A big shakeout is coming
The year 2020 was supposed to herald the arrival of self-driving cars. Instead, we got a global pandemic and growing recognition that autonomous vehicles are an incredibly hard, and expensive, challenge.
It’s a challenge still worth pursuing. More than 42,000 people are estimated to have died in crashes on U.S. roadways in 2020, according to preliminary estimates from the National Safety Council. That’s a stunning figure given that so many people worked from home and gave up commuting last year.
And if you believe, as I do, that the DARPA Urban Challenge of November 2007 really kickstarted the autonomous vehicle industry, it is humbling to realize that roboticists have been working on this for nearly 14 years. Reporter Alex Davies has written Driven, a wonderful book about this history that you should check out.
In California, 56 companies from Apple to Zoox have permits from the state’s Department of Motor Vehicles to test their autonomous vehicles with a human safety driver behind the wheel. Seven, including Cruise, Waymo and Zoox, have advanced to permits without a human driver. Just one — Nuro — has received a permit to deploy and operate vehicles commercially.
It seems pretty clear that not all 56 companies are going to survive in their current form.
“The space has been ripe for consolidation for a while,” Asad Hussain, a mobility analyst at PitchBook, told me. “It’s more technologically difficult and capital-intensive than people realize. To really commercialize at scale, we think you need $6 billion to $10 billion for technical development.”
Indeed, Argo AI, an autonomous partner to Ford and VW, is looking at a public offering as early as this year to raise the billions necessary to commercialize its self-driving system in 2022.
And consolidation has already begun. GM acquired Cruise, and last month Cruise acquired Voyage. Amazon acquired Zoox. Aurora acquired Blackmore and then OURS Technology, key suppliers of lidar.
There’s also a bit of a shakeout when it comes to another key measure: talent. John Krafcik’s departure from Waymo after five and a half years at the helm raises a lot of questions about business models and corporate patience. The departure was announced on Good Friday, and Tekedra Mawakana and Dmitri Dolgov will be co-CEOs going forward, and it’s telling to me that Waymo hasn't updated its website yet with this information.
The hype cycle for autonomous vehicles kicked off in earnest in 2015. On the eve of that year's Consumer Electronics Show in Las Vegas, Mark Fields — then the CEO of Ford — predicted that self-driving cars would be on the road in five years, making him the first big-name CEO to put that stake in the ground. In 2016, Elon Musk said that Tesla would demonstrate a fully autonomous Los Angeles-to-New York trip by the end of 2017, another deadline that has come and gone.
Mike Ramsey, a senior mobility and transportation analyst at Gartner, was the lead author of Gartner’s 2018 “Hype Cycle for Connected Vehicles and Smart Mobility” report. The report plots technologies’ maturity against the hype they are receiving, with the idea that technologies are hyped far ahead of when they actually arrive. The Gartner report said that autonomous vehicles had plunged into the "trough of disillusionment," which remains one of my favorite phrases of all time. The Hype Cycle report is updated every year, and AVs are still in the trough.
“Consolidation is part of the trough of disillusionment,” Ramsey said when we caught up recently. “Top-tier companies will be acquired, second-tier companies will change directions and bottom-tier companies will just run out of money.”
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