It's long been said that hybrids will rule the world. Wait, that's not right. Hybrids will serve the world as more of a stop-gap between internal combustion and fully electric cars, at least until the battery tech and infrastructure are ready for prime time. (At least, that's the going theory, but when it comes to the future of powertrains, things are never easy to predict.) Until then, the world will may have some teething issues—let's explore that.

Welcome to Critical Materials, our daily news round-up of EV and automotive tech. Today, we explore how automakers intend to use the money made from hybrid vehicles to fund EVs. We also poke at California lawmakers who want to rein in robotaxis, and learn who Cruise has chosen as its new safety chief. Buckle up!

30%: Automakers to Use Profits From Hybrids to Fund EVs of Tomorrow

2023 Toyota Prius Prime

Automakers are racing towards electrification. While there might be some debate on just how fast the charge toward battery power should be, some manufacturers seem to have a strong strategy down pat—and it's all about hybrids, baby. Last year's hybrid sales boom is proof of that. 

It's not what you think, though. While hybrids seem like a great way to satisfy the market that lives between ICE vehicles and BEVs, companies see them more as a way to fill the funding hole that bridges the gap. Specifically, they're using the massive profits generated from these hybridized cars to fund the development and deployment of battery-electric vehicles, or at least that's the case in Japan, according to Automotive News:

That new wave of battery-powered cars will arrive in the second half of the decade, when Japanese carmakers say EV demand will really take off. The EVs, they say, will be world-class competitors leveraging new manufacturing techniques and maybe even solid-state batteries.

In the meantime, Japan's carmakers are busy cashing in on their transition lineups.

[...] Japan's strategy of building a hybrid bridge to the EV future is derided in some circles. But as the recent financial results show, hybrid profits today may help power EV sales tomorrow.

The pub reports Honda, Toyota, and Mazda have all found hybrid sales in their domestic markets to be boosting overall revenue. In fact, each one of these automakers saw a sharp uptick year-over-year, setting a record profit for Toyota and near-record profits for Honda and Mazda. And as high-margin products, hybrids have been the key to this. (As for automakers with few hybrids like Nissan and Mitsubishi, they're not doing as well.)

It's important to point out that consumers may be feeding a bit of pent-up demand. Over the past few years, new car buyers needed to battle semiconductor shortages, loans with high interest rates, and other market complexities that could have delayed the decision to purchase a new vehicle. Now that new car buyers are finally executing on that decision, they appear to be shopping for fuel-sipping hybrids—and that's a great thing for automakers.

That much-needed profit is being re-invested by automakers during a time when the shift in business is costing billions. Now, flush with cash, manufacturers can more comfortably fund the pivot from ICE to electrification in key markets as new models, platforms, and strategies debut over the next five to ten years.

60%: California Lawmakers Want to Crack Down on Autonomy

Waymo Jaguar I-Pace

Californians are tired of being unable to opt out of autonomous vehicles beta testing on public roads. On Monday, lawmakers and labor unions rallied together to call for stricter regulations of self-driving vehicles—specifically, autonomous trucks—amid a spiraling news cycle of crashes involving robotaxis in recent weeks.

According to a report from Reuters, lawmakers are now pushing for two bills that they say will increase the safety of California residents. The first bill would permit local cities to control AV permits and regulations, something currently regulated at the state level. The second would require heavy trucks over 10,001 pounds to have a trained human driver behind the wheel when in operation on California streets. A telling quote from that story:

"It's a common-sense measure that keeps humans on board a truck until we have a plan for our workers and we're sure that tech bros aren't jamming unsafe technology down our throats," said State Assembly representative Cecilia Aguiar-Curry.

Last year, a similar version of the truck bill was passed by state lawmakers. However, it was vetoed by California Gov. Gavin Newsom who said that the current regulatory framework presented enough safety measures for the public. Lawmakers have since reintroduced the bill following a string of accidents involving robotaxis over the past year.

Residents are rightly on edge. Just last week, a Waymo vehicle struck a cyclist. Public response was rightfully critical of the robotaxi provider, and news of a Waymo-branded vehicle being set on fire during Lunar New Year celebration was reported just days later. It's not clear if the two were related.

GM's self-driving arm is also under fire. Cruise has been in the news for the past several months following a federal probe into a crash that led to a car named "Panini" dragging a pedestrian for up to 20 feet last October.

It's unclear what will come of any proposed regulation at this time. Local cities have cried mercy with the inability to regulate AVs on their own streets for some time, meaning the passage of a bill proposing localized control of testing would likely be welcomed. As for the truck bill, the Governor's office said that it "will evaluate the bill on its merits" if it reaches Newsom's desk.

90%: Cruise Gets a New Safety Boss

20231107 - Cruise Origin

Speaking of Cruise, the AV company has hired its first Chief Safety Officer.

Cruise welcomed former Apple executive Steve Kenner to its team this week, all while its entire fleet of robotaxi operations are paused due to a suspended driving permit and safety concerns.

Kenner has a vast background work with autonomous vehicles and safety projects. His work history includes stints at Aurora, Locomation, Kodiak, plus Uber's former self-driving division. In short: he's someone with AV safety experience being onboarded at a time when the company is aiming to satisfy recommendations made as part of a report regarding Cruise's response to the October 2023 crash.

Here's what Kenner has to say about his new position:

Safety requires that every team within a company work together to put passengers and other road users first. That partnership must include regulators, and I look forward to earning their trust. At the end of the day we have the same goal as regulators: to make our roadways safer and establish public confidence in the AV industry. I have worked on safety critical technologies throughout my career, I believe in the safety potential of autonomous vehicles, and I want to safely and responsibly realize that potential.

On a personal note, I started my career as an engineer at GM, so it's a full circle moment returning to work for a company so closely aligned with GM and its plans for the future.

Cruise is in a pretty tough spot right now. Public trust is shattered, its investment from parent company GM has been slashed by $1 billion, and a whopping 24% of its workforce has been laid off. On top of all of this, Cruise's co-founders, CEO Kyle Vogt and Chief Product Officer Dan Kan, have both departed the company.

Kenner is one of the company's first big hires since its very public shakeup. Likely, he will be one of the keys needed to repair trust with regulators and the public, though it's the first step of many needed to get the company aligned with the shortcomings identified in its incident response and safety procedures. Change is here, and Cruise knows that it needs to adapt to succeed.

100%: How Much Do You Trust Robotaxis, Anyway?

Zoox robotaxi driving on public roads in California

AVs aren't going away anytime soon. They're seemingly here to stay, with the only barrier between them and wide adoption being regulation. Well, that and how well they can operate on public roads without driver intervention.

It's a long road ahead, for sure, but it's hard to admit that the vehicles haven't significantly improved since the early days of both Uber and MobilEye.

That being said, how's your trust in robotaxis looking today? Have you (or would you) take a ride in one? Or do you trust being on the same road next to one? Let me know your thoughts about the state of the industry down in the comments.

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