Weekly Brief: Apple Saves Start-Up From AV Scrapyard

Commentary By Andrew Tolve

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1st July 2019

What a week it was for self-driving start-up Drive.ai, which awoke on Monday with plans to close its operations and sack staff but then went to bed on Friday fresh off an acquisition by Apple.

Neither side has revealed how much Apple will pay for Drive.ai but reports suggest that it’s a bargain price for a company that was valued at $200M just two years ago. Since its founding by a pair of researchers from Stanford’s AI Lab in 2015, Drive.ai has raised $77M in venture capital. Apple reportedly won’t even pay that much for it.

On the surface, this is a steal for Apple. The tech giant has an established, if mysterious, autonomous vehicle division called Project Titan into which it can plug Drive.ai’s engineers, technology, physical assets and services. The start-up’s most significant service is a fleet of bright orange self-driving vans that trundle along a predetermined loop through downtown Arlington, Texas. It’s like mass transit buses save for the bus driver behind the wheel. It’s hard to imagine Apple slapping its own name on these vans in the future, given how stealthy it has been with its own projet in the past. More likely, it will shut the service down or keep it going under the Drive.ai name, using the data it gathers to advance its existing work.

Another important part of the acquisition is a retrofit kit that allows businesses to integrate autonomous features into their existing fleets. On the one hand, it’s hard to imagine that Apple will go this route, given that it’s never been a company that has sold software or technology to be integrated into another company’s products. Apple is, first and foremost, a device company with its own distinct brand and stand-out design. Expectations are that, if Project Titan ever comes to fruition, it will be in the form of a self-driving Apple Car that is as sleek and streamlined as an iPhone or a Macbook Pro. Then again, Apple has pursued aggressive inroads into the automotive space via Apple Car Play. If it can go the third-party route with infotainment, why not with a self-driving platform?

Clearly a lot of questions remain. Given that this is Apple we’re talking about here, few of those questions are likely to be answered anytime in the near future. What is certain is that Drive.ai’s plummet in value in the last two years goes to show that the luster in the AV space is starting to wear off. For the past five years self-driving start-ups have sprouted up like weeds, each with seemingly endless access to mega-million-dollar funding rounds.

Yet, investors are beginning to understand that the pay-off for an investment in AVs may take longer than expected, if it ever arrives in the first place. Drive.ai’s retrofit kit didn’t find much traction, despite the $50M Series B funding round that went into it. Also running loops around Arlington is a far cry from a nationwide rollout in tandem with Lyft, as the two companies once envisioned when they partnered on a pilot in the San Francisco Bay Area in 2017. Again, nothing much came of it.

That’s why Drive.ai was on the brink of closing up shop – it couldn’t find a way to be anything more than an experimental shuttle service running back and forth between a couple venues in a second-tier city in Texas. Given how hard it is to safely operate a robo-taxi service, heavily geo-fenced gigs like Drive.ai’s in Arlington are increasingly looking like the short-term future for autonomous vehicles. Is that something worth investing millions in?