Weekly Brief: Autonomous Tech Still Trapped on the Fiscal Ropes

Commentary By Andrew Tolve

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7th November 2022

In the wake of an earthquake, brace for aftershocks.

Two weeks ago back-to-back seismic events rocked the autonomous vehicle industry. The first was news that Argo AI, one of the most promising self-driving start-ups armed with billions of dollars of backing from Ford and Volkswagen, was shutting down immediately. The second was that Tesla was under criminal investigation by the US Department of Justice over false claims that its cars can drive themselves.

The AV industry is a small one. Almost everyone knows everyone. Engineers often pass from one company to the next. Mergers and acquisitions bring old friends back together again. It’s no surprise, then, that the AV industry is still reeling two weeks later. Argo AI took a slow, steady, safe approach to autonomy. Tesla adopted a fast, breakneck attitude, seemingly unafraid of blowback or potentially deadly consequences. Now one company is gone and the other could be facing criminal charges.

Last week the industry went on the offensive to quell employee and investor concern. Cruise’s CEO Kyle Vogt announced that Cruise has expanded its driverless service in San Francisco to cover nearly the entire city. This more than doubles the previous service area, bringing in new core neighborhoods like the Mission, the Marina, the Presidio and more. The last remaining un-serviced zones in San Francisco are Twin Peaks and the Financial District. “AV progress continues to accelerate,” said Vogt on Twitter. “Wild that only a year ago I took the first ever driverless @cruise ride and tonight I can take a driverless ride almost anywhere in SF.”

This omits the fact that Cruise’s service has not gone smoothly to date, offering a steady drip of recalls, accidents, embarrassing traffic jams and middle-of-the-night-only restrictions. General Motor’s CEO Mary Barra has touted her company’s plan to lead a trillion-dollar market, with Cruise raking in $1Bn in revenue each year by 2025. That’s two or three years from now depending on how you do the math. Cruise is on track to lose almost $2Bn this year.

Chris Urmson, CEO of Aurora, sent out a similar message to Vogt’s last week, assuring investors that Aurora won’t follow in Argo AI’s footsteps. His company has sufficient cash in the bank to make it to its commercial launch in 2024, he said. He lamented the loss of Argo AI and the impact it will have on Pittsburgh and the broader AV community. “But I also want to be clear that this is not a signal that a future with self-driving technology isn’t real or imminent. In fact, it’s quite the opposite.”

This sounds soothing. Then again, last month in a leaked memo from Urmson, he said he was considering desperate measures to keep the company afloat, including layoffs or selling Aurora to Apple or Microsoft. Despite assuring investors Aurora has enough money to make it to commercialization in 2024 last week, Urmson’s memo suggested the company needed to raise an additional $300M.

Even the most reticent, deep-pocketed AV outfit of all, Waymo, felt the need to make an announcement last week. The Waymo One robo-taxi service in Phoenix now includes the Phoenix Sky Airport, meaning that “Trusted Testers” can catch a driverless ride from the airport to downtown Phoenix at any time of day or night. A cynic would point out that Trusted Testers are not members of the general public and expanding pilots among test groups won’t do much to assuage the fears of angsty investors. As an energy crisis strains Europe and the global economy dips toward recession, it’s time to see commercial results. The AV industry is years from delivering them.