Toyota Bets Billions on "Green Engine" & Cruises Are So Back

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0:27Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, why is Argentina's president palling around with Mark Zuckerberg and Sam Altman? Ben, does filming your Chipotle worker while they are making your bowl actually lead to bigger portion sizes? It's Wednesday, May 29th. Let's ride.

0:48New York is famously a concrete jungle, but sometimes the natural world and human structures collide in pretty awesome ways. Like this evening, when the phenomenon known as Manhattanhenge is occurring, The term, which was coined by Neil deGrasse Tyson, refers to when the sun sets directly in line with the east-west Manhattan street grid. So you get this pretty incredible view of the sun going down in between the canyon of skyscrapers. There shouldn't be any clouds tonight, I'm hearing, so it could be pretty spectacular. Yeah, an astronomer from the American Museum of National History told the New York Times that she thinks of it as astronomy in your face.

1:25It's like a huge science party that will occur in the city. One of many this year, by the way. I mean, we've had the solar eclipse so far, so very big year for astronomy-related cool stuff happening. Now let's hear a word from our sponsor, Sage. Not the herb, but a tool that saves finance professionals a lot of time and money. Life as a finance professional is stressful. You've got a lot of balls to juggle, and I can see why CFOs are sometimes called chief figure-it-out officers. Tens of thousands of you CFOs are working with too small tech that doesn't afford you the full view of the financial health of their business.

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2:39This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon, series premiere tonight on NBC. Tim Cook, Mark Zuckerberg, Sam Altman, and Sundar Pichai do not have a ton of room on their calendars, but this week they're all making time to meet one guy, Argentina's chainsaw-wielding president, Javier Mille. Those pesos won't go very far here. Mille is jetting up to the U.S. to chat with the tech industry's biggest moguls about investing in Argentina and to hype up his drastic reforms to fix the country's broken economy.

3:21It's been a while since we caught up with Miele since he was elected last year. So what's he been up to? Well, on the campaign trail, the self-labeled anarcho-capitalist promised two things, bringing down soaring inflation and gutting government spending. And so far, he's kept his word. Inflation, while still growing at an astonishing 289 % annually, slowed to single digit monthly increase for the first time in a half a year but at what cost because of mile's austerity measures economic activity has plunged and more than 2 000 construction projects all over the country have just stopped frozen in time even if they were close to completion but with this trip to silicon valley mile is looking past this current pain to a brighter future where the metas open ais googles of the world might want to put down roots in argentina yeah by the end of june this year, he will have completed eight foreign tours, which is just by far a record for any Argentinian president in the first six months in office.

4:19And some Argentinians have gone on record and say, hey, we're not really used to our president being this internationally famous for younger voters, especially these photo ops that he's doing with these very big tech leaders. He had a interview with Elon Musk. But then the big question is, is this really benefiting Argentinians in any meaningful way? Or is it just kind of elevating Miele's international profile? So there's two sides to this coin. Yeah. So let's look at what he's done since he's come into office besides just travel around and stamp his passport a lot because he certainly has done that.

4:52He met with Musk twice in the past month. So those two are certainly buddy-buddy. They both espouse more right-wing libertarian values. So yeah, he wanted to bring down inflation. And to do that, He's basically sent the economy into this massive recession. He's pulled back all government spending, private construction, private investment has just absolutely plummeted. So people actually in Argentina are feeling a lot worse right now. He's called these policies shock therapy. And he said, look, I know you're going to endure some pain now, but hopefully in the end of this, we'll get on the right track.

5:24And so far in terms of inflation, things are getting on the right track. Like I mentioned, inflation has eased up to an 8.8 % monthly increase in April, which was down from 26 % in December. The annual inflation rate is almost 300%, so there's still a ton of work to do there. At the same time, though, seems like the government finances are getting in a better place. Argentina recently posted its first quarterly surplus in 16 years, which is really good news for investors who are hyped about Argentina. And the IMF, which has this$44 billion rescue program, applauded Miele's moves to get the government back on the right track from a fiscal standpoint.

6:03One thing you have to look at, though, is that if he's going on all these international trips, you obviously want to attract international investment. So how is that going? It's still a little hard because there's just a lot of inconsistencies in Argentina right now. The government has this plan where they have these very strict currency controls, which limits abilities of companies to take profits out of the country. that's still in place because Millet doesn't actually control Congress in Argentina. So that is still something that's hampering international investment. And also, is Millet going to actually convert or replace the peso with the U.S.

6:39dollar, which is another thing he promised on the campaign trail? So you can do all the photo ops. You can make all the trips. You can stamp your passport. But unless you kind of create a stable environment for foreign investment, then you're not going to get those foreign dollars that he's obviously trying to court. While most automakers are zigging headfirst into electrifying their feet, Toyota is zagging, unveiling a brand new combustion engine yesterday. But this ain't your mother's combustion engine. It's capable of running on normal gas, but can also handle alternative fuels like hydrogen and bioethanol.

7:11It's all part of Toyota's grand plan. Hybrids like the Prius have been selling like hotcakes for the automaker, So it's pursuing a multi-pathway approach that focuses on hybrids, even as most of the industry pushes towards electric vehicles. At a presentation of the engines yesterday, Toyota execs also noted that there are five and a half million jobs in the supply chain for vehicle production in Japan. So shifting an entire industry towards EV cars isn't economically or socially possible at this point. Neil, this is a strategy that faced a lot of initial criticism, but has been a winning one over the last fiscal year.

7:45What do we think about these new engines? Yeah, when you see this headline, you're like, wait, what year am I living in? Toyota is unveiling a new internal combustion engine. It's betting on traditional engines at a time when the rest of the industry is going all in on EVs. But it is part of Toyota's broader strategy, which has been zigging where everyone else has been zagging. They are betting that EVs, battery electric vehicles, are just not going to be as big a part of the global auto market as everyone else thinks. Toyota's chairman has literally said that EVs are going to top out max at 30 % of the global market, and everything else is going to be these alternative fuels, combustion engines with varieties of types of ways to power them, hybrids.

8:31And it's not just going to be these battery EVs that get our way to a carbon-neutral future. Right. It seems like Toyota is taking the most pragmatic approach of all the automakers, not the idealistic approach, because at the end of the day, whether it's EVs or alternative fuels or hybrids, it probably will depend on, one, the technology, and then, two, if it makes sense business-wise. And right now, the thing that makes sense business-wise is that hybrids are just selling very, very well. All that being said, though, Toyota is still very much committed to EVs. Earlier this month, they said it's going to spend$3.2 billion on research and development of their next-gen EV platform.

9:07So clearly, that's part of their plans. They just don't see it as a silver bullet like many of the others in the industry do. Let's talk about this engine for a bit, get a peek under the hood. It's actually an engine for ants. It's a lot smaller. It's up to 20 percent smaller than a traditional engine. And that's meant to streamline the type of vehicles that they're going to make and reduce emissions that way. And yes, it's it'll be available for e-fuels, hydrogen. And I know some people are skeptical whether those are actually going to be a thing, but it'll interact with an electric motor just overall reduce emissions that a car outputs.

9:42And the goal is here's why they're all doing this is because there's regulations going up all around the globe, especially in the EU. first by 2026, where you have to have, you have to reduce your emissions by a lot. So there's different ways to get there. There's the EV pathway, and then there's a hybrid pathway or the alternative fuel pathway. Toyota's like, we don't care how we get there. We know that these regulations are coming and we have to get to this endpoint, but there are many different pathways where we can take. Yeah. The race against time though comes that if they actually ban sales of CO2 emitting cars in the EU, which has been discussed as early as 2035.

10:17So is it worth spending money developing this new engine if in a decade you're gonna have to cut combustion engines going forwards meanwhile every a lot of other automakers are seeing what happened with hybrids and are absolutely leading in yesterday porsche revealed its first hybrid it's 911 carrera so we got a porsche porsche uh hybrid coming and then we also have byd which is the chinese automaker revealed a$14 ,000 hybrid that, get this, goes, what was it? 1 ,250 miles on a single trip. So you could drive from New York to Miami on this single hybrid. The cruise industry is one of the fastest growing sectors in all of tourism, and the boom is being fueled by a demographic you might not expect.

11:01The youths, passengers under age 40, including kids, made up around 42 % of cruisegoers last year, according to a report from the Cruise Lines International Association. Millennials now account for almost the same share of cruise passengers as baby boomers and Gen Xers. Last week, Norwegian raised its annual forecast for the second time in a single month, pointing to millennials and Gen Z as its fastest rising segment. Experts say that this is a payoff for all the work the cruise industry has put in, adding new ships and experiences that appeal to younger people like fitness classes, food for foodies, and of course, speedy Wi-Fi so you can forget you're on a cruise.

11:42Toby, overall, this year is expected to be another record-setting one for cruises with a number of passengers reaching 36 million or 20 % higher than pre-pandemic levels. Insane, why are they so hot? Yeah, it's been a weird year for cruises though because shares of Norwegian in Carnival are actually down this year around 17 % each, but they did grow last year, 63 and 130 % respectively. Royal Caribbean is also up for the year. So I do think that cruises have always existed in this interesting space in affordability because they've long been relatively more affordable than land-based alternatives, especially true during bad economic times because just the way that the economics of a cruise line works is that there's always last-minute deals to be found because they have to fill those cabins.

12:29So it just makes sense for people to kind of put off on booking them and then snap up those last minute deals. So it kind of we were we were discussing before the show. It feels like cruises are almost in that sweet green area where people are looking for an elevated experience. It's not that much more expensive or it's relatively cheaper compared to other options like eating out. And cruises just can occupy this great middle ground right now. And a lot of young people are flocking to a lot of young people and a lot of first timers. In that same report, 27 % of cruise passengers over the past few years said they went on a cruise for the first time back in the prior two-year period.

13:08That was just 12%, so that's a huge growth in the number of first-time passengers. And then people who go on cruises also say they want to go again. 82 % of all people who go on a cruise are booking again, so that's a retention number that any streaming service would love as they see people cancel. and that's a high amount of people that are having a pretty good experience on cruises. There's also just some buzz around the industry too. Remember in January this year, the world's largest cruise ship was launched. That was the icon of the seas from Royal Caribbean. 20 decks, 40 restaurants, 7 ,000 passengers, 3 ,000 crew members.

13:40So we've talked about cruises a little bit and I feel like they're just coming back into the cultural zeitgeist a little bit more. Up next, we're talking about an interesting decision Spotify made that has customers a little peeved.

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15:26Spotify, where you may be listening to this very podcast right now, is discontinuing its car thing at the end of the year. That's not me being imprecise either. Spotify had a product literally named The Car Thing, and it really is halting production on them this year. The Car Thing is a little screen with a big knob. You put on your car dashboard that does exactly one thing, help you play music from your Spotify account. It wasn't exactly setting any sales records though, and The Verge described it as a more remote control for Spotify on your mobile phone than any standalone player. But still, a niche community loved the$90 device.

16:02That's why Spotify's decision to not only sunset the device, but to render it completely inoperable has left people baffled. Users got an email saying that their car things will stop working on December 9th. Neil, I get the decision to stop making a hardware product. That only found moderate success, but you're playing with fire when you brick a device that people still use. Right. There have been calls to open source it or get refunds or figure out a way so that these people aren't just stuck with a$90 brick in their car that they have to dispose and it leads to more e-waste. I think that Spotify's communications around this entire thing has been pretty poor and that's why people are upset.

16:39They say that the goal of the car thing was to learn about how people listen to music in cars. They said the goal of our car thing exploration in the United States was to learn more about how people listen in the car. This initiative has unlocked helpful learnings. When they say something like, hey, this is something for us to help get better and learn more about you probably so we can make more money in other ways. And people are like, well, I just paid$90 for a device that I actually kind of liked. And now you're discontinuing it. You're not allowing me to use it just so you can do a little experiment on me.

17:13I can see how that does not go over well. Yeah, the car thing, though, let's be clear, was definitely a heavily flawed product. It came with no onboard storage. It required a phone using Wi-Fi or data to connect to it via Bluetooth in order to work. So a lot of people said, why do I need the car thing, actually? Because if it requires and leans on my phone to work, then it's not actually saving me. It's a little redundant. That said, though, the people who did like it are usually the people who didn't have, like, an Apple CarPlay integration. where remember CarPlay just gives you an easier interface to interact with while you're in the car rather than having to look at your phone while driving.

17:49So Spotify's car thing did that for some people. So it's not like there was this huge, massive audience. It's more just that the way Spotify has handled it, that has angered it and it's led to it escaping the niche audience. I mean, we're talking about it right now. Hacks for scoring more food at the Chipotle counter have circulated online for years, but the latest one going viral, It might cause you to lose a little faith in human decency. After rumors spread that Chipotle is cutting down on its portion sizes, some customers have been pulling out their smartphones and videotaping employees as they fill their burritos and bowls, dubbed the phone hack.

18:26The theory is that Chipotle instructed its workers to give larger portion sizes to customers who are filming while skimping on customers who are just acting like normal people. Chipotle flatly denied that it decreased its portions, adding that filming an employee making your order doesn't mean you'll end up with heaps of steak. So where does this theory come from? It appears to originate with mega popular food influencer Keith Lee, who bashed his Chipotle order in a review that was viewed more than 16.5 million times. His main gripe was that the portions of the chicken in his burrito bowl were, quote, crazy low.

19:02Then some people who claim to be Chipotle workers posted online that they were told by management to give larger proportions if they were being recorded, which the company said isn't true. So here we are, Toby. Why does it seem like Chipotle is always at the center of ordering controversies? I think it's just the nostalgia a lot of people have associated with Chipotle because growing up, Chipotle hit. Like, let's be honest. It was known for its big portion size. It was known for just being like this absolute unit of a bowl that you could make. So I do think that whenever people see a skimpy bowl these days, They think back to the good old days.

19:36Whether that's true or not is definitely up for debate. The one thing I do want to say, too, is probably don't do this because don't go in and start filming your Chipotle worker. This is just someone trying to do their job. You're trying to hop on a social media trend. You're trying to, I don't know, abuse the power that a phone brings out. So just don't do this. It's not a good look for anyone involved. I don't think any Morning Brew Daily listeners would ever do something like this. It's super weird and rude. But I will say, so Chipotle lives by TikTok and it dies by TikTok, honestly, because Keith Lee, who posted this bad review that led to this whole saga, actually boosted orders like crazy last year when he did this little menu hack where he put fajita veggies into a steak quesadilla.

20:24And that led to what CEO Brian Nichols said was the two top digital sales days of all time when they actually incorporated this into the menu. So Chipotle has this way of doing really well when something goes viral, some hacky thing with their menu goes viral, and also leads to huge headaches. They called the quesadilla that Keith Lee came up with the Keithadilla, which is hard to say on air. But yeah, they definitely leaned into it. They also leaned into this trend itself because four days ago, Chipotle posted a TikTok on their official account saying, POV, you work at Chipotle right now. And it was just this video of people standing at the Chipotle counter with their phones out snapping pictures.

21:08So Chipotle is aware of this trend. I mean, they responded to it. So they definitely are not in the dark on this because you're right. They're one of the more online companies. Here's the one Chipotle hack that I do know how to use that I'm going to give to Morning Brew Daily listeners right now. It doesn't subject the workers to anything bad either. So you ask for a bowl, and you know when they say, do I want white rice or brown rice? You say white, and then as there are maybe two, two and a half scoops in, you go, I'll take some brown rice too. So then they almost have to match the portion of white rice they've already put in, and you're just off to a great start.

21:39The portion size is already – you've set the bar for what portion size you're expecting. So go with the half white, half brown rice hack and you'll get bigger bulls. That's a free one on me. When you think of the good old days, what comes to mind? Well, YouGov asked 2000 Americans a series of questions to try to pinpoint when exactly the good old days really were. And it was a bit of a mess. Initially, no real patterns emerged. Republicans tend to remember years under Republican presidents as more favorable. Democrats the same for Democratic presidents. So politics tinged people's perceptions.

22:13but by far the biggest indicator of the years people remember the most fondly isn't the actual time period itself. It's how old they were when they were experiencing it. As a Washington Post analysis of the data puts, age more than anything determines when you think America peaked. Neil, every single question this survey asks, when was the best music, the best fashion, the happiest families, the most moral society? All the answers peaked when the respondents were in their childhood or teenage years. Yeah, let's run through the specific responses. So when you were four to seven years old, that's when you thought everyone had the closest knit communities, the happiest families, most moral society, and most reliable news reporting was when you were eight through 11.

22:57The best economy, the best radio, the best TV and movies were in your early teens, age 12 through 15. No wonder the best economy was when you weren't spending anything and your parents were paying for everything. And then finally, when you're 16 through 19, this is where some of the stuff you are spending money on, you're going out, fashion, music, and sporting events. Most people said those peaked age 16 through 19. So that's sort of the breakdown, the progression. But it was just it's crazy to look at these graphs and show how uniform they are, that people's perception of the past peaks at particular ages.

23:31Yeah. You go have also asked the inverse. They asked when was the worst music in the worst economy. And the most common response by far was right now, even if it's not closer. Right. More people said the economy was worse right now than they said the Great Depression. So it's this weird quirk to the results too, though, in the sense that when Americans asked last year which decade they'd most want to live in, the most common answer was also right now. So definitely at some level it appears that people don't truly believe we're living in like the worst decade ever right now because they say they'd rather – they'd prefer to live right now than any other era.

24:09So there's just a lot of interesting psychological wrinkles to this data and we see this in the peaks and all the answers. Yeah, I mean, there is a psychological term called declinism, which pairs with rosy retrospection is that what we're seeing here is that people view the past with rose tinted glasses. They view what happened in the past as just much better than what's happening now. There's a study that's asked people while they were on vacation, how the vacation was going. Maybe they were frustrated. They didn't have like high marks for that particular vacation. But then when you ask them a few weeks later about how their vacation was, they were like, oh, it was amazing.