The autonomous driving industry is entering a new normal.
Six months ago, Cruise, a self-driving company owned by GM, received a huge $5 billion funding from GM's finance division to accelerate mass production of Origin driverless cars.
Dan Ammann, then CEO of Cruise, said the new financing put the company's total funding in excess of $10 billion before entering the commercialization phase. This means that the company has become by far the most cash-rich self-driving company in the world.
Then, in October, Dan Ammann unveiled his latest plans, which included commercializing The Deployment of Robotaxi in San Francisco as early as next year, and then increasing the fleet's operating capacity to 1 million vehicles by 2030.
However, just yesterday, Dan Ammann suddenly announced his departure due to possible differences with GM in terms of strategic planning. Subsequently, Cruise co-founder, president and CTO Kyle Vogt was announced as interim CEO.
This is the second major temporary executive change in the U.S. autonomous driving industry startups after the departure of Waymo's first CEO John Krafcik earlier this year, all because of the commercialization process of autonomous driving.
"It's a very challenging thing," says John Krafcik, "and I do have the same sense of uncertainty as everyone else, even in my position." I don't know when everything will be ready. ”
First, the contradiction between expectations and reality
Dan Ammann, a former investment banker, stepped down as president of General Motors in early 2019 to take over as Cruise's CEO. Since then, market expectations for autonomous driving have cooled as technological challenges have become more apparent and serious accidents have highlighted the risks of autonomous driving.
In 2016, GM bought Cruise for $1 billion, and publicly reported that the company has more than 300 self-driving test vehicles in San Francisco and Phoenix, making it the second-largest self-driving company after Waymo.
Cruise originally planned to launch a commercial self-driving mobility service in San Francisco in 2019, but ultimately postponed the plan. In 2020, GM officially unveiled Origin, a driverless shuttle tailored specifically for autonomous driving, and was originally scheduled to start trial production in 2021.
To this end, GM invested $2.2 billion in the transformation of its production line. At the same time, in order to ensure that Origin models without traditional control equipment such as steering wheels can be operated on the road, Cruise has repeatedly urged the US government to seek support.
Cruise has since acquired Voyage, a self-driving technology startup that operates short-haul connections in the community. The purpose is to open up more markets for the commercialization of autonomous driving, for example, Voyage's commercial landing experience in semi-closed communities.
In the view of Cameron, the founder of Voyage, there has always been a bad atmosphere in the industry similar to the "emperor's new clothes", and it will take years for autonomous driving technology to achieve safety and scalability in densely populated cities. State-of-the-art machine learning and robotics are not yet up to the task.
In Cameron's view, the current state of the industry is that the real progress of most of the companies involved does not match the original expectations. Although, there are still more investment institutions and companies pouring into the industry, even in order to chase the head of the enterprise and consider the cost of funds.
"This is typical hype," Cameron said, adding that many institutions and even companies in the automotive industry have not thought much about the implementation of autonomous driving technology and commercialization. "They just heard it was the future and they wanted to get involved."
A local U.S. industry source pointed out that in both incidents (the sudden departure of Waymo and Crusie's helmsmen), executives promised roadmaps with different milestones at different times, but none of these milestones were achieved."
Like other executives in his industry, John Krafcik has repeatedly promised that fully autonomous vehicles are coming soon. At a public event in early 2020, the company showed off a demonstration video of a truly driverless car.
Soon, though, John Krafcik took a back seat. Because after Waymo launched the Robotaxi service project without security officer configuration, progress was slow.
On the one hand, from a hardware point of view, the challenge at the time was whether the sensors could work optimally in all weather conditions. At the same time, vehicles are still very cautious about the unpredictable behavior of pedestrians.
On the other hand, even though Waymo is doing its best to reduce hardware costs, or even invest heavily in its own hardware, the company estimates that the cost of hardware and software modification on the basis of existing vehicles is still as high as tens of thousands of dollars (this does not take into account the amortization of upfront research and development costs). The company invests more than $1 billion a year.
For industry leaders like Waymo, lack of money is still the primary problem. Previously, the company raised $5.5 billion in two external financings, and the company's valuation exceeded $30 billion. The sudden departure of John Krafcik also has a lot to do with the company's slow progress in the commercialization of autonomous driving technology.
According to data, Other business units of Alphabet (including Waymo) have operating costs of $4.48 billion in 2020, while revenue is only $657 million, of which Waymo's revenue has hardly contributed anything.
Just earlier this year, John Krafcik publicly stated, "It's an extraordinary chore." It's more challenging than launching a rocket... Because it has to be done safely over and over again. ”
He admits that he and his colleagues rely on their experience in the auto industry to judge how fast autonomous driving will grow. "The idea was that if we had a prototype, it could be mass-produced in a few years."
In order to share the cost, GM decided to introduce Cruise's autonomous driving capabilities to the private market and maximize the revenue from software payments for new car purchases, thereby maximizing the dilution of upfront technology research and development costs.
However, progress remains slow, and "integrating autonomous driving systems into private passenger cars is a complex process." This requires us to redesign, test and validate how to safely commercialize this technology at scale. Cruise in charge said.
So far, only 5 to 10 percent of the completed trips on Waymo's fleet have been done by driverless cars. John Krafcik has also repeatedly proposed, "Robotaxi may not be the first commercialization scenario to land." ”
Second, the primary and secondary markets "parted ways"
Dan Ammann had sought a separate listing on Cruise, but that clashed with GM's strategy to "empower" the private passenger car market with autonomous driving capabilities. However, Aurora Innovation, which has already been listed, seems to be in a better situation than not.
In early November, Aurora, known as the world's "Robotaxi first stock," soared 51 percent on its day of listing, closing at $17.11 and a market capitalization of nearly $20 billion. Subsequently, the stock price continued to decline, and the company's latest market value was about $14 billion, and the stock price fell by nearly 30%.
Aurora's listing is also considered a global self-driving industry bellwether event, and the company's stock price performance has become a key indicator to judge whether the capital market has met expectations for driverless technology.
Founded in 2017, Aurora's three co-founders are also industry leaders, Sterling Anderson has been Tesla's Autopilot project director, CTO Drew Bagnell has worked on Uber's advanced technology team, responsible for perception and autonomous software, and CEO Chris Urmson has led Google's self-driving car project for nearly 8 years.
For these companies, this timing is correct, on the one hand, the commercial landing has begun to dawn, and the early stage of technology research and development has entered the key stage of "quantitative change to qualitative change". On the other hand, investors in the primary market have entered the recovery period and are in urgent need of secondary market takeover.
"I don't shy away from the possibility that companies may need to raise more capital." Aurora's co-founders said that a larger amount of capital is needed to continue to invest to maintain the commercialization of the landing, for example, for mass production-level software and hardware improvements, and even the fixed asset investment of the pre-operating fleet.
Like Waymo, Aurora also chose to lay out the truck self-driving market in advance before going public. "If you want a secure system to get to market quickly, it's best to start with trucking."
Aurora's co-founders said, "If you're the CEO of GM, Ford, Volkswagen or any of these big companies, you're going through a very tough process of figuring out which is the priority of spending money and what's at your disposal." ”
For Aurora, however, spending money is like running water.
Last year, the company spent $179 million on research and development, with a total loss of $214 million. As the commercialization process progressed, Aurora spent more than $159 million on R&D in the first quarter of this year alone.
According to the plan, the company will launch the Aurora Horizon truck self-driving subscription service at the end of 2023, and expects to launch the Aurora Connect taxi service a year later, but the company expects at least 2024 to see the light of profitability.
A similar situation also occurs in another self-driving listed company.
In April 2021, Tucson Future achieved a U.S. stock IPO, becoming the first stock of self-driving trucks. Then, over the past 8 months, the company's stock price has gone through a roller coaster, with the $40 offering price rising to around $70 at one point, but then falling sharply and falling below the issue price several times.
Currently, Tucson Future's latest share price is $32.48 per share, with a market capitalization of less than $7 billion. On the financial data front, the company's net loss for the third quarter of 2021 was $116 million, compared to an operating loss of $89.45 million in the year-ago quarter.
Tucson's future prospectus discloses that the cost of L4 self-driving trucks is still very high, and it may be necessary to find more financing solutions to help the company's users in the future or buy (and then rent) vehicles to operate on their own.
In addition, until mass production of custom self-driving trucks by 2024, the company said it also needs huge capital expenditures to maintain and upgrade its existing fleet. "Any investment is highly speculative and may result in the total loss of the investor's investment."
However, the primary market has not been significantly affected.
This week, robotic research, a self-driving company, received a combined $228 million investment from SoftBank and others. The reason is that the company's customer demand is still strongly driven. The company believes that the next two years are very critical, and the industry will usher in a large-scale commercialization window in 2024-2025.
Also this week, Wenyuan Zhixing announced that it has received a strategic investment of US$30 million from GAC Group to cooperate in promoting the development and manufacture of Robotaxi front-loading production models. In the next few years, it is planned to gradually build a fleet of tens of thousands of Robotaxi vehicles.
In September this year, self-driving company Yuanrong Qixing announced the completion of a B round of financing of $300 million, which was led by Alibaba, and the funds will be mainly used for the company's R& D investment, accelerating team expansion, and expanding the scale of autonomous driving testing and operation fleets.
At the same time, the company released DeepRoute-Driver 2.0, a front-loading autonomous driving solution, which reduced the cost of the solution to less than $10,000. "Autonomous driving cannot be mass-produced due to its high cost, and it is expected that by 2024, L4 level autonomous driving systems will begin mass production and enter the market on a large scale."
In addition, the company has also launched the autonomous driving same-city freight business "Yuanqiyun", which will focus on high-frequency transportation scenarios in urban areas such as supermarket distribution and express delivery. The reason is also that same-city freight will definitely achieve commercialization earlier than Robotaxi.
Obviously, almost the vast majority of self-driving companies have pointed to the "sweet" time point of mass production on a large scale to 2024. This means that in the next two to three years, sufficient funds, deep integration with OEMs, the gradual promotion of policies and the release of specific scenario needs will be carried out simultaneously with the elimination and integration of the industry.
No matter which track it is, constantly burning money and waiting for the dawn of commercialization is the current situation of the industry. "Both anxious and full of expectations," industry insiders admitted, to this point in time, no one is willing to give up any possible opportunity.