Hopes Rising on Hydrogen, Amazon and Rivian Progress, Restaurants Copying Dealer Pricing

‍SPEAKERS

Paul Daly, Michael Cirillo

Paul Daly  00:22

Good morning. It is Monday November 7, come out series on assignment. I don't know but that's what we're gonna say Michael Cirillo is filling in. Today we're gonna talk about hydrogen, Amazon and restaurants copying dealers pricing scheme, scheme schematic. People really want to call things. So potentional repeat. Sounds so scheming. Well, it is a great week to be retail automotive Kyle's out, and so I got to pick my co host and the one person that was crazy enough to say yes. What's the one and only Mike Cirillo, Michael, it's good to spend some time with you this morning.

Michael Cirillo  01:00

Well, you know, as long as you get through the bottom, like that full list and you hit the bottom of the barrel, you know, you know Soro is gonna come through

Paul Daly  01:06

cereal is always like, alright, what are the top 10 people I want on my show? And then there's Cirilo

Michael Cirillo  01:14

number 11. Ah, never

Paul Daly  01:16

never actually, you were my first call. If that sounds anything, man. Thanks for having me. Oh, it's always good to have you get a lot of things going on. We'll be on the road car and I'll be on the road. Are you going? Where are you going this week? Are you going to use car week? No, you're gonna MRC. You're staying in Texas holding it down?

Michael Cirillo  01:33

Yep. Yep. I thought Yeah, it was one of those things we just got back from 800%. You guys were there. And with myself on my team, we're just kind of like, you know, what are our plate runneth over. And so we were just like, we're gonna focus here. And what's the point in getting new, new new, I know, this is the auto industry, when you know, there's lots on the plate already that we can be focused on. So we're just going to hang out. I love

Paul Daly  01:56

that. I love it. Well, Kyle and I will be running and gunning at modern retail conference formerly triple as Brian passions event in Palm Beach. So try to bring you some fresh insights from there. We're gonna miss you, we're probably going to dial Cirilo in anyway. So that's just how we roll up.

Michael Cirillo  02:14

Maybe I'll just roll in like I did when you guys did your family reunion. And you can

Paul Daly  02:19

and you're more than welcome to do that. We've got a lot of content that's been dropped a couple podcasts in the dirt has been going really well, which is conversations that we've had when we're on the ground. And in the dirt. Michael, you are part of a lot of those at the 800% Club. And we also released a recent episode of the auto clubs podcast, which Michael has been a part of forming and as a co host, and probably had one of the most fun episodes I've ever had when I interviewed you about your beginnings. And we talked about everything from dial up internet, to the statue of David, to why you're in Texas now. So go check that out, too. You can just search auto collabs or in the dirt, or just go to a sotu.com and all the podcasts are listed there. Alright, we have some news to talk about today. There was one story that I almost put in here that I didn't, and it was about four dealers pushing back literally that was the word in there. So that's not why we're the pushback here today. But I was like, you know that has an important tone. But it has a little bit of a like, let's not start the week with conflict because there's enough conflict in the world. So instead, I started with this one. So here's first story we expressed our optimism on this show about hydrogen many times. And our friends at automotive news today released a great and it's like a very lengthy and thorough art article. I enjoyed it a lot reading it this morning on the history and promise of alternative fuel source hydrogen over the weekend as companies and experts weigh in on the broad investment in the technology and the blended approach to the replacement of fossil fuels. So here are a few points from that and then we'll jam on it a little bit. It's finally happening segment Matt Torrington engineer manager of fuel cells for global supplier Bosch little company there, which said this year it will invest as much as 591 million in hydrogen production technology by the end of the decade. Then Kristin ringland global Mobley analyst at Ernst and Young another little company said there are things that don't work well with batteries and they're excited that hydrogen might fill those gaps. We also another comment we don't see this as an either or said Rod Borup program manager of hydrogen fuel cell tech lab within the Los Alamos National Laboratory he sees it as an and not a both not an either or button and and check this out and 2021 GMs $35 billion investment in a dual carbon emission reduction strategy includes what we hear a lot about battery technology. But that investment also includes a lot of resources into hydrogen as well. Hyundai is developing fuel cell versions of its entire commercial lineup by 2028. So Hyundai's leaning in with the Next Gen system due next year. And it foresees fuel cell usage in trucks, trains and maritime vessels. It makes a lot of sense. You know, Toyota is doing the thing with BMW right now and to sulfates are releasing something as early as 2025. And you know, we know Toyota, they've been pretty much the most hesitant to go all in on the Bev craze. And Jill pret Gill Pratt, I'm sorry, chief scientist at Toyota Motor Corp and CEO of Toyota Research Institute Institute said, we're very humble about this whole thing. We don't know. And the honest truth is, we don't think anyone else knows, either. So there's a lot of talk, Michael, I mean, we've always talked about hydrogen, I've always looked at it with a sense of wonder at saying, like, man, that that seems a lot closer to the experience that we're used to. I don't know, I don't think I've ever gotten your thoughts on hydrogen.

Michael Cirillo  05:37

Here's my thoughts. What a novel idea like this boy, Gill, he's my guy. Right? And I think this is this is actually, his comments fit well, within the persona of Toyota. I mean, look at how they develop their engines, they find something, they pour tons of research into it. And then they find that thing that sticks, and they don't deviate from it too much, that that's why they just do it super well, right? Just do it super well. And that's the reputation is they, they know that they found a thing, they're gonna stick with it. So I love I love that he brings a little humanity into this, because really what's happening in the industry, like what this makes me think of my overarching opinion about hydrogen, EV ice, whatever it is, this whole narrative reminds me that we're nothing more than a bunch of chirping birds, like we don't actually know. And if we look at our history as human beings on planet Earth for 1000s of years, things never end up the way that we think they will. So despite a lot of chirping, despite a lot of chirping. And so, while I love that investments are being made, I think the narrative could really for now suffice to be, hey, we're making investments to research this to see if it's viable to see if it's going to work long term. But also, we might be flying hot air balloons one day again, like, you know, as our main mode of transportation. No, that's it. It's a healthy, it is humble, but it is a healthy, like, there's still optimism, they're still making those advancements forward. But he is cautiously optimistic that hey, like, who knows where this is going to go? And we should all be thinking that way.

Paul Daly  07:13

You know, there's one, there's one thing that comes to mind when you say that you just look at what's happened with cryptocurrency in the last 24 months, right? You've watched that wave. And if you were to just listen to now, look, cryptocurrency I believe has a future it has a functional future. However, that's a segment of it, when a lot of it was just a lot of chirping. And we've watched the pop culture, momentum gain, and it rises it up and everyone talks about it, this is the next thing, big thing, like we're going to put all our eggs in this basket. And then the chirping is pretty quiet right now, when we found out what the actual market demand for it is the actual value that it plays in people's lives. So that's just the first thing that comes to mind. You know, one thing that came out of this, some experts believe that hydrogen might be best suited in diesel applications. We've talked about, you know, like a battery powered tractor and how that just doesn't work because of the the extended runtimes needed for commercial work doing these high high torque in these high torque environments. And, you know, one expert says, you know, thinking about it in terms of maybe hydrogen is best suited to replace diesel applications, and maybe batteries best suited to replace gasoline applications. So that's another interesting take on you know, maybe it'll, because trucks, diesel applications generate a huge, huge portion of greenhouse gas emissions that we just don't think about in our regular consumer lives because we're not, you know, on the boats, and in the trucks and in the tractors and all of those things that are moving in like hey, you watch one of those things operate and just look what comes out of the the exhaust pipe. And it looks a little different than what comes out of the automotive car exhaust pipe. And so, you know, they they did note in the article, one of the primary challenges is the same as batteries, right lack of refueling infrastructure. However, with hydrogen, it is a much more familiar, a much more familiar experience, right? You go up to the pump, you connect the hose to your car, you watch the little dials go for three or four minutes, then you disconnect and you drive away with a full a full tank. So it'll be interesting to see what happens. I think hydrogen, there's a lot of personally, I like the way a hydrogen engine sounds. I know that's like more of like, an experiential thing. Oh, they're awesome. It sounds cool. It sounds some something between like a video game racecar and an actual car. It sounds really cool.

Michael Cirillo  09:34

We're arriving at George No,

Paul Daly  09:35

no, no. No, it sounds. It sounds like you're getting some dough and you lay down on a hydrogen engine. It sounds like it sounds it sounds that sounds you can do anything. Well speaking of. Once I hit the Segway button once I hit the Segway button, you can't say anything else. I'm just kidding. You can say it. The thing is too is the whole segway

Michael Cirillo  09:57

button Well, I was just gonna say, I mean, how long before the hydrogen thing kicks off and that narrative and we're gonna start to chip, I think the whole thing that that I'm getting out of this as I read through the notes and, and we read the articles is, we really don't know. So that's why I'm still kind of with my my my guy Gill Pratt here. I love the way Toyota approaches things, Gil that I say Gil or go? No, you said Gil. Okay, so let's go, I left approaching things. I love that the automakers are all making investments in this direction. I think it's healthy that we do this research. It's only 2022, almost 23, for crying out loud. And so, you know, to make those investments. I think, you know, though, the trend for me going on the backside of this conversation in this narrative moving into 2023 is I'm going to hear what they all have to say and still approach it with. I don't think it's going to end up the way that any of us think and I would love to plug a hose into my car. Until, you know, say like, you know, poor little Greta gets on my case about using too much water. I don't know.

Paul Daly  11:04

More little Greta. Wow. Or is it or is it Greta? I don't know. Gil, Gil, you're a gift guide. Not a GIF guy, right.

Michael Cirillo  11:12

I'm a gift guy.

Paul Daly  11:14

Okay, I thought I could I could stereotype use that I'm a gift guy as well. Yeah. All right. Well,

Michael Cirillo  11:19

the founder, the founder says it's Jeff. And I'm like, I don't care what the fat like, Dude, we're allowed to come up with whatever we want. It's 2020. Yeah.

Paul Daly  11:30

All right, well, moving on Amazon's fleet of rivian delivery vehicles, Evie delivery vehicles have hit the milestone of 5 million packages delivered, as there are now over 1000 vans in the fleet making deliveries on a regular basis. Amazon's full fleet consists of about 30,000 Vans and also 20,000 shipping containers that you see on the back of tractor trailers, etc. Starting in July, that the EVS rolled out in Baltimore, Chicago, Dallas, Nashville, San Diego and Seattle. And then since then, they've been putting the service in a lot of new cities, there's like a list of like 20 cities here, across the country. Now the program was announced initially in 2019. And if you remember this, the goal was to purchase 100,000 Vans from rivian and have them on the road by 2024. But that's been adjusted to we'll have 100,000 on the year on the road by year 2030. Citing supply chain pandemic, blah, blah, blah, like all the other reasons that you can say, we were way off, right? I don't know. 2024? Meatloaf last

Michael Cirillo  12:31

Sunday. Yeah, yeah.

Paul Daly  12:36

I mean, that's, that's just the that's the low hanging fruit. But um, I think I haven't seen one of these in let's see, there wouldn't be in Syracuse there. Usually, all these are kind of major metros, right, where they probably can stay close to the hub, and they go through. But, you know, this is kind of the fruition of a partnership. You know, we're watching it rivian Does, obviously watching what Amazon does. And they have 1000 Vans. So I mean, I don't know, it's one of those things where like they're doing a thing. I don't know that it's, you know, a seismic change, but we'll kind of see me it seems to be working so far, I guess.

Michael Cirillo  13:09

Yeah, I mean, well, again, this kind of piggybacks off of the previous segment, we have to try in order to figure it out. Like, if we don't try something, then then we're just gonna stick in the same place. And so, you know, kudos to them, they're making a partnership work. I mean, 1000 vehicles doesn't sound like a lot when contrasted against 30,000 total. But it's a lot. That's a substantial investment from both sides of that equation to see if something works. And so, hey, Can't Knock the diligence and the commitment to try something.

Paul Daly  13:41

And you would think like a delivery vehicle would be one where you'd probably get the most benefit, because think of how often those trucks have to stop and start and sit there. You know, they call it in, in fleet management, they call it dwell time, where the vehicles just sitting there and it's running. And you would think that, you know, just the dwell time savings alone, like, it seems like a vehicle like that would be really well suited for a battery. Because it goes home every night, right? It charges while people are doing all their stuff running from dogs and knocking on doors and all that, right. We're not burning gas while we're doing all that. So that's a good thing. That's a good thing.

Michael Cirillo  14:13

And we'll see no other consumables like oil brake float, like, you know, all the different fluids that have to go into it. The maintenance that goes along with such transmissions and all those sorts of things. I mean, there there, there is potential upside here that they're going to be saving a ton and operational costs.

Paul Daly  14:32

Well, speaking of potential of saving a ton and operational costs, it's really nice. Sounds like the point of restaurants. Let's check this out. Restaurants are considering taking a page out of the dealer playbook, not your show dealer playbook, but generalized dealer playbook. I trying their hand at dynamic pricing, due to the mass adoption of online ordering and digital menu systems. So this could include thus lowering prices during slow times to get people in the restaurant maximizing the staff they have at the moment or raising prices during peak demand times to maximize profit. So, the low hanging fruit here that's from a retail wire article low hanging fruit here is to use all that data to figure out when things are busy. How can I make more money from that? Ashwin? Callum Mani or come Lonnie co founder of juicer which is it's kind of like an online ordering platform, told the magazine food on demand. He said if I own a pizzeria and I'm on a college campus and have a line out the door at 1am because all the kids have been partying? And are they really gonna care that a pizza is now $11 instead of $10? Probably not. But that's 10% more I can make on every pizza. And that's a big deal. So, proponents say this is going to work because consumers are accustomed to dynamic pricing, right market based pricing elsewhere. You know, they understood that maybe framing the pricing change as a discount, right, if you eat it during this time or ordered during this time, you get a discount versus an elevated, you know, a premium. And some have reservations like Tim Voss, CTO of focus brands, so the parent of Moe's Southwest grill, Schloss skis and other food service brands, they don't want to be in a situation where people are paying different prices at the same time. So, you know, dealers have been obviously we know, market based pricing a lot of fluctuation. And we've been having that conversation for quite some time. Right. And even saying, like, you know, in the automotive world, you can have a one price model and still be fluctuating prices on a daily basis, right, because the market changes. You know, that's different than negotiation or non negotiation pricing. But um, I've never considered it for food. My first take is that I think it would work actually

Michael Cirillo  16:44

do Yeah, I approached it with a healthy level of skepticism, because I was thinking like, Okay, I understand the marketing case. Like you said, the the concept of the pizzeria and the college students, are they gonna care if they're spending an extra dollar? Yeah, probably not in that isolated context. But if I'm like, Hey, babe, do you want to order in tonight? And she goes, Yeah, and I'm like, Okay, well, we have to do it at 4am. You know, when? Yeah, that doesn't work at $7? No. So I guess it kind of depends. It depends on you know, what market segment you're in whether or not this is gonna work. But I also wonder about the timing of this, especially when the conversation about inflation on food is so high, it's like, and I already know, I'm paying a little bit more when I order out. And now I'm paying even a little bit more on top of that. So maybe less 78% markup on food,

Paul Daly  17:36

or maybe less? Maybe it's Yeah, I do think I do think it has merit, not every circumstance. You know, I think services like DoorDash services, like who's the one where you get the groceries from? I don't use it. So I can't remember shipped the shit. That's probably why I can't remember, it's got a shopping order shop.com. I don't order my food from the from the grocery store.com. Right. It's really changed even like Costco where the online price is different than the in store price. And you never really know what the price was to begin with, when you order from like one of those delivered because they mark it up by like 8% or 4% and covers the delivery fee. And then you don't see the delivery fee, but it's actually baked in there. I think and DoorDash as well, like all this has delivery fees, I think it's made it much more flexible than you know, back in the day, we were like 299 number two at McDonald's. But literally, it was 299 You got two cheeseburgers, a medium fry and a drink for $2.99. And that was like the staple forever. And so I think that there's room for for like changing in there. But imagine if you just changed by like 10%. Right? So you have like a five or $6 value meal, it was 540. Right? And now it's like 594, or whatever that is, like, I don't think that will make a big difference. Especially if sometimes you can order it for 499. You know, well, I don't know,

Michael Cirillo  19:05

whoever like the thing is, it's like anything in business, throw out the idea, put it into application, there will be somebody who uses it. And therein lies the business case, like they're not going to get everybody it's not going to get the Cirilo is at 4am eating tacos. That's the that's the heartburn zone. But you know what I mean, but somebody will and and that's all that really actually matters is the people that will will participate in it and order their food at dynamic pricing.

19:32

I think there's a there's an opportunity for restaurants that are always booked to charge a premium for peak times, like a blanket premium, right? And then like, Hey, if you want to eat at, you know, six or 7pm on a Friday night, this restaurant, you're gonna pay like a $40 premium to be able to book that, right that I think would drive people like maybe I'll eat at 430 If we want to go to the nice place. We'll go a little earlier or a little later. But the blanket statement is you have to start with conscustomer experience and work backwards? does it benefit the customer in some way? Does

Paul Daly  20:03

it not just make you more profit? Like how can you tie that in? And I think we get into tricky situations in automotive as well, when we do things just to maximize profit, and we don't think about it and how is this going to benefit the customer experience on the other side, and it gets us on our heels. So I don't know what that's a little bit from across the retail world today, the hydrogen world today. Regardless, we have businesses to operate today. We have customers to serve, think customer experience first, work your way backwards, and I think that formula will never leave us losing

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