Weekly Brief: Russian Robots Step into the Global AV Game

First came Google’s Waymo. Next came Baidu’s Apollo.

Last week Yandex introduced the latest generation of autonomous vehicle companies powered by search engine giants: the Yandex Self-Driving Group. Yandex isn’t a newcomer to the AV industry. As the largest internet provider in Russia, it started experimenting with self-driving cars in 2017 and has built up a fleet of 130 autonomous vehicles that have driven more than four million autonomous miles on public roads in Russia, Israel and the United States. Much of that work has come in partnership with Uber under their joint ride-hailing and foodtech venture, MLU B.V.

Now Yandex is ready to go from bit player to big name in the AV industry and it’s eager to commercialize its autonomous driving software stack so that it can compete with Apollo and the Waymo Driver. In order to do that, it needs investment. Some of that money will come from its own coffers. The company announced last week that it will invest $150M into Yandex SDG, two-thirds of which will be in the form of equity and the remainder in the form of a convertible loan. It will also purchase a portion of Uber’s stake in Yandex SDG. As a result of the transactions, Yandex will own 73% of Yandex SDG, while Uber will own 19%.

Spinning off an independent company allows the company to attract external investors as well and set itself up for a potential IPO, just like Alphabet did when it spun off Waymo in 2016. Waymo raised $3Bn earlier this year from outside investors, including private equity firm Silver Lake and financial firm T. Rowe Price Associates. Uber followed a similar track in 2019 when it spun off its Advanced Technologies Group and raked in a $333M investment from SoftBank Vision and another $667M from Denso and Toyota.

The more outside investment that pours in, the more interconnected the AV universe becomes. Uber is a major investor in Yandex SDG and in its own self-driving outfit, the Advanced Technologies Group. Alphabet owns 5% of Uber and the vast majority of Waymo. T. Rowe Price Associates is an investor in Waymo and in GM Cruise. SoftBank is an investor in Uber and Uber’s ATG. It also has invested $940M in robo-delivery start-up Nuro and $2.25M in General Motors’ Cruise. It’s like an orgy where everyone wants to make love to everyone else while simultaneously leaving each other in the dust in the name of AV market domination.

That’s the complicated investment landscape into which Yandex SDG now steps. The company declined to say last week if it plans to seek an outside investment round in the near future. For now, it plans to focus on ramping up development of its delivery robot, Yandex.Rover, which is focused on the autonomous delivery of small and medium-sized packages – something of a priority during the pandemic.

The service recently launched commercial operations in the Russian tech hub of Skolkovo. The company also says it plans to launch its autonomous mobility services in Ann Arbor, Michigan, and Tel Aviv, Israel, in the near future.

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