Weekly Brief: Exciting Year Ahead for EV and AV Technologies

New Year’s resolutions rarely last more than a week or two. New Year’s predictions are equally unreliable.

Give it a few months and what seemed certain at the outset of the year often looks foolish in retrospect. Nonetheless, as we look ahead to 2023, it’s hard not to take a stab at what the future holds for the automotive space. Electric vehicles are primed for a huge year, as legacy automakers and EV start-ups bring new models to market at increasingly affordable prices. Consumers used to be confined to a couple choices on the EV front. In 2023, they’ll have dozens to choose from. Cadillac will introduce its first EV, a mid-range SUV called the Cadillac Lyriq. EV start-up Fisker will introduce its first EV, a roomy SUV with a purported 350 miles in range. Genesis will debut its first EV, the luxury GV60 SUV. GMC has a Hummer EV SUV on the way. Hyundai has the Ioniq 6, Jeep its first all-electric Jeep SUV. The list goes on.

Supportive government policies, like the Inflation Reduction Act in the US, will further boost momentum, as will growing familiarity and comfort levels among consumers. Electric vehicles no longer feel exotic or strange in 2023. Everyone seems to own one or know someone who has taken the plunge. What’s more, the supply chain woes that ailed the automotive industry in early 2022 are now mostly in the rearview mirror and automakers have invested billions of dollars to build new EV factories, many of which are slated to open in 2023. As demand grows, automakers should be able to meet the need.

None of this is good news for Tesla. The most dominant force in the EV world has been on a skid of late, and dozens of alternatives from a growingly competitive field won’t help. Just before the New Year, Tesla’s stock plummeted to a two-year low on news that California had outlawed Tesla’s marketing of its Full Self Driving technology and because Tesla announced that its Shanghai factory will only produce EVs for the first 17 days of January and then will take a two-week break, in theory, for Chinese New Year. In practice, people are speculating the closure is because demand for Teslas has dropped and the carmaker has a glut of inventory. Further evidence for this argument is that Tesla, which historically has never discounted its vehicles, offered a $7,500 discount last week for all Model 3s and Model Y SUVs purchased before the end of the year.

Tesla’s stock has now dropped 73% from its high in November 2021 and has lost more than $500Bn in value. Elon Musk’s escapades with Twitter certainly haven’t helped. Much of Tesla‘s value was built on Musk’s reputation as a paradigm-busting tech genius, not a deranged megalomaniac who is more concerned with owning the libs on Twitter than with running a trillion-dollar car business. If his disastrous stint at Twitter continues, 2023 could be the year that investors turn on Musk and we start to hear calls for his resignation from the EV company that he once took to unparalleled heights.

This could also be a banner year for autonomous technology and the robo-taxi industry in particular. The last four years have been dominated by stories of tempered expectations on the robo-taxi front. Automakers, AV start-ups and tech giants alike thought that the self-driving car revolution was imminent and often made unfortunate promises for widespread deployment in 2019 … then 2020 … then 2021. Eventually they realized that it was better not to offer any deadline at all. The boldest predictions we get now about self-driving cars are located five or 10 years in the future.

That could change this year. Waymo’s robo-taxi service, Waymo One, is now fully operational and commercialized in Phoenix, including a growing presence at the airport and downtown. Look for a fully commercialized Waymo deployment in San Francisco by June of this year. Los Angeles is set to follow. Cruise is already commercialized in SF and is growing in Phoenix. Uber and Lyft have robo-taxis in service in Las Vegas.

Last week in China, Baidu received Beijing’s first-ever license to test drive fully driverless vehicles on public roads, with no driver or safety operator in the car. The tech company also announced a major expansion of its commercialized fully driverless robo-taxi service in Wuhan, tripling the size of its operation area, increasing the number of robo-taxis in service and expanding operating time to include key evening hours. The company says that it aims to build the world’s biggest fully driverless ride-hailing area in 2023.

It will be interesting to see if 2023 is the year when companies like Baidu, Waymo, and Cruise finally feel confident enough to bring their robo-taxi fleets to new cities where they haven’t trialed for years with safety operators, or if they will continue the slow, stepwise, methodical approach of going city by city. My suspicion is that we will see strong growth in robo-taxis deployments in 2023 but it will still be a few more years before companies take the reins off their technology and scale rapidly.

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