Weekly Brief: Auto Tech Start-Ups Feel the Chill of Economic Downturn
LiDAR maker Quanergy filed for Chapter 11 bankruptcy just 10 months after going public via a special purpose acquisition company (SPAC) called Citic Capital Acquisition Corp.
Quanergy specializes in smart LiDAR solutions that allow machines like self-driving cars to see the world around them in three dimensions and make rapid, informed decisions. The purported value of the company was $1.4Bn and it was trading as a top 10 LiDAR company in the world by market cap until the wheels fell off last week.
In many respects, the company’s demise tells the story of 2022 as optimism for EV start-ups and self-driving revolutionaries at the start of the year ran into the cold, hard reality of cooling investor optimism amidst a market downturn and rising inflation. Companies that went public via SPACs during the pandemic fared particularly poorly. Many ended up under investigation by the US Securities and Exchange Commission for shady reporting to investors. Some went bankrupt. A handful did both, Electric Last Mile Solutions the most notable of these. Nikola’s CEO Trevor Martin was arrested in October for fraud. General Motors sold its stake in Lordstown Motors, which staved off bankruptcy by the skin of its teeth thanks to an eleventh-hour deal with Foxconn.
Next year isn’t looking much brighter for these companies because supply chains remain challenging and investors wary of dumping more money into start-ups that may not make it through the next quarter. The LiDAR industry in particular is due for consolidation, given that these tech start-ups are all competing for a limited number of customers, and those customers are consolidating as well. Quanergy says that it plans to continue operating as it wades through bankruptcy in hopes of being acquired by a solvent competitor. The company’s CEO Kevin Kennedy will step down as of December 31, 2022.
In other news, Cruise’s fleet of robo-taxis are under investigation by the National Highway Traffic Safety Administration. Cruise moved rapidly in 2022 to deploy robo-taxis to the streets of San Francisco before Waymo could claim the prize. As it ramped up pilots at the start of the year, late-night footage started pouring in on social media of Cruise robo-taxis stuck for hours at intersections, creating obnoxious traffic jams. Cruise brushed the incidents off as minor glitches and managed to convince California regulators that it was ready for prime time. The company launched its first commercial service with the general public in November.
Federal investigators from NHTSA are looking into a number of reported incidents when Cruise robo-taxis became immobilized by seemingly trivial driving maneuvers and weren’t able to extricate themselves without human intervention. Safety regulators are also looking into three reported crashes that came from excessive hard braking in Cruise robo-taxis. Safe to say this is not the news that Cruise wanted splashed across headlines as it looks to expand into Phoenix, Arizona, and Austin, Texas.
Uber Eats announced that it has begun food deliveries via automated robots in Miami, Florida. The company is partnering with tech start-up Cartken, whose AI-powered sidewalk delivery bots can carry about 25lbs of groceries or cooked meals as they wheel about a neighborhood or college campus. Cartken is currently engaged in pilots around the US but Uber Eats will be its first formal partnership with a global on-demand delivery app beyond college campuses. The two plan to start small in the Dadeland district of Miami before expanding to other neighborhoods of Miami-Dade and around the US in 2023 if the program is successful.
Across the globe, Hyundai rolled out two similar delivery bot programs in Seoul, South Korea, only its autonomous bots will be busy indoors at a hotel and a residential-commercial complex rather than on the street or sidewalk. Hyundai’s autonomous robots are built in-house on a Plug & Drive (PnD) modular platform and are capable of delivering everything from packages to hot food and room service. Paul Myles has the full story.
