as the industry looks to increase efficiencies and shore up the industry’s historic labor shortages and vulnerabilities.
Autonomy will become an economy. An economy that we call the autonomy economy.
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Motional Investor Aptiv, Waymo parent Alphabet and Zoox parent Amazon are The Road to Autonomy Index component companies
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What’s Moving the Markets
Could Zoox Become a Prime Robo-Casino?
Zoox has been relatively quiet when compared to their peers in the autonomous vehicle industry. What Zoox has that their competitors don’t is Amazon.
Amazon is in the midst of a major transformation from the everything store to the everything company. As part of the everything strategy, Amazon acquired Zoox on June 26, 2020 for $1.2 billion. (On a side note, Walmart also looked at acquiring Zoox).
At the time of the acquisition there were rumors and lots of questions. What were Amazon’s plans for Zoox? Would Zoox pivot into autonomous trucking? Would Zoox pivot into last-mile delivery? None of the rumors came true as Zoox stayed true to their robo-taxi ambitions.
Since Andy Jassy assumed the CEO role of Amazon on July 5, 2021, Amazon has changed for the better. The company has become more efficient, automated and profitable.
Under Mr. Jassy, Prime Video has become an advertising juggernaut. In Q1 2024, Prime Video generated $11.82 billion in advertising revenue. Ad sales were up 24% year-over-year.
The strength in advertising was primarily driven by sponsored products, supported by continued improvements in relevancy and measurement capabilities for advertisers. We still see significant opportunity ahead in our sponsored products as well as areas where we’re just getting started, like Prime Video ads.
– Andy Jassy, CEO of Amazon on the Q1 2024 Earnings Call, April 30, 2024
In our opinion, one of the best untapped sponsored products is gaming/gambling. With Zoox ramping up testing in Las Vegas, we believe one of the best ways to monetize Zoox in Las Vegas is by introducing in-vehicle gaming partnerships with casinos.
Instead of arriving at the Las Vegas airport and schlepping your way to the Uber pick-up zone, imagine being picked up curbside in a Zoox vehicle. The vehicle would check you in, have a drink ready and your favorite gambling game up on the screen ready for action the moment you step off the curb.
Want to go out to dinner at a different property? Take the gaming vehicle. For the casinos this enables stickiness and ensures that you keep gaming at their property. For Amazon, it’s highly profitable revenue as they could layer ads and experiences on top of it.
Scaling gaming outside of Las Vegas would be tough, but scaling a Prime Mobility service to select cities around the U.S. would not be tough. Imagine a world where you could subscribe to Prime Mobility for a flat yearly fee and receive unlimited rides in a Zoox autonomous vehicle?
It’s possible and profitable. Amazon could create bespoke Zoox Only in Vegas experiences and then scale Prime Mobility without gaming, but with an ad layer to select cities around the U.S.
After all, who would ever thought that Amazon AWS would be the growth driver for Amazon? Now that growth driver is advertising and it one day it could be Prime Mobility. Amazon is the everything company.
If you are interested in learning more about our thoughts on what a Vegas autonomous vehicle experience could look like, we would recommend the following podcast:
- The Vegas Experience, A Conversation with Chris Anderson, President, Sala Consulting (November 29, 2021)
Our take: The future of autonomy is experiences. Amazon is in a unique position to unlock and profit from those experiences.
Amazon is a The Road to Autonomy Index component company
Way-mo Medical Appointments
In an April 21st interview with the San Francisco Chronicle, Aman Nalavade a Product Manager at Waymo told the paper “many riders” use Waymo to go to and from medical appointments because the vehicles offer “a private environment.”
When you go to a medical appointment, you never know what the news is going to be. You tend to be stressed out about the unknown and question the what if scenarios. You are uncertain how the test results might come back. You are stressed out about your family’s health history. Anyway you slice it, going to the doctor is a stressful experience.
By removing the driver from the equation, you can cry, you can decompress or just sit there in silence and ponder. You do not have to worry about a chatty driver asking you questions or trying to engage in a conversation. The Waymo vehicle is your private sanctuary to contemplate what might happen on your way to the appointment, or just what happened after the appointment.
Most importantly, Waymo will get you to and from your appointment safely.
If you are interested in learning more about autonomous vehicles and health care, we would recommend the following podcast:
- Economic Impact of Autonomous Vehicles on Health Care, A Conversation with Dr. Peter Weiss, Dr. Peter Weiss, Board Certified Physician and Health Care Entrepreneur (March 20, 2024)
Our take: Health care is a major opportunity for the autonomous vehicle industry. Just ask, Blade. Blade, an air mobility platform known for their JFK to NYC helicopter service is America’s largest organ transporter. In Q4 2023, Blade generated 67.37% of their revenue from transporting organs, not people.
Waymo parent Alphabet is a The Road to Autonomy Index component company
What Will Become of Motional?
That is the question and we will soon find out now that Aptiv has officially announced their plans for Motional.
Next up, Hyundai. What are Hyundai’s long-term plans for Motional? Hyundai’s recent cash infusion of $475 million will only get Motional so far as they look to launch commercial operations.
Hyundai is going to have to layout a plan that the markets believe and signal their long-term ambitions for Motional. We continue to believe the best path forward for Motional is to shut down the development of their robotaxi ambitions and merge the remaining assets of the company into Hyundai’s Genesis division.
In the Genesis division, Motional could embrace a dual-mandate. Continue to develop an SAE Level 4 autonomous driving system, while starting the development of an SAE Level 3 system to directly compete with Mercedes-Benz DRIVE PILOT.
Overtime the dual-mandate could transform into a sole focus of developing personally owned autonomous vehicles. Hyundai has grand plans for Genesis. Will autonomy be apart of those plans? Only time will tell.
Our take: Hyundai has a decision to make. We would advise to make that decision diligently.
Motional investor Aptiv is a The Road to Autonomy Index component company
From the Farm to the House
The food processing business has historically faced labor shortages and vulnerabilities, as the industry has extremely high employee turnover rates. To stabilize their businesses, food processing companies are turning to automation.
Applying automation to food processing will enhance workplace safety and increase operational efficiencies. At Wayne-Sanderson Farms (a joint-venture between Cargill and Continental Grain Co) they are actively using automation to increase efficiencies.
Robots now perform almost two-thirds of all chicken deboning, more than twice the rate before the pandemic. When Covid hit and we couldn’t get the labor, we were forced into it just to meet customer demand. Machines are now “equal to, if not better” than handwork at deboning dark chicken meat such as thighs, as technology has gotten better and better.
– Kevin McDaniel, Chief Operating Officer, Wayne-Sanderson Farms as told to Bloomberg (Quote is sourced from a May 1, 2024 Bloomberg article)
In 2021, Tyson Foods announced they were investing $1.2 billion to increase automation in meat plants over the next three years, owing to labor shortages in production. That investment continues today as Tyson continues to invest in capacity utilization and deploying automation to drive volumes/efficiencies.
Outside of the processing plants, Tyson has a partnership with Kodiak to autonomously haul food products between Dallas and San Antonio, Texas. Tyson along with their peers in the food processing business are going all-in on autonomy and automation.
TSN launched a productivity program in FY 22 to drive a better, faster, and more agile company. TSN looked to deliver $1B in productivity savings by the end of FY 24. However, it achieved this milestone a year earlier than expected in FY 23. We think TSN still has opportunities to improve efficiencies in its plants. For example, TSN plans to leverage automation and robotics to automate difficult and higher turnover positions.
– CFRA Tyson Foods, April 27, 2024 Invest Report authored by Equity Analyst Arun Sundaram, CFA, CPA
We expect more announcements in the subsequent quarters, as the food processing industry further embraces and deploys autonomy and automation to shore up their operations.
Meat processing companies are adopting robotics and automation technology to maximize production efficiency. Robotic systems automate deboning, cutting, butchering, and monitoring processes in meat production. This decreases cycle times and increases throughput.
Automation enables meat processing companies to improve plant conditions, reduce contamination, and makes meat processing safer for workers as well as consumers. Robots can help manufacturers in transferring a wide range of meat and sausages from conveyor belts to trays at a rate of up to 240 cycles per minute.
Plants with fixed automation systems increase yields by at least 2-3% over workers. Image-Meater from CSB is a special hardware and software solution which fully classifies the sides of the pork automatically into different quality levels.
– North America Meat Products Market Briefing 2024 – March 2024
The investments being made by the food processing industry are a positive sign for the emerging autonomy economy.
Our take: Autonomy is soon to become an economy. This is another clear example of how autonomy and automation are increasing operational efficiency with profitable economics.
Social Buzz
More Autonomy Investments on the Horizon?
Could Daimler Truck be looking to diversify beyond Torc and make further investments in the autonomous trucking sector? Reading page 14 of their May 2024 Investor Presentation (PDF) certainly makes you think about the possibilities, as Daimler Truck wants to “focus on the right investments” that includes autonomous trucking.
Could the right investments be investing in additional autonomous trucking companies? Could the investment be scaling up the “autonomous-ready” Freightliner Cascadia platform and on-boarding additional Daimler Truck autonomous trucking partners?
Daimler Truck is clearly hinting at something. We will be watching to see what moves Daimler makes over the coming quarters as it relates to autonomy.
Our take: Daimler Truck has the unique ability to become one of the most important companies in the autonomous trucking ecosystem. The Freightliner platform gives them a unique competitive advantage. Will Mr. Martin Daum take advantage of that opportunity to drive long-term profitable revenue for Daimler Truck? Only time will tell.
Daimler Truck AG is a The Road to Autonomy Index component company
A Vision and A Business. The Future of Tesla.
The future of Tesla is autonomous. Elon Musk is going all-in on autonomy at a time when investors are showing hesitancy to invest in the sector.
Be fearful when others are greedy, and be greedy when others are fearful.
– Warren Buffett
Elon is following the famous Warren Buffett quote as he is being greedy, when others are fearful. When Tesla cracks FSD (with or without a camera-only approach), shareholders will be rewarded immensely. It will be a bumpy road to Tesla achieving full autonomy, but we firmly believe the company will achieve it at some point in the future.
Our take: If Tesla cracks full autonomy using only cameras, the autonomous vehicle industry will be in for a major reboot.
Expanding Down the Peninsula
On May 3rd, Waymo announced they are beginning to test fully autonomous operations on the San Francisco Peninsula. Testing is happening as political headwinds continue to swirl around the autonomous vehicle industry in California.
There are several legislative bills currently pending in the California State Legislature that would effectively ban autonomous vehicles in the state. Despite these headwinds and the uncertainty of what these legislative bills would do to their business, Waymo continues to expand in California.
This is a bold move by Waymo. A move that should be commended as Waymo is putting the citizens of California above the wants of special interests. When Waymo expands fully autonomous commercial operations down the San Francisco Peninsula, you will be able to order a Waymo in a 160 square mile radius.
Our take: The future is here now. The only question that remains is, will California stand in the way of innovation and progress?
Waymo parent Alphabet is a The Road to Autonomy Index component company
The Road to Autonomy Index® / Weekly Performance
The Road to Autonomy Index® is a high-definition lens into the emerging world of autonomous vehicles. It is the world’s first and only pure-play index designed to measure the performance of the autonomous vehicle/truck market.
For the week of April 29, 2024, The Road to Autonomy Index returned 0.66%, the S&P 500 returned 0.55% and the NASDAQ 100 returned 0.97%. The Road to Autonomy Index outperformed the S&P 500 by 0.10% and underperformed the NASDAQ 100 by 0.31%.
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The Road to Autonomy & Autonomy Economy Podcasts
The Road to Autonomy podcast features unconventional conversations about the future of mobility and the `Autonomy Economy features an insider’s perspective on the economics of autonomy. New episodes every Tuesday and Wednesday.
Insights into the Commercialization of Autonomous Driving
David Welch, Detroit Bureau Chief, Bloomberg joined The Autonomy Economy podcast to discuss the commercialization of autonomous vehicles and autonomous trucks.
Listen on The Road to Autonomy | Apple Podcasts | Spotify | YouTube Music
Friday, May 3, 2024
Navigating Policy and Labor Challenges in The Autonomy Economy
Finch Fulton, Government Affairs and Policy Advisor, K&L Gates joined The Road to Autonomy podcast to discuss the policy and labor challenges currently facing the emerging autonomy economy.
Listen on The Road to Autonomy | Apple Podcasts | Spotify | YouTube Music
Tuesday, April 30, 2024
Texas Oil & Gas Fuels Economic Growth Amid Global Energy Challenges
Dean Foreman, Chief Economist, Texas Oil & Gas Association The Autonomy Economy podcast to discuss the pivotal role the oil and gas plays in the global economy.
Listen on The Road to Autonomy | Apple Podcasts | Spotify | YouTube Music
Wednesday, April 24, 2024
Autonomy Insights
Autonomy Insights keeps you ahead of the trends and influences that are shaping the future of the autonomy economy. New episodes every Monday.
Autonomous Trucking’s Impact on the Drayage Market
Autonomous trucking could eventually disrupt the drayage sector by enabling more efficient terminal-to-terminal transportation for major shippers such as Amazon and Walmart.
In this insightful discussion, trucking expert Lee White joined us to share an insider’s perspective on how the drayage market dynamics could shift as autonomous trucking is commercialized. He discusses the current challenges in the drayage market due to rising fuel costs and the freight recession.
Watch on X | YouTube | LinkedIn
Monday, April 29, 2024
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