Posted by STEER On April 21, 2020
Founders, executives, and analysts agree that self-driving car companies are in for a bumpy ride.
The self-driving car was a dream deferred even before the Covid-19 outbreak brought the U.S. economy to a standstill. By early 2020, plans to launch robotaxi services had been pushed back or scaled down as excitement over driverless cars gave way to recognition of the long work and heavy expense of bringing the technology to market. Now the pandemic has forced companies to pull their cars from the road, send engineers to work from home, and look carefully at their balance sheets.
While some companies are taking the opportunity to demonstrate the promise of autonomous vehicles for contact-free delivery, these efforts serve mostly to show how far the industry remains from large-scale, truly driverless deployments. Hyperdrive spoke with a handful of industry consultants and executives about what’s ahead. There is general consensus that autonomous vehicle developers are in for a bumpy ride, and that consolidation is inevitable. But there is also widespread confidence that the project of building self-driving cars is more urgent than ever.
“Covid-19 is driving home for so many the promise of fully autonomous vehicles not only to make our roads safer, but also to help riders stay healthy during uncertain times,” said Dmitri Dolgov, chief technology officer of Waymo, formerly known as Google’s self-driving car project, via email.
Below are the key takeaways from those conversations. Interviews have been edited for length and clarity.
Grayson Brulte, co-founder, Brulte & Co., a consulting firm focused on autonomous vehicles and the future of transportation.
Oliver Cameron, co-founder and CEO, Voyage Auto. The company contracts with retirement communities to provide self-driving ride-hailing services. Its main client is The Villages, a community of more than 115,000 in Central Florida.
Ryan Chin, co-founder and CEO, Optimus Ride. The Boston-based startup, founded in 2015, builds self-driving shuttles for private residential and commercial developments. Its clients include the Brooklyn Navy Yard, an office park in Reston, Va., and a retirement community in Paradise Valley, Calif.
Brian Collie, managing director and senior partner at Boston Consulting Group, where he leads the automotive and mobility practice.
Dmitri Dolgov, chief technology officer, Waymo. Waymo is widely acknowledged as the leading self-driving car developer. It recently raised $2.25 billion, including money from its first outside investors, to continue its work on self-driving taxis, delivery vehicles, and long-haul trucks.
Ro Gupta, co-founder and CEO, Carmera, a New York based maker of high-definition maps, based on data gathered from vehicle-mounted cameras. Almost all of the company’s partners —including delivery companies and other fleets—have continued to operate during the pandemic, in some cases racking up more miles than before.
Anuja Sonalker, founder and CEO, STEER. The Maryland-based startup founded in 2016, sells kits that enable cars to navigate parking lots without a driver. The company works with 33 sites in Maryland, including malls, grocery stores, and pharmacies, to provide a robot valet. It has also begun selling $1,200 kits for use in garages and driveways.
Chris Urmson, co-founder and CEO, Aurora Innovation. Aurora, a Palo Alto, Calif.-based startup founded in 2017, is working to build a “driver” that can operate ride-hailing fleets, personal cars, delivery vehicles, or long-haul trucks. Urmson, part of the engineering team that won the DARPA Urban Challenge in 2007, founded Aurora after leaving Google’s self-driving car project, where he was lead engineer.
Simulation keeps the work going:
Most autonomous vehicle developers use simulation engines to create driving scenarios and test their software. These virtual tools have allowed engineering teams to continue to work productively, without fleets on the road. Aurora, Optimus Ride, and Voyage have all paused their on-road testing. Waymo continues to operate a small number of fully driverless ride-hailing minivans in suburban Phoenix, as well as its delivery and trucking operations, but has paused all rides with safety drivers.
Dmitri Dolgov (via email): “We’re seeing the increased importance and benefits of our multiyear investment in large-scale simulation, productivity tools, and advanced frameworks for training and evaluating machine learning models, and we’re doubling down our efforts in these areas.”
Ryan Chin: “You can do a lot of work on simulation. You can go back and work on things that you wanted to work on but didn’t have time for, and you can still make lots of advancements. … It’s not like we’re gonna run out of things to do in a week.”
Oliver Cameron: “Our cars are not running in the world. They are not collecting production miles. And that just puts more emphasis on simulation to be able to find what’s broken and fix it. But we can’t fool ourselves into thinking that simulation can take the place of real world miles. … There’s always going to be that step where you get [the software system] onto a real car and you run it through things you’ve never seen before because the world is dynamic.”
Chris Urmson: “We have a simulation tool that allows us to emulate the sensors we have on the vehicle to generate new data in interesting environments that might be hard to create in the real world. So we can do an awful lot of work with that. Is it useful for us to get real world data? Absolutely. That’s why we have a fleet. But part of the way we have operated from the very beginning has been, instead of trying to operate a massive fleet and hope to get the data you want, to be really thoughtful and targeted with the data collections.”
There is broad consensus that the AV industry was already entering a period of consolidation. The huge opportunity brought out dozens of venture-backed companies over the past decade, but with time, it’s become apparent that it will take many years and billions of dollars to create a viable business. That realization has narrowed the field; the current economic shutdown is likely to accelerate this.
Ro Gupta: “Even before Covid-19, this industry was already doing a reset in terms of being more realistic with the timelines.”
Brian Collie: “2022 was a commonly accepted number for commercialization. We’re now looking at being pushed out to 2025, 2026. So we were already seeing significant cash pressure for some of these small or more midsize players to weather from here until then. And the situation with Covid-19 will only exacerbate that.”
Chin: “Anyone that’s trying to raise [money] right now, it’s going to be tougher for them.”
Cameron: “Consolidation, regardless of virus, was coming and has been for quite some time. Post-virus, yes, there will be an accelerated number of companies that die, whether in AV or not. Let’s be honest: It’s going to impact everything.”
Anuja Sonalker: “Those who don’t have enough runway or did not prove their value proposition before this came, they will have a hard time. It will take every single ounce of their strength to survive this.”
Urmson: “We have been saying since very early on that we saw consolidation coming. … We’re positioned with enough runway to get through the other side of this and be a beacon for some of these great people whose companies didn’t happen to work out.”
A shock to the auto industry:
Most in the group believe more established automakers could reconsider investments in autonomous driving during the current crisis; that could potentially slow down progress on those projects.
Collie: “When you’re looking at, globally, automotive sales being down in order of 20 to 40% … when you have dozens of plants and tens of thousands of employees and near-term production requirements, you might now look at AV as being much more of a luxury that you can no longer afford.”
Cameron: “Some of the big guys may not weather this. It may seem like they can, but think about the politics within a big company and the politics of where you spend your time when the whole world is falling apart. I imagine there’s a lot of belt-tightening going on.”
Urmson: “If you are a General Motors or a Ford or a Volkswagen or any of these big companies, you are going through a very difficult process of prioritizing what you spend money on and what is discretionary. That focus is going to be on how do they get people back to work and how do they meet the demand of the public.”
Brulte: “Can these [auto] companies sustain funding for these operations? Or will they get pressure from the labor unions to stop funding this? You’re closing a factory, yet you’re funding your self-driving car project? That’s going open up some really interesting political divides.”
Collie: “If you’re a tech startup or new mobility player that has moved into this space, this is your full business … while others are distracted, this is getting your sole focus. And we think there’s gonna be a tremendous opportunity for the biggest independent new mobility players to widen the gap.”
The fate of the sharing economy:
The coronavirus has made sharing closed spaces with strangers a fearful experience. It’s unclear how long it will take consumers to get over that fear.
Brulte: “You will see a dramatic shift in society as it relates to shared mobility, and it will go back to private mobility of individuals riding in a vehicle without another person. Covid-19 will accelerate that shift.”
Urmson: “Even when we get the all-clear, which probably takes quite some time, there’s going to be a residual concern about getting close to other people that you don’t know. It will affect the psyche for a while. And at the same time, when you think about how do we actually move people through big cities, the only good way to do that is through shared mobility. In the long term, I think that automated vehicles have an important role to play in that, whether it’s as private taxi-like vehicles or whether it’s part of a public transportation network.”
Collie: |“Even though right now we are caught up in this unprecedented crisis and all of us are talking about how we’re going to think differently about getting on a train, about getting on a bus, about sharing a car, I don’t think it will take long once this is done for those attitudes to start to change back to where they were before.”
Gupta: “For behaviors changing in a lasting way, I just think no one can ever predict those . … One example I think about is 9/11. There were lots of people that swore they would never get on a plane again.”
Collie: “When people talk about how people are gonna be less inclined to sharing, they’re doing so with the frame of reference of what a pooled vehicle looks like today, where you’re getting into a repurposed privately owned vehicle and you’re squeezing into a back seat with two other people. Vehicles are going to have a very different form from how they look today.”
Chin: “How do you design vehicles that have that capability to self-sanitize? I think that’s less of a technical problem than Level Four or Five autonomy, but it is something that we’ll have to incorporate.”
Read the original article on Bloomberg here.