The Autonomous Vehicle Companies in the Self-Driving Race
If you needed any further proof of how unhinged the stock market has become, just look at the outsized and outlandish IPO for DoorDash (DASH) this week. The company stands at a $70 billion market cap for food delivery. On paper, that makes DoorDash more valuable than General Motors (GM), one of the world’s oldest and largest car manufacturers. To put that into perspective, DoorDash’s revenues were nearly $2 billion for the first three quarters of 2020. In 2019, GM brought in over 3X that amount – in earnings – on $85 billion in revenues.
GM is also the company that DoorDash partnered with last year to test autonomous food delivery through the former’s self-driving subsidiary. Cruise Automation, one of a number of autonomous vehicle startups that have been acquired in recent years, is among the lead contenders in the self-driving race.
In fact, the battle to be among the first to deploy a truly driverless vehicle seems to have become mainly a competition between corporations willing to invest in and/or acquire the technology to put robotic cars on the road. At least $16 billion has been spent on developing autonomous vehicles through 2019, according to one estimate. That number doesn’t even include the additional $3 billion that Waymo, Alphabet’s self-driving unit, raised earlier this year.
While we’ve covered some of the most well-funded autonomous vehicle startups in the past, it’s been way too long since we took measure of where the industry stands. In this article, we’ll catch you up on some of the major maneuverings in self-driving mobility.
Big Tech and Autonomous Vehicles
Big tech has made big bets into autonomous vehicles. Let’s start with Waymo, which traces its origins way back to Google’s secretive X Lab more than a decade ago. About 30 million miles (10 million of those simulated) later, the spin-off raised a little more than $3 billion from its parent corporation, Alphabet (GOOG), along with 10 other investors. The rest of the list is pretty interesting, from car retailer AutoNation (AN) and VC firm Andreessen Horowitz to investment management companies T. Rowe Price (TROW) and Fidelity. Even Canada’s national pension plan is taking a bet on Waymo, which is turning the corner into a driverless delivery service called Waymo Via. That’s in addition to the company’s current pilot program in Phoenix for its Waymo One autonomous ride-share program in 50 square miles of the city.
Waymo has to be considered in the pole position for this race, as one of only five companies licensed by the state of California to test fully driverless vehicles. Originally focused on the robo-taxi model, Waymo is gearing up to enter the driverless truck market thanks to all those new greenbacks and a deal with Daimler (better known as Mercedes-Benz) to develop Level 4 autonomous technology for class 8 semi-trucks.
Amazon (AMZN) bought its way into the self-driving race this year with the acquisition of Zoox, which had raised about $1 billion for built-from-scratch self-driving taxi service. Still operated as a standalone company, Zoox is also one of the very few autonomous vehicle companies authorized to drive the streets of California without a driver. The e-commerce giant, of course, is interested in autonomous delivery systems like drones so people can get their made-in-China crap faster than ever. Previously, Amazon has invested in self-driving vehicle startup Aurora and electric car manufacturer Rivian, among others.
Apple (AAPL) has been working on its own self-driving tech, dubbed Project Titan, since 2014. The company has been fairly stealthy about its efforts, but the consensus is that Project Titan is now primarily focused on the software end, with Volkswagen being one of its key partners. It acquired an early-stage startup called Drive.ai last year after laying off more than 200 of its own employees on the project. Project Titan’s autonomous vehicles have logged thousands of miles on California roadways for the last several years, but of late, the project seems to be going nowhere fast.
China has launched a number of electric self-driving companies over the last few years, like publicly traded Nio (NIO), which is about as valuable as GM at a market cap of nearly $60 billion. However, when it comes to China’s big tech companies, the consensus frontrunner is Baidu (BIDU), which is the Chinese equivalent of Google. Like Apple, Baidu has borrowed from Greek myth to name its self-driving platform. And, like Project Titan, Apollo is focused on the software, providing its open-source autonomous driving platform to dozens of partners inside and out of the automotive industry.
Big Automakers and Autonomous Vehicles
Just about every automaker on the planet is working on autonomous vehicles at some level, with a complex web of partnerships and quasi-joint ventures among competitors. Here we’ll just focus on some of the more mature efforts, beginning with Cruise, a startup acquired by General Motors in 2016 that operates somewhat independently. It has raised about $5.3 billion from GM, along with other investors including Honda, T. Rowe Price, and SoftBank, which has been a major player at all levels of the autonomous mobility market. Over the last five years, Cruise and its autonomous vehicle fleet have driven more than two million miles, with the AI system also trained on the equivalent of 200,000 hours of simulated driving per day.
Last year, Cruise introduced the Cruise Origin, a driverless vehicle without a steering wheel, pedals, or any other instruments needed by inferior human drivers. And, just in October, Cruise became just the fifth company approved for a driverless permit in California to test its Level 4 autonomy in San Francisco.
Update 01/19/2021: Cruise has raised $2 billion in a new equity round that has pushed its valuation up to $30 billion to accelerate the commercialization of its all-electric, self-driving vehicles. This brings the company’s total funding to $7.3 billion to date.
Ford (F) forged into the self-driving market in a big way in 2016 with a $1 billion investment in Argo AI, a Pittsburgh-based startup that has since become something of a joint venture with Volkswagen. The latter kicked in $2.6 billion last year, bringing total funding to $3.6 billion. The companies each own a 40% stake, with Argo’s founders and employees holding a 20% minority share in the company. Like Cruise, Argo is nominally a standalone company. Ford has been testing self-driving tech in Miami for the last couple of years in partnership with delivery companies like Postmates. It recently started a pilot program to bring fresh food to students stuck at home doing TikTok videos between homework assignments using its autonomous Fusion hybrid cars.
Toyota is taking a different tack in its goal of developing an autonomous electric vehicle by mostly doing things in-house, with the occasional mega-round investment in the odd startup. The world’s largest automaker has invested nearly $4 billion since 2015 in the Toyota Research Institute (TRI) to lead the company’s autonomous driving efforts. That included $2.8 billion in 2018 to spin off TRI-Advanced Development as a new company. Toyota has two platforms in development – Guardian and Chauffeur. The former is sort of a smarter advanced-driver assistance system that prevents drivers from making stupid mistakes. The latter is a true Level 4 or 5 system for future robo-taxi services.
Not every self-driving startup or company has sold out to the big tech or big auto corporations. In fact, the casual consumer of tech news might assume that the company with the best shot of winning the self-driving race is Tesla (TSLA). Earlier this year we wrote about how the company has outlasted many short-selling skeptics. The argument in favor of its outrageous market cap, which sits well above a half-trillion-dollars, is that Tesla is best poised to control both the electric vehicle (EV) market and the autonomous vehicle market. And let’s be clear about something: Most EV companies, almost by default, are also developing or integrating self-driving features into their vehicles now.
While Tesla certainly has the first-mover advantage going for it – and has even become profitable after 17 years in business – many are questioning if their self-driving Autopilot tech is beating Waymo, Cruise, and others whose sole focus is solving the autonomy problem. Last year, automotive consulting firm Navigant Research rated Tesla second from the bottom out of 20 companies working to develop self-driving systems.
Tesla’s fearless leader seems to think otherwise, claiming that their AI capabilities are akin to Google’s capabilities vs. other search engines. But don’t take his word for it. The Japanese seem to think that Tesla is six years ahead of the competition. Regardless of whether Tesla is a leader or a laggard, autonomous driving is one tough nut to crack.
Autonomous Vehicle Startups
In fact, we learned just how difficult it is to create a robotic car capable of safely navigating the highways and byways of the country. Uber (UBER) recently abandoned its own ambitions to develop an autonomous vehicle after sinking more than $1 billion into the effort over the last five years. It will sell off the 1,200-person division to Aurora, a Silicon Valley startup focused on the AI computing hardware and software required to power fleets of driverless cars and trucks. (Uber also ditched its flying car unit, handing over the keys and $75 million to startup Joby Aviation for urban mobility solutions.)
Founded in 2017, Aurora has raised $1.1 billion after Uber also invested $400 million in this month’s deal, boosting the startup’s value to reported $10 billion. Other investors include VC firms with marquee names like Sequoia and Lightspeed Venture Partners, along with Hyundai, Shell, investment management company Baillie Gifford, and more pension money from soon-to-be-penniless Canadians. Its platform, Aurora Driver, consists of a central computer that uses machine learning and other sophisticated software to process data from a suite of sensors such as LiDAR, cameras, and radar.
The company is testing its tech in at least three major cities – San Francisco, Pittsburgh, and Dallas.
Wired noted that the deal also provides Aurora with another ready-made partner in Toyota, which had sunk $500 million into Uber’s self-driving group last year. The Japanese automaker is certainly hedging its bets, as it also invested $400 million earlier this year in a $463 million Series B for Pony.ai, a Chinese self-driving startup nominally headquartered in Silicon Valley. After adding $267 million in November, the company’s total funding to date is just a few million shy of $1 billion, with a $3 billion valuation. Other investors include Sequoia’s China branch and the Ontario Teachers’ Pension Plan (and you thought your company’s 401K was making risky investments).
The company has tested its hardware and software stack across millions of miles in both the United States and China.
Another Chinese self-driving startup with an HQ flag planted in Silicon Valley is AutoX. The company has only raised about $160 million, mostly from China-based firms, including e-commerce giant Alibaba (BABA). It made this list because it is among those five companies with the golden ticket to operate completely driverless cars in California. And this month it became the first company in China to deploy truly autonomous cars, with 25 vehicles participating in a pilot program in the city of Shenzhen, TechCrunch reported.
So far, we’ve listed four of the five companies licensed to operate fully unmanned cars in California. Last but not least is Nuro, yet another Chinese startup with offices in Silicon Valley. We briefly profiled Nuro earlier this year in our piece on contactless delivery drones and vehicles. Since then, Nuro added another $500 million to its coffers, bringing total investments to $1.5 billion, with a valuation of about $5 billion. You’ll notice some familiar names among the investors including T. Rowe Price, Baillie Gifford, Fidelity, and SoftBank. The company is focused on last-mile delivery for e-commerce, developing purpose-built autonomous vehicles for carrying essential goods like groceries
If there’s one thing we can conclude from this massive web of investments across the autonomous vehicle landscape: Pensioners in Canada are going to be poor and penniless when they retire. The other thing we can glean from this broad and admittedly incomplete overview is that no one company can really do this alone. The experts – the honest ones, at least – will tell you we’re probably about 80% of the way to Level 4 autonomy at scale. Unfortunately, the last 20% is going to take the longest to solve outside of very controlled conditions.
Next year, our MBAs will dive deeper into how companies are working to solve the hardest challenges in autonomous vehicle technology. We’ll see if retail investors can go along for the ride by looking for any stocks out there that might provide some pure-play exposure to the driverless investment theme.
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