AV Market Consolidation and Collaboration
The autonomous vehicle’s space is in a turbulence zone.
After enjoying positive vibes from investors and media a few years ago, the technology is facing tough times these days. As it gets clearer that the robotaxi market won’t happen this year at scale (as predicted by some AV companies), all players start looking for options to accelerate deployment of the technology.
Car Manufacturers’ Perspective
By taking a look at the largest car manufacturers, we may notice a different approach to full autonomy. In general, all of them gradually develop technology from L2 to L4/5 level. However, the difference lies in reliance on external teams.
While it’s not a black and white situation, I’d differentiate four dominant strategies:
- “Acquisition”: identify the best startup and acquire it to either enhance internal teams or let the acquisition target keep working independently on the technology, which is to be integrated into a purpose-built car or/and exiting conventional cars;
- “Internal development”: a company believes in its capabilities to develop the AV technology;
- “Partnerships”: companies in this space join forces to share investments, risks, and speed up the process. Partnerships range from not legally binging agreements to multi-billion joint-ventures;
- “Mixed”: a balanced approach, which utilizes all or some of the above strategies.
Now let’s dive deeper into each of the strategies to explore particular companies’ activities.
Acquisition. With Cruise and Argo.ai's examples, we can see that automakers bet on external teams. Even though they may still develop something internally (like Super Cruise on Cadillacs), they invested billions to acquire the best teams to secure the future. VW joined Ford and will invest $2.6 billion in Argo.ai despite an existing AV business unit in Munich.
“Internal development”. The opposite approach has many proponents (aside from a well-known Tesla), some of which have already shown positives results. In Asia, Suburu has developed an EyeSight system that auto-steers and adjusts speed. Dongfeng, for example, recently presented a Sharing-VAN 1.0 Plus, which is a mass-produced L4 vehicle.
In Europe, both PSA and BMW have been working on the technology for years internally though they don’t share much about the progress.
“Partnerships”. In this group, carmakers partner with others to either co-develop the AV technology or integrate 3rd party technology into their cars. For example, FCA, Volvo, and Jaguar signed partnership agreements with Waymo to integrate the AV technology stack in cars, which will be used as robotaxi.
In China, FAW has established a joint venture with Plus.ai. While their goal is the L4 truck, the JV already has the first commercial product is the L2 semi-autonomous truck.
“Mixed”. The last group rather than having one focus, prefer to have multiple work-streams. For instance, Hyundai invests $2 billion in a joint venture with Aptiv to have a production-ready autonomous driving platform available for robotaxi players in 2022. At the same time, Hyundai has developed L2 features, which can be found in its cars. This is in line with the company's claim to make semi-autonomous features affordable and included even in most affordable models.
Likewise, Daimler is taking every opportunity to win the AV market. Back in March 2020, the company announced that it sets a higher priority for autonomous trucks over cars. While the company works on the AV technology internally, it acquired Torc Robotics to accelerate autonomous truck development. Additionally, Daimler has partnered with Bosch for the same purpose but with a focus on cars.
As we can see, more than 50% of carmakers use external resources to increase the chance of making to the autonomous future among the first.
Big Tech’s Perspective
Historically, the largest tech companies look for ways to diversify their core businesses. Since self-driving cars are less about the actual cars and more about software stack and sensors suite, some of the big tech players have entered the race.
Google’s Wyamo is probably the most famous and oldest company in this space. It started this moonshot already a decade ago and successfully improves the technology year by year. These days Waymo explores robotaxi, local delivery, and autonomous trucks opportunities.
The largest recent deal belongs to Amazon, which acquired Zoox. Before the deal, Amazon wasn’t very active in this space with a small investment in Aurora. It’s not yet clear how Amazon will (or if) steer the direction of the Zoox vision. So far it is stated the startup will keep working independently. Though taking into consideration that Amazon manages a huge fleet of cars and trucks, together with Zoox they now have multiple market segments to choose from and pursue.
Chinese search giant, Baidu, is deep into the AV space. It launched the Apollo platform to facilitate the development of autonomous vehicles. Baidu claims to have already more than 100 partners. Baidu itself actively tests its self-driving cars and accounts for the majority of driven kilometers last year.
Two months ago it opened the world’s largest test ground for autonomous vehicles. It’s located in Beijing and has 13,500 square meters to house more than 200 self-driving vehicles.
In Russia, Yandex, which has a ride-hailing JV with Uber, is working closely with Hyundai Mobis. They inked the partnership agreement in 2019 and in June 2020 introduced the fourth generation of Yandex self-driving cars that operate on 2020 Hyundai Sonata.
Other tech giants are either not active in this space or their activities are less visible. We know very well that Apple is working on AV technology. It started its project, Titan, internally but failed to achieve significant results. Last year Apple acquired Drive.ai to enhance and speed up the development. However, the company is not vocal about recent progress.
Ride-hailing Companies’ Perspective
The ride-hailing business has stabilized a bit in recent years. Once companies cemented their positions in various geographical markets, they started to consider technological developments, which will transform the market. While flying taxi feels like a distant future, the self-driving taxi is closer to our reality.
Uber is likely one of the best-known players in this space. It was among the first and most bullish to roll out robotaxi. Uber’s ATG division is actively working on its self-driving car technology and testing its cars in multiple cities across the U.S.
Its major ride-hailing competitor, Lyft, has launched Level 5 a couple of years ago that now employs 400 engineers across three headquarters. On the technology side, Lyft develops everything internally aside from acquiring Blue Vision Labs, which specializes in augmented reality. On the business side, Lyft has partnered with Waymo and Aptiv to give customers the ability to order self-driving rides.
In China, ride-hailing giant, Didi, recently launched on-demand robotaxi service in Shanghai. Its existing fleet is developed in partnership with car manufacturers and suppliers, in China. However, the company is lagging in terms of testing. Last year, its rival Baidu logged 91% of all driven kilometers.
Recently, DiDi announced to have 1 million self-driving cars on its platform by 2030. It’s a bold statement given that autonomous vehicles missed big time the forecasts from prominent AV companies. To achieve this goal, a newly formed partnership with BAIC, a Chinese carmaker, will be very helpful in developing customized self-driving vehicles.
To sum up the state of the market, we can observe the following:
- Car manufacturers: While all of them work of partial autonomy, some players are more aggressive toward achieving the L4/L5 level. The latter ones are either acquire the most talented teams or have intensive internal development. More than 50% of carmakers look for external capabilities via any form of cooperation.
- Big Tech: Many largest tech companies are very active in the AV space. The majority of them establish partnerships while developing technology internally. Google and Baidu’s spin-offs, Waymo and Apollo, are among the frontrunners and demonstrate an advanced state of the technology along with a significant scale of operations.
- Ride-hailing: The largest players clearly envision that robotaxi is an inevitable future and hence invest heavily in developing the AV technology. Top three (Uber, Lyft, DiDi) companies have grown teams internally that now work on their self-driving car projects.