Autonomous vehicle companies and suppliers have collectively spent about $ 75 billion on developing self-driving technologies, with little sign of significant revenue emerging from robocar services after all that cash incineration.
This spelled disaster for Aurora Innovation, TuSimple Holdings and Embark Technology, whose shares have each plummeted by at least 80% this year. Unsurprisingly, Intel just reduced the targeted valuation for its Mobileye autonomous driving business to around $ 16 billion, a fraction of the more than $ 50 billion it would have had in mind 10 months ago. Cruise, owned by General Motors, raised funds with a valuation of around $ 30 billion early last year. In March, GM took over the SoftBank Vision Fund at a price that implied the firm was worth approximately $ 19 billion.
This is what happens when new long-gestation technology meets the short 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 approached self-sufficiency.
The hype of the past decade or so and the slump of recent times are questioning whether self-driving cars will ever work. Anthony Levandowski, one of Google’s early pioneers of autonomy, who left for Uber Technologies and later convicted of theft of trade secrets, now runs a startup that develops autonomous trucks for industrial sites. In a Businessweek cover story this month, he said less complex use cases will be the way forward for the foreseeable future.
Adam Jonas of Morgan Stanley, who seven years ago placed tremendous value on a Tesla mobility service that is still nowhere to be found, recently said in a statement that autonomy could be a 10- or 20-year proposition.
Companies in space are now forced to contemplate drastic measures. Aurora chief executive Chris Urmson sent an internal note in September raising the prospect of cost cuts, making the company private, spinning off assets, or even trying to sell the company to Apple or Microsoft.
Others have seen high-level turnover. GM CEO Mary Barra fired Cruise counterpart Dan Ammann late last year. TuSimple replaced founder and CEO Cheng Lu in March and his general counsel James Mullen resigned in September. Waymo, owned by Alphabet, lost its chief product officer Dan Chu last month to 23andMe.
While executives and investors in some cases are heading for exit, well-capitalized companies in the space are moving towards new markets and projects. Cruise plans to replicate its San Francisco robo-taxi service in Phoenix and Austin, Texas. Waymo will begin offering rides in Los Angeles and has also transported beer between Dallas and Houston.
Startup Kodiak Robotics raised $ 30 million in private capital this week and operated its 8,000-mile cargo trucks from Texas to Florida. While there was a test driver behind the wheel, the human succumbed to the robot 94% of the time, Kodiak CEO and founder Don Burnette told me in an interview. The company is starting to ship furniture for Ikea.
I asked Burnette if Kodiak will be ready to abandon the safety driver anytime soon.
“We’re close enough,” he said. “We always seem to say that. There are a couple of years to go. “
It may take even longer, but the market by mistaking the timing of autonomy does not mean that it will never work. The lesson is that such radical technology as robotic driving has always been better in the incubators of daring venture capitalists, not the portfolios of trigger-happy stock traders.