Autonomous vehicle companies and suppliers have spent about $75 billion developing self-driving technology, with little sign of meaningful revenue emerging from cash-burning car services.
This has spell disaster for dawn Innovation, TuSimple Holdings and Embark Technology, their shares are down at least 80% this year. Unsurprisingly, Intel has just lowered the target valuation for its Mobileye self-driving car business to about $16 billion, a fraction of the more than $50 billion it had in the first 10 months. before. Yacht, owned by Synthetic engine, raised money at a valuation of about $30 billion early last year. March, GM acquired SoftBank’s Vision Fund at a price implying that the venture is worth about $19 billion.
Here’s what happens when long-lasting new technology meets the short-lived patience of public markets and the harsh reality of rising interest rates. Many of these companies raised tens of billions of dollars long before their technology was proven or their businesses were almost self-sustaining.
The hype of about a decade ago and the demise of the end of the year is raising the question of whether self-driving cars will ever work. Anthony Levandowski, one of Google’s original autonomy pioneers, who left Uber Technologies and later convicted of stealing trade secrets, now runs an autonomously growing startup truck for industrial zones. In a Businessweek cover story this month, he argued that less complex use cases would be the way for the foreseeable future.
Morgan Stanley’s Adam Jonas, who seven years ago assigned enormous value to a Tesla Mobile service is yet to be found, in a recent note stating that autonomy could be a 10- or 20-year proposition.
Companies in this sector are now forced to consider drastic measures. Aurora CEO Chris Urmson sent an internal memo in September outlining the prospect of cutting costs, taking the company private, transferring assets or even trying to sell the company to Apple or Microsoft.
Others have high turnover. GM’s CEO Mary Barra fired Cruise’s counterpart Dan Ammann late last year. TuSimple replaced founder and CEO Cheng Lu in March, and its general counsel James Mullen stepped down in September. Alphabet-owned Waymo lost its chief product officer Dan Chu last month to 23andMe.
While executives and investors are in some cases headed for exits, well-capitalized companies in the sector are moving deep into new markets and projects. Cruise plans to replicate its San Francisco robot taxi service in Phoenix and Austin, Texas. Waymo will begin offering rides in Los Angeles and has also shipped beer between Dallas and Houston.
Startup Kodiak Robotics raised $30 million in private funding this week and runs its cargo trucks 8,000 miles from Texas to Florida. While there was a test driver at the wheel, humans gave way robot 94% of the time, Kodiak CEO and founder Don Burnette told me in an interview. The company is starting to ship furniture to Ikea.
I asked Burnette if Kodiak would be willing to ditch the safe driver soon.
“We are pretty close,” he said. “We seem to be saying this all the time. It was a few years out. “
It may take much longer, but the wrong time market is autonomous doesn’t mean it will never work. The lesson to be learned is that cutting-edge technology like robotics is always better in the incubators of the daring venture capitalist, not the portfolios of giddy stock traders.
