Venture Capital’s Position on the Future of Autonomous Vehicles
By Jacob Mackey, Michigan PEVC Analyst
As technology advances and permeates more of our daily life, there is no question that autonomous technology will become an important part of improving business operations and engineering design, especially within the automobile industry. TuSimple is a new entrant in the autonomous vehicle industry, recently receiving $178 million from investors in their first few rounds of funding. The startup was valued at $1.1 billion dollars, making it a newly designated ‘unicorn.’ A unicorn is any privately held startup that has a valuation of over $1 billion, prior to acquisition or planned IPO. TuSimple’s autonomous driving technology provides better long-range capabilities than existing technology and this is currently their main differentiating factor in this evolving industry.
The recent investment into TuSimple, led by firms such as NVIDIA GPU Ventures and Sina Corporation, is consistent with the current trend of technologists increasing investing in autonomous technology using deep learning and algorithmic decision-making. Other companies such as Ike, Apex.AI, Boxbot, and Gatik AI have also received millions of dollars in investments. However, large capital investments in this industry calls into question the ability of this market to sustain the substantial growth it is currently experiencing. A sharp growth in the market value of this industry will likely be accompanied with an eventual saturation leading to stalling growth rates.
One factor that can potentially influence the industry as a whole is consumer fear regarding autonomous technology’s safety. With companies like Waymo already hitting the streets with prototype versions of their autonomous vehicles, some consumers have become worried that this technology is going to put their lives at risk. These fears were amplified when an Uber-operated self-driving car killed Elaine Herzberg, who was crossing the street in Tempe, Arizona in March of 2018. Despite accidents like this, growth has continued in the autonomous vehicle market. This indicates that investor sentiment towards autonomous vehicles is on the cautiously speculative side, given that there are still clear risks involved with the technology that must be ironed out.
Despite clear projections of future growth, the acceleration towards a driver-less future will eventually stagnate. This new technology is currently being built and sold in a market that has limited regulatory boundaries. If the government decides to restrict these companies’ ability to release their products for sale within a reasonable time frame, Venture Capitalists will be motivated to push for an exit as soon as possible due to the potential of a full regulatory block in the name of safety regulation. Although these concerns must be considered, this industry is poised for high growth and high returns over the next few years. That said, equal deliberation must be given to the safety of this technology before significant investments can be made.
