Russian Giants Square Up in Fight for AV Revenues

Russia’s largest financial holding announced a spin-out of its automotive project SberDigitalAuto and created subsidiary Sber Automotive Technologies (SberAutoTech) on September 4, 2020, the same day as Yandex made an identical move.

Yet, the Sber deal failed to produce as many headlines. While it may seem understandable because Sberbank, rebranded recently as Sber, is new on the self-driving scene and currently just starting test rides on public roads, there’s a good reason to take a deeper look. Sber hired a large group of engineers who stand behind Yandex’s current generation of AVs and it is also the only company in Russia capable to invest the same, or even larger, amount of money and lobbying force as Yandex.

A year to overhaul

Sber first revealed interest in driverless technology in November, 2019 by partnering with software company Cognitive Technologies on self-driving joint venture Cognitive Pilot with a 30% share. Later in April 2020, the bank created a parallel automotive development project of its own dubbed SberDigitalAuto. Local business media reported about Sber headhunting for the project since December 2019, recruiting brains from Yandex and other local AV developers.

“Sber is creating a self-driving platform as well as an automotive operating system, featuring products and services with a potential to significantly improve safety and comfort of drivers and passengers,” Elena Kravets, marketing and PR director at SberAutoTech, stated in an email. “We plan to launch public test rides in late 2020 or early 2021. In 2021, we will also start practical tests of solutions based on Sber’s automotive operating system.”

Coming from ground up to street testing on a tight schedule naturally causes concerns. Will the technology be matured enough to be safe? “Sberbank is certainly a strong company capable in creating systems and technologies,” said Ksenia Borovikova, PR director at another AV specialist Zyfra Group. “Based on the current state of technologies in the industry and Sberbank’s active attitude, one year is a time feasible to reproduce the Yandex’s technical achievements in automation of vehicles.” Yandex officially launched its self-driving project in May, 2017 and started regular street testing 14 months later, having contributed at least twice the time planned by Sber.

Borovikova suggested that the ambitious deadline was necessary either to catch up with the first-mover or to attract the best candidates: “Engineers and other AI and robotics specialists look for places that provide opportunities for professional growth and realization of ideas so I think that it’s a normal competition for getting the best minds and ideas. Real implementations are very important; a company successful in faster bringing AVs to public roads becomes more attractive for development staff.”

One opportunity is that SberAutoTech acquired half-ready technology from another developer, presumably Yandex or Cognitive. Kravets stated: “While SberAutoTech is creating the autonomy solutions mostly on its own, we’re open to collaborate with partners who share our values.” The press secretary at Cognitive declined to comment. Ilya Grabovski, PR director at Yandex, stated in an email: “We did not give our technologies to any company.”

Arena for two

Competition between Yandex and Sber had been heating up since at least 2014 when the latter announced a plan of transformation from a bank into a tech company. Headquarters at both companies work in the paradigm of an ‘eco-system surrounding a consumer’, including dozens of services from delivery to streaming video to voice assistants and so on. It also explains why the bank would want to develop self-driving and operating systems for cars because the synergy is clear with Sber’s products in telecoms, digital entertainment and financial services.

“Sber is creating an automotive platform capable to promote more Russian technologies in the automotive market, including smart driving assists, solutions for autonomy and interaction with smart road infrastructure,” wrote Kravets. “Sber eco-system provides unique opportunities in this direction.”

On September 23, 2020 Sberbank had fixed its transformation from a financial holding into a tech company with a $32M rebranding plan, adopting new name Sber.

In summer, 2020 Sber and Yandex divided their last joint assets. The simultaneous launch of auto-tech subsidiaries with basically the same range of products is making obvious that Sber and Yandex are officially now opponents, not partners. It is also a message that Sber sees Yandex as its primary competitor in the national new mobility arena.

With Waymo, Uber and other leading AV developers shunning the Russian market, Yandex had long been the biggest and most active developer nationally and deserved criticism for using its exclusive position to gain an advantage over smaller rivals. Sber has similar reputation in the financial sector. Nevertheless, heavy competition between the two auto-tech players of comparable financial clout may play in the hands of consumers. Borovikova said: “Coming of just another player is undoubtfully beneficial for the whole autonomous driving market.”

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