Back in November following Tesla’s Cybertruck announcement, we published a note titled Cybertruck Misses Core Truck Buyer, But Still An Incremental Positive. Following 22 conversations with midwest-based construction pros, a core truck-buying segment, we’ve realized we were wrong, as early indications point to them hitting the mark.
Surprisingly, Cybertruck is building support with construction professionals. We now believe the segment will account for 15% of Tesla units in its first fully ramped year (likely 2023 given it ships late in 2021). We previously estimated that Cybertruck would account for 5% of units. Our key takeaways from the conversations:
- Something bigger is going on. Stepping back, we left with the feeling that the speed of EV adoption is setting up to trend faster than we anticipated. We entered the conversations expecting to hear clear concerns about EV’s shortcomings. Instead, 10 of the 22 said their next truck will be electric, 4 undecided, and 8 expecting to stay with an internal combination. In other words, two-thirds of construction pros are positive or neutral on EV’s.
- Tesla’s product awareness is favorable with 11 of the 22 claiming they were aware that Tesla had announced an electric pick up, and only 4 of 22 could name the truck.
- Intent to buy was higher than we expected, with 5 of the 22 intending to purchase a Cybertruck in the next 5 years. While there’s a gap between intending to buy a truck and actually purchasing a $45-$55k vehicle, the intent to buy was higher than we expected.
- Pros think Cybertruck is more expensive than it actually will be. We showed a photo of Cybertruck and added that a base model Ford 150 starts at $29k. Next, we asked them to guess Cybertruck’s base model price. The average was $84k, with a median of $80k and a range of $45k-$220k. The actual base model pricing is expected to be $40k (2WD option). The 4WD with full self-driving version is priced at $57k. We expect the average selling price with add-ons will be closer to $55k.
- Last, we discussed how they would feel driving up to a job site in a Cybertruck (with the photo visible to them) and asked, given its brutalist design, would you be embarrassed to show up to work in this truck. Only 3 of 22 said they would be embarrassed.
The end of the war is a long way off, but Amazon has just won another battle for the future of retail. The company recently announced the opening of Go Grocery, a first-of-its-kind large format automated retail store in downtown Seattle.
In doing so, the company also partially fulfilled prediction #4 of Loup’s eight 2020 tech predictions.
The store uses a similar blend of sensors and software as the original Amazon Go convenience stores the company began rolling out two years ago. However, at 11,400 square feet, the new Go Grocery store is 5x larger than the largest Amazon Go convenience store. And the company has indicated that the technology will work for even larger format stores, like a Whole Foods location, which are about 40,000 square feet on average. “There’s no real upper bound. It could be five times as big. It could be 10 times as big” Dilip Kumar, vice president of Amazon Go, told The Wall Street Journal.
Licensing Amazon Go Tech to Other Retailers
The Wall Street Journal also reported that Amazon plans to license the Amazon Go technology to other retailers, as we had previously speculated. We outlined the rationale for Amazon to license the tech here. In short, Amazon will follow the same model the company pioneered with Fulfilled by Amazon (FBA) and Amazon Web Services (AWS), commercializing internal technologies to see multi-billion dollar enterprises.
The Amazon Go backend gives the company a trojan horse into the brick and mortar retail space—ironically, the next major battleground in the future of retail.
Perhaps the more critical question is why a retailer would work with Amazon. Our answer is the same as it is with all of Amazon’s best offerings: convenience. Retailers would have a turnkey solution for automated retail. While larger stores like Walmart and Target may not want to use the technology for competitive reasons, branded retail stores (like a Nike store) may be a fit if Amazon can create a product that helps save the retailer labor and processing costs.
Walmart’s Jetblack Goes Dark
Contrast Amazon’s recent feat with Walmart’s latest failure. Jetblack, Walmart’s text message-based personal shopping service in New York City. CNBC reported that the Walmart service will be discontinued after it “attracted few customers.”
Credit the company for risk taking, but a luxury concierge shopping service just isn’t a fit for Walmart.
While these news events are merely coincidental, they may point to a larger trend of both Amazon’s and Walmart’s success rates as they develop retail technologies.
But Amazon has faced challenges, too. Text messaging as a medium for shopping struggles with many of the same ineptitudes that plague voice-based shopping.
Shopping on Alexa
Every year, we ask the leading digital assistants, Google Assistant, Siri, and Alexa, 800 questions each in our Annual Digital Assistant IQ Test. In our 2019 test, Google Assistant was able to correctly answer 93% of them vs. Siri at 83% and Alexa at 80%.
Surprisingly, the largest disparity was Google’s outperformance in the Commerce category, correctly answering 92%, vs Siri at 68% and Alexa at 71%. Conventional wisdom suggests Alexa would be best-suited for commerce questions. However, Google Assistant correctly answers more questions about product and service information and where to buy certain items, and Google Express is just as capable as Amazon in terms of actually purchasing items or restocking common goods you’ve bought before.
We believe, based on surveying consumers and our experience using digital assistants, that the number of consumers making purchases through voice commands is insignificant. We think commerce-related queries are more geared toward product and service research and local business discovery than actually purchasing something.
Loup’s Vision of The Future of Retail
We envision the future of retail in three categories: 1. online retail (e.g., Amazon.com), 2. automated retail (e.g., Amazon Go Grocery), and 3. Empathic retail (personalized services based on mutual understanding or empathy; more here).
Amazon has already won the online space and Amazon Go technology could prove to be the operating system of automated retail. We’re bullish on the empathic retail space partly because it’s outside of Amazon’s core competency (convenience), leaving room for others to succeed.
Automation is poised to be the defining theme of the 2020s. The time is now because of the confluence of advancements in deep learning, information collection via powerful sensors, and hardware able to calculate real-time judgments on that information to act on it.
Despite the promise of automation, applications of automated technology each suffer from unique constraints. Autonomous vehicles, one of the most exciting use cases for automation, must deal with an endless number of complex situations created by highly unpredictable open world environments. Given the catastrophic downside of AV failure, development of AVs has been deliberate, and level 4/5 autonomy for consumers is still a long way from reality.
Industrial automation, on the other hand, is one of the more advanced sectors of autonomy. Industrial environments are controlled — many industrial automation applications operate separately from humans while others, like cobots, are built to work alongside people. Controlled environments mean fewer variables for software to process. Instead, industrial automation applications face more of a hardware problem. It is difficult to create robots capable of performing the full extent of human labor. Robotic arms need to be built with end effectors specific to a task. Warehouse robots can move products, but face limitations on picking and sorting. Cobots must be limited in force output to reduce danger to the humans that work alongside them. This means that specific industrial functions can be automated but it’s difficult to automate the entire environment.
Given opposing constraints — complex software requirements given uncontrolled environments for AVs and limitations of hardware for industrial automation — combining the two applications of autonomy creates a compelling way to build a safer, more efficient industrial environment.
That’s exactly what Outrider does.
Outrider creates distribution yard operations of the future with a fully autonomous electric yard truck, management software, and site infrastructure – a complete system. It’s also one of our portfolio companies.
Outrider’s system allows yard trucks to operate without human intervention, moving trailers to and from loading docks while connecting to and disconnecting from the trailers fully autonomously. The marriage between a controlled industrial environment and autonomous vehicles is a match made in heaven.
Since a distribution yard is a controlled environment by nature, an autonomous system doesn’t need to understand the nearly infinite set of possible interactions in the open world, but rather a limited set of interactions in the controlled industrial environment. Distribution yards can integrate sensors through the yard to send information to autonomous industrial vehicles about changes in the environment. Distribution yards can also be rebuilt for human safety by limiting pathways where humans may come into contact with automated vehicles. Building this type of infrastructure for AVs to operate in the real world would be impractical for both cost and implementation reasons.